Statement Of

MR. GARY TURNER

PRESIDENT

IDAHO FARMERS UNION

On Behalf Of The

NATIONAL FARMERS UNION

Before The

SENATE AGRICULTURE, NUTRITION

AND FORESTRY COMMITTEE

MAY 11, 1999

Statement of Mr. Gary Turner

President, Idaho Farmers Union

On behalf of the

National Farmers Union

Before the

Senate Agriculture, Nutrition and Forestry Committee

May 11, 1999

Mr. Chairman, Members of the Committee, I am Gary Turner, a farmer from Burley, Idaho and President of the Idaho Farmers Union. It is my pleasure to appear before this committee representing the views of the 300,000 farmer and rancher members of the National Farmers Union on the issue of trade sanctions and their impact on this Nation's agricultural producers.

Mr. Chairman, let me say at the outset, that our organization sincerely appreciates the bi-partisan leadership you and many of your Senate and House colleagues have demonstrated concerning the imposition of unilateral economic sanctions and trade restrictions on agricultural products. This leadership has already culminated in serious discussion and proposed legislation to provide greater flexibility and limitations concerning the use of sanctions and embargoes. Furthermore, your activities can be directly identified with important progress achieved in the past year concerning trade sanctions. These actions have provided an increased level of hope among farmers and ranchers that the agricultural impact of U.S. unilateral trade actions will be more fully considered before their imposition, and existing sanctions will be modified to allow the sale of farm products.

Specifically, last year's exemption of agricultural products from the sanctions imposed on India and Pakistan resulted in the immediate sale of wheat to Pakistan and the ability to continue our agricultural trade relationship with that important customer. A Senate task force on sanctions was also established last year to consider the effectiveness of unilateral trade actions in furthering U.S. policy objectives overseas and potential modifications to sanctions policy to increase flexibility in their application. Although the task force failed to endorse specific policy recommendations, the discussions themselves advanced understanding of both the limited foreign policy achievements and the negative domestic impact of such actions. Within the last month, the Clinton Administration announced that it is relaxing administratively imposed sanctions on Iran, Libya and Sudan. Although future sales opportunities for agricultural and medical products to those countries will be considered on a case-by-case basis, the new policy provides an opening to grant an export license that could result in the sale of about $500 million worth of agricultural products to Iran in the near term.

Sanctions impact agricultural producers in several ways that have both short and long term affects. (1) U.S. sales opportunities are reduced causing generally lower commodity prices and producer income. (2) Inventories of those commodities increase in the U.S. resulting longer term, surplus caused price pressure. (3) Reduced U.S. competition in sanctioned markets provides other suppliers the opportunity to gain overall market share at the expense of U.S. producers and, in many instances the ability to extract higher than normal returns from those sales through discretionary pricing in non-competitive markets. Those returns can be utilized to become a stronger price competitor in other markets where competition exists, and/or provide a signal to their producers to expand production.

More must be done if the U.S. is to fully capitalize on the revised sanctions conditions as part of a foreign policy strategy of engagement and new recognition of the limitations of certain trade restrictions in a globally competitive marketplace.

First, legislation should be adopted exempting agricultural products from existing and future unilateral economic sanctions imposed by either Congress or an Administration.

Second, regulations governing commercial, guaranteed credit and humanitarian transactions should be clarified and applied in a consistent manner concerning all countries.

Third, the U.S. should undertake aggressive actions to restore both the market potential and our reputation as a supplier in those markets where sanctions have been imposed.

Finally, while agricultural producers appreciate and support the recent developments that have reduced the negative impact of sanctions, we recognize that this trade element is neither the sole, nor the largest cause of the economic crisis faced by farmers and ranchers today. If the current sanctions-caused market damage could be repaired, even those producers of agricultural commodities that have suffered the greatest market losses through these actions would not be restored to a position of short or long-term economic sustainability.

Additional policy responses are required in a number of areas if we are to regain an acceptable level of economic stability for agricultural producers and rural communities. These include the creation of an effective risk management and income safety net for farmers and ranchers, establishment of a fair and level playing field in global agricultural trade, and a commitment to achieving and maintaining competition among food chain participants domestically and internationally.

Chairman Lugar, the National Farmers Union commends you for the steadfast leadership you have provided on the sanctions issue. We support the bi-partisan legislative efforts that have been initiated to resolve several of the issues raised in this testimony. Additionally, I would like to note that the leadership of twenty-eight other national farm and commodity organizations gathered in St. Louis late last month and agreed that "U.S. exports of food, fiber, and food and fiber products should note be used as the subject of sanctions".

Mr. Chairman, I thank you for the opportunity to appear before this committee and look forward to responding to any questions you or your colleagues may have.