MR. ALLEN: Just to introduce this, new crop corn and soybeans again today hit new contract lows.

I would like to thank the USDA, the USTR, and the World Trading Organization, Commissioner Susan Combs and the Texas Department of Agriculture for allowing me my allotted time here today.

Farm agriculture is changing as quickly as Austin's computer industry, yet there are fewer solutions to agriculture's complex puzzle. U.S. farm bills of the past have not been in the least effective. We certainly know now, and should I say again, that commodity supply management does not work. Paying U.S. farmers not to produce while trying to entertain a Diluted Conservation Program, CRP, has still yielded the same all-too-familiar problems we face today; that is, heavy commodity supplies and low farm prices.

At the heart of this dilemma are two root problems, and I hope everyone gives me the space to listen. Agricultural production, information, and computerization technologies are not unique to the United States. Advanced ag technologies are being utilized in many other nations; for example, Delta Land and Pine companies sell their Bt cotton strains to China as well as U.S. farmers. This has changed something that the American producer has always been proud of, being the best in the world. But that's not true anymore.

Number two, throwing taxpayer money at U.S. farmers has not worked. Farm subsidies have not changed the heart of the producer. Past farm bills should have been named something other than farm bills, and maybe we should call them what they really are, such as the Freedom to Farm Welfare Program, as it's turned out to be.

What I mean is this: When high commodity prices are present, producers hold out or gamble for yet higher prices. Then, when the price collapses, the taxpayer kicks in a few more billion dollars. It's like Las Vegas providing more chips to a gamblaholic when he runs out just to keep him in the game. And what does this have to do with establishing a sound export program for the future? I think it has everything to do with it. Here are my ideas to make farm policies incentive policies: Promote demand, and shore up, if you will, domestic farm production.

First, the United States needs to quit playing the free market game. Freer global markets should remain our objective, but we must quit pretending that we're free and that everyone else is not. We should admit up front that our agriculture industry is as subsidized as everyone else's. Bailing out U.S. farmers nearly every other year is no different than Canada's socialized Wheat Board subsidies.

Secondly, farm programs should be disaster-oriented, exports-based only, having nothing to do with the commodity price being magically intertwined. If there are incentives within these kinds of policies, then they should be destined or designed for young beginning farmers. If future ag policies ignore price, this will, in turn, establish a freer market as far as supply intervention goes. Price subsidies should be erased. Price levels cannot be the presupposition to an ag policy. It can still be said U.S. farm agriculture is the only U.S. industry that affords such wonderful benefits and safety nets already.

Thirdly, crop insurance programs are on the right track and need to continue to be defined and refined through farmer education.

Fourthly, past USDA policies have done nothing but encourage farmers to withhold their inventories even when prices are very profitable. The answer is not in extending loans and making it easier to stockpile grain, but to encourage farmers to stay current using healthy risk management tools and to operate the farm as a financial business. I would like to underline that farm production is for sale every year, not for storing.

Lastly, I recommend that future policies avoid the bailing out stigma associated with low commodity prices. U.S. producers should be professionals, not welfare recipients. Future farm subsidy money should be issued for practical business needs; simply, let's teach them how to fish instead of giving them fish every time something goes wrong. For example, let's give them training and incentives to become effective marketers and risk managers. The FCC recently agreed to increase funding for Internet hookups for schools and libraries by one billion dollars. Cannot rural Internet access be done at the same time? Canada has already done this, with 80 percent of its producers on-line. It makes us look like a joke.

As the U.S. farm population continues to disintegrate another 30 percent in the next three to five years, we must assist those farmers who possess the talents to remain with the necessary business skills, equipment, technology, and education.

Ladies and gentlemen, my idea is to modernize the producer himself, like the very tractor he drives, so that he is capable of using and managing economics 101, not his sweat. American farm policy has to start laying profitable incentives down; it's a business just like any other business.

Let's face three additional facts, if you will. Nothing else has really worked. It's not the commodity prices. Ample profits have been available since 1994 up until now. It's time to be creative as opposed to defensive, even if to subsidize a part-time secretary and a computer to put the producer's business house in 21st century order and subsidize retraining programs and assurances on the contrary.

Envision a profitable U.S. agricultural industry instead of worrying how to keep all of America's producers happy and in the business, which has created nothing more than politicized, socialized, and costly defense no-win strategies. Imagine demand being naturally enhanced by balanced producer production, trade, and profitability. Let's move to the heart of the matter, which will move U.S. agriculture forward.

Thank you very much. Are there any questions?

MR. GALVIN: Thank you. Appreciate your statement. I think there's been some effort over the last few years to try to make more progress on what I'd call the risk management side of things. And, as you know, it's been pretty difficult. But if you look at the expansion we've say, five years, I think it's been a pretty sizable increase. Just this past spring, I think we tried to do in part what you're suggesting, and that is taking some of the money that was otherwise destined just for farm payments and providing them instead as incentive payments to those who would go out and buy crop insurance, especially the so-called buy-up crop insurance policies that really would offer better coverage and I think also encourage farmers, as they buy that crop insurance, to also think in terms of forward pricing some of their commodities.

So I think to some extent we're – you know, we are moving in that direction, but clearly there's more that needs to be done because of all the problems making crop insurance work from one region to another. You know, it seems to work better in the Midwest, for example, than in some regions in the South and Southwest. But I can assure you that this whole desire to, quote, fix crop insurance - and it's something that I know Chairman Combast (sp) and others are working on as well - but it remains a real high priority for Secretary Glickman as well as a number of members of Congress.

MR. ALLEN: May I add something else?

MR. GALVIN: Sure.

MR. ALLEN: Luger's (sp) representation of the risk management program, I think he proposed last week or the week before eight different pieces of risk management farmers could use.

I would like to just say on public record that that is so kindergarten that it just makes my heart sick. It's not going anywhere and they're not taking the step that they need to take.

MR. GALVIN: Okay. Thank you.

MR. ALLEN: Thank you very much.