Statement by Ryland Utlaut

Chairman of the National Corn Growers Association

before the

Committee on Agriculture

United States Senate

August 4, 1999

Mr. Chairman, members of the committee, my name is Ryland Utlaut. My family and I grow corn and soybeans near Grand Pass, Missouri, and I currently serve as chairman of the National Corn Growers Association (NCGA), representing more than 30,000 farmer members nationwide.

Thank you for the opportunity to testify before the committee today. We have nearly 200 farmers in Washington this week to tell our story about the state of the farm economy and to shape NCGA's response to the current situation. We have had a task force grappling with this issue for the past two months, and yesterday several teams of growers further fine-tuned our positions. Although our detailed recommendations will not be finalized until our delegates conclude their meetings later this week, we have come to some general conclusions. I will detail some of them for you in a moment, but first let me touch briefly on where we are today.

It's no secret to anyone in this room that the price of corn and other commodities has declined dramatically in recent years. Farmers received an average price of $3.24 per bushel for corn produced in 1995. That price dropped to $2.71 per bushel for 1996 corn and $2.43 for 1997 corn. It looks like we will end the 1998 marketing year August 31 with an average price of $1.95 per bushel, and the U.S. Department of Agriculture recently reduced the projected price for 1999 corn to between $1.65 and $2.05 per bushel.

Our current problems are caused by a complex web of factors, not the least of which is weak worldwide demand compounded by ever-increasing U.S. stocks. Lately, it's been popular to pin all of our problems on the Freedom to Farm provisions of the 1996 Farm Bill. But Freedom to Farm did NOT cause the current economic crisis in agriculture and abandoning it is not the answer. The nation's corn growers continue to support a market-oriented approach to farm policy - an approach that allows farmers to make the production decisions for their operations and focuses on building demand for corn both in the United States and abroad.

But if Freedom to Farm is going to work, there are other factors that need to fall into place. We need a commitment to research to keep us competitive in the future by unlocking new uses, maximizing production levels and preventing major disease problems. We need affordable, effective crop insurance tools to help us manage the risk inherent in an industry dependent on weather. We need a strong global economy and access to markets around the world. We need a tax system that allows us to keep a reasonable portion of what we own. We need viable, efficient transportation systems to best serve our customers at home and abroad. And because those things are not fully in place, America's farmers find ourselves in a very difficult position today.

Despite the fundamental soundness of Freedom to Farm, the current price situation underscores the fact that, regardless of how good a farm program is, there is always the possibility that farmers' cash income will not cover production costs and other expenses. In those cases, we need the federal government's help to address problems that are beyond farmers' control.

Given the current state of the farm economy, there's clearly a need for assistance. The trick is how best to provide it. Farmers need immediate, short-term relief to help them weather the current crisis. But at the same time, we cannot lose sight of the importance of forward-thinking, long-term policies that will help us avoid future farm crises by building stable markets for our products both at home an abroad. That said, the recommendations I will briefly outline for you will attempt to encompass both.

To address the current economic crisis facing U.S. agriculture, NCGA urges Congress to take action in the following areas:

· Market Loss Payments - Support emergency market loss assistance to provide immediate, short-term relief for struggling farmers.

· Payment Limitation - Support changes to the marketing assistance loan program to ensure that a producer's full production is eligible for loan deficiency payments (LDPs). Current payment limitation rules will severely restrict marketing options, increasing loan forfeitures and storage and interest costs.

· Trade - Help build export markets by supporting reform of U.S. sanctions policies, China's admission into the World Trade Organization and further reform of agricultural trade policies in the upcoming round of WTO negotiations.

· Transportation - Support authorization and funding for needed improvements to the aging lock and dam system in order to help farmers ship their grain more efficiently and cost-effectively.

· Risk Management - Pass crop insurance reform legislation that increases affordable risk management options for all producers. The preferred means of doing this is by maximizing subsidies at the highest levels of coverage.

· Ethanol Market Development - Support efforts to increase the use of clean-burning ethanol in reformulated gasoline, a move that could add 20-50 cents to the value of every bushel of corn grown in the United States.

Mr. Chairman, members of the committee, the nation's corn growers thank you for holding this timely hearing and we appreciate the opportunity to express our views. I'd be happy to answer any questions or provide more details on the recommendations I've just outlined. In addition, our farmer members who are in town this week may be visiting you and your staffs to discuss these issues in depth.

Let me close by saying that the need for Congress to support an emergency assistance package is very real. We look forward to working with you for the remainder of this week and during the August recess to fine-tune this package.