Committee questions of the panelists?

Sheldon, did you have a comment?

CO-MODERATOR JONES: Yeah, Mr. Secretary, I wanted to talk to Mr. Pederson just for a moment. We, too, have the Karnal bunt problem that you mentioned. I just wanted to report to you through yesterday's testing, all of California, Arizona and Texas has been tested, there's been no findings of Karnal bunt in any of those three states.

What that does for us in California, with the exception of a small area in Blythe, under the most recent promulgation of the rules, the Imperial Valley and other wheat growing areas will be completely out from under the Karnal bunt wing or that mask of USDA Regulation. The bulk of Arizona's wheat growing area, as well, will be out from under regulations.

New Mexico is completely out, and I believe with the exception of San Saba County in Texas, where they found bunt two years ago now, there's a small, about as big as this room, I think, county in Texas that's regulated. But this crop here, there was no evidence of bunt or Karnal bunt in any of the three regulated areas.

So perhaps we've escaped some of that. There still is an issue with the Mexicali Valley free farm zone, but they're not recognizing Arizona, California zones as free farm. And certainly we need to work on that.

CO-MODERATOR LYONS: Thanks, Sheldon, for your comments. Well, then what I would propose to do, if there are no other questions -- Jim, excuse me.

ASSISTANT U.S. TRADE REPRESENTATIVE MURPHY: I just wanted to put one question to the panel. Not probably for answering now, but perhaps for later. On state trading, I know several of you mentioned to eliminate or discipline, it would be very useful if you could give us further your thoughts on what the disciplines should be, assuming that we're not successful in just eliminating them, which would certainly be a nice achievement if we could do it.

But assuming that we're on an option of disciplining here, it would be useful to have your suggestions as to what those disciplines should be composed of, what would you like to see in the way of disciplines? Transparency, of course, is one that we often hear, but are there additional -- well, even on transparency, to what degree, to what extent, what is it that we should assure that is transparent? And beyond transparency should there be additional disciplines on the activities of the STE's?

It would also be useful if you have any specific information on, shall we say, inappropriate behavior of STE's? You can imagine we're often in discussions with our Canadian and Australian friends on this issue, and indeed the Chairman of the Australian Wheat Board seems to make Washington a regular stop on his travel itinerary. I think we see him more than we see anyone else.

And we have some fairly spirited debates with Mr. Flugge. And he, of course, denies the various anecdotes, which we throw at him. And it would be useful if there's information of specific accounts of inappropriate behavior which we could throw at these good folks as we enter into these negotiations.

Thank you.

MR. PEDERSON: If I could respond just briefly. We, and I say we, the California Association of Wheat Growers put together a study and looked very closely at many of the issues and tried to, for ourselves, catalogue where all these areas are of concern. And we do have that and I believe that we can make that available to you.

You know, I drove up here today from about three hours south of here, and I got a bit tired of seeing Canadian grain cars at every stop. To the extent that, and I have no paper proof of this, but we've heard that there's barley coming into this state at $38 a ton. Now, that's not with the rail subsidy added to it, you know, so I'm not exactly sure what the final figures are for that, but we can't produce, you know, $38 dollar a ton of wheat here or barley. You know, it's impossible.

CO-MODERATOR LYONS: Craig, can you make that report available to the Committee?

MR. PEDERSON: As far as the other issues that we talked about, yeah. And I don't have the pricing, but word of mouth people are not really willing to step forward when they're purchasing barley at that price. It's a great deal and it's difficult to get that information. But on the other issues pertaining to the state trading enterprises, we will get that to you.

CO-MODERATOR LYONS: Any other questions?

USDA DEPUTY SECRETARY ROMINGER: Michael, which countries are the ones that are of most concern on the STE's for rice?

MR. RUE: Quite frankly, we're faced by a little bit of a different situation with the STEs. It is more regarding to the importing side, in that in the case of Japan, where they had a food agency, that it's sometimes dealing like with a black box, you're not too sure exactly what criteria are creating the results.

Naturally, we do face State trading on the export side with the Australians. Quite frankly, they don't seem to be as onerous as the wheat side. It is an advantage to them to be able to see all their marketing plans at one time, as opposed to here in California and in the balance of the U.S. where we're very competitive with each other.

But our biggest problem in the rice industry is on the purchasing side, quite frankly.

USDA DEPUTY SECRETARY ROMINGER: Yeah, that's what I thought. As far as Karnal bunt with Mexico, and that was an issue that we discussed at the binational meetings in Mexico City earlier this month, and we are continuing to press Mexico. We said we'll recognize your areas, but you have to recognize ours as well. And so we're going to keep pushing them to make sure that they follow through on that.

CO-MODERATOR LYONS: Okay.

Any other questions by the panel?

Okay. Well, thank you very much. We reconvene the listening session at 1:00 o'clock. I would encourage Panel number 5 to be prepared to begin at 1:00 o'clock.

Thank you.

(Thereupon the lunch recess was taken.)