“On the whole, we are optimistic. The balance sheet of U.S. agriculture should continue to strengthen again in 2011. Consistent with recent trends, increases in debt are forecast to be offset by larger increases in farm asset values. What is astonishing is that in two years, the farm economy has essentially rebuilt the equity lost in 2009 — and in 2011the farm sector’s debt-to-asset ratio should drop even further below last year’s 11.3 percent. Our nation’s farmers and ranchers should be celebrated for this achievement. Their careful management of debt has played an important role in helping them make a strong and quick rebound from the financial crisis.  

As for credit, conditions appear to be improving: Commercial banks across the country say loans are available — although standards are tight — and farmers are increasingly paying them back on time. Exceptions include regions dominated by livestock, milk and poultry production.  

“Last year, despite low interest rates, there was lower demand for farm loans than in previous years. At the same time capital spending was up, probably being financed with cash or nonbank credit. We hope to see this trend continue, especially as a result of the bipartisan tax deal reached in December which provides for 100 percent expensing of businesses investments like tractors and combines.

As for the value of farmland: Farm real estate value rose by an estimated 3 percent in 2010, to a record $1.8 trillion and we expect this trend to continue. While this benefits existing landowners, high farm real estate values make it difficult for individuals who may wish to enter farming and increases operating expenses for individuals who rent farmland. I hope that moving forward we can work to confront this issue and others as we look to grow the next generation of farmers, ranchers and producers. This may mean a solution based on sweat equity, or another way to provide credit to those who wish to farm in this country. But for the good of our environment, the quality of life we all enjoy, the relatively low cost of food, and for the American economy as a whole, we must keep farmland as farmland — and farmers on the farm. 

To conclude: As we enter 2011, the U.S. farm economy is coming off unprecedented increases in U.S. agricultural exports, farm cash receipts, farm income, and asset values the past few years. American agriculture is helping lead the recovery from the worst economic collapse since the Great Depression. Prospects for coming year generally look bright. More normal weather and production increases worldwide should lead to improved supply-demand balance in key markets, such as wheat, corn and soybeans. With biofuel demand expected to continue growing, although at a slower pace in the future, a big challenge will be responding to that demand by developing new feedstocks, producing on more acres, and producing more per acre while protecting the environment. I have the utmost confidence that our farmers and ranchers along with the assistance of USDA will be able to meet these challenges.

Mr. Chairman that completes my statement.”