Chairman Combest and House Agriculture Committee members, I am North Dakota Agriculture Commissioner Roger Johnson. Thank you for holding this series of field hearings to hear from farmers and ranchers on farm policy issues.

On behalf of North Dakota’s 30,500 farmers and ranchers, I appreciate the opportunity to submit this written statement.

North Dakota is home to some of the most productive agricultural land in the world. Our state’s economy is driven by production agriculture and related agricultural businesses. We lead the nation in the production of durum and spring wheat, barley, sunflowers, pinto beans, dry edible beans, flaxseed and canola. Unfortunately, production without adequate prices does not create profitable opportunities in agriculture.

Our two largest agricultural industries – wheat and cattle – have brought in low and negative returns to producers in recent years. (Attachments 1 & 2) The average net return per acre of wheat has been negative for three years in a row.

The outlook for profitability in agriculture continues to be bleak again this year. The ND Extension Service 2000 crop budgets show weak and negative cash flow and profitability for many crops in North Dakota (Attachments 3, 4 & 5).

The sustained period of low prices across most agricultural commodities was piled on the back of a rash of natural disasters that have plagued North Dakota farmers in the past several years. Bad weather, severe flooding, and crop diseases are just some of the things that Mother Nature has handed North Dakota farmers.

While the number and intensity of these natural disasters isn’t considered "commonplace" in North Dakota, the effects on the producers took a quick and devastating toll on our agricultural economy.

In 1998, we responded and formed a commission to study these impacts and recommend action for a healthy, strong agricultural sector in North Dakota.

The resulting vision is that North Dakota becomes the trusted provider of the highest quality food in the world, with prosperous family farms, thriving rural communities, and world-class stewardship of resources.

This vision spawned goals and objectives with recommendations for action, many of which can and should be done right here in North Dakota and in other states.

While these recommendations have the potential to provide economic opportunities for producers, they will not be effective in the absence of a federal farm policy that provides a basic, necessary safety net for producers in this country.

The results of the North Dakota Rural Life Poll, which was conducted by the Center for Rural Studies and released late last year, indicate that North Dakota farmers overwhelming (93%) favor the re-establishment of a safety net in agriculture. Just over 60% of those polled favor repealing the 1996 farm bill, and approximately 75% of the respondents favor raising marketing loan rates to adjust to changing market conditions. The results of this poll confirm the magnitude of the farm crisis and what I, and others, have been telling Congress for years. We need a change in farm policy.

While Freedom to Farm isn’t entirely to blame for the current crisis we face in agriculture, it certainly hasn’t provided the safety net we need to protect producers in times of economic downturn and crisis. Freedom to Farm was developed to "wean" producers from the federal government. I didn’t agree with that concept in 1996 and I believe the majority of agriculture today agrees that not only do we need to continue farm programs, but we need to strengthen them.

The planting flexibility allowed under Freedom to Farm is one component of the farm bill that has been well received. But, planting flexibility really only works when other more profitable alternatives exist for farmers to consider. The problem right now is the market, for which farmers are supposed to plant, isn’t providing signals to grow anything. It is telling them to abandon farming, not to just grow something else.

So, what is driving planting decisions this spring? I believe that federal loan rates are playing a big role in the farmers’ decisions. The loan rates mandated by Freedom to Farm provide an artificial disincentive to plant small grains, and an artificial incentive to grow oilseeds and farmers have responded. In North Dakota, wheat and barley plantings have decreased since 1996, while soybean plantings have increased dramatically during the same time period (In addition to equalizing loan rates, subsequent farm policy must be developed to create a counter cyclical, targeted program that protects farmers in times of sustained low prices.