Thank you, Mr. Skogen. Our next speaker this afternoon will be Shelden Melberg of the Minnesota and North Dakota Sugarbeet Industry followed by Mark Froemke with the Grain Millers and Dick LeCocq of the Minnesota Cattlemen’s Association.

MR. MELBERG:

Good afternoon. I am Shelden Melberg, a sugarbeet grower from Hector, Minnesota, and today I am representing the 3,700 farm families who raise over 700,000 acres of sugarbeets in Minnesota and North Dakota and have a direct investment in our cooperatively owned sugar companies of over $1 billion. Almost $3 billion are generated each year in the two states by the sugar and corn sweetener industries. Over 800,000 bushels of corn are used for sweeteners. As a result, the market value of corn is increased by 25 cents per bushel, providing an additional $307 million to corn farmers in Minnesota, North Dakota, South Dakota and Wisconsin. We provide a reliable supply of this essential food ingredient to consumers, the major food manufacturers in the Midwest at prices 32 percent below the average paid by consumers in developed countries. We do this all at no cost to the taxpayer. Make no mistake, the sweetener industry is an alternative value-added commodity that is the backbone of our extremely fragile rural community. Unlike other major commodities, our sugar farmers have no risk management tools for marketing. Therefore, our government rightfully limits the amount of imports of sugar into the United States as a legitimate response to foreign predatory trade practices and to provide price stability and a safety net to our farmers. Our country remains one of the top three importers of sugar in the world along with Russia and the European Union. We are the most efficient producers of beet sugar in the world and the lower costs than most of the cane produced in the world. This is why we have gone on record to support trade agreements we believe to provide fairer trade. Our sugar growers, however, are rightfully frustrated and skeptical about how current trade agreements have been negotiated and performed. Almost 75 percent of all sugar produced in the world is produced in developed countries -- in developing countries that are either not members of the WTO and have no obligations or are members who have received special and differential treatment and are exempt from many reform commitments. These countries have fewer commitments than developed countries and enjoy a longer transition period. We also understand that many countries are not yet in compliance with their commitments. In many cases they allow deplorable labor and environmental conditions that we do not tolerate in this country. The Brazilian sugar industry is cited by our State Department as using child enforced labor in their cane fields. The collapse of currency values in developing countries such as Brazil and Mexico have created massive problems for the world’s sugar market. Our developed countries -- developed country competitors are the European Union and Australia. The European Union has internal price supports 30 percent higher than in the United States and uses massive export subsidies which today is currently at 25 cents per pound. Europe’s heavily subsidized exports of sugar from the African, Caribbean and Pacific region are not even registered with the WTO as an export subsidy. Australia maintains a marketing monopoly and receives subsidies for their industry’s infrastructure. The failure of the Uruguay Round to address these problems or enforce the rules has contributed to the current collapse of the world sugar prices which are well below any producer’s cost production. Rather than leveling the playing field the Uruguay Round simply locked in the distortions and lowered the playing field. As a result, it was the U.S. producers who have found themselves placed at a disadvantage. In summary, this is a brief sample of what the sugar world looks like and there -- these are some of our experiences with trade agreements. For our industry to support future agriculture negotiations under the WTO, a request offer negotiating approach must be -- must be used that recognizes that industries and markets are different with diverse characteristics and sensitivities. Sugar production is unique and has many unique problems. We must negotiate an agreement that does not put us at a disadvantage during the transition process. It is the only approach that can bring American agriculture together and keep us together throughout the negotiations. Experience has shown that using a formula or one-size-fits all approach in trade negotiations is not acceptable. The most important issue to address are the elimination of direct and indirect export subsidies and state trading monopolies. This will require those exporting countries to unilaterally adjust their domestic support system. Eliminating export subsidies should increase world prices and reduce the need to maintain high tariffs as a response to these predatory export subsidies. In closing I would like to say this is an industry worth fighting for as you go to the negotiating table. Rural communities, jobs, manufacturers and the most complex and sophisticated food industry in the world depends on our ability to compete fairly in the international arena. And we are perfectly willing to do so. We welcome the opportunity to compete farmer to farmer. We cannot, however, compete against the treasuries of foreign governments or poorly negotiated trade agreements. Thank you for the opportunity to address these concerns to you today.