MR. HOWRIGAN: Good morning. I am Howard Howrigan, dairy farmer from Fairfield, Vermont and President of the St. Albans Creamery, a dairy cooperative with approximately 600 members located in northern Vermont, New York and New Hampshire. I was elected Chairman of the Dairy Research Board at the last meeting and interested in research and development of new dairy products. We also do a lot of research into the nutritional and medicinal value of dairy products. We have got six research centers located in the United States, and the northeastern one being here at UVM.

St. Albans is also a member of the National Milk Producers Federation, and I serve on the U.S. Dairy Export Council and in the area of trade policy I work closely with those organizations.

I'm very pleased and honored to appear before you today to discuss with you the upcoming multilateral negotiations with the WTO and to stress the importance of export dairy products to the U.S. dairy industry. Over 96 percent of the world's population live outside the United States and are a very major market for our growing dairy industry. Our export dairy products are desperately needed by the third world countries to improve nutritional needs.

Let me start by underlying the importance of the U.S. dairy industry in U.S. agricultural and the economy as a whole. Dairy is the second largest agricultural commodity sector in the U.S. It generates income in excess of $20 billion per year and retail expenditure of about $70 billion a year.

In Vermont alone, dairy farmers produced 2.615 million pounds of milk in 1998, second highest apple production of any state in the country. This milk was worth approximately $400 million and much of this money comes from the out-of-state sales of Vermont dairy products. This is generator income and has a real impact four to five times greater than its initial value to our local economy. The dairy industry represents 6.3 percent of the state's economy and 85 percent of the agricultural economy in the State of Vermont.

Despite the size, the dairy industry is a relatively newcomer to international trade. Yet, our export share has been growing in recent years. One of the primary reasons for U.S. dairy's slow and difficult emergence internationally has been the fact that dairy is one of the world's most protected and subsidized industries in other countries.

The European Union, Canada and Japan -- some of the most important dairy markets -- are able under their WTO commitment to impose tariffs at the rate of over 100, 300 and 500 percent compared to less than 100 percent here in the U.S. This is just an example of the huge disparity between the U.S. and its trading partners.

We are aware that the U.S. dairy industry has much to gain from successful negotiation but I cannot stress enough to this administration that the dairy farmers are going to lose future growth capacity if an incomplete or poorly balanced agreement results. I don't think I can stress strongly enough that we can't go for an early harvest in the process. We must keep dairy part of  the packet. We in agriculture are extremely concerned about the administration's plans to support a round of negotiations that would accommodate early agreements in other sectors. I understand that some actions have been taken with respect to the language presented in Geneva. I can assure you again, that's not enough. We need more.

Mr. Undersecretary, we are deeply concerned that USDA is not speaking up on this issue. We urge you to reconsider the administration's plan again. An early harvest concept, if approved, will significantly hurt agriculture interests in the next round and this is simply not acceptable.

With respect to timing, the U.S. dairy industry strongly encourages the termination of the new round of negotiations in no more than three years. We would like to see dairy export subsidies be gradually eliminated in no more than five years, starting no later than 2002. The elimination of subsidies is categorically the first priority of dairy farmers in America. We strongly believe that it should also be the U.S. priority for the upcoming WTO negotiations so dairy farmers can play with anybody.

We support the U.S. government position to tighten the rules on domestic support to ensure that such programs do not encourage excess production that distorts trade. However, we strongly believe that disarmament cannot be unilateral. We cannot afford to leave dairy farmers at the mercy of European government outlays. Failure to bring the EU domestic support under control will significantly undermine the accomplishment in reducing export subsidies.

We would also caution the administration about circumvention of WTO commitments. Agriculture, in particular our industry, cannot afford the time nor the resources to bring other countries into compliance.

MR. ALLBEE: Sorry. You're going to have to summarize. Are you almost done?

MR. HOWRIGAN: Well, I again would just say I'm pleased to be here and honored that you could come here and listen to some of our concerns, but I reinforce -- (inaudible) with the dairy products and agricultural products in the U.S. from the U.S. Thank you.

MR. SCHUMACHER: Thank you. You and I've known each other for a long time. I will take and bring back, and I think Paul will -- we'll hear a lot more testimony today, but clearly my sense is from you and your colleagues, no early harvest. Hearing that loud and clear, that agriculture must be part of the (inaudible) also in Canada, we bring that issue, we are doing a little bit better on exports. I think until we get our hands around EU dairy subsidies, which is just huge in Europe, we will not be moving -- competing against the European taxpayers. We are using the dairy export incentive program at full capacity, but just simply difficult competing, one, with the market access to Canada, two, the desk trading in the Dairy Board, but most importantly, the European taxpayer slashing of both export subsidies and domestic subsidies of dairy.

What concerns me so much is, the dairy farmers here, is when they talked about the reform of agenda 2000, that it's entitled to stretch an area out to 2008. About the commitment to reforms in Europe, we will assume we have an impact here, so we have work to do in those areas.

We will, as long as I'm here, hearing this testimony, we will keep pressing very, very hard for the dairy farmers nationally, and certainly in the northeast, which are impacted by the level of access.

I clearly appreciate your taking the time to come here and bring 25 dairy farmers to a farm yesterday. We thank you for your testimony. Thank you.