Commissioner Combs, I am Wes Sims, a cattle, dairy and crop producer from Sweetwater, Texas and current president of Texas Farmers Union. It is a pleasure to appear before you today representing the agricultural policy interests of the family farmer and rancher members of the Texas Farmers Union.
My comments today will focus on agricultural policy elements necessary to provide economic stability, security and opportunity to producers through a competitive agriculture system that ensures a safe, affordable, high quality supply of food and fiber to consumers. I have submitted a full copy of my testimony for the record and will attempt to summarize it in the limited time available.
Over four years ago the Congress passed the Federal Agricultural Improvement and Reform Act of 1996, dubbed Freedom-To-Farm by its proponents. While the problems associated with the farm bill are increasingly apparent and of record, I would like to provide a brief review of the bill's promises and results.
Freedom-To-Farm was based on the optimistic assumptions that the conditions in place when it was passed would continue for the long-term. In effect its advocates promised:
*World population and income growth would create new export demand.
*Risk management programs could replace other economic safety net programs.
*Reduced government regulation would occur resulting in lowered production costs.
*Fixed marketing loan and de-coupled payment programs would ensure adequate farm income, and;
*A reduced farm safety net in the U.S. would force our competitors to make production adjustments.
The results to date however provide strong proof the optimism of 1996 was totally unfounded:
*Agricultural export projections were wrong, and in fact imports of competing products have increased substantially while U.S. agricultural exports have declined.
*Risk management programs have failed to provide adequate coverage for producer yield and price losses.
*Production costs have continued to increase.
*Producer economic security has been severely reduced, and;
*Competition for export markets has increased as others have expanded production to reduce the impact of the commodity price collapse to the benefit of multi-national merchandisers.
Freedom-To-Farm has failed as evidenced by declining commodity prices and producer incomes that have led to billions of dollars in needed ad hoc economic assistance over the last three years and prospectively into the future unless policies are changed.
The issues of market concentration, agricultural trade policy and creating a more viable economic safety net for producers must be addressed.
The concentration of market power in terms of research and development, processing and merchandising among a few highly integrated firms poses a serious threat to the benefits of a private, competitive marketplace for both independent producers and consumers.
*U.S. anti-trust laws must require proof that a merger or other arrangement between integrators enhances market competition.
*International cooperation is needed to address the global implication of anti-competitive behavior.
*Increased market transparency must be achieved through price reporting, product labeling, a "bill of right" for contract producers, etc.
The U.S. must pursue an international trade negotiation strategy that recognizes the social, political and economic importance of production agriculture in the establishment of fair and enforceable international trade rules. Priorities should include:
*Elimination of the most trade distorting practices including direct export subsidies, sanitary/phytosanitary trade barriers and the impact of currency valuations and manipulation.
*Retain flexibility to address import surges and other unfair trade practices.
*Expand humanitarian assistance to address food shortages and promote economic development unilaterally and through greater global cooperation, such as through the proposed international school lunch program.
FARM PROGRAM COMPONENTS
Farm program legislation should be changed to establish an effective, equitable, country-cyclical economic safety net program for producers that reduce many of the planting and market distortions created by the components of the current Act and provides a real opportunity to increases commodity prices received by producers. The major components of such a program should include:
*Equitable loan rates for all program commodities based on cost of production or a period in time when commodity market prices were more adequate and in better balance.
*Increased dairy price support levels coupled with a more market sensitive processor assistance (make allowance) program.
*Target benefits to family-sized producers based on current actual or expected commodity production.
*Expand planting flexibility opportunities.
*Establish limited farmer-stored reserve programs for renewable energy production and humanitarian assistance that are isolated from the commercial market to ensure the availability of commodities to those programs in the case of a production shortfall or significant price increase.
*Enhance conservation programs by expanding the Conservation Reserve and Wetlands Reserve Programs.
*Establish an intermediate program to rebuild soil productivity.
*Provide incentive payments for the application of appropriate conservation measures as part of on-going production management.
CONCLUSION Commissioner Combs, it is time for Congress and the Administration to take action to initiate the process of correcting our nation's agricultural policy to meet the immediate and future needs of America's farm families.
Thank you for the opportunity to participate in this important hearing. I will be pleased to respond to any questions you may have.
|Texas Farmers Union, P.O. Box 738, Sweetwater, Tx 79556|