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fident that by the time Congress votes on NAFTA later this year, the country will 

 recognize that NAFTA is a vital part of the solution to the economic challenges that 

 face us. 



Robert L. Foster 



Mr. Chairman, members of the Committee On Agriculture, Nutrition and For- 

 estry, I appreciate the opportunity to testify today. I am Robert Foster, Vice Chair- 

 man of Agri-Mark, Inc., a value-added milk marketing cooperative. I live and farm 

 in Middlebury, Vermont. 



My task today, as a dairyman and a producer of livestock, is to share with you 

 my perspective on the North American Free Trade Agreement. 



I also will be expressing the position taken by the Council of Northeast Farmer 

 Cooperatives at its meeting yesterday, September 20, 1993. CNFC represents 5500 

 dairymen in 4 cooperatives: Agri-Mark, Eastern, St. Albans, and Upstate. These co- 

 operatives service the Northeast fluid markets, package and market the full range 

 of manufactured products, as well as provide ingredients to service the dairy indus- 

 try. Products range from whole and skim milk powder to Cabot sharp cheddar 

 cheese, from condensed milk to ice cream and yogurt mix for Ben & Jerry's Ice 

 Cream. Agri-Mark has exported product to six continents. 



We live in a global economy. As such, every effort must be made to develop and 

 negotiate agreements which level the playing field so that more trade — not less — 

 can develop and prosper. Agreements provide the rules that guide this activity and 

 which transcend the political governments that seem, at times, to change rapidly. 



I believe that in considering this subject, one must take into account the long- 

 term as well as the short-range consequences of that action. One must consider the 

 perceptions and implications of the actions taken. In other words, what kind of sig- 

 nal does the acceptance or rejection of NAFTA send to the rest of our trading part- 

 ners. Do we want to trade or not? The signal is just that simple! 



We live in a world of finite resources. One nation cannot isolate itself from the 

 rest. Consider, if you would for a moment, that my State, Vermont, decided to close 

 its borders and produce only what we need ourselves. Our agriculture (particularly 

 dairy), our industry, our educational institutions, our tourism industry, our forest 

 products industry — and I could go on and on — all produce for and market to many, 

 many others outside our borders. Vermont's economy would literally dry up and 

 wither away; 85-90 percent of our dairy output is marketed out-of-State. 



With that in mind!, what will NAFTA do? It will create one of the largest markets 

 in the world — some 370 million consumers — more than $6.5 trillion in production. 

 NAFTA provides mechanisms for the elimination of tariffs imposed on a number of 

 U.S. products. Some are immediate, others may be phased out over 15 years. 



Specifically, Vermont's dairy and livestock prices are determined for the most part 

 by national supply and demand mechanisms and markets. Sure, there are niche 

 markets; and Vermonters are good at finding these. Agriculture and its productive 

 capacity, assisted by technology, has allowed fewer and fewer producers to produce 

 significantly more. In dairy, for example, the national herd average is around 15,000 

 lb/cow/yr. Many herds produce well over 20,000 lb/cow. However, both U.S. dairy 

 and beef face a domestic market that is mature — that i^, a market of consumers 

 that have a standard of living that has plateaued, with little chance to move much 

 more product in either category. The same is true in Canada. Mexico, on the other 

 hand, is a developing market and is a rapidly developing country. 



In dairy we face a double challenge. Tight prices have forced the accelerated adop- 

 tion of current technology and management. Remember, I mentioned that national 

 herd average is 15,000 lb/cow/yr. Many in this State produce over 20,000 lb/cow with 

 some over 24,000 lb/cow; if more than half are below 15,000, if current technology 

 allows for over 20,000, and if adoption of this technology is occurring at a rapid rate, 

 then we could see as much as a 20 percent increase in production over the next sev- 

 eral years. The domestic market is only growing at 1 to 2 percent per year. Dairy 

 must become, to use Senator Leahy's words, "a reliable and dependable exporter" 

 of a significant amount of production, or our productive capacity must be downsized 

 substantially. 



In beef a similar situation exists. In 1995, we are expected to produce from 106 

 million head the same tonnage of beef as we did in the early 1970's from 132 million 

 head. Like dairy, the domestic market for b^ef can only absorb about a 2-percent 

 growth per year. Cattle exports grew by 15 percent in 1992, with Japan and Mexico 

 as the principal markets. Exports now account for 5 percent of annual U.S. produc- 

 tion and 10 percent of value, ^ding $70 per head to fed cattle sold in the U.S. Cat- 



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