Statement by Roger Pine
Chairman of the National Corn Growers Association
before the
Subcommittee on Production And Price Competitiveness
Committee on Agriculture, Nutrition, and Forestry
U.S. Senate
July 18, 2000
Mr. Chairman, members of the subcommittee, my name is Roger Pine. We raise corn,
soybeans, wheat and turf grass on our family farm located on the outskirts of Lawrence,
Kansas. I am testifying today on behalf of the National Corn Growers Association (NCGA),
which represents 30,000 members in 47 states. I currently serve as chairman of the NCGA.
We appreciate the opportunity to appear before this subcommittee to discuss export
programs and to suggest ways to improve our export development efforts to benefit U.S.
agriculture.
U.S. corn farmers are efficient, productive and competitive in world grain markets, but our
export performance does not always reflect that comparative advantage. Ten years ago the
United States controlled over 80 percent of world corn exports. This crop year our market
share is estimated at 59 percent. (See attached chart). We export additional corn as high
fructose corn syrup, corn gluten feed and meal, as meat and poultry and in countless other
value-added products. It is important that we consider the entire export demand for corn and
corn products, but my testimony today will focus on bulk corn exports.
I have attached a chart to my testimony that shows remarkable growth in world and U.S. corn
exports during the 1970s, but disappointing performance over the last twenty years.
Domestic farm policy limited U.S. corn exports in the first half of the 1980s. Once farmers
were permitted to use certificates to redeem price support loans at local market prices, U.S.
corn exports began to increase. But export levels fell again in the early 1990s, and except
for two years with U.S. corn exports above 2 billion bushels, weak export performance has
contributed to the high stock levels and low prices that plague producers today.
NCGA policy supports fair and open global trade to assure U.S. corn and its products full
access to world markets. Effective export programs can help position U.S. agricultural
products in foreign markets and can develop new markets where economic growth generates
demand for additional food and fiber. Food assistance programs enable the United States to
share our abundance to meet the food needs of developing countries.
Export Credit Guarantees
The Commodity Credit Corporation (CCC) operates the Export Credit Guarantee Program
(GSM-102) and the Intermediate Export Credit Guarantee Program (GSM-103) to assist
importers that need credit to purchase food and fiber. These programs facilitate commercial
sales of U.S. agricultural products to creditworthy foreign customers. The CCC guarantees
payments due from foreign banks, typically 98 percent of principal and a portion of interest at
an adjustable rate. The guarantee enables U.S. financial institutions to offer competitive
credit terms.
The GSM-102 is the most significant export program to facilitate corn exports. This program
offers customers up to three years to repay loans. Mexico has been the largest user of
GSM-102 credit guarantees for feed grains purchases this fiscal year. The Andean
countries, Turkey and South Korea have also used the program extensively.
The United States and other members of the Organization for Economic Cooperation and
Development (OECD) are currently negotiating changes to export credit guarantee programs.
The United States fully discloses our loan guarantee programs and is calling for greater
transparency in other countries' loan programs. Our competitors are asking the United
States to agree to drastically shorten the repayment period for GSM loans.
The NCGA and other agricultural organizations support efforts to complete the OECD
negotiations. We believe that the OECD can best resolve the financial issues of export loan
programs. If this issue can be resolved now, the agricultural negotiations in the World Trade
Organization (WTO) can concentrate on trade-distorting export programs. However, the
United States must not accept an unworkable OECD agreement. The United States must
continue to insist that our loan guarantee programs meet the credit needs of our export
customers and that every country is required to fully disclose their export credit programs.
Export Subsidies
Export price subsidies have cheapened grain on world markets and made it more difficult for
unsubsidized grain to compete. The United States' proposal for agricultural trade reform in
the WTO calls for the elimination of export subsidies. This is an objective that NCGA fully
supports. The Uruguay Round Agreement on Agriculture began the process by requiring
developed countries to reduce subsidized export volume by 21 percent and subsidy
expenditures by 36 percent from the 1986-90 base period on a commodity basis. Member
countries also agreed that only products whose exports were subsidized during the base
period would be eligible for future export subsidies.
Market Development
The United States operates two modest market development programs - the Market Access
Program (MAP) and the Foreign Market Development Cooperator Program (FMD) - that help
fund private sector market development activities. These programs boost exports through
advertising, nutritional information, store promotions, trade servicing, technical assistance,
and other non-price market development activities.
The United States spends only a fraction of what its competitors spend on market
development activities. It is time for Congress to demonstrate that the United States is
prepared to invest in new markets with increased funding for MAP and FMD.
Food Assistance
The United States has shared our abundance with developing countries in times of famine
and food shortages. Besides addressing critical food needs, our food aid and donation
programs are an important part of broader foreign assistance. The United States -
individually and through international organizations - can help developing countries meet
critical food and health needs. Children provided proper nutrition, health care and
educational opportunities today will become more productive adults who will generate the
economic demand for the food and fiber that American farmers produce.
Infrastructure
If U.S. farmers are to remain competitive in the global marketplace, they must be able to
deliver their products to domestic and world markets efficiently and cost-effectively.
Our foreign competitors - Brazil, Argentina and China - have made significant investments
in their transportation infrastructure, thereby enhancing their global competitiveness. At the
same time, the transportation infrastructure in the United States is deteriorating at an
alarming rate. The lock and dam system developed nearly 60 years ago is outdated in light of
today's transportation needs.
NCGA wants to ensure that U.S. farmers retain their ability to deliver their commodities to the
world market in the most efficient and economical manner. We urge Congress to provide
adequate funding to upgrade the locks along the Mississippi and Illinois Rivers to reduce
costly transportation delays and expedite the movement of corn and other products.
Sanctions - the antithesis of export programs
The United States has imposed unilateral trade sanctions more often than any other nation.
Not all sanctions restrict agricultural trade, but all unilateral actions undermine the economic
relationships between the United States and our customers and potential customers.
The damage from unilateral sanctions is much more destructive than the loss of individual
markets. Every country has the responsibility to ensure its citizens basic food security
through national policies that encourage the production or importation of adequate food
supplies. U.S. sanctions policies encourage the use of trade distorting programs in every
country that is unwilling to trust the United States as a reliable supplier of food.
To avoid this perception, Congress must exempt commercial sales of food, feed and other
agricultural products from unilaterally imposed sanctions. In addition, the U.S. government
should weigh the cost to our own economy before imposing unilateral sanctions around the
world. Even when the sanctions are eventually lifted, U.S. exporters will have to rebuild
relationships with former customers and will have to convince those customers that the
United States can be a reliable supplier.
Thank you for allowing me to present the views of the National Corn Growers Association on
this important issue.
USDA. 1999 estimated export numbers. 2000 projected export numbers.