Good afternoon, Mr. Chairman and members of the House Agriculture Committee. I want to express my appreciation for having the opportunity to testify before this committee on the state of the agricultural economy. My name is Ted Winter, and I own and operate a diversified farm in Fulda, Minnesota. I also serve as majority leader of the Minnesota House of Representatives. I am here today to testify on behalf of the National Farmers Union which represents 300,000 independent farmers and ranchers from across the United States.

First, I want to express my deep concerns about the severity of the current farm crisis and its impact on hardworking farmers and ranchers across America. Low prices for our commodities--no matter what type, corn, wheat, soybeans, cattle, hogs or dairy--threaten the economies of rural communities everywhere in America. The low prices are affecting all farmers, regardless of where they live. For example, corn prices are well under $2.00 per bushel in much of the country (in fact, in my area corn is selling for $1.80 per bushel); winter wheat under $2.50 per bushel; spring wheat, $3.10; and soybeans, approximately $5.50 per bushel.

Some regions are in even worse shape, as low prices combined with reduced yields due to weather or disease, have combined to nearly devastate the economies of certain areas and force many efficient producers out of business. For example, in my home state of Minnesota, the northwest part of the state has experienced multiple disasters--a 500-year flood, the worst winter in history, and excessive moisture for several years in a row, that has increased yield-robbing disease such as scab. And to make matters worse, the crop insurance program does not protect us from these risks.

For these reasons, many producers are getting out of farming -- both voluntarily and involuntarily. Farm auctions, so rare a few years ago, are as numerous as they were in the mid-1980's in northwest Minnesota, and the northern Plains. Other regions are just as bad; Texas, Oklahoma, Georgia, Florida and parts of numerous other states are suffering the double hit of low prices and disastrously low yields.

And the impact is not just crop related. Livestock producers are suffering from low prices as well. Cattle prices are below break-even levels, hog prices continue to decline, and the price of milk is well below what is profitable. Traditionally when crop prices were low, farmers in diversified operations could count on livestock to make up for the loss. Today, farmers are unable to recoup their losses because prices are low across the board.

The bottom line is that all of agriculture is in trouble as a result of low prices. This trend should not be allowed to continue. The time for action is now.

What can we do about the problem? While there is a consensus here in Washington that something needs to be done to resolve the crisis, there is a difference of opinion about the solutions.

There are a number of steps we urge Congress to take to address this crisis:

1) Remove the Cap on Marketing Loans--The Federal Agriculture Improvement and Reform (FAIR) Act of 1996 froze marketing loan rates at 1995 levels. Removing the cap and allowing the rates to float at 85 percent of the 5-year Olympic average (minus high and low years) would allow farmers more marketing flexibility to ride out the low-price years. It would immediately increase marketing loan rates for wheat by approximately 60 cents per bushel, corn by 30 cents, and soybeans by 30 cents. The impact on producer income is significant--for example, a farmer with 1,000 acres of wheat with a yield of 30 bushels per acre would receive $18,000 more by eliminating the loan cap.

2) Extend the loan period for marketing loans by six months--Currently commodity loans are for a period of nine months. By extending them by an additional six months, it will give producers extra time to market their crops, to sell when prices are higher.

3) Create Indemnity Payments--Crop insurance is a good tool, but it has serious flaws that have yet to be fixed. In the meantime, thousands of producers in disaster areas are suffering, and crop insurance in these areas has failed to provide the risk management we had expected. Fixing crop insurance is a long-term proposition. In the short-term, Congress should provide indemnity payments to provide relief to farmers and ranchers suffering from multiple disasters.

4) Increase Exports--Eliminating trade sanctions, stabilizing foreign currencies, replenishing the International Monetary Fund, increasing food aid, and continuing to promote U.S. agricultural exports abroad are positive steps that could improve commodity prices in the near term and provide additional price stability in the future.

5) Aid Livestock, Dairy--Traditionally farmers and ranchers have been able to rely upon livestock sales when crop prices fell. That has not been the case recently as hog, cattle and milk prices are all well below break-even levels. For these reasons, we urge Congress to pass legislation to: require mandatory price reporting of livestock sales to ensure fair and open markets; require country-of-origin labeling on imported meats; and stabilize milk prices by enacting a floor price.

In conclusion, Mr. Chairman, we must recognize that the price paid to farmers and ranchers is a small fraction of the price in the grocery store. Yet, the economic health of farmers and ranchers and their communities is essential to keep our nation strong. Mr. Chairman, we applaud you for holding this hearing and urge you to take quick, decisive action to bolster commodity prices. America's farmers and ranchers are counting on it.