Based on USDA projections that Mr. Dunn just pointed out to 

 the committee, but in addition to that some specific discussions 

 with members of the National Farm Organization, I think we can 

 all agree that the economic outlook in agriculture is at best very 

 fragile. 



As I am sure the chairman and the vice chairman are aware, 

 many of these midrange and even some of the larger farms that 

 survived this recession of the mid-1980's have never really fully re- 

 covered from that period. A few cents a bushel or pound difference 

 one way or the other will literally make the difference between 

 survival for a lot of these farming operations or being around next 

 year. 



I also think it is important to point out to this committee that 

 the circumstances between many of these midrange producers will 

 vary considerably, depending upon their individual circumstances. 

 I am talking about circumstances on their land costs, the type of 

 commodity they happen to produce, et cetera. All these factors 

 make a big difference. 



I also want to make it clear that many of these producers to 

 which I am referring — I am not comparing the efficiencies between 

 producers. I am basically talking about good efficient farmers that 

 are still hanging on and farming out there today. I think possibly a 

 good way to illustrate this and bring it a little closer to home is to 

 use an example of our family farm in South Dakota, which is ap- 

 proximately a 2,000-acre farm operated by my brothers. 



The farm is diversified. It raises beef, hogs, some row crops, and 

 small grain. The debt-to-asset ratio on that farm is about 55 to 60 

 percent. Whether that is representative I wouldn't say. But in any 

 case, I think it is an illustration. I also wanted to point out that 

 they are renting some land where they pay $40 to $50 per acre for 

 rent. 



That rental charge on rented land is pretty close to what it costs 

 them to service their debt with a 55 to 60 percent debt-to-asset 

 ratio in that area. 



The major cash crop on the farm is wheat. Their production cost 

 on wheat is approximately $3.50 a bushel. Mr. Chairman, 40 per- 

 cent of that production cost is land cost with interest, taxes, and so 

 on. 



The 1992 wheat crop in our area, was very good. However, the 

 protein was a little less than what it normally is. As a result of 

 that, we fall below the line on protein content. The price drops 

 rather significantly. The average price for wheat in that area today 

 is about $3.30 a bushel based on 14 percent or less protein. 



The ASCS yield is about 30 bushels. The payment yield on the 

 farm is a little less. Their actual yield in recent years is about 15 to 

 20 percent higher than that. When you subtract 15 percent flex 

 acres, and take the difference in the disparity between the yield, 

 you come out with about 60 to 65 percent of their production that 

 is actually covered by deficiency payments. This would net them 

 about $3.74 per bushel across the board on wheat with the $3.30 

 market price. The bottom line is that they will net about $10 per 

 acre for their wheat. 



In the case of cattle, the picture looks much brighter, at least 

 today. Feeder cattle are bringing 80 to 85 cents when they put 



