108 



Michael Bauerle 



On behalf of the 8 other corn farmers who make up the Nebraska Corn Board 

 and the over 32,000 corn producers in Nebraska we represent, I would like to thank 

 you for allowing us to present this testimony on the North American Free Trade 

 Agreement. 



The Nebraska Corn Board is a producer-funded check-off organization. Created in 

 1978, the Nebraska Corn Board conducts programs of market development, re- 

 search, promotion, and education to increase the demand for corn and improve the 

 profitability of our producers. 



As we prepare to harvest another corn crop in Nebraska, the third leading corn 

 producing State in the Nation, we have survived a summer filled with some of the 

 worst weather calamities in our State's history: 100-year floods, 100 mile-per-hour 

 winds that devastated some of the best looking corn in some of our best corn produc- 

 ing counties, and just last week, record-low, corn-killing temperatures not seen this 

 early in Nebraska in 100 years. 



After 20 years of farming, I have grudgingly learned to accept the fact that there's 

 not much I can do about the weather. During that same 20 years, I have also 

 learned that I can have an influence on the demand for the corn I produce. The 

 North American Free Trade Agreement, or NAFTA, is one area that would increase 

 the demand for the corn I produce. 



Unlike many other leading corn producing States in the United States, Nebraska 

 corn growers are heavily dependent on the export market. Approximately one out 

 of every three acres of corn grown in Nebraska is exported. Two years ago and long 

 before the current debate over NAFTA began, as part of its strategic planning proc- 

 ess, the Nebraska Corn Board identified Mexico as a potential key market for Ne- 

 braska corn exports. 



Members of our staff and board have already made several trips to Mexico to 

 identify potential buyers for our corn. This has been a joint project between the Ne- 

 braska Corn Board and the Nebraska Department of Agriculture, with partial fund- 

 ing through the USDA's Federal-State Marketing Improvement Program. 



During the past year, as the NAFTA debate intensified, many members of the Ne- 

 braska Corn Board were frustrated by the fact that there wasn't enough accurate 

 information available about NAFTA and its effects on the producers we represent. 

 It seemed like we were faced with a daily barrage of conflicting reports and studies 

 about the effects of NAFTA on our farming operations. 



In order to determine exactly which of these claims were reliable, accurate and 

 factual, we decided to take matters into our own hands. We commissioned the Agri- 

 cultural Economics Department at the University of Nebraska-Lincoln — one of the 

 premier land-grant research institutions in the United States — to do a critical, in- 

 depth analysis and review of studies completed so far on NAFTA and its impact on 

 Nehraska corn producers. 



It's important to point out that this request was for information, with no predeter- 

 mined guidelines or conditions. Ten agricultural economists participated in this crit- 

 ical review of over 80 published studies, articles and books on NAFTA. We received 

 the results of this analysis, titled "The Economic Effects of the North American Free 

 Trade Agreement on the Nebraska Corn Industry," last week. After reviewing it, all 

 nine members of the Nebraska Corn Board expressed their unanimous support for 

 NAFTA as it pertains to corn. 



While it's impossible to predict precisely what the effects of NAFTA will be, our 

 analysis indicated if NAFTA is ratified, it will produce a small but positive, static 

 gain for the U.S. economy. Projections indicated that U.S. gross domestic product 

 could be .02 to 1.34 percent greater with NAFTA than without NAFTA. The eco- 

 nomic gains were even greater in the analyses when the dynamic effects of free 

 trade (increased competition, economies of scale, enhanced investment, etc.) were in- 

 corporated. 



Most of the studies reviewed also reported that U.S. agricultural output, exports, 

 and employment would expand with NAFTA. Sectors that would benefit from 

 NAFTA include dairy and dairy products, coarse grains, wheat, oilseeds, and meat 

 and livestock products. Several studies estimate the grain and oilseed sectors would 

 experience the biggest export gains. 



It appears certain U.S. corn exports to Mexico would expand under NAFTA. Pro- 

 jections indicated U.S. corn exports to Mexico could be anywhere from 44 to 244 per- 

 cent greater with NAFTA than without NAFTA. The magnitude of the increase will 

 depend on several factors: the level of government assistance for Mexico's corn pro- 

 ducers, the government's restriction on the quality of corn that can be fed to live- 

 stock, and the substitutability of yellow corn for white corn in Mexico. 



