OPENING STATEMENT OF HON. MIKE MCINTYRE, A REP. RESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. MCINTYRE. Thank you very much, Mr. Chairman. Just briefly let me say welcome and we are so happy that this did work out for the House Agriculture Committee to come to our home State. And we are especially eager to hear from the farmers today and your suggestions, so that what we are doing will make a real difference in your lives.

As I said earlier this morning to some other farmers, this has been anything but free trade and Freedom to Farm has been anything but free, it has been very costly unfortunately to many farmers and producers. So we want to go back with solutions that will make a difference and we welcome your input today.

Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Jenkins.

OPENING STATEMENT OF HON. WILLIAM L. JENKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mr. JENKINS. Well, thank you, Mr. Chairman. Let me again thank you for holding these hearings and for coming. Although we are not in east Tennessee, we are very close and this is the first hearing we have had where we are going to be hearing from tobacco producers. I suspect the Carolina producers are probably going to be Flue-cured, but we have three witnesses here from east Tennessee who are Burley tobacco producers and also beef cattle producers. And I look forward to hearing from them, and I appreciate very much their willingness to come over here and testify. I hope by the end of the day that we can gather some information that we can take back that will demonstrate just how deep the plight of the Burley tobacco farmer is with the cuts of last year and the cuts of this year, and all the difficulties that we face in that particular realm of agriculture.

Thank you, Mr. Chairman.

The CHAIRMAN. Mr. Etheridge.

OPENING STATEMENT OF HON. BOB ETHERIDGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. ETHERIDGE. Thank you, Mr. Chairman. And let me also thank the Ranking Member and my other distinguished colleagues for being here for this hearing. I think it is so important.

But as important as it is today on agriculture, I would be remiss in not recognizing that basketball is the fever right now in this country and you are on the campus of the next NIT champion and I will let Congressman Price-I will yield to him in a minute to talk about the next NCAA champion.

But we are glad to have you here and I want to thank you, Mr. Chairman, for coming to hear about the state of agriculture and you know what it is. Mr. Chairman, I think this is the right way to begin writing a farm bill. It is the right time to begin fixing it, because we do have problems in America, as you know. I grew up on a tobacco farm about 20 miles east of here. It has changed a

great deal since I was a youngster, but I have been involved in one way or another in agriculture all my life. It is just plain tough being a farmer right now.

Over the past 5 years in North Carolina, it has gone from our gross product in this State has gone from representing 25 percent of our gross State product to 20 percent. Now that is a substantial drop in just 5 years. In the past decade, more than half of our dairy farmers have gone out of business. We are producing only half the tobacco that was being grown here just 3 years ago. Pork, small grains, corn, soybean farmers, all of them are facing all across the country, it is a crisis in America. Almost every major recession we have had in America was preceded by a crisis in the farm economy. We now have an opportunity to correct that before the crisis gets

worse.

So it is so important to our farmers, and again, Mr. Chairman, I thank you for holding this hearing here in North Carolina today and specifically on the campus of N.C. State University.

I would be remiss if I did not say as I close, a few months ago, the people of this State were quite upset because we had a fellow announce his retirement who had been commissioner of agriculture for over 30 years, the dean of agriculture commissioners in this country. He is affectionately known in North Carolina as the Sod Father, Commissioner Jim Graham. I think he is here if he has not already left.

The CHAIRMAN. The commissioner is here, we saw him earlier. Mr. ETHERIDGE. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Etheridge. I am sorry that you brought this up, but I would be remiss if I did not say that in Texas we play basketball too, there is a university down in Lubbock that I represent, Mr. Stenholm is a graduate of, that women are playing tonight against Tennessee. So you are the one that brought it up.

Mr. ETHERIDGE. We wish you luck Mr. Chairman, since we are out. [Laughter.]

The CHAIRMAN. We will go to Mr Price and let him go ahead and get in his jabs now. Thank you for joining us, David.

OPENING STATEMENT OF HON. DAVID E. PRICE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. PRICE. Thank you, Mr. Chairman. We really do appreciate your being here, you and Mr. Stenholm and this fine group of Members. This is unusual to have this many Members come out for a field hearing-maybe not for this committee, but I think for most committees. We are honored that you are all here and we look forward to a good discussion today about our situation in agriculture in the southeastern part of our country.

North Carolina is fortunate to have four Representatives on this Agriculture Committee-Mr. Hayes, Mrs. Clayton, Mr. McIntyre, Mr. Etheridge. And they daily bring the needs and experiences of North Carolina farmers to the table. And it is to this committee's great credit that it is here today to personally listen to the testimony of our growers from North Carolina.

I appreciate the generous invitation to let me sit in as a representative of a neighboring district, and I pledge to work with you, Mr. Chairman and others on this committee, from the Appropria tions Committee, as we address the challenges you are going to hear about today.

We have an ongoing challenge of disaster relief in North Carolina. There are major agricultural pieces in that, assistance to the marketing cooperatives dealing with the damaged crops, direct assistance for equipment and structural losses in agriculture, some rural housing assistance. This is in the current supplemental appropriations bill before the Congress as we speak. Then in the reg ular appropriations cycle, of course, we will have agricultural research and many other challenges and the need for a new basic farm bill will be discussed here today. And that, of course, has serious financial implications as well.

So I appreciate the chance to sit in and to learn from these hear ings. We are grateful for you being here and we know that this day will be a good one contributing to the national deliberations on ag riculture policy.

The CHAIRMAN. And Mr. Hayes, who will end up chairing this be fore the day is over, as some of us have to catch planes. Mr. Hayes, I recognize you at this time.

OPENING STATEMENT OF HON. ROBIN HAYES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. HAYES. Thank you, Mr. Chairman. Just a few brief comments. First, those of you who are not fellow North Carolinians, welcome to North Carolina, we are really glad to have you here. Folks, I want to take you back for just a little bit. Many of you suffered through a tremendous amount of snow in North Carolina and interestingly we had our agriculture retreat over in Wye, MD and we had one of the most interesting bus rides I have ever seen as we went to that hearing. It was very, very helpful as we try and meet the needs of farmers across this country.

We owe a special debt of gratitude to Chairman Combest and Ranking Member Stenholm because, as they pointed out during that get-together, we have got a wonderful country, but it is a huge country and there are many agricultural interests from east to west coast and north to south. And I also remember their willingness to take their time-it is a great sacrifice from their families to travel all over the country to do what they do and to do what our committee does, and we thank you.

But I also want to thank Ray LaHood, who was sitting on one side of the room as the discussion about where we were going to go, said the Southeast is so important to agriculture in this country, why do we not think about North Carolina as well as we looked at some other things. So Ray, especially thank you for your help in getting this hearing here in Raleigh, NC.

And thanks to our farmers. Ronnie, I have never seen you in a suit looking so good before, but you all got up early and I hope you have got somebody at home on a tractor as you are here testifying. You can turn on the television, the radio, pick up a newspaper and you can hear people in elected office talk any time. That is why we

are here, to listen to you, that is the purpose of the hearing. And thank you, Mr. Chairman, but thanks more especially to those men and women in the audience who are willing to come and share their time. The problems, you have the solutions, so your participation is much appreciated and greatly needed as we go about our tasks.

Thank you again, Mr. Chairman.

The CHAIRMAN. Thank you, Mr. Hayes.

I will call our first panel. We will do this in the order-well we can just do it the way you are sitting down there, but the first panel is Mr. Roy Baxley, a cotton producer from Dillon, SC; Mr. Elton Braswell is a corn, soybean, wheat producer from Monroe, NC; Mr. Ronnie Burleson, who is a cotton producer from Richfield, NC; Mr. Earl Hendrix, who is a soybean, cotton, corn producer from Raeford, NC; Mr. William Johnston, a soybean and cotton producer from Jackson, NC and Mr. Zeno Ratcliff, III, who is a corn and wheat producer from Pantego, NC.

Let me see, we will just start with Mr. Baxley down here with you and move down the table in that fashion. So please proceed at your discretion.

STATEMENT OF ROY BAXLEY, COTTON PRODUCER, DILLON,

SC

Mr. BAXLEY. Good morning. My name is Roy Baxley, I am a cotton, grain and soybean farmer from Dillon, SC. Thank you for the opportunity to share my views with the panel today.

Let me begin by saying the unprecedented support provided by Congress over the past 2 years was desperately needed and greatly appreciated. In addition to the direct income support, the funding for cotton's Step 2 program was essential to help us export our crop and support our domestic consumption.

It is regretful to report that once again this year, planting time prices for cotton and the other major row crops produced in my area are well below the cost of production. It appears we will again need some special assistance from the Federal Government to avoid catastrophic financial problems. I was pleased to learn that the current budget resolution proposed by the House of Representatives includes additional funding for direct income support. It is also encouraging that the administration has included additional funding in its budget proposal.

While all southeastern cotton producers appreciate the timeliness of the past supplemental income payments through the AMTA provisions, I must point out that the emergency package provided less help for the Southeast than for any other production region. Because of the disparity in the Southeast between cotton acreage and program acreage, program benefits are distributed unequally across the regions of the cotton belt. Also, because emergency relief benefits were distributed on the basis of PFC acreage and yields, we also got a smaller share of those benefits.

In many areas of the Southeast, cotton production exceeds program payment pounds by as much as 40 percent. Our producers would benefit more if the assistance were somehow tied to actual production. We know this is a difficult issue to resolve and we hope to be able to bring you a consensus recommendation for adjust

ments that will remove the inequities without imposing penalties on other production regions.

Regarding future farm policy, the overriding decision that first must be made by Congress is whether it will provide adequate budget authority to develop any farm policy. Without a substantial increase in baseline spending authority, any policy developments are in vain.

Generally speaking cotton farmers in the Southeast like many of the policy principles contained in the FAIR Act, including planting flexibility as well as the marketing loan provisions keyed to the world price for cotton. Cotton producers do support the lifting of the cap on loan rates. We also like the three-step competitiveness program that has helped to keep U.S. cotton price-competitive to our customers while underpinning the price received by growers.

The most glaring weakness for the FAIR Act is its inability to provide adequate income protection when prices are very low. We knew when the act was passed that the safety net was inadequate, but Congress was driven by budget pressures and farmers simply hoped that when low prices developed Congress would be forthcoming with some kind of help, and that, of course, is what has happened.

As we begin the process of developing new farm policy, it is essential that this flaw be corrected. Producers and their bankers cannot afford to count on emergency assistance every year in which we experience low prices. Some type of counter-cyclical payment tied to production is needed to add stability to our farm policy.

Cotton farmers, along with many others, are greatly concerned about the recent trend toward targeting of benefits. This is surely one of the most ill-conceived provisions of U.S. farm policy. Payment limitations are counter-productive for American agriculture and for every American citizen. The concept that a family farm is a small operation is a myth. Most of the commercially viable farming operations I know are family-based. Unless the United States is willing to sacrifice its agricultural production base to foreign subsidies, we must have farm programs that enable commercial-sized farming operations to enjoy a reasonable partnership with our government.

My fellow producers were heartened to see some progress in this area by Congress, as you doubled the marketing loan game and LDP limits for 1999 and authorized the use of certificates for loan redemption. Certificate loan redemption prevented the forfeiture of about a million bales of cotton to the CCC. At the same time, Congress appears to have a better appreciation on non-competitive aspects of payment limits. We were discouraged to learn of the severe targeting of benefits in the administration's recent proposal.

While our industry is still developing our recommendations on future farm policy, it is our early consensus that we do not support a return to mandatory supply management provisions.

Our industry does generally favor reasonable conservation and wetlands reserve programs that help to generate optimum results from marginal lands while providing significant environmental benefits.

As our industry continues its discussions, we have several important issues to resolve. We will continue to discuss coupled versus