[Congressional Record Volume 140, Number 21 (Wednesday, March 2, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                WASHINGTON REPORT--AGRICULTURAL OUTLOOK

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                        Wednesday, March 2, 1994

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, March 2, 1994, into the Congressional Record:

                          Agricultural Outlook

       US agriculture continues its strong recovery from the farm 
     recession of the 1980s. In 1986, farmers' net cash income was 
     about $48 billion, government spending was a record $26 
     billion, and farm exports were $26 billion. In 1993, net cash 
     income is expected to be $59 billion--which would surpass 
     last year's record level of $57.7 billion--government 
     spending was $16 billion, and exports are expected to remain 
     at the 1992 level of $42.5 billion. Although the value of 
     exports was stagnant, there was a rise in 1993 in high value 
     exports, particularly dairy, meat and poultry.
       Although the typical 1990s farm is still family-owned and 
     operated, it is no longer the small, diverse operation of 60 
     years ago. In 1930, the nation had roughly 1 billion acres of 
     farmland in 6.3 million farms, and today the same amount of 
     land is in 2.1 million farms. 15% of these farms are 
     responsible for more than 75% of all US farm commodity sales, 
     and the remainder are operations that annually gross $40,000 
     or less from farming and rely on off-farm sources for 
     additional income. Indiana is following these trends. In 
     1992, Indiana had 62,778 farms, compared to 70,506 farms in 
     1987. While the amount of land in those farms fell from 
     16,170,895 acres in 1987 to 15,618,831 acres in 1992, the 
     average size of Hoosier farms increased from 229 acres to 249 
     acres.


                     1993 agricultural performance

       Southern Indiana was spared the floods and drought that 
     plagued other regions. Higher prices meant greater profit for 
     those with production to sell, and many Hoosiers recorded 
     bumper crops. Even for those hurt by the disasters, the 
     impact of the crisis is not expected to be as severe or as 
     widespread as in the mid-1980s. Low interest rates, less 
     debt, lower land costs, and government assistance will all 
     help to cushion the effect of the disasters for these 
     farmers. Overall the US farm sector improved slightly in 
     1993, and, in Indiana, the total value of principal crops 
     rose 10% over the 1992 level.


                       expected 1994 performance

       A return to normal weather in 1994 will set the stage for a 
     more production year for US agriculture. With the recovery 
     from the floods and drought, crop production will likely 
     increase 5 to 10%. Last year's smaller crop and reduced carry 
     over will likely boost prices for many commodities in 1994. 
     Expected larger outputs along with higher crop prices will 
     mean increased income for many farmers this year. Higher 
     prices will increase production costs for livestock and 
     poultry producers, however.


                         the president's budget

       The President has requested $60.25 billion for US 
     Department of Agriculture (USDA) in fiscal year 1995, of 
     which an estimated $13 billion will be spent on price and 
     income supports, farm credit, agriculture research, and 
     extension. The President's budget includes several new farm 
     policy recommendations, including crop insurance reform and 
     elimination of certain export subsidies. Congress will 
     scrutinize the budget request to assure that farmers receive 
     full benefit for each dollar spent.


                                 trade

       Opening export markets is critical for US farmers. One out 
     of every three acts of cropland already goes for export each 
     year, and US productivity continues to rise. In 1976, the US 
     exported almost exactly the same amount of corn as in 1993--
     1.6 million bushels. But our corn yield has increased almost 
     50% in those 16 years. Because the US economy cannot consume 
     all the output from the steady rise in farm productivity, 
     expanding global export markets must be a primary policy 
     goal. The growth in the markets for value-added farm 
     products--like corn and soybean meal--will also help absorb 
     the added production.
       The NAFTA, which became effective January 1, will phase out 
     barriers in US-Mexican agricultural trade over 15 years. 
     After full implementation of NAFTA, US agricultural exports 
     are expected to be $2.6 billion higher annually than without 
     the agreement. This year Congress is scheduled to consider 
     implementing legislation to the Uruguay Round of the GATT. 
     Under the agreement, agriculture would be covered by the GATT 
     for the first time and GATT members would be required to make 
     significant cuts in the value and volume of agricultural 
     export subsides. I know of no single step that would help 
     farmers more than to expand US agricultural exports. New 
     global markets provide the American farmer with exciting 
     opportunities.


                                New uses

       The Clean Air Act of 1990 expanded the role of cleaner 
     fuels, such as ethanol, in fighting air pollution. The 
     Administration recently proposed regulations that would carve 
     out a specific niche for corn-based fuel additives in the 
     reformulated gasoline market. The rule, which will be 
     finalized in June, will help corn growers.


                          USDA reorganization

       Discussion of USDA reorganization continues. The 
     Agriculture Secretary can act to streamline and realign 
     headquarters offices and functions and to close or 
     consolidate field offices, but other aspects of his 
     reorganization plan require congressional action. The 
     centerpiece of the plan, which is now under consideration in 
     committee, is a new Farm Services Agency that would carry out 
     price and income support, crop insurance, and farm credit 
     programs, and possibly certain conservation programs. The 
     plan calls for the first and largest cuts to come from USDA 
     headquarters. My goal is to reduce the bureaucracy and save 
     money, while providing improved and farmer friendly service 
     to farmers. The full House is likely to debate the 
     reorganization bill later this spring.


                 Conservation and Environmental Issues

       The recent farm acts established programs to encourage soil 
     conservation and address water quality issues. The upcoming 
     reauthorization of the Clean Water Act will again focus 
     attention on agriculture's role in non-point pollution and 
     wetlands conversion; laws governing pesticide sale and use 
     will also be reviewed. I want Congress to look at these 
     proposals with great care to assure that they do not penalize 
     farmers.


                                Outlook

       Strong economic growth and low interest and inflation rates 
     will continue to help U.S. farmers. They will also benefit 
     from the lowest debt-to-asset ratio--a key indicator of farm 
     financial health--in 25 years. There will be challenges for 
     US agriculture, including declining price and income 
     supports, increased competition from abroad, lower sales to 
     the former Soviet Union, and reduced US export subsidies 
     under GATT. My view is that US agriculture is in a strong 
     competitive position to succeed over the decade. As we in 
     Congress continue to monitor US agriculture policies in 
     anticipation of farm act renewal next year, my hope is that 
     greater economic growth at home and abroad and stable 
     production expenses will help US farmers strengthen their 
     position as the world's leading producers.

                          ____________________