[Senate Hearing 107-746]
[From the U.S. Government Publishing Office]
S. Hrg. 107-746
LIVESTOCK ISSUES FOR THE NEW FEDERAL FARM BILL
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JULY 24, 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
TOM HARKIN, Iowa, Chairman
PATRICK J. LEAHY, Vermont RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota JESSE HELMS, North Carolina
THOMAS A. DASCHLE, South Dakota THAD COCHRAN, Mississippi
MAX BAUCUS, Montana MITCH McCONNELL, Kentucky
BLANCHE L. LINCOLN, Arkansas PAT ROBERTS, Kansas
ZELL MILLER, Georgia PETER G. FITZGERALD, Illinois
DEBBIE A. STABENOW, Michigan CRAIG THOMAS, Wyoming
BEN NELSON, Nebraska WAYNE ALLARD, Colorado
MARK DAYTON, Minnesota TIM HUTCHINSON, Arkansas
PAUL DAVID WELLSTONE, Minnesota MICHEAL D. CRAPO, Idaho
Mark Halverson, Staff Director/Chief Counsel
David L. Johnson, Chief Counsel for the Minority
Robert E. Sturm, Chief Clerk
Keith Luse, Staff Director for the Minority
(ii)
C O N T E N T S
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Page
Hearing(s):
Livestock Issues for the New Federal Farm Bill................... 01
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Tuesday, July 24, 2001
STATEMENTS PRESENTED BY SENATORS
Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee
on Agriculture, Nutrition, and Forestry........................ 01
Lugar, Hon. Richard G., a U.S. Senator from Indiana, Ranking
Member, Committee on Agriculture, Nutrition, and Forestry...... 02
Crapo, Hon. Michael D., a U.S. Senator from Idaho................ 32
Lincoln, Hon. Blanche L., a U.S. Senator from Arkansas........... 30
Nelson, Hon. Ben, a U.S. Senator from Nebraska................... 33
Thomas, Hon. Craig, a U.S. Senator from Wyoming.................. 03
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WITNESSES
Caspers, Jon, National Pork Producers Council, Swaledale, Iowa... 05
Davis, Eric, National Cattlemen's Beef Association, Bruneau,
Idaho.......................................................... 07
Hermanson, Pete, Past NTF Chairman, National Turkey Federation,
Story City, Iowa............................................... 15
McDonald, Dennis, Ranchers-Cattlemen Action Legal Fund, United
Stockgrowers of America, Billings, Montana..................... 09
Moore, Frank, Vice President, American Sheep Industry
Association, Douglas, Wyoming.................................. 10
Roenigk, William, Senior Vice President, National Chicken
Council,
Washington, DC................................................. 12
Rosmann, Maria, Sustainable Agriculture Coalition, Harlan, Iowa.. 18
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APPENDIX
Prepared Statements:
Harkin, Hon. Tom............................................. 46
Caspers, Jon................................................. 48
Davis, Eric.................................................. 58
Hermanson, Pete.............................................. 108
McDonald, Dennis............................................. 74
Moore, Frank................................................. 81
Roenigk, William............................................. 98
Rosmann, Maria............................................... 115
Document(s) Submitted for the Record:
Letter to Hon. Richard Lugar from Chris Campany.............. 132
Statement of United Egg Producers............................ 136
Questions Submitted for the Record:
Question from Sen. Pat Roberts to Eric Davis and Jon Caspers
(Answers were not provided)................................ 142
LIVESTOCK ISSUES FOR THE NEW FEDERAL FARM BILL
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TUESDAY, JULY 24, 2001
U.S. Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC.
The committee met, pursuant to notice, at 9:06 a.m., in
room SR-328A, Russell Senate Office Building, Hon. Tom Harkin,
[Chairman of the Committee], presiding.
Present or submitting a statement: Senators Harkin, Conrad,
Lincoln, Nelson, Dayton, Wellstone, Lugar, Thomas, and Crapo.
STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA,
CHAIRMAN, COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
The Chairman. Good morning. The Senate Agriculture,
Nutrition, and Forestry Committee will come to order.
For the last several weeks, we have heard from a wide range
of interested groups about their ideas for the next Farm bill.
We will continue these hearings today at the full committee and
then subcommittee levels mostly in August.
Today, we will hear from the animal agriculture industry
concerning farm bill issues. Animal agriculture is a very
important part of our total U.S. agricultural picture. Cash
receipts from the livestock sector are projected to account for
53 percent of total cash receipts from production in 2001 and
nearly $11 billion of U.S. agricultural exports, about 20
percent of the total. That export total amounts to more than a
50 percent increase in the last 10 years.
Livestock also plays an important part in my own State's
agriculture. Iowa is the No. 1 producer of hogs and eggs and
has many other animal agricultural products. I believe that
Iowa's prominence in animal agriculture is reflected by today's
panel.
I would like to welcome the three Iowans who are here, Jon
Caspers, Vice President of the National Pork Producers Council
from Swaledale, Iowa, Pete Hermanson, who is former Chairman of
the National Turkey Federation from Story City, and Maria
Rosmann from Harlan, Iowa, who represents the Sustainable
Agriculture Coalition.
Considering the importance of animal agriculture to U.S.
agriculture overall, I believe it is time our farm policy
accord animal agriculture the attention it deserves. We should
craft a farm bill that addresses the concerns of animal
agriculture across the nation. The next Farm bill needs to help
livestock and poultry producers meet the challenges they face.
Just as an aside, I have often said that it seems like
animal agriculture has always been sort of the stepchild of
farm bills. We do everything else and it is sort of an
afterthought in animal agriculture. It is my intention, that
this next Farm bill will, hopefully, focus more attention on
animal agriculture. It provides us multiple opportunities for
crafting support for the animal agriculture industry. We must
encourage increased research on animal health and diseases and
new uses.
The next Farm bill must also provide increased
opportunities for livestock producers to expand their
businesses, both domestically and in the United States, through
marketing, fair trade agreements, and value-added products.
That means increased funding for cooperatives and other private
initiatives. I read all the testimony last night and I am
particularly interested in the testimony of Ms. Rosmann, who is
here, and their experience on a family farm structure in Iowa
and what we can do to encourage more enterprises like that, as
well as a strong export program like the Market Access Program
and how we can get, if you will excuse the pun, beefed up a
little bit.
As many of you know, I believe the Farm bill needs to
expand the conservation title. We need to strengthen programs
like EQIP, create new ones like the Conservation Security Act
and others, to provide incentive payments for farmers and
livestock and poultry producers to maintain and adopt
conservation practices, like good manure management.
We need to make a comprehensive review of EQIP that
includes looking at the current restrictions on cost share
assistance for livestock owners. However, we must be careful
not to go down the road of subsidizing large livestock
operations unfairly or financing technology, such as manure
lagoons, that should soon be obsolete.
Moreover, we must carefully examine the consequences of
government involvement. The wrong kind of government
involvement in the name of conservation could actually hurt the
industry, or at a minimum, distort production decisions or
markets.
Again, animal agriculture plays an important role in our
whole agricultural picture. I look forward to hearing the
panel's testimony and working with all of you on crafting sound
and forward-thinking aspects of the Farm bill as it deals with
animal agriculture.
[The prepared statement of Senator Harkin can be found in
the appendix on page 46.]
I would yield to my colleague, Senator Lugar.
STATEMENT OF HON. RICHARD LUGAR, A U.S. SENATOR FROM INDIANA,
RANKING MEMBER, COMMITTEE ON
AGRICULTURE, NUTRITION, AND FORESTRY
Senator Lugar. Thank you very much, Mr. Chairman. I thank
you again for calling this hearing to consider livestock and
poultry issues in the next Farm bill.
In recent months, livestock, poultry, and other
organizations have requested that we consider their requests
for action on matters related to conservation and environmental
compliance, on trade promotion, research, and other issues.
Conservation deserves a new focus in the next Farm bill and I
applaud your efforts, Mr. Chairman, to bring that about.
In 1985, 97 cents of every financial assistance dollar from
the USDA went to working lands. Three cents went to land
retirement. Today, the situation is nearly reversed, with some
85 cents going to land retirement programs and only 15 cents
going to working lands. This funding balance must be addressed
during our reauthorization of the Farm bill. I do not believe
we can land idle our way to environmental performance.
Today's State water quality reports still name non-point
sources of pollution as the nation's biggest water quality
challenges. Nutrients and pathogens represent the largest
environmental challenge confronting most farmers and ranchers
today, and the ones most likely to result in costly new
regulation. How we deal with these environmental challenges
will affect the commercial viability of farming and ranching
over the next decade.
In legislation I will soon introduce, a significant
increase in the EQIP funding would be authorized, and I
appreciate your mention, Mr. Chairman, of the EQIP program in
your opening statement this morning.
In the trade area, there have been calls for increased
funding in the export enhancement area, such as the Market
Assistance Program. I would respectfully request that each
sector represented here today provide us with a written outline
of their present export strategy, hopefully by the beginning of
August. We cannot approach the trade title from a perspective
of increasing funding levels in each existing program. For the
benefit of producers and taxpayers, a total review of all
existing programs is essential.
As this committee considers the trade title of the next
Farm bill, I remind colleagues of an important issue to
agriculture outside of this committee's jurisdiction, and that
is trade promotion authority. We should not have a narrow focus
on a particular title of the Farm bill without acknowledging
the consequences for farmers of ongoing Congressional inaction
on this front. It is also important to note the inevitable
impact of commodity policy on the livestock and poultry areas.
During development of the commodity title of the Farm bill, we
must be mindful of the impact of these sectors. In particular,
we should avoid interventions in the grain market by the
Federal Government which would harm the livestock sector's
international competitiveness.
Mr. Chairman, on a topic not likely to pertain to the Farm
bill, although important to agriculture, I would simply say, be
assured of my ongoing commitment to work with you and Senator
Daschle and other colleagues on the issue of interstate
shipment of State-inspected meat, a topic often before our
committee.
Again, I thank you for holding today's hearing and I look
forward to hearing from each of our witnesses.
The Chairman. Thank you very much, Senator Lugar.
Senator Dayton.
Senator Dayton. I will wait for the witnesses. Thank you,
Mr. Chairman.
The Chairman. Thank you. Senator Thomas.
STATEMENT OF HON. CRAIG THOMAS, A U.S. SENATOR FROM WYOMING
Senator Thomas. Thank you, sir. I am very pleased that you
are having this hearing today, of course. In Wyoming, livestock
is our activity. Over 70 percent of our agriculture is there.
I want to particularly welcome my good friend Frank Moore
here from Douglas, Wyoming, who is Vice President of the
American Sheep Council and is a sheep producer and has been for
a very long time.
We had recently, during this last recess, a meeting in
Wyoming that we hosted with the Wyoming Department of
Agriculture and many of the producers from livestock were
there, of course. There were a number of things that they
talked about and emphasized. One is, the Farm bill is not a
one-size-fits-all and that mentality, we have to be careful
about. Support for opening markets, export markets, of course,
was strong, high, there. Increased funding for conservation and
technical assistance, so that you could talk about grasslands
and open space and preservation of lands and technical
assistance. Also, a greater coordination among Federal
agencies. That, of course, is a broad thing to do, but it
really has a lot of effect in agriculture in terms of Fish and
Wildlife Service, EPA, and others, so that is there.
The cattle industry, of course, is our leading one. They
don't ask for price supports, but they do think they ought to
be included in agriculture, and I agree with that, particularly
in trade and those kinds of things.
We are particularly interested this morning, Mr. Chairman,
with our sheep industry. We are second in the Nation for sheep
and wool. It has suffered the worst price cycles probably in
history since the Wool Act was repealed in 1966. Prices have
fallen from 70 cents to about 33 cents a pound for wool, which
doesn't cover the shearing costs, of course. There are lots of
factors in that, the Asian financial crisis, competition from
synthetic fibers, of course, the U.S. dollar, and so on.
There are a number of proposals they are looking forward
to. One of them, of course, is the wool program, which we will
be talking about soon in the supplemental or the ag dollar
appropriation. There are a number of things that they are doing
in terms of trying to put together a value-added cooperative so
that the producers can be involved in the product. That is one
of the best things we can do.
Hopefully, and I hear this a lot and I feel very strongly
about it, that it seems to me in our agricultural farm bill
considerations, we have to deal with the impacts of where we
are now, of course, but we ought to make sure that what we are
doing is going to lead us to where we want to go over a period
of time. Too often, we end up just dealing with the problem
that now exists, and I understand how easy it is to do that,
and you have to do it, but at least a portion of that ought to
go forward and us trying to visualize how we can get
agriculture where we want it to be, more self-sustaining and
those kinds of things.
At any rate, that is more than I should say, but I feel
very strongly about it. The Farm bill has traditionally, of
course, been largely program crops, but now that is a little
behind us and we are now looking at how we can deal with the
general concept of agriculture, and in States like ours, that
means livestock in many ways. Thank you, sir. I appreciate it.
The Chairman. Thank you very much, Senator Thomas. I tend
to agree with just about everything you said there.
Senator Thomas. I am glad I stopped when I did, then.
[Laughter.]
The Chairman. I didn't know what was coming. Thanks, Craig.
The Chairman. We welcome our panel. We will just go down
the list. First of all, your statements will be made a part of
the record in their entirety. Rest assured, we have read them
over. If you could just limit your statement to maybe five to
seven minutes--we have three, six, seven people--let us say
around seven minutes or so, and then we can get into questions,
I would sure appreciate it.
We will just go down the list. We will start with Mr. Jon
Caspers representing the National Pork Producers Council from
Swaledale, Iowa. Welcome, Jon.
STATEMENT OF JON CASPERS, NATIONAL PORK PRODUCERS COUNCIL,
SWALEDALE, IOWA
Mr. Caspers. Thank you, Mr. Chairman. I am Jon Caspers. I
am a pork producer, as you mentioned, from Swaledale, Iowa, and
I serve on the Board of Directors of the National Pork
Producers Council.
Mr. Chairman, the country's pork producers are extremely
pleased that the 2002 Farm bill debate is focusing on
conserving working agricultural lands, keeping them productive,
profitable, and at the same time, enhancing the environmental
benefits that they provide. Your bill, the Conservation
Security Act, is one of the big reasons that the debate has
turned in this direction and we welcome your efforts and
commend you for them. We also note that the committee's ranking
member, Senator Lugar, is working on a conservation bill with
many valuable policy proposals.
As we have stated before, livestock and poultry producers
face or will soon face costly environmental regulations as a
result of State or Federal law designed to protect water and
air quality. In addition to the State requirements, the
regulations will come from the Clean Water Act TMDL program,
the proposed CAFO permit requirements, and the Clean Air Act.
While producers have done a good job environmentally on their
operations in the past, we want to continue to improve, but in
many cases, the costs are simply prohibitive.
A $1.2 billion a year increase for the EQIP program, which
50 percent would go to livestock and poultry producers, is a
historic step forward. However, as previous testimony from NPPC
and other groups has demonstrated, $1.2 billion is needed
annually for livestock and poultry producers alone. We,
therefore, respectfully request that the committee take full
advantage of any opportunity that may exist to expand EQIP
funding further in order to meet the pressing conservation
assistance needs existing in all agricultural sectors.
There are several specific issues that we would like to
address as you prepare legislative language for the
conservation title of your farm bill. We feel strongly that
livestock and poultry producers must be eligible for
conservation cost share assistance regardless of the size of
their operations. Family-owned or operated livestock operations
come in all sizes, and all of these need cost share assistance
if they are to remain economically viable while providing the
public with the environmental benefits they obviously seek.
For example, the EPA's analysis for the proposed CAFO rule
assumes it will cost a 3,400-head farrow to finish swine
operation in the Midwest $332,000 in capital costs to comply
with the proposed rule. It will also cost approximately $26,000
a year for annual recurring activities for this operation to
operate and to maintain its new system.
Any EQIP provision that excludes operation simply on the
basis of number of animals will end up excluding thousands of
family-owned operations struggling to remain as independent as
possible. The unintended consequences of a size cap is rapid
consolidation of the pork industry, and something, I am sure,
this committee does not want. It is our view that a payment
limitation schedule comparable to that used in row crops is far
more appropriate except that payment should not be limited by
year but by needs of the overall EQIP contract.
Second, protecting air and water quality as it relates to
livestock and poultry manure management must be national
priorities for EQIP. While EQIP can provide benefits to
wildlife, the Wildlife Habitat Incentives Program, or WHIP, is
the program for encouraging wildlife conservation on working
agricultural lands and we support increasing WHIP funding.
It is important to ensure that the program allows for the
participation of third-party, private sector, certified experts
to supplement the technical assistance to be provided by USDA.
We note that your CSA and Senator Lugar's concept paper provide
for the use of such persons and we support your efforts. A
voucher system is one way that could be used to meet this need,
but there are several others.
We also feel that EQIP needs to be able to meet
conservation priorities that are not defined on the basis of
small geographic areas, like a watershed, and that existing
provisions of EQIP that add considerable administrative burden
with little associated environmental benefit should be
scrutinized.
We also believe the new Farm bill should provide incentives
to help livestock producers fully develop the value of their
nutrients. One of the most promising possibilities for small
and medium-sized operations involves capturing methane and
producing electricity. Harnessing the energy from swine
nutrients can meet farm electricity needs, provide added income
as excess capacity is sold to other power generators, enhance
odor control, spur rural economic development, and help reduce
our nation's dependence on foreign oil.
Pork producers also support legislation that would grant
tax credits for the generation of electricity through the use
of swine nutrients and other agricultural by-products. Mr.
Chairman, we understand that you are developing farm-to-energy
technology provisions for the Farm bill. We are ready to work
with you and others like Senators Crapo and Grassley, who
recognize the value and promise of farm-to-energy initiatives.
We have also long supported increasing the authorization of
the Market Access Program, or MAP. At least a doubling of the
current authorization, from $90 to $180 million per year, is
warranted. MAP and the Cooperator Program have been
instrumental in helping boost U.S. exports.
Thank you for allowing us to testify today and we look
forward to working with your committee in the future.
The Chairman. Jon, thank you very much for your testimony.
I look forward to working with you and the National Pork
Producers Council on these issues.
[The prepared statement of Mr. Caspers can be found in the
appendix on page 48.]
The Chairman. Next, we will move to Mr. Eric Davis of the
National Cattlemen's Beef Association from Bruneau, Idaho.
STATEMENT OF ERIC DAVIS, NATIONAL CATTLEMEN'S BEEF ASSOCIATION,
BRUNEAU, IDAHO
Mr. Davis. Thank you, Mr. Chairman, Senator Lugar, members
of the Senate Agriculture Committee. It is a pleasure to be
here today to give this testimony on behalf of the National
Cattlemen's Beef Association.
I am a fourth generation rancher from Bruneau, Idaho. My
family has been on the place we are on now for about 50 years.
On behalf of NCBA and my lifetime and my dad's and some others
ahead of me making what we think are ecologically sound and
economically viable uses of renewable resources, I am happy to
be here to present NCBA's views on the Farm bill development.
I will mention only broad topics in my oral testimony. My
written testimony goes into greater detail in all these areas,
and, of course, I would be happy to address specifics later,
should there be questions.
Chairman Harkin, the beef industry, NCBA, and NCBA's
predecessor organizations have traditionally taken the position
of wanting less Federal intervention in farm policy.
Nonetheless, the members of NCBA understand that farm programs
are a major component of U.S. domestic policy and will remain
so for the foreseeable future. Therefore, NCBA will continue to
focus on ensuring that farm policy does not benefit one part of
agriculture at the expense of another. NCBA will not consent to
U.S. farm policy that is financed out of the pockets of the
beef industry.
With that in mind, we will be keeping a close eye on the
following areas: Mandatory set-asides, acreage reduction
programs and production controls, farmer-owned reserves, non-
recourse loan forfeiture, flex fallow type programs, and any
Federal dairy buyout, herd reduction program, or mandatory
dairy supply management program. Should proposals such as these
become part of the Farm bill discussion, NCBA will seek to
mandate by USDA and the recognized research community the
complete impact study of these proposals on the beef industry.
I would reiterate, NCBA opposes any Federal farm program that
has a negative impact on the beef industry.
Now, with that said, Mr. Chairman, this committee's
commitment to conservation and the environment are of
particular interest to the cattle industry. There are a whole
host of conservation initiatives that have been proposed for
this Farm bill and we are encouraged that the initiatives
proposed all place an emphasis on helping producers keep their
operations and productive lands working and profitable while
they move to the next level of conserving the natural resources
on these lands.
We appreciate this opportunity to provide you with our
views and observations as you craft the details of these
provisions for your farm bill package. NCBA wants to stress
that whatever form the final package takes, it is critical that
the 2002 Farm bill make a major new commitment to providing
livestock producers with conservation cost share and incentive
payments assistance in the context of voluntary incentive-based
programs. This must be done if we are to keep economically
viable producers on the land, be able to conserve our natural
resources for future generations, and provide the environmental
benefits being demanded from American agriculture by the
public.
Some specific priorities for NCBA are, No. 1, $1.2 billion
per year for EQIP or a new program similar to EQIP to assist
producers with the costs of Federal, State, and local mandatory
manure management and water and air quality protection
requirements. Producers must be eligible for this assistance
regardless of the size of their operations. A payment
limitation system comparable to that used in row crops should
or could be adopted.
No. 2, EQIP's effectiveness could be enhanced by
establishing priorities based on geographic and non-geographic
parameters.
No. 3, the Conservation Reserve Program should be amended
to make it a priority to keep working lands working. This means
that emphasis must be placed on enrolling buffers. Whole field
enrollment in the CRP program should be substantially limited.
Mr. Chairman, as you know, NCBA represents that segment of
agriculture that owns and manages our nation's private grazing
lands. They contribute significantly to the quality and
quantity of water available for all of the many land uses and
they constitute the most extensive wildlife habitat in the U.S.
Our next generation farm bill must continue to recognize the
contributions these grazing lands make to a healthy environment
by providing financial and technical support for grazing lands
and grasslands conservation programs.
Specifically, we support reauthorization of the Grazing
Lands Conservation Initiative. We also support passage of the
Grasslands Reserve Program. Traditionally, farm bills have not
recognized the importance of grasslands. The Grasslands Reserve
Program would allow ranchers to continue economic activity
while protecting natural resources.
The National Cattlemen's Beef Association is currently
preparing comments on environmental regulations that will
impact all segments of the industry. These regulations will add
tremendous costs to doing business and important modifications
need to be made to Federal programs to assist the beef industry
in maintaining the highest standards of resource protection.
Mr. Chairman, I thank you for the opportunity to comment
here today and look forward to any questions that may follow.
The Chairman. Thank you very much, Mr. Davis.
[The prepared statement of Mr. Davis can be found in the
appendix on page 58.]
The Chairman. Now, we will turn to Dennis McDonald,
Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of
America, from Billings, Montana, R-CALF. Welcome.
STATEMENT OF DENNIS McDONALD, RANCHERS-CATTLEMEN ACTION LEGAL
FUND, UNITED STOCKGROWERS OF
AMERICA, BILLINGS, MONTANA
Mr. McDonald. Thank you, Mr. Chairman. I am a rancher from
South Central Montana, the small town of Melville. My wife,
Sharon, of 25 years, and our four children operate a cow-calf
operation. We breed 850 or so mother cows. We background our
calves, sometimes finishing the steers to slaughter weight. We
breed 100 or so quarterhorse mares annually for working cow
horses.
I am here on behalf of R-CALF, an organization dedicated to
representing grassroots cattle producers around the country. We
have members in 38 States. I serve on the Ag Trade Advisory
Committee and had the opportunity to speak before this
committee a month or so ago when you were focusing on trade
issues.
The light cattle prices at the ranch presently, I am
pleased to report, are strong. I am optimistic our industry can
remain vibrant, provided we have the basic tools that will
allow us to market our end product at home and abroad. To that
end, we are urging that a cattle chapter be written into the
new Farm bill.
Mr. Chairman, I heard your comments loud and clear about,
often, livestock being the stepchild in previous farm bills.
That thought occurred to me several months ago and I thought
maybe a solution might be to designate a cattle chapter or
livestock chapter within the Farm bill that would focus
attention on the issues peculiar to our livestock industry.
With cattle in all 50 States generating $35-plus billion
annually, it seems a cattle chapter is needed. We have over one
million producers contributing to our rural communities and, I
believe, providing a cultural foundation for our nation.
The viability of our industry is challenged on several
fronts. Concentration in the marketplace is one such area, with
four major processors ultimately slaughtering 80 percent of the
finished cattle. As a result, the reduced leverage in the
marketplace have, in recent years, caused the elongation of the
down wave of the cattle cycle. R-CALF is convinced that a
cattle chapter within the Farm bill could help restore greater
equilibrium to pricing and, thus, help the market function in a
more rational manner.
We are aware of legislation supported by both parties that
addresses some of these issues. One such issue is the
cattlemen's fair share of the retail dollar. In 1970, cattle
producers enjoyed approximately 70 percent of the retail
dollar. That shrank to 50 cents by 1996, and that trend is
continuing. Obviously, we are experiencing a shrinking share of
that retail dollar.
R-CALF is convinced this trend might be reversed if the
Farm bill contains provisions addressing some of the issues I
have outlined in my written testimony. Those include speaking
to the issue of unfair contract prices, a call for enforcement
of antitrust laws, as well as enforcement of the Packers and
Stockyards Act. Further transparency in the marketplace is of
vital importance, and we have taken a major step with the
mandatory price reporting legislation and the recent rule
changes that will help implement that legislation. Country of
origin labeling and restriction of our USDA grade stamp, and I
will return to those subjects in a moment.
Senator Lugar, you mentioned the interstate shipment of
inspected beef, a critical issue to cattlemen around the
country, particularly as we attempt to add value to our product
and attempt to take our product directly to the ultimate
consumer.
The only funding request that R-CALF is suggesting is an
experimental fund that would help fund those efforts as we form
co-ops around the country to attempt to get into that retail
market. We are asking for a $200 million fund for that purpose.
Country of origin labeling, we would hope would be
addressed in the Farm bill. R-CALF strongly supports Senator
Tim Johnson's proposal, the Consumer's Right to Know. A strict
labeling law will allow producers to differentiate our product
from all of the other beef products that are imported from
around the world. For beef to carry the USA label, it should be
processed from a calf born, raised, fed to finished weight, and
processed in this country. Any deviation from that definition
should be labeled as such.
Likewise, with the USDA grade stamp. That is a mark of
excellence that the cattle producers of this country have
awarded themselves over the last century by producing the best,
most nutritious, healthiest product in the world. That USDA
Choice grade stamp is seen as a fairness issue among producers
across the country. It should be our brand, a brand of
excellence that will help differentiate our product from the
other products around the world.
Finally, to compete, we as producers need to own our cattle
from the gate to the plate, from the ranch to the restaurant. I
had made reference earlier to an experimental fund, moneys that
could be used to promote co-ops and to allow us to market our
product directly into the marketplace. Hopefully, I have
delineated that thought with more particularity in my written
submission.
Finally, I just want to say on behalf of all grassroots
producers across the country what an honor to be invited to
speak before you. I thank you for that opportunity.
The Chairman. Mr. McDonald, we are honored to have you here
and your organization, which I know is growing very rapidly all
over the Western part of the United States.
[The prepared statement of Mr. McDonald can be found in the
appendix on page 74.]
The Chairman. Next, we turn to Mr. Frank Moore of the
American Sheep Industry Association, previously introduced by
Senator Thomas, from Douglas, Wyoming. Welcome.
STATEMENT OF FRANK MOORE, VICE PRESIDENT, AMERICAN SHEEP
INDUSTRY ASSOCIATION, DOUGLAS, WYOMING
Mr. Moore. Thank you, Chairman. I appreciate the
opportunity to be here. I am a fourth generation rancher from
Douglas. I have been in the sheep and cattle business all my
life, as our family has for over 100 years.
I had the fortunate experience of traveling with the
Senator yesterday and sitting on the ground waiting for planes
for quite a while, so we visited a little bit about the Farm
bill and what you need to do.
The Chairman. In Chicago?
Senator Thomas. Denver.
[Laughter.]
Mr. Moore. I am going to deviate a little bit from my
statement. We have our written testimony that should
specifically talk about the issues that we think need to be
covered and go into detail about how we feel the sheep industry
should be included in this Farm bill. I certainly agree with
your opening statement, as several of the Senators have said,
that livestock needs to be included.
The wool and lamb markets are way down. Our wool is at a
30-year low. Thirty-three cents last year was the average price
for wool. It has been 1971 since we have seen those prices.
That is not including anything for inflation. That is just your
basic price. That is a significant decrease. Obviously, it is
pretty tough to compete in today's market and be stable when
you have got prices like that. The lamb markets are currently
down.
Those of us that are left in the sheep business, we believe
in the sheep business. We intend to stay in the sheep business.
We think that the ones that are left are the ones that have the
true heart for the business, are the efficient producers, the
ones that are able to compete in the world market.
What we want to do is remain in business and we are tied to
government. We are tied to government. All of agriculture is
tied to government, whether we are receiving any programs or
not. We have got our cheap food policies. We have got
endangered species regulations. We have got environmental
regulations. We have got a strong dollar that significantly
impacts us when imports start coming into this country. Our
high standard of living--we want to maintain that high standard
of living.
In the European Union, they have a $2 billion support and
subsidy program for their sheep industry over there. That is
billion with a ``b''. In a lot of cases, that is 50 percent of
their revenue from their sheep industry, from the sheep
enterprise.
Australia and New Zealand, Australia's currency has been
devalued by over 40 percent in the last five years compared to
the strong dollar. We appreciate the fact that we have a strong
dollar, but it gives them a significant import advantage when
they bring products into this country.
When we are competing on a world market, we can compete in
production, we can compete in efficiency, but it is pretty
tough to compete against subsidies such as those and the strong
dollar. What we are asking for in this Farm bill is to be sure
that we are included, be sure that we have some kind of floor
and safety net so that there is a little bit of stability.
We appreciate your concerns with conservation. We are very
confident that the sheep industry is an environmentally
friendly animal and we don't have any problem with conservation
and the environment. We are comfortable in those areas.
We are making changes. We have been working significantly
over the last few years and since we lost the Wool Act in 1993.
For those of us that remained in the business, we have made
significant changes to become better producers, to provide more
value-added products. We are doing a lot of cooperative type of
efforts, and I agree with what Mr. McDonald said. We need to
make sure that those cooperatives have a chance to get up and
running and be efficient.
We are working on scrapie eradication and some other
programs to make our product as healthy and as health conscious
as possible. We are doing a lot of quality improvements.
One thing I want to make sure that everybody understands,
what we are asking for with our assistance program that is in
the Farm bill, we are not talking about going back to the old
National Wool Act. This is a modest safety net, a floor, just
to make sure that there is a little bit of stability in the
industry.
We have a couple of other issues with the U.S. Government
that are important that we need to get off the ground so that
our industry can get going. We have had a program for a
promotion program at USDA since February of 2000. We need to
get that up and running. That the industry, once it starts
putting some money into self-help, will make some progress. We
need your support in getting that up and running as quickly as
possible. We expect to see that out any day.
Mandatory price reporting, we hope that issue can be taken
care of. We think that is one of the problems we have had in
the last few months with our decreased lamb prices. Since the
mandatory price reporting went into effect, we have had
virtually no lamb market reports. We need to make sure that
there are some changes made there so that the price reporting
comes out and helps us and gives us some significant
information that we can use.
The Market Assistance Program that we have been included in
in the last couple years has been what has cash-flowed a lot of
sheep operations. We appreciate your support on that and we
want you to know that that has been a help. It has kept a lot
of people in business and it keeps them moving forward.
We will work with you in whatever way we can. As the
Senator and I talked about yesterday, we are trying to fit into
the Farm bill as you have it right now. We will work with you
in whatever way you want to go to make sure that our policies
are looking to the future.
I appreciate being here, and thanks for all you guys are
doing.
The Chairman. Mr. Moore, thank you very much for your
testimony. Rest assured, we recognize the importance of the
sheep industry and the wool and mohair industry in this
country. We will get into that more in the questions.
[The prepared statement of Mr. Moore can be found in the
appendix on page 81.]
The Chairman. Mr. William Roenigk, National Chicken
Council, Washington, DC, Mr. Roenigk, welcome to the committee.
STATEMENT OF WILLIAM ROENIGK, SENIOR VICE PRESIDENT, NATIONAL
CHICKEN COUNCIL, WASHINGTON, DC
Mr. Roenigk. Good morning. Thank you, Mr. Chairman, Senator
Lugar, members of the committee. The chicken producer/
processors appreciate this opportunity to present our
recommendations and comments on the important issue of poultry
fundamentals for the next Farm bill. The National Chicken
Council appreciates the chairman's invitation to be part of
this very vital discussion.
I am Bill Roenigk, Senior Vice President of the National
Chicken Council. I concur with the chairman's opening comments
this morning. I also concur with Senator Lugar's comments on
the export and international trade situation. They are of great
interest to us and we would be pleased to submit our export
strategy program to you as you requested.
The National Chicken Council represents the vertically
integrated companies that produce, process, and market about 95
percent of the young meat chicken in the United States. Both
the domestic and international marketplaces are of great
importance to our industry. The industry's long tradition of
being market-oriented has served consumers, taxpayers, and crop
farmers, as well. Being focused on the market provides a better
opportunity to meet the dynamics and challenges of the changing
market for food and, thus, grow our business.
Accordingly, we strongly support Federal farm commodity
programs and policies that are not only market-oriented, but
encompass the capacity to take full advantage of future market
opportunities, both here in the United States and overseas.
The National Chicken Council supported the 1996 Farm Bill
and continues to believe the principles and objectives of the
FAIR Act provide the best path to pursue. In the long-run,
market-based policies help make American agriculture stronger.
To have policies and programs that are otherwise, at least for
those of us who must market a substantial portion of our
production in a global marketplace, means our fundamental
competitiveness is jeopardized.
The National Chicken Council is a member of the Coalition
for the Competitive Food and Agricultural System, CCFAS. Like
the other 120 members of this coalition, we are committed to
having a farm bill that is based on market-oriented policies
and programs. We believe in this commitment because, given the
proper operating environment, U.S. agriculture can grow, which,
in turn, will stimulate the farm economy and provide increased
employment across the United States, especially in smaller
towns and cities.
Earlier this month, CCFAS presented its statement to this
committee regarding policy fundamentals for the next Farm bill.
I will not repeat all the points and issues addressed by that
statement, but I will emphasize certain aspects that are of
particular interest to our segment of agribusiness.
The National Chicken Council believes it is especially
important that the Marketing Loan Program provide for
adjustments in loan rates that better reflect average market
prices and that producers be allowed to continue to benefit
from crop planting flexibility provisions. At the same time,
our organization does not support any further supply management
measures, nor the creation of a new inventory management
reserve.
Further, while the concept of countercyclical income
provision may sound good in theory, it is very difficult to
properly execute in practice. Thus, the countercyclical payment
programs beyond certain provisions in the current law that
provide for this type of income balance are not supported by
the National Chicken Council. We recommend a market-oriented
farm program because, as the economic analysis conducted by the
CCFAS has found, both commodity producers and users benefit and
benefit more than supply management policies and programs.
The growth market is not the mature U.S. marketplace, but
the global marketplace. Furthermore, a robust international
market allows U.S. poultry processors to better balance supply
and demand for the various poultry parts. Thus, being able to
compete in the global market allows U.S. poultry producers to
better balance supply with a broader range of consumer demand.
In world markets, no animal protein has a better competitive
price advantage than U.S. chicken leg quarters.
Basic to being competitive in the world market is the
ability of the U.S. poultry producers to purchase corn, soybean
meal, and other feed ingredients at costs that are not
artificially above world levels. The FAIR Act helps to provide
the opportunity to be competitive.
During the 1990's, U.S. poultry producers benefited from a
tremendous growth in exports. Chicken export volume increased
nearly fivefold over the decade that just ended. Last year,
well over 18 percent of U.S. chicken production was sold in
international markets. Currently, U.S. chicken exports are
running 20 percent ahead of last year. Future increases in
world consumption of poultry are predicted to be truly
significant. The potential for U.S. poultry producers to supply
a part of this substantial increase in global demand for
poultry is tremendous, if given the competitive opportunity to
do so.
Your support, however, is needed to help us increase these
exports, along with other farm exports. The United States must
continue to work aggressively and boldly for more liberalized
world agriculture trade. All countries must be challenged if
they do not live up to their trade agreements. Renewal of the
President's trade promotion authority would be a good first
step.
Devoting more resources to value-added agricultural exports
to a level that at least matches the percentage used by the
European Union and other major competitors would be a prudent
investment by the U.S. Government. The next Farm bill provides
an excellent opportunity to help put the United States in a
leadership position for value-added exports.
Turning to conservation and environment, as agricultural
production expands, the challenge of protecting soil, water,
air, and other natural resources becomes greater. Farm policy
that provides incentives promoting sound stewardship for the
environment is a positive approach. Conservation measures to
protect the environment and environmentally sensitive lands
are, of course, appropriate. However, it would not be
appropriate in the name of conservation to restrict good,
productive farmland, especially in times when the market
signals are calling for more supplies. Locking away cropland in
the Conservation Reserve Program to manage supply is
counterproductive. Enrolled acres in the CRP should be truly
environmentally sensitive, with the emphasis on the benefits to
natural resources.
An important part of the environmental protection and
conservation practices is the sound scientific handling of
agricultural animal wastes. The Environmental Quality
Incentives Program, as mentioned by at least one or more of the
speakers this morning, is an important part of helping poultry
and livestock farmers to meet their responsibilities with
respect to the Clean Water Act, CAFO, and Clean Air Act.
Authorizing adequate funding for EQIP and designating at least
50 percent of the annual funding for animal agriculture would
be important for these producers to continue to be good
stewards of the environment.
As more attention is focused on the next Farm bill, it is
clear that we are at a real crossroads in agricultural policy,
where a continuation on a road toward market-oriented farm
programs and not a return to the road that guarantees
government price supports, coupled with restrictive measures to
manage supply. While the government-guaranteed road has greater
appeal because it may have fewer bumps and turns, it is a road
that provides all who travel it with few rewards in the end.
The next Farm bill should be designed and written to take
full advantage when a healthier world demand for food occurs. A
farm bill that does not anticipate and encompass the expanding
international opportunities for the American farmer is a farm
bill that will miss a golden opportunity.
The National Chicken Council looks forward to working with
the committee to assist in crafting a new farm bill that allows
market forces to reward efficiency, encourage productivity,
improve risk management, better allocate resources, and
maximize net farm income.
Thank you, Mr. Chairman, for the opportunity to present our
statement.
The Chairman. Thank you very much, Mr. Roenigk.
[The prepared statement of Mr. Roenigk can be found in the
appendix on page 98.]
The Chairman. Now, we turn to Mr. Pete Hermanson of the
National Turkey Federation from Story City, Iowa. Pete,
welcome.
STATEMENT OF PETE HERMANSON, PAST NTF CHAIRMAN, NATIONAL TURKEY
FEDERATION, STORY CITY, IOWA
Mr. Hermanson. Thank you, Chairman Harkin, Senator Lugar,
and members of the committee for the opportunity to discuss the
impact of the upcoming Farm bill, it will have on the turkey
industry and to present the industry's suggestions for the
bill.
My name is Pete Hermanson. I am part of a family farm
operation in Story City, Iowa, where we raise 200,000 turkeys
each year and grow corn and soybeans. In the last few years, I
have become involved in turkey processing, as well. I am a
founder and board member of the Iowa Turkey Growers
Cooperative, which owns and operates West Liberty Foods, one of
the nation's top 20 turkey processors. I want to thank Chairman
Harkin for the vital support he gave the cooperative during the
creation of West Liberty Foods. We will talk more about its
progress a little later.
I am here today on behalf of the National Turkey
Federation, NTF. NTF represents 95 percent of the U.S. turkey
industry, including growers, processors, breeders, hatchery
owners, and the allied industry. I am proud to be a past
chairman of the organization. The committee is to be commended
for conducting this hearing. Today, I would like to look at
three ways the bill could significantly affect the turkey
industry in Iowa and around the country.
One of the biggest challenges facing the turkey industry in
my area is the cost of complying with environmental
regulations. The current rules and the ones we expect soon from
EPA could cost producers with more than 50 animal units a
combined total of $12 billion or more for the next 10 years.
The National Turkey Federation advocates increasing funding for
the Environmental Quality Incentive Program, EQIP, to $2.5
billion annually in the next Farm bill, with the money split
evenly between crop and livestock producers.
Additionally, EQIP should be expanded so that USDA can
assist producers with single-year projects and can cost-share
on planning activities, like drafting of comprehensive nutrient
management plans. EQIP should no longer be restricted to
producers with fewer than 1,000 animal units, which is equal to
55,000 turkeys. A turkey grower in Iowa who produces 55,000
turkeys is not a big farmer or a rich farmer. Rather than limit
participation by farm size, it would be better to set a
limitation on the payments any producer can receive in a single
year.
NTF recognizes much of the Farm bill debate will revolve
around the commodity title. We also know that many on this
committee have been critical of the market-oriented reforms in
the 1996 Farm bill. I would like, though, to talk about how the
previous Farm bill affected Iowa turkey growers and West
Liberty Foods.
The Iowa Turkey Growers Cooperative was founded in 1996
when the turkey industry was in the midst of a slump, having
lost money for 30 consecutive months. The turkey plant in West
Liberty, Iowa, had closed, and the livelihoods of many turkey
producers and plant workers were at risk. Thanks to strong
guidance from Chairman Harkin and his staff and a loan
guarantee from USDA, our co-op was able to purchase the plant
and create West Liberty Foods. It has gone on to become a real
success story. If a different type of farm bill had been passed
in 1996, we might not have survived. Let me explain.
Feed accounts for 70 percent of the cost of turkey
production. By late 1995, the country's historic policy of
propping up farm prices by controlling production was harming
turkey producers and others who raise livestock and poultry.
Demand for feed grains here and around the world was
increasing, yet U.S. stocks were declining. In the midst of
these soaring grain prices and depressed turkey prices, West
Liberty Foods was struggling to make a profit. As Chairman
Harkin knows, we were in bad shape in 1997.
Turkey prices began to strengthen in 1998, but the price
increase alone wouldn't have made us profitable. We needed
grain prices to reflect world markets, and the 1996 Farm Bill
accomplished that goal. If grain prices once again fall out of
line with world supply and demand, as they did in the mid-
1990's, the future of many Iowa turkey growers and of West
Liberty Foods will be in jeopardy. Also in danger will be the
jobs of the 1,100 workers we employ at our plant and the 200
other workers we employ at a further processing plant we just
purchased.
I want to make it clear that neither NTF nor I are here to
advocate a cheap grain policy. I am a grain farmer, too, but I
want grain prices to be strong because of the global market,
not artificial domestic programs dictate strong prices. West
Liberty Foods would not have struggled as badly in 1997 if $5
corn had been the world price, but we were feeding our turkeys
$5 corn and competing against foreign competitors who are
paying far less for their grain.
Therefore, the National Turkey Federation believes it is
important to avoid market-distorting programs in the next Farm
bill. The planting flexibility of the last Farm bill is
critical to farmers being able to respond to market demand for
feed grains.
NTF is sensitive to the committee's desire to protect
farmers during periods of low prices. We know many want a
countercyclical program in the next Farm bill. Beyond adjusting
in the loan program, creating a countercyclical program that
maintains market flexibility is probably not practical. A
better solution is to ensure that the AMTA-style payments are
at a level that provides farmers sufficient income protection
during the widest possible range of economic conditions. The
NTF would support payments in the range of combined AMTA and
market loss assistance payments for fiscal year 2001.
Finally, an appropriately crafted farm bill can boost farm
income by increasing the competitiveness of U.S. poultry in the
international markets. It takes about 2.5 pounds of feed to
raise a pound of turkey. Every additional pound of turkey we
can produce for the overseas markets increases demand
domestically for feed grains, oil seeds, and similar feed
ingredients.
The NTF strongly recommends the next Farm bill bolster
funding for value-added export promotion. The United States is
lagging further and further behind our competitors in promoting
these products. New Zealand reinvests in market promotion five
cents for every export dollar it learns, while we invest less
than one penny. The next Farm bill must structure our export
promotion program such as the Market Access Program and Foreign
Market Development Program so that our spending levels are
comparable to our foreign competitors.
In summary, we recommend providing the financial assistance
necessary to help poultry and livestock producers comply with
the environmental regulations. Maintaining the market-based
farm policy will help farmers during periods of low prices and
bolstering commodity prices by ensuring a stronger commitment
to value-added export promotion. The National Turkey Federation
and its many members appreciate the opportunity to share our
concerns and recommendations with you. Thank you.
The Chairman. Mr. Hermanson, thank you very much for your
testimony, and thanks for your great leadership on West
Liberty. They are doing great.
[The prepared statement of Mr. Hermanson can be found in
the appendix on page 108.]
The Chairman. Now, we come to Ms. Maria Rosmann,
Sustainable Agriculture Coalition of Harlan, Iowa. We welcome
you here. I remember being on your farm a few years ago. I
haven't been there lately, so I will have to go out.
Ms. Rosmann. You are always welcome.
The Chairman. Reading your testimony yesterday, it looks
like you have made quite a bit of progress, so welcome to the
committee.
STATEMENT OF MARIA ROSMANN, SUSTAINABLE AGRICULTURE COALITION,
HARLAN, IOWA
Ms. Rosmann. Thank you, and again, you are always welcome
to visit. Good morning. I thank you again for the opportunity
to testify this morning. My name is Maria Vakulskas Rosmann. I
am from rural Harlan, which is West Central Iowa. I am
testifying today on behalf of the Sustainable Agriculture
Coalition. It is a network of organizations who represent
farmers, environmentalists, and rural people who come together
to formulate practical, effective approaches to agricultural
problems.
My husband, Ron Rosmann, and I farm a certified organic
farm. It is a 600-acre operation, both grain and livestock. Our
crops and livestock include corn, oats, barley, soybeans,
turnips, alfalfa. We raise beef, we raise pork, we raise
poultry--no sheep, no turkeys yet. We have a cow-calf herd
which numbers 100 cows. We feed out all our calves. We raise
farrow to finish about 400 hogs annually. I raise about 400 to
500 chickens annually, as well.
Two years ago, I left my position in rural school
development to begin the marketing of Rosmann Family Farm's
labeled meat and poultry. Neither my husband nor I have any
off-farm employment, which is important to share with you
today. We employ one full-time hired person, and during the
summer months, we are assisted by our three teenage sons, two
of whom are in high school, the third a student at Iowa State
University.
Our crops have been certified organic since 1994. The beef
operation was certified in 1998, and we have been farming what
I consider sustainably since 1983. My husband has been farming
since 1973, following his graduation from college and return
home to the family farm.
Recently, my husband was elected President of the Board of
Directors of the Organic Farming Research Foundation based out
of Santa Cruz, California. The mission of this foundation is to
sponsor research related to organic farming practices, to
disseminate this research appropriately, and to educate the
public and policymakers, such as yourselves, about farming
issues related to organics.
In one year, one year alone, from 1999 to the year 2000,
the number of certified organic growers in the United States
increased 18 percent, from 6,600 to 7,800. A recent survey by
the National Marketing Institute estimates that 43 percent of
our population has used organic foods or beverages in the past
year, and those figures are high.
A study by OFRF indicates that the nation's land grant
universities, however, are failing our organic farmers and
ranchers. Of the 885,000-plus acres available for research in
the land grant system, only 0.02 percent, 151 acres, is devoted
to certified organic research. An earlier study by this
foundation found that less than 0.1 percent of Federal
agricultural research dollars were being spent on organic
farming research.
The coalition supports the continuation of competitive
grant funding through the Initiative for Future Agricultural
and Food Systems and the coalition also supports the addition
of either a specific category for organic farming research or a
directive that a percentage of initiative funds be targeted to
organic research. We also contend that the certification fee
structure must continue to be weighted in a manner that allows
family farmers, such as myself, to compete in the organic
marketplace. The coalition also strongly urges the committee to
expand USDA's recent announcement of cost-share assistance for
organic certification, and our farm is being certified at this
hour at home, pursuant to the crop insurance bill, from the 15
pilot States to the entire country.
In 1998, we did something very, very unusual for us. We
added value to our livestock. Currently, all of our livestock
is sold on the organic market. However, we had made the
decision to go with our own business, our own marketing, and
become our own middleman. Our product is a certified organic,
boneless, dry-aged, frozen packaged product available in
grocery stores in Des Moines and Ames, Iowa, available through
private sales from people primarily in Central Iowa, numbering
currently over 110 folks, currently available through the Food
Systems Project at Iowa State University through Practical
Farmers of Iowa, whereupon all Iowa meals are part of the large
catered events in the Des Moines and Ames area.
We also serve or make available the larger amounts for
homes, and it is being served this weekend in California at a
large event. When I get home, I will be shipping out a
substantial amount of steaks to be served at the Claremont
Hotel in San Francisco. You can also see who our clients are,
what kind of meat that they prefer, and why they prefer it, and
that is part of the testimony.
We believe that the new Federal Farm bill needs to include
a program that focuses on production ag as a basis for rural
development, and we believe strongly that ACRE serves that
need. ACRE proposes that a relatively modest proportion of
mandatory Federal agricultural funding be dedicated to
research, training, and business and marketing assistance, such
as what we undertook by ourselves, that it work for both the
farm and ranch income. What is really neat about ACRE is that
it is a competitive collaborative grants program that can
mobilize existing organizations and agencies to provide
coordinated assistance in direct response to the needs of
agricultural producers.
I have a letter to support this in my testimony, but I wish
to strongly state and add our strong support for the inclusion
of a competition title in the new Farm bill. Our farm, you can
pick out on the flight pattern from Omaha to Minneapolis. I saw
my farm yesterday when I flew in, and it was important to say
that because I can see the diversity from the airplane, looking
down to see the various crops, and it is sad to say that
government programs, we feel, have failed miserably to foster
good stewardship of the land. They have done the opposite. They
have encouraged over-production. They have discouraged crop
diversity. They have discouraged crop rotations.
We strongly support the Conservation Security Act
introduced by Senator Harkin and Senator Gordon Smith. We also
included our recommendations for existing conservation programs
in my testimony. However, I strongly, strongly encourage that
all farm and conservation programs in this new Farm bill
include payment limitations, include stripping all loopholes,
and include the increased fraud and abuse penalties.
Finally, I would like to address, if I may, please, the
idea of fewer and fewer farmers. Who will farm the land? Who
are around anymore to farm the land? The new Federal Farm bill
needs a beginner farming and ranch development program, and I
have detailed it in my testimony.
Again, I invite you strongly--Senator Harkin, you are
welcome anytime on our farm to see organics that work. I would
strongly encourage each and every one of you to find the
organic, certified organic farms in your area and see that
they, indeed, work, and they work for the betterment of our
society. Thank you very much.
The Chairman. Thank you, Maria.
[The prepared statement of Ms. Rosmann can be found in the
appendix on page 115.]
The Chairman. Thank you all very much for your testimonies.
I am going to be in Iowa in August. Maybe I will stop by. Like
I said, I have been on your farm before, but it has been a long
time; I would like to see your latest development. Please give
my best to Ron and the family.
You said you now direct market your own beef and stuff.
That is something new that I didn't know about. Who slaughters
it and who prepares it?
Ms. Rosmann. This is done at Amend Packing in Des Moines.
It is a federally inspected plant. Kent Weis is a fourth-
generation butcher. It is done--we are taking animals on Friday
of this week, so it is all done in Des Moines and stored in Des
Moines. What it does, it is aiding another group. It was very
difficult, sir, to find a federally inspected plant that wanted
to do work with a smaller producer. We have been with them now
three years.
The Chairman. You said that organic growers increased by 18
percent last year?
Ms. Rosmann. Again, certified.
The Chairman. Certified.
Ms. Rosmann. Certified, the third-party agency coming in to
prove what you have claimed.
The Chairman. You said that only one-tenth of a percent of
Federal agricultural research money goes to organic systems
research?
Ms. Rosmann. Yes, sir.
The Chairman. Well, if that is growing that rapidly, maybe
we ought to take a look at that, too, and see about that.
Ms. Rosmann. What might be interesting, we have compared
our yields, our proven yields on the grain end of it for the
past 10 years with Iowa State University Extension. We match in
Shelby County the corn yield, 135 bushels an acre. We match
that average yield. We are down one bushel for soybeans, 43
versus 44.
If I may take the opportunity to say, when discussing about
the livestock as part of a farming program, livestock need to
be part of the total systems approach to agriculture. It is a
vital part. It can't be just corn and beans, beans and corn.
The Chairman. What do you do with all your manure? You have
got chickens, you have got hogs, and you have got cattle. What
do you do with all the manure?
Ms. Rosmann. Manure is spread. In fact, we have to seek
other sources for our manure for fertility.
The Chairman. You do apply it all?
Ms. Rosmann. Oh, yes. It all gets applied. We compost it
and apply it. We do not have confinement systems, but we still
obviously have the manure.
The Chairman. How many acres are you farming now?
Ms. Rosmann. Six hundred.
The Chairman. Both you and your husband, and you have one
full-time hired person?
Ms. Rosmann. Three. God bless them, boys.
[Laughter.]
Ms. Rosmann. It is labor intensive, of course, it is, and
right now we are in the middle of oats and barley harvest. It
is labor intensive. We are fully employed.
The Chairman. I also appreciate what you said about the
need for USDA to provide assistance to develop direct marketing
and value-added enterprise. It sounds like you have done very
well, but most people who farm, I mean, direct marketing, that
takes time. Not too many people have marketing degrees or know
how to market and that can be a real problem. When you started
doing this, did you get any assistance at all from USDA for
marketing?
Ms. Rosmann. No, sir.
The Chairman. None whatsoever?
Ms. Rosmann. Each of us had taken a marketing class in
college, which does not make a marketer. We intentionally
started slow. We intentionally started small so that we could
learn as we went along. We do not need--we hardly advertise.
The advertising that I provide is to let clients know when I
will be in Des Moines and when they can place their orders, and
our clients are broad.
It is a broad base. It is a broad economic background. They
are people who want not only organic product, they want a
hormone-free. We have a lot of cancer, radiation, and
chemotherapy patients who are able to digest our meat--their
claim, not mine--and they are able to tolerate our meat. For
whatever reason, we feel fortunate. On the other hand, we are
dealing with people of all economic backgrounds and people who
want to support family farms.
The Chairman. Thanks. I will get back to you.
I have one question for all of you, basically. I want to
talk about the EQIP program, because this is vital to all of
you. Many of you specifically mentioned the need to eliminate
caps on the level of payments a producer can receive and to
eliminate the restriction that prohibits cost-share money for
the larger livestock operations.
Again, we have got to look at all of the aspects of EQIP.
First of all, I agree that we have got to get more money into
EQIP, and we are going to do everything we can to do that.
However, I am concerned about creating a program that would
unfairly subsidize large livestock operations. Now, we have
seen how large payments to program crop producers have gone
predominately to large farms and helped them grow larger. There
are enough studies to show that maybe what we have done
inadvertently, not just in the last Farm bill but for farm
bills going back for a long time, is that by supporting every
bushel, bale, and pound that is produced, obviously, always the
bigger get more. The bigger you are, if it is every bushel,
pound, and bale, then the bigger you are, the more you get, and
that widens the gap all the time, because the percentages will
widen that gap.
We see that, for example, in terms of land prices, by some
of the things we have been doing, the bigger you are, the more
money you get, and the bigger land owners can then out-bid the
price of land so that younger people can't get involved. They
can't get into that bidding process. The bigger you are, you
can bid up the price of land, and we have discussed this a lot
here in this committee about how we have maybe inflated land
prices through some of these programs that we have had.
Again, maybe we see the same thing happening now with
larger feeding operations. On the other hand, we want the
larger feeding operations to be environmentally sound. I am on
the horns, if you will excuse the pun, of a dilemma here. I
want to help the larger operations to meet environmental
concerns because that is of a societal benefit. On the other
end of that horn is if we provide EQIP money without any caps,
more will generally go to the larger producers. Because they
are bigger, they will consume more, and, therefore, it will
give them a competitive advantage.
How do you do this and make sure that the EQIP money is
distributed fairly? I see it as a great dilemma, and I am not
sitting here telling you I have the answer. I don't know. We
are going to try to figure it out, and any suggestions and help
that you have would be most welcome. How do we provide for an
equitable distribution of EQIP payments for livestock owners?
If we don't have caps, how do you keep it all, most of it, from
generally going to the larger producers?
Do you understand what I am saying, and what my problem is
in wrestling with this? We want to help the larger producers
because I want to help them meet environmental problems, which
helps us all, but not to the detriment of the smaller producers
who also need that help. I don't know how we do that, and any
thoughts or suggestions any of you have, Jon or anyone else, I
would be more than welcome to take any advice or suggestions. I
didn't mean to pick on you, you were just first in my eyeline
of sight there, Jon.
Mr. Caspers. I will be picked on. I will go first. What I
suggest in my testimony and what we have suggested in the past
is that we would support a payment limitation of $200,000 per
contract and then the elimination of the size test.
The Chairman. You are saying a cap not on the size, but on
the money.
Mr. Caspers. Right, but just on the money. I guess the
current program----
The Chairman. That might work.
Mr. Caspers [continuing]. I see eliminating too many of my
neighboring producers from participation in the program at that
cap. To address your question further, and I would like to talk
specifically about some of the rules and regulations that are
coming fairly quickly to our industry and across agriculture,
specifically EPA's CAFO regulations, the cost of implementing
those regulations as proposed by EPA is going to be
substantial, and I take some numbers from EPA in the Midwest.
They are anticipating for some different sized operations
the 10-year costs of operation for a 1,460-head swine operation
of $281,000, 10-year cost. Now, as you go higher in numbers,
they have got a 3,400-head operation, the cost of almost
$600,000 over a 10-year period, and a 13,800-head operation,
which would be a large operation, of almost $2.2 million.
Now, if those operations all had access to $200,000 in
assistance for a contract to help implement, to install and
implement and operate those systems, obviously, you could bring
all those operations under that program and the public could
gain the environmental benefits. Certainly, $200,000 is going
to represent certainly a much larger benefit for the smaller
operation than it does the bigger operation. At the same time,
you include them in the program, so you gain the environmental
benefit.
The Chairman. Did you have an idea of how much that might
cost us? Maybe you put that in your testimony, I don't know. If
you did a $200,000 amount, what would that be over 10 years? We
will figure it out.
Mr. Caspers. Yes. I guess what we have called for is $1.2
billion to be put into the program for livestock and poultry.
The Chairman. Per year for 10 years?
Mr. Caspers. Yes.
Senator Thomas. Mr. Chairman, are you talking about
confined feeding regulations, is that it?
The Chairman. Yes.
Mr. Caspers. We are talking about, yes, the CAFO
regulations that EPA has promulgated.
The Chairman. Concentrated animal feeding operations.
I will yield to my colleagues now, but I want to get back,
John, and talk about the methane that you have talked about,
and perhaps some of the others, also, want to talk about
methane production and energy, that type of thing that I am
interested in, also, perhaps including in the Farm bill. I will
yield to my ranking member, Senator Lugar.
Senator Lugar. Thank you very much, Mr. Chairman. I just
jotted down, as you did, that the payment limits issue is
clearly one that we have to come to grips with. The $200,000
limit is probably a good idea, but I suspect that this is very
different from the sorts of limits that we have had in the past
and I am not certain where this leaves everybody with regard to
the types of operations they have.
You have the problem with all of our programs, whether it
is the commodity title or the EQIP situation with livestock,
where there has been great debate in the Congress in the past
about payment limits. Essentially, the trend has been to raise
those in recognition of larger operations that are efficient in
the country and I have supported that. I appreciate the
opposing point of view, which says, essentially, that it does
mean a larger amount of Federal money goes to larger farmers.
The Sparks report that we often cite indicates that eight
percent of operations in the country are doing about 72 percent
of the business, whether it is livestock or commodities. We
have a pretty high degree of concentration in American
agriculture as it stands and probably growing larger as our
younger farmers rent land from people who are in the States or
elderly people and so forth, who in effect have larger
operations, even if they don't have an equity in the land, and
that is the way to get a middle-class income, essentially.
At some point, the payments issue is one that has to be
resolved by the committee and I appreciate your sort of
highlighting that in your colloquy.
Another point that three of you have raised, and maybe more
of you would have if we had sort of raised this as a basic
issue, is the cost of feed as a part of the picture. As I
recall with the turkey situation, 70 percent of the cost comes
from feed, 70 percent of the cost of turkey production. The
testimony there is that the historic policy, as you have termed
it, or propping up farm prices by controlling producers is
doing great damage to turkeys and others who are in the
livestock and poultry business.
Others of you may have differing sorts of situations, but
there is a basic tradeoff here with regard to our attempts to,
as we do around this table frequently, the low cost of corn and
wheat and prices for beans and what have you, try to think of
how we can imagine those going higher. Now, as you imagine them
going higher, why, this has a very different sort of impact, as
a matter of fact, if we make a concentrated effort to do that.
Some would contend the bill the House is considering now with
sort of a third layer of pricing, with another target price
situation, really achieves, at least temporarily, a higher
price, however you get there. That is probably bad news in
terms of operations if you are a livestock and poultry person.
At some point, we have to come to grips with the commodity
title and the livestock titles in some harmony, or some
wholeness, because they are sort of a part of the same picture.
Now, most of you are suggesting that the market works and that,
essentially, you are prepared to see a more market-oriented
situation governing your feed costs. Perhaps as you think
through that, you might have further refinements on your
testimony and maybe some recommendations with regard to the
commodity titles, because this is likely to be a very large
issue for the committee.
Then finally, there is mention in most of the testimony
about the need for trade promotion authority for the
administration. There is mention that NAFTA made an enormous
difference, that huge increases have occurred in poultry, in
turkeys, in pork, and they have. Of course, that is the ball
game in terms of the volume and the movement, the dynamics of
the business. If you can solve somehow the feed problem and
EPA, in one form or another, these are sort of the parameters
of having some future, making some money in the prospect.
My own biases are more toward market solutions in the
commodity situation, toward fewer limits with regard to
payments in terms of EQIP or with regard to anything in the
business, and very strong trade promotion. I mention those to
begin with so you have some idea of where we are coming from.
What advice can you give us just off the top of the head
today, in the time that I have to ask you this question, about
the commodity title? Really, some of you are involved in
addition to livestock or poultry, in producing corn or beans or
wheat or something else in addition. What is the tradeoff here
and what should we be looking at philosophically as we take a
look at the commodity title? Does anyone have more testimony on
that? Yes, sir?
Mr. Hermanson. If I could just make a comment, I guess my
concern as we look ahead, I have been in Brazil a couple of
times, have friends of the family down there, been there a
couple times in the last three years, and my concern--I love
the people and I love to see them develop and grow, but I am
concerned that they will end up with our meat production. I
mean, they have got hundreds of thousands of acres that haven't
been developed yet and they are working infrastructure. That is
what I am concerned about, is that we don't lose agriculture in
the U.S.
Senator Lugar. Trace that through. Why does Brazil end up--
--
Mr. Hermanson. What I am saying is if we have an
artificially high price of grain here, that will encourage them
to develop more grain.
Senator Lugar. I see.
Mr. Hermanson. If grain is cheaper, which it is, there is
expansion now in the hog production and turkeys are getting
down there, too. We have to work in the world arena, I believe.
Senator Lugar. Well, that is the basic argument of having a
competitive price, that it doesn't give away either our grain
exports or our meat production prospects, because if our prices
for grain are too high, then other countries have lower costs
and lower prices and take away those markets, and as you are
suggesting, may also induce a meat production or poultry
production situation utilizing that differential in world
price.
That is a part of our dilemma. There are a good number of
farmers who come before this committee and they would say,
well, the world out there is a big place, but I have got a farm
here now and I want a guarantee of a price that covers my cost,
whatever it may be. Now, the rest of you folks will have to do
the best you can, but nevertheless, looking after No. 1, we
have got to pin this down, all four corners. There are a good
number of such farmers, as you may have seen in your
associations.
I thank you very much----
Mr. Hermanson. As a grain producer, at that point in time,
it is nice to have good prices, it surely is.
The Chairman. Balance, get a balance.
Senator Conrad.
Senator Conrad. Thank you, Mr. Chairman, and thanks to this
panel of witnesses. You have really been excellent witnesses
and I have enjoyed the testimony.
I have a series of questions about EQIP and CRP, but before
I get to that, there is something that is very much on my mind
that I would like to especially ask the first four witnesses
about, and that is the question of what we are doing with
respect to foot and mouth disease and whether or not we are
providing adequate protection to our industry.
I was recently in England and literally every day in the
newspaper, there were scare headlines with respect to mad cow
disease, with respect to foot and mouth disease, with respect
to other supposed problems, GMOs and all the rest. I would just
like your impression at this point, whether or not we are doing
everything we should be doing to protect our livestock
industry. Mr. Caspers.
Mr. Caspers. Well, we have certainly felt the effects of
that. We canceled our World Pork Expo this last summer due to
concerns with all the foreign travelers and foreign visitors.
We have, typically, 1,500 or 1,600 foreign visitors attend
World Pork Expo every summer, and certainly, we just couldn't
find any way really to assure that we could guarantee that they
had the proper separation in terms of time away from animals in
foreign countries with the potential exposure to animals at
that show. We had to go ahead and cancel that show this last
summer.
Now, I understand the President in his budget has requested
some additional dollars for the inspections at the ports of
entry, and that is extremely important that we do that. We, on
our Swine Health Committee, which I served as chairman up until
recently, continue to get reports of people traveling through
ports of entry and really trying to test the system as they
come through to make sure that they took proper precautions,
that they disinfected their shoes and went through all the
proper procedures, and they continue to report, at least at
that time, that you almost had to be insistent that somebody do
something or assist you in that process. We were, I guess, a
little disappointed in that, and hopefully, with some
additional funding and people, those inspections could be
beefed up and that will happen if there can be additional
resources put to that.
Certainly, it is a concern and it is still a concern. FMD
is endemic in many parts of the world, in Africa and many parts
of Asia, Southeast Asia. For some reason, those breaks in the
past haven't made the headlines like we have seen coming out of
the U.K. with the break there, but certainly, there is risk
from many parts of the world.
Senator Conrad. Mr. Davis.
Mr. Davis. I guess, basically, I would echo the previous
witness. Yes, we have to keep in mind that we have not had FMD
in this country for over 70 years, so what we have been doing
certainly hasn't been a failure. That is not to say we don't
need to continue to be concerned, beef up inspections. That is
part of why we support that.
Part of our plea for increased research dollars speaks to
that issue, particularly as it regards the disease research
center at Ames. It is badly needed. There is still more that we
don't know than what we know, folks, and we can't afford to get
behind on doing those things that give us the answers as best
we know how through sound science to further beef up our
confidence.
Senator Conrad. All right. Mr. McDonald.
Mr. McDonald. Yes. To answer your question, we are probably
not doing enough. One area of concern to me is the reporting of
these diseases by our trading partners. I am thinking of the
incidents last year where Argentina was declared foot and mouth
free and we started setting up the protocol for importing
cooked beef from Argentina, and lo and behold, in late summer
last year, we started hearing rumors of the disease in Northern
Argentina. Yet, it wasn't reported to the WTO until January.
That lapse of time potentially, at least, could have caused
great harm. The same situation occurred with BSC in Europe.
When I participated in the business forum in Buenos Aires in
April, I was urging that any trade agreement provide a specific
protocol for verification and reporting of these various
diseases.
The comments earlier about the protocol that we have
instituted in our airports and travel facilities is good. Does
it go far enough? I don't know where the good science and
practicality meet, but it is certainly a potential disaster to
the live cattle industry.
Senator Conrad. Mr. Moore.
Mr. Moore. Thank you. I would agree with the others, that
it obviously is a real concern. It is a concern for all of the
livestock industry. We can be very thankful that we haven't had
it in this country for 70 years. Obviously, we are doing
something right. Definitely, APHIS needs as many inspectors as
possible to make sure that they can cover all of the airports
and other points of entry and that we are addressing the issue
as a serious potential problem.
We have a disease in sheep of scrapie that we need scrapie
eradication. Those rules have been worked on. We need to get
them published. As Mr. McDonald said, we have to make sure that
the partners that we deal with around the world are following
the same protocol as we are as far as reporting the diseases
and as far as how we accept their statements and they accept
ours.
Senator Conrad. I thank you for those suggestions and
comments. As I have looked at it, the risk that is associated,
is enormous. I really think as part of our review here we
should seriously consider strengthening protections against
hoof and mouth. Being in England and seeing the devastation to
their industry, it is very sobering, seeing people lose
everything, and that is what is happening there. It ought to
alert us all that we have got to take this very seriously. I
thank the chairman.
The Chairman. Thank you. Mr. Roenigk, I know that you
wanted to comment.
Mr. Roenigk. Senator Conrad, if I could just briefly add,
fortunately, poultry does not get foot and mouth disease.
However, USDA is talking about a six-mile quarantine in case
there is an outbreak. I guess they have different options. If
poultry is within that six-mile quarantine, we cannot feed our
birds, we cannot take our birds out, we cannot take our
products out. I don't think USDA has fully addressed that, and
it would be devastating for people who don't have the disease
but at the same time would bear all the burdens of someone who
did have the disease, and so I would like to bring that to the
attention of the committee. Thank you.
Senator Conrad. Thank you for that.
The Chairman. That is interesting.
Senator Conrad. I didn't know that.
The Chairman. I didn't know that, either.
Senator Thomas.
Senator Thomas. Thank you, Mr. Chairman.
Frank, I want to followup just a little bit. I will be
brief. You, having served in the legislature, know it is
important to be brief in the answer.
You pointed out that it is necessary to continue the wool
payment, hopefully in this $5.5 billion thing. What
specifically are you doing? I am impressed with what your
industry is doing to move yourselves forward. Could you recite
those one more time?
Mr. Moore. Senator, we have done a lot of things in the
last few years. We filed the Section 201 case against Australia
and New Zealand to put in place some kind of relief period so
that our industry had a little stability. We have worked on
scrapie eradication. We have got rules at USDA that are just
about to be published and we are going to get that disease
under control and that will be a significant step as far as the
industry and our image is concerned around the world.
We are working on value-added products. We are working on,
in the six-State region that Wyoming is included in--Idaho,
Montana, South Dakota, Utah, Colorado--we are also working on
what we call a third-generation cooperative, to start a program
where we are doing what Mr. McDonald referred to. We are taking
care of our product from the gate, at the ranch, to the
consumer's plate.
Some of these issues are going to change the way we market
lamb and the way we market wool, and these are the kinds of
things that our industry has been working on for a long time.
We need stability right now to make sure that we can get these
things up and running. It is difficult to change an industry,
but we are working on it.
Senator Thomas. You are doing promotion and carcass
classifications and so on?
Mr. Moore. Yes. What we are working on is a number of
things. We are trying to go to a grid pricing structure so that
we have something that the product is sold based on the quality
rather than just on a commodity price.
Senator Thomas. It is interesting, the problems that you
have had with this mandatory price reporting. Why hasn't that
come out of USDA and what has been the result of it not coming
out?
Mr. Moore. Well, for the last three months, we have had
basically no reports whatsoever. We used to have a voluntary
program. Now with the mandatory program and then you put in the
restrictions so that there is confidentiality, with the
concentration of packers we have in our industry, it is very
hard for a report to come out under the current formulas that
doesn't immediately identify which players are in the
marketplace that day. USDA is trying to address those issues
and hopefully will come out with some revised formulas for the
reports in the next few days. Definitely, without market
reports, we are all kind of working in a vacuum.
Senator Thomas. That is because there are so few processors
that if they reveal it, it is an intrusion into private
information, is that concept?
Mr. Moore. Yes.
Senator Thomas. That is interesting.
Mr. Moore. Three major packers in the industry.
Senator Thomas. Mr. Davis, I admire your commitment to your
industry. You said you are going to beef up inspections.
Mr. Davis. As soon as I said it, I was afraid somebody
would get that.
[Laughter.]
Mr. Davis. Further improve, is that better?
Senator Thomas. Whatever. It is good. You could turkey them
up, too, couldn't you?
[Laughter.]
Senator Thomas. What would you say, you guys in the beef,
what would be your first two priorities in this bill for the
beef industry? Both of you--either one of you.
Mr. McDonald. I would say country of origin labeling and
restriction of the USDA grade stamp. That is a cornerstone of
our ability to be able to compete in this global market. We
need to distinguish and identify our beef.
Senator Thomas. Thank you.
Mr. Davis. I guess those are also policies of ours, but I
am not sure I would, in the context of where we sit today, that
I would name them as No. 1 and No. 2., with the backlog in the
EQIP program and the regulations that are coming down on CAFOs
or whatever you call them the biggest need for help is there as
the No. 1 priority, and I go back to our research priorities.
It is kind of like, in my opinion, maybe more mine than the
industry's.
Senator Thomas. Research on land management or on your
product?
Mr. Davis. On our--no, as pertains in this bill on disease
research and food safety and those types of things.
Senator Thomas. I see.
Mr. Davis. In the big picture, research has been much like
livestock has in previous farm bills. It kind of tends to drift
down, and I guess I would like to see it stay up a little
higher.
Senator Thomas. OK. The concentration problem, I wonder, is
it legitimate to ask the chairman something about jurisdiction?
The monopoly jurisdiction, does that go in the Farm bill? Is
that something that ought to be there? Some of the things we
are talking about here, country of origin, are those things
that we have jurisdiction over in the Farm bill?
The Chairman. Some of it has to do with the Justice
Department's jurisdiction. We can set up some policies within
the Department of Agriculture to try to address it, but not in
the legal aspect. The Justice Department has that jurisdiction.
What was the other one?
Senator Thomas. The country of origin, those trade issues
and so on.
The Chairman. Well, I don't know if we would have the
jurisdiction for mandating country of origin labeling or not. I
don't know.
Senator Thomas. We probably share it with the Finance
Committee, I suppose.
The Chairman. If we do it, they would probably ask for
referral.
Senator Thomas. Well, we want to have some power there.
The Chairman. Craig, let me just say this. We are ready to
break new ground, so----
[Laughter.]
Senator Thomas. I am sorry to ask that, but as we talk
about some of these things, apparently, they don't all go in
the Farm bill, of course, jurisdictionally, but they should be
brought out and we can do something with it. Thank you, sir. I
appreciate it.
The Chairman. We can always try it.
In order of appearance, Senator Lincoln.
STATEMENT OF HON. BLANCHE L. LINCOLN, A U.S. SENATOR FROM
ARKANSAS
Senator Lincoln. Thank you, Mr. Chairman, certainly for
your leadership, and also you have set this committee on a very
aggressive schedule to review our current farm policy and to
look at what we can do in a positive way to work with our
producers. Certainly with what the House is doing, they go to
markup later this week, perhaps, to mark up their farm bill
proposal, so it is entirely possible that we will see the
completed House bill by the time we leave on the August recess.
That means we have got a lot to do and I know that we can do it
and that is all the more reason why it is so important to have
you all here to work with us. We appreciate the witnesses'
participation. The commodity group was here last week. We
appreciate that.
I come from a State where I do try to balance very much
because we have great pork producers, our cattlemen's
association, obviously poultry, and certainly a great group of
turkey growers in Arkansas, balancing with the commodity groups
that we represent.
I just would like to put a plug in, as well, that there are
some short-term needs that we are addressing more immediately
here. We are very anxious, all to put together an emergency
market loss assistance package that will respond to the
immediate needs of our farmers and our rural communities, and,
ultimately, the clock is ticking on that because September 30
is rapidly approaching. We are going to be working with the
chairman. I appreciate his leadership in pushing the committee
toward a resolution on this and I hope that we will come up
with something that can be very beneficial to everyone, because
short-term is obviously very essential to all of our producers.
Beyond the short-term, however, we do need to look at farm
policy and a new farm bill that responds to all of agriculture,
both producers and livestock producers. Our farmers, our
livestock farmers particularly are an essential part of the
agricultural community that produces the safest, most abundant,
and affordable food supply in the world. I say that regularly
because I like the way that it sounds and I want more and more
people to understand that. Coming from a seventh-generation
Arkansas farm family, I have lived it and breathed it all my
life.
As we look at the issues that we are faced with, and I know
that Mr. Hermanson brought up some of it in terms of balancing
the interests against the row crops and the row crop farmers as
well as the livestock producers, I would certainly be
interested--Senator Lugar mentioned it a great deal, as well,
but if you all have recommendations of how we can better
balance.
I know for us, you mentioned Brazil. For row croppers, the
fact that we have exported a great deal of technology and
allowed those row croppers down there to be very efficient, not
to mention the investment we have made in infrastructure that
allows them to get their products to that global marketplace
that we have talked about. I have to say that, Senator Conrad
is not here, but he always puts up an unbelievable chart that
indicates the amount of subsidies, export subsidies
particularly, that the governments of the EU provide their
producers, which put us at a tremendous disadvantage in that
global marketplace when you take into account the input costs,
the increased input costs particularly that we have seen over
the last couple of years and our costs of production through
environmental regulations and others.
Is there anybody on the panel that has a good suggestion to
how we balance between our row croppers and our livestock
producers? I have got a vested interest in this.
Ms. Rosmann. Make them all organic.
[Laughter.]
Ms. Rosmann. Your prices, ma'am, will increase. The prices
for our grains and our--why are we able to sustain otherwise a
family of five and a full-time hired help just doing it the way
we do? Multiply that by many, many people. Multiply that by the
people whom you hope will replace us in the next generation and
maybe you will have the beginnings for a very sound answer to
this dilemma.
Senator Lincoln. Well, I do believe that it is important to
recognize the sustainable farming and the organics that are
involved there and what the marketplace can sustain. No pun
intended, Mr. Hermanson, but I don't think we can go cold
turkey. I have got way too many----
[Laughter.]
Senator Lincoln [continuing]. In terms of the producers
that are out there and the elements that we face, particularly
in the area of the country that we farm, with unbelievable
pests, not to mention the humidity, the moisture, sometimes the
drought, other factors that we have to take into consideration
in the capital-intensive crops that we grow. They are very
different, and the perspective that we have to take sometimes
has to be somewhat different.
I do agree that there is a place and that there is room for
us to begin to look at more in terms of that, but in terms of
balancing that?
Mr. Hermanson. It is a challenging opportunity that this
committee has because I don't think there is an easy answer.
The thing that you need to have at least a safety net for the
crop farmers. I mean, we need that, and obviously if you are
only in crop production, if you could have $10 soybeans and $5
corn, you think you would be happy, but it doesn't work in the
whole balance and, of course, we have to work with this global.
I don't believe we can build a wall around the U.S.
We have to be in the world market, but by the same token
what we have been doing has been some benefit as far as there
has been--if a farmer in Iowa grows a crop, with the transition
payments and the LDP, there has been cash-flow for him. Feed
costs, it has been very beneficial, of course, to the turkey
industry because we have had economical feeds and it has given
us an opportunity in this co-op that we have, that we have
gotten on our feet and we are doing well.
Again, it is not an easy thing, but we have to recognize
that there are parts of the world that are just waiting to
develop. Of course, I don't think the European common market,
even though they subsidize a lot, I don't think that is where
our competition will come from. It is the area that they
haven't developed yet.
Senator Lincoln. That may go to a lot of what you have
already commented about in terms of making sure that our
playing field is fair and certainly to the jurisdiction of
trade issues. It is going to be critical. I know for us, in our
State, the catfish issue that we have got in terms of labeling,
misleading labeling that is coming from the catfish production
or the basafish production out of Vietnam, the problems we are
having with our poultry industry in Africa, South Africa, in
terms of the dumping cases that they are claiming, we have got
some real concerns there and we have got to be able to stand up
for our producers. I do it at the risk of being called the
``fish woman'' and a few other things, but it is very
important.
Any other comments about our trade issues there or your
perspectives of whether we can see more clearly or not whether
there is going to be this robust growth in global demand for
U.S. agricultural exports that we kind of based the original
Farm bill on in 1995? I mean, we instituted that farm bill with
the basis that there was going to be this international
marketplace and this robust growth in demand.
Mr. Roenigk. Senator, if I could address that. Yes, I
agree, the 1996 Farm bill was based in large part, or some
part, that there was going to be this robust growth in
international trade for basically all U.S. farm commodities,
and to some extent, that happened, but to a large extent, it
didn't. I don't think the next Farm bill should say, well, it
didn't happen, therefore, it can't happen. It has a more likely
chance of happening now. We have seen it already in poultry. As
China comes into the WTO, as people's income around the world
increases, the first thing they turn to is animal protein,
whether it is poultry or some other animal protein, so we need
to give ourselves an opportunity to really take advantage of
that.
It goes back to the words we were using this morning about
balance. Senator Lugar used the word ``harmony.'' I don't know
that we will ever achieve harmony, but the balance is
difficult. I don't have an answer other than to say if prices
are too high for grains, it jeopardizes our competitiveness,
but also, too, those higher prices get worked into the price of
farmland so that larger farmers see higher prices coming, they
go out and perhaps bid on this land and bid it up, and pretty
soon, whatever price corn is, it is still not high enough
because the corn land costs so much.
At the same time, sometimes users are accused of wanting
prices too low for grains, and that is not true because if
farmers are not rewarded for their work and their risk, then
they go out of business and it is certainly not something we
want. We want a good, steady, adequate supply of all feed
ingredients and just give us a chance to compete in the world.
I appreciate the question. Thank you.
Senator Lincoln. Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Lincoln.
Senator Crapo.
STATEMENT OF HON. MICHAEL D. CRAPO, A U.S. SENATOR FROM IDAHO
Senator Crapo. Thank you very much, Mr. Chairman.
Unfortunately, I am going to have to leave in just a couple of
minutes to a live interview that starts right at 11 o'clock, so
I am not going to be able to ask the questions I had. I did
want to introduce my constituent and good friend, Eric Davis,
who is here representing the National Cattlemen's Beef
Association. He is representative of all the cattlemen that we
have in Idaho, and I suspect across the nation. He runs a cow-
calf operation and feedlot and runs cattle on State, private,
and Federal land in Owyhee County and his family, I believe,
has been in business, your operation, over 50 years. When we
talk about environmental regulations and the other impacts that
people in the livestock industry face and who is helped by our
conservation programs and the like, we are talking about Eric
Davis.
I told him beforehand that I was going to grill him with
questions. Really, what I had was a bunch of softballs to throw
at you, so if the chairman would allow, I would like to submit
those questions in writing and have them responded to.
The Chairman. Whatever your desire is.
Senator Crapo. I will do that, and I just want to also say
before I conclude here that I have reviewed all of the
testimonies. I particularly focused on yours, Eric, since you
are a good friend and constituent, and I want to thank you not
only for your testimony, all of you, but for your testimony
that focuses on the importance of maintaining free and fair
markets. As we develop the farm policies of this country,
domestically as well as internationally, we need to recognize
that we will get the greatest benefit by focusing on markets
and helping them to work effectively. I thought it was truly
refreshing to see that kind of testimony and that perspective
on how we approach our farm programs.
With that, I am going to have to run or else they are going
to start the program without me, but I do have a series of
questions, Mr. Chairman, that I will submit for the record and
for written answers.
The Chairman. Thank you very much, Senator.
Senator Crapo. Thank you.
The Chairman. Senator Nelson.
STATEMENT OF HON. BEN NELSON, A U.S. SENATOR FROM NEBRASKA
Senator Nelson. Thank you, Mr. Chairman, and thank you to
the panelists for sharing your thoughts with us. Obviously,
this is a shared adventure that we are on, trying to find some
of the answers to many of the most difficult problems that we
are going to face within our economy in the near future.
Certainly, it has been an adventure over the last four-plus
years.
I am pleased that we are taking time to focus on the whole
question about livestock or animal agriculture, because so very
often, the discussion seems to be about commodities and other
issues, not focused specifically on animal agriculture.
From my perspective in Nebraska, our livestock industry
accounts for about 60 percent of our cash receipts, so it is an
extremely important part of what we do in the State of
Nebraska. Our cattle industry alone is responsible for about
one out of every eight jobs in our State. At home, we like to
remind people that we have more cows than people. More than 40
percent of the feed grains that are raised in Nebraska go into
feeding livestock, and we call that adding value, so it is
extremely important as we face the writing of the Farm bill, as
we move forward, that we keep in mind the relationship between
animal and non-animal agriculture as it relates to a sound
program that achieves harmony and balance, if we are
successful.
The impact of the Farm bills in the past, I suspect, has
had some direct impact on agriculture and now it is not just
simply taking into account the price of feed grains, but also
the policy that affects conservation practices and other trade
practice and whatever it is that we do to develop more markets
for agriculture in general.
To wed together the importance of animal agriculture and
our commodities agriculture, I came across an article in Top
Producer magazine that was timely for this hearing. It is about
export competitiveness and the new Farm bill. The author,
Marcia Zarley Taylor, says farm bills can't fix it. That is
always scary. She argues that the Farm bill has little to do
with our international competitiveness, but that other policies
do, EPA, a lot of other issues that affect us, the value of the
dollar against every other currency in the world, that these do
have a lot to affect this.
She says that we really need to embrace livestock. She
reminded me that the grain fed to livestock is the most
important use of commodities that we produce, and certainly it
is when it is such a large percentage. It has also been an
extremely important component in rural development, especially
in the South and the Great Plains.
The article goes on to point out that United States
companies are already some of the largest poultry and hog
producers in Brazil, and many of you have already commented on
Brazil and Argentina as competitors. The point that she makes
is if we chase more of our processors and livestock offshore
because of what we do or don't do here at home, no government
welfare program yet invented will replace corn and soybean
volume channeled domestically. We cannot afford to drive our
agriculture offshore. We must, in fact, embrace it. I am very
anxious to have you help us understand how we bring together a
policy that will do that.
We have already had some discussion about how you deal with
the whole field of livestock in the Farm bill and if we create
this eligibility for conservation cost share or the incentives
assistance that we are talking about and that applies
regardless of size, how we are going to be able to make this
all come together and balance the dollar against the value that
we are seeking to achieve for agriculture.
I leave you with that. I, too, have another obligation, but
we are going to have to rely on your knowledge, your
experience, to help us find a way to make all this happen, to
balance the interests for environmentalism, the interest for
international trade, the barriers that we face in many corners
of the world, many of them not that far from here, the
challenge we have with animal disease and how we bring this all
together, because if we don't achieve that balance, I can
assure our ranking member that we won't get that harmony any
way we try it. He already knows that I am worried that he is in
a transition period with his farm and I want to make sure we
are transitioning him up, not out.
[Laughter.]
Senator Nelson. I thank you very much, and I will leave you
with that. We look forward to more input from you as we move
forward. Thank you.
The Chairman. Thank you very much, Senator Nelson.
To all of you, I made my intentions clear to try to include
an energy title in the new Farm bill. I was picking up some
interest in various sectors. There has been a lot of attention,
of course, paid to ethanol and soy diesel, other bio-based
kinds of lubricants and fuels. I heard in recent weeks about
the potential for using animal products for bio-fuels. I had
not thought about that in the past, but obviously, it looks
very promising. I talked to a group representing some of our
rendering plants around the country and heard how much can be
obtained just from the animal fats and by-products that could
be used in terms of bio-fuels.
Mr. Caspers mentioned the use of methane. I ran across
someone the other day who is using, if I am not mistaken, an
ethanol plant and they are taking methane from both a landfill
and a large animal feeding operation and they seem to have a
lot of years of supply of methane for the heat processes that
they need.
As I look out around the landscape, especially in our State
of Iowa, where we have a lot of large hog confinement
facilities it has been very contentious in terms of the
environment and how we handle that. They used to be looked upon
as great energy producers, in terms of capturing the methane
from those operations, both in swine and in cattle. It is being
done in some places, but I don't know that we are doing much to
help assist that from the Federal standpoint. I don't know that
we are putting much research money into that, either.
Those are my thoughts on what we might do in the Farm bill.
If any of you have any thoughts about that, either today or if
you talk with your organizations, and have some thoughts on how
we might utilize animal agricultural in energy production, I am
very receptive to that. Anything you have to add today, I would
be glad to hear, or anything later on, I would be glad to hear,
too.
John, you mentioned it, methane production. Obviously,
there is a lot of methane in those large confinement
operations.
Mr. Caspers. That is certainly possible. With a little help
and some incentives of some kind, whether it is through some
additional dollars for research, whether it is for tax credits
or whatever, that could certainly be encouraged and is
certainly a ready source. It needs some other environmental
benefits and certainly can help be one thing that would address
the energy shortage and our reliance on imported oil.
The Chairman. If I am not mistaken, help the environment,
too.
Mr. Caspers. That is correct. That is correct.
The Chairman. You get a lot of bounces off that, maybe some
additional income to the producer. I am looking for thoughts
and suggestions as you go along. Does anyone else from the
livestock sector have any thoughts? Pete.
Mr. Hermanson. Last month, some of the people from the
turkey industry met with some of your staff members regarding
burning of poultry litter to create electricity, and they are
working on something in Minnesota, maybe some possibilities,
some others. It is a matter in some areas where you can argue
that there is a better use for that organic nutrient, but in
some areas, it is a challenge because of a place to get rid of
it. We would support that continuation of that credit in that
area as part of a solution, again, of getting some energy and
taking care of a problem byproduct.
The Chairman. I was in England a couple of years ago and I
visited a couple of power plants over there, one smaller one
that had been operating for some time and a new one that had
just come online, and that is all they are doing is burning
chicken litter. That is all they are doing. Well, chicken,
turkey--poultry litter is what they are burning. I thought they
built one in Delaware. Do you know anything about that, Mr.
Roenigk?
Mr. Roenigk. Yes, Mr. Chairman. There is one proposed and
it is planning to come onstream.
The Chairman. In Delaware, isn't it?
Mr. Roenigk. Yes. If you look at the projects that are
coming, we have a concentration of poultry production in
Delmarva, two hours' drive from here, depending on how much
traffic is on the Bay Bridge. If you add up all the projects
that are planned, both energy and commercial fertilizer, I can
see the day when there will be a shortage of poultry litter on
Delmarva. We are turning a problem into a real asset. People
are going to have to bid for this material and that is a good
thing.
The Chairman. I heard they might be doing something down in
Arkansas on that, too, but I will have to ask Senator Lincoln
about that, one of these power plants burning chicken litter. I
visited the one in England, and it was operating.
Mr. Roenigk. Yes. It is based on the technology from
England. The important part is that they be long-term
commercially feasible. There are some tax breaks needed in the
beginning to help them get started. I would agree with that.
The Chairman. Sure.
Mr. Roenigk. Over the life, they should be commercially
feasible and we shouldn't ask taxpayers to keep on supporting
those long-term, but some startup help would be appropriate.
The Chairman. Again, we can't give tax benefits in the Farm
bill, but maybe we can promote some things that will get the
Finance Committee to begin to look at. Maybe there are some
things we can do here to nudge them a little bit.
Last, I just wanted to ask Mr. Davis, the National
Cattlemen's Beef Association, you expressed opposition to
renewing the farmer-owned reserve. I can tell you, there is
some support for that. I don't know how widespread it is, but I
keep hearing more and more that we need some type of a support
for a farmer-owned reserve, basically to give farmers the
ability to market grain more orderly over a period of time.
I hope you take a second look at that, because I can
remember, and one of the curses of having been here as long as
I have been on the Agriculture Committee, I remember things
that went on in the past, and I remember in the 1980's, we had
a big drought in the last part of the 1980's. We had a farmer-
owned reserve at that time. I remember a lot of my cattlemen
and pork producers at that time were very happy that we had
that, because prices spiked very high, but we had that reserve
that let the grain out to the feeders. That was in the late
part of the 1980's.
Again, I just wonder about having a hard and fast position
about some form of a farmer-owned reserve.
Mr. Davis. I appreciate your comments, Mr. Chairman. Our
history has shown that we will work with you and the committee
all the way through this process and entertain the thoughts
that come. Yet, we do still have our policies that we have to
represent, as well.
If I can expand just a bit on that, and kind of on some of
the things that have been alluded to all day, we need that
balance, that harmony. We need to back up a step or two from
here. I am not as old as I look, but I remember being around,
not in this town but out where I live, watching some of these
things happen before. That is why this panel is here today,
because there have been times in the past when we did not have
that harmony and it caused great weeping and gnashing of teeth
out in the places where we live.
I commend you and the Senate and your predecessors and,
hopefully, your successors, when that time comes, to keep us
involved in this process. We intend to stay engaged and work
with you----
The Chairman. Good. Well, you will be.
Mr. Davis [continuing]. To make it a balanced and
harmonized, hopefully, farm bill.
The Chairman. Don't worry. We are going to make sure you
are involved. There is no doubt about that.
On the topic of exports, the Market Access Program and the
Foreign Market Development Program are two that we do have
jurisdiction over, and to varying extents, help different parts
of the industry. Any further thoughts on either the MAP program
or the Foreign Market Development Program, the cooperator
program, and what countries might look promising? Do you feel
that this should be something that we should also strengthen in
the next Farm bill? I will just open it up for anyone.
Mr. Davis. Mr. Chairman.
The Chairman. Yes, Mr. Davis.
Mr. Davis. Yes. We would like to see the MAP program, in
particular, strengthened. We think it has been beneficial to
our industry and, really, all of the meat industries. At what
level, as we get into those details, either I am going to have
to turn around and talk to staff about details, but yes, we
think that is an important part of remaining competitive in a
global market with our production.
The Chairman. The Pork Producers Council?
Mr. Caspers. Yes. The Market Access Program is probably the
largest beneficial program that we have. We certainly encourage
that and we have called for a doubling of the funding in that.
That program has been around for quite a few years under the
MAP name, or I can go back far enough when it was called other
things. Certainly, that is a huge benefit to us and it has been
extremely successful. It is competitive in nature, and so
organizations that use the funds effectively are rewarded with,
hopefully, more funds in the future, and we have gained through
the U.S. Meat Export Federation a fair amount of funding, but
there is certainly a much larger need and we can certainly use
quite a bit more additional funding to promote that and to
continue to expand pork exports from this country.
The Chairman. You are asking for a doubling, basically, of
the MAP?
Mr. Caspers. Yes. Yes.
The Chairman. Did you have something, Mr. Roenigk?
Mr. Roenigk. I believe the current program is funded at $90
million for MAP, and I recall not too many years ago, it was
$200 million or even more, and certainly previous levels would
be easily used. I know there was an issue of big companies/
small companies using these funds. That can be addressed.
One quick example. In Hong Kong, when they had the chicken
flu and they had to depopulate their domestic population of
chicken, the consumer there was confused as to whether chicken
was wholesome or not, and a little bit of advertising, letting
them know that U.S. chicken was wholesome, no problem with the
flu and so on, really paid off in big dividends. It is a kind
of program you can go in on a long-term basis, but also the
short problems and address them and it really makes a big
difference with just a little bit of money.
The Chairman. Very good. Anything else?
Mr. Moore. Yes. I would like to add, the U.S. sheep
industry has expanded our wool exports from 7 percent to about
30 percent in the last few years, so we have sent a lot of wool
to the Asian countries. Definitely, the MAP program and our
export markets are very important to the sheep industry.
The Chairman. Very good. That is really all I have. Senator
Lugar, do you have any other followup questions?
Senator Lugar. Thank you, Mr. Chairman. Let me just mention
one way of trying to perhaps move along the energy situation,
whether it is with the livestock producers or grain people, of
course is through our research programs that this committee has
fostered. I noted the Senate appropriators have included most
of the research moneys that we needed, both for the formula
grants as well as the cutting edge research. Sometimes the
House appropriators have taken a more difficult view toward
that. Hopefully, that offers our universities an opportunity to
try to convert what is actually occurring in the field to
something that is commercially viable and can stand the test
without subsidies or pilot projects or what have you, and that
is really critical for basic ethanol as well as with the
livestock-based energy.
I just want to sort of raise a general question. You have
asked Mr. Davis, Mr. Chairman, about the farmer-owned reserve.
Let me just say that the farmer-owned reserve, along with set-
asides, 275 marketing loan for corn, and various other things
bears some reminiscence of policies of the past. Some of those
provide, at least in the short term, a higher price of corn, at
least if you had bushels of corn to sell on the acres that you
hand't set aside.
I am just curious, from the livestock producers'
standpoint, and I ask this from my own family's history--
Senator Nelson has alluded to my farm, and I don't want to
leave in doubt that it is transitional in the sense that we are
heading out of there. The transitional farms in the Sparks
report were the farms that come after the leading 8 percent,
the next 10 percent, and it was suggested there that about half
of the income for farms that are in that category come from off
the farm. About half comes from on the farm. Beyond that,
almost all of it comes from off the farm on a net basis.
My Dad, who passed away 45 years ago, had this sort of a
dilemma in the New Deal period. Supply control was the policy.
As a result, he was forced by the government to plow under
acres of corn and also to kill little pigs. The supply control
worked on both sides in those days.
Now, the harmony of the operation came from the fact that
he fed the corn to the pigs and some cattle that were on the
farm. Most farms in those days had livestock and grain
operations, and the economies came by going in the direction of
the market. There were times when the corn market or the grain
markets were stronger than the livestock market, so you fed
fewer or more or what have you.
Times have changed in the last 45 years and many people are
into specialties. They deal just with poultry or just with
cattle, buy the grain somewhere else, so that we have a problem
in terms of policy that is a little bit different. In the
initial New Deal period, supply control was across the board.
The idea was just simply farmers, if you let them produce,
would produce too much. Inevitably, the price would go down,
stay down, and there was no way of ever elevating it without
getting rid of supply. As a national policy, we did.
What I am curious, and I ask this of the pork producers and
the cattle people, over the course of time in the livestock
industry, farm policy left the supply control situation. In
other words, although it remained with grain and still does,
and when we are talking about, whether it is the farmer-owned
reserve or set-aside or any of these policies, they get down to
the idea, how do you limit supply and how do you sort of knock
it down to get the price up in some fashion. On the livestock
side, things proceeded without these rigorous management tools
of supply control.
As a matter of fact, we have some testimony from the
commission appointed by the last Farm bill, some difference
even between one of our members and one of the commissioners on
strawberries. The suggestion was there ought to be a strawberry
program and a fellow that was on the panel said, not on your
life. Leave this alone. Essentially, we have got a market out
there that you haven't fooled with, in the way that you have
fooled with the grain business.
Why did livestock proceed on a market situation without
supply control? You pointed out 53 percent of income in our
farms come from livestock. This is the majority of dollars at
this point, in a fairly untrammeled way. Do you want to leave
it that way, and how did it get that way, or what are the
values of proceeding that way as opposed to some other? Does
anybody have any thoughts for the good of the order?
Mr. Davis. I don't know that I am smart enough to answer
that question, Senator. In the cattle part of the livestock
industry, as you know, we have tried to stay as market-driven
as possible for as long as I can remember. Yes, the programs
have affected the livestock industry and the way we as
individual operators pick out the economic things that we think
are the best economic methods to stay in business.
We recognize we have cycles. We are not always on the high
of a cycle, either. We have our good times, we have our bad
times, but overall, our philosophy, as you know, has been to
take those, adjust in response to the market signals, try to do
those things to increase demand, do other things to help take
the peaks and valleys out of the cycles. We have been
unsuccessful in doing that since the 1920's. We still have the
peaks and valleys.
There is a recognition that that is part of the biological
systems we work with as well as the human aspects that make
those decisions, and I guess the bottom line of where we have
always come down is we understand the importance of those
various farm programs. We understand that they affect us. We
understand that most of us do more than one thing and are
affected directly as well as indirectly.
Let us let the market work as well as possible, and when we
do have programs, if it is a conservation program or a
commodity program, if it is in the public interest to preserve
or enhance or in some way guide someone to doing a better job,
then let us do it for that reason. Understand that it has to be
the public that pays for it, and don't do it on the back of
another segment of agriculture.
Senator Lugar. I presume the majority of your members still
favor that idea?
Mr. Davis. I believe they do, yes.
Senator Lugar. Would that be true of the membership of pork
producers?
Mr. Caspers. Yes. Our membership is generally supportive of
participating in the open free market as much as possible.
Certainly, we have some requests where there is additional
regulation to be put on our industry, where the public
benefits, that the public would assist in the cost of that
regulation.
Senator Lugar. Well, that gets sort of to the EQIP
discussion we had earlier on. In other words, let us say you
folks wanted to continue in the market, so that relieves the
Federal Government from subsidizing you or somehow propping up
your prices and what have you. Essentially, you are coming in
and saying, if EPA or some other well-minded organization of
the government believes that some things ought to occur for
other reasons of national policy, namely the good of clean
water and the environment, then this is where the Federal
Government ought to intervene in your business in terms of
providing at least some assistance so that your members can
meet these requirements. Otherwise, you have a cost factor vis-
a-vis the Brazilians we heard about earlier today or others who
may or may not have governments that are that equally
interested in the environment.
If that is the case, then we talked earlier about the
limits of this type of thing. If you get into this proposition
in which we sort of pick and choose what size farms we are
going to assist with regard to this, that is a difficult
problem, although one that we talk about all the time, but I
raised it earlier for that reason. It appears to me there is
probably legitimacy in a governmental role there that most of
you support.
The other side of the thing that you tend to support is as
a cost comes from the environment, from EPA, cost also comes
from farm bill policies that deliberately increase the cost of
feed, because if we intervene while you are in a free market
and make this a different kind of market, you are likely to
have a bottom line that is very different, EPA being one
subtraction and the Farm bill another.
To the degree you all have grain and livestock, why, you
can sort of work this out on the farm. To the degree you don't,
and increasingly, I gather, this is the case with some larger
operations, why, you have got a problem in which our
intervention has some direct effects on this thing.
Does anybody have any comment on that? I will then be still
and let the chairman adjourn the meeting. Yes, sir?
Mr. Roenigk. Just a quick comment. I grew up on a dairy and
poultry farm in Pennsylvania. The dairy price was determined by
the market order and poultry by the free market order, and my
father, I never heard him say that prices of either one were
high enough.
[Laughter.]
Mr. Roenigk. I don't have an answer, but I have a comment,
and I do remember the soil bank and my father did like the soil
bank, not because we had acres enrolled but because he got a
part-time job going out and measuring all the neighbors' fields
to make sure that they were in compliance with the soil bank.
Just a comment, not an answer.
Mr. Hermanson. I would just make the comment, I guess, that
we should help, as part of the EQIP, to keep production in the
U.S. rather than at least pushing it offshore, as was mentioned
earlier. Then the other thing that we need to support the grain
side, the crop production side of it so that the grain is
produced in the U.S. to feed the meat, and we would like to
share some of that with the rest of the world.
That is where the turkey industry is. We just want a--if
somebody is going to impose some regulations, maybe we need
some help with that. We would like to have a good supply of
feed, and obviously if you can do some enhancement as far as
export, that is good for us, too. Thank you.
Senator Lugar. I would just add finally, and I will ask Ms.
Rosmann to comment on this, I have made the observation in
these meetings and from my own experience that over the course
of the years, we have gotten about a 4-percent return on
invested capital on our farm. To many Indiana farmers, that
sounds too high. We are not sure that we have seen that. The
others would say, who are not farmers, why are you in the
business at all? You could have gotten six percent on
government bonds for the last 30 years without the problems of
trade.
I am just curious, even if we got it right, assuming we
have this market-oriented situation and it is harmonious, is
anybody making any money in this panel, I mean, not you
individually, but your clients or the people that you are
representing today?
Ms. Rosmann, with your farm, obviously, you have got a
family. You have 600 acres and you have a very interesting view
in terms of marketing your product. Do you make four percent or
more on your invested capital? I am just curious, if not, aside
from the fact that you love farming, and that is the reason
most of us are still in it, because we do, why are you in it?
What is the return that comes from this type of operation?
Ms. Rosmann. We believe strongly, sir, that sustainable
agriculture, organic agriculture, not only sustains soil,
water, and air, but that it sustains people, and the social
capital that is involved with that is tremendous.
Why are we in it? I grew up in Sioux City, Iowa. I was not
raised on a farm. I had this notion of what farm life was going
to be like when we were married 23 years ago and I found out
real quickly that it is not that way. I married an individual
who has a profound love for the land. I married an individual
whose parents have that profound love and respect for the land
and commitment to it.
Again, I call attention that many of us in rural America
have to have the second or third jobs to support the hobby of
farming. We, again, do not have off-farm employment. That is
critical. We are able to use what money we earn--this year, it
has been poured back into machinery repair because we are not
able to afford to keep up with the types of machinery that we
need because it is a diverse operation.
Why are we in it? We are in it because it is the
appropriate way to, we feel, raise a family, teach the next
generation, should they choose to decide farming as a career,
and because we feel that feeding our clients and our global
clients. We, too, are involved globally. Our pork goes
overseas. It is part of the Berkshire program, where it is
sold, marketed directly to Japan. We are part of a network of
growers who participate in that. Our soybeans we raise are
tofu, food-grade soybeans, so they are marketed directly
through Heartland Organic Marketing Co-op, now out of Stuart,
Iowa.
We are intimately involved in this process because we feel
that small- to medium-sized family farming is the only way to
secure our future and our community's future.
Senator Lugar. What sort of a return do you make on this?
Ms. Rosmann. Do you think I am going to----
[Laughter.]
Ms. Rosmann. We, again, make enough, sir, to sustain
ourselves. We do. We make a profit. We make a--a just wage? I
don't know. Again, a whole lot of it, when you own your own
business, it gets poured right back into the expenses.
Remember--I will leave with that.
Senator Lugar. That is a very good reason why you are
farming. I just sort of still have the general question as to
how we are going to make money in American agriculture, and it
is not really clear. This is still a low-return business as you
take a look at the opportunity cost for money. The strategy
that we try to think of in terms of our Federal legislation
ought not to make it worse, but we are really trying to make it
better.
This is why I asked each of you to think creatively in
terms of really what kind of a policy would make any difference
in terms of either return on invested capital in any of your
businesses, because absent that, eventually, we are going to
have an erosion of people leaving the business. In various
ways, we will prop it up, and that has been the policy of the
committee and the Farm bill, to save every farmer. Eventually,
not everybody wants to be saved, in the event that the returns
are very unpromising, and that is sort of a basic question that
underlies our work here.
Thank you, Mr. Chairman.
Ms. Rosmann. If I may, sir, the return on our poultry, the
return on our pork, the return on our beef is all a premium, a
premium because it is sold on the organic market. The barley,
the other small grains that we have, the corn and soybeans,
again, are all priced above market, traditional market rates.
We would not be able to survive in a traditional sense of that
type of agriculture. We are only able to do it because of the
value-added concept, however, value-added concept with
appropriate pricing in the organic market.
Senator Lugar. I am suggesting, just so I am not vague, is
if you have a 600-acre farm in Iowa, without guessing the land
values, but it would sound to me like you have a $1 million net
worth if you own all of that without loans, so four percent on
that would be $40,000 net profit, say, before taxes. Or if you
have got more value in it, why, you need more, and that is the
sort of return I am thinking about, just to quantify it.
Nevertheless, I appreciate your testimony.
Ms. Rosmann. Thank you, sir.
The Chairman. I might add, Dick, that, again, I am hoping
that in our next Farm bill that we at least try to provide for
support for this kind of diversity. I mean, there is room for
all. There are a lot of niche markets out there for
agriculture. I have seen other farms in Iowa. I have a friend
who grows Oagu beef up around Penora. He has got a nice niche
market there. It may not be for everybody, but there are those
markets out there. To the extent that we can help promote
those, it just gives us more options, gives us more ways of
doing things in agriculture to provide more income and keep
people on the land.
Obviously, you do have to have a decent return because you
have got to pay for the capital. If you are going to go into
it, you have to have a decent return, so you have to be able to
pay for the capital and improvements and that type of thing,
plus have enough money to live on and build a house and raise
your kids and send them to school. Beyond that, there ought to
be room for people who want to engage in agriculture, as of a
way of life. They may never get very rich doing it, but they
can have an enriching life and they can be a good part of our
rural environment.
It is not necessarily getting bigger, it is doing things
differently. The Rosmanns have shown that there are ways of
doing that, and other farmers are doing it in Iowa. It is not
just the Rosmanns, others are doing different things. Now,
again, I am not saying that this is how everything has to
happen, but at least there ought to be room for that and there
ought to be support for that type of an endeavor in our
country.
If we are only spending one-tenth of a percent on the
research, maybe there ought to be some more research and
support. How do you make these kinds of transitions to
different types of agriculture, for example, the knowledge of
how to do it and how to transition and do these different
things. Like I said, there ought to be some support to at least
enable people who maybe don't want to make immense wealth, but
they do want to raise a family and have a decent lifestyle and
at least have some equity later on in their lives. I am hopeful
that we can at least provide for that kind of support. There
has got to be room for everybody in this.
With that, I thank you all very much. It was great
testimony. Again, I ask you, through your various
organizations, that if you have any thoughts on the energy
aspect of it, please give us your thoughts and suggestions on
that. I would sure appreciate it. Thank you very much.
The committee will resume its sitting on Thursday at 10:30
a.m.
[Whereupon, at 11:33 a.m., the committee was adjourned, to
reconvene on Thursday, July 26, at 10:30 a.m.]
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DOCUMENTS SUBMITTED FOR THE RECORD
July 24, 2001
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QUESTIONS SUBMITTED FOR THE RECORD
July 24, 2001
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