S. HRG. 98-425-PT. 2 TOWARD THE NEXT GENERATION OF FARM POLICY HEARINGS BEFORE THE JOINT ECONOMIC COMMITTEE AND THE SUBCOMMITTEE ON AGRICULTURE AND TRANSPORTATION OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-EIGHTH CONGRESS FIRST SESSION PART 2 JUNE 14, 16, 22, AND 23, 1983 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 26-386 0 WASHINGTON :1984 JOINT ECONOMIC COMMITTEE (Created pursuant to sec. 5(a) of Public Law 304, 79th Congress) SENATE HOUSE OF REPRESENTATIVES ROGER W. JEPSEN, Iowa, Chairman LEE H. HAMILTON, Indiana, Vice Chairman WILLIAM V. ROTH, JR., Delaware GILLIS W. LONG, Louisiana JAMES ABDNOR, South Dakota PARREN J. MITCHELL, Maryland STEVEN D. SYMMS, Idaho AUGUSTUS F. HAWKINS, California MACK MATTINGLY, Georgia DAVID R. OBEY, Wisconsin ALFONSE M. D'AMATO, New York JAMES H. SCHEUER, New York LLOYD BENTSEN, Texas CHALMERS P. WYLIE, Ohio WILLIAM PROXMIRE, Wisconsin MARJORIE S. HOLT, Maryland EDWARD M. KENNEDY, Massachusetts DAN LUNGREN, California PAUL S. SARBANES, Maryland OLYMPIA J. SNOWE, Maine BRUCE R. BARTLETT, Executive Director JAMEs K. GALBRAITH, Deputy Director SUBCOMMITTEE ON AGRICULTURE AND TRANSPORTATION SENATE HOUSE OF REPRESENTATIVES JAMES ABDNOR, South Dakota, Chairman OLYMPIA J. SNOWE, Maine, Vice Chairman WILLIAM V. ROTH, JR., Delaware GILLIS W. LONG, Louisiana LLOYD BENTSEN, Texas CONTENTS WITNESSES AND STATEMENTS TUESDAY, JUNE 14, 1983 Jepsen, Hon. Roger W., chairman of the Joint Economic Committee: Opening Page statem en t ....................................................................................................................... 1 Amstutz, Daniel G., Under Secretary, International Affairs and Commodity Program s, Department of Agriculture................................................................... 5 Lighthizer, Hon. Robert E., Deputy U.S. Trade Representative............................ 19 Wallis, Allen, Under Secretary of State for Economic Affairs .............................. 36 THURSDAY, JUNE 16, 1983 Abdnor, Hon. James, chairman of the Subcommittee on Agriculture and Transportation: Opening statem ent........................................................................ 65 Urbanchuk, John M., director, International Agriculture Service, Wharton Econometric Forecasting Associates, Inc., Philadelphia, Pa............................... 67 Deaton, Brady J., associate professor, Department of Agricultural Economics, Virginia Polytechnic Institute & State University, Blacksburg, Va.................. 89 WEDNESDAY, JUNE 22, 1983 Jepsen, Hon. Roger W., chairman of the Joint Economic Committee: Opening statem en t....................................................................................................................... 137 Olson, Hon. Allen I., Governor, State of North Dakota, and chairman, Soil Conservation Task Force, National Governors' Association................................ 139 Berg, Norman A., Washington representative, Soil Conservation Society of A m erica, W ashington, D .C ......................................................................................... 148 Gray, Robert J., director, policy development, American Farmland Trust, W ash ington , D .C ........................................................................................................... 183 Sampson, Neil, executive vice president, National Association of Conservation D istrict, W ashington, D .C ........................................................................................... 208 English, Burton C., staff economist, Center for Agricultural and Rural Devel- opment, Iowa State University, Ames, Iowa........................................................... 233 Batie, Sandra S., associate professor, Department of Agricultural Economics, Virginia Polytechnic Institute & State University, Blacksburg, Va.................. 245 Lee, Linda K., assistant professor, Department of Agricultural Economics, Oklahoma State University, Stillwater, Okla ........................................................ 267 Crosson, Pierre, senior fellow, Resources for the Future, Washington, D.C........ 283 THURSDAY, JUNE 23, 1983 Jepsen, Hon. Roger W., chairman of the Joint Economic Committee: Opening statem ent ....................................................................................................................... 307 Naylor, Frank W., Jr., Under Secretary, Small Community and Rural Devel- opm ent, Departm ent of Agriculture......................................................................... 310 Duncan, Marvin, vice president and economist, Federal Reserve Bank of K ansas C ity ................................................................................................................... 322 Irwin, George D., Chief Economist, Farm Credit Administration.......................... 344 Olson, Thomas H., president, Lisco State Bank, Lisco, Nebr., and chairman, Agriculture-Rural America Committee, Independent Bankers Association of A m erica .......................................................................................................................... 357 (III) SUBMISSIONS FOR THE RECORD TUESDAY, JUNE 14, 1983 Page Abdnor, Hon. James: Opening statement .................................................................. 4 Am stutz, Daniel G.: Prepared statem ent .................................................................... 10 Brock, Hon. William E., U.S. Trade Representative: Letter of response to a letter dated July 18, 1983, from Senator Jepsen and other senators regard- ing an export program for poultry and eggs........................................................... 64 Hamilton, Hon. Lee H.: Opening statement.............................................................. 2 Lighthizer, Hon. Robert E.: Prepared statem ent ................................................................................................. 20 Response to written questions posed by Representative Snowe...................... 62 W allis, Allen: Prepared statem ent............................................................................... 39 THURSDAY, JUNE 16, 1983 Deaton, Brady J.: Prepared statem ent......................................................................... 94 Jepsen, Hon. Roger W.: Opening statement ............................................................... 67 Urbanchuk, John M.: Prepared statement ................................................................. 72 WEDNESDAY, JUNE 22, 1983 Abdnor, Hon. James: Opening statement ................................................................... 138 Batie, Sandra S.: Prepared statem ent.......................................................................... 249 Berg, Norman A.: Excerpts from part 8 of hearings held before the House Subcommittee on Appropriations for Agriculture, Rural Development, and Related Agen- sies regarding the Payment-In-Kind program, released June 2, 1983 ....... 155 Prepared statem ent ................................................................................................. 158 Crosson, Pierre: Prepared statem ent ........................................................................... 289 English, Burton C. and Earl 0. Heady: Prepared statement .................................. 237 Gray, Robert J.: Prepared statem ent ........................................................................... 188 Lee, Linda K .: Prepared statem ent .............................................................................. 271 Olson, Hon. Allen I.: Prepared statement................................................................... 143 Sam pson, Neil: Prepared statem ent............................................................................. 213 THURSDAY, JUNE 23, 1983 Abdnor, Hon. James: Opening statement ................................................................... 309 Duncan, M arvin: Prepared statem ent ......................................................................... 327 Irwin, George D.: Prepared statem ent......................................................................... 349 Naylor, Frank W., Jr.: Prepared statement................................................................ 314 Olson, Thomas H.: Prepared statement, together with attachments..................... 361 TOWARD THE NEXT GENERATION OF FARM POLICY TUESDAY, JUNE 14, 1983 CONGRESS OF THE UNITED STATES, JOINT ECONOMIC COMMITTEE, Washington, D.C. The committee met, pursuant to notice, at 10:10 a.m., in room SD-124, Dirksen Senate Office Building, Hon. Roger W. Jepsen (chairman of the committee) presiding. Present: Senator Jepsen and Representative Holt. Also present: Robert J. Tosterud, professional staff member. OPENING STATEMENT OF SENATOR JEPSEN, CHAIRMAN Senator JEPSEN. The hearing will come to order. The subject of today's hearing is agricultural trade policy. Our witnesses today are: Daniel Amstutz, Under Secretary for Interna- tional Affairs and Commodity Programs, Department of Agricul- ture; Robert Lighthizer, Deputy U.S. Trade Representative, Office of U.S. Trade Representative; and Allen Wallis, Under Secretary for Economic Affairs of the Department of State. Ken Farrell of Resources for the Future appeared before this committee last week and characterized future agricultural policy as a "triangle of interests." I agree with Mr. Farrell's contention that future agricultural policies must be developed within a frame- work that explicitly recognizes both the mutual supportive charac- teristics as well as the inherent