We just had the end of a land boom. That I would do. Characterized as a hundred year boom in the same sense that hydrologists speak of the flood that has a probability of occurrence once in 100 years. After the flood of that 92g expect quite a clean up job and after a land boom of the magnitude we just had we do have quite a cleanup job First reports of some of the magnitude of the declines are just now becoming available. From Minnesota. We had a July 1981 to July 1982. Overall Statewide decline in land values are about 10% and nominal terms. I had a. In which the Consumer Price Index when it up 7.2% which is a real decline of over 17% Not easily assimilated, but not uniformly distributed either. By far the sharpest decline has occurred in the County's to the east of the Red River Valley and strung up and down on North South axis coming down towards St. Cloud. And then in a group of counties in the southern border of the state where they lion values are the highest and where the increases had been spectacular after 1972 and those two groups. We can note a decline of about 20 to 25% in nominal terms and adjusted for real purchasing power. This means in several of the counties on the south central border and some of the counties in the east of the Valley area and we can have a real purchasing power declines in the last year of in the 30% range. Now, this is the wipe out of equity of massive proportions. It's a impairment of the base of Minnesota Agriculture and it's going to take some time to accommodate this kind of a decrease Not only has the decline Ben Sharpe. It's been all the more painful since about 3/4 of the level of land. I is it Prevail in 1981? Represented increase has it occurred since 1972. It was a rapid loss of a recent game. and the game had been artificially stimulated by some policies. Inadvertent but none the less powerful that Hadley General effect of throwing gasoline on the Fire. One of the most pronounced was the extent to which the combination of lending practices and inflation. Have rendered the rate of interest virtually useless as a guide to investment. In the eight years 73 to 81. 32 quarters of years the real rate of interest on Federal Land Bank mortgage loans was negative in 18 of the 32 quarters 18 out of 32 quarters between 73 and 81 you made money by borrowing money in that you could pay back at the end of the borrowing. With monies that had depreciated in purchasing power more than they buy less than the land value increase due to inflation so that the loan in effect was a gift. And this renders normal calculations of rates of return on investment or choices among investment meeting list of farm buyers was red as a consequence that expected to make their rewards to capital gain and this has diverted attention from the normal pursuit of profit with the result that we now have a majority of people in the United States who only know that land values go up. They had never gone down in their lifetime. And be who had been taught in the most recent past that you could be completely useless as a farm manager that you could do everything wrong and you could wind up the end-of-the-year richer than you begin it. That's not the best school for wise use of agricultural resources. While this was going on several other domestic changes were taking place within the state and among them. They The emergence of part-time farming is what amounts to a new lifestyle? The majority of farmers now get the majority of farm Family household income from non-farm sources of employment. And this is widespread. This is not just a cut ristick of the area around the Twin Cities or around Rochester or St. Cloud Mankato. Consequently, we have interspersed in agricultural Community. A lot of people who are claimants for agricultural land who are using it and agricultural Pursuits in some cases, but who can bring to bear on the agricultural land purchase income earned from off-farm sources and his name is it in affect agriculture now has to pay for an asset base that reflects to wait use potential. It can be used for agriculture. It can be used for non-agricultural Pursuits and a non-agricultural demand for land can generate win in a showdown. Consequently, we have to learn to live with a possible conflict in mind used between rural non-farm users and farm users. Which has the overall effect of lifting the acid-base of Agriculture without increasing its profitability. That's a general situation is not peculiar to Minnesota, but we have a very well developed a case of it in, Minnesota. Let me turn now to some lessons that I think we may have learned or could well learn from this land boom history. I believe the overriding lesson is that we are not in a position to force other nations to buy are grains. And so I be add a corollary that who's that we can price ourselves out of World Markets. And anyone who looks as what happened to the strength of the dollar in the last 18 or 24 months and observes what it did to our markets for grain exports Can See Clearly that we are not in the position of a monopolistic able to demand the price for a scarce commodity that the world must have at all cost. Another lesson that is important. Is that the euphoria that led to this land boom? Included a belief in the ultimate demand for grains from the rest of the world that would bail us out if there was a tough spot patch for a few years. Just hang on and wait it out and it was hungry Millions would come pounding on our door eventually and bring our land values back up to what we consider to be a reasonable level again. I like the one lesson that should be clear now is that virtually all of the export expansion of the last decade was two countries who have among them the lowest rate of population growth in the world. About three-fourths of our total agricultural exports go to countries specifically the European common market and then Comic-Con countries of east Europe in the Soviet Union and Japan. Which between them have a compound growth rate of 0.67% per year or whatever else is true. It's not true that the demand for American grains in export Market is a consequence of the population explosion. That's not where we've been selling our drinks. That's not where we're likely to sell them in the future. A world population explosion is not going to bail us out of our present acute problem of overproduction. Another lesson, we can learn from this recent experience. Is that about 70 to 80% of all of the farm sales after 1975 have been for Farm size enlargement. And most of these were already being added to Farms that work on the upside of the average are the words bigger Farms were being made bigger. In that circumstance your legislature may very well want to look carefully at proposals for Farm debt relief and for moratorium on debt. It's entirely possible that you could be. Harming people you wanted to help and that you could do more damage than good by General sweeping debt moratorium. We have in place in Minnesota or Family Farm security program has been I think well administered. It's been cautiously approached and carefully husband and I urge you to consider the continuation of that program and to avoid any temptation to try to make out of it. They debt relief measure. I related. Possible appeal will be made for the support of agricultural programs that depend on cost of production estimates that included in cost of production unrealistically High land values are there is a circular reasoning involved here. If you include overpriced land in calculating rate of return and then there is no solution to the question of what is a fair rate of return. And this tendency is acute if it can be mobilized not only with the support of the farm community about of the financial Community as well. So they'll be some tendency to want to do that. And you may well want to be on your guard against it. In another dimension, you're almost certainly going to hear more about property tax relief because notorious feature the property tax is that it tends to lag behind real movement and run prices have been going up like they assessments tend to like behind the increases, which is nice for a while. And then when there is a turnaround as we've had the assessment also became to lag behind the declines and this. Of most acute pressure is just ahead of us with some attempt to steal more local services on the property tax that is a stepping back on the part of the federal government and the states in the provision of support and then we can anticipate some real trouble in of the burden of property taxation. One final Point has to do with the possible expansion of further processing of Minnesota products in the state. I think we have forgotten one great truth in this state and that is that are most efficient processing takes place in the feeding of livestock. We have our poultry and our homes and our cattle and are dairy cows as are most efficient processors. and these will remain so they probably the only sector in which we could really be efficient and an international Dimension. And for that reason we very well want to be careful how we consider protectionist measures in Minnesota agriculture that could trigger International Trade Wars because there's no sector of the Minnesota economy more dependent on International Trade then is agriculture and has more to lose at an attempt to wrap up the United States in a fortress America mentality and practice protectionist economic policies. Thank you.