MR. SULLIVAN: Thank you. Earl, I can appreciate your dilemma with being from Mississippi State being a bulldog and trying to write and be an editor for the Progressive Farmer and staying out of trouble. My dad went to Mississippi State and my wife went to Ole Miss. I have a cousin that went to Alabama, one that teaches at Florida State and my grandparents all went to school at Auburn and got ag degrees. I personally like LSU when they played down in Death Valley because the food I can get, the Po Boy sandwiches and the stuff they serve down there. I can't get tickets to Tennessee and Kentucky yet, but I'm trying. I can pick out any team on a given Saturday and pull for them.

MR. MANNING: You're (inaudible.)

MR. SULLIVAN: I would like to thank Mr. Secretary and this distinguished panel that's come to the Mid-South. We appreciate it very much. I'm a seven thousand acre farmer from northeast Arkansas, just a few miles north of here, almost in the boot hill of Missouri. I operate a family farm with three sons and my wife. We farm all grain, soybeans, wheat, rice and corn. And also my comments today will primarily be centered around wheat. I represent the Arkansas Wheat Promotion Board. Back in 1984 we wheat farmers in Arkansas passed a check off and became the first winter wheat state to become a member of U.S. Wheat Associates and a lot of this information, a lot of the policies that I have opinions on actually came through the board of directors U.S. Wheat which I serve. We have had -- as a result of this check off we raised about 500 thousand per year that's been on promotion and research. We had the Chinese (inaudible) team that has come through and many others that came through. This particular Chinese team that came through was from Bejing and we had depended heavily on the Chinese market which I will refer to a little bit later. The commodities that we -- I represent major exported commodities in Arkansas wheat about two billion dollars in 1997 were exported and this is much more than our 150 of the share of the figures that you had, Mr. Schumacher, on the screen this morning. Soybeans and poultry have always been number one and two. Soybeans is number one, 435 million, poultry 413. Rice is right there with them, 411 and wheat 238 million and cotton, which we talked about this morning.

The Mid-South has always been well-known as a cash crop and wheat is even a little bit higher than cotton as far as what -- we produce about a million acres of wheat. It's probably the best kept secret in the United States that we grow wheat in Arkansas and in the Mid-South (inaudible.) Most of these products are grown in the eastern part of the state near the Mississippi Rivers and Arkansas River, so we have a real advantage as to exporting overseas. We normally exported and have been exporting about 80 percent of the wheat that we grow through the Gulf ports and we think that our objectives coincided almost verbatim with the ones that you had on your screen this morning. The five goals that you had on your screen that would coincide with the ones that we had, early conclusion to negotiations, elimination of export subsidies, sanitary and phytosanitary issues. These need to be renewed and not reopened. Market access for Biotech and dispute resolutions.

The U.S. domestic wheat market, which has not been referred to this morning, but it's still expanding. It does not offer the growth potential that was available abroad. Ninety-six percent of the world's population is living outside the United States. So U.S. wheat producers have little but to focus on the potential of the export market. The U.S. maintains fewer trade distorting practices and activities than most other wheat exporting countries. It should use its leverage to influence and set forth an agenda and strategies to benefit the U.S. farmer. U.S. policymakers continually need to be reminded about the Freedom to Farm Act which was predicated on the assumption that producers would have ready access. This has already been referred to numerous times today. United States Congress also needs to go ahead and pass what we call the Trade Negotiating Authority Legislation which previously is known as fast track so that we can participate in these trade matters. Any progress in reducing barriers would continue to be almost impossible without this fast track legislation.

I think Andrew has done a great job of talking about biotech, so I'm going to pass that one. The U.S. wheat producers are relying on export markets for roughly one half of 50 percent of the sales. They resent being shoved out of some of the world's significant export markets for U.S. political purposes. It's pure and simple. We're mad about; we're angered about and we want it changed. We'll do all we can to have it changed and we're trying to do that as you can see with our check off. Sanctions on wheat exports do not work. They just encourage buyers to find their products elsewhere. U.S. producers want to be reliable exporters, and, therefore, oppose the imposition of any sanctions except in cases of war or national emergency. And the WTO should endeavor to discourage unilateral sanctions on food in countries around the nation. We have a situation in wheat that I'm sure you're familiar with. I'm going to give you a copy of this, but I'm going to point out a little bit about it because I'm centering it on the Chinese market.

Back in 19 -- there was a smut disease called TCK. I'm sure you may have heard about it. Tilletia controversa kuhn is the name of it, develops in winter wheat crops that are grown in any parts of the world, particularly in this can country in the Pacific Northwest. It does no harm to anyone, no humans or animals. It's specific environmental conditions that cause this TCK product where you have constant snow cover and we have none of this as I've shown in the Arkansas wheat or the Mid-South wheat because we don't have conditions for it. But back in 1972 China instituted restrictions on imports to the U.S. wheat because of TCK and put in what they called zero tolerance. But from 1970 to 1996 when China continued to import wheat from the Gulf Coast and none from the Pacific Northwest. My friends and farmers were hopping mad about that. They have always been concerned about it because they felt like they were being unfairly discriminated against. During that period of time we exported a huge amount of wheat to China. China and Russia were our number one market for wheat for many years, and we've lost the Chinese market; we've lost the Russian market. We'll never get the Russian market back and we know that. But in '86 China expressed an interest in becoming a member of GATT and for next 13 years they were trying to pursue this and trying to talk about the World Trade Organization and membership in that. Then in 1988 through '91 several China workshops were developed. Some of you may have been received in developing a TCK spore identification process. So in 1992 the U.S. decided to sign a bilateral agreement or memorandum of understanding in which China agreed to resolve the sanitary and phytosanitary products and base everything on sound science. Well, in 1993 through '96 Eugene Moos, who I assume is still with the SPA, undertook efforts to solve the TCK problem. There was a joint China working group, U.S. China working group, that was formed that had many meetings and searching for a solution. So China finally announced that the West Coast wheat, which we think at times has the TCK problem, could be shipped to the island of Hainan without restriction, wherever that is, some island. And so the U.S. rejected promptly this as being the solution that was entirely too restrictive.

So that brings us back sort of fairly close to where we are now. The U.S. has done considerable research to determine the levels of TCK spores. In March of '96 China refused to unload several Gulf wheat shipments. Now this is our Gulf Port Shipments of wheat because of TCK, which caused a substantial financial loss to U.S. exporters. This was a dramatic change from any earlier practices that they had where they had always been very easy to export wheat through the Gulf to Memphis. So it ended all U.S. wheat exports to China for the next couple of years and basically that cuts our exports out to China. In '98 they conducted another study and the USDA found that the risk of TCK wasn't significant statistic so this study draws on previous research and finds that climactic conditions are necessary for it to be established are restrictive to a limited area in China; that the level of concentration is much too low to allow TCK to be established in China through the shipments of wheat that we might send to them.

In January of 1999 U.S. wheat producers in 10 states hired Micky Kantor, a former U.S. Trade Representative and Commence Secretary to work with the TCK issue and he in an opportunity to maximize -- an effort to maximize the opportunities represented by Premier Zhu's expected to visit our country this April and assure that TCK was part of the deal. And so in April of '99, this brings us up to date, during this visit from the Prime Minister of China it was announced that China was lifting all long-standing restrictions of imports of U.S. wheat from where TCK is known to occur. This agreement is for one year, for one year. There is no stability other than this agreement and the agreement allows for wheat imports that do not exceed the 30 thousand TCK spores per 50 gram sample. We think that the China market potentially could amount to as much as eight million metric tons of wheat. We need that sale. We need these foreign countries to pay cash for their wheat. We don't have to issue them credit from what I understand. So that brings me down to my last comment that is that I want to be like Al Helms and some of the others. I don't want to be too Halloweenish on this whole deal, but our ending stocks -- these are USDA figures, by the way, that I got off the internet -- ending stocks for wheat this year are expected to be 980 million bushels, 980 million bushes. They're going to be piled up somewhere because there's not enough storage to hold that amount. This is percent increase over the '97,'98 carryover and it's the largest carryover since the 1987, '88 carryover. Now that's all wheat. On soft trade wheat our ending stocks are projected to be 150 million bushels which is the largest ever. Soft wheat, bread wheat exports are only projected to be 75 billion bushels this year, down 105 million from last year. Where does that take us? The record for exports were 460 million bushels 1981 and 1982. That's back when China was buying wheat. And we're as high as 200 million bushels as recent as1989 and 1990.

So to name them off the top six exporters as of February of '99, Egypt was number one, Japan was number two; Philippines was number three; South Korea is number four; Nigeria was number five and Pakistan was number six.They went down from third this year. So I think we would like to leave you with the same comment that was made earlier by some of these Mid- South farmers, and that is that we definitely need strong help from your committee with your what would be known as the Seattle Round of negotiations. We're banking on us and our government to help us because we're going to have to -- someone is going to have to get rid of this wheat. We know that these people are hungry and need it and have the money to pay for it. Thank you.

MR. SCHUMACHER: I want to make a comment on the sanctions. I think there is continued confusion on that (inaudible.) One, I think we've increased our food exports from three million normal to about roughly 12 million. Trying to get support to moving the excess inventory to those countries that need it. Some of them can't pay for it so we're providing it (inaudible.)

Second on sanctions, this has come up a three or four times so I want to take half a minute to address that. Amy Voss and I worked very closely with the administration to ease the administration of sanctions. There was confusion. We had six countries we had sanctions on, Cuba, Libya, Sudan, Iraq, North Korea and Iran. Iran and Iraq, Libya and Sudan we have proposed to lift those sanctions. We have regulations that will deal with that in a couple of weeks. We hope that Iran is dry this year and they will have a lot of cash and draft a contract for that purpose. Iran could be one of wheat importers this year. So if that goes through, we've -- we have asked Congress to look at some legislation to sustain this in the future.

On Cuba we think it's very important for wheat and rice that our competitors and legislation and when I was sworn in we could not sell to Cuba until the legislation had changed, and there were some senior senators in Congress who did not wish to change that legislation. So there has been a number of (inaudible.) It would be very competitive (inaudible) selling to Cuba (inaudible). You mentioned rice, wheat and we would very much like to have that market back and we need a legislative change in Congress. There are some changes made on some aspects of the sanctions but on Cuba there is not much progress. That does represent your wheat sales and rice sales?

MR. SULLIVAN: We need it because (inaudible) return from Cuba as I said they have some products. They have a lot of lobster and a lot of citrus. I know none of the farmers that I know of have ever (inaudible) so we would like to swap some rice and wheat for lobster.