going to be sold, under what conditions, how much. It is not done by the private sector anymore, at least with respect to oil, seeds, and grain. And maybe we need that. Maybe in a modern world, we are going to face the Europeans in 1992 and we have a lot of problems making sure that we have market access. But let us be honest about it, we have created a super powerful Department of Agriculture Federal Grain Board in this country. It is selling our products. And what we have to make sure is it is doing it fairly, there are no secret deals, there are no preferential arrangements with certain companies and so we do intend to do oversight and examine that to make sure in fact, that is the case.

I have been criticized because I have had some oversight hearings on the Export Enhancement Program. But do you know that we found out that the Department of Agriculture gave export bonuses to RichCo Grain to sell grain overseas. RichCo Grain, its owner is Marc Rich, the largest tax evader in the history of the United States. He is in Switzerland. He is a fugitive from justice. He owes this country $200 million and we gave his company bonuses to help move grain overseas. Now, it was negligence, it was probably an oversight. But all I am saying is, if we are going to have a Federal Grain Board in Washington, we had better make sure that they know what they are doing and that they do not make mistakes like this. One thing I would ask you, you said that we have to improve our relationships between the commodities. Some argue that to do that, we have to reduce the corn target price because it is out of line with respect to the wheat target price, the cotton target price and the rice target price. Do you have any comments on that, any of you?

Mr. TRIER. Well, I would only say that out of line in compared to what?

Mr. GLICKMAN. Compared to the cost of production. What is happened is that-now, some of my colleagues down South say that the corn target price as it relates to the cost of production is higher than wheat, cotton, rice, or the other feed grains and it has encouraged people to plant corn as opposed to the other commodities. Now, maybe the others are too low. But I just wondered if you might respond to that?

Mr. TRIER. My only point here is that one of our colleagues here today has a report from Ohio State University just done recently here, the cost of production of corn in Ohio is $2.53 a bushel. I do not see how we can lower the target price any more.

Mr. GLICKMAN. Well, I am not advocating that. I want to get your response for the record so when we go back, I want to go back and tell people what the folks in corn country have to say about it. Does anybody else have any comments on that? Yes, sir, Mr. Lash.

Mr. LASH. Just the same thing as he says. It does cost us more to put out an acre of corn than it does wheat or soybeans but we have to put it out to hold our base.

Mr. GLICKMAN. OK. Well-yes, sir.

Mr. NASH. Mr. Chairman, distinguished members of the committee, I was the colleague from Ohio that brought these production figures. I am sure that the same type of production figures are available from Purdue, your land-grant university, but when you

look at costs and this is put out by Ohio State University Farm Management Extension Service and they show that to produce a 90-bushel yield of corn that your cost per bushel is $2.77 a bushel, to produce 120 bushel yield per acre that your cost is $2.53 a bushel, to produce 150 bushels, the cost is $2.46. And when you look at the loan level of less than $2 a bushel considerably, you can see that farmers are attempting to produce at less than the cost of production.

When you carry it one step further, and again I am sure that Purdue, if you would like to have the Indiana figures, are parallel to these, when you carry it further with a production on soybeans for 1989, they projected a 30-bushel yield would cost you $7.07 a bushel to produce, a 40-bushel yield would cost you $6.28 a bushel to produce, a 50-bushel yield would cost $5.84 a bushel. And then we look at a loan rate with no other programs for soybeans whatever, a loan rate of $4.67 per bushel and you say, how in the name of goodness can you fill this building with 4-H club leaders and young 4-H people and how could you have an FFA? They have already changed the name of FFA. They have dropped the future farmers part of it, which I am sure you are aware of, and if you are going to have young farmers continue to come into agriculture, then you have to have a realistic income, at least they have to expect to get the cost of production plus just a small profit

Mr. GLICKMAN. Well, I would say that in my judgment, the 1990 farm bill ought not to reflect further reductions in the target prices, period. I think that given production increases, production expenses are increasing, we probably ought to go the other way but I do see, as Mr. Trier talked about, we are going to look at every commodity and examine whether they are in proper relationship with each other because if they are not, then you unnecessarily interfere with the marketplace and you encourage people to plant one kind of crop versus the other based upon planting for the target price which may not reflect the relative values of the commodities. It is just a sensible thing for us to look at as we look at that new farm bill.

Thank you very much. Mr. Jontz.

Mr. JONTZ. Let me also thank each of you for your statements. Mr. Lash, in your testimony you said that it is important to stay on a course that will move us closer to the goal of a market driven and market oriented agriculture. In theory, I do not think there is much disagreement probably about that but tell me what you mean by that when it comes to the question of target prices. Do you think target prices should be cut further as the 1985 farm bill provided?

Mr. LASH. Yes, I think we should-I think we should get to a market-oriented market. It always seems like when you have the target price or loan rate, that sets your price of your grain. And if we can get rid of the grain, then we do not have anything to hold our price down. Once we lose our markets, it is very difficult to regain them. It always has been. We lost our markets to South America. We embargoed our soybeans a few years back. And then, of course, we lost a lot of our markets to Russia, our wheat markets to Russia. We embargoed wheat. We have had a terrible time

getting them back and I think that has probably been one of our big problems with our grain markets today.

Mr. JONTZ. So you would recommend a continued reduction in target prices?

Mr. LASH. Yes.

Mr. JONTZ. On what basis? How do you feel that reduction should proceed? On what basis do you think it should proceed? Maybe you do not want to offer any recommendations-but if you do.

Mr. LASH. No, I do not.

Mr. JONTZ. Mr. Trier, in your statement you note that NFO has called for the development of international trade agreements with other major producing nations on a commodity basis as an alternative to a single GATT agreement on agriculture and other foreign trade issues. Can you expand on what you see as the benefits of that approach to our international trade agreements?

Mr. TRIER. I am obviously not an expert on international trade but I do understand a little about it. Originally, the GATT agreements did not even include agriculture. GATT trade agreements were set up for manufactured goods and products and only in the latter years did the agricultural community come into that area. There are separate agreements set up in, for instance, sugar, tea, and some other specialty crops. We need to negotiate with the major producing countries in the world on a commodity by commodity basis, not on a total agreement where we are thrown in with television sets and whatever.

Mr. JONTZ. And what should be the objective of those negotiations?

Mr. TRIER. The objectives should be a managed supply for world needs, managed production, and a realistic price where we can sell our product for a profit.

Mr. JONTZ. A better balance between supply and demand on a world basis?

Mr. TRIER. To put it simply, a supply management world wide. Mr. JONTZ. So that other nations would be engaged in supply management programs in the same sense that we already are?

Mr. TRIER. When you look around the world, the agricultural community is on the bottom of the economic ladder. I do not care whether you go to the United States, Ethiopia, South America, agriculture is on the bottom of the economic ladder and that should not be. We need supply management to bring agriculture up with the rest of the economy.

Mr. JONTZ. And if we could get those prices up, then there would not be any need for subsidies?

Mr. TRIER. Right. It would be a lot less costly for the American taxpayer. If we can get our price out of the marketplace, if we can get rid of the deficiency payment, that farm bill instead of costing you $30 billion back in 1985 or 1986 will be down to where it was back in the 1970's.

Mr. JONTZ. So instead of negotiating through GATT to eliminate subsidies, you recommend that we negotiate on a commodity basis with our major competitors to get supply and demand in better balance so that prices are where they should be?

Mr. TRIER. Yes, sir.

Mr. JONTZ. I think I will halt my questions at that point. I do want to welcome Mr. Nash to our State. We do the best we can in Indiana to look after the concerns of Ohio farmers on the Agriculture Committee since you do not have a member and we are happy to have you over here today and appreciate your leadership in agriculture.

Mr. GLICKMAN. Thank you. Ms. Long.

Ms. LONG. Thank you, Mr. Chairman.

Mr. Nash, I would like to echo Congressman Jontz' welcome to you. It is certainly a privilege for us to have you in Indiana and I am especially privileged because you are in my congressional district.

I would like to ask you, Mr. Basting, to submit your figures, your statistics on the cost of corn production in Ohio for the record because I think it is important for us to have that in the record. [The material follows:]

1/ Does not include costs or returns for storage of grain. 2/ Assumes only maintenance application of fertilizer needed, continuous corn, 3.8% O.M., 20 C.E.C., and soil test values of 45 lbs. P/A and 300 lbs. K/A. 3/ Includes supplies, utilities, soil tests, small tools, crop insurance, etc. 4/ Interest on all variable costs, except drying and trucking, for 7 months at 10% interest.