Testimony before the

US Senate

Committee on Agriculture, Nutrition and Forestry

May 11, 1999

Presented by:

Herb Karst, President

National Barley Growers Association

Thank you for the opportunity to appear before the committee this morning. I am Herb Karst, a barley, wheat and canola farmer from Sunburst, Montana and president of the National Barley Growers Association.

Your hearing on trade sanctions is timely. The Administration's recent announcement that it would review unilateral agricultural sanctions on a case-by-case basis was welcome news to US producers, but broader action is needed to ensure that exporters of US agricultural commodities and products can convince foreign buyers that the US will be a reliable supplier in global markets.

Barley producers agree with Chairman Lugar that unilateral sanctions rarely achieve their stated objectives and more frequently harm US producers rather than their intended targets. Mr. Chairman, your leadership on this important issue is vital and US barley producers appreciate your efforts to develop a bilateral and bicameral coalition in support of legislation to provide a more coherent structural framework for considering the costs and benefits of applying unilateral sanctions. We look forward to working with you to achieve essential changes this year.

As a member of the US Grains Council, NBGA is on record opposing unilateral economic sanctions that restrict or prohibit the sale of US agricultural products. The Council has also urged the US government to support its own commitment to enhancing food security in importing nations by pursuing a supply-assurance commitment within the WTO.

As you know, the costs of sanctions are high for US agricultural producers. Memories of the US embargoes of the 1970's continue to lead buyers to question the commitment of the US to be a reliable supplier of feed grains in the global market. Unilateral sanctions currently block US feed grains marketers from competing in Iran, Sudan, North Korea, Libya and Cuba. According to the US Grains Council, these 5 markets imported approximately 3.16 million metric tons of grain in 1998. Total world coarse grain exports were approximately 90 million metric tons. Thus, the US unilaterally removed itself from 3.5% of the global market for grains. For barley, unilateral sanctions against Libya and Iran blocked US producers from a combined 1.2 million metric ton market in 1997/98, representing over 9% of world barley trade of 13.169 million metric tons. (Source: FAS data) Putting this into perspective, the lost-marketing opportunity in these two countries is approximately double the total of US barley exports for 1997/98.

Looking at the high-value malting component of our market, one doesn't have to look far to find an economic cost from unilateral sanctions policies. In 1997, Cuba imported approximately 20,000 metric tons of French barley malt while more strategically placed US farmers, malting companies and shippers were frustrated observers to this roughly $7 million transaction.

I think it is important to understand the ripple effect of unilateral sanctions. When the US unilaterally removes itself from one or more markets, our competitors in agricultural trade are able to price their commodities and products in those markets without competition from the most effective grain marketing system in the world. This creates an opportunity for our competitors to utilize profits from these non-competitive markets in other markets where they must compete with the US. By unilaterally acting to prevent US agricultural products from being marketed into one country, the US erodes its own position in other markets. Given the documented failure of unilateral sanctions in achieving their stated goals and objectives, this is bad policy and bad business.

Thank you.