Thank you Mr. Chairman.

Good afternoon ladies and gentlemen. It is a privilege to participate in this outstanding conference. I don't know how many of you have focused on my topic, but if you have, you understand it poses a challenging question. I think its fair to conclude, you won't make a profit from the 1990 farm bill. In fact, the real keys to profitability are the topics covered by other speakers...quality, world markets, innovative marketing, pest management, new cultural practices, enhanced management...and so on. The fairest statement I can make about the 1990 farm bill is....it doesn't inhibit your ability to build a profitable operation. And certain provisions may enhance the market conditions you need to achieve profitability. USDA projects net cash and net farm incomes for 1991 and 1992, after rising each year from the mid-1980's through 1990, will return to their 1988-89 levels. Through the mid-1990's and the remainder of the current farm bill, economists expect improvement in major farm indicators in nominal terms. The only declining indicator is government payments. Direct payments reached a high of $16.7 billion in 1987. This year, they totalled slightly more than $8 billion continuing the decline of the last few years. For 1992, direct payments are forecast at $9 to $10 billion, up 10 to 13 percent from 1991. Most of the increase is because cotton deficiency payments which expected to increase by about $500 million. But realistically, you know direct government transfer payments will continue to decline long term. The growing budget deficit, new international trade agreements, a declining rural political base and public misconception about agricultural programs will contribute continued pressure to reduce agricultural spending.

So the long-term spending and policy trends are relatively clear. Let's take a look at current farm legislation and its influence on your bottom line.