MR. HORNE: Thank you, Panel, for this opportunity to come before you. I serve as president of the Kerr Center for Sustainable Agriculture. I've served also in a capacity on a scoping task force for sustainable agriculture on President Clinton's Council for Sustainable Development. I'm also a farmer and a rancher all of my life, and today I would like to just kind of set a back set for trade issues and look at it from a holistic and a more -- perhaps a sustainable point of view, not really representing each different commodity, as that's well been done today.

So I'll be speaking about trade policy on the structure of agriculture, trade policy that should work for farmers and not against them, and trade policy and its effect on the environment and natural resources.

A country's trade and ag policy are inter-linked. One cannot separate the two. The purpose behind major ag policy decisions in the U.S. historically have been allotments, subsidies, supply management, and other tools. And it is not just to balance supply and demand and stabilize net farm income, but also to increase exports. And it is for this reason the trade policy should be made to explicitly reflect not just the cost of production of commodities - fuel, fertilizers, and those sort of inputs - but also those hidden costs that are degrading the invironment, such as our soil, the soil erosion, and each bushel of beans or corn that we ship overseas. These are hidden costs that affect the productive capacity of our farm/ranch.

The trade policy must take into account its effect on the structure of ag in the U.S. If policy favors the continued expansion of the industrial model of ag, then we will have less family farmers, less stewardship of natural resources, and declining rural communities. Food security and quality of life issues will accelerate as significant problems for our country.

Historically, the result of farm policy was consolidation, rural community decline, and the price of subsidies being bid into the price of farmland. We all know that the era of the vanishing farm between 1950 and 1980, where we saw just in the last 20 years, over 300,000 farms and 62 percent of all the farms disappear since 1950. And while many believe that moving people out of agriculture makes us an efficient agricultural system, the truth is that the price of commodities such as wheat and beans and other commodities are still at 1960, 1970 levels. Producing surpluses with only the hope of export markets is not rational in terms of good resource allocation.

There's also clear evidence, as the Department has recognized, that there is concentration in farming and agribusiness. Today less than 20 percent of the largest farms are responsible for 80 percent of the receipts. The largest broiler operations account for 97 percent of sales nationwide; less than four percent of the largest farms produce two-thirds of the vegetables, sweet corn, and melons in this country. And then we move to the meat sector. We find four large firms controlling 80 percent of the meat-packing business and four large firms controlling 24 percent of the total bushels produced of grain in this country.

So we're down to seeing that about four percent of the population of farmers in the U.S. is earning 57 percent of all farm receipts. Even if farmers use the very best management techniques in producing food, the most sophisticated marketing techniques, such as the use of futures and options, it is not enough. They cannot even come close to negating the effect of a handful of firms controlling the market. Export policy and trade policy often favors these large corporate entities rather than the nation's family farms.

Trade policy also affects the structure and type of agriculture in the countries we are exporting to. In those countries that are developing, it is not right to encourage monoculture, factory styles of production, and the displacement of indigenous people -- the indigenous population from rural to urban areas. It's something that the United States may not be thanked

for in later years.

The next point is that of policy working for American farmers and not against them.

The aim of trade policy should be to benefit the American farm families and not to reflect the profit maximization goals of a handful of corporate entities that control virtually all the agricultural production in the United States of the major commodities.

Trade policies should reflect the highest of American values and standards. Agricultural exports, while helpful, are not the solution to agriculture's problems of persistent low returns and food security issues, such as putting too much power in the hands of many vertically- integrated companies. When farms disappear, so do the families that farm them. The loss of farmers and the resultant structures put communities in turmoil, and at risk is the loss of many more family farmers in the next year. The corporate structure of confined animal operations and other contractual agreements are taking away from farmers the right to produce food in their own way. Ag and trade policy often sends the wrong signal to farmers about how much and what to produce. And, of course, embargoes destroy the best of planning.

In a similar ways, agribusinesses are assuming greater control of production agriculture. Agribusinesses are developing genetically-modified seed that the farmer not only has to purchase but also has to agree to sell back to the same company. Corporate owned operations like these are growing at staggering rates, releasing varieties at staggering rates, and few are looking at the downside of such technologies. The current monopolistic tendencies in the U.S. ag industry are undoing family farms, schools, competition, and destroying our rural communities.

Trade and ag policy must be linked to ensure that they are not working to the other's disadvantage and that they are not counter to other U.S. initiatives; for example that reduce pesticide usage. In this respect, we must phase out imports of foods from countries that have policies that are counter to our policies. Allowing other countries to export to us with unfair labor practices puts the American farmer at a disadvantage competitively, and furthermore, it encourages the exploitation of workers in other countries.

The U.S. should not allow the importation of any food products that are grown with chemicals banned in the U.S., as we continue to produce those chemicals and export them to other countries. This practice endangers the health of Americans, particularly when enforcement standards are low, and particularly those who are the least able to speak for themselves, such as infants, the elderly, the ill, and the poor. Labeling as to country of origin genetically modified food, irradiation, certified organic, or other labels should be obtained for products coming into this country.

What is the effect of trade policy on the environment and natural resources? Trade policies should aim to develop a national accounting system that takes into account the cost of degradation of natural and human resources as well as the direct cost of production. Unfortunately, policy often does not account for the true or total cost of ag production. What gets counted are those resources that are expended and the others are ignored, partly because it's hard to assign values to the loss of soil productivity and other measures of degradation. Social costs associated with agriculture and the loss of rural communities also represents true costs of our industrialized system of production.

There are several conclusions that I would like to make and suggestions that I would offer. First of all, trade policies should not be structured to use food as a weapon on the poor in order to achieve military or governmental challenges in other countries. Trade policies should be focused on ensuring that just the needs and not just the wants of Americans are met in such ways that we ensure the sustain ability of our food system and the natural resources upon which our system depends with fairness, consideration, compassion for all the people that work the land.

Trade and ag policies should take into account total cost accounting of the natural resources expended per unit of export. Policies should be -- should instead be examined to ensure that the beneficiaries of such policies are distributed equally to the American taxpayer, and more importantly maybe for the rank and file workers farming our land.

I would like to close with the definition of sustainable development that was given by Norwegian Prime Minister Roflan (sp) that we --that the work with the President's Council for Sustainable Development is used. In sustainable development, whether we're talking -- is relevant to all activities whether it's trade or whatever, and it's defined as development which meets the needs of the future without jeopardizing the choices that we have in the future. And we don't want to limit our future by simply destroying the rich agricultural base that we have with the natural resources we have in this country.

And so I thank you for the opportunity to come, and would be happy to respond to any questions you might have.

MR. GALVIN: Thanks, Jim. I appreciate it. I think this morning you probably heard some general consensus around a few broad points like getting rid of export subsidies in the next round and further decreases in tariffs, increases in quotas, maybe more disciplines on domestic agricultural subsidies worldwide. To the extent that those would become our objectives and we'd make some progress there, do you think the net impact on the environment would be beneficial or harmful or what?

MR. HORNE: Well, I think it probably would be beneficial. Because I have the belief that most American farmers want to be good stewards of their land. But, you know, when you're pent up against the wall trying to make a living -- and if you look at farm bankruptcies, it's a pretty startling picture. I think if farmers made a decent profit, they would plow that money back into conservation activities. And if our USDA policies actually favored, you could say green payments or some sort of an ecological repayment, I think that farmers would respond very positively to that and our land would be protected forever. But if we continue with persistent low returns, the farmer has to choose between his family, his children's education and controlling soil erosion, it's a difficult choice. And it's going to -- I think the cheap food policy drives that, and it's an unfair burden that we've put on our farmers.

MR. GALVIN: And I asked the question - maybe it reflects a bit of a bias on my part - but I remember the first time I went to Europe and saw the fields there, and the beautiful fields, beautiful farms. But you could see those, you know, lines through those fields of wheat and barley and all that. And I couldn't figure out what those lines were at first until somebody told me, well, that's because of the regular chemical applications they put on their crops in the course of the growing season. And I don't mean to be picking on the EU, but I think when you look at their structure of agriculture, and there are some things they point to with pride in terms of their number of farmers and, you know, the size of farmers and the strength of their rural communities and all that, but I think to some extent it does come at a cost. Because I think it's generally recognized that their application rate of fertilizers, herbicides, and other chemicals is generally twice as high or even more as compared to the U.S.

So, you know, I think there and clearly some problems that are as a direct result of the level of domestic support that they offer, as well as the heavy export subsidies that they ultimately rely on to clear their surplus onto world markets.

MR. HORNE: All I can conclude by saying is that we have to have profits in the short-run to survive, but we must be very careful when we trade and look at the effects, holistically, on the whole system of communities, farmers, and the American public, as well as workers in other lands and how they are treated. Thank you very much.

MR. GALVIN: Appreciate it. Thank you.