53 



first full meeting of your committee. On behalf of the 250,000 mem- 

 bers of the National Farmers Union, I thank you. 



You will notice in my testimony that I go through and do a recap 

 of what came out of the 1993 Outlook Conference represented by 

 USDA. They are showing that next year, 1993, farm income would 

 drop to a range of $42 to $48 billion. This will be about a 12-percent 

 drop from this year or a 17-percent drop if we have the worst case 

 scenario. 



Dr. Donald, who predicted this, also said there will be a decline 

 to $41.5 billion in 1993 in exports. Other economic indicators report 

 that the record for 1992 production would lead to lower prices in 

 1993 and again reiterating the $42 to $48 billion of net farm 

 income. 



The change in inventory — the carryover stocks will have a tre- 

 mendous impact on that. 



Expensewise, farmers' costs will rise about $3 billion in 1993. 

 That is a gain of 2 percent. We are anticipating planted acreage to 

 be less in 1992, but higher costs will offset the reduced rate of 

 input use. There will be a continued trend to use reduced tillage 

 and to use less large equipment. 



Energy prices for 1993 will be a large factor. We are seeing an 

 increase in crude oil of 6.5 percent. Diesel increase of around 5 per- 

 cent. In 1993, seed use is expected to increase by 1 or 2 percent. 



U.S. fertilizer prices declined in 1992. It will be a slight increase 

 in 1993 as a result of the surge in natural gas prices. Pesticide costs 

 will rise about 4 to 6 percent. However, pesticide use may decrease 

 by 3 percent from the 1992 rate. 



The high crop production in wheat and feed grains in 1992 will 

 remain. There will be a large carryover stock, which will keep 

 prices low and will affect the livestock and dairy industries. We are 

 looking at a $1 to $2 per hundred weight drop in 1993 for pork and 

 about $1 per hundred drop in milk prices. 



Past and present situation — Mr. Chairman, if you will look at my 

 testimony, there are some charts in there. Figure 1 shows a snap- 

 shot of what has been happening in the farm sector since 1988. 

 Even though net cash income is rising, the real net cash income is 

 declining. Net income is showing a decline in both the net farm 

 income and real farm income. 



Farm assets in both real estate and nonreal estate are remaining 

 somewhat constant. Farm debt is showing a mild rise in the real 

 estate sector and a somewhat higher increase in the nonreal estate 

 sector. Cash receipts are declining and most disconcerting to us is 

 the Government payment which after 6 years of decline has begun 

 to increase. In the charts it shows an increase of about $13 billion. 

 Since the time this chart was developed it is now projected to be 

 $17 billion. 



This chart shows an increase in Government spending at abso- 

 lutely the wrong time. 



If you will look at the next chart on page 5, Mr. Chairman, you 

 will see what has happened to top entitlements. Of the 12 entitle- 

 ment programs, the farm program ranks No. 12. It is the only one 

 that has had a decline in the average percent between 1985 and 

 1991. And worst of all, it shows from 1991 a projected decline while 

 all other entitlement programs are going to have an increase. 



