that is one reason they have made a real commitment and one reason why they are so hard line on this. But we have just got to keep working on that.

I want to yield to my friend from Alabama for another comment. Mr. EVERETT. Mr. McMillan, I just want to show the panel and those out there in the audience this newspaper article that was in last Friday's edition. If you cannot read it, what it says is “Family Farms Are Growing and Thriving." [Laughter.]

Now you talk about miscommunication-that is what I am talking about, the reason we need your help. Now the article goes on to explain that they are talking about niche farming and that those doing $100,000 a year and more are still losing money and in desperate shape.

But the fact of the matter is, I was in the newspaper business for some 33 years, I came to Congress late, like you came to agriculture late, we both may have made a mistake, I do not know. I was in the newspaper business 33 years and I know from experience that unless you have a direct interest in farming, 90 percent of the people who see that headline will not read this story. And that is the problem.

Thank you, Saxby.

Mr. CHAMBLISS. I yield back the balance of my time, Mr. Chair

man.

Mr. SHIRAH. Mr. Chairman, one more comment. The insurance issue that I heard Mr. Bishop speak to, it needs to be changed and that is good and I am glad you have done that. But one of the shortcomings is that it does not insure the overall aspect of a farming unit, it only will look at a direct crop cost. There is so much indirect cost that the farmer still has, it slowly erodes his debt to equity by the insurance, even with a good claim, covering a payment that does not look at so he is born still the total factory costs that have to get serviced and the insurance just does not cover it, it does not cover cost recovery. And not on farming practices but on things totally out of control, the drought issue strictly. Acts of God, that is the only thing that I see that it really needs to shore up better, is when it is an Act of God condition; when you can demonstrate all the best practices and document then, then Act of God has got to be able to be recoverable of all costs that the farmer bears that year.

Mr. CHAMBLISS. Jim, let me just tell you very quickly how we addressed that, because there is no way in crop insurance or any insurance program for that matter that you can cover every conceivable problem that you may have out there. But under the chairman's good leadership, we have devised a crop insurance reform package that is flexible and the main thing it changes is it takes à decision on crop insurance out of the hands of the Government and puts it in the hands of the farmer. And that is really where it ought to be. You are going to have the flexibility to decide how much coverage you want, what crops you want to insure, whether you want to insure irrigated versus non-irrigated. We put some incentives in there on the Government as well as the private sector to develop some policies that are just entirely different from anything we have right now. So we cannot cover every conceivable problem that may arise because we obviously do not know what all

of them even may be now, but we put a lot more flexibility in this package than what we had before.

Mr. SHIRAH. Will it be retroactive to this crop year?

Mr. CHAMBLISS. No.

The CHAIRMAN. We would have had it in place this crop year had the Senate acted.

Mr. Riley.

Mr. RILEY. Thank you, Mr. Chairman.

This has been a very enlightening panel, I have really enjoyed it. I think we are looking at this though in somewhat of a wrongheaded attitude.

Ricky, assume that we did implement something like your crop insurance program, your IRMA program. If you went 4 years and you were totally funded in it, what do you think the chances of any fraud would be in that program then?

Mr. WIGGINS. I think it would eliminate it.

Mr. RILEY. It would eliminate it, because the only person that you would be defrauding would be yourself. And that is the kind of systemic changes we need to make in this. If we could ever get to a point where you are doing what is best for you-I heard somebody testify yesterday and it really kind of disturbed me, about the level of fraud and abuse that is going on in these programs out there and when I heard a person sitting exactly where you are say there is 101 ways I can kill my crops and you will never know it. I can set the drill half inch too low and I will kill the crop and if I do not have any cost in it, I am going to make money.

But if we could go to a program, Ricky, like yours where over a period of time, we end up where you are literally self-insuring yourself, then I think we totally eliminate fraud. And folks, that is what we have got to do. If we could take what you have said on crop insurance, couple that with one other factor, and I like to call them farmer savings accounts, something like an IRA, so when you do have a good year, you can take 10 percent of that money and put it in something like an IRA. We have had cycles in agriculture ever since I have known, we will continue to do it because of weather conditions and a lot of other reasons. We have got to develop a way that you can level that out without the Government having to come in and write these $10 billion checks. And it looks to me like if we will let a Federal bank, or actually we mandate that a bank, set up a loan loss reserve, why can we not set up some kind of loss reserve for you so when you do have these bad prices, so when you do have some problem, that it is a tax-deferred account, something similar to an IRA, couple that with the program that you have on crop insurance and I think then if there is any reason for the Government to even participate, it would be only for catastrophic events, Acts of God. And it should be relatively cheap, but it would be almost like buying an umbrella policy, liability policy today, and I think that is-if we could move this country in that direction, I can see a time where we would not have to have a farm bill every year, we would not have to have this. And I think we can do it.

Now how you get there, I do not know. It is going to be a longthe problem is we have got to have 2 or 3, 4 back-to-back good years for you to do it. But if we could do that and do something

to make us competitive in the foreign markets, I think we could literally in the next 10 years get to the point that the Federal Government lets you make those decisions. We will eliminate fraud, we will eliminate most of these subsidy programs and I think the Government's intervention at that time would be minuscule.

Mr. Shirah, let me ask you one thing. In your service with BellSouth, if you were competing against countries that had 40 percent subsidies, what do you think BellSouth's position would be?

Mr. SHIRAH. Well, they are currently doing that today in many of the international markets. What I think they have is a strategic plan that says in 5 years here is where I hope to be, there may be some bumps along the way but here is where I hope to be in 5 years.

And so what I am concerned about on our issues is we have got a lot of casualties in the wake that are going to occur in America before we get to 5 years from now. And I am doing my best to make sure I am not one of them but there are some awfully good friends and awfully good neighbors and awfully good Americans that are going to lose their whole life's work.

Mr. RILEY. Oh, I know.

Mr. SHIRAH. In just a year or two.

Mr. RILEY. Saxby said a minute ago he really appreciated you being on this panel because of the intelligence you brought and I said this guy got into farming 3 years ago, so

[Laughter.]

Mr. SHIRAH. I have an understanding of what our names are and we are after a famous movie and my name is "Dumber." I did go into it under a lot of people advising me not to and that is a sad state of affairs in America today, where everybody you talk to when you say I am going to go into farming tells you no, do not do it, you have got to be crazy.

Mr. RILEY. Well, and we hear that

Mr. SHIRAH. And then you do it anyway.

Mr. RILEY. Yeah, we hear that everywhere. When you have parents advising children not to go into farming, not to go into any type of agriculture, I think that we have some problems, long-term problems that are going to be hard to overcome.

But again, as I look at it, and Ricky, I want to congratulate you on your program. I think it is a great model for us to start working with as far as providing crop insurance. If we can come up with something else to help you even out those low points, where you have some kind of reserve account that you can call on when prices are down or your yield happens on your particular farm-happens to fall, I think we will go a long way toward solving most of the problems that you have outlined.

Mr. Owens.

Mr. OWENS. Mr. Riley, USDA statistics from the University of Georgia, in Georgia there are 40,333 farmers, under the age of 25 years old is 257.

Mr. RILEY. I think that is probably right. When I first got out of college, I went to a college on the other side of the State, but when I first got out of college and went into the egg business, there were 125 independent egg producers in the State of Alabama. Today there are two. That is not a trend that I would like to see

this country encourage and I think we are doing more and more of it and we have to be efficient. And if you do not believe you are efficient today, when I first started selling eggs, I was getting 55 and 60 cents a dozen for them, that is 35 years ago. Today, they are still 60 cents a dozen. Back then I could buy a new car for $2,200, today it is $22,000. And that egg producer is still getting the same price for his product.

So if you do not believe that we have raised the level of efficiency in this country, you take just about any of our agricultural products, they are pretty well stagnant where they were 20 or 25 years ago and the only way you could possibly survive is to become more efficient.

But now we need to capitalize on that efficiency, we know how to do it and I think if we can get the Government out of your way, you will be a lot more likely to do it.

Thank you very much.

The CHAIRMAN. I thank the panel very much.

I will call our third panel: Mr. Jerry Parham, timber and cattle producer from Reform, AL; Mr. Louie Perry Jr. is a livestock, peanut, cotton producer from Moultrie, GA; Mr. Allen Whitehead, a peanut, livestock, cotton producer from Ashburn, GA and Mr. Dean Wysner, a cattle operator from Woodland, AL.

Mr. Parham, you may begin whenever you wish, please, sir.

STATEMENT OF JERRY H. PARHAM, TIMBER PRODUCER, REFORM, AL

Mr. PARHAM. Thank you, Mr. Chairman, members of the committee, I am Jerry Parham, president of Alabama Farm Bureau. I live in Pickens County where I own and operate an 800-acre tree farm. I want to thank you for the opportunity to address you today concerning my personal farming operation and, with your indulgence, agriculture in general.

My 800 acres were once used for cattle farming and forestry, but due to low cattle prices in the early 1980's, I converted to more trees and fewer cows. The price cycles in agriculture, in this case cattle, forced me to abandon one form of farming and adopt another. The price cycles in the timber industry are still there, but they are much broader is range. I know by today's standards an 800-acre operation is small, and I also know that if I had not had a position as a school teacher, I would have lost the farm due to the price cycles. I worked off the farm in order to keep the land that is so dear to me. The price cycles have forced some small and large farmers in my area into bankruptcy.

Earlier this year, I served as a delegate to the American Farm Bureau Federation annual meeting where we overwhelmingly adopted a resolution supporting implementation of a counter-cyclical safety net as a supplement to the Agricultural Market Transition Act payments. We believe such a policy we address sharp declines in prices without relying on large financial assistance packages from Congress. I believe such a safety net could keep many farmers in the industry and keep many farms in production.

When farmers go bankrupt, the land will usually go into forestry or be bought by land speculators and be taken out of agriculture altogether. When prices are low, other farmers do not have the fi

nancial resources to buy this land. However, speculators find this land most desirable because it is clear, well-drained and accessible. Like today, when farm economy is low, many times the rest of the American economy is booming. We must keep our best agricultural lands in production if we are to maintain our world dominance in agriculture and a positive exportation of agricultural products.

A significant amount of work has been done to develop a more comprehensive crop insurance program that would allow farmers to better protect themselves against yield and price variations. With the increased number of producers relying on crop insurance as their primary risk management tool, Congress must complete the task begun over a year and utilize the $6 billion set aside for the program in last year's budget resolution.

I think we would all agree that risk management is important in any business. I feel that I must point out a growing segment of our agricultural industry that cannot use crop insurance as risk management tool-that is contract farmers. I believe that contract farming will continue to grow in size and numbers. We are all aware of contract farming in the poultry and swine industries, most of us know that some cattle farms are under contracts with feedlots and I recently found contract farming of special cultivated crops. Yes, even in my beloved forest industry, we find landowners under contract to large companies to grow trees.

Now I would like to talk about the largest contract farming operation in Alabama, which is poultry. For example, Mr. Smith, who lives on a 120-acre farm that is a cattle and poultry farm in north Alabama, lost approximately $4,500 during a 10-week period in 1999. If you would refer to the income and expense schedule that I have at the back of this for you.

Contributing factors causing Mr. Smith's loss were the size of his birds, 7.129 pounds; the external temperatures in northwest Alabama during July and August averaged about 95 degrees when normal temperatures advantage 89 degrees; and not having the ability to sell any earlier than the processing plant schedule would accommodate. Also lost during the 10-week period was Mr. Smith's labor and time. I understand that even contract farmers must provide necessities for their families and Mr. Smith was able to sell all of his cattle so he could survive for 10 more weeks. The sale of cattle is no longer an option. Mr. Smith needs a risk management tool such as crop insurance. Since Mr. Smith does not own his product, the birds, he cannot buy insurance. There must be a way to recognize Mr. Smith as a farmer so that he can participate in governmental programs as well as risk management options.

I would like you to note I am not asking for welfare for contract agriculture. I am asking that options be made available for the farmer. I would also like for you to note that these modern day sharecroppers have more to lose than ever. To be a modern day sharecropper, you must own your own land and be willing to put your land at risk. No other industry would place so much at risk without some form of insurance.

While Congress is raising the minimum wage, the amount still to be determined, fuel prices are skyrocketing. Not only does the farmer not get a cost of living raise, he is faced with higher energy costs. I ask you how much longer can our industry survive.