[Senate Hearing 107-225]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 107-225

                              CONSERVATION

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                     FEBRUARY 28, and MARCH 1, 2001

                               __________

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


  Available via the World Wide Web: http://www.agriculture.senate.gov


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           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
PAT ROBERTS, Kansas                  THOMAS A. DASCHLE, South Dakota
PETER G. FITZGERALD, Illinois        MAX BAUCUS, Montana
CRAIG THOMAS, Wyoming                BLANCHE L. LINCOLN, Arkansas
WAYNE ALLARD, Colorado               ZELL MILLER, Georgia
TIM HUTCHINSON, Arkansas             DEBBIE A. STABENOW, Michigan
MICHEAL D. CRAPO, Idaho              BEN NELSON, Nebraska
                                     MARK DAYTON, Minnesota

                       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(s):

Wednesday, February 28, 2001, Conservation.......................    01
Thursday, March 1, 2001, Conservation............................    89

                              ----------                              

                      Wednesday, February 28, 2001
                    STATEMENTS PRESENTED BY SENATORS

Lugar, Hon. Richard G., a U.S. Senator from Indiana, Chairman, 
  Committee on Agriculture, Nutrition, and Forestry..............    01
Allard, Hon. Wayne, a U.S. Senator from Colorado.................    17
Dayton, Hon. Mark, a U.S. Senator from Minnesota.................    18
Fitzgerald, Hon. Peter G., a U.S. Senator from Illinois..........    15
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    09
Leahy, Hon. Patrick, a U.S. Senator from Vermont.................    13
Miller, Hon. Zell, a U.S. Senator from Georgia...................    02
Roberts, Hon. Pat, a U.S. Senator from Kansas....................    12
Thomas, Hon. Craig, a U.S. Senator from Wyoming..................    03
Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............    15
                              ----------                              

                               WITNESSES

Smith, Katherine, Director, Resource Economics Division, Economic 
  Research Service, U.S. Department of Agriculture, Washington, 
  DC.............................................................    03
Stephenson, Robert, Director, Conservation and Environmental 
  Program 
  Division, Farm Service Agency, U.S. Department of Agriculture, 
  Washington, DC.................................................    22
Weber, Thomas A., Deputy Chief for Programs, Natural Resource 
  Conservation Service, U.S. Department of Agriculture, 
  Washington, DC.................................................    20
Zinn, Jefferey A., Senior Analyst in Natural Resources Policy, 
  Congressional Research Service.................................    05
                              ----------                              

                                APPENDIX

Prepared Statements:
    Lugar, Hon. Richard G........................................    34
    Harkin, Hon. Tom.............................................    36
    Stabenow, Hon. Debbie........................................    38
    Smith, Katherine.............................................    40
    Stephenson, Robert...........................................    58
    Weber, Thomas A..............................................    51
    Zinn, Jefferey A.............................................    44
Document(s) Submitted for the Record:
    Hutchinson, Hon. Tim.........................................    84
    Lincoln, Hon. Blanche L......................................    87

                              ----------                              

                        Thursday, March 1, 2001
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    90
Nelson, Hon. Benjamin E., a U.S. Senator from Nebraska...........   136
Thomas, Hon. Craig, a U.S. Senator from Wyoming..................    91
                              ----------                              

                               WITNESSES
                                PANEL I

Cox, Craig, Executive Director, Soil and Water Conservation 
  Society, Ankeny, Iowa..........................................    92
Hassell, John, Executive Director, Conservation Technology 
  Information 
  Center, W. Lafayette, Indiana..................................    93
Johnson, Paul, Farmer, Decorah, Iowa.............................    98
Rudgers, Nathan, Commissioner, New York State Department of 
  Agriculture and Markets, National Association of State 
  Departments of Agriculture, Washington, DC.....................    96

                                PANEL II

Buis, Tom, Executive Director, National Farmers Union, 
  Washington, DC.................................................   114
Cohn, Gerald, Southeast Regional Director, American Farmland 
  Trust..........................................................   118
Sparrowe, Rollin, D., President, Wildlife Management Institute, 
  Washington, DC.................................................   116
Specht, Dan, Sustainable Agriculture Coalition, Washington, DC...   111
Stallman, Bob, President, American Farm Bureau Federation, 
  Washington, DC.................................................   110

                               PANEL III

Faeth, Paul, Director, World Resources Insitute, Washington, DC..   131
Stawick, David, President, Alliance for Agricultural 
  Conservation, 
  Washington, DC.................................................   128
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................   142
    Buis, Tom....................................................   205
    Cox, Craig...................................................   144
    Cohn, Gerald.................................................   219
    Faeth, Paul..................................................   227
    Hassell, John................................................   156
    Johnson, Paul W..............................................   182
    Rudgers, Nathan L............................................   171
    Sparrowe, Rollin D...........................................   209
    Specht, Dan..................................................   196
    Stallman Bob.................................................   185
    Stawick, David...............................................   222
Document(s) Submitted for the Record:
    Miller, Hon. Zell............................................   232
    American Soybean Association.................................   245
    Defenders of Wildlife Statement on the Conservtion Security 
      Act........................................................   248
    The Land Stewardship Letter..................................   233
    National Corn Growers Association............................   244
    Natural Resources Conservation Service Program Backlog.......   249
    President of Wildlife Management Institute, Rollin D. 
      Sparrowe...................................................   237
    Statement of the International Association of Fish and 
      Wildlife Agencies to the Senate Committee on Agriculture, 
      Nutrition, and Forestry 
      Regarding Farm Bill Conservation Programs by Max J. 
      Peterson...................................................   238
    Statement of the National Association on Conservation 
      Districts on the Conservation Security Act.................   246
    Sustainable Agriculture Coalition............................   247


 
                              CONSERVATION

                              ----------                              


                      WEDNESDAY, FEBRUARY 28, 2001

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9 a.m. in room 
328, Russell Senate Building, Hon. Richard G. Lugar (Chairman 
of the Committee) presiding.
    Present: Senators Lugar, Miller, Thomas, Stabenow, Allard, 
Crapo, Roberts, Harkin, Fitzgerald, Dayton, Leahy, Lincoln, and 
McConnell.

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

    The Chairman. Thank you for coming. This hearing of the 
Senate Agriculture Committee is called to order.
    Let me mention to the Member, Senator Miller, who is here 
on time, we are hopeful at some point, perhaps in the next 45 
minutes, of obtaining a quorum of the committee. That would be 
11 Senators. At that time, I'll try to interrupt the 
proceedings to gain consideration of the committee of our 
budget, our subcommittee rosters, memorandum of understanding 
between Senator Harkin and myself on the bipartisan conduct of 
the committee and budget and a whole raft of other things.
    This type of procedure is occurring in all committees who 
are having meetings today or tomorrow, and so it's important 
that we take action on that. But we will try to count heads, 
and if we find 11 around the table. So I would ask staff, 
Democratic and Republican, to alert their Senators, hopefully 
to bring about their presence, if possible. It is not easy ever 
to get a quorum this early in the day or in the session. But we 
will need to have one so that we can move ahead.
    At this point, I simply want to say, in my opening 
statement this morning, that we have begun our work on the new 
farm bill by receiving testimony from the Commission on the 
21st Century Production Agriculture about its recommendations 
on our legislation. Today our committee begins 2 days of 
hearings on conservation, a very important part of our farm 
bill and our Farm bill discussion. Conservation programs were 
significantly expanded in the conservation title of the 1985 
Farm bill. The establishment of the conservation reserve 
program in the 1985 bill was due to recognition by many of us 
in Congress of the need to address serious soil erosion 
problems facing agriculture.
    The 1990 and 1996 Farm bills further strengthened 
agricultural conservation programs. This is one area of farm 
bills where there has been strong bipartisan support in the 
Congress.
    In my view, there are at least three fundamental questions 
to consider as we begin debate on the conservation title. First 
of all, what should be the environmental goals of the next farm 
bill? How should they be designed to attain those goals through 
voluntary incentive based programs?
    Second, what will be the cost and benefits to landowners 
and producers of achieving those broad goals? Third, what will 
be the cost and benefits to society of achieving those goals?
    Hopefully the testimony presented at these 2 days of 
hearings will help us answer these questions and perhaps others 
that members will pose. One of the challenges facing 
agriculture today is how to provide food, fiber and industrial 
raw materials without jeopardizing the future productivity of 
our natural resources. Private landowners are stewards of over 
70 percent of our Nation's land. Our Nation's farmers and 
ranchers are facing increasingly complex environmental problems 
and regulations. Increasingly, taxpayers have been demanding 
and expecting increased conservation achievements from farmers 
and the agricultural sector.
    Given this situation, we have still another request to 
consider. Should there be a substantially larger investment by 
the Federal Government in conservation cost share and incentive 
programs?
    As we try to answer these questions, it will be important 
for our committee to hear about how the current conservation 
programs are managed, the use and distribution of funding for 
those programs, the types of agricultural producers and 
landowners who participate in the geographic distribution of 
those participants. We're also seeking suggestions for 
improvements and changes to the current programs and asking 
whether there is need for new initiatives. We'll be trying to 
determine the appropriate role for the Federal Government in 
assisting farmers, ranchers and other landowners in achieving 
conservation goals.
    Now, today we'll gather testimony from representatives of 
the U.S. Department of Agriculture and the Congressional 
Research Service about the administration and funding of our 
current program. At tomorrow's hearings, witnesses will include 
representatives of farm organizations, conservation and 
wildlife groups, and State agencies. And we will seek the views 
on current programs, as well as suggestions for improvements 
and new approaches.
    I welcome our witnesses today, and look forward to hearing 
their testimony. Before I call upon them, let me ask first of 
all if there are comments or statements from Senators who were 
present at the initiation of this hearing. Senator Miller, do 
you have an opening comment or statement?
    [The prepared statement of Chairman Lugar can be found in 
the appendix on page 34.]

         STATEMENT OF HON. ZELL MILLER, A U.S. SENATOR 
                          FROM GEORGIA

    Senator Miller. I have an opening comment, but Mr. 
Chairman, I'd just like to submit it for the record. I want to 
hear as many of these witnesses as possible.
    The Chairman. Thank you. It will be submitted into the 
record and published in full in the record.
    Senator Thomas.

        STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR 
                          FROM WYOMING

    Senator Thomas. Thank you, Mr. Chairman. I, too, will 
submit it for the record. I just want to say that these 
programs are especially important in Wyoming. I think, when you 
look at the environment and those kinds of things, we have a 
good relationship with NRCS and we look forward to continuing 
that. But I agree with you, Mr. Chairman, that we've got to 
look into it and see how we can make it work better and make it 
a part of the Farm bill. So thank you for this.
    The Chairman. Well, thank you very much, Senator Thomas. 
Your statement will be a part of the record in full.
    It's a privilege to have before us Ms. Katherine Smith, 
Director of Resource Economics, U.S. Department of Agriculture 
in Washington, DC.; Mr. Jeffrey Zinn, Specialist in Natural 
Resources of the Congressional Research Services of Washington, 
DC.
    Let me ask that you try to summarize your testimony and 
preferably within a 10 minute period of time each. We'll ask 
you to testify completely, Ms. Smith and Mr. Zinn, and then 
we'll have questions from the Committee. And as you've heard 
the explanation, if suddenly I see the magic moment has arrived 
in which we have a quorum of 11, I will ask you to suspend 
temporarily your testimonies, so that we can go about that 
business, and then we will proceed again.
    Ms. Smith, would you give us your testimony?

 STATEMENT OF KATHERINE R. SMITH, DIRECTOR, RESOURCE ECONOMICS 
    DIVISION, ECONOMIC RESEARCH SERVICE, U.S. DEPARTMENT OF 
                          AGRICULTURE

    Ms. Smith. Yes, thank you, Chairman Lugar.
    The USDA's Economic Research Service makes economic 
assessments of conservation program options, frequently in 
collaboration with the agencies that implement those programs, 
and occasionally as an independent third party evaluator.
    My written testimony provides an overview of conservation 
programs from that perspective, their costs, their benefits and 
economic insights that we've gained from having evaluated their 
performance over time. You'll be getting the details of the 
current programs from other USDA witnesses this morning. In my 
brief oral comments, I would like to emphasize three points. 
First, the benefits of conservation and environmental programs 
have been substantial. We don't even know the total value of 
the benefits, because many of them are benefits that are not 
valuated on the market, they're non-market benefits that are 
difficult to evaluate. And yet we have accumulated quite a 
total of those that we can evaluate in some way.
    The sum of on and off site benefits of a 40 percent 
reduction in crop land soil erosion over the last 15 years is 
estimated to be valued at over $2 billion per year. 
Conservation provisions have drastically slowed the rate of 
conversion of wetlands to agricultural uses, thus preserving 
the wildlife habitat benefits and the environmental restoration 
benefits of between 2.5 and 4 million wetland acres since 1985.
    Wildlife habitat improved by enrolling land in the 
conservation reserve program is estimated to have provided over 
$700 million per year in benefits from enhanced hunting and 
wildlife viewing opportunities alone, without the other 
wildlife enhancement benefits that have not been able to be 
estimated in dollar terms. An acre of conservation reserve 
program land in the great plains pulls .85 metric tons of 
carbon out of the atmosphere each year. Depending on 
international greenhouse gas negotiations, this carbon 
sequestration service could be worth a substantial amount.
    Now, my second point is that while some of these benefits 
are self-sustaining, particularly those that arose from 
education and technical assistance that informed producers 
about the benefits they could obtain personally from adopting 
practices, most of the benefits are transitory. Because in the 
absence of public programs, producers would have little 
economic incentive or perhaps limited economic capability to 
maintain the actions that result in these big benefit numbers. 
So preserving the gains means continuing some form of public 
assistance in the conservation and environmental arena.
    Third, we've learned from observing the performance of past 
and present programs that certain program characteristics are 
more likely to make the programs successful, especially in 
assuring cost effectiveness of programs. One of those 
characteristics is that they are coordinated not only with 
other conservation and environmental programs and regulations, 
but also with farm programs which can, if we're not careful, 
work at cross purposes, or to complement. But it has to be kept 
in mind that the coordination is an important thing to keep at 
the forefront of planning new conservation programs.
    Second is targeting, spatial targeting by region of the 
country that warrants attention for whatever the environmental 
goal is that your committee decides is the one or the ones that 
deserve attention, and also possibly targeting by types of 
producers that particularly need support in carrying out 
conservation practices.
    A third kind of lesson learned from the past is that 
flexibility is a good thing. Giving producers the option to 
decide how to achieve an environmental goal is more cost-
effective and more successful than telling them, you must do 
this particular practice. Working in the flexibility makes it 
easier to meet a goal.
    And finally, some recent work that we've done in the 
Economic Research Service suggests that there can be unintended 
consequences to providing support for conservation practices if 
that support encourages increased production, an increase in 
the acres under production. If that happens, you may see a 
reduction in adverse effects on the environment from the 
initial land farmed that can be overtaken by the environmental 
consequences of putting more land in production.
    So these are some of the things mentioned in greater detail 
in the written testimony and available in a new report, 
AgriEnvironmental Policy at the Crossroads: Guidelines on a 
Changing Landscape, of which we've brought about 50 copies and 
would be happy to distribute. Thank you for the opportunity. 
I'll be happy to take questions after Jeff Zinn.
    [The prepared statement of Ms. Smith can be found in the 
appendix on page 40.]
    The Chairman. Well, thank you very much, Ms. Smith.
    Let me just ask staff if you can attach some of those 
copies. It might be well to distribute them to Senators as they 
come to this hearing today, and members of the staff, so that 
they will have them. Because that's an important report and we 
thank you for bringing those copies for us.
    Mr. Zinn.

STATEMENT OF JEFFREY A. ZINN, SENIOR ANALYST, NATURAL RESOURCES 
             POLICY, CONGRESSIONAL RESEARCH SERVICE

    Mr. Zinn. Mr. Chairman, members of the Committee, good 
morning and thank you for inviting me to testify today.
    The Committee has asked other witnesses to offer 
recommendations for change in conservation policies and 
programs. CRS policy, as many of you know, does not allow me to 
make or take positions on recommendations on the record.
    My oral statement summarizes my written testimony, which 
provides a context for consideration of these recommendations. 
It reviews the evolution of the conversation efforts since 1985 
and characterizes the conservation effort today. It also 
discusses current programs and activities, and outlines some 
recent changes in NRCS, the principal USDA conservation agency.
    My statement concludes by identifying through several 
questions issues that may arise as you debate future policy 
options. Congress has greatly expanded the conservation mission 
in the last three Farm bills to include numerous new topics and 
new approaches. New topics include water quality, wildlife, air 
quality and animal agriculture, among others. New approaches 
include State technical committees, priority areas for some 
programs, and the use of easements, among others.
    The conservation mission now includes more than 30 distinct 
programs and activities scattered throughout USDA, but 
concentrated in the two agencies who will testify later, NRCS 
and FSA, and depending on whether you're a lumper or a 
splitter, I think you could list quite a few more programs and 
activities if you wanted to.
    Three of the programs and activities deserve special 
mention, I believe. Conservation Technical Assistance is a core 
activity that is critical to the success of almost all other 
conservation programs and the largest activity in terms of 
staff demands for conservation. The Conservation Reserve is the 
largest program in terms of spending. It uses about half the 
total conservation budget each year, in recent primarily to 
make rental payments.
    The Environmental Quality Incentives program is the main 
cost sharing program and includes several policy innovations. 
Many of the other conservation programs or smaller efforts 
focus on a wide variety of topics.
    The expansion of conservation can be viewed in budgetary 
terms. Total spending grew from about $1 billion in 1985 to 
$3.6 billion in 1998. USDA subdivides the spending among five 
categories for analytical purposes. One of these categories, 
rental and easement payments, has grown from a negligible 
amount to about half the total, about $1.8 billion. In the 
report that Kitty passed out, there's an excellent graph that 
really shows how this change has worked.
    The other four have all grown but at far more modest rates. 
These changes mean that a significantly larger portion of 
conservation funds are being paid directly to landowners to 
provide conservation benefits, while a smaller portion is going 
to the agencies at USDA who deliver the conservation effort. 
The Congress has had to respond several times in recent years 
to constraints at NRCS by enacting supplemental or emergency 
legislation to provide needed technical assistance funding.
    The expansion of conservation can also be viewed in 
staffing terms. While the conservation mission has grown, total 
staffing at NRCS has shrunk from more than 13,600 staff years 
in 1985 to 11,600 staff years in 2000. Its larger mission has 
meant that local staff who deliver conservation to producers 
and landowners have many more clients and are often unable to 
work with them one on one, which historically has been the 
hallmark of their role in conservation.
    Another important result is that far fewer resources are 
devoted to monitoring and program evaluation, making it more 
difficult to ascertain what the programs are actually 
accomplishing. The need for more information has made the 
Natural Resources Inventory an even more important tool for 
understanding how land, water and other resources are affected 
by the conservation effort. It provides data that are necessary 
to determine how well the programs are working, especially in 
the area of erosion control.
    Questions about the future of lands in the CRP and other 
land retirement and multi-year contract programs have become 
more important as the end of some of these contracts starts to 
approach. In the CRP, land can be offered to be re-enrolled, 
but it is unclear how program benefits will be retained for the 
other programs that have multi-year contracts.
    Policies to deal with this future need appear to be 
lacking, although some States are reportedly planning to step 
in to ensure that some of these environmental or resource 
benefits are retained. We're just starting to become aware of 
what some of these efforts might be.
    Let me conclude by listing several questions that may arise 
as you debate policy options for the future. First, will the 
next generation of conservation policy be driven primarily by 
opportunities to do more for agriculture, or by pressures from 
outside forces to alter current agricultural practices?
    Second, are additional programs needed? Third, are there 
opportunities for greater program consolidation or 
coordination? Should any programs be eliminated? We seem to 
find it much easier to add programs to the list than to 
subtract them in the policy making process.
    Can some programs be simplified administratively? Should 
greater emphasis be given to measuring accomplishments and 
ongoing performance? What is the appropriate balance between 
programs for working lands and programs to retire land? And 
finally, should the conservation mission be expanded or 
readjusted to provide greater assistance to landowners?
    Thank you for the opportunity to talk with you today, and I 
look forward to answering any questions you may have. Thank 
you.
    [The prepared statement of Mr. Zinn can be found in the 
appendix on page 44.]
    The Chairman. Thank you very much, Mr. Zinn.
    We'll commence a round of questioning, with Senators 
limited to 5 minutes each on the first round. If there are 
additional questions, we will attempt to proceed there.
    Let me begin simply by indicating that in your testimony, 
Mr. Zinn, you have gone through the history of the 1985, 1990 
and 1996 Farm bills with the 1985 bill and the Conservation 
Reserve Program the largest of these programs initiated, as you 
pointed out correctly, created to help curb erosion. Ms. Smith 
has pointed out that we've had significant success in this, 
valued at $2 billion a year each year, I gather, as this has 
proceeded.
    But the debate in the committee then, and I suppose an 
underlying factor now, was that this was also a way of cutting 
back production, or productive acres. A good number of Senators 
saw dual benefit. Even then, in 1985, prices that were 
unsatisfactory likewise farmers and in some cases that were 
retiring or elderly and wanted to retire, the Conservation 
Reserve Program appeared to be a good way to park a good bit of 
land.
    In the 1990 Act, the committee having observed that there 
were some lands that were environmentally challenged, but a lot 
of lands that were perfectly good wheat, corn and soybean 
fields in the program, adopted a scoring program as to how much 
conservation benefit occurred. So the bidding then occurred on 
the basis of the scores that were available. So that then led 
to much more of a conservation emphasis. That appears to have 
proceeded really, although the 1996 Act was involved, as you 
pointed out, in expanding the program, most significantly the 
EQIP, the farm land production program and the wildlife habitat 
program.
    We've had testimony about the tremendous values in each of 
these situations. The EQIP program of course requires, as 
you've pointed out, a lot of staff assistance. The cost sharing 
situations are more complex than the bidding of acres in.
    But the net effect of this has been remarkable. Year after 
year, as we've had oversight hearings, no conservation program 
of any sort or any other environmental program in America, has 
had the cumulative effective, or for that matter, the annual 
effect, of these programs that come right out of the Ag 
Committee. So we celebrate that each time we take another look 
at this.
    What I would ask of both of you, however, is were we on the 
right track, in your judgment, in 1990 in trying to zero in on 
the fact that we have so many acres, so many dollars, and try 
to get the most conservation effect for those dollars? Has the 
point system or those criteria that we used worked? Is there a 
degree of equity or correspondence between actual conservation 
results and this bidding process? Do either of you have any 
expert testimony or will you have on suggestions if we were to 
revise the scoring system, or enhance it in various other 
criteria as to how we should do that?
    Ms. Smith. You give me an opportunity, Mr. Chairman, to 
reinforce one of the lessons we learned, one of the points that 
I made. That is about targeting. The scoring system, the EBI 
scoring system, is an excellent way to target that land that 
you do want to set aside in order to obtain specific 
environmental benefits. It has worked quite well.
    In terms of revamping it, really depends on whether you 
want to stick with the same goals or change the weights 
associated with those goals or add new ones. But the technique 
has proved to work extremely well.
    The Chairman. Do you have suggestions about different 
goals? In other words, you sort of begged the question as to 
what we want to do, and obviously we'll try and make up our 
minds. But what would you recommend that we do, from your 
perspective?
    Ms. Smith. I don't think I'm in a position to make a 
recommendation that reflects really the national priorities. 
There are lots of different ways that you can collect that 
information, by using States or localities to help determine 
what those weights should be on each of the objectives, by 
making the weights variable from year to year, rather than 
fixed in that EBI formula.
    The Chairman. What are our basic objectives? Obviously to 
stop soil erosion, and you've cited that a good bit of that is 
occurring, and thank goodness. We have some carbon 
sequestration going on that is very helpful overall in our 
environmental picture.
    Ms. Smith.That is not currently an explicit goal.
    The Chairman. It just happens to be one of these 
byproducts. What else does the program hope to do? In other 
words, are we enriching soils in some way? Are we doing other 
things that enhance this general value?
    Mr. Zinn. I'm going to comment also, but probably not 
answer your question well at all. It seems to me there are 
several questions to think about with the future of CRP, 
without making specific recommendations. One is, is the size 
appropriate? Is the total number of acres that we include in it 
the approximate size we want to be working at in the future? I 
think you'll be hearing proposals to increase the size.
    A second point is that, do you want to have one program 
that covers everything using the environmental benefits index 
or whatever formula we use, or do you want to have some sub-
programs, as we have now, to deal with especially valuable 
environmental areas, State cooperative programs and the like. 
So that's a second consideration.
    And then the final thing I would say is that the CRP, from 
its history, focuses on erosion and cropland. One could ask 
whether there should be some components in CRP that maybe don't 
deal with cropland, maybe don't have the requirement of the 
cropping history requirement, and that's something to consider 
as well.
    The Chairman. I thank both of you. We've been joined by the 
distinguished Ranking Member, Senator Harkin, who has had a 
long time interest in each of these areas, and has been a major 
proponent of these hearings, as well as legislation. Tom, I 
indicated before you and some others arrived that at the moment 
we are able to get eleven of us here, I would like to break 
into our dialogue to have the business meeting that we need to 
have for adoption of the budget, the subcommittees and what 
have you. But at this moment, we don't have eleven people here, 
and I would like to recognize you for your statements and 
questions of our witnesses.

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

    Senator Harkin. Thank you very much, Mr. Chairman. I 
apologize for being late. Wednesday mornings is when we have 
our Iowa breakfast for Iowa constituents. We had a big load of 
them this morning, so I apologize for being a little bit late. 
Because this is, as you indicated, Mr. Chairman, a long-time 
interest of mine, and of all of us, I'm sure, on this 
committee.
    We know we've accomplished some good things in the past, 
the various and sundry conservation programs, some that date 
back basically to the 1930s. They have done a good job. When I 
look at the hills in Iowa and I see all the terraces that are 
out there that date back to, oh, gosh, I suppose they started 
back in the 1950s some time, 1960s, 1970s, 1980s. It's done a 
lot to save our soil. The various things that we've done beyond 
that, the CRP program, the EQIP program, the wetlands reserve, 
all of these have done really good things in terms of stopping 
soil runoff.
    There have been a lot of questions, of course, in terms of 
CRP. It has taken a lot of land out of production. Quite 
frankly, in many areas, it's had some detrimental economic 
impacts, in local areas. I'm sorry, I just caught the tail end 
of the Chairman's remarks here, but I wonder if we shouldn't 
now be looking at a new, sort of a new approach on conservation 
that's not just soil runoff, but how do we get into the whole 
new area of nutrients and nutrient runoff. How do we measure 
that, how do we encourage the best kinds of practices so we 
don't have this immense nutrient runoff that we have?
    How do we deal with the new situations that we have, at 
least in my part of the country and I think some down in your 
area, too, with the large confinement operations, and what 
that's doing to our environment? I think I'm right, I may be a 
little bit off here, but I think we have about as many hogs in 
Iowa today as we did when I was younger, 30 years ago. Thirty 
years ago, we didn't have any problems.
    So if we have the same amount of hogs today, why are we 
having so many problems? Well, 30 years ago, every small farmer 
had a few hogs. And the animal waste from that, you put on your 
land. That's what we did. It was never called waste. We didn't 
call it waste. That was something that was a valuable asset.
    Because that was done, it was all spread out, we didn't 
have a problem with nutrient runoff. But now with these large 
confinements and stuff we've got all kinds of problems with 
underground and water pollution, with holding facilities 
breaking periodically, trying to spread this fertilizer in the 
wintertime, when it gets run off into the streams. So we have 
that new dynamic that we have to deal with out there.
    Then, looking at the whole green payment and carbon 
sequestration again, this is going to have to be an area we're 
going to have to consider in the future, because of our 
agreements with other countries. This is an area where I think, 
again, we can look at how we can develop this for farmers to be 
eligible for some kind of support for carbon sequestration.
    So in my view, it's my little rambling discourse here, that 
while we've had good programs that worked in the past, I don't 
know that we have to abandon them, I think they're still 
valuable. I think we need to build on them for a new system of 
conservation. I think that's our challenge here on this 
Committee, to try to find out just what are those new areas and 
how do we address them.
    I'll end on this note. I think most of our conservation in 
the past, most, not all of it has been paying farmers to not 
produce, some kind of land reduction. You take this out, you 
put this aside, you do something that you don't produce on it, 
and you get a payment. But most farmers I know do things that 
enhance the environment on an annual basis in their production 
practices. They use their labor, they use equipment, they even 
may use some of their own money. But they don't get any help 
for that, it's just out of pocket.
    I'm wondering if now we shouldn't begin looking at some 
kind of, in the new Farm bill perhaps, process whereby we can 
on a voluntary basis get farmers to do certain conservation 
practices in their production patterns. Not to cut down on 
production, it may even enhance production. But then give them 
the kind of support they need as they do produce.
    We have, I think, in the next 20 years we're going to see a 
change in agriculture where people are going to be just growing 
corn for feed. They're going to be growing it for feed and for 
proteins, for oils, for pharmaceuticals, a whole biotech 
revolution is upon us. We're going to have soybean fields that 
are some for soybean meal and some soybeans for lubricants, 
some soybean fields for edible oils and you're going to have a 
lot of different designer crops out there.
    How do we start fashioning conservation programs to address 
the new biotech revolution that is upon us? I think that is our 
challenge. I don't have a specific question right now. But if 
you just have any thoughts on those areas, I'd be delighted to 
hear from you on that.
    Mr. Zinn. I have a couple of comments I would like to make. 
One is that historically, before 1985, I think the conservation 
programs focused on erosion, and because they focused on 
erosion, the programs were largely limited to dealing with 
cropland issues. I think cropland production is about 20 
percent of the value of all agricultural production.
    As the mission has expanded to include other goals, other 
kinds of lands, and land uses have become important to 
conservation and to the conservation effort. I think we see the 
programs maybe still largely as having a big focus on the 
cropland side. There are pressures that I think you'll be 
hearing about at tomorrow's hearing to expand the effort, to 
give more attention to some of these other lands and resources 
that go with this expanded mission.
    A second comment is that the programs deal almost entirely 
with individual farms. It seems to me that as we get into a 
more encompassing framework for looking at conservation needs 
and conservation issues, perhaps we should also look at ways to 
reward or assist multiple farmers who want to do things in a 
small area where the benefits of many of them getting together 
is more than the benefits of each of them acting individually. 
So I think this sort of scale at which we approach conservation 
is also an important issue. Priority areas, start to get at 
this, but there are some other directions one could go.
    And finally, I think as you identified, there are lots of 
new topics that are being put into the conservation mix. They 
make solving the problems and designing programs much more 
complicated. That suggests some challenges for the institutions 
that do this that perhaps should get a little more recognition 
than they have in the past.
    Senator Harkin. I appreciate that. Again, as we design 
these programs in the future, I mean, a lot of our payment 
programs have changed and are continuing to change. Since there 
is a societal benefit to good conservation practices, I think 
we ought to look upon that in terms of not just a burden on the 
individual producer, but something that we all ought to share 
in. That's just my own feeling on that.
    Thank you.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 36.]
    The Chairman. Thank you very much, Senator Harkin. Did you 
have a comment, Ms. Smith?
    Ms. Smith. Yes, I do, thank you. The extremely expert and 
helpful people sitting behind me gave me literally a long list 
of different environmental benefits that can arise from 
conservation and environmental programs. The big three are 
soil, wildlife habitat and water quality. But there's air 
quality, farm land preservation, water storage, navigation, it 
goes on and on and on. So you've got this large list of 
benefits.
    As you mentioned, Senator, you also have differentiated 
farming operations and site specificity on top of all that 
heterogeneity. So you end up with all sorts of accommodations 
and permutations of possible benefits, possible cost, possible 
actions, on different kinds of operations. So it really 
underscores the point that there isn't going to be a one-size-
fits-all.
    Senator Harkin. I haven't seen the list, but I challenge 
your thinkers sitting back there, is energy production listed 
on that?
    Ms. Smith. Yes.
    Senator Harkin. Oh, well, you're way ahead of me.
    [Laughter.]
    Ms. Smith. Biomass.
    Senator Harkin. Good for you. OK, that's fine.
    The Chairman. The magic word. Thank you very much, Senator 
Harkin.
    I'm going to recognize the Senators in order of seniority, 
and let me just sort of go down, so you'll have an idea of 
about when your turn will come. Essentially, on the Republican 
side, Senator Roberts, Senator Fitzgerald, Senator Thomas, 
Senator Allard, Senator Crapo. I have only one alternative on 
the Democratic side for the moment, you'll be joined, Debbie--
well, here, you've already been joined by Senator Leahy.
    Very well. Senator Roberts.

         STATEMENT OF HON. PAT ROBERTS, A U.S. SENATOR 
                          FROM KANSAS

    Senator Roberts. Thank you, Mr. Chairman. I want to thank 
you for holding this hearing today, and I want to thank Senator 
Harkin, who just received an award in San Antonio from the corn 
folks and the soybean folks for his efforts in being a real 
leader and thinking out of the box in regards to our 
conservation efforts and how we can make them more 
environmentally sound but still adhere to the basic thrust of 
what we're all about. It was an award that was certainly well 
deserved.
    There are going to be many, many hearings in the always 
very complex task of writing the next farm bill. But I don't 
think we can underestimate the importance of conservation. 
These programs have numerous soil and wind erosion, wildlife 
and environmental benefits, as the Chairman has pointed out, 
and the distinguished Vice Chairman or Ranking Member and the 
witnesses.
    I want to just raise a little flag of caution, a parochial 
flag, a high plains flag that is always straight out because of 
the wind. We have memories of the day of the Dust Bowl in the 
dirty thirties. Basically it was because of this very terrible 
event that Congress first got into this business. I applaud the 
discussion in regards to the CRP program. I would point out 
there are more acres in Kansas in the CRP program than any 
other State.
    It's been a very popular program, and as a result we've had 
a lot of folks, I remember, during the 1996 Act, who thought 
that they could have a similar program benefits. With the 
budget dollars we have, the only concern I had at that 
particular time was that we didn't want to rob Peter to pay 
Paul, or to rob Peter to pay Pat, or Pat to pay Peter, or to 
rob the high plains for other areas. We were very supportive of 
some of the changes that were made from the standpoint of the 
environment, but we had hoped for additional funding, as 
opposed to taking away the original purpose of CRP, where we 
still have the needs.
    So I'm going to insist, Mr. Chairman, that these important 
benefits maintain their very proper role in these programs, and 
we certainly remember the important history of the programs. I 
was a member of the House Agriculture Committee in 1984 when we 
first started this. I think I'm listed as one of the co-authors 
of the CRP program, along with then-Congressman Dan Glickman, 
who became Secretary. Then we finally got it done in 1985.
    Let me just point out that sometimes we have problems in 
implementing what we're trying to achieve with many varied 
benefits. When we changed the EBI, the EBI index or criteria, 
all of a sudden we had farmers whose contracts were in jeopardy 
because of the red fox, I can't remember what little small fox 
we were trying to protect, and the burrowing beetle. We looked 
and looked and looked, and it wasn't so much that we had cited 
these species that should have been protected, that are 
protected, we couldn't find any.
    But there was a holdup in regards to contracts and payment. 
I remember we got into quite a meaningful dialogue with 
Secretary Glickman. He presented me, Mr. Chairman, a box with a 
burrowing beetle in it during the debate.
    I just think we ought to remember that soil is the greatest 
non-toxic pollutant we have in agriculture, and we still have 
those primary functions that I think we must address. Let me 
say that I appreciate the statement by the witnesses. I had 
some questions for them, but obviously that should come later.
    Except for the compliance provisions in the statement by 
Ms. Smith, and I thank you for an excellent statement, and you 
mentioned highly erodible land, or what we affectionately call 
land from hell out in western Kansas. We had a lot of 
requirements. We almost had a revolt out there, until we got 
the head of then the SES to come out and take a look at normal 
cropping practices, at what we're trying to do to actually save 
the land.
    So it's the implementation of some of these things that I 
think are very important. That's why I think I'm so gratified 
that Tom Harkin is really hitting up this, because obviously 
we're all going to be aware of the best laid plans and then how 
they actually affect our farmers and ranchers.
    I think I've said enough, and I don't mean that to be any 
kind of a warning flag. I just want to say that these are very 
good programs. We ought to keep that base, and we ought to 
again think out of the box, as the distinguished Senator from 
Iowa has indicated, and I think we'll be headed in the right 
direction.
    And I thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Roberts.
    Senator Leahy.

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM VERMONT

    Senator Leahy. Thank you, Mr. Chairman. Unfortunately, 
we're doing two things at once, as so many of us do. Today 
we're marking up the Bankruptcy bill in Judiciary and I'm going 
there. But I wanted to, because of the agenda in Judiciary, 
I've had to be absent from some of the first meetings of this 
Committee. But I wanted to welcome the new members, Senators 
Allard and Thomas and Hutchinson and Crapo, and on our side, 
Zell Miller, Debbie Stabenow, Mark Dayton and Ben Nelson. I see 
at least four of those new members here now.
    I think, Mr. Chairman, you and I have been on this 
committee for well over 20 years, but I think it wasn't since 
1981 that we had these many new members. I was younger, you 
were the same age.
    [Laughter.]
    Senator Leahy. But I look forward to working with you and 
Senator Harkin on this. One of the things that we have done, 
this committee is probably the most bipartisan or nonpartisan 
committee in the Senate. We've been able to pass so much by 
consensus. I hope we can get money in the budget resolution to 
pass the farm bill this year, so that we don't get caught up in 
election fever next year. But that's of course up to others.
    I am working with a group of New England and Mid-Atlantic 
States, they produce about 7 percent of the market value of 
U.S. farm products, 7 percent, they get around 1 percent of 
Federal agriculture payments. I think we should look at that 
part of the country, where oftentimes we feel we get ignored 
when there's a disaster bill, anything else, we're asked for 
the tax money, we don't get the help, and we should look at 
that.
    But the most important thing is that we have something we 
can all support, because it's hard enough sometimes to get a 
farm bill through the other body. We have to show some very 
strong support in the Senate to do that.
    I also would like to see us work on mandatory funding for 
the international school lunch program. Our former colleagues, 
both senior members of this committee, Senator Dole and Senator 
McGovern, have done so much on that. Of course, our own 
nutrition programs here. I think we can look at things like 
even global climate change. We look back 100 years from now, 
people are going to say, what did we do for our farmers and 
consumers there. Senator Roberts may be the only one who's 
around 100 years from now, along with Senator Thurmond.
    [Laughter.]
    But for the rest of us, I want it to work. I hope that we 
can avoid divisive regional fights on various subjects like 
dairy.
    [Laughter.]
    If we can do that, Mr. Chairman, I know that you have been 
nominated and rightly so in the past for Nobel Peace Prize. If 
we can avoid any fighting over dairy, I'll be nominated for 
one. Thank you.
    Senator Roberts. Would the distinguished Chairman Emeritus 
yield?
    [Laughter.]
    Senator Leahy. To the other former chairman from the House, 
of course I would. Because we were part of the chairman caucus 
who had a certain hairstyle criteria.
    [Laughter.]
    Senator Roberts. Let us just say that the antique furniture 
in the House and Senate are served best by those with marble 
tops.
    [Laughter.]
    We have another former chairman sitting to your left. But 
the point I would like to make is that both Senator Allard and 
Senator Crapo are battle-hardened veterans of the sometimes 
powerful House Agriculture Committee, and have ridden with us 
well on the infamous Ag posse. I know they're going to do a 
great job. But I wanted to point that out to the Chairman 
Emeritus. I thank you.
    The Chairman. The Chair will intervene at this point before 
the discussion deteriorates any further. Pat, please don't 
leave for a moment, because we will have deterioration if you 
leave.
    Let me just say that in a moment, I'll move that the 
Committee rules, the subcommittees and committee memberships 
and the Committee budget be reported. Before I do so, I want to 
point out my appreciation to Senator Harkin and his staff, who 
have worked diligently with our staffs to try to have an 
understanding of how our committee can best function during the 
Congress. We have drafted, in fact, a memorandum of 
understanding. I wanted to reassure all committee members, and 
copies of that are there. I want to express public appreciation 
to Senator Harkin for the spirit with which he has entered into 
it, and all members.
    Senator Harkin. Mr. Chairman, if I could just reciprocate 
on that. I just want to publicly thank you. We had a very good 
meeting going over these rules with our staffs, with you and me 
and our staffs. We've worked all this out. I couldn't have 
asked for a better relationship and better understanding 
between us, given the division, even division that we have on 
the committee and in the Senate. I want to publicly thank you 
for your generosity and for your willingness to work together 
in this great spirit. I just want you to know that I support 
you wholeheartedly in your recommendations.
    The Chairman. I appreciate that. I think this bodes well 
for the work of our committee. As has been pointed out, we 
don't really get much credit or time on the Floor unless we 
come with a pretty good package by consensus. That may not 
always be possible, but we shall try.
    At this point, I move that we adopt the committee rules, 
the subcommittee membership.
    [Whereupon, the committee proceeded to a business meeting.]
    [Whereupon, the committee returned to the legislative 
hearing.]
    Senator Fitzgerald.

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

    Senator Fitzgerald. Thank you, Mr. Chairman, and I want to 
congratulate you on holding these hearings. I generally have 
been supportive of conservation programs.
    I'm not going to have a full blown opening statement. I'll 
just be interested to learn whether the USDA has done any 
studies of which of the many conservation programs that the 
Department offers are the most effective, I suppose both in 
terms of helping our environment and I suppose one of the goals 
of these programs is also to try and guard against 
overproduction, too. Although maybe not explicitly, but I think 
that's a side benefit of the conservation program.
    So I'll be interested in hearing that, and I'm wondering 
whether we've really ever done any studies to analyze which of 
the many conservation programs give us the best bang for our 
buck.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Fitzgerald.
    At this juncture, I've received proxy statements from 
Senator Cochran and Senator Hutchinson, and a statement from 
Senator Hutchinson with regard to our hearing today, the first 
with regard to the business we just conducted. I'll ask staff 
to make these a part of the record.
    [The Information referred to can be found in the appendix 
on page 84.]
    Senator Harkin.
    Senator Harkin. Thank you, Mr. Chairman. I have Kent Conrad 
and Senator Daschle and Senator Baucus also.
    The Chairman. Very well, they will all be appropriately 
reported in the proper places.
    Senator Stabenow, it is your turn.

STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Thank you, Mr. Chairman. To you and to 
Senator Harkin, thank you for holding this hearing. This is a 
very important topic, I think conservation is a very important 
part of our agricultural policy. And also to Senator Harkin, 
congratulations on your award, your much deserved award, as 
well.
    From my perspective, from Michigan, since 1987 we've had 
over 278,000 acres that have enrolled in some kind of a 
conservation program. I would certainly like to see that 
increase. I have been very supportive, as a member of the House 
Agriculture Committee, of the CRP program and other programs.
    I've noticed that you specifically said it's not your role 
to make recommendations to us. Although we would like, I think, 
to hear recommendations specifically from you about ways to 
expand or move in other directions. But I'm wondering, with the 
CRP program, if you would be willing to talk about possible 
other criteria. You've talked a little bit about it today, it's 
been focused on soil erosion and cropland. What other kinds of 
areas would seem to be logical extensions, based on what you 
see in terms of the various demands and interests?
    Mr. Zinn. I think that you're really asking two questions. 
No. 1, is what goes on the list, and No. 2, is in the index, 
how many points do you give for each of the things you decide 
you want to put on the list. I think without getting specific, 
it's important to think of the list as something that can 
evolve over time, and probably should evolve over time as the 
merits of relative issues change in the national policy 
setting.
    At some point it might be worth considering regional 
variations, so that some regions of the country might have a 
somewhat different list than other regions, because both the 
agriculture is different and the problems are different. But 
beyond that, I don't think I do want to get into specifics. I 
suspect you'll have lots of people coming after us who do want 
to get into specifics.
    Senator Stabenow. Do you want to add to that?
    Ms. Smith. I think Jeff answered it very, very well. There 
are a range of things that the current EBI does not incorporate 
that it could incorporate. Whether that needs to be done at a 
national or regional or State level is an open question. Those 
weights are all important, really. You can add many, many 
things to the list and dissipate the effect on any one, or you 
can just change the weights and change, as some may have 
expressed some concern about, the principal objectives of the 
program.
    But certainly, carbon sequestration, energy, livestock 
waste are things that appear to be eliciting greater concerns 
now than a decade ago. So those might be considerations for 
change.
    Senator Stabenow. Absolutely. Well, thank you. We'll look 
forward to the others that are coming forward with their 
specific items that they would like to have us look at. I would 
again compliment Senator Harkin for always thinking outside the 
box and I am looking forward to a wide discussion, Mr. 
Chairman, about the options before the committee.
    [The prepared statement of Senator Stabenow be found in the 
appendix on page 38.]
    The Chairman. Thank you very much.
    Senator Allard.

        STATEMENT OF HON. WAYNE ALLARD, A U.S. SENATOR 
                         FROM COLORADO

    Senator Allard. Mr. Chairman, thank you. I am looking 
forward to serving here on this committee as a new member.
    The Chairman. It's great to have you.
    Senator Allard. I served on the House Agriculture Committee 
during the Freedom to farm bill deliberation, EQIP was under 
the jurisdiction of the subcommittee which I chaired over 
there. So I'm interested in that, and obviously interested in 
conservation programs. We have a particularly unique State in 
the fact that I like to refer to our State as two miles deep, 
from the highest point of the State down to the lowest point. 
So watershed gets to be an important issue. We have peaks over 
14,000 feet and the lowest level of the State is somewhere 
around 3,200 feet. We have a lot of plains area with dry land 
crops.
    So we have a rather diverse State. Conservation programs 
are very important to the State of Colorado. I think we need to 
continue to ask the question, how are our dollars are being 
spent, are the programs effective and what not.
    I have a question pertaining to the Small Watershed 
Rehabilitation amendments of 2000. They became law with 
considerable support from the Congress. I was just wondering 
what has NRCS done to aggressively move forward on this Act, if 
anything.
    Mr. Zinn. I think the NRCS people will be coming after us, 
and can give you some pretty specific answers on that.
    Senator Allard. Can you comment on the EQIP program?
    Mr. Zinn. Yes.
    [Laughter.]
    Senator Allard. Would you comment on the EQIP program, what 
your perception is on it and what needs to be done, if 
anything, to improve it?
    Mr. Zinn. A couple of comments about EQIP. One is that the 
use of priority areas has some real pluses for the environment, 
I think, by focusing effort. But it's had some minuses in the 
farm community for those people who don't come from priority 
areas and have found it much harder to access funds that they 
used to be able to get more easily through ACP. So that's one 
issue that I think some people will raise, is whether this is 
working the way it was intended and is providing greater 
environmental benefits.
    Another question, and one I raised in my testimony a little 
bit, is what happens at the end of these multi-year contracts 
that people who participate in EQIP get? Are they under any 
obligation to maintain the facilities they built or the 
practices they've installed with the money they've received? I 
don't believe they are, although somebody from the Department 
who knows the program better might offer some other insights on 
that. To the degree there's no future requirement of any kind, 
maybe some of those investments aren't going to be particularly 
long-lived as landowners change their priorities about what 
they're doing. I worry that perhaps policy should include 
something that comes after the EQIP contract.
    A third question about EQIP is whether the length of 
contracts and the funding amounts are really the appropriate 
sizes. Is that buying the kinds of things we want, or do we 
need to make the potential for more money available to do 
larger things?
    A final point about EQIP is the animal agriculture, for 
EQIP, as you know, the first conservation program that's 
explicitly dealt with animal agriculture. As such, as you go on 
to design the next farm bill, you should have some lessons that 
have come out of EQIP that would help in policy formulation for 
the next generation of conservation dealing specifically with 
animal agriculture issues.
    Those would be my four points.
    Senator Allard. What about, there's a wildlife habitat 
incentive program, WHIP. Can you comment about that a little 
bit?
    Mr. Zinn. I know very little about what that Program has 
accomplished. I've heard lots of stories, anecdotes about good 
things that have been done in various places. I don't know what 
the sum of those stories is, and maybe somebody from the 
Department could answer that better. The other thing about the 
wildlife program I think is it may be one of those programs 
that might be combined or more fully integrated with some of 
the other conservation programs, because it is sort of small 
and sitting out there by itself in the conservation context. I 
think the wildlife people might take a different view of it, 
however.
    Senator Allard. I think there's just one small area in 
Colorado that would be impacted by that. It's probably one that 
the State will look at a little closer. So I am like you, we're 
going to wait and see how this program moves forward.
    I'd like to get back to the EQIP, but I guess my time's 
out. I'm sorry, Mr. Chairman.
    The Chairman. We'll come around again.
    Senator Allard. Very good.
    The Chairman. Senator Dayton?
    Senator Dayton. Thank you, Mr. Chairman.
    I'd be glad to yield some time if you want to follow up on 
a question.
    Senator Allard. No, I'll wait. Thank you.

         STATEMENT OF HON. MARK DAYTON, A U.S. SENATOR 
                         FROM MINNESOTA

    Senator Dayton. I'm going to be brief, anyway, I have a 
group of Minnesota farmers out waiting to meet with me. I'd say 
leading into that that one of the relatively few programs on 
which I think there's broad consensus and support among all 
Minnesota farmers, as well as hunters and environmentalists, 
are the value of the conservation programs. So I strongly 
support them and look forward to finding out from these 
witnesses and others how we can strengthen and improve them.
    I was particularly interested in your response, Mr. Zinn, 
to Senator Allard's question about the animal conservation, 
because in Minnesota, we have a very, very serious and 
widespread problem with the animal feed lot operations and 
lagoons, and a lot of producers, large, medium and small, who 
are really now under serious financial constraints and are also 
wanting to be responsible stewards of their land, as well as 
their neighbors and others who in some cases very desperately 
want to see them make the necessary improvements.
    So I'm really interested to see and explore, Mr. Chairman, 
as we unfold these hearings and look at this, if there's a way 
in which that kind of need can be incorporated into one of the 
existing programs, or one of them can be expanded into 
permitting that kind of activity to be undertaken. Thank you.
    The Chairman. Thank you very much, Senator Dayton.
    Senator Harkin?
    Senator Harkin. I don't have any questions.
    The Chairman. Senator Allard.
    Senator Allard. Thank you, Mr. Chairman. Just briefly, on 
the EQIP program. Basically you have the Environmental 
Protection Agency implementing rules and regulations on feed 
lots. Then you come in here and give kind of a supporting role, 
help them comply with those requirements and regulations. Do 
you feel like you're able to keep up with the requirements that 
are being imposed on feed lots by the Environmental Protection 
Agency with the support that you should be getting from EQIP?
    Mr. Zinn. I think others from the Department can answer 
that a lot more precisely than I can. But my impression, is 
that more resources and more money in this particular instance 
probably would make a fairly big difference. Also, because the 
animal agriculture issue has largely emerged since the last 
Farm bill was enacted, there is very limited policy that gives 
animal agriculture a priority within the conservation programs.
    As you and others are stating, it sounds like that's going 
to get some serious rethinking. It probably will require some 
tradeoffs in resources if more goes to animal agriculture and 
there isn't more to spread around, then it will have to come 
out of something else that was being done in the past. Those 
are the kinds of questions that are arising at this point.
    Senator Allard. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Allard.
    I just want to compliment you again, Ms. Smith, on this 
remarkable publication you have distributed today, the 
AgriEnvironmental Policy at the Crossroads. Particularly in the 
opening parts which support your testimony and the charts 
showing that soil erosion has been significantly reduced. These 
are impressive figures now, aggregated from 1982 to 1997, at 
least in one of your charts.
    Even more dramatic, the change in the wetland picture, that 
more wetlands have been restored than lost, so that the graph 
that you have there, showing from 1954 to 1974 shows in fact a 
loss, it looks to me like, of over 600,000 acres. Now these are 
equated, and a very small chart showing a little in, a little 
out, but in essence a net gain as opposed to a dramatic loss.
    Finally, the lessons learned that you have evaluated there 
are very helpful as we take a look not only at the achievements 
but some of the problems that have been involved in that and 
the challenges. So I commend this to all Senators and their 
staffs and members of the general public, because that will 
enhance our discussion with the facts.
    Mr. Zinn, you have likewise, in behalf of your service, as 
well as your own personal testimony, been very, very helpful.
    So we thank you both and hope that you will continue to be 
resources for us as we proceed through this chapter of the Farm 
Bill.
    Ms. Smith. Thank you, Mr. Chairman.
    Mr. Zinn. Thank you.
    Senator Harkin. I want to join the Chairman in thanking you 
both for many years of service. We appreciate it very much.
    The Chairman. It's a privilege to call now our second panel 
of this hearing, Mr. Thomas Weber, the Deputy Chief for 
Programs, National Resources Conservation Service of the USDA, 
and Mr. Robert Stephenson, Director of Conservation and 
Environmental Programs of the U.S. Department of Agriculture, 
both coming from Washington, DC.
    I'll ask you to testify in the order that I introduced you. 
First of all Mr. Weber, then Mr. Stephenson. Your statements 
will be made a part of the record in full. So I ask that you 
summarize appropriately and hopefully within a 10 minute 
period, then the Committee will commence questioning. Mr. 
Weber.

        STATEMENT OF THOMAS A. WEBER, DEPUTY CHIEF FOR 
           PROGRAMS, NATURAL RESOURCES CONSERVATION 
           SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                         WASHINGTON, DC

    Mr. Weber. Thank you, Mr. Chairman, members of the 
Committee. Thank you for the opportunity to be here today and 
provide an update on the conservation programs that are 
implemented by the Natural Resource Conservation Service. As 
you know, farmers across America are faced with increasing 
pressures to maintain a productive and profitable business. We 
know that farmers want to be good stewards of the land, and our 
mission is to help them to be good stewards with their 
conservation challenges, and at the same time assure that they 
remain productive.
    The backlog of our program requests is a testament to the 
commitment of the farmers and ranchers of this country to 
conservation. Today I would like to highlight the many ways 
that our conservation programs are making a difference and 
describe the large demand and interest in these programs that 
NRCS has serviced.
    Our programs are voluntary. And they are to help farmers 
and ranchers deal with regulatory pressures. The public benefit 
from these programs has been so eloquently described today, the 
societal benefits are an improved environment for all of us in 
America, a point that I feel has not been adequately addressed 
in this country. In short, I believe the conservation programs 
that this committee included in the last Farm bill are win-win. 
They're win-win for farmers, they're win-win for America.
    But before I outline these programs, I want to say a word 
about the cornerstone of everything that we do, that is, the 
Conservation Technical Assistance Program. Everything we 
accomplish is contingent upon the talents and skills of those 
people that are out there in the countryside, in our field 
staff, and the partners that we work with to help farmers and 
ranchers. They're trained professionals with the technical 
tools and skills and standards to get the job done. They're in 
every community in this country and rural America. They're 
there to help people. The partnership that we have with State 
and local people, conservation districts, State conservation 
agencies, Resource Conservation and Development councils and 
others are just as important to helping get the conservation 
done as part of what we do as well.
    Having said this, I want to move on quickly to a review of 
the 1996 Farm bill programs and highlight several of them. 
First, the Wetland Reserve Program. It has been mentioned on a 
number of occasions here today. It's meant to preserve, protect 
and restore wetlands, where functions and values have been 
depleted or diminished. It is making a substantial contribution 
to the restoration of the migratory waterfowl habitat in this 
country, and other habitat for birds and animals, including 
endangered species.
    The 1996 Act authorized a total of 975,000 acres in the 
program. At the conclusion of fiscal year 2000, the program had 
almost reached the maximum. However, this year's appropriation 
provided an additional 100,000 acres, allowing the fiscal year 
2001 acreage to increase to 140,000.
    We have had five times as many acres offered voluntarily by 
landowners to be enrolled in this program than what we can 
provide funds for. It is clear that WRP continues to be a very 
popular program with farmers and has extremely strong support 
around the country.
    Second, the Wildlife Habitat Incentives Program provides up 
to 75 percent of the cost share for implementing wildlife 
habitat practices. The program had an initial funding cap of 
$50 million. As a result of the strong need for this program, 
those funds were exhausted in fiscal year 1999, at which time 
we had 1.4 million acres enrolled in over 8,600 long-term 
contracts.
    At the beginning of 2001, the former Secretary did decide 
to utilize an additional $20 million for WHIP from funding that 
was in Section 211(b), which was the Agricultural Risk 
Protection Act of 2000, for WHIP. Again, our successes and 
landowner interest indicates that WHIP is a program with very 
strong support in the countryside.
    The next program has to do with farmland protection, a 
point of interest around this country in terms of development 
and concern over conversion of agricultural land to other 
purposes. It does provide cost sharing for development rights 
and easements. There was $35 million available for it in the 
initial 1996 Farm bill. At this point in time, all $35 million 
has been utilized.
    Again, the former Secretary in 2001 did decide to place $20 
million from the Agricultural Risk Protection Act into the 
Farmland Protection Program. We know that agricultural land 
conversion is a growing concern, and we note that the amount of 
land far overshadows the amount of money available.
    I would speak quickly to the EQIP basically to say that we 
have utilized all of the funds available for the EQIP program 
in every year that funding has been available. It was 
authorized for $200 million a year. In many years, we've had 
$174 million for this program to address the resource needs. 
And I would point out also in this program, each year we've had 
three to six times the demand for the dollars that we have 
available.
    These programs have been extremely successful, and we 
continue to receive many times the applications that we can 
authorize to fund for these. That's good news.
    Mr. Chairman, in closing, I would note that good 
conservation doesn't just happen. It takes all of us, including 
Congress, our conservation partners, and most importantly, the 
people that are living on the land that make all of this 
happen. We're proud of our accomplishments. We look forward to 
working with you to build on all that we've done for the 
future. This concludes my statement, Mr. Chairman, and thank 
you again for the opportunity to appear.
    [The prepared statement of Mr. Weber can be found in the 
appendix on page 51.]
    The Chairman. Thank you for that very strong statement. We 
look forward to questioning you in a moment.
    First, we'll call on Mr. Stephenson for his testimony.

           STATEMENT OF ROBERT STEPHENSON, DIRECTOR, 
            CONSERVATION AND ENVIRONMENTAL PROGRAMS 
DIVISION, FARM SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE, 
                         WASHINGTON, DC

    Mr. Stephenson. Good morning, Mr. Chairman and members of 
the committee. I'm pleased to appear before you to discuss 
conservation programs.
    The Conservation Reserve Program, implemented by the Farm 
Service Agency, is the Federal Government's single largest 
environmental improvement program on private lands. Today the 
CRP is safeguarding millions of acres of American topsoil from 
erosion, improving air quality, increasing wildlife habitat and 
protecting ground and surface water by reducing water runoff 
and sedimentation. Countless lakes, rivers, ponds and streams 
are cleaner, healthier and more useful because of the CRP.
    The CRP's success, I believe, is accomplished through local 
voluntary partnerships between individuals and Government. 
Instead of compelling participation, the program uses financial 
incentives to encourage farmers to voluntarily establish 
valuable conservation practices, such as permanent covers of 
grass and trees on land subject to erosion, where vegetation 
can improve water quality or to provide food and habitat for 
wildlife.
    Initially, the CRP emphasized reducing soil erosion. 
However, the public was becoming more sensitive to other 
environmental issues, such as condition of streams, lakes and 
rivers, and the need to preserve threatened wildlife species. 
In the 1990 Farm bill, Congress broadened the program's focus 
and today, CRP's objectives include improving water quality, 
turning marginal pasture land into riparian areas, increasing 
wildlife habitat and other environmental goals.
    In 1993, total enrollment stood at 36.4 million acres, 
which is today's maximum authorized level. Generally, farmers 
bid competitively for CRP contracts, maximizing the power of 
each dollar spent. Only the most environmentally sensitive 
cropland is accepted, while less vulnerable farm land remains 
in production. The result is an effort that targets the most 
sensitive land and helps farmers while it keeps productive farm 
land growing food and fiber at a competitive cost.
    The CRP's benefits go far beyond environmental improvement. 
By idling highly vulnerable and environmentally sensitive 
cropland, the program has produced a wide range of economic 
benefits. In an early study, the Economics Research Service 
indicated that the economic benefits provided by the CRP total 
an estimated $8 billion or more per year.
    In October of 1997, FSA implemented the Conservation 
Reserve Enhancement Program. That's a partnership between the 
Federal Government and the States where CREP addresses 
nationally significant environmental problems by targeting CRP 
program resources. CREP is working to address water quality 
problems in the Chesapeake Bay, restore salmon habitat in the 
Pacific Northwest, protect New York City's water supply, 
enhance water quality in Illinois and Minnesota, restore a 
portion of the Great Lakes, improve wildlife habitat in 
California and North Dakota, protect water supplies for 54 
communities in Missouri and restore vital estuaries in North 
Carolina.
    For certain high priority conservation practices yielding 
highly desirable environmental benefits, farmers and ranchers 
may sign up at any time without waiting for an announced signup 
period, provided certain eligibility requirements are met. 
Continuous signup allows management flexibility in implementing 
certain special conservation practices on cropland. These 
practices are designed to achieve significant environmental 
benefits, giving participants a chance to help protect and 
enhance wildlife habitat, improve air quality and improve the 
condition of America's waterways.
    Through mid-January of this year, over 1.4 million acres 
have been enrolled under continuous signup practices such as 
filter strips, riparian buffers, contour grass strips and grass 
waterways. The continuous signup effort has significantly 
increased the enrollment of these environmentally important 
practices. For example, enrollment of filter strips has 
increased over 600 percent compared to the land enrolled prior 
to the enactment of the 1996 Farm bill.
    On April 13 of last year, USDA announced new financial 
incentives totaling up to $350 million over a 3 year period for 
producers participating in certain practices of the CRP 
continuous signup. These new incentives included a signing 
bonus of $10 per acre for every year of the contract, or $100 
to $150 per acre. A payment equal to 40 percent of the 
practice's installation cost, increases in maintenance create 
incentives for practices involving tree planting, fencing or 
water developments, and updated marginal pasture land rental 
rates to better reflect the market value of those lands.
    FSA also implements the Emergency Conservation Program, 
which provides emergency cost share funding to agricultural 
producers to rehabilitate farm land damaged by natural 
disasters and for carrying out emergency water conservation 
measures during periods of severe drought. The Pasture Recovery 
Program, which provides payments to reestablish permanent 
vegetative cover to owners and operators who suffered pasture 
losses and the Debt for Nature Program for persons with FSA 
loans secured by real estate who may qualify for cancellation 
of a portion of their indebtedness in exchange for a 
conservation contract with a term of 50, 30 or 10 years.
    I appreciate the opportunity to testify today, and I'll be 
happy to respond to your questions.
    [The prepared statement of Mr. Stephenson can be found in 
the appendix on page 58.]
    The Chairman. Thank you very much. Let me start the 
questioning, we'll have a 5 minute round for each of us, and 
more if indicated. In your testimony, there's a table at the 
end of it, Mr. Stephenson, you have Conservation Reserve 
Program current enrollment level, which is a very useful chart, 
indicating the number of contracts by State, the number of 
acres in the CRP, and the average rental rate, presumably the 
number of dollars per acre that were a part of that contract.
    The differences between the States and the average rental 
rates are substantial. There's a good explanation for that. 
Would you give that? Give us some idea of the bidding process, 
and why for example, in Iowa, let's take the distinguished 
Ranking Member's State, the average rental rate is $97.86 an 
acre. In another State where there are lots of acres, North 
Dakota, for example, it looks to me like it's $33 an acre.
    What would be the differential between an acre in Iowa and 
an acre in North Dakota, given the fact there are many 
contracts and many people involved in this?
    Mr. Stephenson. We have tried to spend considerable 
resources working with the FSA economists, the NRCS economists, 
as well as in ERS, to approximate local prevailing rental 
rates. That is a rental rate for agricultural dry land values. 
We start the process by asking all of the local FSA and NRCS 
employees and other USDA employees, such as extension service, 
to sit down and tell us by soil type, NRCS maintains a data 
base of soil types nationwide. They approximate those values 
and our goal is to not affect the market, but to approximate 
what a farmer would get if it was being cropped.
    That's done for each soil type in the country. The farmer, 
when he makes his offer or she makes her offer, the NRCS will 
tell us the predominant soil types for that offer. We will take 
the rental rates that have been established for each soil type 
and we'll do a weighted average to come up with the maximum 
amount that we're willing to pay for that acre.
    The Chairman. So you then have some benchmarks, and after 
this, why, in some States or some districts, this may pile in 
with all sorts of offers, in that case presumably the final bid 
is lower than your maximum, maybe substantially. Is that the 
case?
    Mr. Stephenson. In part of our evaluation of the offers, if 
a farmer is willing to accept less than the maximum that we're 
willing to pay, we give them additional credit, because we view 
it as saving taxpayer money.
    The Chairman. What do you mean by give them additional 
credit?
    Mr. Stephenson. In the environmental benefits index, we 
consider six environmental factors plus the cost that the 
taxpayers----
    The Chairman. I see. So that would give him some more 
points, along with the rest of the economic side of this thing. 
It was very interesting.
    In taking a look at this table, of course it covers the 
whole country, but what is the current situation with regard to 
CRP? There has not, as you pointed out, been an overall signup 
in the fiscal year. But if we were to have another signup, 
would you anticipate there would be a great many more bidders 
than acres available in this program?
    Mr. Stephenson [continuing.] I would expect, and I might 
ask Mike Linsenbigler, who's here with me, but I would expect 
that if we had a signup this year, which we are not scheduling 
one, we would anticipate probably somewhere between 2 and 3 
million acres being offered. I wouldn't be in a position to 
estimate how many of those would be accepted, but we would have 
about a million acres coming due this fall.
    The Chairman. In the initial idea of CRP, the hope was that 
many landowners would sign up for very long periods of time 
because they were going to plant trees. It would not make sense 
to plant the trees and cut them down after 5 years or some 
intermediate period. What has been the experience of the 
program with regard to those acres that are now in trees, and 
therefore perhaps in a more permanent status of conservation?
    Mr. Stephenson. Many of those acres have been re-offered 
for signup, some of which we accepted. I'm not sure--do you 
have any numbers, Mike?
    Mr. Linsenbigler. Historically, the rural bank program, 
about 95 percent of them plan to plant trees, remain in trees.
    The Chairman. So the contract expires, the farmer would not 
receive more money, but nevertheless received money for the 
initial contract, planted the trees and has then a timber 
stand, and as you say, in 95percent of cases, left the timber 
stand, continued on as an asset for the property.
    Mr. Stephenson. That's true, except that those acres that 
were under CRP contract that were about to expire were eligible 
to be re-offered.
    The Chairman. So perhaps some of these timber stands are 
re-offered and additional compensation was paid.
    Mr. Stephenson. That's correct.
    The Chairman. With the other programs that you've mentioned 
that are less extensive than CRP, is there a similar bidding 
process for those? How do people get into them and how much are 
they paid?
    Mr. Stephenson. Under the Emergency Conservation Program, 
it's contingent upon some type of disaster condition, tornado, 
hurricane, drought. Once a geographic area is approved, we will 
make available cost share funding for approximately 64 percent 
of the out of pocket costs of a producer.
    The Chairman. Sixty-four percent?
    Mr. Stephenson. That's correct. Under the Pasture Recovery 
Program, that is really a very simple program. It's a cost 
share program for seeding. Our cost share rate is 75 percent.
    The Chairman. How about the wetlands programs? How do 
people bid to get into that?
    Mr. Stephenson. I need to defer to Mr. Weber.
    Mr. Weber. Thank you, Mr. Chairman. The Wetland Reserve 
Program, people would actually come forward with an offer to 
have either a permanent easement, a 30 year easement or 
actually full restoration of the land without an easement. 
There are different cost shares for those, based on the value 
of the land, or the cost of restoration. Those proposals would 
come into the State technical committee, which is made up of 
not only the NRCS that would chair it, but also the other 
Federal agencies involved, made up of wildlife groups, other 
interest groups in the State, agricultural groups.
    They actually go through a process of evaluating those, 
setting point values and ranking them in order. Then based on 
the money available, they would go down that list in that order 
and then make offers accordingly.
    The Chairman. So you have a point system or some evaluation 
also for the wetlands?
    Mr. Weber. That is correct. That's essentially true in any 
of our programs.
    The Chairman. Of all the programs. Now, is information 
about these programs widely available to producers throughout 
America? I presume the answer is yes, but if so, how is it made 
available? If you are a landowner, somewhere in America and 
you're interested in any of these programs, how would you find 
out if you were eligible or how do you go about the bidding 
process?
    Mr. Stephenson. I think probably both agencies maintain a 
very rigorous public information program. Each of our agencies 
have offices, most of them co-located throughout the country in 
agricultural areas, where local people answer those questions 
on a routine basis. In addition to that, we both have I think 
probably fairly active web sites that get quite a lot of 
activity where there's extensive information about all of our 
programs.
    The Chairman. I thank you for those responses. It's obvious 
from the cumulative totals that you have mentioned that a great 
deal of conservation good is occurring, likewise, substantial 
income for many landowners in America. Both are of interest, 
obviously, to this Committee.
    Senator Harkin.
    Senator Harkin. Thank you, Mr. Chairman. Thank you both for 
excellent verbal and written testimonies here. Again, thank you 
for your leadership in both the FSA and the NRCS.
    Mr. Chairman, I think there is some really valuable 
information here that's been delineated in a concise form, and 
I appreciate that. The Chairman touched on those with the 
tables.
    Just a couple of things I'd like to hit on here. First was, 
Mr. Stephenson, let me look on yours, at the farmable wetlands 
pilot program that we just passed last year. We put the money 
in the appropriations bill for it. As you point out, this 
covers sort of the upper Midwest, I don't know how many States, 
maybe six or seven States total. I've heard from farmers in 
Iowa who are anxious to sign up in this. They've been waiting 
and I just want to know, do you have any idea when we're going 
to be able to start making these signups available, and making 
these contracts?
    Mr. Stephenson. We're very hopeful we're going to have 
something available this spring. Immediately after the bill was 
enacted, we had a group of field employees come in, and NRCS 
also participated. We have drafted a rule for the Federal 
Register, which is in clearance now, in the Department. We're 
hoping that's going to move very quickly, and then this spring, 
we'll be able to begin entering into contracts.
    Senator Harkin. Spring out our way is what, April?
    Mr. Stephenson. I've only been permitted to say this 
spring.
    [Laughter.]
    Senator Harkin. All right. Well, please take back to the 
Department the urgency of this. There's a lot of people, I'm 
sure it's true in Minnesota, too, I'm sure they're waiting to 
sign up there, and ready to go. This again could be a valuable 
asset and help this year to many of our farmers, especially 
some of our smaller farmers that have the less than five acres 
that they could put away and get some help on that. So I hope 
you'll move ahead on that aggressively.
    Second, I've heard some concerns out our way about how well 
the two departments, NRCS and FSA, are working together. 
Basically, as we know, you do the technical work and you pay 
the bills, basically. What I've heard is that in some cases, 
well, I've heard from some of the FSA people, well, NRCS is not 
getting the technical work out in time, I heard from the NRCS 
people, well, FSA is not getting the paperwork done on time and 
paying it on time.
    So I don't want to say that this is something I hear 
constantly, but I hear it enough to warrant my question to you 
as to how you feel about the working relationships between your 
two departments. Is there something that we ought to be looking 
at here that might provide for a better delivery of these 
services? I just ask for your comments on that.
    Mr. Weber. Senator Harkin, I'll try to take a shot at that, 
and Bob, I'm sure, has some thoughts. It's my personal view 
these two agencies work extraordinarily well together, 
considering the complexities of all the programs and the 
interactions that take place, both from the technical side and 
the financial side. I've worked with a group of professionals, 
Bob here and his staff, and others, that I have a tremendous 
respect for. I think we can do business together. Yes, there 
are times that come up that individuals may not get along out 
in the countryside. But I think we work through those 
collectively and together, and we're able to do an excellent 
job.
    I think the agricultural producers that are benefiting from 
the conservation out there and the payments that they're 
getting from that process are being served well.
    The Chairman. Mr. Stephenson, anything to add?
    Mr. Stephenson. Two things come to mind. First off, we 
have, I think in many cases, vigorous debates down at the 
Department between us. I think by and large, we end up with a 
better product. Sometimes we try not to be personal, but 
sometimes it's certainly loud. But the end of that, I think, 
generally has resulted in a better product.
    As far as the situations where maybe one side of the Agency 
is pitted against the other out in the field, I think we both 
committed to each other a long time, for many years now, that 
when those come up, we try to address those. If there's a 
problem, we want to get to the bottom of it, because we can 
burn a lot of resources. That's not our goal.
    Senator Harkin. Well, again, I'm not trying to pick sides 
here or anything like that. Like I said, it's not something 
that I hear a lot of, but I hear about it. And it sort of 
raised a question in my mind, Mr. Chairman, why, we've been 
doing this this way for a long time and do we need to continue 
to do it this way? In other words, since NRCS really has the 
bulk of the work to do, they're the ones that go out and do the 
bulk of the technical work and the help and that type of thing. 
Why shouldn't they be the payers of the bills, too? Why 
shouldn't they just run the financial end through NRCS, too?
    I just ask that as an open question. Maybe there are some 
reasons why, but I want to test that hypothesis. And I'd like 
to test it as we move along this year in our programs. Maybe we 
need to streamline it just a little bit more.
    So I leave that out there, I don't need a response on that, 
but I'd like to kind of look at it as we go along, why can't we 
just do it through one agency, rather than involving two and 
have FSA do some other things that maybe they should be 
involved in. I just leave that out there for that. There maybe 
some reasons that I am not looking at.
    Mr. Stephenson, again, I don't know if I'm duplicating a 
question here that the Chairman got into. I was trying to 
listen carefully, and maybe you did respond. You talked about 
this point system, but I'm trying to figure out, in designing 
the incentive payments for the continuous signup practices, 
that only some of them are eligible for these incentive 
payments. I'm trying to figure out how you determine which 
practices are eligible for the incentive payments and which are 
not. I'm talking just about those incentive payments now.
    Mr. Stephenson. On the incentive payments, they were born 
out of a number of meetings that NRCS conducted out in the 
countryside, a number of meetings that FSA conducted out in the 
countryside. Then I believe there were some joint meetings 
where farmers were basically asked, what are the impediments to 
enrollment and what can we do to remove those. What we were 
told by those groups is by and large, what resulted in the 
incentive payment and the structure and the amounts that we 
came up with. I think we were very responsive to what we were 
told out in the countryside by the summation of all those 
several meetings that occurred over a couple of year period.
    Senator Harkin. In other words, it was based on NRCS's?
    Mr. Stephenson. NRCS did a series of public meetings and 
FSA did a series of public meetings, then I believe there were 
some joint agency meetings too.
    Senator Harkin. So out of that, that's how you determined 
what practices would be available for the incentive payments?
    Mr. Stephenson. Yes.
    Senator Harkin. Do you get much feedback on that from your 
customers out there? Have they been pretty satisfied?
    Mr. Stephenson. As to the levels today? The major complaint 
we're getting now, or that I've received anyway, and 
essentially the only complaint, it has been because we did not 
make them retroactive, has been the concern that's been raised 
to me, about what the new levels were.
    Senator Harkin. And I hope this may not, I ask this 
question, but you may not need to answer it, maybe we need to 
get other people from the Department up, some of the budget 
people. But you pointed out, Mr. Weber, how much over-
subscribed these programs are. It's been my experience, too, 
out in the field, that they're just way over-subscribed. I 
think that doesn't really tell the whole story. They're over-
subscribed, but I think there's a lot of people that, they see 
how long it takes, the odds are they're not going to get in, so 
they don't even sign up anyway, they get discouraged from 
coming in. I think that may be another added amount onto that 
that's not reflected in the figures. EQIP you said was four-
times greater?
    Mr. Weber. It varies from three to 6 times, depending on 
the year.
    Senator Harkin. Well, do you have a table, or do you have 
something that would show us how over-subscribed each of the 
programs are?
    Mr. Weber. I have individual figures. I don't have it all 
in a table. I could outline it very quickly for you, verbally, 
if you wish.
    Senator Harkin. Well, I don't know if I want to take the 
time of the committee here. I'd kind of like to take a look at 
it. Send it up, or something like that. What I'd like to see 
is, what data do you have on what each, line up each one of 
those programs and give me a little bit of history on the 
subscription rate and how much they've been over-subscribed. 
Then I'd like to know some figures on the funding, because I 
want to see what would the funding level be required if we were 
to meet 100 percent of the people that subscribed. That's what 
I'm trying to get a handle on.
    Maybe that's some place, you've got those figures handy. I 
just could not get my hands on them the other day and I'd like 
to take a look at them.
    Mr. Chairman, thank you very much.
    The Chairman. Thank you very much, Senator Harkin. In fact, 
I think the question that Senator Harkin just asked would be of 
really great interest to the whole committee, because clearly 
as a part of our legislative work, we're going to try to 
evaluate the demand for the programs. We are not at liberty as 
a committee to determine all the monies, and we'll have to be 
working with others on that. But it would be useful to know the 
parameters, and that testimony, if you could give that to the 
committee, as well as to the Ranking Member, it would be much 
appreciated.
    Mr. Weber. We'd be pleased to provide that.
    [The information can be found in the appendix on page 56.]
    The Chairman. Senator Allard.
    Senator Allard. Mr. Chairman, I want to follow up on that 
last question that I tried to ask the other panel. I felt like 
you would be more in a position to answer that. It has to do 
with the watershed program, to be more specific, the Small 
Watershed Rehabilitation Program. I'd like to have you comment 
on what's happening with that program.
    Mr. Weber. Thank you, Senator Allard. The Small Watershed 
Rehabilitation Amendments to the 2000 Public Law that was 
passed and signed by the President in November authorized us to 
work with sponsors of small watershed projects that come under 
Public Law 556, Public Law 534 and Resource Conservation 
Development Acts.
    We have identified and we provided a report to Congress, I 
think it's probably been a year or two back now, identifying in 
a quick assessment, and I need to underline quick, that we have 
at least 2,200 structures in this country, and I'm talking 
dams, small dams, that are in need of significant renovation, 
rehabilitation or breaching because of potential hazards to 
life and property. The cost of that we had estimated from that 
quick study was about $543 million.
    This is a major issue in terms of public health and safety, 
we believe. The legislation has been authorized; however, there 
are funding issues that need to be dealt with of course by 
Congress in that. At this point, there are no dollars funding 
that effort. There are dollars for pilot rehabilitation 
projects that were authorized under the Emergency Watershed 
Program, the last supplement that came through, the last two 
supplements actually, a total of $16 million.
    Those States are Wisconsin, Ohio, Mississippi and New 
Mexico that are now going through pilot efforts to road test 
the process that we need to go through to actually rehabilitate 
these structures. Those States continue to work through as 
sponsors. We have roughly 15 dams we're looking at starting 
this spring or summer to actually do construction to 
rehabilitate.
    So that's where we're actually doing some things out there 
on the landscape under emergency legislation. However, under 
the new legislation for rehabilitation there are no dollars at 
this point.
    Senator Allard. The sponsors of these are responsible for 
operation and maintenance, do I have that right?
    Mr. Weber. That is correct.
    Senator Allard. Then the Federal Government is supposed to 
come and provide cost share for rehabilitation. How do you 
divide that responsibility up and how does that work?
    Mr. Weber. The legislation prohibits expenditure of Federal 
funds for operation and maintenance issues. Where operation and 
maintenance has not been carried out in fulfilling the 
responsibilities under the original project.
    Senator Allard. Now, my question is, how do you draw the 
line between maintenance and rehab?
    Mr. Weber. Basically, a rehabilitation issue would be 
things like where concrete has passed its useful life, let's 
say 50 years. You have spoiling, you have cracking, you have 
deterioration. That would not be a normal operation and 
maintenance issue. You have metal pipe that corrodes and over 
50 years, you would certainly in parts of this country have 
major problems there for replacement. That's how we go out and 
look at every one.
    Senator Allard. Let me ask you about the size of the dam. 
The Bureau of Reclamation has some responsibilities for dams. 
I'm not exactly sure how far that goes. Is there some overlap 
between what you're doing on the small watershed side with dam 
safety and what-not, and what the Bureau of Reclamation may be 
doing?
    Mr. Weber. That's an excellent question. My answer is no, 
because we do have, both organizations, including the Corps of 
Engineers, have a clear distinction in terms of their 
authorization. We work on watersheds that are less than 250,000 
acres under our legislation, and the others work on the bigger 
projects. So our dams tend to be much smaller. But we do have 
roughly 10,000 of them around the country.
    Senator Allard. Two hundred fifty thousand acres, that 
probably limits you pretty much to flatter land areas? In 
Colorado, they're larger because of our heavy slope and what-
not, I would guess in many of those areas it would go into the 
Bureau, is that correct?
    Mr. Weber. Probably, I would guess, and we would have the 
data. Most of the projects in Colorado I believe are in eastern 
Colorado.
    Senator Allard. Or they could be maybe even real high in 
the mountains, where there's not much drainage up above.
    Mr. Weber. Right.
    Senator Allard. OK. The States have passed dam safety laws 
and what-not like that. We've had some high mountain reservoirs 
which break in Colorado, cause a flood all the way down. Have 
you gotten involved in any of those kinds of issues, high 
reservoirs, perhaps a small drainage area that would qualify, 
then there's a break or something? Have you been involved in 
any of that?
    Mr. Weber. Not to my knowledge in the high country. We have 
had some other structures through flood events that we've had 
damage to.
    Senator Allard. In Colorado, we have a lot of, we have some 
State laws passed on dam safety and everything. We have a 
problem with some of these structures with developments 
occurring below the structure, it raises the issue about dam 
safety and what-not. How do you think the program is working in 
coordination with States like Colorado that have dam safety 
laws, that pass at the State level what you're trying to do at 
the Federal level with these small watershed structures?
    Mr. Weber. In the work we're doing out in the States, we're 
working directly with the State dam safety officials. Georgia 
is a great example. The State is putting in several million 
dollars a year to upgrade these structures to the current 
standards, which is another issue that we need to deal with.
    Senator Allard. Who sets the standards?
    Mr. Weber. Essentially the States.
    Senator Allard. So they kind of drive your expenses?
    Mr. Weber. Yes, they would have the criteria requirements. 
But we work directly with them.
    Senator Allard. Is there an advantage to the State to have 
high standards so they drive more spending by the Federal 
Government? Does that happen?
    Mr. Weber. I don't believe so. I'm not that familiar with 
each State's standards.
    Senator Allard. Mr. Chairman, thank you.
    The Chairman. Thank you very much, Senator Allard.
    Gentlemen, we thank you very much for your testimony. 
Senator Allard's questions brought forward again what you have 
mentioned, and that is the programs of many of our States that 
are significant. All of these programs work best where American 
Federalism is the most vital, that is, the Federal Government 
and the State governments, and on even some occasions, local 
governments, because of particular situations.
    I can recall just anecdotally from our own family 
situation, my dad attempting to work with whoever was there in 
the 1930s, 1940s, 1950s, and the programs we've talked about 
today are truly remarkable as I reflect back on that time. 
We've had wonderful hearings, I think Senator Harkin would 
agree with me, testifying bit by bit over the course of the 
last 15 years or so, of how America has been transformed.
    We look at this, and we should, in the nitty-gritty of who 
signs up and who gets paid and so forth. That is very important 
in terms of equity, and we've got to try to work that out. But 
the overall number of acres have transformed the interior of 
many, many of our States. This is exciting to see. I can recall 
the flood control, erosion control business in Indiana, even 
when I was young enough to understand all this, in the 1940s, 
really came down to just getting a bulldozer on your own and 
using the vacation money to put more dirt on top of the levee 
or to clear whatever had to be cleared. There really wasn't 
much governmental impetus to this.
    But if you planned to farm there for a good long while, you 
had your own conservation ethic. It was your soil and your land 
that was going to be affected.
    More recently, when the CRP was founded, I had the 
privilege of entertaining the Secretary of Agriculture, John 
Bloch, out on the Lugar farm, to announce this thing, much to 
the horror of Dave Stockman at the time, who was not aware that 
it was going to cost so much.
    [Laughter.]
    The Chairman. But in any event, I've always seen Jack 
Bloch, thanked him for coming, and for his own commitment. 
Because USDA really was at the forefront of that, and an 
advocate for these programs.
    We appreciate again your testimony today. We look forward--
I would mention, for all members and staff, I convey that, our 
hearing tomorrow will be in the Hart 216, the larger chamber. 
It will be at 9 o'clock again, and we look forward to a large 
number of witnesses who will come in from all over America to 
comment on these programs.
    Do you have any further comments, Senator Harkin?
    Senator Harkin. No, Mr. Chairman, again I thank you for 
your leadership in this area over the past. We really have made 
some great progress in this country, thanks to your 
departments, both of you, and the programs we've had out there. 
As I said earlier, I don't mean to repeat myself, but I think 
we now have to think about what's down the pike here. Again, 
how we utilize the great program that Senator Lugar started, 
the CRP program, that, we have some test programs going now to 
use the biomass off that for energy.
    But still, it's still CRP, it's not erodible, you're not 
plowing anything up, you're planting grasses on that. There's 
also carbon sequestration that takes place there. Perhaps we 
can utilize some of that for other purposes other than just 
sitting there. It's still wildlife cover and everything. So I 
think we're thinking about ways of enhancing some more farm 
income while not stepping back from our commitment.
    Thank you, Mr. Chairman.
    The Chairman. The hearing is adjourned.
    [Whereupon, at 11 a.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
      
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                           February 28, 2001

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                              CONSERVATION

                              ----------                              


                        THURSDAY, MARCH 1, 2001

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:02 a.m., in 
room 216, Senate Hart Building, Hon. Richard G. Lugar (Chairman 
of the Committee) presiding.
    Present: Senators Lugar, Thomas, Nelson, and Harkin.
    The Chairman. This hearing of the Senate Agriculture 
Committee is called to order.
    In our hearing yesterday we heard testimony from 
representatives of the U.S. Department of Agriculture and the 
Congressional Research Service and others about the 
administration and funding of our current conservation 
programs.
    As the author of the Conservation Reserve Program in the 
1985 Farm bill, I was heartened to hear about the significant 
reduction in soil erosion that has been achieved because of 
this program.
    A recent report prepared by USDA's Economic Research 
Service details the important environmental gains that have 
resulted from USDA's conservation programs in general.
    Another example cited was the Wetland Program. Through the 
Wetlands Reserve Programs created as a part of the 1990 Farm 
bill title, agriculture has become the single largest source of 
the U.S. wetland restoration.
    In my opening statement yesterday I stated that there are 
at least three fundamental questions to consider as we begin 
debate on the conservation title of the new Farm bill.
    First of all, what should be the environmental goals of the 
next farm bill designed to attain through voluntary incentive-
based programs and what will be the costs and benefits to the 
landowners and producers of achieving these broad goals? What 
will be the costs and benefits to society of achieving those 
goals?
    One of the challenges facing agriculture today is how to 
provide food, fiber and industrial raw materials without 
jeopardizing the future productivity of our natural resources. 
Private landowners are the stewards of over 70 percent of our 
Nation's land.
    Our nation's farmers and ranchers are facing increasingly 
complex environmental problems and regulations. Increasingly, 
taxpayers have been demanding and expecting increased 
conservation achievements from farmers and the agricultural 
sector.
    Given this situation, we have another question to consider. 
Should there be a substantially larger investment by the 
Federal Government in conservation cost share and incentive 
programs? By seeking answers to these questions we will be 
trying to determine the appropriate role for the Federal 
Government in assisting farmers, ranchers and other landowners 
in achieving conservation goals.
    Today, our hearing witnesses will include representatives 
of farm organizations, conservation and wildlife groups and 
State agencies. We will seek views on current programs as well 
as suggestions for improvements and new approaches.
    I welcome our witnesses today. We look forward to their 
individual testimony. Before I call upon the first panel, I 
call upon our distinguished Ranking Member, Senator Harkin, for 
his opening comments.

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

    Senator Harkin. Mr. Chairman, thank you again for holding 
today's hearing on Conservation and America's private 
agricultural lands.
    I first want to welcome my good friend, long-time friend 
and fellow Iowan, Paul Johnson. As you know, he is the former 
Chief of the Natural Resources Conservation Service and former 
Director of the Iowa Department of Natural Resources and a 
farmer from Decorah, Iowa. He has been a true friend of farmers 
and a visionary conservationist in the mode of Aldo Leopold 
himself. I appreciate his long leadership in this area.
    I also want to welcome two other Iowans: Craig Cox, the 
Executive Vice President of the Soil and Water Conservation 
Society from Ankeny, and Dan Specht, a farmer from McGregor, 
Iowa, who, like Paul Johnson has got a long history of hands-on 
active involvement in conservation and with practical farmers 
of Iowa trying to figure out how we can keep more family 
farmers on the farm and keep them actively involved in our 
conservation of our natural resources.
    So I welcome them here. I know we will have a lot to learn 
from them.
    As we learned yesterday, our farmers and ranchers have made 
great strides towards protecting natural resources. Their role 
as conservationists of our lands for future generations is 
every bit as important as the food and fiber they grow.
    We need to provide them with the tools they need to succeed 
and expand our tradition of promoting conservation on private 
agricultural lands.
    I commend our distinguished colleagues, Chairman Lugar and 
Senator Leahy for their unwavering dedication to conservation 
in past farm bills. I think in this new farm bill conservation 
must once again be an integral part of farm policy. In fact, I 
would go so far as to say that in the next farm bill I think 
that conservation ought to be the centerpiece of our next farm 
policy because it encompasses, really, everything we are trying 
to do.
    I will get into that more later on, but I think it ought to 
be the centerpiece of our next farm bill.
    It goes without saying that our farmers and ranchers are 
facing stiff economic challenges, low prices for their crops. 
Our rural areas are being decimated and we need a different 
view on how we can reach out to help our farmers and ranchers 
and at the same time give them the tools and the expertise and 
the financial help that they need to continue to be good 
stewards of our soil and water and air.
    With that, Mr. Chairman, again I look forward to the 
testimony from our witnesses. Thank you again for holding these 
very timely hearings.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 142.]
    The Chairman. Well, thank you very much, Senator Harkin. As 
if obvious, I share Senator Harkin's view of the importance of 
the conservation title. That is one reason that we both decided 
to have these hearings first.
    We had one hearing from the Commission that was mandated by 
the farm bill, summarizing an overall national point of view. 
But in terms of chapters or categories, this is our first 
attempt and we believe it is an important one.
    I want to recognize Senator Thomas if he has an opening 
comment this morning.

        STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR 
                          FROM WYOMING

    Senator Thomas. No, Mr. Chairman. All of us are having to 
come and go. I just would make the observation that I agree 
with what both of the gentlemen have said. It does seem it is 
our responsibility to examine and see which of these several 
programs are the most efficient and effective, how could they 
be done more efficiency, should some of them be combined and 
where should our priorities be. It seems to me those are 
important issues as well.
    So thank you.
    The Chairman. Thank you very much, Senator Thomas.
    Let me introduce now the first panel this morning. First of 
all, Mr. Craig Cox, the Executive Director of the Soil and 
Water Conservation Society, a former Senate Agriculture 
Committee staff member for Senator Leahy.
    Mr. Cox moved to the USDA as Acting Deputy Under Secretary 
for Natural Resources and Environment before taking his current 
position with the SWCS. The SWCS is an international, nonprofit 
organization of conservation professionals.
    It is a special pleasure to greet Mr. John Hassell, who is 
Executive Director of the Conservation Technology Information 
Center [CTIC], which is based at Purdue University and a part 
of the National Association of Conservation Districts and a 
public-private partnership.
    CTIC promotes the use of conservation tillage and residue 
management in ways to protect water quality. They also promote 
watershed planning as a basis for protecting water quality.
    Mr. Nathan Rudgers is Commissioner of the New York State 
Department of Agriculture and Markets. He represents the 
National Association State Departments of Agriculture. We are 
delighted to have you on the panel this morning.
    As Senator Harkin has mentioned, Mr. Paul Johnson is first 
of all an Iowa farmer. He is a former Chief of the Natural 
Resources Conservation Service and former Director of Natural 
Resources for the State of Iowa. Mr. Johnson testified at the 
Senate Agriculture Committee hearing reporting IDNR on the 
total maximum daily load issue last February. We appreciated 
that testimony.
    He lives on a farm in Iowa and is testifying today as a 
farmer.
    I will ask each of you to testify in the order that I 
introduced you, starting with Mr. Cox. If you could summarize 
your remarks in 5 minutes, that would be great. We will be 
somewhat liberal in allowing some spillage beyond that, as you 
have seen our practice before. But to the extent that we can 
have those summaries, we will get into the questions that the 
members will want to raise with you.
    Mr. Cox.

  STATEMENT OF CRAIG COX, EXECUTIVE DIRECTOR, SOIL AND WATER 
               CONSERVATION SOCIETY, ANKENY, IOWA

    Mr. Cox. Mr. Chairman, Senator Harkin, and Senator Thomas, 
I want to thank you so much for the opportunity to appear 
before you this morning, and particularly on such an issue that 
is so critical to agriculture and to the American public.
    I would like to applaud you for taking conservation on so 
early in this process. I think that sends a good signal to all 
of us who are so concerned about American agriculture and the 
American landscape.
    The Soil and Water Conservation Society held a series of 
workshops last year. We are in the process now of analyzing the 
content of what we heard at those workshops and what it should 
mean for reform in the farm bill.
    We will issue a report in April with a set of detailed 
recommendations that we hope will be of service to you in your 
work on the Farm bill provisions.
    But even our preliminary analysis to day, I think, makes 
three things clear that perhaps respond to some of the 
questions, Mr. Chairman, that you asked at the outset. First 
off, we found that people are worried. Participants across the 
country universally reported that USDA conservation programs 
are not meeting their critical need for assistance, both 
technical and financial, to deal with the environmental 
problems that they face.
    That is making them worried both about the environmental 
and making them worried about the sustainability and future of 
the farms and ranches in their community.
    The second thing we heard that was clear is that in this 
case money matters a lot. Participants across the board wanted 
significant increases in existing conservation programs in 
order to address these critical natural resource needs. In fact 
analyzing the proposals from participants for increased 
funding, we come up with a proposal to double funding for 
existing conservation programs to create about a $5 billion 
annual program.
    That, in the opinion of our participants, would be a 
sufficient investment to deal with the most basic needs of 
agriculture in terms of ensuring the sustainability of the 
agricultural enterprise by improving its environmental 
performance.
    But, in fact, participants want to do much more than that. 
That is what they are worried about. But what they hope for is 
an investment sufficient to go beyond pollution prevention and 
go beyond damage control to actually encourage widespread 
enhancement of the environment across this country.
    In that context, our participants are really envisioning 
about a $10 billion annual conservation baseline program.
    Now, I know at first blush talking about increases of that 
magnitude might seem outlandish, but I think if we take them in 
perspective we get a different view. Creating a $5 billion 
annual baseline would be an increase comparable to what you 
accomplished in the 1985 Farm bill.
    A $5 billion annual program would be about 20 percent of 
what we spent last year in income and disaster assistance to 
farmers. Now, even a $10 billion baseline would make this 
conservation effort about 10 percent of the total program 
outlays projected for USDA in 2001.
    We heard yesterday a report of over-subscription rates of 
three, five or six times what we are able to satisfy with 
current funding. So in that context, perhaps a $10 billion 
increase seems almost conservative.
    The other thing we thought was clear is that there is no 
single program or authority that can address all of these 
concerns. What we really need is a comprehensive conservation 
title that has the following components, we think:
    First, a major emphasis on technical services and technical 
assistance, a major new emphasis on assistance to working lands 
and farmers producing food and fiber whileprotecting the 
environment.
    Strengthening our land retirement programs that thankfully 
we have in place today, leveling the playing field so good 
stewards are rewarded and not penalized for what they do and 
creating more authority and flexibility at the State level to 
tailor these programs to unique circumstances.
    I think, in conclusion, taking these kinds of actions 
would, in fact, move conservation to the center of farm policy 
with tremendous benefits both for the American public and, I 
think, for the agricultural community itself.
    Again, thank you for the opportunity to appear here today. 
The Soil and Water Conservation Society would be more than 
willing to do whatever we can to help you in the months ahead 
as you shape critical conservation policy for this country.
    [The prepared statement of Mr. Cox can be found in the 
appendix on page 144.]
    The Chairman. We thank you for your testimony and your 
specific listing of objectives, funding as well as 
organization, of this title.
    Mr. Hassell.

  STATEMENT OF JOHN HASSELL, EXECUTIVE DIRECTOR, CONSERVATION 
      TECHNOLOGY INFORMATION CENTER, W. LAFAYETTE, INDIANA

    Mr. Hassell. Better soils, cleaner water for our nation's 
environment and greater profits and a brighter future for our 
farming families. I want you to know that this is the message 
that we receive from farming families across the nation as we 
go out and talk about conservation programs.
    Good morning, Mr. Chairman, and members of the Committee. 
As I was introduced, I am John Hassell with the Conservation 
Technology Information Center, a nonprofit, public-private 
partnership. We are a part of the National Association of 
Conservation Districts; however, we are separately governed by 
a board of 25 directors, made up of industry representatives, 
farm press, conservation groups, environmental organizations 
and producers.
    We also have nine cooperating Federal agencies that provide 
assistance to us. So we are truly a public-private partnership 
promoting conservation on America's working lands.
    What I wanted to do today was deliver to you information on 
three points: One, information about the work that CTIC did 
during the 1985 and 1990 farm bills, a new initiative called 
Core 4 Conservation on which I have handed out some information 
to you, and also recommendations for the next farm bill that 
came from the NACD Farm bill task force.
    CTIC was previously known as the Conservation Tillage 
Information Center and was started to promote conservation 
tillage and residue management. CTIC supported the 1985 and 
1990 farm bills by instituting what was known as the Crop 
Residue Management Initiative. We worked with producers to help 
them meet the compliance portion of their conservation plan.
    Because of this effort, 75 percent of the compliance plans 
that were written included Crop Residue Management. If you go 
back and look at the chart that I handed out to you earlier, 
the blue and red one; one side shows No-Till Adoption and Soil 
Erosion and the other side shows Conservation Tillage Adoption 
and Soil Erosion. Both show that during this Crop Residue 
Management Initiative, that we had an increase in conservation 
tillage adoption and no-till adoption and a decrease in soil 
erosion.
    [The information referred to can be found in the appendix 
on page 169.]
    This is really significant. If you look at where both 
flattened out, this is when CTIC dropped its Crop Residue 
Management Initiative. There is quite a correlation between the 
two.
    We believe that this particular initiative was a success 
for several reasons. One is that we are a public-private 
partnership that worked toward a common goal. There was new 
technology available that allowed no-till implementation to be 
successful and be delivered.
    The third was that we had a national marketing campaign 
that delivered a consistent message about the benefits of crop 
residue management.
    Now, our new initiative is something that we call Core 4 
Conservation. I am going to tell you the principles several 
times because I don't want you to forget them. The principles 
of Core 4 Conservation are: Better soil, cleaner water, greater 
profits and a brighter future.
    Core 4 Conservation utilizes a systems approach to land 
treatment that provides environmental benefits while at the 
same time looking at the economic benefits to producers.
    So many times in environmental programs we push the 
environmental end and we never come back and talk about the 
economic benefit to the producer. Producers are a lot more 
likely to adopt something that is economically beneficial to 
them as opposed to environmental, even though they want to do 
the right thing.
    The practices that we recommend under Core 4 Conservation 
and the systems approach are: conservation tillage, buffers, 
nutrient management, and integrated pest management, along with 
other practices that would be determined upon a site-specific 
approach.
    We understand from the scientists and experts that have 
looked at these practices, that we can address 80 percent of 
the environmental issues on cropland if we use this approach. 
That is significant.
    I believe that Core 4 Conservation is also a banner for all 
of agriculture to rally under. I really believe that today 
agriculture is somewhat fractured and we really need something 
that we can all unite under.
    The goals of Core 4 Conservation are very clear and 
concise: Better soil, cleaner water, greater profits and a 
brighter future.
    Members of the CTIC Board of Directors were participants on 
the NACD farm bill task force. They took the Core 4 concepts to 
that task force and they were implemented within the proposals 
of the NACD final report. In that final report, and we agree 
with this, and it does meet Core 4 Conservation, we want to 
maintain a voluntary incentive-based approach. We think that 
this is extremely important:
    Increasing local involvement in setting priorities and also 
in carrying out programs; utilizing science-based technology to 
make decisions; and increasing the technical assistance.
    The task force also saw that there was something missing, 
so they recommended the Conservation Incentive Programs similar 
to Senator Harkin's proposal that would reward producers for 
being good stewards.
    Now, the best intended programs are doomed to fail without 
a mechanism for implementation. I think that we need to 
continue to utilize the 3,000 local conservation districts as a 
delivery system and at the same time we need to increase the 
funding for technical assistance through our partners, the 
NRCS.
    Federal programs can't do it alone. We need the private 
sector involved in it. We are a public-private partnership and 
the private sector not only brings the necessary resources to 
promote conservation to their constituents, but they also 
provide us with cutting edge research and products that make 
conservation affordable and achievable for American farmers.
    Without a vision on how American agriculture will profit 
and thrive in the future, any conservation program will fail. 
We need a mechanism for delivering information to 
agribusinesses, to technical advisers and producers.
    We believe that Core 4 Conservation does have that. I think 
that you will agree that everybody can buy into this approach. 
I believe that if we look at better soils, cleaner water and 
greater profits for farm families that will result in a 
brighter future for all of us. Core 4 Conservation is 
conservation for agriculture's future.
    Thank you.
    [The prepared statement of Mr. Hassell can be found in the 
appendix on page 156.]
    The Chairman. Thank you very much, Mr. Hassell.
    Mr. Rudgers.

          STATEMENT OF NATHAN RUDGERS, COMMISSIONER, 
           NEW YORK STATE DEPARTMENT OF AGRICULTURE 
          AND MARKETS, NATIONAL ASSOCIATION OF STATE 
                   DEPARTMENTS OF AGRICULTURE

    Mr. Rudgers. Good morning, Mr. Chairman, Ranking Member 
Harkin and Senator Thomas. Thank you for the opportunity to 
offer testimony this morning on the conservation provisions of 
the next farm bill.
    My name is Nathan Rudgers and I am the Commissioner of 
Agriculture from the State of New York. I am here today, 
honored to represent the National Association of State 
Departments of Agriculture. I am joined this morning by 
Commissioner Robert Wells, from Alaska and Director Joe Hampton 
from Illinois, who have chosen to join us this morning as well.
    Today I will present a broad outline of a new environmental 
program for America's open space resources that are under the 
care and stewardship of agricultural producers. I would like to 
stress that this proposal is a work in progress. It is the 
product of extensive discussions over the past several months 
among commissioners, secretaries and directors of agriculture 
representing all regions of the country.
    It was formally adopted as NASDA policy during our mid-year 
meeting on Monday. We will further refine our proposal in 
upcoming months based on continued discussion with other 
stakeholders and the input from this committee.
    While we support the continuation of the existing 
conservation programs and increased funding of those programs, 
we are recommending certain changes in WHIP, EQIP and CRP. For 
example, NASDA recommends that USDA give State more flexibility 
and discretion in administering the EQIP Program by allowing 
one-year contracts, removing the payment cap, and removing the 
national size restriction for livestock projects.
    These and other proposals are described in detail in my 
written testimony.
    Despite the overall usefulness of existing programs, we see 
gaps in coverage that are probably inevitable in any set of 
programs designed with the entire country in mind. In addition, 
we have seen that Federal environmental regulation and policy 
has evolved to further address issues such as concentrated 
animal feeding operations that were probably not prominent when 
existing conservation programs were designed.
    Because meeting changing environmental demands is a make-
or-break challenge for certain producer groups, many of our 
State departments of agriculture have taken the initiative to 
design their own programs tailored to address resource needs 
unique to their States that cannot be met by existing 
conservation programs.
    For example, through the leadership of Governor Pataki New 
York has a highly successful Agricultural Environmental 
Management, or AEM, Program. It offers technical and financial 
assistance in nutrient management planning and cost share 
assistance for improvements carried out under approved plans.
    The primary goal of this voluntary, incentive-based program 
has been to assure that New York farmers can meet environmental 
requirements while maintaining the economic viability of the 
farm.
    The AEM Program is a partnership effort with local sewer 
and water conservation districts and NRCS field staff, as well 
as staff from my department, Cooperative Extension, farmers and 
people in the community.
    AEM and similar programs in other States supplement 
existing Federal conservation programs while helping farmers 
bear the cost of what we see as substantial public benefits 
such as open space conservation, resource preservation for 
future generations, clean air and water.
    Just as the Federal Government has provided cost sharing to 
help local governments upgrade water treatment infrastructure 
to meet Clean Water Act requirements, we believe the Federal 
Government should provide assistance to States to help farmers 
and ranchers meet environmental requirements.
    Moreover, this assistance should be provided with enough 
flexibility so that States can target these funds to their own 
resource needs.
    Consequently, we are recommending the establishment of a 
new block grant program for agriculture environmental 
stewardship with these guidelines: First, money would come 
through cooperative agreements between USDA and State 
Departments of Agriculture which would be the lead agencies in 
designing and carrying out these programs.
    Second, program parameters would recognize activities that 
enhance protection of land, air, water and wildlife, defined in 
the broadest terms possible to permit local flexibility while 
avoiding duplication of existing planning systems and 
infrastructure.
    Third, States would have the flexibility to allocate 
dollars between payments to producers and/or technical 
assistance based on local needs and priorities.
    Fourth, producer participation would be voluntary, 
incentive-based and targeted towards those environmental 
enhancements supported by sound science and producing 
measurable results.
    Fifth, contract payments to participating producers would 
be made on an annual basis.
    Finally, all programs would have provisions to protect 
individual producer privacy and data confidentiality.
    We note that expenditures in the environmental area are 
likely to be considered ``green box'' payments in the context 
of our WTO commitments, since their impact on commodity output 
would certainly be neutral.
    We are also sure that our proposal will keep farming 
operations that are most heavily burdened from failing while we 
work to improve opportunities for growth and profitability in 
agriculture as a whole.
    Speaking for all my State colleagues, I appreciate the 
opportunity to present views on how we can support good 
agricultural environmental stewardship in every region of the 
country.
    We look forward to working with the Committee on 
development of a Federal agricultural policy that provides 
necessary tools for a healthy and profitable agricultural 
industry that helps farmers continue to be good stewards of the 
land.
    Thank you.
    [The prepared statement of Mr. Rudgers can be found in the 
appendix on page 171.]
    The Chairman. Thank you very much.
    Mr. Johnson.

        STATEMENT OF PAUL JOHNSON, FARMER, DECORAH, IOWA

    Mr. Johnson. Thank you. Senator Lugar, Senator Harkin and 
Senator Thomas, it is an honor to be here today to share some 
ideas with you.
    Since Aldo Leopold was already mentioned, I think I will 
start with a quote from him written more than 60 years ago when 
he wrote that ``It is the American farmer that weaves the 
conservation carpet on which America stands.''
    He went on to say, ``Should he weave it with the sober 
yarns that warm the feet or shall he also add the colorful 
yarns that warm the heart and the eye.''
    I think we can say at this point that we do have the sober 
yarns woven into America's land. It has come about because of 
through work that you have done in this committee and the 
conservation policies that you have put together over the 
years.
    At that same time, 60 years ago, Hugh Hammond Bennett, the 
first chief of the Conservation Service was up here and 
actually delayed a hearing similar to this until the storm 
clouds moved in with dust from the Great Plains. Out of that 
hearing came the Soil Conservation Service.
    I won't delay. On the other hand, within 2 months the Des 
Moines River will probably be very high in nitrates to the 
point where the largest nitrate removal plant in the country 
will not be able to handle it. We will ask people to not give 
babies water from Des Moines.
    We do still have problems. We have made great progress. We 
do have problems and that is what we are about here today.
    You are very important. If you went out and asked Americans 
where conservation and environmental protection takes place in 
this town, they will tell you the Department of Interior and 
the EPA. I would suggest you are more important than both of 
them put together, particularly over the next decade as we 
craft our policy. I don't need to tell you, most land is 
private. Most wildlife habitat is on private land. Most air 
quality, most water quality at this point is dependent on what 
you do. Your failure to act has consequences that I think we 
have all talked about.
    None of us like to farm under a heavy regulatory hand. Yet, 
I think that will come if we don't continue to make progress.
    I would like to suggest five ideas for your consideration 
as we move forward. First, I would suggest that you look at 
crafting a clear, unambiguous national private lands 
conservation act.
    Every 5 years or so we talk about conservation as 
productivity of a farm bill. I think this is where it belongs, 
in this committee. But just as we have a Wilderness Act and we 
have a Clean Water Act and a Clean Air Act, places where the 
Nation focuses on these issues, I think it is important that we 
consider doing that for private lands as well.
    We suffer from a lack of support and a lack of 
understanding across this country. I think that something like 
that could help to do it. I don't know exactly how it should be 
done, but I think it should be a fascinating task to begin. I 
suggest that you take a look at that.
    I believe that it is time that we set a national goal to 
make sure that a basic conservation carpet covers all of our 
land, cropland, grazing land, and non-industrial private 
forestland.
    I think that we know how to do it. We have been at this 60 
years now. I think we know how to be landowners to do it. It is 
called ``money.'' The conservation payment to every landowner 
in the country who is willing to achieve a sustainable level of 
soil conservation and water protection would do more to advance 
conservation and environmental protection in our country at 
this point than anything we have ever done. I think you ought 
to consider that.
    Craig Cox mentioned $10 billion. I think that he is in the 
ballpark. Can we do it? We are the wealthiest Nation this world 
has ever seen. We are in good shape right now as well. I would 
urge you to take a look at that.
    Leopold once wrote that, ``Conservation occurs when the 
farmer takes care of land, but also when land takes care of the 
farmer.''
    I think that a basic conservation payment for doing basic 
soil and water conservation will do more to have take care of 
farmers across this country than just about anything else we 
could do as well. So as you talk about conservation policy, I 
would certainly include that.
    You have a wonderful set of tools to put those colorful 
yarns into our carpet, CRP, WRP, WHIP, EQIP, Farm Land 
Protection. All of these are very, very good programs and I 
would urge you to keep them. They all need additional funding. 
I think they all need more flexibility as well.
    I will cite an example of the continuous CRP. In Iowa, if 
you have a waterway that you put in 10 years ago because you 
were a very good farmer you are not eligible for a CRP 
contract. If you plow it out and put soybeans in it for two 
years and come back, you will get it in. I think this is 
downright dumb. I think that it needs to be changed.
    While we are on that issue, I think the possibility of 
partial field enrollment, small pieces of a break in a field or 
a corner that is hard to farm, if it meets a high enough EBI, I 
think it ought to be included in that CRP as well.
    Imagine a working land across this country that has a good 
conservation carpet in it with residue management and good 
nutrient management and at the same time has these colorful 
pieces throughout it of wildlife habitat. I think it would be 
an exciting landscape for us to work on.
    The conservation infrastructure is in place and I think 
many people in front of you have suggested that we need 
additional resources there.
    When I came in and headed up the NRCS in 1994, I was handed 
a ten percent cut. We lost ten percent of our people across 
this country. These are conservation technicians and soil 
conservationists. Don't let that happen this time. I think a 
Nation that is so well off, please don't let that happen.
    Number five, I would certainly expand our research in 
conservation. I view the commodities, things that come off of 
good conservation as conservation commodities, whether they are 
clean water or wildlife habitat.
    I would suggest that you put a great deal more effort into 
the research to make sure that we can provide these 
conservation commodities to the American public.
    Thank you for the opportunity to be here. I will be open to 
further questions or comments.
    [The prepared statement of Mr. Johnson can be found in the 
appendix on page 182.]
    The Chairman. Well, thank you very much, Mr. Johnson.
    As an overall comment, let me make the point that your 
papers all of them, will be made a part of the record in full. 
They are a comprehensive chapter in themselves in terms of 
their recommendations.
    For instance, the broad idea of having, as you were 
suggesting, Mr. Johnson, conservation acts equivalent to the 
Wilderness Act or Clean Air Act, or what have you is a 
remarkable concept itself.
    As I read your paper before you came, I was still trying to 
envision technically how we do that, not that it is impossible 
in this Congress, but nevertheless, trying to think through the 
jurisdictions. It is generally agreed among our colleagues that 
we have jurisdiction to deal with CRP and WHIP and what have 
you.
    Perhaps our ambitions should be broader or should take 
others into consideration. But it is an interesting idea, 
certainly. I just wanted to comment, Mr. Cox. Imbedded in your 
paper is some very interesting data in which you point out, as 
some others have, that about 36 percent of farmers currently 
receive farm payments, as we think of these, trying to 
supplement income, a safety net.
    Your suggestion is that that could be a much broader net if 
we centered much more of our income sufficiency on the 
conservation situation, not supplanting the crop-by-crop or 
category-by-category idea, but nevertheless, historically, the 
program crops whereas other programs have come in and we have 
tweaked the system to try to use those programs.
    Each of you in a way has talked about this broad carpet of 
land in our country, the stewardship that is involved, how 
comprehensively, either State by State or as a Nation, we try 
to coordinate this.
    So I thank you, really, for the height of your imagination, 
but likewise your experience in dealing with all of this.
    Now, let me just pick up one thought that was given to me 
yesterday by an official in my own home State who has taken 
responsibility for conservation and soil programs and what have 
you. She pointed out that in Indiana-- and I was not acquainted 
with is the whole digital process now where all of the soil 
types for farm by farm, county by county, may be available 
fairly shortly on the Internet or at your personal computer--a 
farmer can take a look at what his or her land looks like.
    In fact maybe even an evolution of this would be to be 
various overlays on this. This is an exciting idea. It hasn't 
happened yet in Marion County, Indiana, but will, I am advised, 
maybe within 18 months or so. So this is a way all of us can be 
better informed wherever we are sitting about the precise soil 
situations that we have now and the possibilities for the land 
for which we have some stewardship.
    Along with the information, of course, comes the 
possibility for responsible action for the type of promotion, 
public relations, that have been discussed today.
    Just as I say, as we started out with the farm bill, in 
trying to think through, given your guidance today, what do we 
do on the general support of American agriculture through 
money?
    Mr. Johnson says it helps to solve a lot of problems. Where 
should the money go? One way, as you are suggesting, Mr. Cox, 
but I want all of you to comment, is that much more of our 
support as a people, as a Federal Government, should come 
through the conservation, through the stewardship of land 
situation, perhaps as opposed to bushel-by-bushel subsidies or 
crops or what have you?
    I am not certain, as we have other panels that will come 
in, that everyone will agree with that. As a rule, when we take 
up farm bills, we hear from wheat growers, corn growers, cotton 
growers, rice growers, category by category, vegetable and 
fruit growers, people in sugar, tobacco, a lot of people who 
have very specific and urgent needs for preservation of what 
they are doing.
    Occasionally, somebody comes in with the whole farm idea 
that we ought to be supporting whatever people want to do as 
opposed to doing it category by category because some 
categories always get left behind, may not have been a part of 
the last farm bill. So they try to get additional support in 
the next one.
    But what you are suggesting is really something more 
fundamental than whatever the produce happens to be from this 
process and that is really the land, the stewardship, the basic 
assets that we are stewards of for a fairly short time, but are 
a part of our national heritage, maybe much more a part of our 
national responsibility.
    Do any of you want to venture into this dangerous territory 
and comment about money? Now, you might say, well, we should do 
all of the above. In other words, there is nothing wrong with 
supporting the price of corn, but at the same time, why, I do 
believe something more for stewardship of the land and maybe 
that is what we will end up doing.
    My guess is ultimately there will have to be decisions in 
terms of priorities. Some things are likely to be substituted 
in part, not in full. So if you can, give us some underpinnings 
that we ought to be thinking of.
    Who of you would like to start?
    Mr. Rudgers. Mr. Chairman, I think it is very important to 
the Commissioners, Secretaries and Directors of Agriculture 
across the Nation that the next farm bill really be an 
integrated approach.
    Let me offer a thought as to why conservation programs and 
additional assistance in the area of conservation has a direct 
impact on all those commodities that you mentioned.
    We are expected to compete globally and most, if not all of 
the commodities you mentioned have an export outlook. Their 
future success is tied to their ability to export. In order to 
do that, they need to be competitive. In order to be 
competitive, they need to have a level playing field.
    That are expectations in this country and environmental 
action and environmental care on our land is very high. In 
order to meet those expectations, producers are already 
expected to provide significant impacts on their land and 
within their livestock operations.
    In order to be competitive, though, they really need 
additional support and additional investment to level that 
playing field. That is why this type of an approach fits very 
well with the commodity programs as well.
    The Chairman. Mr. Johnson.
    Mr. Johnson. In 1985, with the Food Security Act, we put 
together conservation compliance. We said that if you receive 
these supports of various kinds, then you meet this basic 
requirement.
    As we moved away from that, and I am not quite sure where 
you are going to go this time around, but as we move away from 
it, we lose that connection. That is why I suggest the basic 
conservation payment to meet basic soil conservation 
requirements and basic--probably nutrient would be the key 
issue when it comes to water quality, that plus soil 
conservation.
    We are spending, still, in the neighborhood of $20 billion 
a year or more in agricultural policy. There are many ways to 
get that money to support agriculture.
    The problem out across the countryside today, as I see it 
from where I am, is what is the Nation getting in return for 
this? I think to shift a good chunk of that to paying for 
conservation commodities, and these are things that the Chicago 
Board of Trade doesn't pay you for. Yet, they are extremely 
important to the American public. That is one way to look at 
it, to move in that direction, I think.
    I would urge you to take a look at that. I know that is a 
radical change from where we have been. There are those who 
will say, ``But farmers will do it anyway, so why should we 
worry about it?''
    Well, everywhere else in our society we get rewarded for 
doing good things. I think most farmers will go above that with 
those colorful yarns that I was talking about. But that basic 
conservation mat across the country, I think the public would 
be very pleased with.
    The Chairman. Well, it is an unusual but important 
responsibility for this committee. Some would see this 
committee as being purely advocates for producers. What you are 
suggesting is that the committee should be advocates for the 
total American public.
    Mr. Johnson. That is right, but the producer gains from it 
as well and has some security. We have talked often about 
revenue assurance for agriculture. What better way to do it 
than this?
    Mr. Cox. Mr. Chairman, I think the question you ask is very 
fundamental. The way I think about it is you are really asking 
what do we want from agriculture? There are some other numbers 
in my testimony that I find even more shocking in that 8 
percent of farmers produce over 70 percent of the monetary 
value of agricultural production. From a conservation point of 
view they are doing that on only 32 percent of the acres in 
farms.
    Not to be, perhaps, too outspoken, but if all we want from 
agriculture is abundant supplies of food and fiber, it is hard 
not to come to the conclusion that we can do that with fewer 
farmers and fewer acres in production.
    I think moving conservation to the center provides us a way 
to engage much of the rest of agriculture in a way that 
produces something in addition to food and fiber, which is 
environmental enhancement.
    I wouldn't tread too deeply into suggesting how you balance 
traditional commodity support objectives with conservation 
objectives, but if there is a bright spot, it would be that 
perhaps moving conservation to the center would provide 
additional options for producers, especially those producers 
who really aren't touched by the existing commodity programs 
and yet still have the same responsibility to manage their 
lands as those farmers and ranchers who are being supported 
through commodity programs.
    So it may be that bringing conservation to the center could 
allow you to fashion an agricultural policy that is tailored 
more to the realities of the diversity of agriculture and more 
to the realities of the structure of agriculture.
    Maybe perhaps even achieve some cost savings from having, 
essentially, a one-size-fits-all commodity program that works 
well for some producers and maybe not so well for other 
producers and yet costs a fair amount of money.
    The Chairman. Mr. Cox, you have introduced an idea. I think 
one of the Sparks, Incorporated reports gets into structure. I 
cited that in another hearing. But 8 percent of the entities 
that are family farms, with $1,000 in sales or more qualifying 
to have a farm entity. There are about 1.9 million such 
entities in our country.
    But just 8 percent of these, 160,000, do produce, I think 
according to Sparks, much more than 70 percent of everything 
that occurs. If you take the next 10 percent, another 18 
percent of the farms do at least 7/8ths of all the business.
    This leaves 82 percent of entities, 1.5 million plus. 
Sparks would contend that 100 percent, on a net basis, of the 
income of all of these farms comes from off the farm. This 
doesn't mean that some of the 1.5 don't make some money, but 
the rest lose enough that as a net group 82 percent are getting 
all their money from off the farm somewhere and almost making 
nothing on the farm.
    That is a structural revolution that is not well 
understood. But we sort of plow into a farm bill thinking about 
1.9 million farms, as you say, one-size-fits-all, something 
that is sauce for the goose is sauce for the gander, but 
without relationship to who is there and what they are doing.
    But now this is a radical suggestion that you are making 
because some would say the purpose of agriculture is to produce 
food and fiber. That is what the public interest is.
    Now, you are saying, well, that is a part of the public 
interest, but as a matter of fact, it is being satisfied, 
roughly, 7/8ths of it, by very few people.
    So what about the other 4/5ths? Because these are people 
who are farming or tending or conserving land for the rest of 
America. If I gather, and I don't want to put words in your 
mouth, but you are saying the major objective of agriculture in 
America ought to be the support of these people, in essence. 
Further, if we are going to have a public interest, it ought to 
be principally geared to that, as opposed to the 8 percent who 
are corporate, commercial, family, but in any event, good sized 
farmers with entities that are currently among, I suppose, the 
36 percent of farms that you point out get some money. The 
other 64 percent don't.
    Do you want to amplify further or am I mischaracterizing 
where you are headed?
    Mr. Cox. No. I think you are characterizing it correctly. I 
think, you know, what makes agriculture unique as an economic 
sector, I think what really makes agriculture unique is the 
land. I mean there is no other sector of our economy in which 2 
percent of our population is entrusted with the care of over 50 
percent of the land in the United States.
    If there is anything about agriculture that is different 
than the local dry cleaner or the hardware store, it is because 
of both the responsibility and the unique characteristic of 
farmers and ranchers as the fundamental land managers and 
environmental managers in this country.
    I want to make clear that the top 20 percent who are 
managing all this land and producing all these commodities will 
need environmental assistance. But they may need a very 
different kind of environmental assistance than the large group 
of individuals who are managing the largest portion of our 
landscape.
    So I don't think we can ignore the top producers, so to 
speak, from an environmental point of view. But what the 
changes in structure does provide is a real opportunity to 
clearly recognize as a public the responsibility and the 
opportunity of harnessing the skills and labor and management 
of that large group of producers out there specifically for 
environmental enhancement.
    The Chairman. Mr. Hassell, do you have a thought about 
this?
    Mr. Hassell. I think that is real interesting when we start 
looking at the environmental issue because the agricultural 
community is affected by it tremendously today.
    When you look at some of the reports that are turned out, 
whether they are accurate or not, they are still public record 
about agriculture being the leading non-point source 
contributor today. That is disturbing to me, working in 
agriculture, because I know there are a lot of people out there 
that do good work. One of the things that I think, and the 
point that I want to make is that--and somebody said this 
yesterday--we don't have the dust storms like we did 50 or 60 
years ago. We don't see this environmental challenge out there 
that we have to work with.
    But you know what? Conservation is every day. It is not a 
one-time fix. We go out and we take land out of production to 
put it into CRP lands or wetlands or whatever, and that is good 
because they are probably lands that needed to be taken out. 
But we also need to be looking at those lands that are in 
production and providing conservation support for those so that 
we can continue to have a good, cheap, healthy supply of food 
and fiber and energy.
    A recent report came out, and I can't cite who it came 
from, that the majority of the soils within our world today are 
degrading at a faster rate than they were assumed to be 
degrading 20 years ago. We lose almost two million tons of 
topsoil per acre in this country of ours. That topsoil takes 
years to reproduce or to produce the amount that we lose.
    Paying for conservation on working lands is probably one of 
the most important things that we can do. Less land is 
available today for food and fiber production than there was 25 
or 30 years ago and we continue to have more and more taken out 
as we get urban encroachment and other types of activities that 
do that.
    So conservation on these working lands is probably one of 
the most important things that we need to do if we are going to 
provide the food and fiber to this country and other countries 
at the cost that we provide it today.
    The Chairman. Thank you.
    Senator Harkin.
    Senator Harkin. Well, Mr. Chairman, thank you. This has 
been a fascinating interchange because we are getting into some 
of the philosophical basis of what we are going to do on this 
next farm bill and how we are going to move.
    It seems to me that what we do here sends signals topeople 
as to what they ought to do and how we ought to act. Many of 
our programs over the last 15 years or so have been really 
geared towards income support based, as the Chairman said, on 
the bushel basis. How much you produce, that is what you get 
supported on. That is the bottom line factor.
    So what that has done is it has sent a lot of signals to 
get bigger and get bigger and get bigger, because the bigger 
you are, the more you produce and the more you get. So we sort 
of sent those signals out.
    I think now there is question as to whether or not we ought 
to continue to send those signals. This is the chart here that 
you were talking with Mr. Cox about. It is a little worse than 
what you said. It is $32 billion that we outlaid last year for 
all payments to farmers and $1.9 billion in conservation.
    Your figures were at 2.5. But it is really $1.9 billion in 
conservation. So we spent $32 billion. Again, AMTA payments 
went out. A lot of people got the AMTA payments. It was not 
related to price. It wasn't related to anything. It just went 
out. A lot of these people got AMTA payments that weren't even 
producing anything.
    There have been a lot of questions raised about that, about 
whether or not that was a wise thing to do, just continue to 
give those AMTA payments.
    Well, if we are going to take this amount of money next 
year, and I hope we will have at least that much in our 
baseline budget, do we want to continue to do that or do we 
want to refocus it?
    I think you are suggestion of going up, doubling, is a 
little low. I think it ought to be more than double. EQIP, we 
heard yesterday, had a four to six times greater demand than 
the funding available; farmland protection, six-times greater 
than the money available; and wetlands reserve, five-times the 
level of funding in terms of the requests. There are probably 
more. Those are the ones I just happen to have handy.
    I think the idea, if you get down to the philosophy of 
this, as Paul Johnson said, and I wrote this down: ``The 
conservation commodities.'' Well, why don't we look upon it as 
a commodity? People say, well, you can't eat it. It doesn't 
really make you money. So how can it be a commodity?
    Well, maybe it is like a reservoir. Maybe it is just 
something that you store up and you keep for the future, just 
in case, aside from the Leopold concept of the aesthetic value 
and what it means for just warming the eye and the heart.
    Perhaps we ought to consider how this might be a reservoir 
of land that we keep for generations. Whereas a reservoir might 
not make you any money right now, but gosh, if you have a 
drought and you have to use that water, it is sure nice to have 
had that reservoir.
    So maybe that is the way we ought to look upon 
conservation, as a commodity that we have to invest in now for 
future generations. Hopefully, we can move ahead in that 
direction. I still think it should be the centerpiece of our 
next farm bill.
    Mr. Rudgers talked about State involvement. One thing I got 
to thinking about when I was reading your testimony and 
listening to you that occurred to me, is if we are going to be 
refocusing efforts to put money out there for incentive 
payments on conservation, should we require State matching 
moneys? The only reason I say it is because if you are going to 
have the State involved and your testimony was about keeping 
the States involved, should we have State matching 
requirements?
    Mr. Rudgers. There are many examples already where States 
are contributing significant investment into these activities. 
So the answer to your question is yes. However, the challenge 
is what level of investment do States have in making that 
approach be fair across the Nation.
    For example, in my State, not only do we have State 
contribution significantly for farmland preservation and for 
non-point source pollution abatement, but we also have 
participation of the City of New York in the Watershed 
Agricultural Council, which over several years has provided $35 
million in funding to provide improvements on the land for the 
farmers in that watershed because the city recognized the value 
of keeping agriculture as a preferred land use in that 
watershed and helping farmers stay on that land.
    The alternative is development, the loss of that land for 
the water quality benefits that it provides in the hands of the 
steward, namely the farmer.
    You have across the Nation several examples of State 
investment. So I think that is a reasonable expectation. But I 
think to set a certain percentage would probably be unfair.
    Senator Harkin. Well, I am just trying to get more bang for 
the buck, obviously, here.
    Mr. Rudgers. Absolutely.
    Senator Harkin. I don't want to have something out there 
that would discourage people from being involved in 
conservation because the State didn't do something. But on the 
other hand, if we could get this up to, say, $10 billion, for 
incentive payments for farmers, which I hear all of you sort of 
saying, one way or the other, if we could get the State to come 
in with a little bit, we could leverage that money up a little 
bit.
    Mr. Rudgers. I don't have this answer, but it would be 
interesting to see what that number looks like if you add in 
the State contributions that are already in place.
    Senator Harkin. We ought to do that. I would like to find 
that out, what States are doing out there and what they have 
put into that in the past and add that on top of that. That 
would be a good figure. Does anybody else know that figure?
    Of the total spending that we spend here, how much have the 
States kicked in of their own money. Do you have any idea, 
Paul?
    Mr. Johnson. It really varies from State to State. Some 
States have a huge amount going into it. Missouri, for example, 
has a dedicated percentage of a sales tax going to 
conservation, both soil and water and wildlife.
    The State of Iowa probably matches the cost share funds 
that we put out through the USDA. Other States may have almost 
nothing. So it really does vary from State to State.
    Senator Harkin. Any other thoughts on matching requirements 
at all? I don't know if you have any thoughts on that at all. 
It might be one way of leverage. I have to get some data on 
that to find out what the States are doing.
    The other thing is what you talked about earlier, Paul, the 
National Private Lands Conservation Act. You have talked about 
this before. Is there anything out there? Is there any kind of 
a draft proposal on that floating around anywhere?
    Mr. Johnson. I certainly don't know of one. We have a 
process that goes on that certainly ought to be folded into it, 
the RCA process that reviews private lands, agriculture lands 
in particular, every few years. So we wouldn't be starting from 
scratch.
    My concern is to get it elevated to the point where America 
understands the good that agriculture does in providing 
conservation benefits to our Nation. Right now, as I say, go 
out on the mall and ask people where conservation takes place 
and they will point to Interior or EPA. They won't even look at 
Agriculture.
    Yet, as I said, we are more important, I believe, if we do 
it right. So if this committee would call for the beginning of 
that process, I think there are a lot of good minds in this 
country that would love to work on it with you.
    Senator Harkin. The last thing I would say is that all of 
you seem to agree on at least one thing and that strain through 
all of your testimony is this present system that we have where 
if you have already been practicing good conservation you don't 
get anything, but if you haven't been and then you start, you 
get something. That is just nonsense.
    We ought to come in and start helping those people who have 
already been practicing good conservation, who have put in 
their waterways and put up their buffer strips and things like 
that. A lot of people have done this on their own. Farmers who 
have spent their own time, their own money, their own labor and 
their own equipment-it is like you say, the only way you are 
going to get it is plow it up, put it into soybeans and then 
put it back in again, then you are going to get something. I 
think that is nonsense.
    So I think all of you have said that we have to come in and 
at least provide support for those farmers and ranchers who 
have already been doing good conservation.
    Again, from what I have heard from all of you this figure 
is way too low. Do you all agree on that?
    Mr. Cox. Yes.
    Senator Harkin. It has to be raised. I think most of you 
feel strongly that it should be done on a voluntary basis, that 
it ought to involve the technical help and support of the 
Conservation Service to do that.
    I asked one question yesterday. I still don't know them 
answer to this. Since you have been there, maybe you can help 
answer this, Paul. The Conservation Service does all the 
technical help and stuff and the Farm Service Agency pays the 
bills.
    I have gotten some communication in Iowa where they have 
not been working closely together. I have to question why that 
is, why shouldn't the Conservation Service do the technical 
thing and just pay the bills? Why do we have that split?
    Mr. Johnson. This began in the 1930s. I am not sure I want 
to go there, other than to suggest that I think that the 
infrastructure that we have out there, Extension, Research, 
Farm Services, Rural Development, NRCS, all have important 
roles to play.
    I think where we have suffered is we have pitted one 
against the other over the years. I think what would do more 
good for this country in the delivery of these services is to 
probably better define what each does and certainly the Farm 
Services does provide a lot of administrative work.
    But unfortunately, NRCS, from my perspective, isn't able to 
make all the conservation decisions. I think that you need to 
help define their positions, but you also need to remind them 
that they do good work. We really do run each other down, and I 
think that that is terrible. I think we ought to be able to 
work through it.
    Senator Harkin. Well, Mr. Chairman, I don't know, the more 
I'm getting into this the more I am thinking we really ought to 
take a look at those structures out there, the old structures 
that have been build up over the years and see if maybe there 
ought to be some changes in any of these services.
    Mr. Johnson. One thing I would like to caution you on as 
you do this, the Natural Resources Conservation Service is an 
agency of professional people and I hope that that doesn't get 
compromised as you work through this.
    You need to have independent technical assistance and 
opinion out there. It should not be compromised with a more 
political approach from administration to administration.
    Senator Harkin. No. That is a legitimate concern and I 
don't want that to happen either.
    Mr. Rudgers. Also, Senator, States have stepped up and 
provided the opportunity to create a table where both Federal 
and State agencies can come around and work on these issues 
effectively. That has effectively brought Federal partners 
together for conversation and for action, which has been 
effective.
    So the perception that things are not quite getting along 
as well as they should might not be universal. I can offer my 
own State as an example. We have both a State technical 
committee with active participation of those Federal agencies 
and State agencies and also our State Soil and Water 
Conservation Committee and the AEM Steering Committee under 
that which provide the opportunity for those folks to gather 
around the table and then agree on objectives and act on those 
objectives effectively, using both State and Federal dollars. 
It is an excellent model and it helps solve some of the 
concerns that you have which I think are legitimate.
    Senator Harkin. Thank you all. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Harkin. I would 
just follow through once again with a more parochial note.
    Yesterday the NRCS Director in Indiana drew my attention 
and this is apparently true throughout the nation-that as they 
took a look at NRCS staffing levels in our State of Indiana, 
that in 1987 there was the equivalent then of 330 work-year 
persons. This is now down to somewhere around 240 in the year 
2000.
    Their suggestion is, given the mandates of the last farm 
bill that we passed, that they needed 290. So even with the 
economies that might have occurred, there would appear to be a 
20 percent plus shortage in terms of the people giving the 
technical assistance to farmers in the field, with regard to 
EQIP or these other programs.
    Senator Harkin. Is this just Indiana?
    The Chairman. Yes, this is just Indiana's situation. I 
would gather probably NRCS could provide similar charts for 
every other State, but perhaps because of the urgency of these 
hearings and the fact that Senator Harkin and I were going to 
chair on yesterday, they provided this.
    But it was very interesting and it is instructive of the 
point you are making. These are technical people. They point 
out about 83 percent of their entire workforce are technically 
gifted people in these fields.
    So even as we have important ideas about how the 
stewardship should occur and the Federal contribution to this, 
we have to be thinking through in the field who is available. 
We have armed services objectives, people who can use smart 
weapons, and recruiting these people is sometimes difficult, 
and particularly if there is not the budget provided.
    I would just reassure you at least that we are attempting 
to factor these things into our own consideration and going to 
school as we listen to you.
    We thank all four of you for your testimony, for coming 
today and staying with us throughout this period.
    Mr. Johnson. Thank you, Mr. Chairman.
    The Chairman. I would like now to call on our second panel. 
That will include Mr. Bob Stallman, the President of the 
American Farm Bureau Federation, Washington, DC.; Mr. Dan 
Specht, Sustainable Agriculture Coalition of Washington, DC.; 
Mr. Tom Buis, Executive Director of the National Farmers Union 
in Washington; and Mr. Rollin D. Sparrowe, President of the 
Wildlife Management Institute of Washington, DC.; and Mr. 
Gerald Cohn, Southeast Regional Director of the American 
Farmland Trust, Washington, DC.
    Well, I will ask you gentlemen to testify in the order in 
which we have introduced you. It is always a pleasure to have 
the President of the American Farm Bureau Federation with us. 
We thank you for coming. Would you please commence your 
testimony,
    Mr. Stallman.

  STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU 
                   FEDERATION, WASHINGTON, DC

    Mr. Stallman. Thank you, Mr. Chairman, Senator Harkin. It 
is a pleasure to appear before this committee to allow AFBF to 
present our views. I am a rice and cattle producer from 
Columbus, Texas.
    Increased regulatory costs on all levels-Federal, State and 
local-are placing a heavy burden on individual farmers and 
ranchers as well as distorting the traditional structure of our 
industry.
    The unintended consequence is the inability of small and 
medium-sized family farms to compete in a highly charged 
regulatory environment. The Farm Bureau believes there is a 
need for new environmental policy framework.
    We need to move beyond the current debate over whether the 
public has the right to mandate features and/or farming 
practices in the rural landscape. If a voluntary incentive is 
offered for a desired environmental outcome, farmers will 
overwhelm America with improved soil, water and air quality and 
wildlife habitats.
    In order for a conservation incentive program to work well, 
public policy must recognize the inherent limitations that 
command and control regulations have in attaining desired 
public benefits. Efficient public policy is one where the thing 
demanded by society is the thing that is being produced.
    Farmers and ranchers can produce and market more than 
traditional agricultural commodities. We can also produce and 
market environmental benefits. Under this concept agriculture 
and the Government program must come together to create an 
alternative market for environmental improvements or amenities 
that the public desires.
    Specifically, Farm Bureau policy supports expanded 
incentives to encourage voluntary improvements in the 
environment, expansion of the funding baseline in the 
commodity, specialty crops, livestock, conservation, research, 
trade and risk management titles; voluntary participation in a 
direct payment program that would comply with the WTO green box 
requirements and providing willing producers with additional 
voluntary incentives for adopting and continuing conservation 
practices.
    Our vision is to capture the opportunity and efficiencies 
of providing producers with additional conservation incentives. 
Specifically, I would like to highlight three programs for 
which we would like to see new funding.
    First, the Farm Bureau supports a limited increase in the 
amount of acreage eligible to be enrolled in the CRP with new 
acreage targeted toward buffer strips, filer strips, wetlands, 
or grass waterways.
    Second, the current Environmental Quality Incentives 
Program does not provide livestock and crop producers the 
assistance needed to meet current and emerging regulatory 
requirements. EQIP must be reformed and funding increased.
    We support the following reforms to EQIP: No. 1, 
elimination of language that prevents large livestock 
operations from being eligible for cost share. No. 2, broader 
third-party technical assistance authority, which would allow 
farmers to hire consultants to provide technical assistance. 
No. 3, elimination of priority areas, which would allow all 
producers, regardless of location, to participate in the 
program. No. 4, simplification of program participation.
    Finally, I wish to express our support for a new voluntary 
environmental program that would provide producers with 
additional conservation options. This program would provide a 
guaranteed payment to participants who implement a voluntary 
management plan to provide specific public benefits by creating 
and maintaining environmental practices.
    The management plan should be a flexible contract, designed 
and tailored by the participant to meet his or her goals and 
objectives while also achieving the goals of the program.
    We support an increase in the budget baseline of $3 billion 
annually for the three conservation initiatives I have 
outlined.
    Two other conservation programs supported by the Farm 
Bureau are the Farm Land Protection Program and the Grazing 
Lands Conservation Initiative. The Farm Bureau supports funding 
for the Farmland Protection Program.
    There have been attempts in recent years to make nonprofit 
organizations eligible for this funding. The Farm Bureau would 
oppose this change.
    Additionally, we oppose the imposition of a farm management 
plan on the property. The intent of the Farmland Protection 
Program is to avoid development pressures, not dictate farming 
practices.
    The Grazing Land Conservation Initiative is a program 
providing additional technical assistance that are NRCS for 
range and pasture management. We support the continuation of 
this program.
    One last item before concluding: Confidentiality of USDA 
information has become an increasing concern and priority for 
farmers and ranchers. We have seen attempts by other government 
agencies to secure NRCS and NASS data for regulatory purposes.
    There have also been attempts by non-governmental 
organizations to secure farm and ranch data from FSA and APHIS. 
The Farm Bureau strongly supports establishment of statutory 
authority that protects the confidentiality of all data 
collected by USDA on individual farms and ranches.
    Thank you for the opportunity to be here today. I will be 
ready for questions when the time comes.
    [The prepared statement of Mr. Stallman can be found in the 
appendix on page 185.]
    The Chairman. Thank you, Mr. Stallman.
    Mr. Specht.

  STATEMENT OF DAN SPECHT, SUSTAINABLE AGRICULTURE COALITION, 
                         WASHINGTON, DC

    Mr. Specht. Good morning. Thank you for the opportunity to 
testify. My name is Dan Specht and I am a fourth generation 
farmer from northeastern Iowa. I am testifying today on behalf 
of the Sustainable Agriculture Coalition. I started farming in 
1971 with my parents and three of my brothers. I have been 
farming on my own since the mid-1900s.
    I now raise crops and livestock on about 700 acres. Most of 
my land is considered highly erodible. My farm is just outside 
the Big Springs Study Area. Many of you may have heard about 
it.
    This study was started as part of Iowa's Ground Water 
Protection Act and it studied the movement of nitrates into 
surface and ground water.
    Although many of my friends and neighbors in recent years 
have been forced to earn off-farm income and are no longer 
raising livestock, I am actually very optimistic about the 
future of agriculture. I am optimistic because I have been able 
to produce crops and livestock using low-cost methods that are 
profitable and environmentally sound.
    I have been able to market those products with preserved 
identity through farmer-owned organic marketing cooperatives.
    Besides raising organic soybeans, I have also converted a 
large part of my farm to a system of grass-based beef 
production called ``management intensive rotational grazing.''
    Despite my optimism, I am distressed at the barriers 
current farm policy put in front of farmers like myself who are 
trying to adopt methods that are more environmentally sound and 
economically viable.
    I think the existing commodity programs have three fatal 
flaws. First, if you were a farmer like myself who was making 
hay, grass and small grains a big part of your rotation during 
the base-building years of the 1980s, you are not eligible for 
AMTA payments on those acres.
    The more land you planted into row crops then, the more 
money you qualify for now. Because of my diversity, I am only 
receiving AMTA payments on a tiny fraction of a corn base out 
of the 500 acres that I own.
    Neighbors of mine who farm similar land qualify for AMTA 
payments on nearly 100 percent of their crop acres because they 
have a high corn base.
    Doubling AMTA payments, which has happened in the last 
couple of year, has only doubled this inequity. Now, the system 
of LDP, Loan Deficiency Payments, is adding insult to injury.
    Unlike the AMTA, which has prospective planting 
flexibility, LDP monies flow only to the program crops, 
creating further barriers to resource conservation and 
environmental improvement. This bias puts diversified, 
conservation-oriented farmers at a competitive disadvantage in 
all kinds of situations, including land markets.
    How would you like to be put in a position like I have been 
in and have to explain to a landlord that because I was farming 
his farm in a soil-conserving rotation his farm isn't worth as 
much today because he has a small corn base.
    The second fatal flaw is that the program allows actual 
cash prices for the crops to fall below the cost of production. 
We now have the worst of two worlds. We have no limits on 
production, coupled with what amounts to direct payments as 
LDPs to increase production even more.
    This gives a competitive edge to industrial livestock 
producers who can buy the raw material, feed, at less than the 
cost of production, while a farmer feeder has to have the real 
production cost paid.
    The third fatal flaw in this program is the lack of 
effective targeting to family farm income or any effective 
payment limitation. The current program is ``the sky is the 
limit.'' The program exacerbates the first two problems. It 
provides a public subsidy for land concentration and reduces 
diversity and continues environmental problems.
    These flaws mean we are losing the potential to capture 
many of these social benefits that diverse crop and livestock 
farms can provide. I believe that the first thing Congress 
needs to do in addressing conservation in the Farm Bill is to 
take a hard look at farm programs and take serious steps 
towards making them consistent with widely shared public 
support for good stewardship. Incentives for over-production 
and land consolidation need to be reduced. Barriers to 
diversification need to be removed and real requirements for 
basic conservation need to be reinvigorated.
    I have witnessed some of these resource and environmental 
benefits firsthand on my own operation and I would welcome any 
members of the committee to come out and see my farm with its 
improved wildlife habitat, erosion control, and water quality. 
Pheasant season is open in November. Deer season is December. 
Turkeys are April and May.
    I am always looking for an excuse to go fishing. I have the 
Mississippi River right next door. There are a lot of trout 
streams and farm pond in northeast Iowa that you would be 
welcome to visit.
    But I would like to share with you what the scientific 
community is finding about sustainable farming systems that I 
am using. One of these systems is management intensive 
rotational grazing.
    The Minnesota Cooperative Fish and Wildlife Unit has found 
that rotational grazing significantly reduces the amount of 
sediment flowing into a waterway. In one instance, a single 
storm dumped 10 tons per acre of soil off cropland but only 4 
pounds per acre from the adjacent rotationally grazed paddocks.
    Researchers have also found that life in the stream 
degraded by overgrazing and sedimentation starts to recover as 
it flows through a rotationally grazed area.
    The University of Vermont has found that a grass-based 
operation burns 24 percent less fuel than a row-crop farm.
    University of Wisconsin researchers recorded more than 
twice the number of nesting grassland songbirds in a 
rotationally grazed paddock when compared to the same acreage 
of a continuously grazed pasture and almost no nesting in 
adjacent cropland.
    The Chairman. Mr. Specht, let me just ask if you would 
summarize a little bit more. That would be appreciated because 
in fairness to all of our witnesses, I suggested at the 
beginning, perhaps before you got here, about a five minute 
summary. If you could do that I would appreciate it.
    Mr. Specht. Well, this testimony is in my written remarks.
    The Chairman. Yes, and it will be made completely a part of 
our record.
    Mr. Specht. One thing I do want to bring out today are the 
health benefits that have been recently discovered by ARS 
researchers and researchers at the University of Wisconsin. 
Worldwide studies have shown where cows who graze exclusively 
have dramatically higher levels of conjugated linoleic acid, 
CLA, in their milk. Laboratory studies done throughout the 
world on CLA in both meat and milk have shown it can help 
prevent breast cancer and other malignant growths. It also is a 
very heart-healthy substance.
    The fascinating thing about CLA is that what an animal eats 
determines what the CLA content is in the product. CLA in meat 
and milk from animals getting their diet from grazing is five 
times more concentrated than milk from confined and grain fed 
animals.
    I wanted to make sure that everybody in the room heard that 
fact because it is very new scientific information.
    The Chairman. I appreciate your highlighting that as well 
as the other elements of your testimony. It was important.
    I make the point for all of the panel that all of your 
statements will be published in full in the record.
    [The prepared statement of Mr. Specht can be found in the 
appendix on page 196.]
    Mr. Buis.

  STATEMENT OF TOM BUIS, EXECUTIVE DIRECTOR, NATIONAL FARMERS 
                     UNION, WASHINGTON, DC

    Mr. Buis. Thank you, Chairman Lugar, Senator Harkin, and 
Senator Nelson. It is an honor to be here today to share with 
the Committee the National Farmers Union's positions and 
recommendations on current conservation programs and a couple 
of new initiatives.
    The conservation programs currently authorized under the 
FAIR Act have generally been very sound programs. They have 
served to conserve our soil resources, enhance our wildlife and 
improve the quality of both air and water through incentives 
and technical assistance.
    However, we do believe there is room for improvement in two 
general areas. First, it is important that the level of funding 
be adequate to ensure the long-term success of these 
initiatives. Second, a key priority of these programs should be 
to target assistance to family-sized farm and ranch operations.
    We believe such an approach will serve to promote the 
broadest possible development in application of conservation 
measures while reducing the likelihood these programs encourage 
further concentration in agriculture.
    After reviewing the current programs, we would make the 
following observations and suggestions. The Conservation 
Reserve Program has been the most successful conservation 
program in our nation's history, thanks in large measure to 
your foresight in introducing that legislation 15 or 16 years 
ago and the determination of this committee and other 
committees in Congress to keep it going.
    It has significantly reduced soil erosion, dramatically 
improved wildlife habitat by idling highly erodible and 
environmentally sensitive land. We thank you for that.
    We also support in the CRP Program raising the cap on total 
enrollment to at least 40 million acres, reducing the emphasis 
on whole farm enrollment, ensuring compensation rates are tied 
to local rental rates, reviewing and enforcing the aggregate 
county entry levels, reviewing the requirements and benefits of 
planting expensive and often unneeded five-way seed mixtures as 
cover crops, and for re-enrolling existing CRP acreage we think 
a required field inspection should be conducted to determine 
whether the current cover crop contains desired multiple plant 
species, not just based upon what was planted originally.
    We also feel that allowing whole field enrollment is a wise 
way to go, as well as authorizing enrollment of farmable 
wetlands similar to a pilot program that is about to be 
implemented in South Dakota.
    For the Wetlands Reserve Program, we recommend removing the 
cumulative acreage cap and providing such funds necessary to 
address the current and future demand.
    We also recommend additional funding and support for the 
EQIP Program, Conservation and Technical Assistance Program, 
Private Grazing Land Initiative, Wildlife Habitat Incentives 
Program and the Farmland Protection Program.
    There is tremendous demand out there for these programs and 
we would encourage their continuation.
    In addition, we think there are some improvements that need 
to be made and some programs adopted. First among these is the 
Conservation Security Act--and I want to commend Senator Harkin 
for the outstanding work he has done on that proposal. We think 
it is a great proposal that would provide incentivepayments to 
producers for the application of appropriate conservation 
measures on land that is currently and likely to remain in 
production.
    The Conservation Security Act, I think, is designed to 
target those payments to family farmers and ranchers who are 
engaged in production agriculture in a way that is consistent 
both with our obligations to the WTO while encouraging 
increased levels of environmental stewardship.
    We think this framework is a way to reward both those who 
have undertaken the establishment of conservation practices in 
the past and those who implement future activities. We highly 
recommend the committee take that into consideration.
    A second new initiative that we have been talking about is 
the Soil Rehabilitation Program. In many parts of the country 
there are significant areas of cropland that have been 
decimated by adverse weather, disease and/or pests. The 
incidence of these problems has reduced the productive capacity 
of the land and poses an ongoing threat to the producers in the 
short and intermediate term.
    The program would provide both technical and economic 
assistance to family farmers so that they may undertake the 
needed stewardship activities to restore their resources to 
their historic level of productivity.
    For example, in the Northern Plains the disease fusarium 
head blight, also known as ``scab,'' has reduced the yield and 
quality potential of wheat, durum and barley production 
significantly in recent years. Due to the accumulation of the 
disease inoculum in the soil, lack of resistant grain varieties 
and agronomic limitations on alternative crop production, 
producers must either assume the excessive production risk of 
discontinue production of those traditional crops.
    We think either scenario is beyond the economic capacity of 
these producers and we would encourage the Committee to adopt 
it.
    Briefly, we also support appropriate incentives, and maybe 
this can be worked into the Conservation Security Act 
provisions of Senator Harkin for support for carbon 
sequestration efforts at the farm and where farmers cannot only 
benefit but be able to have a market for carbon sequestration 
credits that is open to both producers and cooperatives.
    Mr. Chairman, I thank you for the opportunity. I will be 
glad to answer any questions.
    The Chairman. Thank you, Mr. Buis. It is always good to 
have testimony from the National Farmers Union. Thank you for 
coming this morning.
    [The prepared statement of Mr. Buis can be found in the 
appendix on page 205.]
    Mr. Sparrowe.

STATEMENT OF ROLLIN D. SPARROWE, PRESIDENT, WILDLIFE MANAGEMENT 
                   INSTITUTE, WASHINGTON, DC

    Mr. Sparrowe. Thank you, Mr. Chairman. I really appreciate 
being here to speak on behalf of a very large array of wildlife 
interests who have become increasingly involved in farm 
programs over the last couple of decades.
    We appreciate the great progress made during the past few 
years with wildlife as a co-equal status with soil and water 
conservation.
    We think there have been some wonderful opportunities that 
we are doing our best to take advantage of. You have heard much 
about the benefits from the hearing yesterday and some of the 
speakers today, so I won't repeat the specifics at this point. 
We have some in our testimony about gains for such things as 
waterfowl and game birds and so on.
    What I would like to talk about is what we in the wildlife 
community have been up to to try to answer a fundamental 
question we anticipated we would be asked, and that is: how 
much is enough and what does it do for wildlife and what are 
the broad benefits?
    We think a lot of these programs have returned excellent 
benefits to farmers and they help make the continuing case for 
conservation programs to be a big part of agricultural 
expenditures.
    We have conducted workshops bringing wildlife and 
agricultural interests together to address this issue and talk 
about problems and implementation. We have maintained an e-mail 
network with farm bill active people across the country, both 
in the agricultural sector, private sector, and in the State 
fish and wildlife agencies.
    This has been very helpful in sorting out issues related to 
implementation. It hasn't solved them all. But it is a good 
forum to have. Our big energy has gone into producing the 
document that we attached to our testimony which is the ``How 
Much is Enough for 2002'' document.
    One of the most interesting things about this is on the 
opening page under ``acknowledgements,'' there are 60 agencies 
and organizations that contributed to both the input and the 
support for putting this together.
    This is a demonstration of the interest and the willingness 
of wildlife organizations and agricultural organizations to 
work together. Based on these assessments, there are lots of 
details presented on a regional basis. That is one of the 
messages that comes out of this assessment, that there are 
differences in what needs to happen on the land, both for 
farmers, for crops, and for wildlife in California versus North 
Dakota versus Georgia.
    We think there is an increasing need to take that into 
account. The examples of specific success are many. But there 
are some areas of the country that have not benefited as much. 
The northeast and the southeast and some parts of the west have 
seen this as a farm program, a wildlife program for the upper 
Midwest.
    There is great interest in expanding the reach to deal with 
some real problems on the land that farm activities affect in 
other parts of the country.
    I want to call your attention to an NRCS publication, a 
comprehensive review of farm bill contributions to wildlife 
conservation, which, in response to the demand to work 
together, Pete Heard of the Wildlife Habitat Management 
Institute led with some of our wildlife colleagues.
    They put together a really excellent compendium of what the 
science base is for what we now know some of those benefits 
are.
    We are engaged in a very important coalition-building 
effort at this point, looking at such data on evaluating 
program impact, working toward coalitions that, at the State 
level, bring farm operators, wildlife biologists, agribusiness 
representatives and others together, some folks who don't talk 
to each other in all circumstances.
    In some State we have seen great success and great advances 
in people sitting down together, particularly States where the 
State technical committee has flowered and pulled people in to 
work together. We think those coalitions which we now have 
going on in 20 States can be a very important contributing 
factor.
    We have a few recommendations that are specific. The 
technical assistance area has been of deep concern to us. The 
wildlife community has worked with three successive chiefs of 
NRCS, unsuccessfully, to make our case that while downsizing 
and other things have been going on, that without technical 
assistance at the field level, these programs can't be 
delivered. I think you have heard that from several other 
speakers.
    Our radical proposal is that there is one alternative to 
more Federal staffing and that is for some Federal funding to 
be made available directly to the State wildlife agencies and 
other agencies within the States for that matter and even to 
non-government organizations to help with this technical 
assistance.
    One of the big discussion points a few minutes ago here was 
on what the States are contributing. Actually, States and NGOs 
have put up an awful lot in the technical assistance arena. We 
would be pleased to work with you to try to document some of 
that.
    We have strong feelings that agricultural support payments 
should be linked to conservation compliance. We certainly 
endorse as much of that being voluntary as is possible, but 
compliance is a necessary part.
    We think there needs to be flexibility in implementation of 
farm programs, not only on a regional basis, but even in the 
traditional agricultural arenas. Conservation tillage, as an 
example, was designed and did a good job to retard soil erosion 
from wind and water. But it also provides great wildlife 
benefits by leaving some cover on the land.
    We need to look at grazing and cropping and other things in 
collaboration with some additional research to find those 
things we can do with existing agriculture that can also lead 
to additional wildlife benefits.
    Finally, one program we think should be thought about is a 
native grassland easement program. This would provide for needs 
in many areas of the country, particularly the west. We are 
ready to work with you. We think we have a good documentation 
of what some of the benefits and needs for the future are. We 
thank you for this opportunity.
    [The prepared statement of Mr. Sparrowe can be found in the 
appendix on page 209.]
    The Chairman. Thank you very much, Mr. Sparrowe, for coming 
this morning.
    Our next witness is Mr. Gerald Cohn, the Director of the 
Southeast Region of the American Farmland Trust. We appreciate 
your coming.
    Please testify.

STATEMENT OF GERALD COHN, SOUTHEAST REGIONAL DIRECTOR, AMERICAN 
                         FARMLAND TRUST

    Mr. Cohn. Thank you very much. The American Farmland Trust 
appreciates the opportunity to provide your committee with our 
views on how the Conservation Security Act will help farmers 
and ranchers improve their bottom line and meet the increasing 
public expectation of agriculture to produce environmental 
benefits as well as food and fiber.
    We also thank the Committee for recognizing the need for a 
comprehensive farm bill. You will need all the programs, 
including research, conservation, and forestry to help farmers 
meet today's challenges.
    I am the Southeast Regional Director for AFT. With my 
family, I run a small, diversified produce and livestock farm 
in Snow Camp, North Carolina. We have enrolled pieces of our 
farm in the CRP and CREP programs. They are a valuable 
management tool for profitability and to demonstrate the 
multiple benefits of farmland to our community.
    American Farmland Trust is a national nonprofit 
organization with 50,000 members, working to stop the loss of 
productive farmland and to promote farming practices that lead 
to a healthy environment.
    When most people think about farmland protection they think 
it is just about protecting the land. It is not. It is also 
about protecting the community and protecting the farmer. That 
is why the Conservation Security Act is so important to 
farmers, ranchers and agricultural communities around the 
country who face increasing challenges from urban sprawl, 
tightening environmental standards, and global and local food 
markets.
    As Congress starts its discussion of the next farm bill, 
two key issues from AFT's farm bill meetings around the 
country. Farmers and ranchers want to improve the conservation 
practices and the public expects them to do it.
    Unfortunately, the current menu of conservation programs 
doesn't come anywhere close to meeting the demand from farmers, 
ranchers or voters.
    I would like to enter into the record a letter to the 
Senate Budget Committee from over 30 organizations that 
highlights the number of farmers and ranchers seeking Federal 
assistance to meet the Nation's pressing environmental 
challenges, but are turned away.
    Looking at the backlog of farmers and ranchers waiting to 
participate in conservation programs, Federal support needs to 
at least double in the next farm bill.
    Although the demand for conservation programs has climbed 
significantly since the 1996 Farm bill, funding for these 
programs has dropped from 30 percent of agricultural spending 
to just eight percent.
    How can we continue to turn away farmers and ranchers who 
want to do the right thing? I think the public has begun to 
ask, how can we spend $32 billion a year on farm programs and 
not address this overwhelming need?
    These programs still miss a large sector of American 
agriculture that is producing the majority of agricultural 
value in the United States and face some of the most 
significant environmental challenges. I am referring to those 
farmers and ranchers in urban influence areas who face the same 
price and supply challenges as traditional commodity 
agriculture, but also face the many problems brought by urban 
development, nuisance suits, trespassers, transportation 
nightmares and escalating land values.
    In addition, the pressure on these producers to clean up 
the environment is greater than in more remote areas. These 
farmers receive little to no Federal assistance and yet are the 
farmers and ranchers most of us living in urban areas think of 
when agriculture is mentioned.
    The Conservation Security Act is one big step toward 
creating a safety net for these farmers and ranchers. Let me 
give you a couple examples of just a few of the challenges 
facing farmers in my region and how the Conservation Security 
Act will help farmers meet them.
    The first challenge faced in the southeast is rapid growth. 
USA TODAY recently included four southeast cities in the top 
five most sprawling metro areas. Our best farmland is being 
consumed by this tidal wave of sprawl.
    How do we keep these lands and farms and not become housing 
developments? The first step is to protect the land through the 
purchase of development rights. The only Federal program 
supporting this, FPP, is oversubscribed by 600 percent.
    Also, make it economically worthwhile to keep producing. 
That means paying farmers not just for the food and fiber they 
produce, but also the environmental benefits they provide.
    The Conservation Security Act would do that by compensating 
growers, not just sharing the cost for implementing and 
maintaining conservation practices.
    The next biggest threat to agriculture in my region is the 
changing in the tobacco and peanut industries. As quota for 
these commodities is being reduced, farmers are either getting 
out of farming altogether, or struggling to find profitable 
alternatives to replace their lost income.
    Successful diversification requires risk and time and the 
Conservation Security Act would provide an income safety net to 
help farmers through this transition period and promote green 
practices that potentially could open new markets for their 
production.
    The CSA would also bring more regional equity to farm 
programs simply because every farmer would be eligible. Right 
now States in the Southeast receive only 5 cents in Federal 
farm assistance for every dollar they produce, compared to some 
States receiving more than 25 cents per dollar.
    We need to start focusing farm policy on those farmers and 
ranchers who produce the greatest environmental and economic 
benefit to the taxpayer. The CSA is a good start to finding 
that balance.
    By giving farmers and ranchers the tools and financial 
assistance to meet their environmental challenges, we can build 
the public support necessary to make sure the next generation 
of farmers doesn't have to ask if their children will be able 
to carry on the proud farming legacy.
    Thank you.
    [The prepared statement of Mr. Cohn can be found in the 
appendix on page 219.]
    The Chairman. Thank you very much, Mr. Cohn.
    Let me ask a question of you, Mr. Specht, because I was 
intrigued by your analysis of the AMTA payments that have been 
made the last twoyears. Then you pointed out LDP payments on 
top of that, I think you said were sort of a double insult.
    Given the particular choices you have made in how to manage 
your farm, and in fairness, we have had a debate here in the 
committee and my colleague, Senator Harkin, has raised some of 
those issues.
    I voted in favor of the AMTA payment route because 
pragmatically, in an attempt to get income to American farmers 
we had lists, we were able to use computers. We were able to 
cut checks. Money got to farmers. They paid country banks and 
they stayed in business.
    I think all this is well known, although our oilseed 
payments that sort of came along in a way with the second round 
of this are now just being distributed. We got ours in the last 
10 days or so and I gather that is probably true of many people 
who are soybean farmers after a much more laborious process, 
sort of finding out who is there and how many bushels and so 
forth.
    Others who were affected by the Farm bill payments last 
year, in an attempt to help in those emergencies are still 
receiving payments or will at some point, I hope during 
calendar 2001, even as we contemplate the future.
    So this is sort of the nature of this type of business. 
However, on my farm we have 200 acres now devoted to a timber 
improvement stand. We planted 60 acres of walnuts, oaks, and 
cherry, what have you.
    The thought occurs to me as I listen to you that I am not 
getting an AMTA payment on these acres. One option was to plant 
corn on those acres, at least pragmatically the yields, given 
the soil types, the yields would not have been as good as they 
are in my bottomland and various other places.
    So that was part of the consideration and it is always, as 
we try to manage our land successfully. But another part of the 
consideration was my grandchildren like trees and we now have 
12 herd of deer in there and lots of other things that get to 
the wildlife and other considerations of the joy of having such 
a property.
    I am not sure how you evaluate all of this. I have wrestled 
with this a good bit as have Senator Harkin and other members 
of the Committee, both in terms of the safety net for income, 
yet we had the testimony which I cited before this morning that 
just 36 percent of farmers are receiving these checks, these 
payments, which means 64 percent are not.
    Even after you think of the structure of agriculture which 
we recited today, all these overlays are very confusing to the 
members of this committee as to how we ought to proceed. I 
mention this because I sort of ask of you, is your testimony 
essentially that we ought to proceed by de-emphasizing in the 
next farm bill the AMTA route and try to think of some new 
formula that is more conservation based. That is a pretty broad 
category, but thinking through various practices that have been 
suggested today, various land conservation management plans, 
and just pragmatically, how many people will be required to 
evaluate all this or can you or your organizations 
collectively, not today, but in the months to come be helpful 
in trying to think through if you were philosophically to move 
in this direction, how would we do it?
    I will just ask you for a short comment rather than off the 
top of your head reciting legislative language we should adopt. 
This is sort of a long lead up to a philosophical inquiry.
    Mr. Specht. No. I think the original goal of the last farm 
bill to try to move toward market-oriented goals is a worthy 
goal, reducing the emphasis on producing for the program. It 
would be very logical, if you want to support farmers, to do it 
with a conservation stewardship type of a payment. That would 
make a great deal of sense from my point of view.
    I think the consumer would get more out of it and it would 
not be dictating a type, like if you live in southwest 
Wisconsin and you have very steep, hilly ground that happens to 
also be very productive ground, people who have been growing 
strip cropping with alfalfa and small grains and feeding their 
cows alfalfa and small grains are now currently being penalized 
because they were doing it that way versus growing corn on 
those same hills. So I don't think commodity-type legislation 
should be dictating what farmers grow. They shouldn't be 
growing crops for a commodity program. They should be growing 
crops to make money in the market.
    The Chairman. Mr. Sparrowe, let me ask a different type of 
question. You have suggested that State game and fish agencies 
might take on more responsibility in implementing some of the 
conservation programs. Perhaps. But this strikes me just from 
my own experience in my own State that it would create some 
anxiety level on the part of farmers.
    I am not certain how many of these folks they want 
wandering around the farm inspecting the situation and 
sometimes we get into a kind of adversary proceeding over this.
    How can all these people be friends or do you have some 
idea from your experience of how this might work out?
    Mr. Sparrowe. Obviously, personal behavior and sensitivity 
to the needs of people working on the land is something that a 
biologist has to have. Otherwise, they are not going to be 
successful.
    We have some notable successes. We worked to help Kansas 
and NRCS collaborate on this in the early stages of the Farm 
Act. It worked very well. I think six or eight employees of the 
State were supported to quickly advance the cause of some of 
this. A State like Missouri which has a larger, well-funded 
program of its own has recently decided to co-locate its 
biologists who work with private lands issues with NRCS 
offices. So people are working hand in glove, day by day.
    In many cases, starting back with Chief Richards, we noted 
that while there is a lot of biological expertise in NRCS in 
the field, the new people being hired were generally not very 
heavy on biologists. They were heavy on other kinds of skills.
    So not only is it numbers, it is the focus that has been 
placed on this. We are just suggesting strong attention to 
this.
    Another notable success has been Ducks Unlimited, which has 
very widespread private land programs. They have been providing 
extensive, both cost-sharing and technical assistance on the 
ground.
    Pheasants Forever in the upper Midwest has done this and 
other organizations now as different geographic regions of the 
country kind of come awake to the opportunities are trying to 
weigh in.
    The Chairman. It is interesting that you mentioned Ducks 
Unlimited and Pheasants Forever. They have been coming into our 
hearings with enthusiasm for these programs. We are grateful 
that there has been this marriage of a good number of Americans 
and a different constituency.
    Senator Harkin.
    Senator Harkin. Thank you very much. I have just a couple 
of things. I will try to be quick here.
    Mr. Buis, on the carbon sequestration that you mentioned, 
we already have that in the CSA bill. I would ask you and any 
others who are interested in carbon sequestration to take a 
look at that. Any suggestions or advice you have on how we 
might modify it, change it, make it better, we need that input.
    Mr. Buis. We would be glad to. Also, you might want to look 
at the soil rehabilitation idea that we had where you had 
diseased lands that really need to be idled to get beyond the 
scab infestation and some other challenges we face.
    I don't know if that could work in that program as well.
    Senator Harkin. I don't see why not. On the whole issue of 
carbon sequestration, again, I ask all of you to be thinking 
about that. Any further input you have on that, we would sure 
appreciate it.
    Mr. Cohn, I want to thank you for your strong support of 
CSA. I appreciate that very much. Again, I ask for any advice 
or suggestions you have. Two things you mentioned that I think 
we have not kind of focused very much on and that is this whole 
issue of urban sprawl.
    The same is happening, I am sure, in your State and mine 
and everywhere else. We are losing a lot of this good land to 
urban sprawl. I don't know exactly how we stop some of it, but 
you had a suggestion that maybe in the CSA that kind of the 
payments for conservation and enhancement might help keep some 
of this land in farmland and in wildlife.
    Again, I want to get a better idea of how that might work. 
That is something that we have not really focused on but it 
might be a good thing to focus on.
    So if you have some suggestions on how we might wrap that 
into the bill itself, I don't know. It seems to me then you get 
into the thing about people bidding up the price of land and 
that type of thing. I am concerned about that.
    Mr. Cohn. I think, you know, the key step to keeping 
farmland in farmland is to make it profitable to be a farmer 
and having a range of options available to the farmer where he 
can respond to changes in the marketplace and changes in 
environmental conditions is the best opportunity farmers have 
in order to compete on the urban edge.
    Another piece I would add, if I can go back to your 
question of the previous panel about the State and local match, 
the Federal Farmland Protection Program in the first $35 
million that it was authorized for that program leveraged $230 
million of State and local funds.
    So it really evidenced very well the commitment on the 
local level to protecting farmland.
    Senator Harkin. Thanks for those figures. The other thing 
is about the tobacco farmers. I think that is another thing 
that we are going to have to look upon there and the way we 
transition them out.
    We haven't really focused on that. While I may have strong 
feelings about people not smoking, I don't think the tobacco 
farmers can be held to blame for that, for crying out loud. 
They are going to have to transition, so this may be another 
good element of a conservation-based payment system to get 
support out to them in a way they can transition to some other 
type of agriculture.
    Dan, you mentioned, for example, in your testimony--I was 
hoping you would mention it verbally but you didn't get to it. 
But you said one important improvement under the Conservation 
Security Program that could be made would be to direct USDA to 
take all necessary steps to ensure that organic farming plans 
developed under the new National Organic Program were going to 
also meet the terms of the Conservation Security Program.
    I underline that and asterisk that because I think you are 
right. I don't know that we have focused on that too much. 
Since there is more and more demand for organic foods, we see 
it in our farmers' markets. We see it in Fresh Fields, the 
stores that are going up all over that can't even meet the 
demand of people coming into them. So perhaps we need some 
focus on organic farming in a conservation type of a bill.
    Again, if any of you have any thoughts on that, I would 
appreciate it. Dan, do you have any thoughts on that at all?
    Mr. Specht. Well, I think a lot of people who haven't had 
much experience with organic farming don't realize that it does 
take some long-range planning and if you are going to be 
producing from the soil, you have to be building your soil to 
get production from an organic system.
    So a lot of the soil conservation and soil improvement type 
goals are naturally a part of trying to raise healthy, organic 
crops. You are trying to build your soils and soil conservation 
is a part of most of the farmers I know.
    Senator Harkin. I guess I am thinking out loud here, but, 
you know, if you have an incentive-based program which is 
voluntary, which is the way we are moving, and if people want 
to voluntarily engage in organic farming, that is fine.
    Perhaps we ought to have some focus in a bill. I guess I am 
asking, do you think there ought to be some added incentives 
for people to engage in organic farming? Obviously, it costs 
more money, I think, in many cases than it does for non-organic 
farming.
    Mr. Specht. Well, I think we have to be careful because so 
far it has been a market-driven, demand-driven business and I 
think most of the people who are currently producing from 
organic markets would hate to see the organic marketplace 
become another commodity-type business where government 
incentives create over-supply.
    So I think you have to be careful. There would be room. 
Thinking out loud again, I can see there is a requirement for 
organic production to be buffered by a 25- to 30-foot strip 
from chemical applications. Possibly organic buffer strips, if 
they meet other conservation requirements, could be included in 
a buffer initiative along fence rows.
    On either side of the fence, I would be happier if my 
organic farm could produce up to the fence and I could talk my 
neighbor into putting the buffer on his side of the fence. It 
would be nice to see them both qualify.
    Senator Harkin. Mr. Sparrowe, you think CRP ought to be 
increased to 45 million acres. Does your organization have 
other data on the value of CRP's improvements to wildlife, 
viewing and pheasant hunting? You estimated a $704 million a 
year. You cite a study here.
    If you have any other data on that, I would like to have 
it. I would appreciate it if we could see that because it has 
been hard to get a handle on what has been the economic impact 
of using conservation land for hunting purposes, that type of 
thing.
    Mr. Sparrowe. We will look at that.
    Senator Harkin. I am like you, I am a hunter. I like it, 
but I don't know how much economic benefit it has provided. As 
bad a shot as I am, it has probably added a lot.
    Mr. Stallman, again, I thank you for your testimony. It 
seems that the Farm Bureau, is basically in favor of an 
incentive-based voluntary approach to a conservation program 
that would be a part of the new farm bill, at least that is 
what I understood anyway.
    Mr. Stallman. Yes, Senator, that is correct. That is one 
tool in our whole toolbox of farm policy that I presume we will 
be laying out before this committee at some point.
    Senator Harkin. From your standpoint, from Texas, you say 
you are rice and something else?
    Mr. Stallman. Yes, Sir, rice and cattle.
    Senator Harkin. Again, we have to think about this 
conservation thing in a broad aspect, from the fruit and 
vegetable growers, the cherry farmers in Michigan that Senator 
Stabenow has been telling me about, to our livestock producers. 
On the rangeland in the West, they are good stewards, too, and 
they don't get anything for it either. So they ought to be 
involved in this, too. So I appreciate your support on that 
approach. Again, any further advice and suggestions you have, 
we would like to have that.
    Mr. Specht. We will certainly continue to work with you, 
Senator.
    Senator Harkin. Thank you very much. Thank you, Mr. 
Chairman.
    The Chairman. Thank you very much, Senator.
    Mr. Specht, in your sort of thinking outside the box, it is 
intriguing when you mention you are not sure you want the 
organic farmers into the program crop group.
    We had some testimony of this. This is anecdotal, perhaps, 
and it may be broader from some of the farmers who are 
producing fruits, vegetables and nuts and other things that are 
sometimes thought of as being niche crops but now are very much 
larger as a part of the total farm income, making this the same 
point that risk is involved in these areas and so prices are 
higher.
    Once you have a program crop, cotton, rice, corn or wheat, 
as a matter of fact, however else we talk about it, there are 
strong incentives to over-produce and prices remain low, almost 
bound to remain low. That is a problem. How we liberate the 
system from this situation or simply accept the fact that this 
is the way the world works, I don't know, but it is an 
interesting thought.
    You know, in equity, why should not organic folks get into 
the situation, along with peaches and cherries and nuts and 
whatever or tobacco, cotton, rice, almost anybody in equity. 
But it makes an interesting predicament in terms of those 
equities, you know, how the pie is going to be sliced.
    In the past, we have not been too constrained. We have just 
said more of everybody and built a broad coalition.
    But, nevertheless, we are doing a new farm bill. We have an 
opportunity to take a look presently. So I appreciate even 
these unconventional suggestions from unconventional questions.
    Senator Nelson.
    Senator Nelson. Thank you very much, Mr. Chairman. I hear a 
lot of concern about the programs that are coming into place 
that I think are great incentive programs, but they tend to 
reward new applications. They don't necessarily go back and 
take care of those who have already engaged in significant 
environmental work.
    I know it is true that virtue is its own reward, but I have 
found that if you can help compensate and help take care of 
those who have done the right thing, that is also advisable. It 
may even inspire others to do so.
    Do any of you have any specific suggestions, about what we 
might do to go back and reward those who have already engaged 
in favorable practices, who have already done ``the right 
thing'' so that we do take care of that? It is not just about 
new applications and new applicants.
     Mr. Specht. Senator Nelson, that is the environmental 
incentive payment portion of our toolbox. We do understand the 
importance of maintaining what has already been done as opposed 
to, as you accurately suggest, programs in the past that talk 
about implementing practices. That is an important component, 
too.
    But, we do think it is very important to maintain good 
practices and that is why our environmental incentive payment 
approach is a part of our toolbox.
    Senator Nelson. It would be retrospective as well as 
prospective?
    Mr. Specht. Yes.
    Senator Nelson. Thank you.
    Mr. Buis, you recommend increasing the CRP acres and I 
think others have as well--certainly, I agree with that--and 
making itcomparable to local rental rates. Making it 
competitive, making it attractive, certainly is advisable.
    Do you have a sense of how much this might cost us overall, 
being that somebody is always watching the bottom line, I am 
interested in knowing if you have identified anything of that 
sort.
    Mr. Buis. Well, if we increase the acreage cap by another 
three million acres, roughly, if you add an average rental rate 
of, say, $60 per acre, it is going to cost some money. But I 
think all these programs are going to cost money.
    You know, in agriculture today our backs are very much 
against the wall from the budget perspective. I know we and 
most of the farm organizations recently sent a letter to the 
budget committees saying that if we are going to address the 
challenges we face, we are going to have to make that 
commitment to the budget.
    But we think CRP is a valuable tool and one that pays back 
in the benefits to rural America.
    Senator Nelson. Thank you. I also noticed, Mr. Buis, that 
you mentioned that the programs should be aimed to really 
benefit family arms. I recall the Chairman referring to his 
farm as a transitional farm. I have not figured out whether he 
is transitioning up or transitioning out. He may not know 
either.
    But, is there a size factor, not necessarily total acreage, 
but size on the basis of the kind of agricultural producer you 
are talking about?
    Mr. Buis. I think there is. Our delegates actually are 
meeting this weekend in Rochester, New York to try to put some 
more pieces to the puzzle for the conservation provisions. But, 
I think there is a size limitation.
    One of the big concerns that we see growing out of here is 
in the nature of livestock manure management systems and who is 
eligible for those benefits and who is not and what kind of 
competitive advantage that gives a large, integrated operation 
over an independent hog producer. We have seen over 75 percent 
of them disappear in the past 10 years.
    So we are very concerned about that. We want to make sure 
that assistance is available because money is hard to come by 
to put in new management tools out there right now. We will be 
glad to share that with you after our convention.
    Senator Nelson. Well, clearly, there is a difference 
between the size of a farm with low rainfall or no access to 
significant irrigation or other modifications and one that 
maybe can produce the same level of income on a much smaller 
plot.
    So I would hope there would be some effort to help us 
identify what is big. I am concerned about what transition 
means, Mr. Chairman. I hope you are transitioning up. My fear 
is that you are not.
    Thank you.
    The Chairman. Well, thank you very much.
    Senator Harkin. Ben, I don't know if you were here earlier 
to see this, but these are the payments we had last year to 
CCC: $32 billion and $1.9 billion for conservation. The point I 
made earlier, and I will make it to this panel again and anyone 
else who will listen is that things have not improved that much 
in rural America price-wise so we can say, ``Oh, now we can 
forget about the $32 billion, we can just forget about that.''
    No, we can't, because prices are still low. Our rural 
communities are hurting. Our farm families are hurting. The 
question is: Do we continue to put it out the way we did or do 
we raise this up and put more emphasis on a conservation-based 
voluntary incentive program that might be more equitable and 
might be more widespread in terms of involving more farmers 
from around the country, in different parts of the country, 
that have not been involved before, down in the southeastern 
part of the United States, down in the Plains States, where 
they really haven't gotten much of this.
    So that is sort of the point I keep trying to make, that 
maybe this has to go up, not that we cut that down, but we 
bring this up.
    The Chairman. Well, Senator Harkin presents a very 
appealing picture for everybody in this room. I suppose that we 
will have to work with the rest of our colleagues as to whether 
we can simply add on both sides. They may be willing to do 
that. Otherwise, we get back, as we often do, to the 
priorities.
    Senator Harkin. Don't misunderstand. I am saying that I 
don't want to change the total. This may have to go. This kind 
of a payment may have to come down, but I am just saying don't 
reduce the total because we can't afford it in rural America. 
That is all I am saying.
    The Chairman. I suspect that is about right.
    I just want to reassure Senator Nelson that I was surprised 
to find that my farm was in transition, but I was citing the 
Sparks, Incorporated study which showed that we sort of come 
into the second group of ten percent after the larger eight 
percent. The point they made is that farmers in this and this 
category, about 57 percent of their income comes from off the 
farm and 43 percent comes from on the farm.
    So it raises a good question because probably that 
indicates that if you were going to support a middle-class 
income family, send your children to college and other things 
that people want to do, you need to be farming more land. Now, 
you may not own all of it, but our experience, at least in 
Indiana, is that many farmers with, say, 1500 acres, 2000, rent 
part of that, and maybe more, to amortize their unit cost and 
so forth.
    So there is a certain sense of transition by generation as 
to how to make it profitable, as you know from your own 
experience in Nebraska.
    Well, we thank each one of you as witnesses for your 
testimony, for listening to our colloquy both with you and each 
other, and we look forward to working with you as we proceed in 
this title and in others.
    Now, I would like to call our third panel: Mr. David 
Stawick, President of the Alliance for Agricultural 
Conservation and Mr. Paul Faeth, Director of the World 
Resources Institute.
    We welcome our witnesses. Most of you know that David 
Stawick is a former member of our staff of this committee. He 
was very active during the formation of the 1996 Farm Bill.
    The alliance that he heads is a new project of several 
agribusiness firms including Cargill, ConAgra, Farmland 
Industries, Monsanto, Pioneer and Syngenta. I would like to 
mention furthermore that Mr. Faeth, Director of World Resources 
Institute heads an organization that provides very 
comprehensive data on a broad array of environmental, economic 
and social issues.
    Among other things, Mr. Faeth will be summarizing a report 
he co-authored, discussing the use of nutrient-trading 
mechanisms to enhance the environment and provide additional 
income for agriculture.
    The WRI has a very informative website for those interested 
in that, at www.wri.org.
    We are delighted to have both of you. Mr. Stawick, would 
you proceed and try to summarize your comments. As you will 
remember from your days with the committee, 5 minutes more or 
less, followed by Mr. Faeth and then questions from Senators.

      STATEMENT OF DAVID STAWICK, PRESIDENT, ALLIANCE FOR 
           AGRICULTURAL CONSERVATION, WASHINGTON, DC

    Mr. Stawick. Good morning, Mr. Chairman, Senator Harkin and 
Senator Nelson. Mr. Chairman, if I may say so, it was always an 
honor to sit behind you at a hearing like this and it is a 
privilege to sit in front of you for a change. Thank you.
    I appreciate the opportunity to testify. I am very excited 
about the hearing so early in the process, as has been 
mentioned.
    The mission of our new Alliance for Agricultural 
Conservation is to advocate additional financial incentives for 
farmers and ranchers to apply conservation measures on working 
agricultural lands.
    More incentives, focus on working lands. I know certainly 
that you and Senator Harkin share that focus with your work on 
EQIP, Mr. Chairman, in 1996, and Senator Harkin, with your 
Conservation Security Act now. We appreciate that.
    I would like to describe four conservation issues that we 
suggest you tackle in the conservation title of the next farm 
bill. The first is to address this issue of the shortages in 
incentives for conservation practices.
    You have heard a lot of estimates from the very fine panels 
we have had earlier today. I would simply say that none of 
those are unreasonable from where I sit, at least in terms of 
those total numbers.
    There are also some possibilities for improving the EQIP 
Program or whatever program might supplant it or accompany it 
in the future. I mention them in my written testimony and if 
you would like to discuss them later, I would be happy to do 
so.
    Your staffs have asked this panel to kind of get out of the 
box a little bit more, as has been done earlier. Some of those 
issues have already been touched upon. I will take that path 
with our three remaining issues.
    The second of those is to leverage conservation funds 
through market-based initiatives. In many regions there is very 
strong, but untapped, economic justification for utilities or 
business entities or States and local governments to provide 
incentives to landowners who adopt conservation practices.
    This kind of gets to the whole issue of the value of 
conservation. You were talking about conservation commodities 
and the value of those to the public at large, people in urban 
areas.
    Now, Mr. Faeth is going to talk about one approach, credit 
trading. He has a very interesting piece of testimony. I will 
defer to him on that.
    Another idea, though, that you may consider is the 
establishment of local best management practice funds, BMP 
funds, from which EQIP-style payments could be channeled to 
participating landowners.
    Now, these BMPs would reduce pollutant loadings at the 
source so that expensive, for example, drinking water treatment 
facilities down closer near the tap wouldn't be needed. The 
savings to rate payers can be huge. Mr. Rudgers alluded to that 
type of activity in his statement as something that is already 
going on with the dairy farmers in the New York City watershed.
    Now, the Federal Government role in these otherwise market-
oriented strategies might be to assist in the initiative 
capitalization of BMP funds or credit trading scenarios.
    For example, in qualifying projects, the Federal Government 
might kick in a dollar for every $2 or $3 that a non-Federal 
entity would put in for a BMP fund or for buying pollutant 
credits--and those Federal dollars should be passed on to 
farmers.
    BMP funds and credit trading are not a substitute, I would 
say, for other incentive programs such as EQIP, but they hold 
tremendous potential. They are not just pipe dreams. They have 
gone on in various places, Mr. Chairman. For example, they have 
gone on in the Fort Wayne watershed. We have seen them in New 
York City.
    Paul is going to talk about his website. So these are not 
arcane concepts whatsoever.
    The third issue is to increase agricultural landowners' 
access to conservation technical assistance. Environmental 
challenges to farmers and ranchers have proliferated, but as 
Paul Johnson mentioned earlier, the ability of the Federal 
Government through the NRCS to provide necessary technical 
assistance has declined.
    I want to be very clear that we very strongly support NRCS 
and its local conservation district partners. But current 
realities and likely future demands dictate a rethinking of 
NRCS's role in the delivery of conservation technical 
assistance.
    One option might be to focus NRCS field staff on the needs 
of landowners with limited resources. At the same time, larger, 
more capitalized landowners could employ private crop advisers 
and engineers, and agronomists, whose qualifications to make 
those recommendations would be certified by NRCS. So it would 
be an expanded certification process for that agency.
    I understand this is a very sensitive area for people in 
the conservation world. I simply suggest that recent history 
strongly suggests that NRCS as currently focused and funded 
will not be able to provide the technical assistance that is 
needed in the countryside.
    Strategic issue four is to examine a comprehensive national 
policy for working lands conservation. You have talked about 
that before this morning as well. Our Nation's natural 
resources are protected by a series of somewhat overlapping 
laws and regulations authorized by several statutes under the 
authority of many different committees.
    The environment is generally well served by this regime, 
but it can provide exasperation for landowners and actually 
hinder better environmental stewardship. We know the examples, 
the wetlands programs, the Clean Water Act Programs.
    The jurisdictional hurdles that I mentioned will prevent 
this committee from solving this problem in this farm bill. But 
there may be a couple of things that you could do as the 
Agriculture Committee in the short run.
    One would be to authorize an outside group that would 
identify legislative and regulatory overlaps, point out the 
jurisdictional barriers that exist in Congress and suggest 
strategies for moving legislation that could bring more 
regulatory certainty to landowners who participate in USDA 
conservation programs, sort of have a legislative road map that 
you as Chairmen and Ranking Members could use to link arms and 
move forward.
    Another idea might be to direct the agencies themselves to 
look at a similar investigation.
    I close, Mr. Chairman, with two final suggestions that 
impact on all these strategic issues that I mentioned. First, I 
suggest that you delineate goals for what the conservation 
title of the next farm bill should accomplish through voluntary 
incentive-based programs. How much should we reduce agriculture 
nonpoint source pollution? What percentage of land should meet 
the soil loss tolerance? I am talking about specific things, 
strong goals that will help focus on what approaches and 
funding increases are appropriate and will also help generate 
necessary support from outside this committee when you go to 
the Floor and when you get to conference.
    Second, make environmental performance paramount. This is 
relevant when you discuss, as you have this morning, replacing 
to some degree commodity supports with payments that are based 
on conservation.
    New conservation funds, I would suggest, must really result 
in environmental gains. Anything less would ultimately be cruel 
to landowners who are staring down the gun barrel of 
environmental regulation and it would also be hollow for the 
urban dwellers, the taxpayers, who stand to benefit from 
conservation on working agricultural lands.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Stawick can be found in the 
appendix on page 222.]
    The Chairman. Thank you very much, Mr. Stawick, for a very 
important paper and for your summary this morning.
    Mr. Faeth.

 STATEMENT OF PAUL FAETH, DIRECTOR, WORLD RESOURCES INSTITUTE, 
                         WASHINGTON, DC

    Mr. Faeth. Thank you, Mr. Chairman. By way of introduction, 
I would like to say, for those of you who do not know, that the 
World Resources Institute is a private, nonprofit, nonpartisan 
environmental think tank. What we try to do is figure out good 
ideas and implement them to change the way things work to 
improve the environment and also people's lives.
    Our goal is to identify and implement and protect policies 
that protect the environment in ways that maintain and improve 
farm income in this area of conservation.
    In recent years much of our work has focused on the 
development of markets for environmental services that can be 
cost-effectively provided by farmers. The two most likely 
opportunities that appear to be able to be generated in the 
near term include markets for reductions in nutrient runoff and 
greenhouse gas emissions.
    Water quality is consistently rated by the public as the 
number one environmental issue. EPA has identified nutrients as 
the biggest cause of water quality problems with as many as 
3,400 waterways impaired by nutrients.
    In addition, nutrient over-enrichment also leads to hypoxic 
zones, areas where the oxygen in the water is too low to 
support life. The largest of these is the so-called ``dead 
zone'' in the Gulf of Mexico, an area the size of New Jersey.
    As directed by Congress, EPA recently released a task force 
report that calls for reduction in the size of the ``dead 
zone'' through voluntary actions by nonpoint sources and 
existing regulatory control of point sources in the Mississippi 
Basin.
    The cost of meeting clean water goals could be quite high 
with traditional approaches of command and control, coupled 
with more or less untargeted subsidies. But a cap and trade 
system, a market, could cut the cost dramatically.
    Under the Clean Water Act, impaired waterways will 
eventually face some sort of a limit on loads. Point sources 
like municipal sewage treatment plants and industrial treatment 
works will have new obligations to cut nutrient loads.
    This is handled currently through the TMDL or Total Maximum 
Daily Load process that sets a maximum load and allocates it 
among the dischargers in the watershed.
    With that process, basically you are half way to a cap and 
trade system. The only element missing is to create markets to 
trade surplus nutrient reductions through investments in 
agricultural BMPs. With that, we need clear Federal guidance to 
do so and that doesn't now exist.
    We worked with State agencies in Minnesota, Michigan and 
Wisconsin to do studies to explore the cost and benefits of 
market-based mechanisms to support nutrient load reductions 
such as those under a TMDL.
    We found that compared to traditional command and control 
regulations on municipal and industrial dischargers, nutrient 
trading could cut the cost of meeting environmental goals by 62 
to 88 percent in those States.
    The simple idea here is that point sources could pay 
farmers to install cost-effective best management practices for 
nutrient management and take credit for reductions under the 
Clean Water permits.
    We are currently developing and testing a website called 
``nutrientnet'' at www.nutrientnet.org to create nutrient 
trading markets and provide farmers with tools to participate. 
Mr. Lugar, you mentioned earlier about mentioning maps and a 
variety of systems that are now available. We are using just 
this technology to implement this website.
    We are testing this and implementing it with State agencies 
and other stakeholders in Michigan, Idaho, and the Chesapeake 
Bay Watershed.
    One of the fascinating elements of nutrient trading that I 
have found, specifically for nitrogen, is that it can also help 
meet the climate challenge. The largest source of greenhouse 
gases from agriculture is nitrous oxide, largely, but not 
solely from excess fertilizer use.
    There is a very tight synergy between water quality 
management and climate protection for this reason, as well as 
another opportunity for the creation of an environmental 
market. For comparisons sake, a 10 percent reduction in nitrous 
oxide emissions from agriculture would be about equal to all 
the carbon sequestered annually in the CRP.
    If the U.S. someday decides to constrain its greenhouse gas 
emissions and uses a cap and trade system to do that, then 
farmers could generate credits to sell in such a market through 
a variety of BMPs that not only have climate benefits, but also 
reduce nutrient loads, protect the soil, and provide wildlife 
protection.
    So how does all this relate to the farm bill? The key, I 
think, is to help farmers get ready to participate in 
environmental markets and make conservation programs behave 
more like markets. To that end I have a few suggestions.
    First, I think it is important to provide incentives to 
encourage farmers to provide more environmental services to 
society. Not only could this help farmers address their own 
environmental issues, but also help them to create 
environmental benefits for the rest of the economy.
    In the context of the Farm bill, I think this means 
increasing the funding available for programs like EQIP, WRP 
and new programs perhaps such as the Conservation Security Act. 
This would be a good first step.
    A number of conservation organizations are putting forward 
a plan for spending increases which I think is generally in the 
right direction.
    Second, there is no substitute for doing the research. 
Markets dependent on the ability to be sure about what one is 
buying. That means we need to be able to measure environmental 
services, verify and monitor.
    Third, conservation subsidies, to the extent possible, 
should be based on performance. The Environmental Benefits 
Index and the Conservation Reserve Program is one example. But 
it could be extended to other programs.
    Going one step further, and finally, I would recommend that 
the next farm bill include pilot programs that are fully market 
based. Why not allocate money for a pilot nutrient trading 
program or greenhouse gas program? The government could act as 
the buyer, which essentially would be a market-based type 
program. Farmers could use the Internet to estimate how much it 
would cost to generate a nutrient or greenhouse gas credit and 
sell it to the Government in a competitive way.
    Such programs could help prime the market, so to speak, so 
when the time comes farmers will be fully able to take 
advantage of this.
    Building on what Dave said, I would also like to mention 
strategy. I wouldn't be from a think tank if I did not somehow 
talk about or think about strategy.
    If you look at through variety of policy opportunities like 
the Farm Bill, the Clean Water Act, the Hypoxia Action Play, 
perhaps the Kyoto Protocol, with the right lens you see 
opportunities for farmers to provide services to the rest of 
the economy, and also, and not secondarily, put a few bucks in 
their pockets.
    Thank you very much.
    [The prepared statement of Mr. Faeth can be found in the 
appendix on page 227.]
    The Chairman. Well, thank you very much, Mr. Faeth.
    Let me just comment briefly that the Congress faced in the 
Clean Air Act this market-based strategy up front and the 
trading of those credits with utilities or others who are 
creating some clean air problems and other people who are 
taking mitigating strategies, or had at least much more clean 
air focus that had been going on for some time.
    The result has been, among other things, cleaner air in the 
country, a reduction of a number of situations. Now, this has 
not gone without some criticism and I suppose that this is most 
focused in the most recent international conference in which 
the Europeans rejected out of hand the proposal by our 
Department of State that somehow when you come to clean air in 
the world that this credit system would be favorable, as they 
saw it, to the United States, having developed these markets 
and the concept.
    Those who wanted the clean air wanted some punishment for 
the polluters. In other words, as opposed to simply mitigating 
the amount of pollutants in the air in the world, etc., they 
wanted to get at the malefactors, or it could simply have been, 
in some cases, an allegation of sheer protectionism. That is, 
some continents felt this that still gave American producers 
too much of an edge and they wanted a little punishment to sort 
of mitigate their advantages.
    Well, whatever may have been the problem, it did not work 
out in that conference. Now, this is an interesting idea as you 
move along now more toward the water business and the clean 
water and the creation, certainly, of problems of point and 
nonpoint pollution which we have been hearing about a good bit 
today.
    I think the idea is a remarkable one on its merits, but it 
also gets at the problem that underlies a part of our farm bill 
consideration: What about the 64 percent of farms who get no 
payments under the current income support situations, or 
farmers who are not planting for either the subsidies, either 
the safety net, however one wants to characterize the 
situation?
    We had testimony earlier about the management of land by a 
farmer in Iowa who is doing a number of things. It would appear 
to be conservation-oriented and very specific for his own 
satisfaction, but there are occurring societal benefits.
    Now, to the extent that we are able to work out markets, 
whether they be in carbon sequestration of the sort that has 
been talked about with the planting of trees or no-till or 
various other situations, or whether we work at it--and you 
have pointed out with the nitrous oxide that could be reduced, 
and these mechanisms that you are suggesting, clearly, there is 
a potential for income for a lot of farmers who engage in sound 
conservation practices.
    We have not really come to a decision in the Committee or 
even begun to debate this in the Congress as to what the major 
objectives ought to be of landowners, including farmers, and 
producers in America. But clearly there is some consensus that 
a major one ought to be stewardship.
    In terms of our national interests, why do taxpayers who 
are not farmers, not producers, want to put money into all of 
this? One reason may very well be the national interest is to 
have cleaner air, cleaner water, preservation of our basic 
assets, which include stopping soil erosion or problems of 
nutrients leaving the soil.
    I think this is an extremely important concept. The problem 
that I see thus far is that most working farmers are not able 
to envision exactly how this works. They hear discussions such 
as this. They watch C-SPAN and their eyes light up. But there 
doesn't seem to be anything out there that follows through on 
this.
    I visited with some people. One of our jurisdictions is the 
Commodity Futures Market, the CFTC authorization and those who 
deal in these sorts of things. I visited with leaders in that 
industry a month or two ago to discuss how they are coming, 
say, with the carbon sequestration markets. They are coming 
along pretty fast. There may be some possibilities of some 
markets on a much broader scale than simply a pilot project. I 
don't demean that for a moment.
    Your suggestion here is, I suppose, based on the thought 
that with such a new idea for this committee or this Congress 
or this administration to tackle it wholesale may be a bridge 
too far, that you sort of work at it.
    But nevertheless, we are talking about a farm bill of 
several years duration, probably. How income comes to farmers, 
why there is a Federal interest in providing income to farmers 
beyond that which occurs directly in the sale of commodities.
    I appreciate your outlining this and I take this time to 
underline that because it appears to me that this is a very 
important objective in terms of the public interest as well as 
farm income and perhaps for those of us--and most of us are 
interested in the overall environment of our country or our 
world--a distinct contribution.
    Now, in the work that you are doing in the pilot projects 
now, and I have not had a chance to visit the website you cited 
this morning, what happens on that website? Are people 
contemplating hypothetical trading situations? Can you describe 
to us what you might find for those who might want to get into 
this?
    Mr. Faeth. Yes, Sir. We have copies of a brochure on the 
website. It is available and it is functional now. We had been 
doing tests on this; our first live test with farmers and point 
source discharges was in Kalamazoo, Michigan a month ago. The 
State of Michigan is going statewide with regulations allowing 
nutrient trading in probably July or August.
    In Kalamazoo, Michigan, they have a TMDL and the site will 
be operational in support of the TMDL process for Kalamazoo. 
Basically, it is a set of maps. So when you go to the site, if 
you are a farmer, you click on your watershed and you see a 
picture of the Kalamazoo watershed. It has the county 
boundaries and the interstate highways, etc.
    Then you click on the county where you live and you come up 
with a road map. You click again and you get closer to where 
you live. When you click there, what actually happens is that 
it pegs through with a soils map, a topographic map, a land use 
map, and a map of distance to the nearest stream, which the 
farmer never even sees.
    So all the information that you need to actually calculate 
nutrient loads are pegged there, but the user never even knows 
it.
    Then the next step is, you say, okay, what am I doing now? 
I am growing corn and beans with a no-till, etc. You run 
through scenarios of, ``Well, what if I put in a buffer strip'' 
for example, or ``What if I want to create a wetlands?'' There 
are a series of different options you can run through and it 
tells you the cost per pound to remediate that is $8 per pound 
of phosphorous kept out of the stream.
    Next you go to a marketplace and you can post an offer, ``I 
will be willing to sell phosphorous credits, 200, at $15 a 
pound.''
    Clearly you will want to do it at much higher than your 
cost. But then the point sources can post bids to purchase. We 
had 30 players in our last demonstration and we had about 20 
trades that occurred between the parties.
    The Chairman. These are actual commercial trades?
    Mr. Faeth. These are demonstration trades at the moment. 
This will be live in support of the TMDL for Kalamazoo in July.
    The Chairman. Somebody would transfer some money? In other 
words, somebody made a bid of $10 for this phosphorous and pays 
some farmer who offered?
    Mr. Faeth. That is right. Then these are registered with 
the State agencies as appropriate. That is the next and final 
step to actually register the credits and the trade and it 
becomes real.
    The Chairman. Well, you mentioned the TMDL. The last 
hearing we had with regard to that was a very volatile hearing 
because most people who came in who were farmers or with farm 
organizations did not like the idea at all. As a matter of 
fact, they wanted to stop.
    Now, the people dealing with TMDLs, ``Well, we don't want 
to do that.'' But it wasn't really aimed exactly at farmers. We 
had some sort of amelioration of discontent in the process 
aimed at other big polluters and so forth.
    But, nevertheless, it was sort of out there and it came 
largely because of disputes with the forestry interests. As I 
recall, that particular hearing brought it to the fore. But it 
is interesting that in Michigan there is a TMDL and people 
still taking it seriously.
    So as a result, even though farmers were saying, ``We are 
not the ones,'' here is a farmer prepared, as you say, to adopt 
the new plan. It is going to remove something, nonpoint though 
this may be, from the waterways of Michigan.
    Somebody else is willing to pay for that process. So I 
think that is a very interesting and important breakthrough 
which probably will engage more than 30 players after some 
money passes hands and there is a commercial transaction.
    Mr. Faeth. We are developing a version of the site for the 
Mississippi Basin as a test, beginning next year. Paul Johnson 
mentioned trading on the Chicago Board of Trade; we share the 
same vision.
    The Chairman. Well, I hope, in a parochial way again, it 
will extend to White River in Indiana or the Wabash or some 
places of this sort in due course.
    Senator Nelson.

   STATEMENT OF HON. BENJAMIN E. NELSON, A U.S. SENATOR FROM 
                            NEBRASKA

    Senator Nelson. Thank you, Mr. Chairman.
    Mr. Stawick, I must commend you. You are the first person 
to come that I have had the pleasure to hear saying that maybe 
the Federal Government could give $1 dollar or $2 dollars to 
get $4 somewhere else. Usually, it seems to work in the 
reverse.
    I agree with you that the EQIP Program is probably under-
funded. I think in your testimony you said that the payments 
have been about $200 million and yet applications are probably 
in the range of $600 million.
    One of the ways that Nebraska has attempted to deal with 
this is to use the leverage of local funds to be able to 
attract EQIP funds and so there are stakeholders who could 
conceivably help expand the availability of the results by 
staying somewhere near or on the total dollars that are 
expended under the EQIP Program at the Federal level.
    I have to make a pitch for what I did. I created an 
environmental trust fund. Part of the funding that goes into 
the environmental trust fund comes from the Nebraska Lottery. 
That was before Senator Harkin's State had so many riverboats 
on their side of the river.
    While this is not the generous level of support that the 
total gambling provides, it has provided a significant amount 
of money aimed at helping create co-activity in environmental 
stewardship.
    We have several examples of where the environmental trust 
fund has funded on a multi-year basis projects that have then 
qualified for EQIP funds to try to create the kind of leverage 
that I think you had reference to. I would hope that other 
stakeholders would find similar ways to come in and leverage 
and expand the capacity of these funds to do good on so many 
other levels. I hope that that will in fact occur.
    Mr. Stawick. Senator, there is one other very good example 
that was touched upon by Mr. Stevenson in yesterday's 
testimony. That is the Conservation Reserve Enhancement Program 
which is a sort of subset of the Conservation Reserve 
Continuous Signup which is very explicitly involving State 
governments in getting additional incentives to landowners atop 
the CRP payments.
    That is underway in, I think, about 12 States now, 
Illinois, the Chesapeake Bay, Minnesota, etc.. So that is 
another very substantial program that is out there. There are 
more of these so-called CRP agreements, more and more every 
year.
    Senator Nelson. Well, I hope we continue to create these 
kinds of partnerships on a multi-government basis because we 
certainly can get more leverage out of the dollars from both 
sides of the contributions.
    Mr. Faeth, I am taken by the trade of environmental 
transactions that you are talking about here. How are you 
flying under the radar to not attract attention of the SEC to 
begin with or the local Blue Sky laws within the States? I hope 
you are able to stay under that radar.
    For example, as you do that and there are dollars 
exchanging hands ultimately, how do you have, first of all, the 
collection of the dollars, but second, how do you have 
enforcement because if I pay for these environmental practices, 
I want to make sure that they occur at the other end.
    Mr. Faeth. There are a variety of ways that these are being 
worked out. Most of the programs that have been tried are 
experimental programs right now. For example, in Michigan, 
which is the first State to go statewide with a regulatory 
program, the first step is that when there is a trade between 
any of the two parties that it is registered with the State.
    If one party has an NPDES permit and does a trade with 
another party, for example, it may be two point source 
dischargers who both have a permit.
    Senator Nelson. So you have the equivalent of some sort of 
exchange. It may not be the stock exchange or it may not be 
something out of Chicago, but you have some mechanism.
    Mr. Faeth. That is what our site does. It is a bulletin 
board where you post offers to buy and sell. Parties look at 
the site and they decide what they want to pay, look at their 
own remediation costs. If they can buy cheaper than they can 
treat, then they go ahead and do so.
    For rural communities this could be a huge help. In 
Minnesota one of our cases, has 212 point source dischargers, 
only about 25 are larger than one million gallons a day in 
effluent discharge. The rest are tiny. The cost per unit of 
treatment is much higher for small facilities than for large 
facilities. So for rural communities that face the highest cost 
of water treatment, trading is probably the best way to keep 
those costs down and make it more equitable in terms of what 
the water treatment costs would be for those communities.
    So when you trade, you have a contract. One of the things 
that has been tried is a loan that the point source might 
provide to the farmer to implement the practice and then the 
loan it is paid back in credits.
    Senator Nelson. How do you enforce? It is better to have a 
contract than not have a contract. But sometimes both parties 
don't always comply.
    Mr. Faeth. Under the Michigan rules, if you voluntarily 
undertake a trade with a party that has an NPDES permit, you 
provide a commitment under law that you will meet the 
obligation you set out in your trade.
    So if you say, for example, I am going to exclude cattle 
from the stream and you make that promise and take money to do 
so, if you don't do it, you have to provide three times the 
credits that you said you were going to provide.
    So if you said this will generate 100 pounds of phosphorus 
reductions and it is discovered that you don't, the owner of 
the credits or the buyer of the credits has the right to 
enforce and the State has the right to enforce as well.
    If you voluntarily do that and you are found not to have 
done it, then you owe 300 credits to the system. The credits 
that the point source discharger was using to apply are invalid 
and they have to go back into the market and purchase credits.
    Senator Nelson. So enforcement may be civil or----
    Mr. Faeth. It can be both. There are opportunities for 
both.
    Senator Nelson. [continuing.] Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Nelson, for 
illuminating further this process because as we get back to our 
CFTC responsibilities, the whole clearing process is of the 
essence. Where you are sitting, Mr. Faeth, we had a trader in 
corn last year. With a screen there in front of him, one that 
we could watch, he sold 1,000 bushels of corn somewhere in 
Europe, right here in the hearing room.
    The problem then is enforcement, the contract clearance of 
all of this. He went through a rather elaborate explanation as 
to how it works. But this would be of the essence with a State 
or with a Governor or with a court system.
    Still, it is very important. I am glad you have thought 
through those aspects. As you say, you are in the pilot project 
part. Questions that we raise as lay people hopefully will get 
back to those who are working in the system.
    Mr. Stawick, when you mentioned the EQIP Program in your 
testimony you suggested that, as has been pointed out, the 
demand exceeds the funds. Perhaps one way of looking at this 
would be small farms, those who do not have the resources of 
large farms, for example, might have, through a priority, use 
of the technical personnel that are now available and others 
might employ consultants who then have some validation through 
the professionals of their programs and their results.
    Can you illuminate that any further without asking you what 
the cut-off is between those who ought to be using or have 
priority and those who are larger entities who might hire 
consultants for more complex plans? Have you given any thought 
to where we might demarcate that?
    Mr. Stawick. One way of answering that, Mr. Chairman, might 
be to look at what the reality is in a lot of areas already. I 
suggest for technical assistance purposes, as you say, that the 
NRCS field staff perhaps be considered as the--you will be 
familiar with this term for agricultural lending--perhaps NRCS 
field staff could be considered the technical assistance source 
of last resort, so to speak, for persons of limited income.
    The fact is, that is the case in a lot of counties in a lot 
of conservation districts around the country right now. If you 
look at the other end, there are the larger landowners who say, 
``I know I need to do something.''
    It may be a confined animal feeding operation that has an 
NPDES permit. You know, they have to address those permit 
requirements or they may want to put in conservation buffers 
but may not want to go through the encumbrance of an EQIP 
contract or a CRP contract. They say, ``I just want the 
technical assistance. I need somebody to tell me how wide that 
buffer should be and what type of cover should it have,'' etc., 
and they are willing to do that themselves, but they don't have 
the technical help they need to answer those questions because, 
again, the stretched NRCS staff is looking at other, more 
limited resource people.
    I don't know, Mr. Chairman, where that line is, but I would 
suggest that if we got some more information from NRCS to look 
in a lot of these areas, you know, who they are able to help, 
who they are literally able to help with the current staffing 
levels.
    That may help drive us to some answers to your questions.
    The Chairman. That could be. Obviously, NRCS would like to 
have more staff and that may be the will of the Congress, to 
provide more. My guess is if we were generally successful many 
of the things we have been talking about today are going to 
stimulate a lot more interest in conservation around the 
country.
    So even as we get the staff, we hope that there will be a 
broader population of interest. We would come back to this 
problem again and again in terms of the smaller farmers of 
America, in terms of marketing strategies, to be able to use 
puts and calls and future trading or this type of thing which 
we found using the Sparks, Incorporated study that we talked 
about, that the larger farmers, the eight percent, are 
apparently selling corn for about 30 cents more a bushel than 
are the group of smaller farms.
    This is in part because they employ sophisticated marketing 
strategies. They have people, who assist them, go to extension 
courses or do more marketing education. It is not a question of 
the rich getting richer or the poor getting poorer. But in 
terms of technical expertise, this is very important. The 
question is how do we get this more broadly disseminated? How 
do we get people to ask for it, to know that it is even there 
and to have confidence? So these are questions at least some 
Senators are probing.
    Mr. Stawick. Could I raise one other market potential on 
this very question of technical assistance?
    The Chairman. Yes.
    Mr. Stawick. You might consider in the farm bill a system 
in which there was some kind of technical assistance funding, 
perhaps in the form of vouchers that could be given broadly to 
landowners and which could be traded.
    Depending on your size, depending on what are the 
requirements in the TMDL in the watershed where you live, you 
may want to take that voucher and redeem it for assistance 
directly from NRCS or you may say, ``I'm fairly well set with 
my technical assistance needs, perhaps I can sell that voucher 
to somebody else who could then accumulate a few if necessary 
and then get the technical assistance that they need.''
    Those vouchers perhaps also could be redeemed by private 
sector entities that I mentioned that could stand to get into 
the technical assistance business if we could just get them 
certified by NRCS.
    So while that is obviously not really as well thought-out 
as Paul's ideas on credit trading, that may be another way of 
using some market forces to get technical assistance and 
allocate our technical assistance resources, even the 
Government technical assistance resources, where they are 
needed the most.
    The Chairman. Senator Nelson, do you have any further 
questions?
    Senator Nelson. Well, I was just going to say that if we 
keep finding ways with securities and other kinds of trades, we 
might find a way to make agricultural profitable.
    The Chairman. Exactly. That is just what we are about.
    I thank you very much for coming to us today. We thank all 
the witnesses. We will try to take carefully into consideration 
the papers that we made a part of the record in full.
    The hearing is adjourned.
    [Whereupon, at 11:55 a.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
      
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                            A P P E N D I X

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                             March 1, 2001



      
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