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the University of Nebraska compute the production cost on finished 

 hogs at $44.23 per hundred. 



Looking ahead, it is very clear that production costs are going to 

 continue to increase. Most of this increase in production costs 

 will involve factors that fanners have little or no control over. 

 The loss of small businesses and resulting reduction in the tax 

 base in many rural communities has shifted more tax burden to farm 

 real-estate and personal property. Real estate taxes on the 

 guarter section where our farm stead is located in South Dakota, 

 increased by 34% last year. Taxes on the other land in the farm 

 with no improvements increased from 10 to 15%. Environmental 

 reguirements will also increase our cost of production. Farmers, 

 in some areas of the corn belt, estimate a cost of approximately 

 .25 cents per bushel for conservation and environmental practices. 



There has been some upgrading in farm equipment since the mid 

 1980s, however, there are still many farming operations that have 

 survived by delaying new purchases and making due with older 

 equipment. Some of these producers have reached the point where 

 they will have no choice but to increase outlays to upgrade 

 existing machinery. Without some improvement in the price outlook, 

 these new purchases will not cash flow for many producers. 



In summary, Mr. Chairman, the good news is that a 15 to 20% 

 increase in commodity prices would have a very positive effect on 



