UNDER SECRETARY SCHUMACHER: Let's start right up.

MR. CLIFTON: Okay. Then we'll start. How about that.

First on the list is our state representative from Gumboro, Representative Charlie West. Is Charlie here yet? Charlie's not here yet. I didn't think I saw him.

All right. Then Charlie will be put on the end of the list. Hopefully he will show up and we'll give him an opportunity to speak.

Do we have someone down front here to collect the -- okay. Kathy will collect your copy of your testimony as you leave the podium, please. Okay?

Next on our list is Dr. Herbert Putz of Diamond Land and Cattle Corporation. Dr. Putz.

DR. PUTZ: Ladies and gentlemen, I thank you for giving me the opportunity to share my ideas on U.S. agriculture trade policy issues.

Let me introduce myself. My family has been merchants and farmers for 12 generations. I've spent more than 30 years in a leading position in the grain export trade in the U.S. and in Europe. I was nine years in charge of restructuring non-performing loans of major U.S. and overseas corporations for the largest Austrian bank in New York. And in the last six years, I was foolish enough to have been farming and cattle raising on our 6,000 acre family farm in Texas and Virginia. We grow mainly wheat, corn, soybeans in addition to a cow/calf operation and we have sheep as living lawnmowers.

With the vast, in-depth knowledge of the trade issues and their background of the distinguished panel members, I feel a little uneasy to give my five cents worth of wisdom, but I'll try it anyhow.

The previous speakers in the other listening sessions have given you a long wish list for the WTO ministerial conference this year in Seattle such as eliminating export subsidies, cutting tariff rates on farm products, improving market access, make state trading companies more transparent, solve sanitary, phytosanitary and GMO issues.

I believe all possible suggestions have been addressed extensively. This leaves me only to wish you good luck and Godspeed in your negotiations. Unfortunately for you, that's not the end of my presentation.

Let's look at some figures and facts. Ms. Pat Hill from the USDA stated in her presentation to the directors of the U.S. Grain Council meeting in Boston that we have made great strides since the Uruguay Round. Well, if we had made such great strides why is the U.S. agriculture economy in the dumps. Prices have since the Uruguay Round spiraled downward despite the annual world trade for the grains and oilseeds is now, according to the U.S. Department of Agricultural's last figures, exceeds 300 million tons. The U.S. share in this sizable volume of world trade dropped from over 46 percent in the mid-1980's to now less than 35 percent. Our wheat export represent only 25 percent compared to over 50 percent of the total world trade, and rice is less than one-and-a-quarter percent.

Since there is plenty of export business, why have we lost our historic market share? Our competitors seem to have no trouble to have market access or overcome tariff rates on farm products or solve sanitary, phytosanitary and GMO impediments with their customers. We don't want to talk about it right now.

For example, Australia sold to India four million tons of wheat last year, but the U.S. wheat was excluded. We were not even allowed to offer. We could not solve the weed issue. How come the Australians solved this problem?

While we have been given the much applauded freedom to farm, the U.S. farmer has been deprived of the freedom to sell. Neither the farmer nor the export companies can push for a better share of the world trade because other agricultural producers are outgunning us with general direct and indirect export subsidies and more export-oriented government. Our government has not given the U.S. agriculture industry a level field to compete. How long do we intend to let our competitors snap away at our historic market share through subsidies, devaluation and other hidden supports? It took over five years to come to the Uruguay Round agreement. Will it take another five years under the WTO and lose more of our market share? Do we need to beg every year for the next five years for congressional handouts? These handouts bring us not even to the level of food stamp recipients, which latter program is now eight-and-a-half times the size of the help agriculture got last year.

What a disproportionate treatment of our industry which has a proven ripple effect in our U.S. economy and is a major effect in the balance of payment. We have spent and will continue to spend billions of dollars to be the warehouse of the world. This does not help neither the agricultural industry nor the U.S. taxpayer. What we need now is to give the U.S. farmer respectively, the U.S. export traders, the tool to compete on a level field in the world trade and that means activating the export enhancement program. This will help the U.S. farmer and ultimately the U.S. taxpayer to get us going until your anticipated new order under the WTO may take effect down the road.

It is time to fight fire with fire. Otherwise, we will be faced with some long drawn-out trade negotiations which outcome have a historic proven high failure rates.

Ever since Secretary Dr. Kissinger and President Carter used agriculture as an international bargaining chip, other nations have accelerated their policy of national food security and favorable farm policy. This policy helped national economies by keeping the country folks at home; reducing the influx of the people into the city; spending only local currency to bring the local agriculture up to speed instead of using hard-earned U.S. dollars to feed the people; freeing hard-earned U.S. dollars for the improvement of the infrastructure of manufacturing and services, which has the effect of creating new jobs and earning additional dollars through exports.

What incentive or benefit would a nation have to open their borders and expose their own agricultures to the harsh winds of world trade without direct or indirect subsidy or protectionistic measures such as stringent phytosanitary rules or GMO restrictions?

Would a government who had his farmers rioting in Brussels, Buenos Aires, in Pretoria, Warszawa and Prague and many other cities be willing to sign such a liberalization agreement? Do we believe that, for example, Peoples Republic of China or India will jeopardize their food security and drop the support of the farmers in favor of U.S. dollar food imports? Or, taking a cue from European Union Commissioner Brittain's latest statement regarding the EU stance in the upcoming WTO meeting?

An immediate relief for the U.S. farmer is not in the cards. How can it be when the European Union just adopted a continuation of the subsidy system under the CAP well into the year 2005.

Since the outlook for expedient solution through WTO is not promising, what can the U.S. farmer do to improve his economic blight beside begging the Congress for dimes and quarters, which we hate anyhow.

The well-advertised suggestions by advisors in managing our price risks by trading in derivative products such as futures or options and other fancy worded instruments reminds me of Mr. Delorean who wanted to save his Irish automobile company by dealing in drugs.

Why would I need to farm, worry about weather, machinery breakdown, will the workers show up today or not, when my income depends what successful speculator I am. I wonder what the good Chairman Greenspan thinks about these advises. I'm sure he would not like us quitting farm and becoming instead hotshot commodity speculators in New York City.

The U.S. farmer cannot move his production facilities overseas as the U.S. manufacturer did in the last 20 years. The U.S. farmer and livestock raiser is by the nature of the beast bolted to the USA. He cannot take his land, the engine of his production, and move. But if he would follow the example of the U.S. manufacturer and take advantage of the cheap land and leases and tax holidays offered by certain former east European block countries and move his know-how and machinery to these countries, as several U.S. ag corporations have already done, U.S. land prices will tumble and the national food security may be in jeopardy.

While the banks, insurance companies, transportation companies, industry and especially grain companies were given all the help by this administration to merge, the farmer and the livestock raiser continues to face a deliberate impediment to follow this example of success. We cannot take advantage of increasing our productivity of our machinery by adding land, thus, reducing the per acre expenses or do a better marketing. Too many obstacles prohibit the U.S. farmer to stay competitive through growth.

While the banks and industry are able to negotiate real estate tax deals with the local government, the farmers are levied with ever unproportional increases of school taxes. My real estate taxes increased in the past three years by over 35 percent while the local car battery manufacturer does not pay any taxes for years to come.

MR. CLIFTON: Dr. Putz, time, please.

DR. PUTZ: I'm sorry? Finished?

MR. CLIFTON: We've exceeded our time.

DR. PUTZ: Thank you. There's more to go.

MR. CLIFTON: Thank you very much.

UNDER SECRETARY SCHUMACHER: Dr. Putz, can I just ask you one or two questions?

MR. CLIFTON: Please stay at the podium.

UNDER SECRETARY SCHUMACHER: Can I ask you a couple of questions on clarification on your statement?

MR. CLIFTON: Please stay at the podium, sir, so they can ask you some questions.

UNDER SECRETARY SCHUMACHER: I appreciate you coming from -- which county in Virginia are you?

DR. PUTZ: Madison.

UNDER SECRETARY SCHUMACHER: As the farm economy is in terrible shape right now, as you and I had both articulated firmly this morning. The question is are you originally from Austria?

DR. PUTZ: I was born in Australia. I'm a citizen of the United States.

UNDER SECRETARY SCHUMACHER: Right. But basically do you want in Madison County and in Texas, an EU system? You know well and I know well from the board. Do you think we can have a $60 billion outlay for rural America? Feeding the farm. Congress said no. We're going to move away from that. Now they're more than just nickels and dimes.

Senator Pat Roberts said the other day, who is the author of Feeding the Farm, do we need at least five and maybe 15 billion and maybe feeding the farm is a transition. You did not want to have subsidies, but most farmers now are asking their Congressmen for at least a transitional program to get them through until we get these exports back on track.

But would you feel that we should go to a European-type system? And if so, how would Senator Roth, Senator Biden and other be counseled in the case of Delaware and other places to have that? I mean, it's a really important question. You have worked both in Europe and the United States and have great experience. You've seen both work. The European farmer is in reasonable shape these days, although they're dumping their products on to Poland and almost destroying that government and throwing their meats into Europe at extraordinary subsidies.

How do you come out on that question, sir? Do we want a European type system or do we want a more flexible system with more market driven?

DR. PUTZ: You put many questions in one question, sir. First of all, I would like to see the American farmer not handicapped to grow. And there are many issues which handicaps the growth, limitation in payment, certain payments like loan deficiency payments, insurance issues, crop insurance issues. For example, if I add new land, I cannot receive proper coverage because I will be assigned a transition level for all my new acquired land.

But I think the freedom of farming concept is an excellent concept. But you have to put the second leg on that concept, and that is freedom to sell. And how do we sell? Because most of our products go overseas. How do we sell and when do we get this agreement? The issue is when? The timing. We need money today and we need to move our grain today and hopefully get better prices for moving our grain.

I believe in these negotiations. Like all government negotiations, as you better know than I, takes time. And the farmer does not have that time element. I have to pay my bills today. I cannot wait until 2005 when the prices are up there as it is projected.

A European price system? That is a real political philosophical issue because you have two choices. Either cheap food prices for your population or for your citizen. Then you have the freedom of farming. Or you are concerned that your countryside need to be populated and it need to be prosperous and they need to share in the general prosperity of the nation? Then you have to go to European system.

But I cannot judge which system is better. All I can say, sir, my bottom line today is red and we have to change that red into black. Otherwise, you will not have any farmers.

And as far as the subsidy is concerned, and this is also a very political philosophical issue because what is a family farmer today? A family farmer in the interpretation of the U.S. Department of Agriculture is a farmer who is a little guy who has a little tractor, has a nice wife and some kids. Today's farmer is the farmer who has at least a half a million dollars in machinery, and whatever in value his land is. That is the farmer who is really the productive farmer. And let that farmer grow. Do not push him down. Give us the same opportunity as the banks, the insurance, the transportation company has. Please. Do that for us. We'll work ourselves through that, the other mess.

UNDER SECRETARY SCHUMACHER: Thank you very much. This is very helpful, indeed. We appreciate that.

DR. PUTZ: Thank you.