The CHAIRMAN. Mr. Gutknecht. Mr. GUTKNECHT. Thank you, Mr. Chairman. No questions. Thank you. The CHAIRMAN. Mr. Moran. Mr. MORAN. Mr. Chairman, no questions. I thank the panel for their testimony. The CHAIRMAN Mr. Simpson. Mr. SIMPSON. Mr. Chairman, just one question. One of you mentioned the CRP program; I can't remember which one it was. Mr. HEIDEN. I did. Mr. SIMPSON. As I understand it, that was established for a couple of reasons: one, to take marginal land out of production and put it back into the environment and for habitat or whatever. The other was to limit production. Do you think that the CRP program is an effective way of limiting production, now that you're in a global economy, or do you think other countries will just fill up that production if we limit it to the CRP program? Mr. HEIDEN. In Arizona, there is very little of the CRP program. To answer your first question, environmentally, I think it is an excellent program. To answer your second question, there probably is some doubt as to how much we're going to reduce production in light of the fact that we're working in a world market, so to speak. But every little bit helps; and, if you can take an acre that needs to go out of production for environmental purposes and reduce production at the same time doing it, then I think it's a program that the administration has proposed and one that we would certainly support. Mr. SIMPSON. Thank you. Thank you, Mr. Chairman. The CHAIRMAN. Thank you. And I thank the panel and, Mr. Rystrom, took his children out of school in order to come see how Government works. I hope today was a pleasant experience for them. Mr. RYSTROM. Thank you. The CHAIRMAN. Thank you very much. I would invite our third panel to the witness table. Mr. Kevin Fondse is an almond producer from Stockton, CA; Mr. John Giusti is a brussels sprout producer from Half Moon Bay, CA; Mr. Richard Hamilton is a sheep producer from Rio Vista, CA; Mr. Ronald Martella is a walnut, peach, and almond grower from Hughson, CA; and Mr. William Zech is an asparagus producer from Holt, CA. We will take the testimony in the order of the witnesses' introduction. Mr. Fondse, please proceed. STATEMENT OF KEVIN B. FONDSE, ALMOND PRODUCER, RIPON, CA Mr. FONDSE. Good morning, Mr. Chairman, and members of the committee. I'm Kevin Fondse, first vice-president of the San Joaquin Farm Bureau Federation. I am here today to talk to you as a third-generation almond producer from Ripon, CA. Thank you for the opportunity to address you today concerning Federal agricultural policy. Federal agricultural policy has traditionally focused on farm program crops. However, as you are aware, California produces more than 250 commodities. My home county of San Joaquin produces more than $1.3 billion worth of farm-valued commodities and consistently is one of the top eight agricultural counties in the Nation. There will be damaging repercussions to California agriculture if future farm policies do not continue to prohibit the planting of certain crops on flexible acreage, as is the case now. In particular, if fruits and vegetables are allowed to be planted on flex acres, it will have a detrimental effect on traditional producers of those commodities. It is important to note that farmers and the Government entered into 7-year contracts in 1996 and that those contracts should be carried out to their full term in 2002. Congress gave farmers their word regarding access to additional foreign markets through trade policy reforms, relief from overburdensome regulations, additional and improved risk management tools, and tax reforms for their support of the FAIR Act in 1996. Congress has several opportunities to improve farm income this year. Support for permanent trade relations with China. This agreement is critically important for the California almond industry. The California almond industry must expand export markets. China presents a perfect opportunity to increase sales. I strongly urge you to vote for California agriculture and vote for permanent normal trading relations status for China. If permanent normal trade relations status is not granted, China will still become a member of the WTO, and other competing agriculture exporting countries will realize those gains. Crop insurance risk management. The Federal Crop Insurance Program does not work. It is broken. and must be fixed. Specialty crops have been forgotten and mostly ignored. Crop insurance fails in the following areas: unless a total crop failure is reported, crop insurance will not provide relief; paperwork requirements are overburdensome; crop insurance is overpriced for the product; unreliability and lack of credibility. The Government mandated that producers purchase crop insurance in order to qualify for disaster payments; however, when the Government distributed disaster payments, it did not follow through on that commitment. Relief from estate taxes. Farm Bureau policy on estate taxes is clear, eliminate it. Farm Bureau members nationwide have rallied to the charge of "Kill the Death Tax." With Farm Bureau's leadership, Congress passed and the President signed the Taxpayer Relief Act of 1997, which brought a small measure of relief from estate taxes for the first time in more than a decade. Death taxes can destroy family-owned farms and ranches when the tax, which can be as high as 55 percent, forces farmers and ranchers to sell land, buildings, and/or equipment, a highly punitive tax to Uncle Sam for a lifetime of hard work and savings. When farms and ranches go out of business, the rural communities and businesses they support are negatively impacted. Farm 66-375 00-3 land located close to urban centers is often lost forever to development when the death tax has forced family farms out of business. While estate planning is sometimes effective in protecting farm business from overburdensome estate taxes, estate planning tools are costly and require resources that could be better used by farmers and ranchers to upgrade and expand their operations. Death taxes are real and they affect my operation. Now is the time for action; kill the death tax. And this isn't in my comments, but Congressman Condit brought up the water issue. The water is the big issue in California; it's a big issue in my area. There's a lot of disagreement, but the demand is going to take over the supply. Just look at the population growth in California; it's going to something has to be done. There has to be more storage facilities built. Once again, thank you for the opportunity to address the committee. [The prepared statement of Mr. Fondse appears at the conclusion of the hearing.] STATEMENT OF JOHN GIUSTI, BRUSSELS SPROUT AND Mr. GIUSTI. Good morning, Mr. Chairman and committee members. My name is John Giusti; I'm a third generation farm from Half Moon Bay, CA. My family has grown brussels sprouts and artichokes in this area since the early 1920's. I'm here today with several of my fellow brussels sprout and artichoke growers to express our concerns regarding the declining production of brussels sprouts and artichokes on the Central Coast of California. The Central Coast of California is by far the leading production region for brussels sprouts with 96 percent of the planted acreage, and artichokes with 73 percent of the planted acreage. The climate of the Central Coast is ideally suited for brussels sprout and artichoke production. Cool, damp summers restrict the types of crops that can be grown here, making growing other crops economically challenging. Over the past 15 years, we've seen artichoke acreage be reduced by 30 percent. Of the remaining artichoke acreage, about a quarter of it goes to the processing industry, which consists of canning and freezers. Imports from Spain, which are greatly subsidized, have damaged this market significantly. European Union price supports for artichokes equaled almost $240 million for the year 1996-97. This amount is roughly five times the entire amount of our domestic production. Over the past 35-plus years, we've also seen acreage planted in brussels sprouts drop from a high of 5,344 to 3,200 acres; from 63 farms to 25 farms. There are currently 51 million pounds of brussels sprouts produced for domestic consumption. Of this, approximately 60 percent goes to the frozen or process market and the remaining 40 percent goes on the fresh market. In March of this year, the major brussels sprout processors informed their growers that production contracts would be cut in half from the previous year. In looking into this situation, we have found that imports from Belgium have increased from 140,800 pounds in 1995 to over 4 million pounds in 1998. The three con gressional representatives from our region have asked Secretary Glickman to investigate this situation. Frozen brussels sprouts from Belgium are known to be selling for 49 cents a pound, while our same domestic product sells for 69 cents a pound. This 20-cent-per-pound price disparity seems unrealistically low, not to mention the added cost of shipping their product from afar. We have documentation that artichoke production is heavily subsidized in Europe. We do not have similar documentation for brussels sprout production at this time; however, this does give us reason to believe that this industry is subsidized, as well. We know fair trade is good for all and trade must be fair and we must be able to compete on a level playing field. These two crops are essential to the economy of our Central Coast. Over 400 families depend on these crops for their livelihood. We need the help of our Government to ensure that we will not become a casualty of trade battles or have no input or consideration. The brussels sprout and artichoke industries are too small to pursue costly antidumping actions. Countervailing duties may be an option to resolve inequities created by subsidized European products. A further measure of protection would be clear countryof-origin labeling. I feel the consumers should have the right to know where their food is coming from that they put in front of their families at night. California agriculture has faced many challenges. Despite this, we have led the Nation in agriculture production for over 70 years; and we'd like to see this trend continue. We need your support to ensure the future stability of our industry. Thank you. [The prepared statement of Mr. Giusti appears at the conclusion of the hearing.] STATEMENT OF RICHARD HAMILTON, PRESIDENT, CALIFORNIA WOOL GROWERS ASSOCIATION, SHEEP PRODUCER, RIO VISTA, CA Mr. HAMILTON. Good morning, Mr. Chairman, members of the Agriculture Committee. On behalf of the California Wool Growers Association, thank you for making the time to listen to our con cerns. My name is Richard Hamilton; I'm a fourth-generation farmer and rancher from Rio Vista in Solano County. As president of the California Wool Growers Association, I represent a diverse group of producers ranging from seedstock producers to lamb feeders. It's my pleasure to address you today about sheep production in California and the concerns and problems we currently face which will have a dramatic effect on our future survival. The California sheep producers appreciate the help of the members of the House Agriculture Committee in achieving limited protection under the 201 Trade Action. It is essential that the committee understands that the sheep producer fully appreciates the necessity to organize in order to achieve higher degrees of efficiency in production, marketing, and to protect ourselves in a global market. In a demonstration of self-help, the California sheep producers organized and overwhelmingly passed a State Marketing Commission to fund ongoing research and promotion to help our future survival as an industry. With the assistance of the Stanford University Alumni Consulting Team, the California Wool Growers Association made changes to its organizational structure to be more responsive to the ever-changing environment of the producer. Also, there are several examples of producer creativity in marketing and production to help themselves survive. This self-help will have little impact on the majority of producers unless new markets can be expanded, overall production efficiency improved, and the persistent threats to industry mitigated. As much as we try to be innovative in dealing with predator problems ourselves, we are very limited in our resources. Sheep producers can't keep up with the predation problems created by urban sprawl and the public buy-up of private lands. Your support for increased funding of USDA, APHIS, and Wildlife Services program is necessary, both to protect the public and to ensure depredation laws don't further increase already existing pricing conditions in the livestock industry. The utilization of public lands and private lands for grazing is a necessity for the sheep producers. The availability of this land is threatened due to many factors such as the lack of understanding of grazing livestock, water quality restriction, noxious weeds, and the Endangered Species Act, where social and economic impacts are not addressed and reform is needed. We urge this committee to ensure the continuance of livestock for the positive benefits it produces for natural vegetation, fire suppression in the overall balance of nature. Although we truly have some temporary protection from excess lamb imports, sheep producers still suffer serious financial problems with wool prices at historical lows and these low prices don't cover the cost of shearing. We respect that the wool incentive program will not be reinstated; however, we would like to offer a different approach that would help to protect the sheep industries similarly to the protection offered to other fiber crops like cotton, The establishment of a wool market loss assistance program that would authorize support payments when revenues for wool fall below certain levels. Our understanding of our current market situation in lamb rises from three major causes: one, the downward shift in currency exchange rates with our major trading partners, which occurred during the collapse of many of the Pacific Rim economies; two, the continuing problems of market concentration; and, three, the quotas placed on Australian and New Zealand lamb by the European Common Market. All this has made the U.S. market, with their strong dollar and healthy economy, the most attractive of global markets. Granted, the 201 Trade Action give us temporary relief, but a long-term solution to this problem is to develop a system of automatic price adjustment when international pricing systems lead to unfair competition. Packer concentration continues to be a serious problem facing the survival of the U.S. sheep industry. Over 75 percent of the domestic lamb processed is controlled by four firms. And two of the |