MR. MARTIN: Thank you.

Distinguished panel, Mr. Secretary, it is indeed my pleasure to be here this afternoon. Not only to demonstrate my personal commitment to advancing the best interests of world trade, the best interests of U.S. agriculture producers in the world market, but also demonstrate Farmland Industries interests in the same. I don't have a Cajun accent. I'm a farm boy from Illinois. My family continues to farm in Illinois and Iowa but I do have a quite a bit of experience after I was displaced from the farm in the late 80's in the world markets and I hope to bring a little bit of that experience, at least the flavor of that experience, in my short remarks this afternoon. Farmland Industries is a farmer owned west of the Dakotas, south of Colorado into the Southwest. In a way we're very much a grain based cooperative system very much directly involved with producers in economic benefit of world trade.

As such, as an employee of Farmland, I think everyday about the best interests of the producers, and in forming our (inaudible) of world trade, first and foremost is the best interests of the some six hundred thousand U.S. producers that own and directly benefit economically from the success of the Farmland system. That's in about 26 different states. What I hope to do today is first give you an idea of a little bit of the background why Farmland has come out so strongly to support the advancement of free and fair trade environment and the globe.

Secondly, a little bit about our success because I think it's important to the U.S. producer to understand that there can be success in international trade, and then third, Mr. Secretary, and distinguished panel, pointing out our particular perspective and a few point of where we think things ought to go. I firmly believe that the future economic well-being of American agriculture is very closely tied to our competitiveness and expanding in a very fast expanding global marketplace. The importance of trade to American agriculture wasn't emphasized in the '96 Farm Bill with the reduction in farm support programs. U.S. producers will depend on an estimated 35 percent of their gross income by the year 2003 on exports, 35 percent on imports. Therefore, we believe that U.S. policy must strongly reflect a commitment to expanding world markets. The today we see three critical issues:

First, Congress and the administration need to improve the fast track authority as soon as possible.

Second, China must be incorporated to the rules-based system of the WTO. It's absolutely essential for American agriculture to bring the Chinese into a logical scientific rules-based system and that's represented by WTO. Finally, the U.S. needs to exempt food and agricultural products from future unilateral economic sanctions. I know a lot has been done currently and I applaud administration in that regard. Farmland also sees that the importance of international trading is perhaps best underscored by America's shrinking share of the World's population. Americans now comprise only four percent of the world's population today, don't have much population growth. And many countries that we trade with and hope to trade with are experiencing significant population growth and that alone is terribly significant to what is really a bountiful U.S. American agriculture. Our ability to produce is just astounding. I visited some 111 countries in my non farm career that began in 1989. I have seen more than one, I'm sure Gus you would reiterate my comments. There's a demand out there when we get to it. Perhaps the most important is the growing strength of the middle class. The power of the emerging middle class is worldwide made up of consumers with the ability to shift their consumption patterns and that's a critical factor driving consumer markets. Since Farmland is grain based, we're very much involved in the pork and beef markets. I wanted to show a couple of slides to demonstrate that fact. Excuse me for the lack of clarity, although it comes up behind you, but we get a country like India or China where the per capita income is barely approaching 1000 dollars per person. Other countries like South Korea are closer to the 3000 dollar level. You can see that meat expenditures rise dramatically as that income rises and that's the growing middle class from 3000 per capita to the 20 or 25,000 dollars per capita. The U.S. and some of the developed countries are up around 30 thousand per capita. I know I (inaudible) market for need for farmland. I'm principally responsible for the grain, but I know where our targets in representing the pork and beef producers. By the way, the Mississippi catfish producers go in that category, too. Just recently we got involved in this Mississippi catfish production. We see the expenditures going up around the middle class and the world.

Just a couple of other points of view. Beef consumption. Pretty stagnant in the U.S. Population and income play into that very strongly but the world line is a pretty strong lineup. We need as U.S. producers access to markets. The story is very much the same. The green line you can barely see on the bottom is just a flat U.S. consumption line of pork. The yellow line is almost a 45 degree angle up. Over time is the world consumption figures. So a growing middle class, a growing population it's some place else in the U.S. We need and want that market for the U.S. agricultural producer.

Just a couple of other examples for statistics. By 2005 in the country of India we believe there will be 115 million new members of that middle class. By 2005 in China 196 million new members of the middle class. The middle class, of course, as demonstrated by these slides is a major consumer -- potentially a major consumer of U.S. agricultural products, particularly their meat products which indeed are value.

Just a little bit about the Farmland system, something I am very proud of and very proud to be farmer owned and working with the 600,000 producers that own Farmland systems. We have and continue to develop business strategies revolving around and focused on a particularly expanding world markets. In just six years our international sales have grown from less than 200 million dollars to 4.1 billion dollars. Those sales are directly reflected in benefits to the producer, not only in (inaudible) returns, but in growth and equity in the system itself. In my particular case I am responsible for Mexico. Since the passage of the North American Free Trade Agreement our trade with Mexico has increased from 50 million dollars in 1992 to 450 million dollars in 1998, sales with U.S. agricultural producers products. Third point, of course Farmland giving this experience, giving this direct benefit to U.S. agriculture producers supports timely and comprehensively trade negotiations in the upcoming trade round. We also support I think I'm reiterating now in my Cajun voice, but reiterating some of the things that were said before that the rules behind the sanitary and phytosanitary measures simply must be based on strong science. We have had many negative experiences. Thanks to the administration many of those have been resolved, Gus. And we appreciate the assistance to us as exporters. But we must have a strong sound science and deal with that comprehensively across the board. Export subsidies we've talk about 83.5 percent of the global exports subsidies and the U.S. only accounts for 1.4 percent. We know they're there. They have to be on the table and addressed very, very seriously. Tariffs, something I deal with everyday in trying to export grain, I don't care where it's at you need to become aware of it particularly in some of these advantages in South and Central America can from (inaudible). Kind of happy to see that the Indian pact didn't find its way to (inaudible) American in the short term. That helped us out a little bit. We know that the average WTO member tariffs are 50 percent. The EU are at 20 percent and we sit here at eight percent. That's a tough situation. We need to be competitive and that doesn't help us any. We have a very strong interest in seeing state trading prices move toward full price transparency and eventually into the free private sector market entities. That's a strong point for us. We see that in fees in a fair and (inaudible) price of U.S. producers. Biotech products have been discussed in detail. But fair and transparent and, again, scientifically acceptable rules must be implemented across the board. I looked at my part representing the producers interest in Farmland just last year. This year, in fact, Biotech this is my budget my budget, my responsibility to the farmer about 400 million dollars. We don't get Biotech to straighten it out. Again, I applaud the administration for moving that forward in international negotiations. Dispute settlement mechanisms, which gives problems over time must be shortened and we must have clearly have as regional processes an end in mind a time end and however things are going to be concluded with the dispute settlements. We constantly see and have concern for countries being permitted to disregard dispute settlement findings and some of those have been mentioned earlier today so I won't go into those again. But producers must see that end to have confidence in the multilateral trading system. So the dispute settlement is key for acceptance of producing others. That's it. That's my points. Again, I very much appreciate it. Do I have a personal commitment to this effort and into Farmland has a strong commitment as well. I appreciate your time and for all of the audience. Again, this is the way to go. It's working for a farmer owned company like Farmland, we have to smooth out some of those rough spots and we're confident that the administration is capable of doing that for those. Thank you again.

MR. SCHUMACHER: Could I ask you one clarifying question?

MR. MARTIN: Sure.

MR. SCHUMACHER: That's on port. We had comments this morning and also at lunch that pork is in pretty bad shape. Your trim line I think shows that pork demand worldwide is going up faster than beef?

MR. MARTIN: Yeah.

MR. SCHUMACHER: Would you comment? I'm very interested in the way that you're working on pork with Mexico that I heard about at length yesterday with one of your colleagues. I'm quite impressed with that.

MR. MARTIN: It's both the branded strategies and commodities. Of course we all understand the importance of a branded strategy in consumer markets. As the middle class grows, the branded strategy is necessary. Farmland is a partnership with the Mexican swine producer who has access to some of the markets with this existing product and an overlay of our export products into that market on a branding basis. At the same time we compete aggressively in commodities. So we've done -- in fact, we've used the same strategy many times in the case of branding other products. We find it very successful to find an in country partner who already has access to the markets, is sometimes access to some the idiosyncracies to the government regulations where to gain access for our products. Now the branding strategy is very particularly to pork because we're very strong branding pork and beef but very strong in beef. Again, I think we're going to make Mississippi catfish work, too, from a branding strategy. But adding that incremental value, bringing that value back to the U.S. producer in pork through a brand strategy -- it's not simple. It's a complex process in our case, a partnership with the local cooperative in Mexico that also produces pork that already has access has been very successful.

By the way, our principal customer there is a Mexican company that's owned by Wal-Mart, that

particular group, and they're there helping us out a lot, too, in promoting U.S. branded pork products alongside Mexican branded pork products by increasing the sales and ultimately U.S. profit.

MR. SCHUMACHER: Thank you.