Chairman Combest and House Agriculture Committee members, I am North Dakota Agriculture Commissioner Roger Johnson. Thank you for holding this hearing to review factors affecting domestic and international agricultural input prices.

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 has been 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.

Low prices and natural disasters, coupled with the continuing rise of farm input costs have created a very narrow window of profitability for many North Dakota producers.

North Dakota cash farm expenses, which include seed, fertilizer, fuel, repairs, feed supplies, feeder livestock purchases, and hired labor, have nearly doubled over the past ten years (Attachment 6). These statistics are alarming, especially when considering that fixed expenses and steep increases in fuel prices have not yet been taken into account.

Fuel prices have skyrocketed to record levels this year and are substantially increasing already high input costs for agricultural producers throughout the country. Full gas tanks aren’t an expendable option on farming operations – it takes fuel to plant, cultivate, fertilize, harvest and transport crops from farms to market.

I strongly urge Congress to closely investigate the extraordinary increases in gasoline and fuel prices. Increased ethanol production and use should also be encouraged. Congress and states should formulate policy, which encourages ethanol production and the production of other forms of renewable energy such as biomass and wind energy. I also urge the President to increase the oil supply by utilizing the Strategic Petroleum Reserve, which should serve to reduce fuel prices.

During the past decade, farm pesticide costs have more than tripled for North Dakota producers (Attachment 7).

The price increase in pesticides, in and of itself, concerns producers and aggravates the competitive disadvantage they face with Canada.

A study conducted by the United States Department of Agriculture last year confirms that for certain pesticides, American farmers pay 40% more than the cost of Canadian products with virtually identical composition, after taking exchange rates into account.

Farmers – especially in border states like North Dakota – are at a substantial competitive disadvantage with farmers in Canada. In our supposedly free trade economy, it is unfair that our producers do not have access to cheaper Canadian pesticides that are virtually identical to higher-priced pesticides marketed here in the U.S.

As you may know, I took action late last month and made available an EPA registration for the Canadian pesticide Achieveâ 80 DG so that North Dakota producers and chemical dealers could travel to Canada, purchase the product at a savings of approximately $6 per acre, and bring it back to North Dakota. We have been told that this action has resulted in more than 1000 trips to Canada by North Dakota farmers and dealers to purchase this product.

Zeneca, Achieveâ 80DG’s manufacturer, had registered the product with both the EPA and with the Canadian counterpart – PMRA. But Zeneca chose not to market Achieveâ 80DG in the U.S. Instead, it marketed the more expensive Achieveâ 40DG formulation.

Zeneca filed a complaint with EPA following North Dakota’s action, which, in my view, is based on technicalities and skirts the company’s main issue of concern – price. Zeneca has admitted that Achieveâ 80DG poses no health or safety concern when used according to label directions, and is, in fact, registered for use in the U.S. This fact alone highlights the absurdity of the plight faced by U.S. farmers who can’t access cheaper Canadian pesticides. North Dakota has responded to Zeneca’s complaint with EPA and will continue to work with the agency to make this process available in the future in other states and for additional pesticides.

Unfortunately, pesticide registrants have taken advantage of every loophole to maintain disparate pricing structures for products in North America. In this case, Zeneca’s use of the loophole was exposed.

While Congress may not be able to influence the rising costs of all farm inputs, this most certainly is an area where Congress can help.

Improvements must be made to the laws in this country that regulate pesticide use and registration so that federal government rules and regulations do not allow registrants to circumvent processes and exercise discriminatory pricing practices. EPA is obviously concerned with issues relating to the environment, worker safety, and food safety. But at the same time, the EPA should not allow chemical manufacturers to draw it in as a de facto participant in corporate price discrimination. I urge Congress to work with the states and EPA to resolve this issue.

Concerns regarding pesticide harmonization are not limited to North Dakota. A letter to EPA Administrator Carol Browner signed by myself and nine of my counterparts representing states bordering Canada regarding pesticide harmonization.

As the letter points out, EPA has made pesticide harmonization an agency priority; however, emphasis has been placed on harmonizing processes for new formulations and products. We urge EPA to continue working toward a "North American label" for products, but EPA and Congress must also recognize that at the heart of pesticide harmonization issues is differential pricing.

We urge EPA, as I urged you earlier today, "to work to identify, modify, or eliminate administrative and legislative roadblocks and loopholes that may allow registrants of pesticides, whether intentionally or not, to operate a dual pricing structure."

Disparate pesticide prices, high fuel costs, and other input factors are squeezing what little profitability is left out of agriculture. I urge this Congress to work with EPA to resolve harmonization issues and to formulate a national plan that deals with the high cost of fuel. Thank you for this opportunity to share North Dakota’s concerns.