Again, I'll ask you to summarize at three minutes, please.

MR. PERCY: Good morning. My name is Paul Percy. I'm an area farmer from Stowe, Vermont. Director for Agrimart, also the Treasurer of Agrimart. Agrimart is a cooperative that owns Cabot Cooperative Creamery, which produces cheese, and we were one of those groups that did export some cheese to England.

I'm here concerned, and based on my own knowledge of the cooperative, and I'm concerned about the Canadian situation. I heard a comment here a couple of times this morning, one was; ship milk to Montreal. The other was; sell Ben & Jerry's ice cream to Canada. I hate to say so, but I don't think there is any market up there for anything. It's kind of like us talking about selling cheese to Wisconsin. There is more cheese in Wisconsin than there is people out there to eat it. There's more products in Canada than there is people to eat that product. There is more milk being produced in Canada now than they could probably use up there. And all that's going to happen if we ship it up there is to offset that product with milk they don't need. And if you open up the borders, you let that milk flow south down here. I, as a farmer, am going to lose my markets for my milk because I cannot compete on these hills in Vermont for milk from prime flat agricultural land and the thousands of acres between here and Montreal that is capable of producing milk if they open up those markets and let it flow.

And granted, price of milk in Canada is a lot higher today than it is in the states. But if you took their quota system away from them, somehow that quota system will have to be destroyed or disposed of, done away with, in order for us to sell products into Canada. And Canada is not going to step back and say; they are good guys. Let them sell it here. They are going to fight back. And they are going to fight back by doing away with the quota, letting the farmers produce milk. If they do that, they will be able to produce milk and take our markets away. We might sell into Canada for a short period of time and make money doing it. Because they will take the time, the quota system, get the price of milk down to our price of milk.

But the truth of the matter is that will not happen because Canada supports their agriculture up there and they will come up with a way to eliminate that quota system and allow their farmers to produce milk the same as we produce it here. If that happens, we can't compete with them. They have got better land, a longer growing season up there, and they have got everything that we have got. We will lose milk and supply it down here.

Furthermore, there is a company by the name of Spudo in Canada that is coming into the states that has bought -- well, four or five cheese plants. They have one right in Hinesburg, 20 miles from here, 15 maybe. Big cheese plant, modernizing and developing. In my opinion, the only reason they are down here buying the cheese plants is when the borders get opened up, they can bring milk out of this whole Quebec area right into this cheese plant in Hinesburg and produce cheese to sell nationwide with Canadian milk.

I think WTO has to take a real close look at how we are fighting all of their regulations and their negotiations. We have appealed it two or three times. And we have lost them all except the last one. The last one I guess we won. But it's a tough issue, it really is, to deal with. But the long term of it all is I'm afraid of my market and the loss of it.

MR. SCHUMACHER: I think this is -- I appreciate the last few years we have heard from the industry the reverse and today we are hearing a little different view on the Canadian market. So, Paul and I and Bob will take that back and I think what we want to do is, Bob Arlington and others of the economists, is perhaps do a little more detailed study on what would occur if we were able to get access to that Canadian market if what you're saying would occur. We need some analysis and deepen that a little bit. And I appreciate that. We will do that analysis. Carol Goodloe is here. Continuing carefully to do that.

Today we are under pressure by the dairy industry to be a lot tougher on the next round of WTO and get that market dumped in Canada. We have heard a couple testimonies today that maybe we should change the policy, but caution. So, I think we need to do some analysis and I appreciate your coming to us.

MR. PERCY: I realize it's a very complicated issue. It's not only complicated in Canada, it's complicated with the European common market. The whole thing is very complicated. And as a per se farmer, I don't know enough about it really to make a lot of sense. But one thing I do know is long term if you open up this milk supply freely between Canada and the United States, more milk will flow out of Canada into my market than we will ever think of selling in Canada. There's only 30 million people in the whole country. It isn't a very big market. They can produce milk enough for probably Quebec to supply the whole 30 million plus my market. There is a tremendous amount of land up there, a tremendous amount of potential to produce milk.

MR. SCHUMACHER: Ron and Bob and -- for many, many years -- don't know -- (inaudible.)

MR. PERCY: I will be honest with you. I'm one of the few that talks about that. In this case we are going to have a big expansion of the market. I don't believe that, for one, long term it's going to work the other way. Because the Canadian government -- and also maple producers, they can produce maple syrup in Canada cheaper than down here and sell it to us guys. And they will produce milk and cheese and all them products up here cheaper and ship it down here if them markets ever open up. They have free access, they are not under our quota system and they can just produce the volumes that come out of Canada. And I believe that Spudo, who owns this cheese plant here in Hinesburg, along with four or five others across the country -- it's not just this one. I believe what they are thinking is; here's a cheese plant right now Agrimart is selling milk. But long term, if  they ever open up the borders, they have got an instant market for milk. That cheese can be sold across the United States to every producer in this country. That's my thinking on the whole thing.

MR. GRAVES: Paul, I appreciate your comments on this. I share some of the same concerns I've heard expressed from others. I think we need to, as Secretary Schumacher suggested, do a pretty careful analysis of that. There is probably the potential for some short-term gain initially. But I do share some of those same concerns that you have.

I would also, on behalf of the others on the listening panel up here, encourage any thoughts on how we deal with that issue from a trade and world trading standpoint. On the one hand, we know that we have to advocate for a position at this point that moves approximately a third of our U.S. agricultural production into export markets because of production levels in this country. On the other hand, you advocate for protectionism from our northern trading partner. We have the same issue up in the upper midwest, the Dakotas, in that area. We welcome any thoughts and inputs that you have on the entire picture.

MR. PERCY: I know it's a very complicated issue. There is a lot to it. I'm not sitting here looking at it from just the point of my market. I am very concerned about the fact that milk won't flow north. Milk will flow south. We won't be shipping up to Montreal. Milk will be come from Montreal down here, is the direction. I'd bet my farm on that.

Thank you.