MR. SCHUMACHER: It's very good to be back and see many friends and colleagues. And now what we are going to do is to be very clear we are going to take a few minutes, not very long, we would like to hear from you. We aren't here to talk. Many of you don't agree with some of the work we are doing and we want to hear that as well. And that's very important because this is one of 12 of the sessions throughout the country I will be going forward myself and we will probably hear from three or four thousand farmers around the country. This has not been done before in trade, most of the trade that we have done from the Washington lobbyists, lobby groups in fancy suits. We want to hear from farmers who are working.

We are hearing a diversity of opinion from agricultural, from producers, from folks who are dependent on trade and for those who feel that they are not benefitting from the trade or don't want to benefit from the trade. We are looking forward to hearing your comments today. We'll be very brief.

It's also great to see a number of farmers that are familiar. I want to thank you (inaudible) a number of dairy farmers. Yesterday we went through a number of issues on dairy and went over and visited some of the apple growers to hear some of their concerns as well.

I just heard from the State of Washington on Friday. They are in a terrible condition. And I think that's one of the issues we are facing. If you work in, Leon and Nathan, to the next round of WTO, we are facing some of the greatest prices of American agriculture in decades. I travel around every weekend somewhere. We are seeing the lowest soybean prices in three decades, lowest corn prices in a decade. We are seeing cotton prices with low production. We are seeing pork prices wherein last December you could buy a ham, a small ham in the supermarket paying more than what the farmers are making for the whole hog. And the prices now went up a little bit, now they are coming back.

So, we are in -- the apple prices are low on a commercial basis. We are going into the next round with American agricultural an island of despair in a sea of national prosperity. That's why it's very important to hear how we work out of this dilemma because we are so dependent on trade. We need to do a number of things that Nathan and Leon, Paul said because we are facing a number of barriers, including our friends to the north. It's cheaper for you to send your milk to Montreal by truck than Boston. You think it's terrific but it would be nice to have a little milk going to Montreal and Quebec as well, a little closer than 81 and 93. So, that's one of the things that we will work hard in the next round to make sure the northeast includes market to our great friendly neighbor to the north.

What I want to do now is take really no more than five or six minutes and do a little scene setter on where we are on trade. Go to the first -- I will go very quickly through this. These are available on the Internet and they are available to those that wish to have it.

First of all, as Nathan said, agriculture is very dependent on local markets. In 1996 we had 60 billion farmers around the country doing very, very well; record farming, record exports. Land prices were high. So, very, very important. Also, we will talk a little about the role of trade agreements and, moving this along, and most important; what should our negotiations comprise in the next rounds of WTO? As I mentioned, you know, it's quite unfortunate and your comments that the jobs of New York State (inaudible) in exports. But we, especially in many parts of the country, we don't survive unless we export.

Next? You see here why is it so important. Because 26 percent of the agricultural economy depends on international trade compared to manufacturing, about 11 percent. So, we are very universal around the country with exports. And, Steve, you saw in terms of our northeast how important exports are. If you get exports up a bit more, we can do a little bit better.

Long-term trends look positive. 96 percent of the people overseas, incomes are growing once the Asian economy comes back. But how we are going to get from here to there, especially from this year to next year and the year after? That's the question.

This is a business slide. I'll just go through this. Some commodities are -- 80 percent of our production goes overseas, almonds, walnuts. When you sell at the highs, 65 percent of those highs were overseas, and car seats and others, so we are very dependent. You can see some of the -- soybeans, $6 billion, forest -- that's one thing we are going to talk about here, testifying in Vermont. But your industry is very dependent on exports by truck to Montreal and get shipped out and not value added. Red meats, you can see how important all these different products are.

Next. Now, another big issue is you can see that farm equity, the land prices track very closely to exports. So, back in the late '70s you can see farm equity went way up because exports were way up. And you can see the trend on the yellow line sort of tracking the red line. That's why I'm pretty concerned as we face lax market prices what's going to happen to farm equity, particularly in the midwest. It's very helpful to us in the northeast. Soybean prices are a little light, as we should say. It's helpful to the northeast livestock interest. There has got to be a little bit more balance between the volatility there.

And this is similar. You can see the (inaudible) traditionally we are in a surplus situation of food. We export far more than -- substantially more than we import. There is also a trade. But you can see at the right-hand side that our imports, they keep growing and growing on a steady basis and there is a bit more volatility in our exports, so we need to smooth that out, particularly on more value added, as Nathan was saying, exports there.

Next one, Catherine. Now, this is where we get into the nitty-gritty. You can see the different trade agreements we have done in the Uruguay round when fully implemented will contribute over $6 billion of exports that weren't there before. NAFTA, only $3 billion, and NAFTA has worked very well for us in Mexico, not as well as here in the northeast. We need to do a little better. What happens -- we haven't quite got there in apples. But NAFTA -- Mexico has really been terrific in the last two or three years across a range of products.

And then some of the other issues, we have taken Japan beef and citrus. This is a very busy slide but you can see the importance of NAFTA to U.S. foods. If we didn't have the NAFTA agreement, we would be in even deeper trouble than we are now, especially with dairy products, in some of the dairy products. Steve has done a wonderful job promoting Vermont cheeses down in Mexico and they are becoming more popular in that country. But Mexico is generating at least over $6 billion in exports. Again, about 6 billion. NAFTA together are leading single export markets for American foods, passing ham for the first time this year.

These are the background. The general agreement on tariffs, which is 48. This was then supplanted by the WTO completed in '94. And we are going to start a 3 -- negotiation, the next round, we hope to get it done in three years. We are looking forward to hearing from you on what should be in that package.

We have a broad range of -- we are doubling the number of farmers that come to us. We have a State Department -- Paul will be bringing other people in from the Environmental Labor to make sure (inaudible) that's a very important issue for us, that we have a balanced delegation to counsel us there. And this will go on, then, hopefully for no more than three years to wind this up.

Key issues; market access, for example, dairy and poultry, export subsidies, the EU. 85 percent of the world export subsidies are from the European Union. Very small number, 85 percent.

Domestic subsidies and sanitary issues, particularly food safety. We had a good suggestion this morning on that issue. We are going to be reducing tariffs in the next round.

Next slide. And you can see the export subsidies looks like the old Packman games where the EU is gobbling us up. But it's true, we need to get those export subsidies down. It's terribly distorted. It hurts you as dairy farmers here and it hurts our overall trade. So, a major effort in that regard. And you can see the domestic subsidy as well, the EU gobbling us up. The yellow is the small amount that we put in, more this year, certainly less than 10 billion. Look at EU, 80 million. So, those are our major objectives.

And I'll conclude with the next final one. Catherine?

You want substantial tariff reductions. Eliminate Packman in Europe. We want tight rules on domestic support. We want to reform state treaties in the process, and especially Canadian Wheat Board and the Australian Wheat Board. We need to improve and access and implement the tariff rate quotas. We need to facilitate trade in new technology products.

When I say very carefully on the Packman eating us up, we welcome comments afterwards. We won't make any response right now. It's very nice to say you want to make sure you don't get too far out of the way, although they do have 85 percent.

So, I think that's the -- I'll conclude with that and we look forward now to hearing from you for the rest of the day. We are hoping -- we have a number of speakers. We hope people will stick to three or four minutes. We accept all your testimony and I'll be available through lunch and after for further discussion for those that feel very passionate about issues and look forward to hearing from you.

We have some colleagues on crop insurance here. I think the apple industry has some concerns there. Carol Goodloe is here and Hugh Maginiss is here. Thank you very much. We are back among friends and we will learn about some issues.