[Senate Hearing 106-784]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 106-784

        INTERSTATE SHIPMENT OF STATE-INSPECTED MEAT AND POULTRY

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                   ON

        INTERSTATE SHIPMENT OF STATE-INSPECTED MEAT AND POULTRY

                               __________

                             APRIL 6, 2000

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


                    U.S. GOVERNMENT PRINTING OFFICE
67-862 CC                   WASHINGTON : 2000

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 
                                 20402




           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                  RICHARD G. LUGAR, Indiana, Chairman

JESSE HELMS, North Carolina          TOM HARKIN, Iowa
THAD COCHRAN, Mississippi            PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky            KENT CONRAD, North Dakota
PAUL COVERDELL, Georgia              THOMAS A. DASCHLE, South Dakota
PAT ROBERTS, Kansas                  MAX BAUCUS, Montana
PETER G. FITZGERALD, Illinois        J. ROBERT KERREY, Nebraska
CHARLES E. GRASSLEY, Iowa            TIM JOHNSON, South Dakota
LARRY E. CRAIG, Idaho                BLANCHE L. LINCOLN, Arkansas
RICK SANTORUM, Pennsylvania

                       Keith Luse, Staff Director

                    David L. Johnson, Chief Counsel

                      Robert E. Sturm, Chief Clerk

            Mark Halverson, Staff Director for the Minority

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing:

Thursday, April 6, 2000, Interstate Shipment of State-Inspected 
  Meat and Poultry...............................................     1

Appendix:
Thursday, April 6, 2000..........................................    39
Document(s) submitted for the record:
Thursday, April 6, 2000..........................................    91

                              ----------                              

                        Thursday, April 6, 2000
                    STATEMENTS PRESENTED BY SENATORS

Lugar, Hon. Richard G., a U.S. Senator from Indiana, Chairman, 
  Committee on Agriculture, Nutrition, and Forestry..............     1
Fitzgerald, Hon. Peter G., a U.S. Senator from Illinois..........     8
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    13
Daschle, Hon. Tom, a U.S. Senator from South Dakota..............     4
Baucus, Hon. Max, a U.S. Senator from Montana....................     6
Johnson, Hon. Tim, a U.S. Senator from South Dakota..............     6
Lincoln, Hon. Blanche, L., a U.S. Senator from Arkansas..........     7
                              ----------                              

                               WITNESSES

Hatch, Hon. Orrin G., a U.S. Senator from Utah...................     2

                                Panel I

Rominger, Richard, Deputy Secretary, U.S. Department of 
  Agriculture, Washington, DC; accompanied by Ms. Margaret O'K. 
  Glavin, Associate Administrator for Food Safety; accompanied by 
  Ms. Caren Wilcox, Deputy Under Secretary for Food Safety.......    10

                                Panel II

Boyle, Patrick, President and CEO, American Meat Institute, 
  Arlington, VA..................................................    34
Dailey, Fred L., Director, Ohio Department of Agriculture, 
  President, National Association of State Departments of 
  Agriculture, Reynoldsburg, OH..................................    23
Eickman, Michael, Eickman's Processing Co., Inc., representing 
  the American Association of Meat Processors, the Illinois 
  Association of Meat Processors, and 18 other state meat 
  processing associations, Seward, IL............................    26
Foreman, Carol, Tucker, Distinguished Fellow and Director of the 
  Food Policy Institute Consumer Federation of America, 
  Washington, DC.................................................    32
Heikens, Jolene, Triple T Country Meats, representing the 
  American Association of Meat Processors, the Iowa Association 
  of Meat Processors, and 18 other state meat processing 
  associations, Wellsburg, IA....................................    27
Nielson, Richard T., President, Utah Cattlemen's Association, 
  representing the National Cattlemen's Beef Association, Salt 
  Lake City, UT..................................................    30
Pearson, Harry, President, Indiana Farm Bureau, representing the 
  American Farm Bureau Federation, Indianapolis, IN..............    29
                              ----------                              

                                APPENDIX

Prepared Statements:
    Lugar, Hon. Richard G........................................    40
    Roberts, Hon. Pat............................................    41
    Harkin, Hon. Tom.............................................    50
    Daschle, Hon. Tom............................................    84
    Johnson, Hon. Tim............................................    86
    Hatch Hon. Orrin, G..........................................    88
    Boyle, Patrick...............................................    82
    Dailey, Fred L...............................................    52
    Eickman, Michael.............................................    63
    Foreman, Carol, Tucker.......................................    77
    Heikens, Jolene..............................................    68
    Nielson, Richard T...........................................    74
    Pearson, Harry...............................................    70
    Rominger, Richard............................................    43
Document(s) submitted for the record:
    Position statement, submitted by Mike Lorentz, Cannon Falls, 
      MN.........................................................    92
    Position statement, submitted by Michael Weaver, President, 
      Weaver Meats, Inc., Past President, Ohio Assoc. of Meat 
      Processors.................................................    94
    Position statement of the National Chicken Council...........    96
    Position statement of the Consumer Federation of America, 
      submitted by Nancy Donley, President S.T.O.P., Caroline 
      Smith DeWaal, Food Safety Director, CSPI, Carol Tucker 
      Forman, Director, Food Policy Institute CFA,...............   101
    Excerpts from the Wall Street Journal ``Consumer Groups Decry 
      State Meat Inspections'', submitted by Carol Tucker Forman.   104
    Position statement of the Kansas Department of Agriculture, 
      submitted by Bill Graves, Governor.........................   109
    Position statement of the National Confreence of State 
      Legislatures, submitted by Larry Diedrich, South Dakota 
      House of Representative Chair, NCSL Agriculture and 
      International Trade Committee..............................   111
    House Concurrent Resolution No. 5050, submitted by Hon. Pat 
      Roberts....................................................   115


 
        INTERSTATE SHIPMENT OF STATE-INSPECTED MEAT AND POULTRY

                              ----------                              


                        THURSDAY, APRIL 6, 2000

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:37 a.m., in 
room SR-328A, Russell Senate Office Building, Hon. Richard G. 
Lugar, (Chairman of the Committee), presiding.
    Present or submitting a statement: Senators Lugar, 
Fitzgerald, Harkin, Daschle, Baucus, Johnson, and Lincoln.

OPENING STATEMENT OF HON. RICHARD G. LUGAR, A U.S. SENATOR FROM 
  INDIANA, CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND 
                            FORESTRY

    The Chairman. This meeting of the Senate Agriculture 
Committee is called to order. The Committee is holding this 
hearing today to review interstate shipments of State-inspected 
meat and poultry.
    This is not a new issue for the Committee. Small plants 
that have operated under State inspection programs have long 
advocated interstate shipment of State-inspected meat and 
poultry. Plants located near the border with another State have 
been particularly supportive of this change because of the 
potential for increased markets for their products. Producers 
have been supportive because of the potential for additional 
markets for their livestock and poultry.
    At the end of last year's session, Senators Daschle and 
Hatch introduced legislation, S. 1988, which would permit 
interstate shipment of State-inspected meat and poultry. This 
legislation was based on a concept paper developed by the 
United States Department of Agriculture and endorsed by the 
National Advisory Committee for Meat and Poultry Inspection.
    We have the opportunity today before this committee to hear 
of support for this legislation and to air concerns about this 
approach to allow interstate shipment of State-inspected meat 
and poultry. We are honored to receive testimony from our 
colleague, Senator Hatch, an advocate of interstate shipment of 
State-inspected meat and poultry, and we will be pleased to 
hear the United States Department of Agriculture's perspective 
from Deputy Secretary Rominger. Finally, a panel of witnesses 
will testify, including representatives of the State 
Departments of Agriculture, producer groups, meat processors, 
and consumers.
    I offer a special welcome to Harry Pearson, representing 
the American Farm Bureau Federation, and a good delegation of 
Hoosiers who are with us today in this hearing.
    Before proceeding to our witness, let me mention that as 
soon as Senator Harkin, the distinguished ranking member, 
appears, he will be recognized for an opening statement.
    [The prepared statement of Senator Lugar, can be found in 
the appendix on page 40.]
    But for the moment, I would recognize our colleague, 
Senator Hatch, who I aforementioned is one of the authors of 
legislation we will be considering this morning. We are 
delighted to have you, Orrin, and proceed with your testimony.

   STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM UTAH

    Senator Hatch. Thank you, Senator Lugar, Senator Daschle, 
Senator Johnson. I am grateful to be with you and I applaud you 
for holding this hearing. I am particularly pleased that you 
are going to have the opportunity to hear from Richard Nielson, 
the President of the Utah Cattlemen's Association. I am sure 
you will find his testimony cogent and very informed.
    As you know, the New Markets for State-Inspected Meat Act, 
the Daschle-Hatch bill, would lift the outdated ban on the 
interstate shipment of State-inspected meat. Rather than state 
all the details of this legislation, I would like to describe 
to the members of this committee how the ban on interstate 
shipment is affecting small businessmen in rural Utah. I want 
to emphasize that what we are seeing in Utah is echoed in at 
least half the States in this country. The business owners I 
will tell you about own small meat packing plants that are 
inspected by State inspectors.
    The first is Eddie Roberts, who owns Tooele Valley Meats in 
Grantsville, Utah, not far from the Nevada border. Eddie is 
well known in the area for making some of the finest sausage 
available anywhere. Casinos just across the border in Wendover, 
Nevada, know of his sausage products and have tried to purchase 
them. Contracts with these casinos would be a tremendous boost 
for Tooele Valley Meats, but as we all know, Eddie is barred by 
law from selling his sausage products in Nevada or any other 
State.
    A casino in Las Vegas has also approached him, telling him 
they would buy as many roaster pigs as Eddie could produce, but 
the ban also applies to poultry. So much for rewarding product 
excellence. Mr. Chairman and the members of this committee, I 
am sure you appreciate what an order like that would mean for a 
small business in a rural community. Once again, Tooele Valley 
Meats was forced to turn down what they considered to be a 
dream opportunity.
    In Smithfield, Utah, Monte Lucherini owns L&H Packing 
Company, a State-inspected plant just 15-miles from the Idaho 
border. This plant produces roast beef, jerky products, hot and 
mild sausage, and other products. Monte has been contacted by a 
number of businesses in Idaho seeking to purchase his products. 
Once again, a small businessman in a rural area was faced with 
a chance to expand his business but was forced to turn it down.
    With regard to this legislation, Monte has said, and I 
quote, ``I believe that my gross sales would increase 30- to 
40-percent. Employment would be increased also. I would need 
more butchers and more workers. It has also been a thorn in our 
side that we could not service the customers that want our 
products.'' So much for encouraging investment.
    In Vernal, Utah, Don Anderson owns and operates Uintah 
Packing. The principal part of Don's business has been selling 
steaks to river outfitters taking visitors down the Green and 
Colorado Rivers. He was doing excellent business with these 
customers until it was pointed out to the river guides that 
they could not serve Don's product because a portion of the 
river trip would dip into Colorado and Arizona, thus making it 
illegal for them to serve steaks produced by a State-inspected 
plant. Well, Mr. Chairman, Don lost his business and has never 
fully recovered from it. In this case, the currently policy not 
only hindered business, it actually hurt it.
    Finally, I would like to talk about Theone Merrill. Theone 
owns Heartland Foods in northern Utah and produces a number of 
excellent products, many of which are cooked and canned. Now, 
Mr. Chairman, Theone has an idea. He has recognized that if he 
could tap into the Internet as a marketing tool, the entire 
world would be within reach of his products. He had already 
learned of interested buyers of his products in other States, 
but he will not be able to pursue those markets. Needless to 
say, Theone is eager for the passage of this bill. Just as in 
the other cases, Mr. Chairman, his market is limited to the 
State of Utah. So much for rewarding innovation and risk 
taking.
    Now, these stories and the others like them around the 
country would be enough in my book to take action on this bill, 
but there is more. Each of the plants I have mentioned is 
completely free to sell buffalo meat, pheasant, ostrich, 
alligator, emu, and other meat products not only across State 
boundaries but even to foreign nations, and these meat products 
are inspected by State inspectors. Yet State-inspected beef, 
pork, and poultry cannot travel a few miles from Tooele, Utah, 
to Wendover, Nevada.
    Let me put this another way, Mr. Chairman. We trust State 
inspectors to efficiently inspect emu but not beef, and it is 
okay to sell State-inspected beef or pork in Utah, but nowhere 
else. This makes absolutely no sense, Mr. Chairman.
    But what makes even less sense, Mr. Chairman, is the fact 
that while those Nevada casinos or Idaho supermarkets are 
banned from buying sausage and other products from Utah, they 
have no problem whatsoever in importing those products from a 
foreign country. Foreign competitors have full freedom to sell 
their foreign-inspected products in the United States, and, of 
course, they are more than willing to do so.
    Mr. Chairman, I know you share my view that the American 
economic system should reward excellence, hard work, effort, 
and investment, yet current policy concerning State-inspected 
meat is holding Americans back for no justifiable reason. It is 
just plain stupid and I hope you and the other members of this 
committee will agree.
    Not only does this policy of prohibiting the interstate 
distribution of State-inspected meat stifle the growth and 
prosperity of individual small businesses, but it also 
contributes to the concentration in the meat packing industry 
in our country. As I am sure every member of this committee 
knows, there are fewer and fewer places for our livestock 
producers to sell their products.
    I believe the New Markets for State-Inspected Meat Act will 
help to increase competition in the meat packing industry. You 
do not need to take my word for it. Three separate USDA 
Advisory Committees have recommended lifting the ban on 
interstate shipment as a way to create more opportunities for 
small packers and livestock producers in rural America.
    I think that events in the State of Minnesota have 
confirmed this. Minnesota began a State inspection system only 
last year. As a result, in only a short time, 30 new plants 
started up in that State. Now, this is good for competition, it 
is good for consumers, and good for livestock producers.
    The Minnesota experience also demonstrates what many small 
plant owners have expressed to me, that most small plant owners 
prefer to work with State inspectors, which tend to be much 
more hands-on, informative, and responsive than Federal 
inspectors. This is why the small plants in Utah and in other 
States would be happy to comply with Federal inspection 
standards but shy away from turning their plants over to 
inspection by Federal inspectors. This is a key point, Mr. 
Chairman. There is absolutely nothing about this bill that 
would compromise food safety.
    The time is ripe to do away with the outdated and anti-
competitive ban on interstate shipment of State-inspected meat. 
This bill will open markets and spur growth in the meat packing 
industry. It will be good for our small plant owners, our 
livestock producers, and rural America in general. So I urge 
the members of this committee to report this measure to the 
full Senate as soon as possible, and I want to thank personally 
the prime sponsor of this bill, Senator Daschle, for his 
willingness to lead out in this manner and to continue this 
fight to change what really is something that needs to be 
changed.
    I want to thank you for giving me this time this morning.
    The Chairman. Thank you very much, Senator Hatch, for your 
testimony.
    It is appropriate that, in fact, the co-author, Senator 
Daschle, is at hand, the Democratic leader and a distinguished 
member of our committee. Tom, would you like to make a 
statement or respond to Orrin or boost your bill or anything 
pertinent you may have?
    Senator Hatch. Come on, Tom, let us get up here.

STATEMENT OF HON. TOM DASCHLE, A U.S. SENATOR FROM SOUTH DAKOTA

    Senator Daschle. First of all, Mr. Chairman, I thank you, 
as Orrin has, for holding this hearing. This is another example 
of your extraordinary interest in many of the issues relating 
directly to agriculture.
    I think Senator Hatch has pointed out as succinctly as I 
have heard the implications for processors all over the 
country, but in his State in particular. He has also pointed 
out the irrationality of the current situation and the 
implications of current law for not only producers but for 
agriculture in general.
    So I applaud him for his statement. I congratulate him on 
an excellent statement and appreciate very much his direct 
involvement in this legislation. He and I have been working on 
this now for some time. We have 17 other cosponsors on a very 
bipartisan basis, and so I am pleased that we have been able to 
get to this point.
    It is hard to believe that Congress has been debating this 
issue now for over 20-years. As a result of a lot of work by 
USDA and numerous other groups interested in the issue, at 
last, we have a proposal that Senator Hatch has outlined that 
can provide interstate shipment authority in a way that 
benefits everyone, either directly or indirectly. He and I, as 
I noted, had been working on this bill for a good period of 
time now, about 6 months, and it is based on recommendations 
made by the National Advisory Committee for Meat and Poultry 
Inspection.
    It is good for small plants, as Senator Hatch has noted, 
and the communities in which they are located. We think it is 
good for farmers and ranchers. It is good for the States with a 
State-inspection program. We think it is very good for 
consumers and it is good for the market because we think it 
will stimulate competition as well as innovation.
    Under current law, only State-inspected bison, venison, 
pheasant, and ostrich can be shipped interstate. S. 1988 would 
expand this shipment, at long last, to include beef and pork 
and lamb and poultry. Products would be eligible for interstate 
shipment, export to other countries, and use in products 
destined for export to other countries, as well.
    As Senator Hatch has noted, the current law severe limits 
State plants' marketing opportunities and unfairly penalizes 
them based on size and gives unfair market advantage to bigger 
plants for which Federal inspection is an option. This 
limitation penalizes producers, who bear the added 
transportation costs of shipping products to Federally-
inspected plants if they want to market out of State. The 
current law is inequitable among species, of course. Some 
species can be shipped across State lines while others cannot.
    So with the full implementation of HACCP, State and Federal 
inspection programs will be enforcing the same food safety and 
standards and we will have the same seamless food safety 
inspection system we have talked about having now for some 
period of time.
    With S. 1988, we still have the benefit of our State-
inspection programs and their specialized knowledge of local 
needs. In South Dakota, for example, we have 53 State-inspected 
plants. A number of them serve very isolated populations.
    So, Mr. Chairman, allowing this interstate and 
international shipment of products inspected at these plants 
would provide a tremendous opportunity for the producers that 
Senator Hatch noted, producers and processors in South Dakota, 
to owners and employees of these plants who have new business 
opportunities and to towns that are in need of new business and 
capital flow.
    So I am really interested in the testimony this morning of 
a number of witnesses who have come distance, as well as our 
experts from the Department of Agriculture. I again thank you 
for your interest in this issue and especially thank Senator 
Hatch for his cosponsorship and his leadership, as well.
    The Chairman. Thank you very much, Senator Daschle.
    Let me ask each of the Senators who have joined this 
hearing if they have opening comments or questions of our 
witness, Senator Hatch. Senator Johnson?

STATEMENT OF HON. TIM JOHNSON, A U.S. SENATOR FROM SOUTH DAKOTA

    Senator Johnson. Just very briefly, I want to thank you, 
Mr. Chairman, for holding this hearing and Senator Hatch's 
leadership on this important bipartisan issue. As Senator 
Daschle has noted, this issue has been around a long, long time 
and it is overdue that we finally address it in a constructive 
way this year.
    I am pleased to be a cosponsor of S. 1988. This 
legislation, as Senator Daschle has noted and Senator Hatch has 
noted, would help create a seamless system of meat inspection 
between State and Federal systems, and particularly now with 
implementation of our HACCP system, we have the support of USDA 
and a great number of agricultural as well as consumer 
organizations in this country.
    At a time when there has been a lot of frustration 
expressed in South Dakota among my producers about lack of 
competition and integration going on in the packing industry, 
this is a step, I think, in the right direction which would be 
a boon, I think, to livestock producers as well as to the 
State's economy, to the economy of many small communities, as 
well as to consumers. As Senator Daschle has noted, we have 
some 53 small packing plants in South Dakota. Many of them are 
right along our borders, but for artificial and no longer 
rational reasons, not allowed to market their products across 
the State lines into Minnesota, Iowa, North Dakota, Wyoming, 
and Nebraska.
    I am confident talking to these producers in their small 
plants around the State that this would do a great deal to 
allow them to expand their business. It would create new niche 
markets for many of our livestock producers at a time when they 
need more alternative marketing opportunities for themselves 
and it would create greater competition in the livestock and 
meat industry in general. I think that is a good thing for 
consumers and it is a good thing, I think, for the country as a 
whole.
    So I applaud USDA's work with us on this legislation and 
all the bipartisan cosponsors of this bill and I am hopeful 
that we can, in fact, move beyond a hearing to a markup point 
at some expeditious time. Thank you.
    The Chairman. Thank you very much, Senator Johnson.
    Senator Baucus.

   STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR FROM MONTANA

    Senator Baucus. I thank the Chairman. Mr. Chairman, as I 
think and reflect upon this issue, it really is somewhat in a 
certain sense sad that it takes Congress so long to do 
something that is so right. This is a no-brainer. Clearly, 
inspection plants, packing plants, processors in our country, 
whether they are Federal or State, should be able to ship 
product across State lines because under HACCP they will be 
subject to the same inspection standards. It just makes no 
sense at all for me that anyone would oppose this legislation. 
it is just that simple.
    Senator Johnson made a very good point about niche markets. 
This legislation will enable lots of different people to market 
their own meat products in a way that makes sense to them. We 
in my State, Mr. Chairman, we call ourselves the Big Sky State 
and we like to think that ``Made in Montana'' is going to be a 
good selling point, not only nationwide but internationally. It 
is my hope that this legislation is tailored in a way so that 
State-inspected plants will be able to sell not only across 
State lines but around the world.
    And clearly, it is to the best interest of a State 
processing plant to be safe. If they are going to sell their 
product and have it accepted, and probably because they are 
small, they know they have got to do a good job and they are 
going to do a good job.
    It is analogous to me like start-ups in the high-tech 
world. You have all these start-ups because people in our 
country today have the opportunity, if he or she has a good 
idea, to follow up and pursue it, and I think the same should 
be true here. If a group of people want to get together and put 
together their processing plant, they ought to be able to do 
so. There have been many attempts in my State that have been 
futile, frankly, and one of the reasons is this. It is just 
hard to ship. You cannot across State lines.
    I very much commend Senator Hatch, Senator Daschle, and 
others for finally getting this bill together. I am a 
cosponsor, proudly. Many others are, too. This is getting to be 
a thing, Senator. You and I are on a lot of bills, I have 
noticed. This is one more.
    Senator Hatch. It is starting to worry me.
    [Laughter.]
    Senator Baucus. It is a good sign. We Westerners are 
sticking together.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you, Senator Baucus.
    Senator Lincoln.

STATEMENT OF HON. BLANCHE LINCOLN, A U.S. SENATOR FROM ARKANSAS

    Senator Lincoln. Thank you, Mr. Chairman. I appreciate your 
holding the hearing today and want to welcome Senator Hatch and 
thank him for his hard work on this issue.
    Food safety is an extremely important issue, I think, to 
all of us and I am pleased that the Committee is working on 
this issue here in this bill so that we can review the proposal 
that has been offered regarding the interstate shipment of 
State-inspected meat and poultry. The administration and 
several members of this committee have been working very hard 
on this measure to ensure that there is a consensus, and I 
applaud that effort and I would like to work to that degree.
    However, I do represent a State that has a very large 
poultry interest, and today the poultry industry still has a 
few concerns about the impact of this legislation, so I may 
have a few questions for the panelists later on. I am delighted 
to hear from Senator Hatch and would certainly like to ask him 
that maybe if there is a possibility, we can look at some of 
the concerns that we do have from the poultry industry's side. 
I look forward to the witnesses that will present that and 
would just simply highlight that food safety is truly the 
ultimate issue here and that we do not forget that and that we 
reflect on it, and as we can make improvements, hopefully we 
will to this very important issue.
    So thank you, Mr. Chairman, and thanks, Senator Hatch.
    The Chairman. Thank you, Senator Lincoln.
    The Chair would like to enter into the record a statement 
from Senator Roberts, who is a cosponsor of the legislation and 
is supportive of it.
    [The prepared statement of Senator Roberts can be found in 
the appendix on page 41.]
    Senator Fitzgerald.

    STATEMENT OF HON. PETER FITZGERALD, A U.S. SENATOR FROM 
                            ILLINOIS

    Senator Fitzgerald. Thank you, Mr. Chairman. I would like 
to welcome the distinguished Chairman of the Judiciary 
Committee here. You do our Agriculture Committee much honor by 
coming before us and I am pleased to be a cosponsor of your 
legislation, Senator Hatch.
    I think that now, in an era when we have a meat processing 
sector that continues to consolidate, and we are hearing a lot 
of complaints from the farm community about the continued 
consolidation at the end producer level, we now have the four 
largest processors controlling approximately 80-percent of the 
fed cattle market and approximately 60-percent of the pork 
market, it seems to me that allowing State-inspected plants to 
compete on a nationwide basis is a very worthwhile goal. I 
compliment you on this legislation.
    Illinois, according to our Illinois Department of 
Agriculture, has 283 meat processors. These plants employ about 
6,000 people and have annual sales totaling $425 million. 
Whenever I am at a Farm Bureau meeting anywhere in any county 
in Illinois, somebody who is from one of these State-inspected 
plants will get up and complain that they cannot export their 
meat out of State.
    So I think we need to look at if these plants are complying 
with USDA standards, if they are using some of the science-
based technology that the USDA is now requiring, I think it 
will improve food safety in our country, and in addition, it 
will allow for some more competition in the meat industry, give 
the farmers more end producers to sell their livestock to, and 
be good for consumers. So I want to congratulate Senator Hatch 
and I am pleased to be a cosponsor.
    I also want to point out that one of my constituents, 
Michael Eickman of Eickman's Processing Company in Seaward, 
Illinois, is here today and he is representing the American 
Association of Meat Processors, a national organization of 19 
State meat processing associations. Mr. Eickman, I want to 
thank you for traveling to our nation's capital to be with us 
today.
    Thank you very much.
    The Chairman. Thank you very much, Senator Fitzgerald.
    Senator Hatch, you have heard from your colleagues and we 
appreciate very much your coming to offer this testimony 
personally.
    Let me just say that your presence prompts me to make 
really a further request. As if often the case with Congress, 
the jurisdiction of various committees is clear with regard to 
some issues and yet the issues are sometimes bigger than all of 
our committees. We have been talking in this committee a good 
bit about agricultural concentration. That was reflected in 
some of the statements by Senators today, Joel Klein before the 
Committee and others who are involved in that issue and we will 
be talking about that some more. We appreciate the cooperation 
with you as chairman of Judiciary and your members because 
obviously these are subjects of great interest to you. You have 
the whole antitrust issue in the country, but the agricultural 
part of it is very important to us.
    In the same spirit as we have worked with Senator Gramm in 
the Banking Committee and our own Senators, Senator Johnson, 
Senator Baucus, Senator Daschle, Senator Leahy are very active 
in the debate on extending to rural America the television 
satellite situation in the recent debate. These issues bob up 
in various ways, but they are of great importance to rural 
America, as you understand with your constituents.
    So we thank you for coming to be with us today and for 
giving of your time.
    Senator Hatch. I want to thank you, Mr. Chairman, and all 
of you who are cosponsors, particular Senator Daschle, who is a 
great leader and a very fine friend, and I really appreciate 
being given this time. I hope you will listen to our Utah 
cattlemen. They are good people.
    The Chairman. We will listen carefully.
    Senator Hatch. Thanks a lot.
    The Chairman. The chair would like to call now the Deputy 
Secretary of Agriculture, Richard Rominger. He will be 
accompanied by Ms. Margaret O'K. Glavin, Associate 
Administrator for Food Safety, and Ms. Caren Wilcox, Deputy 
Under Secretary for Food Safety.
    Secretary Rominger, we are pleased to have you, as always. 
You have been faithful in responding to our calls for testimony 
and have given us the benefit of your wisdom and counsel and we 
look forward to that again today.
    Before you begin, let me mention that my understanding 
still is that there will be two roll call votes cast at 10:30, 
which is a half an hour from now. That will necessarily mean 
the absence of most Senators for about a half an hour, given 
the time that it often takes to get the first vote cast and the 
second. So I ask your forgiveness to begin with before we even 
begin, but we would like to hear your testimony and then begin 
to proceed with Senators' questions. We probably will be 
interrupted somewhere in that passage. When we return, other 
Senators will be recognized if you can wait that half hour or 
so, and we will proceed then and then move on to our panel of 
other distinguished witnesses.
    Mr. Secretary.

     STATEMENT OF RICHARD ROMINGER, DEPUTY SECRETARY, U.S. 
  DEPARTMENT OF AGRICULTURE, WASHINGTON, DC.; ACCOMPANIED BY 
MARGARET O'K. GLAVIN, ASSOCIATE ADMINISTRATOR FOR FOOD SAFETY; 
    AND CAREN WILCOX, DEPUTY UNDER SECRETARY FOR FOOD SAFETY

    Mr. Rominger. Thank you, Mr. Chairman and other members of 
the Committee. I am pleased to be here today to talk about S. 
1988, to remove the statutory prohibitions on interstate 
shipment of State-inspected meat and poultry products that was 
introduced by Senators Daschle and Hatch last year. In addition 
to Senators Daschle and Hatch, I want to thank the ever-
increasing bipartisan group of Senators who have cosponsored 
the legislation, which is known as the New Markets for State-
Inspected Meat Act of 1999.
    As the former head of the California Department of Food and 
Agriculture, I am pleased that we have finally come up with a 
solution that is fair to States, fair to small producers, and 
fair to consumers.
    With me today, as you have indicated, are Deputy Under 
Secretary for Food Safety Caren Wilcox and Associate 
Administrator for Food Safety and Inspection Service Margaret 
Glavin, who have worked diligently with all of the stakeholders 
to resolve this interstate shipment issue.
    The bill here today solves the perennial question of how to 
level the playing field for small and very small State-
inspected meat and poultry processing plants, allowing them to 
reach markets across State lines. I think the bill finds the 
right balance, providing packers with access to compete in new 
markets, ensuring the necessary Federal oversight to guarantee 
consumers and our foreign trading partners of the integrity of 
a seamless national inspection system, and maintaining the 
identity of State inspection programs.
    The genesis of this bill was a public meeting the 
Department's Food Safety and Inspection Service held back in 
June 1977 in Sioux Falls, South Dakota, at the request of 
Senator Daschle. The meeting initiated a consensus approach 
toward achieving interstate shipment for State products. 
Subsequently, the Agency shared with our National Advisory 
Committee on Meat and Poultry Inspection a concept paper on 
interstate shipment, and ultimately the Committee composed of 
consumer, State, and industry representatives endorsed this 
carefully balanced concept as a basis for legislation.
    When Senator Hatch requested a report on the 
recommendations for lifting the ban on interstate shipment last 
year, we were pleased to forward the administration's proposal.
    The linchpin of this bill is the provision that States will 
adopt and enforce Federal inspection statutes and regulations. 
Inspected and passed State products will bear a Federal mark of 
inspection, making it crystal clear wherever these products 
move in commerce their safety and wholesomeness is assured by 
the U.S. Government.
    In addition, States will be allowed to continue to use 
their State mark of inspection. They will also continue to be 
allowed to impose additional requirements on plants voluntarily 
opting for State inspection. But States cannot impose these 
requirements on or interfere with the free movement of product 
originating from Federal or another State's plants.
    Before State-inspected plants can ship interstate, USDA 
will first conduct comprehensive reviews of the State programs, 
confirm that all the recommendations from the reviews have been 
implemented, and then annual comprehensive reviews will 
continue to verify that States are fully enforcing Federal 
inspection requirements.
    Under the Hazard Analysis and Critical Control Point, the 
HACCP inspection system now in place, the Nation's food supply 
is even safer than it has been. We have seen the overall 
presence of salmonella in broilers, swine, ground beef, and 
ground turkey drop, and for some species by as much as 50-
percent. To strengthen the seamlessness of the national 
inspection program under S. 1988, all salmonella performance 
standard samples for products eligible for a Federal mark of 
inspection, whether produced in a Federal or a State 
establishment, will be collected by the Department and analyzed 
in our laboratories. We believe this will also give consumers 
confidence of the Federal oversight of the system.
    So we think the time is ripe for S. 1988 with the final 
implementation of HACCP in January of this year. The 
approximately 2,300 State plants have adapted to the HACCP 
system very successfully and are producing safe and wholesome 
product under this new system of inspection. With the carefully 
planned in-depth reviews, the confidence will be there among 
consumers, industry, the States, and the Department to remove 
the inequity and allow State-inspected plants to ship their 
products interstate under the provisions of this bill.
    We have 25 great State partners that are on the map listed 
up there with the expertise to best provide inspection for 
their small and very small State plants. The States are 
illustrated on that chart. Those are the ones that are speckled 
there. USDA wants to strengthen its relationship with the State 
programs and ensure their viability. In fact, we want to 
encourage more States to implement their own program.
    To this end, the bill calls for raising the Federal 
reimbursement up to 60-percent of the cost of operating a State 
program. Currently, FSIS will reimburse a State for only up to 
50-percent of its program's costs.
    Additionally, since these are voluntary programs on the 
States' part and a State's resources are not inexhaustible, 
States would be permitted to limit the size of plants that are 
eligible for State inspection and this bill would allow for 
that. The very small plants who produce specialty niche market 
products, such as award-winning Kansas beef--we have got some 
Kansas beef right here--or jerky from--this is the maple cured 
M&J jerky from Vermont, and here we have got Manly Meats 
sausage links from Indiana. These are winners with the passage 
of this bill.
    Interstate shipment will allow these State plants to reach 
new markets and to engage in new and innovative methods of 
marketing, such as mail order or e-commerce over the Internet. 
So this bill would allow these small plants to better compete 
with plants that are Federally inspected.
    I think the consumer is also a big winner here. Consumers 
would be able to enjoy a greater variety of safe meat and 
poultry products like those that I just mentioned. With the 
current prohibition in place, you or I here in Washington 
cannot enjoy the many specialty products produced under State 
inspection. However, once this bill passes and becomes law, not 
only would every American be able to enjoy these and other 
State-inspected products, but people from around the world 
would be able to enjoy these products since they would be 
eligible for export, and they will be able to do so with the 
assurance provided by the USDA mark of inspection.
    Small producers will also win because they will have more 
local plant options for delivering their animals. In some 
regions, small farmers and ranchers have to transport their 
animals over long distances. Even Federally-inspected plants 
will benefit because they are often suppliers to these small 
and very small plants that buy their product and then add value 
to those products.
    The Federal program and the State programs are winners, 
too. Greater coordination between Federal programs and State 
programs will ensure the consistent application of policy and 
enforcement. Importantly, the higher degree of coordination 
will ensure that the expertise will flow both ways, maximizing 
the use of talents available in a national inspection system.
    The interstate shipment debate, as we have heard, has gone 
on long enough. Back in the early 1980s, when Senators Daschle, 
Dorgan, and Roberts were members with Secretary Glickman on the 
House Committee on Agriculture, then-House Subcommittee 
Chairman Harkin held hearings on this subject, and this was a 
decade after the debate on the issue had begun.
    Senator Harkin. Was that in the last century or what?
    [Laughter.]
    Mr. Rominger. A long time ago. So we think the time is 
right. HACCP has been successfully implemented. We have a 
balanced bill addressing concerns of processors, consumers, 
State regulatory authorities, USDA, and the industry, and this 
bill has been introduced. It is time to pass this interstate 
shipment bill.
    Mr. Chairman, thank you for the opportunity to appear 
before you this morning and I look forward to working with you 
in passing S. 1988 so that we can move to a seamless national 
food safety system. We will be happy to answer any questions 
that you or other members of the Committee may have. Thank you.
    [The prepared statement of Mr. Rominger can be found in the 
appendix on page 43.]
    The Chairman. Thank you very much, Mr. Secretary. It is 
appropriate you had the historical reference of our members 
during their House service. I think already it has been 
mentioned, by Senator Daschle, I think, that the issue has been 
with us for 20-years. I can recall each of the conferences 
during that period of time in which this issue has arisen in 
one form or another from one house or another and it is 
appropriate at this point, because we do have the ranking 
member and the Chairman of the Subcommittee that heard this 
bill in the last century.
    [Laughter.]
    Tom, would you like to proceed with your opening comments 
or your questions?
    Senator Harkin. As soon as I sit my cane down back here, I 
will be set.
    [Laughter.]

  STATEMENT OF TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING 
   MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    Senator Harkin. Thank you, Mr. Chairman, and I apologize 
for being late. I had to testify before the Armed Services 
Committee this morning and I just got out of that. I will just 
ask that my statement be made a part of the record.
    The Chairman. It will be included in full.
    Senator Harkin. I just want to make sure that I welcome 
Jolene Heikens of Triple T Meats in Wellsburg, Iowa, who has 
come here today and I look forward to her testimony. We have, 
as I am sure you do in Indiana and I know you do in South 
Dakota, Senator Daschle and Senator Johnson, a lot of these 
small plants that really provide a good source of revenue, they 
employ people, they produce a great product. Especially if you 
are in the corner of a State where you are bordering two other 
States and your market sort of is right over there but you 
cannot do anything, it really works a terrible hardship.
    I think what we have here is a good approach on this to 
ensure that these plants meet all of the requirements of HACCP 
and meet the requirements of Federal inspection, even though we 
can deputize the State inspectors. So I think we have a good 
seamless system here now that we can bring these small plants 
into the national system.
    With that, I thank you very much.
    The Chairman. Thank you very much, Senator Harkin.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 50.]
    The Chairman. I will ask my questions last so that we get 
as many Senators in before the vote. We are now advised the 
vote will be about 10:40, so that gives us a little bit more 
time.
    Senator Daschle, do you have questions of the witness?
    Senator Daschle. Mr. Chairman, I will be brief, but first 
of all, let me compliment Secretary Rominger for his excellent 
statement. We appreciate his presence here today. He said a 
couple of things that I think we ought to elaborate on, if we 
could just a little.
    One intriguing statement was that you actually encourage 
State-inspected plants and you want to see more of a State role 
and State involvement. Could you elaborate a little bit on why 
you think that is important?
    Mr. Rominger. We think it is important because the States 
know their local small plants and we think they are in a good 
position to be able to do a good job of inspecting those 
plants, and now that we have a national seamless system, why, 
we will be able to guarantee the consumers that those small 
State-inspected plants are up to the standards of Federal 
inspection and, in fact, will carry that Federal inspection 
stamp in addition to the State stamp, if the States still want 
to use that. So we think that would give the States an 
opportunity to put their State stamp on it as well as the 
Federal stamp.
    Senator Daschle. You also mentioned that this legislation 
could enhance food safety because of the food testing 
provisions. I would be interested, if you could, to elaborate a 
little bit more on that, especially as it relates to 
salmonella. Why is this a better food safety law than we might 
have otherwise had?
    Mr. Rominger. We have, as you know, recently instituted the 
salmonella testing, and perhaps one of my colleagues will 
elaborate on that, but we think that, that is important to make 
sure that all of these plants are testing for salmonella. USDA 
would continue to take the samples not only in the Federal 
plants but in the State-inspected plants, as well, and analyze 
them so that we would be able to assure consumers that those 
plants are meeting the salmonella requirements, as well, and we 
think that is important because salmonella is one of the 
pathogens that has caused sickness in a lot of people.
    Senator Daschle. And that is not happening today, correct?
    Ms. Glavin. Under HACCP, we do have plants where we test 
for salmonella. We have been doing that now for 3-years. The 
overwhelming majority of the plants, over 90-percent, have been 
able to meet the salmonella performance standards, which is a 
real tribute to those plants. They have stepped up to the plate 
and really taken charge. We think that having a single set of 
salmonella sampling, in other words, done all by the Federal 
Government, will enhance the safety of the product and will 
enhance consumer confidence that all plants are being held to 
the same standard. This has been a big success.
    Senator Daschle. Could I finally ask, obviously, a lot of 
groups, consumer groups, producer groups, processor groups, all 
have an interest in this. I appreciate your efforts to reach 
out to all of them to try to reach a consensus. Could you give 
us your appreciation of that effort? Was everybody included in 
this consensus making effort in the beginning and how do you 
feel about the role that all the groups have had in getting us 
to this point?
    Mr. Rominger. I will ask Caren to elaborate, but yes, we 
did include everyone who was interested and wanted to come to 
the discussions that were held, and, of course, our Advisory 
Committee also reviewed this process extensively. So we think 
everyone who was interested was included.
    Caren, do you want to elaborate on the amount of work that 
went into that?
    Ms. Wilcox. The National Meat and Poultry Advisory 
Committee, the Advisory Committee to the Secretary, did discuss 
this on numerous occasions. They looked at various work plans 
for the legislation. They made suggestions about changes. Those 
discussions--our meetings, of course, are public and were well 
attended by both the members and also those that are not formal 
members but they were perfectly able to make comments at that 
time. So there were several public discussions and extensive 
other discussions.
    Senator Daschle. Mr. Chairman, I have to say the Department 
has just been very, very helpful and cooperative in this whole 
effort. As was just noted, I think the outreach here to try to 
ensure that we have addressed the concerns and the priorities 
of all groups has really been a remarkable effort. I applaud 
them and I thank them for their participation and certainly 
appreciate their testimony this morning. Thank you.
    The Chairman. I thank the Senator.
    Senator Fitzgerald.
    Senator Fitzgerald. Thank you, Mr. Chairman.
    I neglected to congratulate the minority leader for his 
help and his lead sponsorship here. In my enthusiasm to thank 
Senator Hatch, I neglected to mention that you were the lead 
sponsor. While we are of different parties, I have enjoyed 
working with the minority leader on issues of importance to 
farm country out there.
    Mr. Rominger, thank you for addressing that issue about the 
consensus building process because I have noticed that there 
are a list of four organizations that opposed the legislation. 
I am glad you have attempted to work at the USDA with all 
interested parties.
    I have a little bit of a different question. I am wondering 
if the USDA has estimated the cost of implementing this 
legislation and does the President's or the current budgets 
that are floating out there right now being debated on the 
floor of the Senate, do we have appropriate levels of funding 
for the Food Safety Inspection Services to take on this new 
role?
    Mr. Rominger. Yes, we do. The FSIS 2001 budget includes a 
request for $1 million to cover the increased cost that would 
be associated with the comprehensive reviews of all the State 
programs. As far as the reimbursement from 50-percent to 60-
percent, if all of the States opted for that, that would add an 
additional $8 million in payments to the States, but that will 
not be needed until fiscal year 2002, but we would request that 
at that time.
    Senator Fitzgerald. So you think the States are in a pretty 
good position, too? You are saying there is going to be an 
increase in the amount of sharing of the expenses from 50- to 
60-percent?
    Mr. Rominger. Yes. This bill allows for that.
    Senator Fitzgerald. That is good. So the States should be 
in pretty good order, too. And if they are not, they probably 
will have trouble with you, I would imagine, because you have 
to approve the systems they have in place.
    Mr. Rominger. Well, the States, the 25 States that have 
programs now are operating under a 50-percent reimbursement, so 
we think this just will help them.
    Senator Fitzgerald. Thank you. You did touch upon this 
briefly in your testimony, but I just wondered if you could 
update the Committee a little bit more expansively on your 
progress in implementing the HACCP systems, the Hazard Analysis 
and Critical Control Point systems, in both the Federal and 
State-inspected plants.
    Mr. Rominger. As we have indicated, we have been through 
this process now. It was a 3-year process. First, we had the 
large plants that came on January 1, what would that have been, 
1998, and then we had the medium-sized plants and small plants 
on January 1, 1999, and now in January 2000, the very small 
plants have come under the HACCP regulation. We have seen a 
huge majority of those plants meeting their HACCP requirements, 
have their HACCP plans in place, and are doing a good job. So 
we think that now is the time to include all of them in this 
State and Federal inspection system. But they have done a good 
job.
    Maggie, would you like to comment?
    Ms. Glavin. I would only like to add that this past year, 
when we brought on the very small plants, a large number of 
those were State-inspected plants and the States did a 
wonderful job of bringing those plants along. These are the 
very small plants, fewer than ten employees, and we and the 
States worked very closely together to make sure that they were 
prepared.
    Senator Fitzgerald. Thank you very much.
    The Chairman. Thank you very much, Senator.
    Senator Johnson.
    Senator Johnson. Yes. I want to second the comments made 
about appreciation, not only for being here but for the work 
that you have done to build a consensus among so many different 
players who have an interest in this reform. I think we need to 
do more of that in general in Congress, frankly, but in this 
particular instance it is very, very welcome.
    You observed about how we are enhancing our meat safety 
inspection with the implementation now of HACCP and the 
salmonella testing and so on, but, in fact, the track record of 
State-inspected meat products, even before that, how would you 
characterize it? We are starting from what, in fact, was a very 
high level in the first place is my understanding. Is that a 
fair characterization of our State-inspected meat plants, by 
and large, in the past?
    Mr. Rominger. Yes. Yes, I think so. I think the States have 
done a good job in the past. We think that this will assure 
consumers and assure our foreign trading partners that they are 
equal, they are the same as the Federally-inspected plants. So 
there would be even more confidence.
    Senator Johnson. Do you anticipate any resistance from our 
trading partners, having evaluated this new approach in the 
U.S.?
    Mr. Rominger. No, I do not.
    Senator Johnson. Good. When you talk about increasing our 
cost share from 50- to 60-percent and then ultimately an $8 
million increase, a very modest level when you think of a 
national effort such as this, what is that added increment 
designed to enable the States to do? What is the rationale for 
the 50- to 60-percent and how will that $8 million assist the 
States?
    Mr. Rominger. Well, there may be some added costs to the 
States in their coordination with the Federal Government, 
making sure that our inspectors and their inspectors keep up to 
date on all the training that goes on. So there may be a little 
added expense for States in being part of this seamless system, 
so we thought that this would be a way to compensate them for 
that.
    Senator Johnson. Do you anticipate that there will be an 
overwhelming positive response from these 25 States that have 
State inspection systems?
    Mr. Rominger. I think so. Caren, do you have any comment?
    Ms. Wilcox. We certainly believe that probably all of them 
will be very enthusiastic about it.
    Senator Johnson. And you anticipate additional States may, 
in fact, as well, join in with State inspection systems?
    Mr. Rominger. Have we had any?
    Ms. Wilcox. There are provisions in the bill for them to 
come in and we would hope that there would be. We have some 
indications from some States that they are interested in the 
new program.
    Mr. Rominger. Because there are some States that have given 
up State inspection in the last few years and they may be 
interested now in getting back in.
    Senator Johnson. Again, I appreciate your testimony here 
today. I think there is a lot of enthusiasm among the American 
public as well as producers on this issue, and again, your work 
to really put us in a position now to finally begin to 
implement this reform, I think is very welcome and badly 
needed. Thank you.
    The Chairman. Thank you, Senator Johnson.
    Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman, and I, too, 
appreciate your availability here today. I just have a couple 
of questions.
    I do not think anyone in the room will disagree with the 
fact that our agricultural community today faces a variety of 
struggles on a daily basis, and one of the top ones is truly 
trade barriers. Senator Johnson asked a few questions about 
that. You answered with a no, that you felt pretty confident 
that we would not have any problem with our trading partners, 
but I cannot help but imagine a scenario where you have a 
product that is inspected in, say, a State like Oklahoma, maybe 
shipped to Louisiana, where it is further processed into a 
Cajun sausage, and then shipped to Europe.
    I just wonder if our trading partners are going to be 
willing to deal with each of those individual inspecting 
systems through the various States. From your previous answer, 
I can only assume that it is that you maintain that S. 1988 
would not violate any current international trade agreements, 
is that correct, Mr. Rominger?
    Mr. Rominger. That is correct, and we think that our 
trading partners will accept this because that Federal stamp 
will be on the product that is inspected by the State plants 
because they are meeting Federal inspection requirements.
    Senator Lincoln. That just kind of leads me to, and we talk 
about the 25 States that have State inspection systems are very 
pleased with this legislation. I thought it was 26, I guess. 
There are 24 States that do not, is that correct, that do not 
have State----
    Mr. Rominger. No, we have got 25.
    Ms. Wilcox. One dropped out recently.
    Senator Lincoln. The numbers do not matter. I am just 
saying that there is another side to that coin. There are the 
other 25 States that do not have State inspection systems. When 
you mention that, if, in fact, they are meeting Federal 
guidelines, why would it be--I do not know that they would not 
want to be Federally inspected.
    Mr. Rominger. Why would not the small plants want to be 
Federally inspected----
    Senator Lincoln. Because of the cost?
    Mr. Rominger.--instead of staying with the State program?
    Senator Lincoln. Yes.
    Ms. Glavin. Certainly at our public meeting back in 1997 in 
Sioux Falls, we heard extensively from small producers about 
their desire to continue to work with State people who were 
much closer to them, who were much more available than the 
faceless people in Washington, is what they would call us. I 
think I became convinced certainly in that meeting that the 
very small plants, these plants that have a small number of 
employees, often are family owned and family run, are better 
served by a government agency that is closer to them, that 
knows the community, that knows them, is able to get to them 
faster.
    That was the basic reason, because we kept asking that 
question. Why not come under Federal inspection if you want to 
ship interstate? Universally, that was the answer. I know the 
people in the State. They respond to me. They respond to my 
phone calls.
    Senator Lincoln. Well, in terms of leveling playing fields, 
I definitely think that is important, but you have States that 
have opted not to do a State system because they chose to do 
the international trade, or to trade across State lines and 
internationally.
    If, in fact, that Federal stamp is over the State stamp, 
does that mean that the Federal Government assumes the 
liability and the responsibility?
    Mr. Rominger. It would be the same as any other Federally-
inspected plant now. The Federal inspection is on it, which 
means that we are assuring consumers that, that is a safe, 
wholesome, healthy product.
    Senator Lincoln. So you do assume the liability and the 
responsibility of that. Well, then can you just describe how 
the State-inspected facilities would have to comply with the 
FSIS, the regulatory requirements?
    Ms. Glavin. First of all, they would be required to adopt 
all of the requirements of both our legislation and our 
regulation and they would have to enforce those in the same way 
that we do. They do that today. They have equal to. But they 
would have to have the same laws and regulations and enforce 
them as we do.
    Senator Lincoln. So it almost sounds like the Federal 
Government wants to get out of meat inspection.
    Ms. Glavin. No.
    Senator Lincoln. No?
    Ms. Glavin. I would not go that far.
    Senator Lincoln. But, I mean, if, in fact, you take the 
liability but allow the State to do it as long as they comply 
with your guidelines, then it is kind of like was mentioned 
earlier, the deputizing, apparently, of State inspection 
systems.
    Ms. Glavin. We would continue to have oversight of those 
State systems, including yearly reviews of them, and as has 
been mentioned, we will do the salmonella performance standard 
testing, which would be an ongoing check that, in fact, things 
were operating properly.
    Senator Lincoln. The number that you mentioned on that 
salmonella testing, the 90-percent compliance, I guess, or 
positive results from that, were those all Federally--I did not 
understand your answer. Those were all Federally-inspected 
facilities, right----
    Ms. Glavin. Those are Federally inspected.
    Senator Lincoln.--not State-inspected facilities.
    Ms. Glavin. That is what is in our database, yes.
    Senator Lincoln. Right. So then what you would be hoping 
would be if they comply with all of your standards and 
requirements, then those State facilities would meet that 90-
percent level, hopefully, as well?
    Ms. Glavin. The 90-percent was 90-percent of plants are 
meeting the standard, and all plants are required to meet them. 
It is clear that plants are stepping up to the plate and doing 
that. The States----
    Senator Lincoln. Those are Federally-inspected plants, 
correct?
    Ms. Glavin. The ones that my data refers to are Federally, 
yes, but the State plants all have the same requirement.
    Senator Lincoln. They do now?
    Ms. Glavin. Yes.
    Senator Lincoln. OK. Do you know if they are meeting that 
same----
    Ms. Glavin. Yes, they are. I do not know the exact 
percentage of plants that are meeting it, but I would assume it 
is in the same area of 90-percent.
    Ms. Wilcox. Most of the small plants, the very small 
plants, have just come into the program and therefore the 
database is not complete as to the salmonella sets for the very 
small.
    Senator Lincoln. I just had a few concerns and wanted to 
make sure that I had those expressed and would like to maybe 
visit with you further on some other questions that we may 
have.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Lincoln.
    One concern of critics of the bill has been phrased in this 
way. Under this bill, would all State-inspected plants have to 
comply with all USDA directives, notices, and policy 
memorandum? Was that the intent of the proposal as prepared for 
transmittal to Congress?
    Mr. Rominger. Yes.
    Ms. Glavin. Yes.
    Ms. Wilcox. It is our intent, yes.
    The Chairman. Under this bill, would States still be able 
to require and to pay for inspection of all meat species? For 
example, in Indiana, inspection is required for farm-raised 
deer and elk, bison and ostrich and emu, and there are a few 
plants in the State that slaughter these species. Is the 
legislation comprehensive in that way and what comment can you 
make about all meat species?
    Ms. Glavin. That would continue to be allowed, although as 
is the case today, there would be no Federal payment for that 
part of a State's program.
    The Chairman. I see, no Federal payment there. So the 
States could do it, but they have to assume total payment 
there?
    Ms. Glavin. Right, and that is the case today.
    The Chairman. There would still, however, be the dual 
stamps, both the Federal and the State stamps?
    Ms. Glavin. No, only on product covered by the Federal Meat 
and Poultry Acts.
    The Chairman. So on, for instance, the farm-raised deer, 
this is a State responsibility and the State stamps it and pays 
for it?
    Mr. Rominger. Unless the Federal Meat Inspection Act is 
changed to include them.
    The Chairman. The bill allows USDA to reimburse a State for 
up to 60-percent of the costs. The bill also requires a 
comprehensive Federal review of State inspection programs to 
determine their effectiveness of each program, identify changes 
that are required. Is it possible that changes could be 
required that would substantially increase the cost to the 
State of this process, even with the higher Federal 
reimbursement?
    Ms. Glavin. I think the one area where there could be 
additional cost is if additional small plants decided to move 
over to the State system, that could add to the States' costs. 
They would need additional inspectors, etc.. So there is the 
possibility that their cost could increase.
    The Chairman. And it is in that area that the States are 
likely to incur costs? In other words, if you are a State and 
you are taking a look at this and you wonder, granted, the 60-
percent reimbursement is more generous, but am I going to be 
required to do a lot of other things that lead to my costs 
being higher.
    Ms. Glavin. That is part of the reason for allowing States 
in this bill to set a size limit on the plants that they would 
be willing to take into their program so that they have some 
way to control their cost.
    The Chairman. Now, in response to other Senators, you have 
commented you do not anticipate difficulty with regard to our 
trading partners abroad. I am just curious, have any inquiries 
gone out from the Department to any of these markets or any 
other countries? Are they aware that this legislation has been 
drafted by USDA, offered by distinguished Senators, and do you 
have any official reaction from them?
    Mr. Rominger. Caren?
    Ms. Wilcox. I know that they have been informed because 
USTR and FAS have reviewed this bill and there have been 
notices, but I do not know of any formal responses. We do know 
that some of our meetings have been monitored by 
representatives of other governments.
    The Chairman. And they have made either favorable comments 
or no comments or how would you characterize it?
    Ms. Wilcox. No formal comments.
    The Chairman. Now, 25 States are covered on your chart by 
both State and Federal programs presently. Are more States 
likely to join this process, and do you have any evidence, any 
comment as to what kind of decisions might be made by States 
that do not have programs presently?
    Mr. Rominger. I do not think we know for sure whether any 
States will decide to go back to adopt a State-inspected 
program because it does incur costs for a State that does their 
own program because the Federal Government will only reimburse 
under this bill up to 60-percent of their costs. So there would 
be additional costs for the States if they decide to do their 
own program.
    The Chairman. Is that your view as to why many States have 
not adopted State programs, because it does have an added cost 
to it and, therefore, they have just simply been a part of the 
Federal business from the beginning?
    Mr. Rominger. I think that is a major cost, major reason, 
yes.
    Ms. Glavin. There is some movement over the years in and 
out of the program, and in the past few years, the two States I 
remember that have dropped the program were Florida and Alaska, 
and in both cases it was for financial reasons caused.
    The Chairman. And presumably, they did not have additional 
meat products that were outside the Federal bounds. I mentioned 
the Indiana situation of these additional species. That might 
be a justification for having a State program, if you had 
additional items that you wanted to certify.
    Ms. Wilcox. Yes. If you had an industry with non-amendable 
species, yes.
    The Chairman. Senator Harkin, do you have further 
questions?
    Senator Harkin. Mr. Chairman, I just have one. I think you 
and others have covered this waterfront pretty thoroughly. I 
just have one just a little bit different than this, Mr. 
Rominger. I wrote a letter to Secretary Glickman on March 27. 
It has to do with the reduction of 197 inspector years 
contained within the USDA's budget for next year. I am very 
disturbed by this, as a matter of fact, and why that is in 
there. Here we are talking about inspections, and yet the USDA 
in their own budget is asking us to reduce by 197 inspector 
years, and yet we just recently had another outbreak of 
listeria, as you know.
    So I am really disturbed by this and I hope that you will 
take this back to the Secretary and ask him please to take a 
look at the letter I wrote just the other day. I really believe 
that you are doing this without soliciting any public comment. 
I really think that before any changes are made in the 
inspection process, I really do think you need to go through an 
open rulemaking just as you would for any changes in slaughter 
inspection. That was sort of the content of my bill.
    I do not need you to reply to that, but please take this 
back to the Secretary and let him know that we need to really 
discuss this because the last thing we need is a reduction in 
inspectors, I think, out there. If you want to comment on that, 
I would be glad to hear that.
    Mr. Rominger. We appreciate and we understand your 
concerns. Certainly, the Secretary will be responding to your 
letter. I will ask my colleagues to amplify about that, but I 
would just add that, currently, we have funds in the budget for 
additional inspectors and we have an aggressive recruiting 
program underway right now to add some additional inspectors in 
this fiscal year.
    Senator Harkin. So you are adding them this year and 
cutting them next year.
    Ms. Glavin. We do intend to, for slaughter inspection, do a 
full notice and comment rulemaking process for any changes 
there, and we are also committed to a full public process on 
making any changes in the frequency of processing inspection.
    Senator Harkin. I have to tell you, Ms. Glavin, through all 
my years here, I do keep fairly open doors to a lot of 
producers around the country, large and small, and I am hearing 
more and more complaints about the fact of the lack of being 
able to get a Federal inspector, and then I get hit with this 
budget of 197 reduction and I am wondering, what is happening 
here? I do not understand this. Do you have any other comment 
on that? I do not understand it.
    Ms. Glavin. Well, no. As the Secretary indicated, we have 
had a very aggressive recruiting program this year and we have 
seen some success in increasing the number of slaughter line 
inspectors and we are committed to continuing that.
    Senator Harkin. Maybe we can work this out, but maybe you 
can enlighten me more as to why that was in the budget.
    Ms. Glavin. Yes.
    Senator Harkin. Thank you very much.
    Mr. Rominger. We would like to continue the discussion with 
you on that issue.
    Senator Harkin. I appreciate that. Thanks.
    Senator Lincoln. Mr. Chairman, can I just ask them to 
qualify an answer to the Chairman's question? In discussion 
about having presented the proposal to USTR, you did not get a 
formal response from them?
    Ms. Wilcox. Oh, no, from them, but there is a process that 
they have once a bill is introduced that could have 
implications in international trade that they have.
    Senator Lincoln. I just want to make sure that I 
understand. I realize that you have no----
    Ms. Wilcox. No. USTR fully oversaw this bill----
    Senator Lincoln. And supports it?
    Ms. Wilcox.--and the administration as a whole supports 
this bill.
    Senator Lincoln. So USTR, they fully support it?
    Ms. Wilcox. They reviewed this bill----
    Senator Lincoln. It is just the other countries that you 
are saying?
    Ms. Wilcox. Our understanding of the Chairman's question 
was, did other countries know about the bill, and there is a 
process for informing them about it.
    Senator Lincoln. You have gotten no formal comment from the 
other countries----
    Ms. Wilcox. We have no formal comment that I know of from 
them.
    Senator Lincoln.--but you have a formal endorsement from 
USTR?
    Ms. Wilcox. Yes. There was a full review by USTR, yes.
    Senator Lincoln. I just wanted to make sure I was correct 
on that.
    Ms. Wilcox. Thank you for clarifying the record.
    Senator Lincoln. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Lincoln.
    We are concluded with this panel, which is fortuitous. You 
can go back to work. But we appreciate very much Secretary 
Rominger, Ms. Glavin, Ms. Wilcox and will return after these 
votes and have a distinguished panel.
    Mr. Rominger. Thank you, Mr. Chairman.
    The Chairman. For the moment, the hearing is recessed.
    [Recess.]
    The Chairman. The hearing is called to order again. We 
thank you for the patience that you have displayed already as 
our witnesses. We look forward to hearing from each one of you.
    Let me introduce the panel who have assembled. They are 
Fred L. Dailey, the Director of the Ohio Department of 
Agriculture and President of the National Association of State 
Departments of Agriculture from Reynoldsburg, Ohio; Michael 
Eickman, Eickman's Processing Company, Incorporated, 
representing the American Association of Meat Processors, the 
Illinois Association of Meat Processors, and 18 other State 
meat processing associations, from Seward, Illinois; Jolene 
Heikens, Triple T Country Meats, representing the American 
Association of Meat Processors, the Iowa Association of Meat 
Processors, and 18 other State meat processing associations, 
from Wellsburg, Iowa; Harry Pearson, President of the Indiana 
Farm Bureau, representing the American Farm Bureau Federation, 
from Indianapolis, Indiana; Richard T. Nielson, President of 
the Utah Cattlemen's Association, representing the National 
Cattlemen's Beef Association from Salt Lake City, Utah; Carol 
Tucker Foreman, Distinguished Fellow and Director of the Food 
Policy Institute, Consumer Federation of America; and Patrick 
Boyle, President and CEO of the American Meat Institute, 
Arlington, Virginia.
    We are delighted that you are all here. I will ask you to 
testify in the order that I have introduced you. Please try to 
summarize your comments in 5 minutes, more or less, and your 
full statements will all be made a part of the record of this 
hearing.
    Mr. Dailey.

   STATEMENT OF FRED L. DAILEY, DIRECTOR, OHIO DEPARTMENT OF 
     AGRICULTURE, PRESIDENT, NATIONAL ASSOCIATION OF STATE 
         DEPARTMENTS OF AGRICULTURE, REYNOLDSBURG, OHIO

    Mr. Dailey. Thank you, Mr. Chairman. Thank you for the 
introduction, as well. I did not have it on my resume, but I 
did serve 6-years as Director of the Indiana Division of 
Agriculture during the 1970s, so I am almost a Hoosier.
    The Chairman. Indeed, always a Hoosier.
    [Laughter.]
    Mr. Dailey. But I am also responsible for a State meat 
inspection and poultry program which oversees 215 
establishments in our State and I have with me today Dr. Lee 
Jan, Director of the Meat Safety Assurance Division of the 
Texas Department of Health, and he is President of the National 
Association of State Meat and Food Inspection Directors. We 
thank you for the opportunity to speak here today.
    I am here on behalf of all the States to support the 
approach embodied in this bill, which would lift the unfair ban 
on interstate shipment of State meat and poultry products. This 
is a subject of extreme importance to State Departments of 
Agriculture and the time to act is now. The reasons to act are 
clear, simple, and, I think, very compelling.
    Because of our long history of oversight and compliance 
with the ``equal to'' inspection requirements of Federal law, 
the States have never viewed this question of removing 
interstate shipment as a food safety issue. In fact, we are 
very, very proud of our food safety record.
    Some of you may wonder why we have 25 States with their own 
State meat inspection programs. Who are we serving? Our mission 
is to provide consumers with wholesome, unadulterated products 
that are properly labeled and safe. State programs are geared 
to regulating small and medium-sized businesses. Our personnel 
are generally more accessible and more flexible in providing 
inspection resources that are geared to the needs and timing of 
small plants that are not running three production shifts per 
day working five or 6 days per week. State programs also 
provide practical information and technical assistance and our 
overtime inspection fees are considerably less than Federal 
rates. In Ohio, for example, it is $18 an hour versus $47 an 
hour for the USDA.
    We are geared to working with and supporting businesses 
that cannot afford to employ a scientific staff or attorneys to 
sort through all the regulations in searching for answers. We 
provide a direct line of information sharing and decision 
making that is accessible to small businesses much more easily 
than the multi-layered chain of command and the frequently 
adversarial attitude of the larger Federal system. So we feel 
there is definite need for existing State programs to continue, 
and if this legislation passes, you are more likely to see 
additional States adopt programs.
    Now, the question before you this morning is whether to 
change, whether to level the playing field and provide the same 
opportunities for all meat and poultry processors, or to 
continue the Government sanctioned economic advantage for large 
corporations and foreign competitors at the expense of small 
businesses.
    As I was preparing my testimony, I looked back to testimony 
I gave back in 1996, almost 4-years ago, and I began wondering 
how many of our small processors we had lost in that time. I 
went back and counted and it was 41 different plants that we 
have lost. We have also had a number of small cattle ranchers 
and hog farmers that have not been paid competitive prices and 
there have not been as many opportunities for price discovery. 
If you go to a livestock auction, they used to be crowded 
affairs with a lot of packer buyers. Now, there is one or two 
and you almost sense that you take this lot and I will take 
that lot.
    Mr. Chairman, quite a lot has not changed since the 1996 
hearing, and yet quite a bit has changed. That presents us with 
new opportunities. First, let me tell you what has not changed 
over the years and why this issue is so important to us.
    Most importantly, small meat processors under State 
programs are still denied many opportunities to sell their 
product today because they do not have full access to the U.S. 
marketplace. Many of these companies make and market specialty 
products, like sausage, bratwurst, jersey, and ethnic meat 
products often made from old world recipes which are not cost 
effective product lines for large operators but for which there 
is clearly a demand. Repealing the ban would provide consumers 
with more choices in the supermarket and convenience stores.
    It has always struck us as both unfair and illogical to say 
that consumers in one State may enjoy meat product while 
consumers in another State may not meet that same product. I 
choose the word ``meat product'' carefully because this is the 
only State-inspected product that cannot be shipped interstate. 
You heard the difference between buffalo and beef and we have 
beefalo, which is actually five-eighths beef and it has to be 
inspected because it is more beef than it is buffalo. You can 
actually cross-breed the two. But it is illogical when you get 
down and look at the absurdity of it all.
    Maintaining the interstate ban prevents small businesses 
from capitalizing on other sales opportunities, such as niche 
marketing through mail order catalogs, the Internet, and we 
even have a situation in Ohio and Indiana where we have Union 
City. You can sell product on one side of the street, but you 
cannot cross this street and sell it on the other side.
    In my State, Ohio State University recently did a study and 
they found that lifting the ban would mean an additional $56 
million to our State economy and create almost 600 new jobs for 
our State.
    The second thing that has not changed is the unfairness of 
the ban. You have heard about the large packing conglomerates, 
but particularly I think it is very unfair with the foreign 
competition. The trade agreements allow foreign inspected 
product to be shipped anywhere in the United States so long as 
that foreign inspection program is equivalent to the U.S. 
Federal standards, in practice, the same standard which the 
State must meet. If any of our State-inspected plants were 
located in Guatemala, Mexico, Australia, they could ship 
anywhere in the United States. But because they are not, they 
are restricted to intra-State marketing.
    As you have heard, the Secretary has three Advisory 
Committees which has now recommended that HACCP is fully 
implemented in the small plants.
    The third major thing that has changed is that we finally 
have the administration on board supporting our effort. While 
the legislation may not be perfect, it is something that will 
work and it would move us even closer to a uniform national 
inspection program. The bottom line is that today, there are 
now meaningful distinctions between Federal and State 
inspection programs which justify perpetuating this unfair ban.
    I want to thank the administration for putting this concept 
on the table. It is billed as a consensus bill. Some of us feel 
like we have not had as much input as we would like, but we do 
believe that the true consensus is very close, Mr. Chairman. 
With a little work by the Committee with all the interested 
stakeholders and all the issues, we can reach a reasonable 
accommodation that maintains all the essential elements of the 
USDA concept.
    I would like to challenge my colleagues in the food, 
consumer, and agriculture communities who are here this morning 
to commit to working these remaining issues out, getting a bill 
passed, not believe that keeping the status quo is in the best 
interest of anyone.
    So we all have a reason to remain engaged in the process 
and see this bill through to completion. Our NASDA members and 
the constituents we serve hope that Congress will act this year 
to remove this unfair ban and competitive barrier to small 
businesses. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Dailey.
    [The prepared statement of Mr. Dailey can be found in the 
appendix on page 52.]
    Mr. Eickman.

 STATEMENT OF MICHAEL EICKMAN, EICKMAN'S PROCESSING CO., INC., 
 REPRESENTING THE AMERICAN ASSOCIATION OF MEAT PROCESSORS, THE 
  ILLINOIS ASSOCIATION OF MEAT PROCESSORS, AND 18 OTHER STATE 
            MEAT PROCESSING ASSOCIATIONS SEWARD, IL

    Mr. Eickman. Thank you, Senator Lugar and members of the 
Committee. My name is Mike Eickman. I own and operate Eickman's 
Processing Company, Incorporated, in Seward, Illinois. I 
presently employ 25 men and women in a small State-inspected 
meat packing facility. We do slaughter and complete processing 
from farm to table as well as wholesaling and catering. We are 
located 25 miles from the Wisconsin border.
    I am speaking on behalf of myself and the State-inspected 
processing plants across the country representing the American 
Association of Meat Processors and the Illinois Association of 
Meat Processors. These organizations and I strongly ask and 
urge the Senate bill and interstate shipment be favorably 
considered and passed. This legislation will help smaller 
processors economically and finally allow them to compete in 
free trade, which has been restricted through invisible 
barriers called State lines for too long.
    There are presently 25 States that have State inspection 
and they have State inspection because their State legislatures 
feel that meat products within their States should be inspected 
so that the consumer will have a wholesome meat product. The 
Federal system does not require inspection for custom 
slaughtered products that are the property of the local farmers 
and sold to his customers.
    Currently, the Federal Government assists States with 
funding for their programs and requires these States to 
recognize and follow USDA and FSIS regulations. If a State does 
not meet these requirements, then the USDA can intervene and 
may take over the State's program. This would then mean that 
Federal inspectors would be required to inspect in those 
programs so that the products may be sold.
    Since this HACCP was installed, requiring the State 
inspection systems for them to continue to get funding, I feel 
that States should be awarded the opportunity to ship in 
interstate commerce if they so desire. It would not be a 
program that everyone would necessarily have to participate in 
but could be available for those qualified and willing to 
follow the regulations set down by the USDA and State 
officials.
    Secretary Glickman was asked about interstate shipment at 
our convention in Louisville, Kentucky, several years ago and 
he said that it could not happen unless the HACCP system was 
implemented and in place. Now that system is in place and 
operating.
    I have been asked why my plant never went Federal for 
inspection and there are several reasons. In the early years, 
in 1967 when the Wholesome Meat Act was enacted, we were busy 
with doing custom processing. Over the years, this has changed. 
Now there are fewer farms with livestock and the larger feeders 
direct their livestock to larger packers away from our 
facilities. We also felt that the Federal system did not want 
to hassle with small facilities due to the lack of personnel 
and necessary funding to pay for added inspectors.
    Today, we still wonder if the system wants small plants. 
Illinois has nine State plants that have applied for Federal 
inspection and 12 more are in the process of looking into it 
and going Federal. Currently, none of these have received a 
response from the circuit supervisor, and that was as of last 
week. I even had a Federally-inspected plant operator tell me 
that his inspector told him he wished this bill would pass so 
that they could give the smaller plant back to the State. This 
would allow the Federal inspectors to concentrate on the larger 
facilities.
    Another reason is the method of communications the State 
uses to solve problems. We do not have the pile of red tape to 
work through to solve a problem. Just a few phone calls and the 
problem can be solved. We also have heard of the horror stories 
that the larger plants have for trying to get something solved 
on the Federal system and it can be a real task to accomplish 
something.
    In our plant, we also process and inspect exotic animals. 
These are inspected and can be shipped anywhere in the world 
and across the State lines. However, beef, pork, and lamb are 
restricted by the inspection system. Our exotics are inspected 
the same ways by the same inspector and we just have never 
figured out why.
    This is not a food safety issue. It is an economic issue 
concerning small State-inspected operations and they need a 
chance to expand our market base, move freely in interstate 
trade. The passage of legislation will not lower the quality of 
inspection but will enhance the quality of products available 
to the customer. We have customers waiting for our products but 
we cannot ship over that interstate fence and it is a bill that 
is really needed.
    Once again, I ask you to look favorably upon this bill. It 
is needed, wanted, and now is the time for the processors in 
these States to kind of get some compensation for their 
efforts. Please vote yes, and I sure appreciate the opportunity 
to talk to you today.
    The Chairman. Thank you very much, Mr. Eickman. We 
appreciate your testimony.
    [The prepared statement of Mr. Eickman can be found in the 
appendix on page 63.]
    Ms. Heikens.

     STATEMENT OF JOLENE HEIKENS, TRIPLE T COUNTRY MEATS, 
 REPRESENTING THE AMERICAN ASSOCIATION OF MEAT PROCESSORS, THE 
 IOWA ASSOCIATION OF MEAT PROCESSORS, AND 18 OTHER STATE MEAT 
             PROCESSING ASSOCIATIONS, WELLSBURG, IA

    Ms. Heikens. My name is Jolene Heikens and I am from 
Wellsburg, Iowa. My husband and I own and operate Triple T 
Country Meats. I am here today representing the Iowa Meat 
Processors Association and the American Association of Meat 
Processors.
    Currently, State-inspected meat plants can only sell their 
products inside their own State. We feel our businesses are 
being discriminated against for no apparent reason. Last year, 
our business had no choice but to turn down the largest beef 
order we have ever received because we could not cross State 
lines. Is the consistency there when I can sell a State-
inspected buffalo, deer, ostrich, emu, or elk all over the 
United States and the State-inspected beef and pork have to be 
sold within the State?
    What is so special about beef or pork that they get a 
mandatory free inspection? I can literally watch beef be State-
inspected the exact same way as a buffalo or any of the above-
mentioned animals and they could be marketed through the United 
States. Why should these animals be governed under different 
rules? Are we not as concerned about products made from these 
animals as we are with our beef and pork products?
    Interstate shipment is not a food safety issue. This is 
about placing marketing restrictions on State plants who are 
enforcing Federal regulations. Our State has spent hours 
educating processors with the help of Dr. Joe Cordray, an Iowa 
State University meat specialist. The Iowa Department of 
Economic Development, the Iowa Meat Processors Association, and 
Mike Mamminga are just a few that have supported this effort to 
help implement HACCP.
    Communication between plant owners and our State inspection 
people have been a key component to the success of our State 
inspection program. The ease of communication between State 
inspection personnel and plant owners is something I probably 
did not realize the benefits of or the importance until I was 
faced with the frustration of wanting to expand. I had no 
choice but to look at the Federal level because I had possible 
clientele out of State.
    After 2-years of working on writing a business plan and 
applying for several loans and grants, I came to the point of 
being ready to begin building. So I called the Federal office 
in Des Moines and I asked for an appointment to jointly look at 
our plans for our new facility. I was told that would make them 
a consultant and they were not allowed to do that. They would 
come after the plant had been built and ready to open. Then I 
would be made aware of any deficiencies that needed my 
attention. My goal here was to prevent any problems that could 
arise after construction had become, and I certainly do not 
want to be made aware of my deficiencies when I am about ready 
to open a new facility.
    I guess I am back to the ease of communication. I do not 
mean easier terms of inspection purposes. I am talking about an 
inspection service that is available not just to regulate but 
who tries to participate and provide direction.
    We are running a market-driven business which the State 
inspection programs seem to have a much better understanding of 
because they not only want to make sure our meat products are 
safe to the consumer, State inspection is there to help and 
provide answers and direction in a timely fashion.
    In closing, I just simply cannot fathom why interstate 
shipment should even be an issue. Our plants are enforcing 
Federal regulations and we have done everything that we have 
been mandated to do. There should not have to be frustrating in 
wanting to expand to small business, especially when my 
guidelines and regulations are equal to, and in some cases 
better than those regulated in Federal facilities.
    Therefore, I cannot find any valid reasons or laws that 
should prevent interstate shipment of meat and poultry 
products. Thank you for your time. And I am a Hawkeye and a 
Cyclone.
    [Laughter.]
    The Chairman. I understand.
    [The prepared statement of Ms. Heikens can be found in the 
appendix on page 68.]
    It is my privilege to introduce now a Hoosier, so it turns 
up in the batting order.
    [Laughter.]
    I wanted to take this occasion of introducing Harry 
Pearson, President of the Indiana Farm Bureau, to congratulate 
him on presiding over the publication of a remarkable history, 
80-year history of Indiana Farm Bureau, which we just received 
and enjoyed enormously. It is good to have you, Harry, and 
please testify.

  STATEMENT OF HARRY PEARSON, PRESIDENT, INDIANA FARM BUREAU, 
REPRESENTING THE AMERICAN FARM BUREAU FEDERATION, INDIANAPOLIS, 
                               IN

    Mr. Pearson. Thank you very much, Chairman Lugar. It is 
certainly a pleasure to be here this morning and we appreciate 
you holding this hearing. I tried to summarize my comments a 
little bit in comparison to those that have been presented.
    I am Harry Pearson, the President of the Indiana Farm 
Bureau, and I live on a farm and farm in partnership with my 
brother and our family. The American Farm Bureau certainly 
appreciates the opportunity to make comments regarding the 
interstate shipment of State-inspected meat. This is an issue 
of great importance to our farmers and ranchers all across the 
country.
    We strongly support efforts to align and implement meat and 
poultry inspection laws that would allow these products under 
both Federal and State programs to be distributed in interstate 
commerce. The mission of the Food Safety Inspection Service is 
to provide appropriate regulatory safeguards and services to 
ensure that all meat, lamb, and poultry products for interstate 
shipment or foreign commerce meet food safety standards.
    As State and Federal budgets become more and more limited, 
it seems that the time is right for increased coordination 
between State and Federal meat inspection programs. Many times, 
the products inspected in a State-inspected facility are small-
volume specialty products, and quite often, those items 
prepared by the small operators are not always economically 
feasible for large-volume operators. The ability to ship 
interstate could benefit livestock producers, small processors, 
and consumers, and at the same time stimulate economic 
development in rural communities.
    As has been mentioned earlier, the four major packers 
account for more than 80-percent of the fed cattle slaughter. 
Fifteen-years ago, large packing houses only accounted for 
about 36-percent of that volume. Farm Bureau members believe 
that competitive pricing activities of the livestock industry 
have been reduced due to the high concentration of processing 
by the four major packers. Allowing State-inspected meats from 
small and mid-sized processing plants to move interstate gives 
them additional opportunities to expand their business.
    In 1996, the USDA Packer Concentration Panel determined 
that allowing interstate shipment of State-inspected meats 
would provide additional competition in the marketplace. The 
Farm Bureau has worked diligently for the passage of NAFTA and 
GATT and that same type of effort is being applied toward the 
passage of permanent normal trade relations with China. World 
trade opportunities also increase our opportunities as we open 
new markets.
    We strongly believe in food safety and maintaining the 
highest level of consumer confidence in our food safety. As has 
already been mentioned, however, this debate is not about food 
safety but is about our own U.S. processors having the access 
to our U.S. markets on terms that are no more restrictive than 
those that foreign exporters must meet.
    Several years ago, we supported and worked closely with 
Congress and the administration to pass the HACCP system into 
law. HACCP is now fully implemented, with every meat processing 
plant in this country operating under this scientifically-based 
process. It is now time to further the coordination in meat 
inspection and to incorporate interstate commerce for State-
inspected meats.
    There is support from several individuals in our State 
regarding S. 1988 and they are all supportive of its passage. 
These individuals include our State veterinarian, Dr. Brett 
Marsh, representatives from the State Board of Animal Health, 
Dr. Paul Dieterlin, Administrator of the Indiana Meat 
Inspection Program, and Mr. Jim Rihm, President of the Indiana 
Meat Packers and Processors Association. Indiana has 101 State-
inspected plants and Mr. Rihm believes this legislation will 
help the small packer to better compete in the specialty meats 
products market.
    I talked to a producer, a young producer by the name of 
Greg Gunther, who also served on the Small Farm Commission that 
was appointed by Secretary Glickman. He lives eight miles from 
a State line and he has developed a niche market with specialty 
products, but he has to go out of State to a Federally-
inspected plant to get his hogs processed and then take those 
to Chicago. He also does some work with the State-inspected 
plant but cannot move those products across the State lines and 
estimated that, conservatively, that it has cost him about 
$20,000 in income just because he has to go out of State to get 
that inspection done.
    The American Farm Bureau Federation encourages Congress to 
support and pass S. 1988 and allow the Food and Safety 
Inspection Service to take the necessary steps to facilitate 
the movement of State-inspected meats across State lines.
    Mr. Chairman, we appreciate the opportunity to appear 
before you this morning and make comments.
    The Chairman. Thank you very much, Mr. Pearson.
    [The prepared statement of Mr. Pearson can be found in the 
appendix on page 70.]
    Mr. Nielson.

 STATEMENT OF RICHARD T. NIELSON, PRESIDENT, UTAH CATTLEMEN'S 
    ASSOCIATION, REPRESENTING THE NATIONAL CATTLEMEN'S BEEF 
                ASSOCIATION, SALT LAKE CITY, UT

    Mr. Nielson. Good morning, Mr. Chairman. Thank you for the 
invitation to be here today and the opportunity to present this 
testimony. I am Richard B. Nielson and I am the President of 
the Utah Cattlemen's Association and a board member of the 
National Cattlemen's Beef Association. I come from a small farm 
in Central Utah that I operate with my brother and my son.
    Interstate shipment of State-inspected meat is one of the 
top priorities of Utah Cattlemen's Association, the National 
Cattlemen's Beef Association, and the other producer groups 
represented here today. Under current law, State-inspected 
plants cannot ship beef, pork, lamb, or poultry across State 
lines. This restriction limits the ability of these plants to 
expand marketing opportunities and limits competition for 
market animals. Current law also applies unequally to different 
species in regards to State inspection programs. For example, 
based on information provided by the Agriculture Committee, 
there is no restriction on the interstate shipment of State-
inspected bison, venison, pheasant, and ostrich.
    This bill would expand interstate shipment of State-
inspected meat to include beef, pork, lamb, and poultry. Meat 
inspection programs would enforce the same inspection laws and 
regulations enforced under the Federal program to create a 
seamless national inspection system with the States retaining 
the right to impose additional inspection requirements. 
Products inspected under this authority would be eligible for 
interstate shipment, export, and for use in products destined 
for export.
    I would like to share several reasons and anecdotes as to 
why this legislation is justified and why the ban on interstate 
shipment of State-inspected meat should be eliminated.
    Elimination of the ban is good for small businesses. State-
inspected plants are typically family owned and operated small 
businesses whose growth is limited to the markets in their own 
State. Because their markets are limited, so is their ability 
to compete with large corporate processors who have a worldwide 
market. Removing the ban would give these businesses a 
substantial boost in market opportunities for their products 
and create additional competition in the live cattle market, 
which is just one facet in dealing with the issue of packer 
concentration.
    The current ban actually favors imported meat over U.S. 
produced State-inspected beef. While State-inspected products 
are restricted from interstate commerce, meat from over 30 
countries that is not directly inspected by USDA can be sold 
anywhere in the United States. This legislation will recognize 
State inspection systems that are the same as Federal 
requirements and allow State-inspected products to compete on 
an equal footing with imported products.
    I would like to share with you a couple of examples of how 
this ban has gone awry. Tyler Meat Company of Toledo, Ohio, 
sold meat for 10-years to the River Cafe located on the 
Michigan-Ohio border. USDA ordered Tyler to stop sales to the 
cafe even though its kitchen was in Ohio. The cafe dining area 
is located in Michigan. Thus, the sale of Tyler meat was 
considered interstate commerce.
    Another example is the Jackson Brothers Food Locker in 
Post, Texas. Jackson Brothers supplied beef jerky to support 
U.S. troops during Operation Desert Storm. They could ship 
their product halfway around the world to support U.S. troops, 
but they cannot send their product 80 miles west into New 
Mexico. Not only are they limited from growing their business, 
they are prohibited from selling their product to former Desert 
Storm servicemen and women who came to like their product. It 
is very important to note that Jackson Brothers met the 
standards set by the State of Texas Department of Health Meat 
Inspection Service, one of the best programs in the country. 
The HACCP plan for their plant was in place in November of 
1999, 3 months before it was required for plants of their size.
    To summarize, this legislation will remove a barrier that 
impedes competition, stifles growth, and limits the marketing 
opportunities for U.S. beef. Passage of this legislation will 
create a tremendous opportunity for State-inspected plants and 
subsequently for cattle producers who market their livestock to 
State-inspected plants.
    Our goal is a dynamic and profitable beef industry. With 
the growth in technology and the Internet, the world is truly 
our market. We have recently been informed that other groups 
opposing this particular bill have offered to compromise. We 
look forward to working with them and getting as much support 
for this bill as we can.
    Mr. Chairman, we urge you to mark up this legislation in 
your committee as soon as possible and report it to the Senate 
floor. I want the beef industry to have the opportunity to grow 
by meeting the needs of our consumer and not be stifled by laws 
that have outgrown their use. Thank you very much.
    The Chairman. Thank you very much, Mr. Nielson, for your 
testimony.
    [The prepared statement of Mr. Nielson can be found in the 
appendix on page 74.]
    It is a pleasure always to welcome Carol Tucker Foreman. We 
have talked about the history of this issue and Carol Tucker 
Foreman, as you know, served in the administration of President 
Carter. I can remember her testimony, not necessarily on this 
issue, but she may very well have discussed it 20-some years 
ago.
    Ms. Foreman. I am really sorry to say I did.
    The Chairman. Nevertheless, we look forward to your opinion 
today. Please continue.

  STATEMENT OF CAROL TUCKER FOREMAN DISTINGUISHED FELLOW AND 
 DIRECTOR OF THE FOOD POLICY INSTITUTE CONSUMER FEDERATION OF 
                    AMERICA, WASHINGTON, DC.

    Ms. Foreman. Thank you, Sir. I am here representing the 
Consumer Federation of America, and as you pointed out, I 
served as Assistant Secretary of Agriculture with 
responsibility for meat, poultry, and egg inspection. I am also 
serving now as a member of the National Advisory Committee on 
Meat and Poultry Inspection.
    All three of the consumer representatives on the Advisory 
Committee have endorsed S. 1988. The legislation would ensure 
that all meat and poultry products produced in the United 
States are inspected under a seamless system constituting a 
basic set of public health-based requirements. It would also 
eliminate the prohibition on shipping that meat in interstate 
or international commerce.
    The consumer interest in S. 1988 is clear. If passed in its 
present form, this bill could help make meat and poultry 
products safer and contribute to improved public health. 
Pathogens do not recognize distinctions between Federal and 
State systems or large and small plants. Contaminated meat is a 
public health threat regardless of its source and the risk of 
contamination should be reduced wherever they occur.
    According to the Centers for Disease Control, USDA's new 
public health-based pathogen reduction Hazard Analysis and 
Critical Control Point program is successfully reducing 
pathogen contamination and foodborne illness. All meat and 
poultry plants, whether inspected by Federal or State 
personnel, should meet those same minimum Federal requirements. 
Although theoretically equal to Federal standards, State-
inspected plants have too frequently operated at a lower level. 
The General Accounting Office and USDA's Office of Inspector 
General have both criticized the quality of State inspection 
programs. In 1996, the Wall Street Journal detailed the 
problems with Florida's State inspection system and quoted the 
head of the State inspection program acknowledging that State 
inspectors are more lenient on inspection than Federal 
inspectors would be.
    Under S. 1988, State meat and poultry inspectors would 
enforce Federal standards. Federal inspectors would perform 
salmonella testing. USDA would also conduct annual compliance 
audits of State inspection programs. In return, the 
restrictions on shipment of these products would be 
appropriately removed.
    Frankly, Mr. Chairman, consumer advocates would probably 
prefer a single Federal system rather than what is being 
suggested here today. We all have to rely on separate systems 
to inspect toys or airplanes or cars. We are, however, prepared 
to accept this legislation because we think it does set a 
standard for human health protection. We will have to oppose 
the legislation if it is altered in a manner that undercuts the 
public health standards.
    In addition, we will be forced to oppose S. 1988 if USDA 
for any reason restricts its program for pathogen reduction and 
salmonella testing that is so basic to the new system. S. 1988 
articulates USDA's ability to enforce the pathogen reduction 
standards in State-inspected plants. In the absence of 
salmonella testing, we just would not be able to judge whether 
State-inspected meat really is as clean and safe as Federally-
inspected meat. That is why we can accept this bill now. The 
system has changed.
    Under USDA FSIS regulations, each company gets to establish 
its own HACCP plan. In the absence of a Federal standard based 
on public health protection, that is the salmonella standard, 
each company would be free to establish a pathogen level based 
solely on its own preferences for quality and safety.
    All meat and poultry products bear the seal of the U.S. 
Department of Agriculture. Consumers assume that mark means the 
product meets a standard based on public health, not marketing 
convenience. The salmonella standard is not unreasonable or 
unworkable. Over 90-percent of the companies are complying now. 
The success of the program is reducing foodborne pathogens and 
illness. It also improves public confidence in the meat supply.
    Last year, beef consumption increased to the highest level 
in a number of years, in part because of reports that ground 
beef is safer than it used to be. Eliminating the salmonella 
performance standards and testing would endanger public health. 
It would also threaten public confidence in the meat supply. It 
would almost surely diminish both the domestic and 
international market for American meat and poultry. Eliminating 
that salmonella standard and testing would be both bad public 
policy and bad business. Thank you.
    The Chairman. Thank you very much, Ms. Foreman.
    [The prepared statement of Ms. Foreman can be found in the 
appendix on page 77.]
    It is a pleasure always to have Patrick Boyle, the 
President and CEO of the American Meat Institute. We look 
forward to your testimony, Mr. Boyle.

 STATEMENT OF PATRICK BOYLE, PRESIDENT AND CEO, AMERICAN MEAT 
                    INSTITUTE, ARLINGTON, VA

    Mr. Boyle. Thank you very much, Mr. Chairman. It is always 
a pleasure to appear before this committee.
    AMI has long opposed a blanket lifting of the current 
prohibition against interstate shipment of State-inspected meat 
and poultry. This policy stems from our firm belief in the need 
for a single uniform system for oversight of this nation's meat 
and poultry industry, whether that system is administered by 
USDA or by State inspection programs in the State Departments 
of Agriculture.
    Currently, we believe there are actually 26 different meat 
and poultry inspection programs in the U.S., one Federal 
program covering 6,000 plants in 50 States plus 25 different 
State programs covering an additional 3,000 plants. AMI would 
like to see a single food safety oversight program for all 
9,000 of these plants in all 50 States and would support a bill 
that achieves that objective.
    This desire for a uniform system was also in the minds of 
those who cosponsor S. 1988 and in the minds of the Department 
of Agriculture, which developed a white paper in both 1998 and 
1999. Both documents outline the elements necessary for 
creating a more uniform system than we have in place today.
    I believe one clear outcome of the many discussions and 
public hearings held on this issue over the past 4-years, at 
least the past 4-years, is the strong message that greater 
uniformity is required before we can contemplate interstate 
shipment of State-inspected meat and poultry products. While 
AMI commends Senators Hatch and Daschle and their cosponsors 
for introducing the bill, AMI member companies remain concerned 
about various provisions of the bill, all of which, by the way, 
fall short of achieving national uniformity.
    For example, to create a truly uniform system, AMI members 
believe that the current bill must incorporate references to 
the many FSIS notices, directives, and other policy memoranda 
that, while not Federal regulations, they do constitute the 
day-to-day details of the system under which Federal plants 
currently operate. To be truly uniform, State plants must meet 
these same requirements and the bill should explicitly state 
so, especially since USDA testified earlier today in response 
to one of your questions, Mr. Chairman, that is indeed their 
intent.
    Also to be truly uniform, we believe States should not be 
permitted to set regulatory requirements that are different 
from or in addition to the Federal requirements. Every plant, 
Federal or State-inspected, should be subject to the same 
identical requirements.
    Also, national uniformity should also be exercised with 
respect to the thresholds for entry into a State inspection 
program. The current bill would let each of the 25 States set 
its own threshold. AMI believes there should be a uniform 
standard of eligibility for a plant to enter a State inspection 
program.
    At this time, AMI remains opposed to S. 1988 unless these 
and other areas can be addressed. In that regard, however, I am 
pleased to say that we have had some very productive 
discussions with officials from NASDA, including Commissioner 
Dailey, prior to this hearing today, and based upon those 
conversations, I am hopeful that we will be able to work with 
them, with this committee, Mr. Chairman, the sponsors of the 
bill, and the Department of Agriculture and the other 
interested parties to achieve a consensus bill, a true 
consensus bill which replaces the 26 different inspection 
systems with a single uniform meat and poultry inspection 
system for all of the 9,000 plants in this country. Thank you 
very much.
    The Chairman. Thank you very much, Mr. Boyle, for your 
testimony.
    [The prepared statement of Mr. Boyle can be found in the 
appendix on page 82.]
    Before I ask questions of the panel, let me just indicate 
that I have asked the Agriculture Committee staff to convene a 
meeting next week of the major parties involved, all of which 
are represented here today and maybe some others who may have 
been stimulated by the hearing, to try to work through 
differences that may be here. Some of these are apparent from 
the testimony you have given, but there also is a spirit, at 
least that I sense, of people already convening and conversing 
and coming reasonably close.
    I never want to predict in advance consensus before it 
occurs, and this committee attempts to obtain that so that we 
have the strongest support of our committee members when we go 
to the floor and have some prospects for success of the bills 
that we report, but I do sense that there is a constructive 
spirit here. It is one that I would like to promote, and so I 
simply mention that as early as next week, we will be coming to 
grips really with the issues that have been developed today, 
the nuances some of you have mentioned. Some of you have 
supported the bill with reservations and suggested if some 
things happen, you will not support it, and others have 
suggested that you are still attempting to come to consensus.
    Let me just ask for a moment, what barriers hinder State-
inspected plants from shifting to Federal inspections now? Are 
there barriers that we ought to be considering that are out 
there that make a difference as we look at this legislation, or 
is this a significant factor? Yes, Mr. Dailey?
    Mr. Dailey. Mr. Chairman, I think there are three reasons 
that we hear people saying they do not want to switch to 
Federal. One is facilities. Many times the USDA, when they look 
at the engineering and design plans, as you heard here, they 
would require something that does not relate to food safety. 
For example, many of the old plants and even the Federal plants 
that were grandfathered in had three-inch drain tiles. Now they 
have to have four-inch drain tiles. It is really not a food 
safety issue, but it is a very expensive item if you have to 
switch to do that.
    Another issue is the communications and bureaucracy. People 
indicate, if I have to deal with a bureaucracy, I would rather 
deal with a bureaucracy in Indianapolis or Columbus rather than 
Washington, DC.
    The third area, and all of these relate to economics, is 
the overtime pay. As I mentioned, 8 hours a day is provided 
free 40 days a week [sic], but if it happens to be a holiday, 
if it happens to be a weekend, and we do maintain a great 
degree of flexibility with our local plants, then they are 
required to pay much more in per hour charge than what they 
would at the State level.
    The Chairman. I think those are important distinctions. 
Does anyone else want to add to that part of the record?
    [No response.]
    Let me ask, then, a concern that has been raised is the 
need for national uniformity with the Federal inspection system 
and two specific points have been mentioned, whether States 
should be able to set regulatory requirements and whether 
States should be allowed to determine what size plants may 
participate in a State inspection program. Does anyone have a 
comment on those points?
    Mr. Boyle. I addressed those two in my testimony, Mr. 
Chairman, and just to reiterate, it is our view if we are going 
to have a truly uniform system that the State requirements 
should match the Federal requirements and vice versa. Allowing 
the States to have authority to set additional requirements on 
its face contradicts what I think is the overall objective here 
of national uniformity.
    The Chairman. I recall your making those points and I 
appreciate your mentioning them. What is the response of other 
members of the panel? For instance, on the second point, this 
sometimes arises in issues before this committee. The States 
come in and say, well, we are not satisfied with the level of 
what the Federal people are leaving. We have some constituents 
who want something extra special on top of this. So then many 
people from the food industry come in and say, well, sort of 
like the Grocery Manufacturers amendment comes up from time to 
time and the idea for preemptive Federal authority so that you 
do not have a piling on of additional authorities in an 
interstate system of distribution. Is that applicable to this 
problem, Ms. Foreman?
    Ms. Foreman. I am going to respond here on promoting what 
the Department of Agriculture said this morning in their 
testimony, that none of these additional requirements could be 
imposed on product coming into this State, any particular 
State, as opposed to those originating in the State and under 
State inspection. So I do not think you do have that problem of 
piling on. It is particularly what a State wants to accomplish 
for itself. Consumer advocates always believe that standards 
are minimum and that people who want to add to them should be 
allowed to do so.
    The Chairman. Is that everybody else's understanding of how 
this would work out?
    Mr. Dailey. Mr. Chairman, I do not want to monopolize the 
microphone, but let me say that we have been doing salmonella 
testing for 12-years, long before the USDA mandated we do 
salmonella testing. Last year in Ohio, we had 15-human and 
fetal deaths from listeria monocytogenes in meat products that 
happened to be Federally inspected. I think it is--and there 
may be new bacteria or different pathogens that we do not know 
about in the future. But our goal is to develop this seamless 
system and I think we ought to work towards that.
    The Chairman. Let me ask, on the affirmative side, the 
suggestion has been made if we move toward this legislation, it 
will increase sales, that this will be good for the business. 
Has anybody done a study or have any idea of quantifying how 
much good? In other words, is this a philosophical distinction 
without any commercial effect or do you anticipate that volume 
and profits will increase? Yes, Mr. Nielson?
    Mr. Nielson. Mr. Chairman, I would like to respond to that 
in what it would do for cattle producers in the country. If we 
take an animal to a livestock auction and there are two or 
three small plant owners there to bid on that animal as well as 
some of the big operators, my cow brings more money. So it is 
an economic benefit to those of us who produce cattle and 
animals, and that is the group I represent. But I can assure 
you, as a person who goes to an auction, going every week, I 
know how the system works and competition is where it is at, 
Sir.
    The Chairman. That consideration comes before the Committee 
frequently these days and so your testimony is that it enhances 
the markets available to cattle producers.
    Mr. Nielson. Certainly.
    The Chairman. Mr. Pearson.
    Mr. Pearson. Mr. Chairman, I talked to three or four small 
producers that are looking at ways to develop niche markets 
with their animals from the farm, and I mentioned the one, but 
normally, they are going to be able to align themselves with a 
smaller processor much more easily than they can with a 
Federally-inspected plant, and one of them in particular had 
been the Federal plant and that plant closed down and basically 
put him out of business because he could not get at point 
anyplace else and cross State lines.
    The other one I mentioned, he is taking product into 
Chicago that is costing him considerably more because he has to 
go out of State to a Federally-inspected plant, which is still 
twice as far away from him as a small State-inspected plant. So 
for the people that are really looking at ways to develop 
branded products, and we see more individuals, small producers, 
trying to do that, they can do that more easily with the small 
plants that are close to them and even have a branded product 
that they are looking for to really track that product all the 
way to their final consumer.
    The Chairman. I thank each one of you for your individual 
testimony. As I mentioned before, your full statements will be 
a part of the record, but the oral statements you have made, I 
think have been very helpful in delineating the issues, and 
your spirit of being willing to continue to converse likewise 
is very encouraging. We will try to proceed with that good will 
in mind with the meetings that commence next week.
    We thank you for coming today and participating in this 
hearing and the hearing is now adjourned.
    [Whereupon, at 12:05 p.m., the Committee was adjourned.]
      
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