MR. JERNIGAN: I also want to thank the panel for allowing us to come before you today and put in some of the issues that face the sheep industry. My name is Mike Jernigan. I'm a rancher; I depend 100 percent totally on my income from sheep and goats. I ranch in Pecos County, Texas, which is far West Texas right, oh, averages somewhere around eight to 12 inches of rainfall a year. So we have to have a lot of country to manage and to control. And it takes a lot of work.

I, next week, will go in as the president of the Texas Sheep and Goat Raisers. Our organization has been around for a large number of years beginning in the early 1900s. We represent over 2,000 sheep and goat raisers across Texas. Basically, our sheep and goat raising areas begin with the Hill Country through Edwards Plateau all the way out to somewhat west of Fort Stockton. So we cover a large and varied area of Texas and we have lots of producers, and most of those producers have been in dire times in the last few years.

Most of you probably know that the U.S. sheep industry recently filed a Section 201 trade case petition under the rules of the GATT trade agreements against lamb imports from Australia and New Zealand. This 201 petition was very time-consuming and expensive. U.S. sheep producers paid totally 100 percent the expense of this trade -- the trade case, and we felt like it was long and expensive. And here we are and we stilldon't know whether we're going to get anything out of it. The International Trade Commission validated our domestic industry's case and unanimously agreed that four full years of trade restrictions should be recommended to the President for implementation.

The goal of our U.S. sheep industry was to stabilize and strengthen our U.S. lamb market and to restore the confidence and optimism needed for further investment in the business to occur. Current levels of lamb imports have thrown the U.S. prices below production costs. In the past four years, imported lamb has increased 71 percent, with 95 percent of those imported lambs coming from Australia and New Zealand. Newly released information that was -- on research that was done by the U.S. House Agricultural Committee show that imported goat meat has increased over 83 percent during the same period. This goat meat was valued at somewhere over -- a little over 10 and a half million dollars. Since the meat goat industry is a relatively new and growing industry in Texas, as Marvin told you while ago, these import levels are stifling to its growth.

Reports from Australia and New Zealand are projecting growth of lamb and goat imports to as much as double these levels in the next few years. In the 201 petition, our lamb industry proved damage and the threat of increased import levels would compound our losses. President Clinton has made no attempt to -- or has put off making a decision on whether to implement some type of tariff or quota or some other programs for us. I believe that pressure from the key government officials from Australia and New Zealand have caused him to back up and delay a decision further.

In the event that the President will back the U.S. lamb industry with a tariff or a quota, threats from Australia and New Zealand have said that these trade restrictions will drastically affect your meeting with the WTO in November. And although I don't believe these are idle threats, it's very disheartening to us as producers for the President and our trade policies to be more responsible -- responsive to pressure from foreign governments than they are to our own citizens and producers.

Opponents to the U.S. lamb industry's plead for help on these imports has said that U.S. producers must tighten their belts and become more competitive and produce a product more desirable to consumer needs and wants, and I agree with these statements 100 percent.

In 1996, U.S. producers received their last incentive checks, incentive payments, and in many industries, this -- in many instances, this industry support accounted for 30 to 40 percent of the producers' income. At this point, producers who are still in business have already cut their operations to the bone.

How can we become more competitive? This is the area where we need the help. With our loss of the wool incentive support, we also lost most of the funding for our national organization. These funds that were lost were used for product promotion, research, and market development. This national organization gave us the strength to fight off most major import thrusts prior to 1995 through promotion of American lamb. Loss of these promotion dollars weakened our industry and opened us up to market losses to imported lamb. The Australians and New Zealanders were astute enough businessmen to recognize this weakness and move in.

If the imports were coming in under a fair trade policy rather than open door free trade, we could compete and I believe we could win. Imports flood our markets, with 80 percent of these imports being sold at 20 to 40 percent below the price of American lamb. There's several reasons for their lamb to be cheaper, but the main reason is the currency exchange rate of the U.S. dollar against the Australian and New Zealand currencies.

We in the sheep industry have fought the currency differences with wool for many years, and perhaps that was one of the reasons why we had the incentive program. But it was funded through money that was tariff on wool coming into the United States. Only in the last couple of years has this begun to affect our lamb industry in the same way. The strong U.S. dollar versus the weaker Australian dollar makes the import lamb more attractive because it gives U.S. retailers more buying power.

I want to raise the issue that currency differences should be addressed when the WTO negotiations take place. This would place American and foreign imports on more equal levels and promote a fair trade agreement.

The U.S. has the natural resources to generate the wealth we need for a continued healthy economy, but we must protect our production capabilities and our producers. I believe our greatest natural resource is agriculture. If we continue to allow agriculture and segments of agriculture to lose money, we as a nation will be in deep trouble. If we ever lose the ability to feed and clothe ourselves, we will truly be at the mercy of the rest of the world.

Thank you. Any questions?

MR. GALVIN: Thank you, Mike. A bit of good news, and, of course, it was a little late in coming. But the President did announce yesterday his decision on quotas and import duties for lamb, and we've got copies of that decision here if you'd like a copy, as well as anybody else.

MR. JERNIGAN: Good. Sure, I'd love a copy. I guess that's one of the problems with living so far out.

MR. GALVIN: Two extra ones there, too, for anybody else. Any questions? Thank you very much.

MR. JERNIGAN: Thank you.