Mr. GLICKMAN. Well, he is out of government now so he will not care, but you do talk about the power of the Secretary of Agriculture.

Ms. LEUCK. Exactly.

Mr. GLICKMAN. One of the interesting things is that most people do not really recognize this but the way events have turned out the Secretary of Agriculture or the Department of Agriculture has really evolved into a Federal grain board. For all practical purposes no sales are made overseas without Uncle Sam deciding when, under what circumstances, at what price. Now, this may be not all that bad but it is ironic, indeed, that the administration of a conservative President we have created a Federal board to sell farm commodities overseas just like the Canadians have and the Australians have. And one of my concerns is if we have that—and we may need it to compete with the Europeans, there may be no other way to deal in the world—we have to make sure that it operates fairly and openly and does not operate in secret because I do not want another HUD scandal on the hands of the Department of Agriculture, theoretically.

And it is true the Secretary of Agriculture has much greater power than he did 20 or 30 years ago. That is absolutely true. Congress, to some extent, gave him that power because we did not know how to deal with surpluses that we had. We said, OK, here you issue PIK certificates or you use the Export Enhancement Program and they have done a pretty good job of getting the surpluses down but we have given them enormous power. That is true. And when we rewrite the 1990 farm bill, we need to examine are there limits to that power and should they be put into the statute because we can have a good Secretary and then you can have a bad Secretary who could take that power and use it to the detriment of farmers so the section you did not read I think was an excellent section.

MS. LEUCK. May I read it now from the beginning?

Mr. GLICKMAN. No, no.

Ms. LEUCK. I was just kidding.

Mr. GLICKMAN. Mr. Jontz.

Mr. JONTZ. Let me also thank all the witnesses for excellent statements. I am sure with each of the panels this morning we could spend all morning asking questions and listening to the answers but time just does not allow that.

I will ask one question. Also, in Representative Leuck's statement following the portion of her statement that you read Mr. Chairman, is a statement that a profit provides farmers with the ability to upgrade and improve the farm unit and I would like to observe, I think that is a very important part of the ability of American agriculture to be so competitive, so productive, is that we have seen continual improvement.

Dean Thompson, I guess what I want to ask you is this, do you have any concern about a backlog of unmet investment needs that may be accumulating in this country when farmers are unable to purchase machinery they need or unable to make conservation improvements that they need, they are unable to experiment with alternatives that may help them to improve what they are producing? Do you have any fears that we are accumulating a backlog of

unmet needs in this area which may hamper our ability to be competitive on a long term basis?

Mr. THOMPSON. Congressman, there is no question but that in the early to mid-1980's there accumulated a tremendous backlog of unmet investment needs in American agriculture. This was passed all the way through the farm input firms. We saw our farm machinery industry operating at 10 percent of capacity in some years. So clearly we used bailing wire and whatever it took to keep the machinery we had together as we rode out the depressed conditions from 1983, 1984, through 1985. But we have to remember that in the last 2 years, both 1987 and 1988, we had record high net cashfarm income and by a substantial margin, particularly in 1987. This was in part the result of the large deficiency payments that were made and partly the result of the tightening of the market that occurred in 1988 and the resulting stronger prices. As a result farmers were able to pay down debt, and we also saw farm machinery sales start to move again. Obviously, we have not caught up yet completely, but if we have another couple of good years, I think we will be clearly out of the woods. And we are doing a heck of a lot better today than we were 3 years ago.

Mr. JONTZ. Do the increases in cost of production which I cited in my testimony give you some reason for concern that the fact with the declining prices and increase in cost of production, this change in climate which you have correctly identified in this last couple of years may be gone in the near future? Is that a concern of yours because I am troubled by the fact that when we, in the course of the implementation of the 1985 farm bill, throughout that-the early years at least, all the costs of production were going down and now that is turned around and the costs are going up. To the farmer, as I said in my opening statement, profit is the bottom line and if costs of production are going up, then that eats up profits pretty quickly and that backlog that we talked about will continue. Is that a concern of yours?

Mr. THOMPSON. I do not think that we should expect anywhere near as bad conditions as we saw in the mid-1980's. I do not think we will see as good years in 1989 or 1990 as we had in 1987 and 1988. Those were record high net cash-farm income years and by a very substantial margin, well over a 10-percent increase in 1987 over the previous year-or over any previous record. And so while we will not match the maximum we ever had, I still think there is going to be money to be made in farming. Clearly, the cost of production will be modestly higher, and farm prices and deficiency payments will be modestly lower. But I think we will still be in a money-making business for the bulk of the people who are in farming as the principal source of their family income. I expect that there will be a margin of profitability to provide sustainability and the opportunity to reinvest.

Mr. JONTZ. I hope that you are right. Thank you very much.

Ms. LONG. Thank you, Mr. Chairman. I do not have any questions but I do want to address one of Senator Wolf's comments regarding rural development and the responsibility that we have in developing policy in addressing the problem of rural development. I have the privilege of sitting on the Agriculture Subcommittee on Conservation, Credit, and Rural Development and I think you will

be pleased to know that we have been holding a series of hearings in Washington and a large number of people from diverse backgrounds from rural areas have been testifying before the subcommittee and we will certainly be taking their concerns as well as your concerns into account as we are shaping policy for the 1990's, so I do want you to know we are working on that. We recognize that a healthy rural community is a very important part of our Nation's economy and social fabric and we are addressing that. Thank you.

Mr. GLICKMAN. I want to thank the panel for their excellent testimony.

Our next panel is Mr. Mike Hacker with Weaver Popcorn Co., Mr. David Kuk with the Indiana Farm Bureau Co-op, Inc., Mr. Roy Johnson with Super Crost Seeds, Mr. Joe Johnson, general manager of Erny's Fertilizers, and Mr. Ben Yantis, president, Yantis Implement and Yantis Farms, Logansport, Indiana. Thank you gentlemen all for coming today.

As I said to the first series of witnesses, your statements will all appear in the record if you have written testimony, so you may feel free to summarize your statements if you wish. And I think we will start, as I said, Mr. Hacker, Mr. Kuk, Mr. Roy Johnson, Mr. Joe Johnson, Mr. Yantis, and then we will go to questions and Mr. Hacker, why do we not go ahead and start with you.

STATEMENT OF MICHAEL A. HACKER, FIELD PRODUCTION MANAGER, WEAVER POPCORN CO., INC.

Mr. HACKER. Thank you very much. The Weaver Popcorn Co. is a family owned business that has been in the industry for over 60 years. Currently, we supply 25 percent of the total world's supply of popcorn which makes us the leading popcorn company in production in the United States and the world itself. We grow popcorn in 11 States from Ohio to Colorado and so we cover a very wide

area.

Popcorn is a crop that we contract on an annual basis. Agronomically it is very similar to field corn in its production and so that makes it a very logical crop that it replaces when we go out and contract with a grower. That kind of leads me to the first point which is an issue that has already been heard I think this morning four times and that deals with base acres for field corn and maintaining that base.

Popcorn is a nonprogram crop and does not contribute to base acres. Even though it is more profitable on a per acre basis than a comparable field corn crop, a grower is reluctant to replace those field corn acres because it will reduce his base acres. Psychologically he needs to maintain that base with the way the program is now designed.

This situation is the same for all nonprogram crops, that the competition with field corn is not so much from the payments that it is receiving today but for the psychological effect of maintaining

that base.

With that in mind, our suggestions would be to allow nonprogram crops to maintain a grower's field corn base if that is what he is replacing with the nonprogram crops. Loans and ARP payments

would apply to field corn actually planted. No payments would be paid to nonprogram crops. Would require a grower to have a predetermined percentage of cropland set aside, the same for all program participants, and it must be available for all nonprogram crops-not just popcorn but vegetable crops and whatever the situation might be. We cannot isolate certain specialty interests.

The benefits of this is we would stop penalizing a grower for reducing his field corn acres when he grows a nonprogram crop, which ironically is exactly what the farm program is trying to do in the first place.

It would decrease Government payments because of fewer acres eligible for subsidies.

It would allow the free market to determine what crop he grows. As a contracting company, we would still have to compete against other alternatives that a grower has, including field corn.

This will allow the grower to benefit from any number of opportunities he might have from alternative crops and not decrease his base acres. The second area is timing when the program is announced. The majority of all contracts for specialty crops, including our own, are recontracted on an annual basis, between December and March. For us as a company to develop a contract to take to the grower, it is imperative that we know what the program is going to be, and for a grower to make a decision on what he will do with that program crop it is also very important that he knows what the program is so he knows what his set-aside is and knows what other intricacies might be involved.

What we would suggest is that the program is declared in the October/November area of each year and is stuck with it.

This allows the grower adequate time to make fertilizer, lime, and cropping decisions at an early date.

A grower will be able to evaluate the benefits of a contract crop early enough to make intelligent decisions about how it will fit his operation.

Contracting companies will also be able to develop their contracts early enough without fear of being caught by a twist or addition to the farm program in February and March.

The third point is awareness of programs for nonprogram crops. In late February of last year, we became aware of a little-known provision in the farm program that could have had a large impact on popcorn production, as well as other nonprogram crops. The problem is the directive was delivered on December 2 to the ASCS offices and apparently buried into their files.

It was designated as notice PA-1258, and stated basically that: Using Other Non-Program Crops for Credit Towards Planted and Considered Planted. For 1989, other nonprogram crop acreage up to 20 percent of the permitted acreage may be credited towards planted and considered planted if the producer grew at least 50 percent of his field corn or did not designate CU acreage for pay under the 0/92 or 50/92 provision.

With our inquiries to the ASCS office about the proposal, no one was aware of it until we pointed out the notice number that was given to it, in which case they did dig it out of their files and they read it, and they all agreed it was part of the program.

The discouraging thing is that 3 months had elapsed from the time that it was officially written into the policy before anyone

knew about it, even major ag news services and periodicals had very little reports on the provision.

We would suggest the development of mailing lists of contracting companies that deal with nonprogram crops that would be interested in hearing provisions on the Farm Program.

We would also like to have news releases that deal with nonprogram crops and their relationship with the Farm Program.

And include contracting companies in policy discussions as how the effect of proposed legislation would affect specialty and nonprogram crops.

The benefits are very obvious. It would raise awareness, and the knowledge, and the information would promote program benefits and understanding to all growers and contracting companies.

Allow all growers equal access to legislative information to benefit equally from its results.

And promote farm programs so that they are being utilized to the fullest.

The fourth area is very brief. Treat nonprogram crops alike. We feel it is vitally important to treat all nonprogram crops equally in respect to cropping status concerning the farm programs. To involve certain speciality crops in one program and not others could be devastating to prices or amounts produced, depending on which side of the fence that they were on.

Thank you.

[The prepared statement of Mr. Hacker appears at the conclusion of the hearing.]

Mr. JONTZ. Thank you. Please proceed.

STATEMENT OF DAVID D. KUK, EASTERN REGION MANAGER, INDIANA GRAIN DIVISION, INDIANA FARM BUREAU COOPERATIVE ASSOCIATION, INC.

Mr. KUK. Good morning. My name is David Kuk, eastern region manager, Indiana Grain, a division of Indiana Farm Bureau Cooperative Association, Inc.

Thank you for inviting our cooperative to testify before the House Agriculture Subcommittee on Wheat, Soybeans, and Feed Grains.

Our cooperative system is owned by over 60,000 farmers and we, as a cooperative provide farm inputs and markets grain for 8 out of every 10 farmers throughout the State of Indiana.

The Food Security Act of 1985 has been important legislation in improving the health of our farm community, as well as improving the financial condition of the infrastructure that supports it.

The ability of our farmers to compete and succeed in a world market is tied heavily to U.S. agricultural policies. At times, these policies have been restrictive, as was the case in the late 1970's and early 1980's. More recently, through the 1985 farm bill these policies have been conducive to enhancing the export opportunities for American farmers.

With the success of the Food Security Act of 1985 also comes some concerns. Few people would question that worldwide demand for foodstuffs is growing. The central question then becomes,