[Senate Hearing 107-869]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-869
 
                       THE NEW FEDERAL FARM BILL
=======================================================================




                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                            AUGUST 13, 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

                              ----------                              
                                                                   Page

Hearing(s):

The New Federal Farm Bill, Frankenmuth, Michigan.................    01
The New Federal Farm Bill, Grand Rapids, Michigan................    83

                              ----------                              

             Monday, August 13, 2001, Frankenmuth, Michigan
                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............    01
Barcia, Hon. James A., A Representative in Congress from the 
  State of 
  Michigan.......................................................    05
                              ----------                              

                               WITNESSES

Fox, Alison, Counsel, Senate Committee on Agriculture, Nutrition, 
  and 
  Forestry.......................................................    04

                                Panel I

Kirkpatrick, Elwood, President, Michigan milk Producers 
  Association....................................................    11
Korson, Philip, President, Cherryy Marketing Institute, Inc., 
  Lansing, 
  Michigan.......................................................    09
McIlvain, Carl, President, Michigan Farmers Union................    07
Pollok, Jody, Executive Director, Michigan Corn Growers 
  Association....................................................    13
Wood, Wayne, President, Michigan Farm Bureau.....................    06

                                Panel II

Hines, Sam, Michigan Pork Producers Association..................    25
King, Lonnie Dr., Dean of the College of Veterinary Medicine at 
  Michigan State University......................................    23
Kubik, Frank, president, National Commodity Supplemental Food 
  Program (CSFP) Association and CSFP Manager for Focus: Hope....    21
Leach, Richard, Executive Vice President, Great Lakes Sugar Beet 
  Growers Association............................................    29
Thayer, Curtis, Director, Michigan Soybean Association...........    27
                              ----------                              

                                APPENDIX

Prepared Statements:
    Hines, Sam...................................................    65
    King, Lonnie Dr..............................................    57
    Kirkpatrick, Elwood..........................................    44
    Korson, Philip...............................................    43
    Kubik, Frank.................................................    53
    Leach, Richard...............................................    81
    McIlvain, Carl...............................................    41
    Pollok, Jody.................................................    51
    Thayer, Curtis...............................................    72
    Wood, Wayne..................................................    36

                              ----------                              

            Monday, August 13, 2001, Grand Rapids, Michigan
                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............    83
                              ----------                              

                               WITNESSES

Fox, Alison, Counsel, Senate Committee on Agriculture, Nutrition, 
  and 
  Forestry.......................................................    86

                                Panel I

Butler, Thomas C., Manager, Michigan Processing Apple Growers 
  Division of Michigan Agricultural Cooperative Marketing 
  Association....................................................    90
DeKryger, Perry, Executive Director, Michigan Asparagus Advisory 
  Board..........................................................    92
Gray, Dr. J. Ian, Director, Michigan Agricultural Experiment 
  Station........................................................    88
Green, Bob, Executive Director, Michigan Bean Commission.........    94
 Hersey, Julia Baehre, Board Member, Michigan Asparagus Advisory 
  Board..........................................................    91

                                Panel II

Armstrong, David, Executive Vice President, Marketing, GreenStone 
  Farm Credit Services...........................................   104
Fox, Dennis, Environmental Policy Specialist, Michigan United 
  Conservation Clubs.............................................   101
Werdel, Joanne, Policy Analyst and Communications Specialist, 
  Center for Civil Justice.......................................   105
Williams, Ron, State Conservationist, Natural Resource 
  Conservation Service...........................................   102
                              ----------                              

                                APPENDIX

Prepared Statements:
    Stabenow, Hon. Debbie........................................   116
    Armstrong, David.............................................   139
    Butler, Thomas C.............................................   122
    DeKryger, Perry..............................................   124
    Fox, Dennis..................................................   131
    Gray, Dr. J. Ian.............................................   119
    Green, Bob...................................................   128
    Hershey, Julia Baehre........................................   123
    Joanne Werdel................................................   142
    Williams, Ron................................................   133
Document(s) Submitted for the Record From Frankenmuth and Grand 
  Rapids, Michigan:
    AARP.........................................................   258
    Advocate for Care of Earth, Sister M. Lucille Janowiak, O.P..   221
    All County Churches Emergency Support System (ACCESS)........   219
    American Society for the Prevention of Cruelty to Animals 
      (ASPCA)....................................................   212
    American Soybean Association.................................   194
    AgriBank Position Paper......................................   173
    Baffi, Frank J...............................................   209
    Bellville, Nancy, Founder of SAFE (Save Animals From 
      Electricity)...............................................   168
    Benton Harbor Fruit Market, Inc., Lee LaVanway...............   243
    Crop Insurance Agency, L.L.C., Micheal Sahr..................   250
    The Environmental Research Institute of Michigan (ERIM), Dr. 
      Robert Schuchman...........................................   246
    Kellog, Company, George A. Franklin..........................   228
    Michigan Agri-Business Association...........................   251
    Michigan Allied Poultry Industries, Inc., Joe Maust..........   254
    Michigan Association of Conservation Districts, Joe Slater...   266
    Michigan Association of Credit Specialists, Timothy B. 
      Neuhardt...................................................   197
    Michigan Association of Resource Conservation, Jerrold 
      Humpula....................................................   195
    Michigan Beekeepers' Association, Roger Hoopingarner.........   217
    Michigan State University Extension; Children, Youth, & 
      Family 
      Programs, Patricia A. Hammerschmidt........................   205
    Michigan State University; National Food Safety & Toxicology 
      Center, Ewen C. D. Todd....................................   239
    Monitor Sugar Beet Growers, William Bortel...................   152
    Muir, Tom....................................................   265
    National Farmers Organization................................   150
    The Nature Conservancy, Jeff Eisenberg.......................   156
    National Organization for Raw Materials (NORM), Randy Cook...   233
    Norman, Barbara James........................................   264
    Oesterle, Jeffrey R..........................................   207
    Peterson Farms...............................................   225
    Plouff, Perry O..............................................   257
    Red Gold Quality.............................................   171
    United Fresh Fruit & Vegetable Association...................   174
    US Grasslands: Economic and Biological Trends................   163
    Watts, Wayne.................................................   222














                       THE NEW FEDERAL FARM BILL

                              ----------                              


             MONDAY, AUGUST 13, 2001, FRANKENMUTH, MICHIGAN

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:35 a.m., at One 
Covered Bridge Lane, Frankenmuth, Michigan, Hon. Debbie 
Stabenow presiding.
    Present or submitting a statement: Senator Stabenow.

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

    Senator Stabenow. Well, good morning. We're going to 
officially call to order this Senate Agriculture Committee 
Field Hearing, and I want to welcome all of you. We're so 
pleased that you're here in Frankenmuth, one of the places that 
I brag about when I'm back in Washington, DC, and very pleased 
to have Congressman Jim Barcia joining us, as you know, who is 
such a strong advocate for agriculture and represents this area 
in the U.S. House of Representatives. Jim and I have worked 
together for many years since the State House of 
Representatives, and I will not say how old either of us were 
at the time and how long ago that was. It's wonderful to have 
you with us, Jim.
    We are, as you know, holding a second hearing this 
afternoon in Grand Rapids, and so we'll be leaving here as soon 
as we're finished today and going over to Grand Rapids. I 
believe that there's actually some folks here that are going to 
be joining us, so folks are going to be moving rather quickly.
    This is so important that all of you are here, and I'm very 
honored to be a member of the Senate Agriculture Committee--in 
fact, to have served on the House as well on the Agriculture 
Committee. It's critical that we lay out the case for what's 
important for Michigan agriculture. We're a $40 billion 
industry, as you know, in terms of our share of the state's 
economy, and Michigan agriculture employs over 65,000 people. I 
want to make sure that my colleagues in the U.S. Senate 
understand what's important about Michigan agriculture, and 
that's the purpose of the hearing today.
    I've been working very closely with Senator Tom Harkin to 
make sure that Michigan is treated fairly on a wide range of 
farm issues. As we all know, the greatness of Michigan is our 
diversity. It's also the challenge for us when we are focused 
on a farm bill because we have so many different needs and 
interests. That's one of the reasons why I'm so pleased to have 
an official hearing here because we want to put into the 
official record the importance of a wide variety of needs, 
including, of course, all of our various specialty crops and 
our dairy and sugar beets and livestock and all the other needs 
that we have. There are many important other issues that we're 
going to be addressing this year: bio-fuels, our nutrition 
programs, the food safety research, conservation and 
international food aid programs. All of these different titles 
of the Farm bill are very important to us in Michigan, and we 
want to make sure that our needs are addressed.
    In fact, I've mentioned to some folks earlier today this is 
the first time there has been an official Senate Agriculture 
Hearing in Michigan since 1915. Jim, I wasn't there, and I 
don't think you were there either. To put that into some 
context, we did a little history, and we found out that in 1915 
most farmers didn't own gasoline-powered tractors. In fact, 
Henry Ford didn't even start mass producing his popular 
tractor, the Fordson, until 1916. It's been a while. Now not 
only are tractors everywhere, as we know, but they carry 
computers and are linked to satellites, so it's a whole 
different world since the world of 1915. I want you to know 
that as a member of the Senate Agriculture Committee, I promise 
it will not be another 85 to 100 years before we're back.
    Now let me acknowledge Congressman Barcia, and I also want 
to acknowledge, as we proceed today, Mary Washington, who's 
here from Senator Carl Levin's office. Where's Mary? Mary's 
here and I know Senator Levin's extremely interested--he and I 
have talked about the hearings today, and he wanted to extend 
his best wishes. We will be working as partners, the two of us, 
fighting for Michigan agriculture on the Farm bill.
    Also, State Representative Jim Howell is here, and we're 
really pleased to have Jim here. I believe.
    Also, Kim Love is here today from my office--who you all 
know from my Washington staff who has been with me since the 
U.S. House of Representatives and actually spent a lot of time 
growing up in Genessee County and is now in Washington. Kim, as 
you know, is just a phone call away in terms of your needs, and 
we want to make sure that Kim will be working very closely in a 
very hands-on way on the Farm bill and what happens.
    Also working on it will be Alison Fox, who is the Counsel 
to the Senate Agriculture Committee. She's here representing 
our Chairman, Tom Harkin. Alison, we want to welcome you to 
Frankenmuth, Michigan.
    Ms. Fox. Thank you.
    Senator Stabenow. It's good to have you with us. We're very 
pleased to have her here as well. Other staff of mine that are 
important for you to know: Connie Feuerstein, who represents 
this area for me here in Michigan who is also my agricultural 
representative on the ground and goes to a lot of meetings. If 
you've been to Farm Bureau hearings or other meetings, you've 
seen Connie.
    Also Steve Banks is here at the table. Steve works with 
Connie in representing our office here in the area. We're also 
pleased to have Ruth Weiss, who's our court reporter taking 
down the official record for us today that we can take back to 
Washington. Dave Lemmon, who is my communications director. 
When you hear me on farm radio, Dave's the guy who's been 
making that happen.
    Do we have anybody else from our staff? Where's Sue? Sue's 
over here. The most important person for our panelists, she is 
the timekeeper. Sue Glynn, who has been with me since my State 
House of Representatives days and is now my Regional Manager 
for mid-Michigan. Sue is doing a great job as well.
    Let me just say as we're starting that as many of you know, 
I was born and raised in Clare, and family farming was a big 
part of our community and my family as well. I've always been 
amazed as we focus on Michigan agriculture at the great 
diversity and strength that we do have. In fact, sometimes 
people talk about the Midwest as America's breadbasket. I would 
think in Michigan's case it's an understatement. We're actually 
the whole kitchen table. We have meat and the fish and fowl and 
fruits and vegetables--and we produce over a hundred commercial 
crops, including a wide variety of specialty crops, as you 
know, like cherries and apples and blueberries and asparagus. 
We even have the maple syrup that goes on your pancakes. I'm 
pretty proud of all that we've got going in Michigan. When you 
get all done, you can wash it down with a glass of great, 
fresh, delicious Michigan milk. We want to tell the story. In 
fact, Michigan is second only to California in the diversity of 
our crops, as I mentioned earlier.
    There's a lot of good news about agriculture in Michigan in 
terms of our diversity. We've also got a lot of concerns, and 
that's the other reason why we're here today. According to the 
Department of Agriculture, between 1992 and 1997, we lost more 
than 215,000 acres of production farmland in Michigan, and as a 
part of that, over 500 family farmers. That doesn't count 
what's happened in the last couple of years, which I know is a 
great concern to all of you and a concern to me as well. 
Literally thousands of farmers have left the fields, and I want 
to make sure that when we're talking about a farm bill that 
we're focusing on the needs of our family farmers as an 
important, critical part of that. It's important that we focus 
on all of our needs, including conservation and research. We 
want to hear about all of the issues and including overseas 
markets and what's happening as it relates to trade in 
Michigan.
    Let me just explain the format of today. We've divided the 
session into two panels, and as happens with the official 
agricultural hearings, individuals are asked to come and 
testify and present, representing important groups in the 
state. Each person's been asked to speak for 5 minutes. As I 
mentioned, Sue is our timekeeper. To the extent that we are 
able to keep to the 5-minutes, it will allow us to really have 
an opportunity to hear from everybody and for us to ask some 
questions.
    We also want to hear from you--if you would like to add 
some written testimony, I know many people have brought written 
testimony today. We want to add that to the record, so if you 
think of something that was missed today and you want to write 
a letter to me, please do that. You can send it to our Senate 
office, and Kim can work with you after the hearing on how to 
do that. We want to make sure--if you've got something you 
think that is important to stress that has not been stressed 
today, we want to make sure that we hear from you as well.
    Senator Stabenow. Let me take just a moment at this point 
as we get started and introduce Alison Fox again, who is the 
Counsel for the Senate Agriculture Committee who would like to 
say a few words on behalf of the Chairman today.

     STATEMENT OF ALISON FOX, COUNSEL, SENATE COMMITTEE ON 
              AGRICULTURE, NUTRITION, AND FORESTRY

    Ms. Fox. Thank you. I'm very pleased to be here on behalf 
of Senator Tom Harkin, who is the new Chairman of the Senate 
Agriculture Committee. For those of you who don't know, he's 
from Iowa, where agriculture is very different but very 
important. We look forward to working with everybody on the 
committee to develop a very good, comprehensive national farm 
policy in this year's Farm bill.
    We have had hearings in Washington and hearings like this. 
Since this is an official hearing, all of your testimony will 
be part of the record. We will use this testimony together with 
other hearing testimony and work with Senator Stabenow and her 
staff and other members of the committee to develop what we 
believe would be an agriculture policy that suits and serves 
all interests within agriculture. I look forward to hearing 
your testimony on behalf of Senator Harkin, and thank you 
again.
    Senator Stabenow. Thank you, Alison. Let me just stress, 
again, when we talk about official testimony, what that means 
is in the future if people want to look back at the various 
committee hearings held on this particular farm bill, there 
will be official testimony given hearings held in Washington, 
hearings held around the country. This will be a part of any 
document about the history and the background of the Farm bill 
and what happened in terms of the hearing that were held on the 
Farm bill.
    Senator Stabenow. Let me introduce our panelists. Let me 
start with Wayne and mention that we have Wayne Wood with us 
who is President of the Michigan Farm Bureau, as we all know. 
He was elected to that position in December of 2000. He's a 
fourth-generation Sanilac County dairy farmer. Wayne's 
previously served 12 years as Vice President of the 17-member 
State Board of Directors. Wayne and his wife Diane are involved 
in a three-way farm partnership that includes his son Mark and 
brother Randy, so you understand about family farming. The 
family operates milk production of 300 cows and farms 1200 
acres raising corn and alfalfa. We're very pleased to have you 
with us here.
    Carl McIlvain; Carl is the President of the Michigan 
Farmers Union, an organization he's been involved with since 
1952. He was raised on a diversified farm, served inWorld War 
II and returned to farming with his family after the war. He 
expanded his farm from 103 to 365 acres. It's primarily a dairy 
operation. Carl has served on many committees and has been an 
active part of the farming community in Michigan for 50 years. 
In fact, just 2 days ago on August 11th, Carl and his wife 
Betty were inducted into the Farmers Hall of Fame. 
Congratulations. I was out in Denton for a part of that 
celebration, and we want to congratulate you, Carl.
    Mr. McIlvain. Thank you.
    Senator Stabenow. Phil Korson; Phil is the President and 
Managing Director of the Cherry Marketing Institute. The Cherry 
Marketing Institute represents tart cherry growers in Michigan, 
Utah, Wisconsin, New York and Washington State. Phil is a 
native of Michigan and has spent the past 23 years in various 
leadership positions in the cherry industry. I appreciate, 
Phil, your being here today.
    Elwood Kirkpatrick; Elwood Kirkpatrick was elected 
President of the Michigan Milk Producers Association in March 
1981. He served on the Board of Directors since 1979, born and 
raised on a dairy farm that's now 1600 acres near Kinde, 
Michigan, in our state's upper thumb. He milks about 340 cows 
as a family corporation; is a leader in the dairy community 
holding many important leadership positions, including Director 
and Member of the Executive Committee of the National Milk 
Producers Federation and the United Dairy Industry Association. 
He's won many awards for his work, and, Elwood, we appreciate 
your being here with us today.
    Jody Pollok; Jody is the Executive Directory of the 
Michigan Corn Growers Association and the Corn Marketing 
Program of Michigan. These organizations represent 16,000 corn 
producers in Michigan. Jody's been a leader in working on 
issues that are critical to corn growers, including ethanol, 
trade, energy policy, pesticides, and other grower concerns. 
Jody obtained her Bachelor's of Science in Agriculture and 
Natural Resources Communications and her master's in 
Agriculture and Extension Education at Michigan State 
University, my alma mater, so good work.
    Welcome to all of you, and I want to also, as we begin, 
welcome Congressman Barcia again to join us. Jim, I don't know 
if you would like to say a word as we get started?

STATEMENT OF HON. JAMES A. BARCIA, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF MICHIGAN

    Mr. Barcia. Well, just very briefly, Senator Stabenow, I 
want to thank you for having this very timely and important 
field hearing. As I think everyone in the room knows, the week 
of September 10th the House will begin debating and voting on 
the Farm bill. After that, I believe, sometime in October the 
Senate will be taking up the Farm bill. The timing for this 
hearing, Debbie, is wonderful.
    I can see, looking across the room, a lot of friends that 
we've both worked with for a lot of years who are agricultural 
champions and leaders of the various agriculture organizations 
and commodity groups who are here to share their insight, their 
perspective into how we can develop and craft a farm bill that 
will preserve agriculture for the long-term future in this 
country. I know with the recent drought that we've experienced 
and some of us in the room had a chance last week to get out 
into the fields in Bay County and see the condition of the 
various crops, the specialty crops as well as the general 
condition of this year's crops. It certainly is going to 
require our attention in the short term to help some of our 
people make it through this year. Hopefully there will be a 
role for the Federal Government to play in helping keep farmers 
in business this year as a result of the devastating loss of 
value on the crops as a result of this prolonged drought season 
that we've experienced.
    There are a number of issues that the Farm bill will be 
addressing as it emerged from the House Committee on 
Agriculture. It's in pretty good shape, but there will be 
debate and there will be some fine-tuning on that. Of course, 
we'll have to do everything we can to make sure that we 
preserve, of course, the sugar provision and all of those other 
important provisions in the Farm bill that are the lifeline to 
many of our farmers here in the Thumb and across Michigan 
staying in the business.
    Debbie, I just want to thank you for your leadership on 
behalf of agriculture as a former member of the House of 
Representatives and now as a champion of agriculture in the 
U.S. Senate. This hearing is, as I mentioned, extremely timely 
and valuable in terms of both of us. Unfortunately, I do have 
another commitment, so I won't be able to stay for the entire 
hearing, but I appreciate being invited, Debbie. Thank you.
    Senator Stabenow. Thank you; thank you, Jim.
    Wayne, we'll start with you this morning.

    STATEMENT OF WAYNE WOOD, PRESIDENT, MICHIGAN FARM BUREAU

    Mr. Wood. Well, good morning again, Senator Stabenow and 
Congressman Barcia and friends of Michigan agricultural 
industry, and I count you both in that group. I'm Wayne Wood, 
President of Michigan Farm Bureau, and on behalf of our 
organization, I'd like to say thank you to you, Senator, for 
requesting this hearing because I know it don't happen without 
a request and also the opportunity to give you both input on 
what we feel should be in the next Farm bill.
    We believe farmers have a vision, and that future as being 
an industry that profits from not only growing markets, 
increased value-added efforts and voluntary incentive-based 
conservation programs. However, to bridge the gap from here to 
there is going to require some additional public investment in 
agriculture. If we could just talk about the income of farmers 
for a minute, USDA predicts that farm income will decrease to 
41.3 billion in 2001--and that was before the drought in this 
area--a decline of 4.1 billion from the 2000 levels, and the 
trend is expected to continue the next couple years. This 
forecast is based, of course, on the prices that we're dealing 
and the increased input cost.
    Government payments have provided a substantial portion of 
farm income over the past 3 years, and, of course, any decrease 
in those would have quite a severe detrimental effect to the 
farm income and would, of course, undermine the financial 
balance sheet. We believe farmers must be given the opportunity 
to regain their footing and must be provided with a reliable 
safety net.
    Michigan Farm Bureau believes the next Farm bill must 
improve net farm income by enhancing the economic opportunities 
for our producers. We still support a more market-oriented 
approach to farm policy, an approach that allows farmers to 
make production decisions for their own operation, an approach 
that focuses on building demand for commodities, both 
domestically and abroad. We do not support a return to supply 
management or targeting of benefits. We also believe the next 
Farm bill must maintain a focus on conservation and protecting 
private property rights.
    To achieve this, we have several provisions that we are 
supporting: a continuation of the production of flexibility 
contracts, and until more analyses are done, bases and yields 
should not be updated; rebalancing of loan rates to be in 
historical alignment with the current $5.26 soybean loan rate; 
changes to the LDP that would allow all producers of program 
crops to be eligible; and a mechanism to lock in an LDP at any 
time after the crop was planted because, as you know, Michigan 
is penalized in that area; extension of the dairy price support 
program; development of a conservation stewardship payment for 
producers of fruits and vegetables; and maintaining the fruit 
and vegetable planning restrictions for program crops; increase 
funding for EQIP and a reform of the guidelines to provide 
livestock, crop and specialty crop producers the assistance 
needed to meet the current and emerging regulatory 
requirements; development of a voluntary environmental 
incentive payment program for producers who adopt and continue 
conservation practices to air and water quality, soil erosion 
and wildlife habitat; increase funding for and utilization of 
export enhancement programs; expansion of risk management 
provisions; assistance for sugar producers to eliminate the 
marketing assessment; eliminate the forfeiture penalty and 
rebalance the loan rates; funding for Johne's disease and 
indemnification funding for an agricultural marketing equity 
capital fund for value-added enterprises and a non-recourse 
loan program for wool and mohair.
    In conclusion, farmers throughout the country have talked 
about increased costs of regulations, unfair foreign trade 
practices and low commodity prices as some of their biggest 
obstacles. While American farmers say they will accept major 
reforms, in 1996 in exchange for tax reform, regulatory reform 
and improved opportunities for trade, needed reforms in those 
areas simply have not occurred.
    We look forward to working with you, Senator, and 
Congressman Barcia and the Agricultural Committee as we develop 
a new farm bill that will make agriculture sustainable and 
profitable in the 21st century. Thank you very much.
    Senator Stabenow. Thanks very much, Wayne.
    [The prepared statement of Mr. Wood can be found in the 
appendix on page 36.]
    Senator Stabenow. Let me call on Carl McIlvain.
    Carl.

 STATEMENT OF CARL McILVAIN, PRESIDENT, MICHIGAN FARMERS UNION

    Mr. McIlvain. Thank you, Madam Chairperson and staff and 
Congressman Barcia. I appreciate this hearing, and I hope we 
can do it once a year.
    Senator Stabenow. That would be good. That would be a great 
idea.
    Mr. McIlvain. I am Carl McIlvain, President of the Michigan 
Farmers Union, and it is an honor to appear before you today to 
discuss and compare the farm legislation proposal developed by 
the National Farmers Union and the Farm bill proposal recently 
adopted by the House Agriculture Committee. In the few minutes 
I have before the committee, I would like to focus on dairy and 
the program crop component to the two approaches.
    The limitations imposed by the budget on the development of 
U.S. agricultural policy create real challenges in meeting all 
the needs that should be addressed in the next Farm bill. We 
believe the only responsible way these important commitments 
can be made or met is by developing a commodity policy that 
maintains an adequate an workable safety net for producers 
while creating new demand, improving commodity prices and 
managing inventories through reserves and other cost-
containment programs, including the targeting of benefits.
    For dairy, the House legislation simply extends the current 
$9.90 per hundredweight dairy price support system. It fails to 
address new demand creation, surplus production or provide an 
adequate safety net that reflects the variability of milk 
prices over time.
    The NFU proposal maintains the current price support system 
and supplements it with a counter-cyclical target price 
mechanism based on the cost of milk production. We also propose 
that benefits under this program be targeted to smaller 
producers and those who limit production to the level of growth 
in actual market demand. For those who expand production beyond 
market demand, we propose to deny them target price benefits. 
In addition, we support limiting the level of government 
purchases to 3 percent of demand and assessing those producers 
who generate surpluses to create a fund that will be used to 
buy excess stocks for distribution to domestic and 
international nutrition programs.
    For the program crops, the House bill provides for a 
continuation of the status quo with modest adjustments to 
marketing loan rates for two commodities, extension of contract 
payments to the oilseed sector and an opportunity for producers 
to update crop acreage bases. Producer yields remain frozen at 
the 1985 level. The legislation establishes a target price 
mechanism for program crops as an additional payment mechanism.
    Payment limitations are increased to $150,000 per person 
for marketing loan benefits and the multiple entity rules and 
commodity certificate program are continued. This system 
ensures the largest producers and landowners will continue to 
receive the vast majority of program benefits. Direct payments 
under this program represent about 60 percent of the additional 
funding provided in this year's budget resolution.
    We are concerned that this proposal continues the problems 
associated with the current Farm bill. Marketing loan rates for 
the program crops will remain inequitable and further encourage 
planting and market distortions. This situation will only be 
aggravated by the two decoupled income support mechanisms that 
fail to account for changes in production costs and 
productivity.
    The NFU proposal seeks to achieve a balanced and meaningful 
economic safety net for producers, implement programs that 
expand market demand, enhance producer prices and reduce the 
negative impact of surplus production that overhangs the 
commercial marketplace. This proposal can provide the savings 
and flexibility needed to address other policy issues, such as 
conservation, nutrition, research and rural development.
    The safety net component of the NFU proposal substitutes an 
improved counter-cyclical commodity marketing loan program 
based on current production for de-coupled contract payments. 
The loan is based on a percentage of the full economic cost of 
production and ensures competitive market prices. This 
mechanism provides equity among program crops and allows for 
annual adjustments in commodity loan rates due to changes in 
producer input costs and productivity.
    To enhance the prices received by farmers, we propose the 
creation of limited and dedicated reserve programs to ensure 
our ability to supply new demand opportunities, such as 
renewable energy production and a global school lunch program. 
These reserves would be released only for their specified use 
during periods of short supply or rising prices that may 
inhibit the growth of these markets.
    In addition, we propose supplementing the crop insurance 
program through a limited farmer-owned reserve that would 
function as a commodity savings account to be used to offset a 
portion of producers losses not covered by multi-peril crop 
insurance. We also support providing discretionary authority to 
implement a voluntary, cost-containment ``Flex Fallow'' type of 
program.
    Finally, as an additional way to control program costs, we 
suggest a new targeting mechanism. Our approach eliminates the 
current multiple entity rules in favor of single attribution 
based on the individual's assumption of production and market 
risk. It does not limit marketing loan benefits but provides 
for a reduction in producer loan eligibility as an operation 
increases in size.
    We urge the members of the committee to fully review our 
proposals in terms of their effect on farmers as well as their 
impact on other policy objectives.
    Madam Chairman, thank you for the opportunity to appear 
before the committee today to discuss this important issue. We 
look forward to constructively working with you and your 
colleagues in the development of new farm policy. I will be 
pleased to respond to any questions. I do want to say that I 
didn't have a lot of time to work on this, so it does not 
address Michigan's diversity. We do call for country of origin 
labeling and have worked hard for that for many years and 
mandatory price reporting on livestock, which what we have 
seems to have turned out to be a fiasco. We are very interested 
in Michigan's various crops, fruits and vegetables and that 
sort of thing. We have always felt----
    Senator Stabenow. Thank you very much.
    Mr. McIlvain [continuing]. Whatever a farmer produces in 
food should have some kind of taxpayer backing of one kind of 
another for emergencies.
    [The prepared statement of Mr. McIlvain can be found in the 
appendix on page 41.]
    Senator Stabenow. Thank you, Carl. I appreciate your 
testimony very much.
    Phil Korson.

    STATEMENT OF PHILIP KORSON, PRESIDENT, CHERRY MARKETING 
               INSTITUTE, INC., LANSING, MICHIGAN

    Mr. Korson. Good morning, Senator Stabenow and Congressman 
Barcia, and thank you for the opportunity to speak today and be 
a part of this Congressional--Senate Field Hearing. My name is 
Phil Korson. I am President of Cherry Marketing Institute. We 
represent growers in Michigan, Utah, New York, Wisconsin and 
Washington State. These states represent 95 percent of the U.S. 
production of tart cherries with Michigan producing 75 percent 
of the total on an annual basis.
    The cherry industry has been plagued with large crops and 
low prices for a number of years. High dollar exchange rates 
and tariffs have hindered our ability to expand our markets 
abroad, even though we've spent 10 to 15 percent of our annual 
budget in these markets. In recent years, we have discounted 
the price of the product to maintain our markets abroad, and 
yet the pressure continues as we look to the future.
    On the regulatory side, FQPA continues to threaten our 
ability to control diseases and insects, and new pesticides are 
more expensive, increasing the cost of production. The cherry 
industry has had a national program in place since the 1960's, 
and in August 1996, we put in place a Federal marketing order 
to regulate supplies. These are both self-help programs. We 
have developed many new products, including dried cherries, 
cherry juice concentrate, cherry and meat products, and they've 
all been exciting new opportunities for us and for our 
industry. However, in the short term, the industry remains in a 
surplus position, and the needs for Federal support to get to 
the long term is more critical today than it has been in the 
past.
    Cherry farmers support inclusion in the 2002 Farm bill, and 
we encourage your support to cover all specialty crops--and I 
should subnote that by saying those specialty crops that wish 
to participate in the Farm bill. We currently have a three-part 
plan that we would like to see incorporated in the 2002 Farm 
bill.
    First is the establishment of a pool of $300 million that 
would be managed by USDA to buy crops in surplus, where 
producers have received prices below the cost of production for 
the previous 2 years. We had a program in place this past year; 
worked very well in our industry and removed a lot of product 
from the marketplace, gave us an opportunity to introduce dried 
cherries into the school lunch program. It's been a huge 
sampling program for us and had we not had a large crop this 
year, we would have been in an excellent market position coming 
into this crop year. We didn't have a small crop; we had a 
large crop. Therefore we're back in the arena again to try to 
figure out how we're going to move this crop with the current 
economic conditions that we face.
    We also support expansion of the Conservation Reserve 
Program to include tree fruit and other specialty crops to pay 
for the removal of orchards and give growers a reasonable rent 
for the management of the conservation reserve practice that's 
been enacted. In the west side of the state, most of the 
cropland that we have is on highly erodible soils, and we see 
it as an option for a farmer as he gets a little bit older to 
have conservation reserve as an option as opposed to just 
selling that land for development down the road. It also give 
farmers who are in the business an opportunity to have land 
that's plantable when those contracts expire 10 to 15 years 
down the road. In a sense, it preserves farmland, makes it 
available to future generations and gives farmers options that 
are in the business currently.
    Finally, we support the development of a safety net that 
will pay cherry farmers and other specialty crop farmers in 
years when prices drop below 80 percent of the cost of 
production. This would greatly help American specialty crop 
farmers when the market collapses. It would also provideshort-
term program assistance to American specialty farmers.
    Basically what we're looking at is a program that kicks 
into place when everything else fails. As we look at the 
markets today, we can't control our exchange rates abroad, yet 
they have a huge impact on the amount of product that we're 
going to sell when our dollar is very strong in the market 
abroad.
    With that, I would like to thank you again for the 
hearings, for being here in Michigan to host these, and look 
forward to working with you as we move forward. Thank you.
    [The prepared statement of Mr. Korson can be found in the 
appendix on page 43.]
    Senator Stabenow. Thank you very much, Phil.
    Elwood.

   STATEMENT OF ELWOOD KIRKPATRICK, PRESIDENT, MICHIGAN MILK 
                     PRODUCERS ASSOCIATION

    Mr. Kirkpatrick. Good morning, Senator Stabenow, 
Congressman Barcia. I appreciate your interest in holding this 
farm policy hearing here in Michigan and appreciate the 
opportunity to appear before it.
    I am Elwood Kirkpatrick, President of Michigan Milk 
Producers Association. The association is owned and controlled 
by over 2700 dairy farmers in Wisconsin, Indiana, Ohio and 
Michigan. I also serve as First Vice President of National Milk 
Producers Federation in Arlington, Virginia. National Milk is 
the national voice of 60,000 dairy producers back in Washington 
and across the country.
    I would like to spend some time today discussing the 
perspective of both MMPA and National Milk on the proper role 
for the Federal Government in assisting the domestic dairy 
industry through the upcoming Farm bill. I am going to touch on 
more than on just dairy-specific aspects of the next Farm bill.
    The dairy industry is unique among agriculture commodities 
because milk is a highly perishable product, bulky and not 
easily stored. Dairy farmers must market their production every 
day regardless of price. I would like to stress that, even 
though sometimes thought differently, over 95 percent of the 
dairy operations in this country are family farms.
    I would like to speak a little bit about what we would call 
the dairy safety net. At the present time, MMPA and National 
Milk Producers recommend the enactment of a dairy safety net 
program with the following features:
    No. 1, extend the dairy price support--which was scheduled 
to be eliminated this December--extend the dairy price support 
program at $9.90 through the life of the next Farm bill; and, 
No. 2, establish a supplemental payment program involving a 
floor price for Class III and Class IV milk with supplemental 
payments being paid to the Federal Order pool when the price 
drops below a certain target for those products.
    The dairy price support program has proven to be an 
effective means of stabilizing dairy producer prices and 
incomes at relatively low cost to the government. The basic 
rationale for enacting a Class III and IV supplemental payment 
component of the dairy safety net is producer equity. Enacting 
a supplemental payment program for milk used to manufacture 
dairy products would increase dairy producer income by $5.4 
billion over the 2002-2008 time period. Since Class III 
producers would be the primary recipient of this income, the 
program would go a long ways in helping this segment of the 
dairy farm community. We believe this supplemental payment 
program, when coupled with the continuation of the price 
support, can provide the basis for a safety net for dairy 
producers throughout the state.
    In the area of animal health, Senator Stabenow, we know 
that animal health concerns have been splashed all across the 
news in recent months from here in Michigan to all the way 
around the world. The ability to prevent and control such 
disease as Foot and Mouth and BSE is crucial to the entire 
livestock industry.
    Much of the focus here in Michigan in recent years has been 
on eradicating the unfortunate appearance of T.B., and we 
appreciate your efforts in helping to get funds into Michigan 
to carry that program forward.
    Johne's Disease: We have another livestock disease that 
needs a Federal response similar to the response directed 
toward T.B. and brucellosis. Johne's is an infectious disorder 
of the intestinal tract of cattle and other ruminants. It is 
not a threat to human health, but just like Foot and Mouth, the 
disease is a major concern to dairy farmers who have to deal 
with its economic consequences.
    This disease has no effective cure and a vaccine of limited 
efficacy, costs the U.S. dairy industry at least 200 million 
annually in lost production and reduced cull cow prices. Thus 
we are asking for a multi-year program that would help control 
Johne's Disease.
    In the area of environment, dairy producers take pride in 
being stewards of their land and water resources. However, the 
committee should be well aware of the current and potential 
financial impact on producers of certain environmental 
compliance initiatives, such as the new animal feeding strategy 
released the past 2 years by EPA and USDA. We support 
environmental regulation based on sound science, but we can't 
go out of business seeking to comply with often complex 
regulatory requirements. We do support funding the EQIP program 
at 1.25 billion annually, and we would ask that the program be 
opened up to include more individuals than what it has been in 
the past.
    Trade policy is another critical element of government 
policy affecting dairy producers. Trade policy will continue to 
play a critical role in determining U.S. dairy farmers' income. 
I know this issue well because of my role as the chairman of 
the U.S. Dairy Export Council.
    MMPA believes Congress should be involved in carefully 
reviewing future trade agreements as well as providing our 
negotiators with the necessary resources to negotiate well-
monitored agreements. We support the foreign ag service and 
their activities, and we would also support granting the 
President Trade Promotion Authority but with congressional 
oversight.
    Milk protein concentrate imports: Dairy product import 
quotas initially imposed under the authority of Section 22 of 
the Agricultural Adjustment Acts of 1933 and 1935 were designed 
to prevent imports from undermining the dairy price support 
program. Implementation of the GATT and NAFTA trade agreements 
have eliminated the Section 22 quotas, converting them to 
tariff rate quotas for which the tariffs have been reduced over 
time. We do have a bill in the Senate now that would establish 
quotas for the milk protein concentrate. Senator Stabenow, we 
appreciate you and Senator Levin's co-sponsoring of that 
legislation.
    We support the Dairy Export Incentive Program and would ask 
that it be funded at the full level allowed under the GATT 
agreement for the continuation of the next Farm bill, and we 
also would support increasing the funding for the Market Access 
Program that is of great assistance in developing export 
markets for our dairy products.
    Taxes: Last, Senator Stabenow, tax issues weigh heavily on 
farmers just as they do on other taxpayers. We support efforts 
that have already been undertaken this year in Congress to 
provide some form of tax relief for dairy producers. We would 
hope that the elimination of the inheritance tax could be made 
permanent at some point. We're all trying to figure out how we 
die in 2011 so you can pass it on----
    In conclusion, I would just to say thank you for you and 
Chairman Harkin and Minority Member Lugar for the opportunity 
to review with the Senate the dairy producer community's 
recommendations for a comprehensive set of policies that 
provide the framework for the next Farm bill, and we would 
answer any questions and look forward to working with you 
through the year. Thank you.
    [The prepared statement of Mr. Kirkpatrick can be found in 
the appendix on page 44.]
    Senator Stabenow. Thank you, Elwood. I would just concur 
that the way the estate tax was written was pretty crazy, 
actually.
    I notice that Representative A.T. Frank has joined us, so 
welcome, A.T. We're glad to have you with us. Senator Goschka--
did he sneak in? Welcome. Glad to have you.
    Last but not least, Jody Pollok. Jody, we're glad to have 
you.

  STATEMENT OF JODY POLLOK, EXECUTIVE DIRECTOR, MICHIGAN CORN 
                      GROWERS ASSOCIATION

    Ms. Pollok. Thank you. Good morning. Senator Stabenow and 
Congressman Barcia, on behalf of the state's corn producers, we 
appreciate the opportunity to give you some ideas and maybe 
some insight into where we're coming at looking at the 2002 
Farm bill.
    I am the Executive Director of both organizations and have 
been in that position about a year and a half but did grow up 
on a farm. I've walked through the fields too and know where 
we're coming from. We looked at things a little bit differently 
this year and kind of stepped aside and looked at some of the 
challenges that we had had over the past year and a half and 
looked at ways maybe we can make things a little bit better or 
at least look at them differently and see if there weren't some 
other opportunities.
    As we know--and it was mentioned previously by Wayne--there 
are some challenges in Michigan. Especially when you look at 
LDP's, looking at selecting dates, when we look at some of the 
transportation issues, when we look at market prices, look at 
our terminal markets, there are some challenges there. When we 
look at making sure those funds go back to those producers and 
not maybe to a landlord or to someone else. Those are some of 
the challenges we started with. We do participate with the 
National Corn Growers Association, so what we did to get 
started was we pretty much all got in a room and threw out and 
what all the problems were and then said, ``What do we want?''
    We're kind of coming at this from a different angle, but 
one of the things we've looked and we're still working on 
numbers and still certainly perfecting it--but one of the 
things we're looking at is a counter-cyclical program. This is 
more of an income-protection program to make sure that those 
funds get back to that producer to allow that producer 
flexibility and allow them the opportunities to do the things 
that work best for their farm and for their operation. I'm not 
going to go in depth on that because that's already been 
presented to the committee but just kind of want to give you a 
little input from where we're at and some of our concerns.
    We're very concerned when we look at trade. One of my 
colleagues up here has brought up the issue of trade and some 
of our challenges there. In the corn industry this past year, 
there was basically a claim filed by Manitoba discussing 
payments that were going to corn producers. We were able to 
work through that and that was able to not be made a big issue, 
but we're concerned of things like that coming up in the 
future. Once a precedent is set and those kinds of claims are 
filed, you always have those challenges in the future.
    We know that we're hitting on that amber box. We're hitting 
some of those trade issues. We're hitting that amount. What we 
tried to do is look at it, what can we do to change some of 
that support and to make it so it's a little more open, and 
maybe it falls into that green box to look at payments that can 
be received. That's where we were looking at those counter-
cyclical or income-protection program. What we're trying to do 
is come up with a program that doesn't destroy trade. It would 
give producers a chance to update their bases over the past 5 
years, and it would be an income-protection versus a per-basis 
payment. In all the review that we've done and all the homework 
we've done, it looks like that is a program that is going to 
move that to the green box and give us opportunities.
    We want to make sure we don't come up with a program that 
limits us at all in trade but gives us free opportunity to be 
able to get into trade. We talked earlier today a little bit 
about some of the opportunities of Mexico and Canada. We in 
Michigan want to produce corn for a market, and we want to make 
sure that that's market's open and we have every opportunity to 
be able to get to that market. That's kind of where we're at 
and what we're looking at as far as the counter-cyclical 
program.
    We also want to make sure that we're producing. We've had 
programs in the past where we've taken land out of production, 
and that's tended to open up some great opportunities for some 
of our competitors. We want to make sure that we have the 
opportunity to produce, and we also want to be on the cutting 
edge and we want to be innovative.
    We want to thank both of you in the past for helping us in 
ethanol, and right now that's our big project of the day and 
what we're trying to tie our star to and help the corn industry 
in Michigan, but we're looking at ethanol production. There may 
be some great opportunities through the Farm bill to be able to 
do some things for value-added. One of those places where we're 
looking right now is at ethanol because that's our biggest 
star; that's our first upcoming. There may be some ways that we 
can look at farm bill, the value-added, put some opportunities 
in there for producers.
    We looked at consolidation and some of the opportunities 
that are out there. Let's try to put some of that market back 
in the producers' hands. Let them market a product and not just 
a commodity. We also want to make sure that we're doing 
legislation through the Farm bill that's also going to mirror 
and work well with energy policy and also look at some of the 
new things coming further down the pike.
    We talked about research opportunities. There's a lot of 
opportunities for biodegradables in corn. As a board, we've 
looked at the industry and in the next 10 years, the Michigan 
Corn Growers Association and Corn Marketing Program of Michigan 
do not want to sell corn. We want to sell a value-added 
product. Our goal is to have 75 percent of the corn going out 
of Michigan as a value-added product in the next 10 years.
    Those are some of the new and different kinds of ideas 
we're looking at in a farm bill and hope to look for your 
support. We really look forward to working with you in the 
future to refine these ideas and see what kind of programs we 
can develop. Thank you very much.
    Senator Stabenow. Thanks.
    [The prepared statement of Ms. Pollok can be found in the 
appendix on page 51.]
    Senator Stabenow. Well, thank you very much to all of you. 
We appreciate your comments. Jody, let me just ask you to 
followup for a moment on the issue of ethanol. As I have 
mentioned before, Senator Harkin wants to add an energy title 
to the Farm bill. That's a great opportunity for us in Michigan 
agriculture to look for ways that we can add value, that we can 
take advantage of the current debate on energy and really focus 
it on agricultural products. From your standpoint in an energy 
title, what would you want to have there in order to be helpful 
to you?
    Ms. Pollok. Some of the things that we're looking at, 
especially from an energy standpoint, may be able to do some 
things as far as to get fuel out to producers. Right now we 
have flex-fuel vehicles, which are great and wonderful, and we 
need to support the auto industry as they make those. Just 
because you have a flex-fuel vehicle doesn't mean that you use 
that ethanol fuel in that vehicle. There are some 
opportunities--we've talked and just tried to do some 
brainstorming--maybe there's some opportunities to use actually 
some tax credits back to folks that actually use some of the 
renewables. Economically they're pretty much in line, but 
things happen in the market, and we want to make sure that we 
have that steady flow.
    Infrastructure development is expensive. You're going to 
have that as we look at biodegradables; you're going to have 
that as we look at ethanol. We need to know that there's going 
to be some markets there, and nothing takes off overnight. It's 
going to take some time. It's been around since the 70's. We're 
developing it, but we need to know that there's some markets 
there. We need to have some incentives for some of those folks 
that are kind of the catalysts and are willing to get out there 
on the edge and put ethanol into their fuel. Also we're trying 
to come through through the check-off program and do the 
education, but that takes time to let people know. Anything we 
can do tax-incentivewise to be able to get the consumers to use 
that and look at biodegradables and ethanol would be great.
    Senator Stabenow. Anyone else want to respond in terms of 
the energy title or issues that you would want us to look at as 
it relates to that? I know that specific area will benefit from 
an energy title relating to corn, I know soybeans. We have 
certainly other crops that might benefit. Carl.
    Mr. McIlvain. As I mentioned--not in my statement but 
earlier, that National Farmers Union has been proposing an 
energy reserve while crop prices are as low as they are--to 
buildup a reserve of soybeans, corn, sugar--anything that can 
be made into ethanol or oil products. Soybean oil can be made 
into anything, I understand, that petroleum will make. We could 
have an energy reserve of that sort and take some of these 
commodities off the market that are impacting our prices 
negatively. It might be very cost-effective in the long run.
    Ms. Pollok. I guess I would like to add----
    Senator Stabenow. Sure.
    Ms. Pollok [continuing]. To be able to have the funds to 
help the producers get in on that value-added floor of that 
production facility. We want to make sure that the producers 
aren't just producing the corn, but they're also owning the 
facilities so when that corn comes out as a plastic cup or that 
corn comes out as ethanol or however that corn comes out, 
that's still tied to that producer and they're selling that 
value-added product. We're looking a little further for the 
producer component but also the consumer and the user 
component.
    Senator Stabenow. OK. Wayne.
    Mr. Wood. Thank you. Farm Bureau believes that the energy 
policy should have a goal of our country being self-sustainable 
in the energy area. We believe that our producers hold a key to 
making that happen in this country with our renewable fuel 
resource. We also believe that incentives, as I mentioned, for 
value-added should carry the day in that area as we develop 
this program.
    Mr. Barcia. I'll just make on comment, Debbie, and that is 
we appreciate the words of the distinguished panelists with 
regard to renewable fuel. Part of the energy bill that was 
passed in the House the last week that we were in session a 
couple of weeks ago has an entire section devoted to renewable 
fuels and would allow or at least establish, the beginning of a 
framework in which we could not only use up the surplus 
commodities that our very efficient and highly productive 
American farmers and Michigan farmers are producing but also 
reduce our dependence on foreign oil and the fluctuations on 
the world market of fuel through the manipulation of the OPEC 
nations.
    I know not too many of the panelists have spoken to the 
increased financial burden that these higher fuel prices are 
causing to the bottom line in our farming operations, but 
obviously we can support American agriculture by not only 
expanding our markets abroad, which we need to do, but also 
providing for a reliable and affordable source of renewable 
fuel right within our own country and reduce our dependence on 
foreign oil that, as we've seen this past summer--although we 
have reasonable prices on gasoline and diesel fuel currently, 
this week we've seen wild gyrations in the prices. Those 
increased costs of fuels could wipe out the very, very narrow 
margin of profit of many of our family owned farms especially, 
but any sized farm, really. Thank you, Debbie.
    Senator Stabenow. Sure. Thank you. If I could change topics 
and ask you to respond a little bit more about the impact of 
animal diseases in Michigan particularly as it relates to 
bovine T.B. I know Bob Bender is here with us and others from 
the department that have been working, and I do have a 
commitment from the head of the Agricultural Appropriations in 
the Senate, Senator Herb Kohl from Wisconsin, to double the 
dollars coming into Michigan in terms of addressing bovine 
T.B., but we do need to know from you where the focus should 
be. I know I've asked Bob the same thing. What would be the 
most important way to use those resources to help with the 
bovine T.B. problem?
    Mr. Kirkpatrick. Well, yes, the dairy industry as well as 
the cattle industry have gone through quite a bit where T.B. is 
concerned. Every dairy herd in the state has been tested at 
this time, and basically there is a small area in the state 
where there's a fairly heavy amount of T.B., and the rest of 
the state is basically free. We appreciate the funds that have 
been brought in, and that's been able to allow us to get on 
with the program and get back to a point where we basically 
know in the dairy herd where the T.B. areas are located and 
that the rest of the state is free. That's been very helpful. 
It's also helped in the infrastructure development as far as 
some of the laws that were necessary to carry out the program. 
It even is putting us in fairly good shape--if you're ever in 
good shape--in case Foot and Mouth or something like that might 
enter the country. Certainly research dollars are needed and 
methods of controlling T.B. and isolating it and how it is 
spread--it seems like there are a number of ways that it's 
spread to other animals. Funding will be very helpful.
    Senator Stabenow. You think research, from your standpoint, 
is still one of the major areas where we should focus?
    Mr. Kirkpatrick. Research is still a major area; yes.
    Senator Stabenow. OK. Good. I didn't know if anyone else 
would want to respond on that but--Phil? Yes?
    Mr. Korson. Yes, I certainly would; not necessarily as it 
relates to T.B., Debbie, but as we look at research today and 
the need and demand for research as we look to the future, it's 
absolutely critical and key to the survival of American 
agriculture is that we have a solid investment in research. The 
issues today are more complex in the field. As we move toward 
more environmentally sustainable practices in the field, that 
means ramifications in the farm that we have never thought of 
before. As a result of that, how to deal with those issues is 
all research-based. Even though farm--there's less farm people 
on the farm today, the demand for the research to move to the 
next level of production ag, the research component is 
critical. Whether it's T.B. or whether it's production 
practices on the horticultural side or whether it's new or 
safer pesticides that are used and available in the field, all 
critical components of a solid research program that becomes 
the backbone of American agriculture.
    Senator Stabenow. Let me take this moment as well--since we 
have folks here from Michigan State University--to just say how 
important their research is and how proud I am of the research 
efforts that go on through Michigan State University.
    Let me turn for just a moment to conservation because we 
know that under Senator Harkin's leadership, we're going to see 
a major focus on conservation and strengthening the 
conservation title in the Farm bill. Any specific comments on 
that? I don't know, Wayne, if you want to speak to that, but we 
certainly want to look at that, the CRP program and so on, and 
know what it is that all of you would like to see us include in 
the Farm bill because there's a real opportunity to focus on 
conservation.
    Mr. Wood. Thank you. We at Farm Bureau believe that your 
analysis is correct. There's a real opportunity there, and we 
think there's a real opportunity to move dollars into specialty 
crops by changing some of the rules. You mentioned CRP. I would 
in addition put the CREP program in that area, the EQIP 
program. There's some changes in the rules and guidelines that 
very simply would let that happen if the funding were 
available. We would like to see that EQIP program increased by 
$2 billion. We also believe that there's an opportunity if an 
incentive payment was developed to encourage people to maintain 
those structures, maintain those practices once they're put in 
effect. Some of the practices that we as farmers put in are 
funded and then there's a short requirement on it to maintain 
it. Beyond that point, then, there's very little discipline 
unless you have self-discipline to maintain that practice. The 
CREP program, of course, is a longer-term program, but some of 
the erosion control programs we've had. Those are just a couple 
of areas very quickly. I appreciate you asking the question.
    Senator Stabenow. Carl.
    Mr. McIlvain. Our organization has always had supply 
management as one portion of its policy. As every industrial 
industry practices supply management, if they overproduce, they 
cut production. Farmers seem to be the only system that doesn't 
do that. If they overproduce and the price goes down, they 
produce more. The CRP has been an excellent example of a way to 
control production to some extent and probably should be 
increased dramatically if it could be. I know it has come up to 
49 million or something like that, but there could probably be 
a bunch more million put in right now, possibly even on a 
short-term basis, three or five years instead of ten, something 
of that nature. We should be controlling production in some 
manner, and that's been an excellent program as far as wildlife 
and all kinds of conservation is concerned. It's been really 
good, and it's had nothing but praise from the 
environmentalists and the public in general. Why don't we use 
it to any extent we can?
    Senator Stabenow. Would it be your sense, any of you, that 
we should take what we have and expand that, or is there an 
area that's missing? Is there anything new that we should be 
adding? Phil, did you want to----comment?
    Mr. Korson. I'd like to talk to that issue.
    Senator Stabenow. Sure.
    Mr. Korson. As we look at CRP in particular, specialty 
crops are not a part of CRP. In one of the previous hearings 
that we had earlier this year, we got into quite a debate on 
CRP as it relates to specialty crops because there was a sense 
that we've really put our most highly erodible soils into CRP 
already. That may be true on the field crop side. It is not 
true on the specialty crop side. When I look at expansion--and 
one good example would be the asparagus industry on the west 
side of the state that's under unbelievable pressure today. If 
a CRP component was added for the asparagus industry for 
specialty crops that covered asparagus--those are very highly 
erodible soils. We're in an overproduction situation because of 
a production that came into play in South America in recent 
years that's coming into this country duty-free. For some of 
those older growers that may want to hold onto their land, take 
that asparagus out, put it into a conservation reserve 
practice, preserves that land for a later production. That's 
one whole area in the specialty crop arena where we've got a 
lot of highly erodible soils that have never had an opportunity 
to be enrolled.
    Senator Stabenow. Speaking about specialty crops, this will 
be a major area of discussion in the Farm bill in terms of how 
to include specialty crops. Any other thoughts regarding what 
should be looked at in the area of specialty crops? Specialty 
crops are so diverse. There are maybe those that don't want to 
participate in federal programs but that for those that do the 
option, what should we include in the Farm bill? When we look 
at Michigan and look at the focus on AMTA payments and the 
program crops right now, that's leaving a lot of crops out of 
the picture. We have to look at broadening that. Would anyone 
like to respond to that? Wayne.
    Mr. Wood. Well, one of the things we haven't talked about 
is the Tree Assistance Program. I know it was touched on very 
briefly, but that has assisted a lot of growers in the past. If 
we could, it would be nice to put it in retroactive to the year 
2000 to help out--I know there's a lot of dollars and I know 
you helped us get money for fire blight, but there's still 
challenges out there in removing those trees and replacing the 
trees and getting the production going again.
    You asked about the specialty crops, one of the things that 
probably would be very helpful is if we had more opportunity to 
hear from those folks on what they actually want to do. We find 
it challenging in our organization, being the large general 
farm organization, to really hear from those folks. Now, having 
said that, it would be very easy to say, ``Well, why don't they 
tell us what they want?'' They try to, but some of us are so 
ingrained in the traditional program crops that it's hard for 
us to listen. We have to listen to them as individual 
commodities just the same as dairy and corn and wheat are 
rather than, as Phil said, the specialty crop area and try and 
brush it with one paint.
    Senator Stabenow. Well, I would agree. At today's field 
hearing, I have tried to include a number of different folks 
representing specialty crops both here and in Grand Rapids. 
We've tried to reach out to everyone that we can find to invite 
people to give us their ideas. That's very important, so we've 
reached the end of our time for our first panel. I want to 
thank all of you very much and invite our next panel to come 
and join us. I appreciate your coming here this morning and 
providing us with important testimony. Thank you.
    [Recess.]
    Senator Stabenow. Let's come to order for the second panel. 
Welcome. We appreciate your being with us. It's just been 
brought to my attention as well that we have Eric Friedman from 
Representative Dave Camp's office. Where is Eric? We're very 
pleased to have you here with us on behalf of Congressman Camp, 
so thank you. I noticed also walking in the room is Christine 
Juarez from my office. Christine, I didn't get a chance to 
introduce you earlier. Christine is in the back, and we're glad 
to have her with us today as well.
    Let me introduce our second panel, another group of 
distinguished individuals. Let me start with Frank Kubik, who's 
been the Manager of the Commodity Supplemental Food Program at 
Focus: HOPE in Detroit. We appreciate your coming over, and we 
know you've been in that capacity since 1990. Frank started 
working with Focus: HOPE actually in 1981 in the food program 
warehouse. In addition to managing the food program in Detroit, 
he's serving his second term as the President of the National 
Commodity Supplemental Food Program Association. Focus: HOPE, 
as we know, does many things including job training but in 
addition it provides food on a monthly basis to over 13,000 
mothers, infants, children and seniors in Wayne, Macomb and 
Oakland Counties. It's the largest CSFP in the state, and 
Michigan is the largest CSFP participating state in the 
country. It's a major program.
    We're also pleased to have Dr. Lonnie King. Lonnie King is 
the Dean, as we know, of the College of Veterinary Medicine at 
Michigan State University. He's the 11th dean in the history of 
the college since it was established by the Michigan 
legislature in 1910. As Dean, he's the Chief Executive Officer 
for academic programs, research, the teaching hospital, animal 
health diagnostic laboratory, basic and clinical science 
programs and the outreach and continuing education programs.
    Prior to this, Dr. King was administrator with the USDA 
Animal and Plant Inspection Service. Before starting his 
government career in 1977, he was a private veterinarian and 
brings that important perspective as well. He's served as 
President of the American Association of Veterinary Medical 
Colleges from 1999 to 2000 and is currently Vice Chair of the 
National Commission on Veterinary Economic Issues. Lonnie, 
welcome. Glad to have you.
    Sam Hines is with us. Sam is the Executive Vice President 
of the Michigan Pork Producers Association, and he's 
responsible for administering programs and pork promotion, 
consumer information and research financed by pork producers 
through a national check-off authorized by the Pork Promotion 
Research and Consumer Information Act of 1985. In addition, 
he's responsible for monitoring legislation and regulatory 
activities that affect the Michigan pork producers and for 
conducting the industry's public policy initiatives. Sam has 
nearly 40 years' experience in the pork industry. You don't 
look that old. You must have started when you were 5.
    Mr. Thayer. I guess pork is good for you.
    Senator Stabenow. Yes, pork is good for you. He's actually 
102 years old.
    Mr. Hines. Sometimes I feel like it.
    Senator Stabenow. Sam's been involved with the National 
Pork Producers since 1972 and managed the pork producers 
association in Michigan since 1986. Welcome.
    Curtis Thayer; Curtis is the Director of the Michigan 
Soybean Association. We're glad to have you. He was born in 
December and the following spring his mother had him out in the 
buggy in the garden with her and you've been working the land 
ever since, so it's wonderful to have you. He was an American 
farmer through the FFA and has been involved in farm 
organizations all his life. Curtis has a farm with his family 
located four miles west of Freeland in Midland County. A 
portion of that acreage passed down to him from his grandfather 
has been designated a centennial farm. He grows a number of 
crops, including wheat, corn, soybeans and sugar beets.
    Dick Leach, welcome. Dick is Executive Vice President of 
the Great Lakes Sugar Beet Growers. His organization represents 
1400 growers in Michigan. His sons have taken over the family 
farm where Dick grew sugar beets for many years. He is now 
working full time on behalf of Michigan's sugar beet growers. 
It's been a pleasure to work with you as well, Dick.
    Welcome to each of you this morning, and let's start with 
Frank.

         STATEMENT OF FRANK KUBIK, PRESIDENT, NATIONAL 
          COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP) 
          ASSOCIATION AND CSFP MANAGER FOR FOCUS: HOPE

    Mr. Kubik. Good morning, Senator Stabenow and honored 
guests. I'm grateful for this opportunity given us today. The 
Commodity Supplemental Food Program is a proven, effective 
product program of nutritionally designed monthly supplemental 
food packages for low-income seniors and mothers and children 
not eligible for WIC. Proper and adequate nutrient intake 
through a healthy diet is proven to promote health and prevent 
chronic disease. Seniors, especially low-income seniors, need 
the special nutrition assistance to be healthy. CSFP was the 
nation's first Federal food supplementation effort with monthly 
food packages designed to provide protein, calcium, iron and 
vitamins A and C.
    For fiscal year 2001, CSFP has a monthly caseload of 
447,683 participants in 23 states of which approximately78 
percent are seniors. Focus: HOPE was the first operator of the 
CSFP in the State of Michigan. Working with you and others in 
the delegation, this program has now been expanded so that it 
is operated by 19 local agencies across Michigan serving 79 of 
83 counties with a combined monthly caseload of 90,000. For 
fiscal year 2001, USDA will provide over $20 million for the 
CSFP's in Michigan. Many of the commodities purchased for the 
program are grown in this state. CSFP supports farmers in 
Michigan and throughout the country.
    I personally receive many calls from senior citizens who 
are desperate for food and have nowhere else to turn. This 
program is a lifeline for many seniors. The average income of a 
senior on our program is $551 per month.
    The United States Department of Agriculture purchases 
specific nutrient-rich foods at wholesale prices for 
distribution to those eligible for CSFP. Within states, 
agencies of health, agriculture or education are designated to 
operate CSFP. These state agencies contract with community and 
faith-based organizations to warehouse, certify, distribute and 
educate individual participants every month. The local agencies 
build broad coalitions between private nonprofits, health units 
and area agencies on aging so that seniors can quickly certify 
and receive their monthly supplemental food package along with 
nutrition education to improve their quality of life. This 
design of a public-private partnership effectively reaches even 
homebound seniors.
    With the aging of America, the National CSFP Association's 
position is that CSFP should be an integral part of the USDA's 
senior nutrition policy. Emphasis and attention now need to 
turn toward seniors' quality of life and productivity. This is 
the most cost-effective way to provide the nutrient-rich foods 
that low-income seniors are lacking.
    The Commodity Supplemental Food Program stands as a 
testimony to the power of partnerships between community-based 
organizations, private industry and government agencies. CSFP 
offers a unique combination of advantages unparalleled by any 
other food assistance program. CSFP involves the entire 
community in the problems of hunger and poverty. Thousands of 
volunteers as well as many private companies donate money, 
equipment and, most importantly, time to deliver food to 
homebound seniors.
    Measures to show the positive outcomes of nutrition 
assistance to seniors need to be strengthened. A 1997 report by 
the National Policy and Resource Center on Nutrition and Aging 
at Florida International University called Elder Insecurities: 
Poverty, Hunger and Malnutrition indicated that malnourished 
elderly patients experienced 2 to 20 times more medical 
complications, have up to 100 percent longer hospital stays and 
incur hospital costs $2,000 to $10,000 higher per stay. Proper 
nutrition promotes health, treats chronic disease, decreases 
hospital length of stay and saves health care dollars.
    The National CSFP Association is proud to be the 
organization of state and local operators who are dedicated to 
providing our most vulnerable seniors and mothers and children 
with the important nutrient-designed supplemental food packages 
and nutrition education every month to better their quality of 
life. This program continues with committed grassroots 
operators and volunteers. The mission is to provide quality 
nutrition assistance economically, efficiently and responsibly, 
always keeping the needs and dignity of our participants first. 
Our goal is to have CSFP available in all 50 states.
    We are grateful to our congressional friends for their 
support to further the program. We also to commend the Food and 
Nutrition Service of the Department of Agriculture and 
particularly the Food Distribution Division for their continued 
innovations to strengthen the quality of the food package and 
streamline administration. Please continue to support our at-
risk seniors and women and children through the reauthorization 
of the Commodity Supplemental Food Program in a new farm bill. 
Thank you.
    [The prepared statement of Mr. Kubik can be found in the 
appendix on page 53.]
    Senator Stabenow. Thank you, Frank.
    Dr. King.

STATEMENT OF DR. LONNIE KING, DEAN OF THE COLLEGE OF VETERINARY 
             MEDICINE AT MICHIGAN STATE UNIVERSITY

    Dr. King. Well, good morning, Senator Stabenow and 
Congressman Barcia. I'm honored by your invitation to testify 
before you this morning. I'm also pleased that you've taken the 
initiative of holding two field hearings in Michigan today. I 
am Lonnie King, Dean of the College of Veterinary Medicine.
    The original goals of U.S. agriculture programs and past 
farm acts traditionally have focused on commodity prices, 
supply controls and income-support policies. However, recent 
farm bills have needed to balance competing needs and demands 
in growing perspectives from an ever-expanding group of new 
stakeholders and special interests. The 2002 Farm bill will 
generate even greater interest and be debated in the midst of 
unprecedented social challenges and scientific findings and 
critical driving forces.
    A few years ago, Andy Grove, who was the CEO of Intel, 
coined a phrase called ``strategic inflection point.'' This is 
a time in the life of an enterprise when its very fundamentals 
are about to change and a time when these fundamentals will 
prove that past successes and strategies may no longer be 
relevant or effective. This may be the backdrop for our new 
farm bill.
    In my opinion, there are five of these strategic inflection 
points that are going to have to be considered and maybe 
considered in the Farm bill. One of these is a shift from local 
and national markets that were commodity focused to a global 
market that's much more value-added and niche market focused. A 
second is a shift from an emphasis on production increases to a 
new emphasis on the social and the public acceptance of our 
products. Third, a shift from being a privileged class, if you 
will, to an industry that some of the public holds in less 
esteem and believes that we may be responsible for some of 
societal ills. Fourth, a shift from envisioning food as just 
sustenance to food as a real health promoter. Fifth, a shift 
from just looking at animal health to also looking at a role in 
the public's health.
    Collectively, these five critical factors are going to 
demand new strategies, new policies and new research education 
thrusts. While the Farm bills of the past have laid the 
infrastructure and policies for traditional agriculture, the 
next Farm bill should also lead the way for fundamental changes 
in agriculture commensurate with the profound driving forces in 
these critical inflection points.
    Just briefly touching on these--our future is as much about 
capturing opportunity share as it is about capturing current 
market share. As the world's population grows and trades in 
agriculture continues, we're going to be engaged in a new 
revolution. That's the livestock and poultry revolution that 
many believe will be an unprecedented event in agriculture over 
the next two decades. This revolution will have profound 
implications on our health, our livelihoods and the 
environment. Population growth, urbanization, income growth in 
developing countries are fueling a massive global increase into 
the demand of food-animal products and new proteins. This 
seminal shift will produce remarkable opportunities for U.S. 
food and fiber systems.
    The Farm bill needs to ensure expansion of trade, improving 
foreign market access and scientifically based WTO standards 
and policies. For much of the last century, advances in food-
animal production have centered on improvements in production 
efficiencies. Led by agricultural research, it's been an 
extraordinary success. Now we're looking at changes from 
economic efficiency to environmental sustainability and, most 
recently, a unique phenomenon, and that is the social and 
public acceptability of food. Without question, we witnessed 
changes in the retailing and marketing and production industry 
that attempt to differentiate products by special socially 
accepted practices promoting food safety, animal well-being and 
environmental sustainability. These will be driven by the 
global marketplace and consumer demands and future research and 
educational programs in the Farm bill would be critical to 
food-animal agriculture in our future markets.
    The third one was this changing persona of an industry that 
has been held in high esteem, and now we are concerned that the 
public views us because of some of the issues in food safety 
and degradation of the environment and subsidies, and we need 
to do more about changing that. We need a national and 
proactive strategy to help change this public opinion. The 2002 
Farm bill can provide a welcome forum and to construct a new 
social contract between production agriculture and consumers 
and the public in general.
    The fourth is just beginning to be realized, and it's based 
on the advances in genetics and proteomics. It's going to 
create an entire new life science industry characterized on the 
convergence of agriculture, pharmaceuticals, health care and 
computing. This may be a $15 trillion business by the year 
2025. This transformation will change the future of food. 
Instead of being perceived as a necessary staple of our 
existence, food will become an essential component of our 
health, our quality of life and enhanced productivity. Food 
will be combined with medicines, vaccines, nutraceuticals and 
will be used for special health requirements. As we move to 
leverage the opportunity in the life sciences and support of 
agricultural research, I hope that your committee will be 
helpful in ensuring that agriculture issues are included in the 
research agenda of the NIH and NSF and other Federal agencies.
    The final one is moving toward public health, and we've 
seen new emerging diseases, new food safety problems, 30 new 
diseases and 75 percent of them are zoonotic or passed through 
animals. We in Michigan--we've already talked about our T.B. 
situation. We surely have appreciated your support. The foreign 
animal diseases, Foot and Mouth disease and BSE, may impact a 
$100 billion industry here.
    Let me close by offering several concrete actions: One is 
to double the Federal investments in food and agriculture 
research over the next 5 years of the Farm bill; two is to fund 
the National Research Initiative and Competitive Grants to the 
level originally planned by Congress and the USDA, and that's 
$500 million; third is to fully support the Initiative for 
Future Agriculture and Food Systems; to also develop this new 
social contract in the Farm bill that we talked about; help 
develop strategic plans to lead us into the livestock 
revolution; help prepare for the continuation of new emerging 
diseases--it's not a matter of ``when''; it's a matter of 
``if'' it will occur--and finally to help have a new equal 
partnership with Health and Human Services to promote the 
public's health and expanding agriculture research into these 
areas.
    Thank you very much for the opportunity to give testimony 
this morning and also thank you for your tremendous 
responsiveness and support of Michigan and U.S. agriculture.
    [The prepared statement of Dr. King can be found in the 
appendix on page 57.]
    Senator Stabenow. Thank you, Lonnie.
    Sam Hines.

  STATEMENT OF SAM HINES, MICHIGAN PORK PRODUCERS ASSOCIATION

    Mr. Hines. Thank you and good morning, Senator Stabenow and 
Congressman Barcia. Like my predecessors, I want to convey the 
pork producers' appreciation for you holding this field hearing 
and giving us an opportunity to share some of our concerns.
    I must say that U.S. and Michigan pork producers are 
extremely pleased and excited 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 they provide. Iowa Senator Tom Harkin's 
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, and Senator Crapo 
are working on separate conservation bills with many valuable 
policy proposals.
    As we have stated before, livestock and poultry producers 
faces 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 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. 
In many cases, the costs are simply prohibitive. A $1.2 billion 
a year increase for the Environmental Quality Incentives 
Program, which 50 percent would go to livestock and poultry 
producers, is a historic step forward. However, as previous 
testimony from the National Pork Producers Council 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 in order 
to meet the pressing conservation assistance needs existing in 
all agricultural sectors.
    That 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 very 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 will need cost share assistance if they 
are to remain economically viable while providing the public 
with the environmental benefits they obviously see. For 
example, the Environmental Protection Agency's analysis for the 
proposed CAFO rule assumes it will cost a 3444-head farrow to 
finish swine operation $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 maintain its new system. Any EQIP provision that 
excludes operations simply on the basis of the 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, something this committee 
surely 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 payments should not be limited by year 
but by the needs of the overall EQIP contract.
    Second, protecting water and air quality as it relates to 
livestock and poultry manure management must be national 
priorities for EQIP. 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 both your Conservation Security 
Act and Senator Lugar's concept paper provide for the use of 
such persons, and we support your efforts.
    I would like to say just a little bit about the Market 
Access Program. Michigan Pork Producers Association has long 
supported increasing the authorization of the Market Access 
Program. 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. pork 
exports. U.S. pork producers became net exporters in 1995 for 
the first time. In 2000, pork exports totaled 556,895 metric 
tons worth $1.3 billion. Exports increased 12 percent by volume 
and 18 percent by value compared to 1999.
    In order to sustain the profitability of our producers, we 
must do a better job of opening markets and doing away with 
market distorting trade practices. We must retool and implement 
aggressive export promotion and humanitarian assistance 
programs to stimulate consumption of meat products globally.
    Finally, I would just like to mention that pork producers 
also strongly support the reauthorization of the pseudorabies 
eradication program. This program has helped bring pork 
producers within striking distance of eliminating the disease 
from U.S. herds. I know, Senator, you in the past, along with 
Congressman Barcia and Senator Levin, have been very helpful in 
assuring that we had adequate funding for this. I will tell you 
that pseudorabies has been eradicated in Michigan, and as a 
result, the Canadian border has been opened to Michigan hogs, 
giving the state's producers an additional marketing 
alternative. We're within an eyelash of getting it done 
nationally. Those are a few of our concerns. Again, we 
appreciate very much the opportunity to share them and we have 
some added comments in the written testimony that was 
submitted. Thank you very much.
    [The prepared statement of Mr. Hines can found in the 
appendix on page 65.]
    Senator Stabenow. Thank you, Sam.
    Curtis Thayer, welcome.

    STATEMENT OF CURTIS THAYER, DIRECTOR, MICHIGAN SOYBEAN 
                          ASSOCIATION

    Mr. Thayer. Good morning, Senator Stabenow and your staff. 
I am Curtis Thayer, a soybean and corn farmer from Freeland, 
Michigan. I currently serve as a Director on the Michigan 
Soybean Association. We commend you, Senator, for the lead that 
you are taking to hold these agricultural field hearings in 
Michigan and for listening to the voice of American farmers.
    In short, oilseed producer organizations recognize that 
crops which can be planted interchangeably should have programs 
that provide balanced and equitable price and income support. 
The Soybean Association supports production decisions should be 
driven by the market, not by program advantages.
    Intending no disrespect, we do not find the draft farm bill 
to be balanced and equitable in treatment of oilseed crops. It 
gives program crops their current loan rates, the target prices 
they had prior to Fair Act and the 2002 AMTA payment. It gives 
oilseeds reduced loan rates and establishes target prices and 
fixed payments at levels that do not reflect their value or 
historical price relationship to program crops. It then forces 
producers to choose between base periods that lock in these 
inequitable benefits resulting in sharply reduced income 
protection for most oilseed producers and the likelihood of 
increased, base-driven production of program crops.
    We urge the committee to take another look at some of the 
proposals at hearings conducted earlier this year. One of the 
benefits of establishing a new counter-cyclical income-support 
program is that it can be built from the ground up, making it 
easier to address all crops equitably.
    We also are concerned about using payment yields that are 
so far out of date. Other variables could be adjusted to offset 
the higher cost of using recent yields.
    Counter-cyclical payments; regarding the counter--I'm 
tongue-tied--counter-cyclical payment program, the proposed 
target prices for oilseeds are not equitable with those of 
other crops. The 5.86 per bushel target price for soybeans is 
2.1 times the 2.78 target price for corn. Using a very 
conservative price relationship of 2.3 to 1, the soybean target 
price should be $6.39 or 53 cents per bushel higher. Current 
discussion provides no rationale for setting target prices for 
oilseeds at levels that are well below the historical price 
relationship with other crops.
    The proposed counter-cyclical program also would encourage 
producers to sign up for 1991-95 AMTA base period when they 
planted more acreage to traditional program crops. This oilseed 
acreage would not--since oilseed acres are not counted in this 
base option, these producers would forfeit income protection 
for oilseed crops.
    Payment bases: We do not believe producers should be 
required to choose between current AMTA base period and the 
1998-2001 period to determine their eligibility for either the 
fixed or the counter-cyclical payment. The alternative would be 
to update the base for all crops and to establish equitable 
payment rates that would not disadvantage producers who have 
changed their crop mix. This approach would reduce the total 
amount of support provided to crops that have lost acreage 
under the Fair Act but would not reduce support to individual 
farms and farmers.
    We wanted to describe our concerns about fixed payment and 
counter-cyclical programs before commenting on the proposed 
reduction in oilseed loan rates. If these other legs of the 
stool provided balanced income support for oilseed crops, we 
could be flexible regarding loan levels. Unfortunately, the 
fixed payment rates and target prices for oilseeds are well 
below levels justified by historical price relationships with 
traditional program crops. The result is a substantial 
incentive to choose the 1991-95 AMTA base period, which 
provides no income support to most oilseed producers and a 
significantly reduced loan rate. The proposed oilseed loan 
rates would reduce income support to oilseed producers by $1 
billion per year unless other programs proposed in the concept 
paper are substantially modified.
    Regarding other crops addressed in the concept paper, we 
support the decision to restrict multi-year support to crops 
eligible to be planted on base acres. Only crops that share 
base acreage and that comply with required conservation 
practices should receive program benefits.
    The Soybean Association supports reauthorization of the 
various programs addressed by the proposed farm bill, including 
the CRP, EQIP, Wetlands Reserve Program, Wildlife Habitat 
Incentive Program and the Farmland Protection Program. We do 
not support raising the cap on CRP acreage to 40 million acres 
because we believe additional conservation funding should be 
targeted at improving conservation on lands that are already in 
production. We continue to support establishment of a voluntary 
conservation incentive payment program and look forward to 
working with the committee to make room for programs in an 
overall package.
    Senator Stabenow. Curtis, I'm going to need to ask if you 
could submit the rest for the record because we want to be able 
to review all of your testimony but in order to be able to have 
time for Dick to have his 5 minutes, I'm going to have to ask 
you to wrap up the verbal testimony here.
    Mr. Thayer. Wrap it up?
    Senator Stabenow. If it's all right with you, I want to 
make sure that we've got all of your testimony. We will include 
it as if you've spoken here, the whole thing. In the interests 
of time so we can ask some questions, we'll ask you to close.
    Mr. Thayer. One final thought that I'd like to leave with 
you was in the last Michigan Farmer: ``It is better to help the 
farmer make a profit than to say we're going to buy his 
development price.'' That's credited to Lee Swartz. Thank you.
    Senator Stabenow. Thank you very much, and I really 
appreciate the comprehensiveness of your testimony and we're 
going to include it in its entirety. Thank you.
    Dick Leach, welcome.
    [The prepared statement of Mr. Thayer can be found in the 
appendix on page 72.]

          STATEMENT OF RICHARD LEACH, EXECUTIVE VICE 
           PRESIDENT, GREAT LAKES SUGAR BEET GROWERS 
                          ASSOCIATION

    Mr. Leach. Good morning, Senator Stabenow and panel 
members. It's really great to be here and have our industry 
represented. It's really great for you to include Michigan in 
these hearings and to make us part of this 2002 Farm bill. It's 
important to Michigan and agriculture. It's important to 
Michigan.
    I am Dick Leach, Executive Vice President of the Great 
Lakes Sugar Beet Growers Association. I am here this morning 
representing the 2000 Sugar Beet Growers and independent 
businesses located in 17 counties where sugar beets are grown 
in Michigan. There are approximately 200,000 acres of sugar 
beets grown annually in Michigan with about 3,000 directly 
related jobs and a base economic impact of over $250 million 
annually.
    The present status of the sugar industry is this: Domestic 
sugar prices are at a 20-year low; a new 2-year-old beet 
processing plant in the State of Washington has closed its 
doors for this year; two sugar beet processing plants in 
California have shut down; Tate & Lyle, a British company, has 
sold Western Sugar and its six sugar processing factories to 
growers and is selling Domino Sugar to Florida Crystals and the 
Sugar Cane Growers Cooperative of Florida.
    Senator Stabenow. Excuse me, Dick. We're going to ask you 
to take and put the mike up, I guess. There we go.
    Mr. Leach. I've never known anybody to think I didn't speak 
loud enough.
    Senator Stabenow. We just want to make sure we get every 
word here on the record.
    Mr. Leach. OK. Thank you. Tate & Lyle is getting out of the 
sugar business. Imperial Sugar Company, the largest marketer of 
sugar in the United States, is in bankruptcy, and the Michigan 
Sugar Growers are trying to buy Michigan Sugar Company from 
Imperial to save their sugar industry in Michigan. This is a 
pretty bleak picture of a once very robust industry. The loss 
the sugar industry in Michigan and in the U.S. would cause 
greater pressure on other crops that are already in oversupply.
    What this industry needs for the sugar policy in the 2000 
(sic) Farm bill is this: No. 1, We must have sugar policy that 
continues to respond to the unfair and predatory practices of 
foreign sugar producers. No. 2, We must stop stuffed molasses 
and other syrups from being brought into this country by 
foreign countries circumventing our present sugar program and 
violating the integrity of our borders. We must also have an 
agreement with Mexico that will limit their exports to the U.S. 
as long as their sugar production is subsidized. No. 3, We must 
increase the present loan rate. It has not been increased since 
1984. No. 4, We need to continue the non-recourse loan program. 
No. 5, We need the sugar program as a no-cost program to the 
government.
    To make this happen, we need to manage supply and demand 
using imports that are above the World Trade Organization 
commitments. The domestic sugar industry will need to help 
balance the U.S. sugar supply with a flexible market allotment 
system.
    This is the Michigan sugar beet growers' view of what is 
needed as a sugar program that will keep a good affordable 
supply of sugar. It will also keep the family farmers who grow 
sugar beets in the business of producing sugar and adding 
strength to the local rural communities in Michigan.
    I will quit at this point. I don't want to take up any more 
time than I have to. I know you have some questions. There are 
some other things that we could talk about, and we could 
probably go, Senator Stabenow, for a long time on this. These 
are the basic things that we need in our industry if we're 
going to survive. It's awfully important that when we deal with 
the foreign agreements now that we're looking at, the free 
trade of America and Cuba and some of these other folks, that 
we remember that we have a domestic industry that we have to 
support too. Without that, our rural communities, their base 
economic impact on these folks is going to be devastating.
    As you go forward in this farm bill and in the 
negotiations, I hope you will remember. I know you will because 
we've had that experience, and I know how you feel. Tell your 
colleagues that we in Michigan and in the United States are an 
industry, and we need to survive. Thank you again very much for 
having us here.
    Senator Stabenow. Well, thank you, Dick.
    [The prepared statement of Mr. Leach can be found in the 
appendix on page 81.]
    Senator Stabenow. I'm wondering, Dick, if you could expand 
a little bit on the non-recourse loan program, why that's so 
important to our sugar beet growers here in Michigan.
    Mr. Leach. The non-recourse loan program is really what 
holds the government responsible to the sugar program. It is a 
loan program that is given to producers through their 
processors where they can take out a loan on sugar and if the 
price of sugar is below what that loan rate is, then they have 
the opportunity to forfeit that sugar to the government. This 
has happened in this past year because sugar prices were so 
low. Without that, we could not survive. For us to make it, we 
have to have that non-recourse loan where the government does 
not have the recourse of turning that down. They have to 
receive the forfeited sugar in payment for the loan.
    Senator Stabenow. OK. Thank you. Curtis, I wonder if you 
could expand on what you mentioned regarding value-added 
products for soy and some of the developments for a soy-based 
lubricant in Michigan. Particularly as we're looking at the 
energy title again of the Farm bill, that there's some 
important efforts with soy beans that we need to acknowledge.
    Mr. Thayer. Dr. King touched on that lightly. I foresee the 
soybean growers will be producing specific crop for specific 
purposes as in delivering medicine through food. When we get to 
that point, we're going to have to have small processing plants 
to address that market because the large volume processors that 
we deal with today, in all probability, will not be capable to 
gear to those needs.
    Senator Stabenow. Great. Let me ask Sam about the Market 
Access Program, which I know is important, could you expand on 
why that's important? That continually comes up for debate. 
Market access is something that we end up debating every year, 
and I wondered if you could just expand a little bit on why 
that's so important from your standpoint.
    Mr. Hines. Yes, I'd be glad to. Pork producers in the U.S. 
are currently the most efficient producers around the world. 
When you level the playing field, they can compete pretty well. 
We went from the early part of this decade from actually only 
exporting about a percent and a half or 2 percent of our 
domestic production to the current level of 10 percent. 
Organizationally we did a little tracking to see what that 
actually means in terms of dollars recovered, and we found that 
for every percentage increase, it equated to an additional $250 
million in extra value from the market to producers.
    At the level of production that we currently are, it's 
critically important that we focus a lot on exports. We have 
done that in utilizing producer check-off dollars as fully as 
possible. The Market Access Program, particularly from the 
standpoint of the pork industry--and I know from some other 
commodities as well--it's critically important for us to 
continue. Again, related to the level of production that we're 
currently at to be able to level the playing field and compete 
in that export market, so it's critically important to us.
    Senator Stabenow. Great. Lonnie, I wonder if you could 
expand a little bit--you were talking about emerging infectious 
diseases, and we certainly know about bovine T.B. in Michigan 
and have been focused on that. What are the most important 
issues for us in Michigan, do you think? Obviously bovine T.B. 
is one, but could you talk a little bit more about our 
challenges in Michigan?
    Dr. King. Michigan challenges are similar to what's faced 
across the country. First of all, we need a system to rapidly 
detect these problems. A few years ago we didn't know about 
West Nile; now it's close to our borders. We need a rapid 
detection system.
    Second we need a system in place that is an effective and 
immediate response system to limit the spread when one of these 
diseases would crop up.
    Then third we need the resources and capacity to quickly 
eliminate the problem before it moves into other areas. We're 
definitely going to be seeing new versions of exotic diseases 
and emerging diseases just because of the food safety issues 
and also a growing population of immune-compromised people, 
which happens to be, in particular, the baby boomers that are 
reaching the age of 60 and above, which will be 25 percent of 
our population. We have no idea what will happen in that large 
of an immune-compromised group of people, but food safety will 
take on a different perspective.
    Senator Stabenow. Well, I appreciate the efforts of 
Michigan State and of the National Center. When you mentioned 
``rapid response,'' it reminded me of our efforts in the 
agricultural research bill a couple of years ago. I put a 
provision in the bill that requires USDA to develop an 
interagency rapid response system for food safety. Are you 
familiar with what's happening on that? Do you think there 
should be a separate rapid response process for infectious 
diseases?
    Dr. King. The rapid response has moved toward Health and 
Human Services, the CDC and the public health, which is fine, 
but those of us in agriculture also need to be equal partners. 
There's somewhat of antagonism back and forth between public 
health and animal health, and we just need to put that behind 
us and talk about a comprehensive response system where we're 
all working on the same thing.
    Senator Stabenow. You're seeing, then, that the way it's 
designed needs to be more comprehensive as opposed to two 
different systems?
    Dr. King. Comprehensive and integrated and a joint 
leadership as opposed to kind of groups with their own 
territories that really don't have an integrated response.
    Senator Stabenow. We will work on that. We worked on 
getting that language into the bill. Our view was that it would 
be comprehensive. If that's not happening, that's something we 
need to work on as well.
    Let me ask Frank--the nutrition title of the Farm bill is 
obviously very important. It's important that--to have a 
partnership between production agriculture and the community 
nutrition programs. I'm wondering, as we look at and how people 
qualify for your programs, the CSFP, under the current 
qualifying language. I understand that mothers and children 
qualify for these programs up to 185 percent of poverty but 
seniors are cutoff at 130 percent of poverty. You were talking 
about the major focus for what you do being on seniors and 
access to food for seniors. I'm wondering why there are two 
different levels to qualify and what the impact of that it is 
in terms of senior participation.
    Mr. Kubik. In the early 1980's when the senior program was 
piloted in three areas, New Orleans, Detroit and Des Moines, 
Iowa, the income guidelines were the same for both programs. In 
the late 80's when it became a permanent program, the 
department lowered by regulation the income guidelines to 130 
percent for seniors. I suspect that has something to do with 
mothers and children having priority in the program and not 
wanting the flood of seniors to push the moms and kids off the 
program.
    The impact of that now with rising medical costs and 
utility costs, we see people that miss our income cutoff by a 
few dollars in that we don't allow for any exceptions, whether 
it's prescription drugs, utilities, what have you. It's really 
heartbreaking when seniors come in and they give you a list of 
all their expenses, particularly medicine--so many seniors 
don't have prescription coverage--that by the time they get 
through deducting their prescription expenses, they have very 
little money left for food and other living expenses. That's 
the hardest part is when you have to tell someone that they're 
not eligible. If they were younger, they would be on the 
program because we would allow for a higher income for the 
person. That's really heartbreaking when someone comes in like 
that.
    We're working to try to get that number pushed up for 
seniors. With the growing population of seniors, with the 
population expected to double by the year 2030, we need to have 
a program in place to address senior needs as part of a 
nutrition--senior nutrition policy with USDA. By increasing the 
income guidelines, that would be a great way of covering 
seniors who really need the program.
    Senator Stabenow. I would agree. Of course, we get so many 
folks contacting us, particularly as it relates to prescription 
drugs as well. That's another area where I've been working very 
hard in terms of lowering costs and having coverage for seniors 
under Medicare. I'm wondering if even just excluding medicine 
costs from a senior's income limit would make a huge difference 
for seniors?
    Mr. Kubik. It would. We visit a lot of the seniors. We do 
deliveries too. We see they're lacking so many items in the 
house. I've been to a senior building--apartments--where they 
have no electrical appliances. When I open a refrigerator--one 
of the things that seniors will not like you to do is put the 
food away for them because when you open the cupboards and the 
refrigerator, you see there's nothing there. I had an instance 
a few months ago where I went to a senior's home and he had one 
tomato in the refrigerator, and that was all he had. The food 
we brought him just made a huge difference.
    Many seniors we look at, they're up in age and we say, 
``Well, Grandma's sick because she's 80 years old.'' Well, 
Grandma's probably not eating properly and not getting the 
proper medicine. With the relatively small cost of a commodity 
food package, we can save dollars from health care, improve 
that quality of life for a senior citizen. This program is just 
vitally important, that it can address the needs that some of 
these seniors have.
    Senator Stabenow. Frank, you also mentioned that this was 
not in every state yet and that that was your goal. Why isn't 
CSFP available in every state?
    Mr. Kubik. For years our funding has been at the--kind of 
keeping us at the same level with some expansion within states 
but not in any new states. Last year was the first time in 12 
years that, with help of our congressional friends, money was 
provided to start programs in five new states. We need the help 
of Congress to increase the funding. We're a relatively small 
program within the Department of Agriculture's budget, but 
we're the only program that addresses seniors specifically. 
Every state can use us. Again, with the growing senior 
population, that this program is just--it's just a natural that 
should be in all 50 states.
    Senator Stabenow. Great.
    We are coming to the end of this timeframe for the hearing 
today, so I want to thank all of you for coming. I don't know 
if anyone wants to add a point before we come to a close. 
There's so many issues we could be talking about. Each one of 
you represent very important areas, and we want to keep in 
contact with you as we're moving through the legislative 
process this fall.
    As Congressman Barcia mentioned, the House of 
Representatives already passed their version of the Farm bill, 
which is pretty much a continuation of current policy. We are 
taking a broader view in the Senate and looking for ways to 
address a wider variety of crops as well as ways to focus more 
on conservation, rural development, and energy issues. We're 
going to need your assistance as we go forward. Kim is the 
person in Washington, as you know, who works very hard and does 
a wonderful job in connecting with everyone. We want you to 
continue to call her or call on one of our staff here in 
Michigan.
    Also for others who are here today that we didn't directly 
hear from, let me emphasize again that we'd like to include any 
information that you have in written testimony. You can either 
make sure we have that today or you can mail that to us, and we 
will make sure that it's a part of the official record for 
today. I see some of my insurance friends--we focused on crop 
insurance last night at a dinner meeting here. I know that 
there's important testimony we should get in the record 
regarding the crop insurance program. I know there are other 
people here as well that represent important interests that we 
need to get into the record.
    We want to have that written testimony. I want to say on a 
personal note how much I appreciate all of you being here. It's 
a real honor for me to represent all of you in the Senate. 
We're going to do our best to have this farm bill reflect the 
needs of Michigan agriculture and Michigan families and make 
sure that at the end of this process we've done everything that 
we possibly can to make sure that this bill makes sense and 
that we're continuing to support what I believe to be an 
absolutely critically important industry, not just from an 
economic standpoint but from our quality of life standpoint in 
Michigan.
    Thank you all for coming and the hearing is--Curtis? Yes? 
Before I----
    Mr. Thayer. I just want to emphasize two more points.
    Senator Stabenow. Sure.
    Mr. Thayer. One is that we're very sincere in the trade 
promotion authority, that the importance of the total economy--
it's probably one of the most misunderstood functions that we 
deal with. The professional negotiators with foreign trade 
establishes a pact. It goes to the President for his approval. 
The reason for that is that we feel that the negotiators, in 
dealing with the other countries, do not have the confidence of 
the other countries if these negotiated trade agreements go to 
Congress--and no offense to Congress--but you know what 
happens. It gets in discussion. It gets delayed. It gets 
changes. Go straight through to the President and get approved.
    Another point I want to raise is the importance of bio 
diesel in our energy program. Bio diesel not only includes 
soybean oil, but it also includes recycled fire fats. Thank 
you.
    Senator Stabenow. Great. Well, thank you very much. I want 
to again thank our Chairman, Senator Harkin, for allowing us to 
hold this field hearing and, Alison, for being with us today.
    The hearing is adjourned.
    [Whereupon, at 11:41 a.m., the committee was adjourned.]
      
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                            A P P E N D I X

                            August 13, 2001



      
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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]











                       THE NEW FEDERAL FARM BILL

                              ----------                              


            MONDAY, AUGUST 13, 2001, GRAND RAPIDS, MICHIGAN

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 1:55 p.m., at 
4747 28th Street, S.E., Grand Rapids, Michigan, Hon. Debbie 
Stabenow presiding.
    Present or submitting statement: Senator Stabenow.

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

    Senator Stabenow. Well, good afternoon. I'm going to 
officially call to order the Senate Agriculture Committtee 
field hearing that we are conducting today and welcome all of 
you. We are very pleased that you are all able to join us 
today. This is an important occurrence because we are actually 
operating a committee meeting of the Senate Agriculture 
Committee with the support and concurrence of the chairman, Tom 
Harkin. All of the testimony we receive today and any written 
testimony that you would like to give us will be submitted in 
the formal record with the Agriculture Committee in Washington 
so that if someone is interested in knowing about the testimony 
and thoughts of people that have been expressed around the 
country in the field hearings, they will go to the record. 
Whatever we do today here in Michigan will be included in that 
formal record.
    We held a hearing this morning, and I see some familiar 
faces that made the trek from Frankenmuth back to Grand Rapids. 
We had a wonderful hearing this morning and an opportunity to 
hear from a number of people, and we are pleased to have more 
distinguished guests with us this afternoon and very pleased 
that all of you are able to join us as well. I am very honored 
to be a member of the Senate Agriculture Committee. I served in 
the U.S. House of Representatives on the Agriculture Committee 
as well. In fact, I found out a while ago that I have the 
distinction of being the only member of the Senate who served 
on a State House Agriculture Committee, State Senate 
Agriculture Committee, U.S. House and U.S. Senate Agriculture 
Committee. From my perspective, when you are looking at a $40 
billion industry in our State's economy, we need to make sure 
that we are doing everything we can to support our family 
farmers and support Michigan agriculture.
    As you know, Michigan agriculture employs over 65,000 
people, and that doesn't count all the other impacts on 
Michigan's economy. This hearing today is very important, and 
it is important that we have Michigan's story told. We are 
pleased to have the support of our Chairman, Tom Harkin, as we 
look at broadening the Farm bill. We certainly want to support 
our program crops, but we know that in Michigan when fewer than 
50 percent of our farmers are receiving AMTA payments, we have 
a lot of other work to do in terms of support for all of the 
various specialty crops, all of our fruits and vegetables and 
dairy and sugar and all of our livestock and all of the other 
entities in Michigan. We need to really broaden, in my 
perspective, what we are talking about in terms of the Farm 
bill. We also are going to add an energy title to the Farm bill 
in the Senate, which will give us an opportunity to focus on 
biofuels. Certainly we are all familiar with ethanol, but we 
know that there are soy products and a lot of other 
opportunities for us where we can look at biomass fuels and 
ways for agriculture to really take advantage of a focus on 
energy.
    I wanted to mention to you that it has been a while since 
there has been an official hearing of the U.S. Senate 
Agriculture Committee in Michigan. The last hearing in Michigan 
was in 1915. As I said this morning, I wasn't there then. I 
don't know if anybody in the room was. I am not sure, but it 
has been a while. In fact, to put that in perspective, there 
weren't gasoline tractors in 1915. It wasn't until 1916 that 
Henry Ford made his popular tractor, the Fordson. It has been a 
while since we had a formal Senate Agriculture Committee field 
hearing here. Now, as we know, our tractors have computers and 
satellites and all kinds of other technology, so we have come 
an awfully long way since 1915. I want you to know also that we 
are not going to wait another 86 years before we have another 
Senate Agriculture field hearing in Michigan, at least as long 
as I am on the Agriculture Committee. We are going to make sure 
that the committee comes back.
    Let me introduce a few folks to you before we officially 
get started with our witnesses. Let me also say that because 
this is a formal committee hearing, we are conducting it the 
way it is done in Washington where people are invited to come 
representing various perspectives and present testimony and 
come officially before the committee, and then we will accept 
written information from anyone. If you feel like something 
wasn't covered today or you have some other important 
information that is important to you, you think we should be 
aware of it, we would like to receive that written testimony. 
Gloria, are you in charge of that?
    Ms. Dennang. Yes.
    Senator Stabenow. OK. Great. Gloria Dennang from my office 
will be going around so don't just leave it on the table 
because we want to make sure we don't lose something in the 
process. If you could make sure that Gloria gets that 
testimony, then we will make sure something doesn't get 
misplaced by being set on a table someplace. Gloria will be 
doing that.
    I also want to introduce other folks from my office: Kim 
Love, who many of you know from my staff in Washington, DC. Kim 
has been with me now since the U.S. House of Representatives 
and actually grew up in Genesse County and has a lot of farming 
in her family history. She was telling us a story on the plane 
on the way over that when she was in kindergarten and the 
teacher held up a picture of a cow and asked what it was, all 
the kids said ``cow.'' She said ``Holstein.'' She has been 
immersed in agriculture since she was a little girl. As many of 
you know, Kim does a wonderful job and is really my eyes and 
ears and is just a phone call away. We hope that if you haven't 
already taken advantage of that, that you will give Kim a call.
    Let me also introduce my chief of staff. Jean Marie Neal 
from Washington has flown in. We wanted to make sure that she 
had an opportunity to hear what you were thinking and to be 
involved in this process. Jean got delayed yesterday in her 
travels. We won't go into the challenges of flying, but I am 
glad you made it. It was difficult unfortunately, to get her to 
Michigan with some storms coming out of Washington.
    Also Connie Feuerstein. Connie represents me in Flint, 
Saginaw, Bay City and into the Thumb area. Connie also focuses 
on agriculture, so there have been a number of Farm Bureau 
meetings and other hearings that Connie has been attending on 
my behalf.
    Dave Lemmon is my communications director. Betsy Boggs is 
my West Michigan coordinator. Many of you have seen her at 
meetings as well. JoAnne Huls is controlling the time today. We 
are asking each of our presenters to stick to five minutes. 
JoAnne has been with me for a long time and does a great job. I 
also want to thank our court reporter who is here and making 
this official for us, Kim Van de Bogert. We thank you for being 
here.
    We have a number of folks representing other offices, and 
we want to acknowledge them. From Congressman Pete Hoekstra's 
office, Heather Sandberg is here. Heather, we appreciate your 
being here today. From Senator Carl Levin's office, we have 
Daniel Feinberg. Where is Dan? Good to have you, Dan. Keith 
Brown, who is with Congressman Nick Smith's office is here. 
Nick is on the House Agriculture Committee. He and I served 
there together. One of the things that we know about 
agriculture, is that it is a nonpartisan issue. This is more 
about fighting for what is good for Michigan, and we work 
together very closely to make sure that that happens.
    Did we miss anyone representing any elected officials? We 
had invited our State representatives and senators today, and I 
don't know if we missed somebody. Yes, sir?
    Mr. Crouch. I am here representing Scott Hummel, 86th 
District, House of Representatives.
    Senator Stabenow. Great. Appreciate your being here today. 
Great. Well, we are glad to have everybody with us.
    I did want to just mention that from a personal note, this 
is important. This hearing is important to me, and it is 
important to be on the Agriculture Committee because I grew up 
in Clare, and my family is involved in farming, dairy farming 
specifically, when I was growing up. If you know any Greers in 
Brown City or Gladwin or Clare, they are probably related to 
me. When I was growing up, people always talked about the 
Midwest as America's breadbasket. Well, I am here to say that 
we are the entire kitchen table here in Michigan. When we talk 
about whether it is meat or fish or fowl or over a hundred 
different commercial crops that we grow including our specialty 
crops, our cherries and apples and blueberries and asparagus 
and all of the wonderful specialty crops, we have everything in 
Michigan. We have the maple syrup that goes on the pancakes in 
the morning, and when you get all done you can drink fresh milk 
from our Michigan milk producers. I would say we have the 
entire kitchen table represented in Michigan agriculture.
    In fact, we are only second to California in terms of the 
diversity of our crops, which, frankly, from my standpoint, is 
really the challenge for us because in Washington, when we talk 
about the Farm bill, so much of it is focused on program crops, 
of course, program crops are important and I don't want to take 
away from our wheat and corn and soybeans and all of our other 
program crops, but not all Michigan farmers receive AMTA 
payments. Other parts of the Farm bill are incredibly important 
to us. I spend a lot of time focusing on those things in 
Washington. It is also important to note for the record that, 
according to the Department of Agriculture, between 1992 and 
1997 we lost more than 215,000 acres of productive farmland in 
Michigan, which is of great concern to all of us, and just 
during that time period, we also lost over 500 family farms. We 
have to focus on our family farmers as we look at the new Farm 
bill.
    We have a lot that we want to focus on in the Farm bill. In 
addition to specialty crop production, which I mentioned, we 
also want to hear about conservation measures, how we can 
improve upon the conservation title of the Farm bill. Senator 
Harkin, who chairs the committee, is very interested and has 
introduced legislation, which I am pleased to co-sponsor, that 
would expand and strengthen the conservation title of the Farm 
bill. Research, obviously, is very important. We will hear 
about that today also.
    Let me just explain a little bit about what we are doing in 
terms of format. As I mentioned before, we are asking each of 
our panelists today to speak for 5 minutes and then we will 
have some questions for you. If you find that your testimony 
was longer than 5 minutes, we will submit it in its entirety in 
the record if you want to summarize it if it is longer than 5 
minutes. We do want to have a chance to get some questions and 
answers for the official record today, but we will take 
whatever you have in its entirety.
    [The prepared statement of Senator Stabenow can be found in 
the appendix on page 116.]
    Senator Stabenow. Let me also introduce Alison Fox, who is 
here as counsel for the Senate Agriculture Committee, 
representing our chairman, who is very, very interested in what 
we have to say today. He has been very supportive of my efforts 
to speak to a broad range of issues in agriculture, and we 
really appreciate Alison being here to represent him. It is 
only because Chairman Harkin approved doing the formal hearing 
that we were able to be here today and have the resources to do 
this. Alison, would you like to say a few comments on behalf of 
Senator Harkin?

     STATEMENT OF ALISON FOX, COUNSEL, SENATE COMMITTEE ON 
              AGRICULTURE, NUTRITION, AND FORESTRY

    Ms. Fox. I would just like to briefly say that I am very 
pleased to be here on behalf of Chairman Harkin. We are looking 
forward to this fall, working on a sustainable, long-term farm 
bill that has a national perspective, that is comprehensive, 
that addresses all needs of the agriculture community with new 
expanded titles like conservation, new titles like energy, as 
well as dealing with nutrition. I just want to remind everyone, 
as Senator Stabenow just said, that since this is an official 
hearing of the committee, this hearing will become part of the 
Senate record and what Senator Harkin will look to, as well as 
the staff, as we work to develop the new Farm bill. I know 
Senator Harkin is very excited about this, and he appreciates 
all the work that Senator Stabenow is doing and is very excited 
to hear and see the record once we get back to Washington.
    Senator Stabenow. Thank you, Alison.
    Senator Stabenow. Well, let me introduce our panelists and 
then ask them to speak. We have a wealth of experience and 
history in front of us. We are pleased to have Dr. Ian Gray 
with us. Dr. Gray and I have worked for a long time together. 
He is director of the Michigan State University Agricultural 
Experiment Station, as you know. He oversees all operations of 
the experiment station, working closely with the department 
chairpersons and unit directors in developing and sustaining 
research programs and in maintaining strong ties between the 
experiment stations and the commodity groups. He received his 
Bachelor of Science and Ph.D. in food science from Queens 
University, Belfast, Northern Ireland. All you have to do is 
listen to him to know that there is a little Irish accent?
    Dr. Gray. I would say it is a brogue.
    Senator Stabenow. It is a brogue. Dr. Gray is a member of a 
number of professional organizations, still maintains a 
research program, and in 1994 received the Michigan State 
University Distinguished Faculty Award.
    Next we have Tom Butler, who is the manager of the Michigan 
Processing Apple Growers Division of the Michigan Agricultural 
Cooperative Marketing Association, an affiliate company of the 
Michigan Farm Bureau. I have always wondered how long your 
business cards were, Tom.
    Mr. Butler. It is long; it is very long.
    Senator Stabenow. You have the longest title of anybody I 
have ever seen.
    Tom has served in this position for 20 years. He negotiates 
contracts and works on issues affecting the industry on behalf 
of the State's growers. In 1999 Tom received the Distinguished 
Service Award from the Michigan Horticultural Association.
    Julia Hersey is here with Tom. She is a board member of the 
Michigan Apple Committee. She is the daughter, granddaughter, 
and great-granddaughter of apple growers. Julia was raised on 
the infamous fruit ridge in Michigan, and she and her husband, 
Buzz, grow approximately 800 acres of apples, peaches, and 
cherries in Kent, Muskegon, and Newaygo Counties. They have 
three boys. Their fruit-growing business is named Hersey 
Brothers, and their three sons are pictured on the logo, 
enjoying apples, of course. We are pleased to have you with us.
    We are also pleased to have Perry DeKryger with us. Perry 
is the Executive Director of the Michigan Asparagus Advisory 
Board. The advisory board is a grower organization that 
represents 600 asparagus growers in the State. Perry is a 
native of Michigan, has worked in the industry for over 5 
years, and is a graduate of Michigan State University with a 
degree in horticultural science. Glad to have you with us.
    Last but not least, Bob Green is the Executive Director of 
the Michigan Bean Commission. The Bean Commission is comprised 
of the 3,500 dry bean growers in the State of Michigan. Bob has 
worked nearly 30 years in the dry bean industry, and the last 4 
of which have been with the commission. We are very pleased to 
have you as well with us, Bob.
    Let's start with Dr. Gray. Ian.
    Dr. Gray. Thank you.

 STATEMENT OF DR. J. IAN GRAY, DIRECTOR, MICHIGAN AGRICULTURAL 
                       EXPERIMENT STATION

    Dr. Gray. Well, thank you, Senator Stabenow, for inviting 
the Michigan Agricultural Experiment Station to testify. What I 
would like to do is to address the importance of Federal 
research investments in shaping a positive future for U.S. and 
Michigan agriculture in the rural communities. The Michigan 
Agricultural Experiment Station is a member of several national 
organizations, such as the National C-FAR and the ESCOP that 
are collectively working with this committee to double the 
Federal investment in food and agriculture research over the 
next 5 years. That is the theme that I would like to address, 
the importance of doubling the investment in food and 
agriculture research.
    While many of my comments are directed or related to the 
Michigan Agricultural Experiment Station, of which I am 
extremely proud, many of the comments actually will relate to 
other State ag experiment stations across the country. The 
future of agriculture lies within the application of strategic 
research that links the power of new scientific discovery to 
the real world challenges and potential opportunities facing 
agriculture in rural communities. The complexity of today's 
challenges and tomorrow's opportunities requires a research 
approach that holistically integrates fundamental disciplinary 
science, applied agricultural sciences, economics and 
ecological considerations.
    Furthermore, this approach needs to be closely tied to 
social science and public policy considerations. The nation, 
through the SAES system, the State ag experiment station 
systems, invests in food and agricultural research in two ways: 
through Federal and base funding, including Hatch funds, 
McIntire-Stennis forestry funds and animal health funds; and, 
second, through competitive grant programs, such as the 
National Research Initiative and the Initiative for Future 
Agriculture and Food Systems.
    Federal base funding is very, very important. It provides 
the foundation for Michigan agriculture and natural resources, 
human nutrition, rural development and family and consumer 
well-being research programs. It provides infrastructure 
support for research done by State agricultural experiment 
stations, and the partnership between Federal- and State-
supported programs ensures that strategic research is done to 
address local and regional concerns. Federal funding is the 
glue that holds multi-state research programs together. It 
gives States the necessary funding, flexibility to be proactive 
and to quickly address local agricultural problems as they 
develop. It permits us to maintain long-term research in areas 
of fundamental importance to the State and to the Nation. 
Certainly we don't have to look beyond TB in deer and dairy 
cattle in Michigan to realize the importance of Federal 
research programs and as well as the molecular biology approach 
that we are integrating to solve some of the problems facing my 
companions to the left.
    Yet Federal funding for agricultural research over the past 
two decades, when adjusted for inflation, has not increased. 
The proportion of Federal research funds that focus on 
agriculture and food has significantly declined during this 
period when compared to other Federal programs. To maintain 
and/or regain our competitive edge in the global marketplace, 
U.S. agriculture must be better supported via the Federal 
funding system.
    Now, as a corollary to that, Federal-supported research 
also means unbiased research for the benefit of all citizens. 
If private funding replaces Federal funding, then the research 
priorities and focus on the expected outcomes will be 
significantly impacted.
    Competitive grant programs, such as the National Research 
Initiative and IFAFS, must also be enhanced. Advances in the 
agricultural sciences will only come through the generation of 
new knowledge and advances in the basic sciences. Look at what 
is happening with molecular biology. The National Research 
Initiative goal of strategically advancing fundamental science 
that is linked to agricultural opportunities is appropriate but 
will need to be more inclusive by recognizing more fully the 
potential of social and behavioral sciences in agriculture and 
rural community work. Basic research and support of food and 
agriculture must not only be the domain of the USDA programs. 
Agriculture is the recipient of strong disciplinary research 
funded by the National Science Foundation and even the NIH.
    Efforts by this committee to include food and other 
agricultural issues in the overall research portfolio of other 
Federal agencies such as NSF and NIH are to be encouraged and 
applauded. Unapplied knowledge is knowledge shorn of its 
meaning. That is why stakeholder engagement in research 
extension integration are key components of the initiative for 
future agriculture and food systems. These programs complement 
the National Research Initiative and provide the necessary 
integration and multi-disciplinary efforts required to 
comprehensively address contemporary challenges facing 
agriculture in the rural communities. In other words, 
scientific knowledge generated through the National Research 
Initiative and other disciplined research programs can be 
applied in a timely and effective manner in a way that makes a 
difference.
    In summary, Federal competitive grant programs are a major 
component of the national agriculture and rural community 
research portfolio. It is critical that we maintain the 
appropriate balance between basic and integrated research to 
serve the citizens of Michigan and the United States. Formula 
funding provides the stability that enables State agricultural 
experiment stations to address locally important issues and to 
work collaboratively with surrounding State ag experiment 
stations on regional issues. Competitive grant programs for 
agriculture must be funded comparably to other national 
research efforts. Focus the best basic science available on 
food and agricultural issues and facilitate the integration of 
research, extension and educational programs across State 
boundaries. A strong federally supported research program that 
has linked the future industry opportunities will serve the 
interests of all citizens.
    The Michigan Agricultural Experiment Station is ready to be 
a leader with Michigan agriculture in creating a new and 
vibrant agricultural economy that will serve the security and 
economic interests of the entire Nation. Doubling Federal 
funding of food, nutrition, agriculture, natural resources and 
fiber, research extension and education over the next 5 years 
is critical to this effort.
    Thank you.
    [The prepared statement of Dr. Gray can be found in the 
appendix on page 119.]
    Senator Stabenow. Thank you very much, Ian.
    Tom.

  STATEMENT OF THOMAS C. BUTLER, MANAGER, MICHIGAN PROCESSING 
              APPLE GROWERS DIVISION OF MICHIGAN 
         AGRICULTURAL COOPERATIVE MARKETING ASSOCIATION

    Mr. Butler. Thank you, Senator Stabenow, for the 
opportunity to testify at your hearing. You are always welcome 
in Grand Rapids, Michigan, and I hope it isn't too long before 
you return again.
    I manage an association of apple producers which produce 
the majority of the apple crop in Michigan. Apples are most of 
the time included in the area called specialty crops. Many of 
the so-called specialty crops do not desire to be included in a 
new farm bill. Apples, I guarantee you, desire to be included 
in the new Farm bill. I visited with growers from all of the 
producing States as early as last January in Chicago, and to a 
grower, these people desire to be included.
    Apple growers didn't know how to pronounce the words 
``market loss assistance'' until the past couple of years. They 
know now that that is what they need if they are going to 
survive the onslaught of the imports of foreign apple juice 
concentrate into the country, which has destroyed the very 
floor of our industry. The other thing is important, you just 
can't generalize on specialty crops. Apples are a huge crop. 
The citrus people in Florida might want something entirely 
different than would apply to apple growers, and yet they are a 
specialty crop also. This will help domestic producers stay in 
business over the long haul. If they don't get some kind of 
assistance, they will go out of business at a very fast rate.
    There are some other things that we support also, and that 
is including apple orchard land and land in other tree fruits 
in the Conservation Reserve Program. As you are also expert in 
dealing with--we support the expansion of domestic feeding 
programs, and we will do anything we can to work with you on 
increasing the consumption of apples in the school lunch or 
other nutrition programs. We support the inclusion of a tree 
assistance program in the new Farm bill which would help to 
finance growers replanting trees that have been devastated by 
diseases and other weather-related causes, such as fire blight. 
The fire blight problem exists with us in Michigan almost 
uniquely and at any time can devastate the industry both here 
in the Grand Rapids area and in all the other producing areas 
of the State. We thank you for holding this hearing. I can 
assure you that the apple growers want to be included in this 
new Farm bill with some kind of an ongoing market loss 
assistance program.
    Every indication that we have says there will be tough 
times ahead for apple growers. We have been through 3 years in 
a row, and we know we are not on the upswing yet. We will see 
some temporary prosperity created by a short crop in the State 
of Washington or something of that sort, but I believe that the 
industry is going to need some Federal assistance to continue.
    [The prepared statement of Mr. Butler can be found in the 
appendix on page 122.]
    Senator Stabenow. Well, thank you very much, Tom.
    Julia.

STATEMENT OF JULIA BAEHRE HERSEY, BOARD MEMBER, MICHIGAN APPLE 
                           COMMITTEE

    Ms. Hersey. Thank you, Senator Stabenow, for allowing me to 
testify today. For the record, my name is Julia Baehre Hersey, 
and I am an apple grower and a board member on the Michigan 
Apple Committee. Today I would like to speak to you from an 
apple grower's perspective. Apple growers have been facing 
extremely difficult economic conditions during the last 4 
years. Markets have been weak, and grower prices have been 
quite low.
    Here are some of the leading causes for our woes: the large 
and increasing world supply of apples; large volumes of 
imports, especially of apple juice concentrate, which has been 
dumped into the United States at extremely low prices; 
declining demand for U.S. exports, especially in certain 
receiving countries; stable, no-growth domestic demand for 
fresh and processed apples; large and frequently surplus U.S. 
supplies, especially from the State of Washington; and the 
mega-merger trend of U.S. retail grocery chains, making them 
very powerful in negotiating the price we receive for our 
fruit.
    As a result of the combination of the above economic 
conditions, growers in the past few years have experienced low 
prices and considerable economic losses. A number of apple 
growers have been forced out of business during the last few 
years. More will probably follow, as sources report that they 
may not be able to repay their loans. Most growers and much of 
the apple industry as a whole are considerably worried about 
their economic future. Average prices received by Michigan 
growers, according to USDA statistics, show a preliminary 
average price of $4.03 per bushel for the 2000-2001 crop year. 
This is probably too high, and it will likely be revised 
downward when the marketing year for the 2000 crop is 
completed. The Michigan Apple Strategic Task Force unanimously 
supported efforts to provide our growers with Federal 
assistance through the Farm bill. Specifically, it supported 
efforts to secure a $500 million package for the growers in 
this country for their market and disaster losses. While such 
an amount now seems unlikely, we do applaud your efforts to 
resurrect the supplemental farm aid bill that included a $150 
million relief effort for apple growers. Thank you.
    Apples are Michigan's largest tree fruit crop and are 
ranked third nationally. Michigan would receive welcome relief 
from a proportion of this package for our growers. Some of the 
hardest hit growers from a national disaster aspect reside in 
southwest Michigan where fire blight has literally wiped out 
numerous orchards. For these growers, we would support a TAP or 
the tree assistance program. We support increased funding from 
the Market Access Program for apples to help expand export 
sales of Michigan apples offshore through the U.S. Apple Export 
Council. We support increases to the federally funded WIC, or 
the Women, Infants and Children program, to facilitate the 
purchase of fresh apples. We support increased purchases of 
fresh and processed apples in the USDA domestic feeding 
programs. We support increases in federally funded research for 
nutritional research of apples. I want to thank you again for 
giving me the chance to provide you with this information. 
Apple growers are a proud group of citizens, and we have never 
asked for this kind of assistance before. However, when our 
livelihood is at stake, we have no other choice than to seek 
this help.
    I want to tell you about a grower--or actually he is a 
dairy farmer in our area, a young man who is also a recording 
artist. He is a member of the group called The Lonesome 
Trailers, and a lot of his songs are about small-town folklore 
and the farming communities. He has one song that really 
strikes a chord with me, and it is called, ``There Is No Family 
on the Family Farm.'' That is probably my biggest fear. There 
will not be families on farms at all. It is also important to 
point out that without us, the consumer does not have 
nutritious, reasonably priced fruit available to them. Apples 
are subjected to, as you know, some of the highest Government 
regulations and standards in the world. I would like to thank 
you for the support you have given the Michigan apple industry. 
We really appreciate it. Thank you for giving me the 
opportunity to speak today.
    [The prepared statement of Ms. Hersey can be found in the 
appendix on page 123.]
    Senator Stabenow. Thank you; thank you, Julia. I will just 
say that we did pass an emergency assistance bill out of the 
Senate committee, which I believe was much preferable to what 
ended up passing out of the full Senate and what was passed in 
the House. Unfortunately the final emergency bill did include 
dollars for apples as well as a number of other specialty crop. 
We were not successful in getting support from the House and 
passing it throughout the system, but we will be back. We will 
be bringing that back up, and I am confident we will achieve 
something here in the next go-round.
    Ms. Hersey. Thank you.
    Senator Stabenow. Perry.

   STATEMENT OF PERRY DeKRYGER, EXECUTIVE DIRECTOR, MICHIGAN 
                    ASPARAGUS ADVISORY BOARD

    Mr. DeKryger. Thank you, Senator Stabenow, for the 
opportunity to participate here today. Not only does Kim know a 
black and white cow is a Holstein, but she has also had 
experience, she has told me several times, and has fond 
memories of harvesting asparagus. She is familiar with our crop 
somewhat, and we really appreciate the help that you and your 
staff give to our industry.
    As you mentioned, my name is Perry DeKryger, and I am the 
Executive Director of the Michigan Asparagus Advisory Board. 
While I have not polled every asparagus grower in the State, I 
have spoken with many industry leaders over the past several 
months and sought their opinions regarding whether minor crops 
such as asparagus should be included in some manner under a new 
Federal farm bill. The response I consistently received was 
that there should indeed be some provision in a new farm bill 
to provide a safety net for minor farm crops, such as fruits 
and vegetables. The Michigan asparagus industry is in need of a 
safety net at the present time. The industry is going through a 
transition period in terms of crop usage that is being driven 
by market forces far beyond grower control. It is our belief 
that inclusion in a new farm bill should be commodity specific. 
Many leaders in the asparagus industry have stated that they 
want asparagus to be included under a new farm bill. However, I 
have spoken with growers of other vegetable crops, and they are 
adamant that they do not want any type of Government program 
involved in their specialty crops. A farm bill should include 
some provision that would allow growers of a particular 
commodity, such as asparagus, to gain relief or protection in 
an area where they cannot be competitive with foreign 
producers.
    For example, in growing asparagus, the price of labor is a 
big issue. In Peru, the standard wage rate for harvest labor is 
$4 to $5 per day. Our Michigan growers are compelled to pay 
over $5 per hour and, in fact, most good harvesting crews 
working on a piece rate earn $8 to $10 per hour. Still, an 
adequate labor supply continues to be the biggest challenge in 
producing asparagus here in Michigan. In many past farm 
programs, payments were based on what a producer did or did not 
harvest. In the future, we may need to focus these payments on 
a more highly defined target, such as the disparity between 
labor costs, as in the example I just cited. In other 
instances, the focus may need to be on how strong the U.S. 
dollar is compared to the currency of another country or some 
other market variable.
    Another provision under a new farm bill that would benefit 
asparagus growers would be to expand the CRP to allow entry of 
old asparagus fields. Many old asparagus fields that are no 
longer profitable are on highly erodible ground. These could 
best serve the grower and the community by being in the CRP, 
which would take them out of production for at least 10 years. 
This would allow growers to retire on profitable fields, cut 
surplus crop poundage, and protect a natural resource that is 
highly prone to erosion.
    In a new farm bill, the prerequisite for USDA purchases of 
commodity should be redefined. USDA has many feeding programs 
that benefit millions of people, both in and out of our 
country. It has been our experience, however, that USDA very 
seldom solicits asparagus for purchase, generally only after 
congressional prodding. This should not be the case. All 
commodities produced in the U.S. should be purchased routinely 
by USDA and used in feeding programs. These purchases should be 
accelerated in years when a particular commodity is in excess, 
especially when the excess is due to loss of market share 
caused by importation of cheaper offshore product.
    Finally, as an additional safety net in a new farm bill, a 
provision should be made in the annual ag budget process to 
provide money for market loss payments to specific commodity 
growers when unusual situations cause a loss of income greater 
than what they are able to sustain and continue a viable 
farming operation. Many different situations could prompt 
market loss payments, such as weather-related problems, 
depressed markets, or undue pressure from imports of that 
commodity. Whatever methods are used to attain a safety net, 
they must be able to respond quickly and decisively. If they 
are so cumbersome and involved that it takes a year or two to 
generate the needed relief, many of our U.S. producers may be 
out of business by the time relief is realized.
    In closing, I would like to ask that you stop and consider 
where we want our food to be produced in the future. Do we want 
this country to become dependent on foreign producers of some 
of our foodstuffs similar to the way we depend on overseas 
crude oil? Or do we want to put in place some sensible farm 
programs that will enable U.S. farmers growing specialty crops 
to remain viable for the long run?
    Thank you.
    [The prepared statement of Mr. DeKryger can be found in the 
appendix on page 124.]
    Senator Stabenow. Thank you, Perry. Appreciate it.
    Bob Green.

   STATEMENT OF BOB GREEN, EXECUTIVE DIRECTOR, MICHIGAN BEAN 
                           COMMISSION

    Mr. Green. Thank you. The Michigan Bean Commission and I 
would certainly like to thank Senator Stabenow for this 
opportunity to both testify and talk about the agriculture 
difficulties that are happening in Michigan and the United 
States.
    The Michigan Bean Commission, formed under Public Act 114 
in 1965, is charged with doing market development, market 
research and promotion programs for Michigan dry beans and 
Michigan dry bean growers. We also gather and dispense 
information to growers pertaining to markets and market 
conditions. The Michigan Bean Commission is completely funded 
by growers of dry beans in the State of Michigan. Michigan is 
also No. 2 in the production of dry beans in the United States. 
It is also No. 1 in the production of black beans and No. 2 in 
the production of navy beans.
    The current situation in agriculture is grim at best. The 
current prices on virtually all commodities and specialty crops 
are at ``less than cost of production.'' The consistency of all 
commodities being in the same underpriced and overproduced 
situation and that situation continuing on for several years 
adds to the plight of the Michigan farmer. The options for a 
grower to produce a crop that will generate income above his 
cost is nearly zero. If you add into the equation the drought 
conditions that have severely hit the Michigan grower this 
year, you find that a farmer experiences his most serious 
financial situation of his life.
    Under the current Farm bill, the farmer was told, ``You 
produce it and we will sell it.'' The farmer did, but the sales 
did not happen. At the same time, consolidation of both the 
elevator and dealer segment of the dry bean industry and down 
the chain in the dry bean canner and packaging side has also 
had its effect on the opportunities a grower is presented when 
marketing his crop.
    Fewer buyers have led to fewer opportunities for the grower 
in dry beans and in virtually all areas of agriculture, 
including agricultural inputs, as the Senator discussed this 
morning. Dry beans, which have had both boom and bust years 
over the last 20 years, is currently quoting prices that have 
not been this low in the dry bean industry since the 1970's. In 
dry beans, the overproduction of 2 years ago continues to 
plague us with anticipated carryover stocks of navy beans 
abundant enough to satisfy half of next year's needs. At the 
same time, our major competitor to the north, Canada, continues 
to gain acres of all pulses, including those of beans, on land 
that was traditionally wheat ground.
    Dry beans have not been a program crop since the 1960's. At 
that time, the Government would buy the crop from the growers 
and sell it back to dealers as demand warranted. Since that 
time, dry beans have not been involved in the Farm bill and 
have been strictly a supply demand crop. The dry bean industry 
has promoted this fact around the world, proclaiming that dry 
beans are not subsidized in any way. Dry bean growers, because 
of their nonparticipation in the farm program, have also 
benefited by not allowing nontraditional growers to plant beans 
on program land. This benefit has helped the dry bean industry, 
and this benefit must continue. The time for dry beans' 
noninvolvement in the Farm bill is past. The dry beans based in 
this State and other States is diminishing yearly. Whether dry 
beans here compete for the same ground that soybeans and corn 
under LDP competes for, the dry bean industry is not uniform in 
its desires to be considered under the LDP program. At the same 
time, the exclusion of dry beans in the LDP program should not 
limit their involvement in other parts of the Farm bill or 
other Government programs. Dry beans and probably many other 
program and nonprogram crops would benefit from the following:
    Export enhancement: The strong U.S. dollar, while good for 
imports and traveling, has been disastrous with the weaker 
currencies of other countries. With Michigan beans exporting 
every other row of beans, this has hit our industry especially 
hard. The program would allow the dry bean industry more access 
to export markets.
    Quickly, on some other things, the cost of production 
insurance that the State directors of agriculture are looking 
at would certainly be something that we would like to have 
considered. Opening up new markets, we, as some others on this 
panel have indicated, keep running into the negative 
opportunities in other countries with the cost of duty on U.S. 
goods.
    The last thing I will mention, which we talked about for a 
short time this morning, and that was Cuba, which could 
certainly add a vast amount of opportunity to Michigan growers, 
both of beans and other commodities.
    Thank you, Senator.
    [The prepared statement of Mr. Green can be found in the 
appendix on page 128.]
    Senator Stabenow. Thank you. Thank you to all of you.
    Bob, let me ask you, just to followup a little bit more as 
it relates to opening markets. We did talk about the issue of 
opening Cuba to food and medicine, and that will be an issue 
that will be coming before us, probably in the form of an 
amendment on the floor of the U.S. Senate, and I would 
appreciate any other insights you would have or anything you 
would like to share with us about why you feel that is 
important.
    Mr. Green. Well, last November I did have an opportunity, 
along with Congressman Barcia and Congressman Camp and two 
members of my board and a few other people, we did take a trip 
to Cuba and firsthand saw what was there. I guess the thing 
that hit me the most is that they are importing 100,000 metric 
tons of beans a year now. That 100,000 metric tons--excuse me. 
I will use this analogy, but to me it fits very well. They are 
loading it in our lakes up at Thunder Bay out of Canada, and 
they are putting it through our Locks down our seaway and 
sending it down to Cuba. That seems to be a little bit wrong to 
me.
    At the same time, the beans that Cuba is importing is 
something that we grow here very well, and that is black beans. 
Half of that production that they are taking in there is of 
black beans, and the other is quite a bit of navy beans and 
some other beans. At the same time, they are importing 420,000 
tons of rice, which they would certainly like to get from the 
Southern States; 200,000 metric tons of grain; 60,000 metric 
tons of oils; 45,000 metric tons of milk powder; and 40,000 
metric tons of chickens. Their one factor that they keep saying 
is that it would work very well for them to be dealing with us 
also because the only thing that is really costing them is the 
freight because they are paying extra freight to get things in 
there. They are still able to get them.
    Senator Stabenow. What about the issue of Mexico? We have 
worked together with you on the question of exporting beans to 
Mexico. There is a new agreement that was negotiated with the 
U.S. Trade Representative and the Mexican Government about just 
a little while ago. Is that going to make a difference? What do 
you see happening as it relates to that?
    Mr. Green. We certainly see it as positive, but first I 
certainly have to thank you and Kim who were very active in 
that issue and bringing that to the forefront. I would have to 
say that as working for agriculture in Michigan, we have been 
very fortunate with our whole congressional delegation. I mean, 
they really came together on an issue that was very, very 
important to us and really helped out, so thank you.
    As far as the agreement, we see it as positive in that as 
long as it is lived up to, of course, the Mexican Government 
has agreed to specific dates for the auction. There will be two 
dates and specific quantities for those auctions as a 
percentage of the quantity allowed. This is going to make a 
much clearer window for both the growers and the dealers in 
this State. Actually the Mexican importers themselves wanted to 
have the same thing because there was an awful lot of 
speculation going around that as far as when things were going 
to happen and how they were going to happen. Right now that is 
all laid out and will make it clearer for everyone.
    Senator Stabenow. Perry, if might ask you about the U.S. 
Commodity Purchase Program. In the Senate committee version of 
the emergency bill that we attempted to pass right before the 
August recess, we added asparagus to the commodity purchase 
program. I wonder if you could speak a little bit about why 
that is important to industry to do.
    Mr. DeKryger. Well, asparagus is like many crops. You have 
years when you produce more than other years, and some of that 
extra production does get processed. It is available for the 
marketplace and has somewhat of a price-depressing effect on 
the marketplace. Our strategy has been to try and get some USDA 
purchases on those years when we do face some additional 
supplies and inventory. We haven't been real successful the 
last few years. We understand that there is a possibility of a 
purchase coming. Thanks again to your help and Kim's help and 
several of our other Michigan folks in D.C. there, the USDA is 
going to purchase some asparagus. Those little bit of surpluses 
need to be removed from the market on critical years to keep a 
stable and a balanced pricing structure. We see that as a very 
critical need and a role that USDA purchasing could fulfill.
    Senator Stabenow. To followup in talking about trade with 
Bob, your industry has been hit specifically with unfavorable 
trade conditions. I wonder if you might speak a little bit 
about Peru and what has happened and why that trade issue is so 
important.
    Mr. DeKryger. Yes. Back just about exactly 10 years ago 
now, a trade agreement was initiated called the Andean Trade 
Preferences Act, better known as ATPA. That trade act allowed 
four South American countries duty-free entry of products into 
the U.S. The impact it has had on asparagus is that the country 
of Peru has become a very efficient and proficient supplier of 
asparagus to this country. The theory behind instituting this 
trade act was to give these developing countries a legitimate 
marketable crop that they could sell in this country, generate 
revenue and income for their local economies, and that is an 
applaudable thing to do. However, the area where the coca was 
being grown in Peru is completely a long ways from the 
asparagus production area. They became very efficient, the 
asparagus producers, and they are now exporting 75 percent of 
their green asparagus into the U.S. market. As far as I know, 
the supply of coca probably haven't diminished too much. The 
situation is that while it was a good program in concept, it 
has had a devastating impact on our U.S. asparagus producers. 
It is an issue that we are watching and trying to get some 
relief on.
    Senator Stabenow. Thank you.
    Tom and/or Julia, speaking about apples a little bit more 
for a minute, Tom, you were talking about specialty crops, and 
we know it is a broad category. From your standpoint, 
specifically for apples, what do you think would be most 
helpful in terms of the Farm bill? Obviously market loss 
payments, but are there other things as well that you think 
would be particularly helpful to you for us to be aware of in 
terms of the Farm bill?
    Mr. Butler. Well, yes. I believe that I did mention the 
Conservation Reserve Program, that if you could make tree fruit 
land, apple land, cherries and other tree fruits, to be part of 
the Conservation Reserve Program, I believe that growers would 
really benefit from that. That, however, is no substitute for 
the market loss assistance program. Certainly others like the 
TAP program where we have such devastation here in Michigan--I 
can't overemphasize--we have all these modern varieties of 
apples out here, and they are on rootstocks and the varieties 
and the rootstocks that are quite susceptible to fire blight 
infection. Our climate is unique in that it favors fire blight 
infection. We have very limited amounts of material to control 
that, although thanks to you, we have a research program 
underway to develop a true cure for fire blight. That TAP 
program, tree-planting assistance, to help growers that are hit 
by fire blight, is very important, and I hope that that would 
be possible to include also.
    Senator Stabenow. What is the latest in terms of the fire 
blight damage situation?
    Mr. Butler. Well, last year it was the worst that anyone 
had seen in their lifetimes. As a result, many growers went out 
of business because they couldn't afford to replant the young 
trees that they had lost. This year the growers spent the most 
amount of money in the history of their production trying to 
control fire blight and because there were many infection 
periods early in the spring. The temperatures were cooler, 
which does not favor the development of fire blight. Then we 
have run into dry weather in Michigan throughout most of the 
summer here. I know Ian Gray and I were talking about this 
before we started, there is very little fire blight infection 
this year. It is by chance that there is not. It can show up 
again, and we have the varieties and the rootstocks in place to 
wipe out entire farms should we have the right set of weather 
conditions. It is a weather-related disease.
    Senator Stabenow. It is nice to know that the dry weather 
benefits something.
    Mr. Butler. Right.
    Senator Stabenow. Julia, did you want to add anything to 
what Tom had said or anything else----
    Ms. Hersey. Tom has spoken very well. Last year was a very 
hard year for the growers in Southwest Michigan, and that was 
just piled on top of the economic distress that the fruit 
growers have in the State. We don't need many more natural 
disasters to put us where we are headed, so that is basically 
what I have to add.
    Senator Stabenow. Great. Ian, I wonder if you could talk 
about involving stakeholders and how you decide what are 
research priorities. Obviously there are a lot of different 
issues. The first bill I introduced in the U.S. House of 
Representatives was on wheat scab. It was and is, a serious 
issue. We are pleased that we have been able to put together a 
national research consortium to be able to address wheat scab 
and to provide Federal funds for the research. When you are 
talking about everyone here and the different needs, I am 
wondering if you could speak a little bit about how you involve 
all the stakeholders and setting the priorities for research.
    Dr. Gray. Well, if it wasn't for blight, we wouldn't have 
any diseases at all. Everybody gives the name ``blight'' to all 
of these. Stakeholder engagement and involvement is very 
crucial. We have taken within the Michigan Agriculture 
Experiment Station a major effort, particularly through our 
State-funded plant initiative, Project Green. One of the 
requirements that we do engage are stakeholders and setting 
priorities, and that could be an example to be followed by the 
Nation. At the same time we have to define who we mean by 
stakeholders. Stakeholders are generally referred to currently 
as commodity group leaders, the industry that they represent, 
and we do work very closely with them with respect to getting 
their input. Having web sites now and having growers and the 
industry priorities put there. What we may have tried to do was 
to overcome the disengagement that may have been a problem in 
the past so that we actually work with them so that their 
priorities, the industry priorities and our priorities are 
congruent. That is No. 1. Yet at the same time we have to more 
fully define what is meant by stakeholder involvement. 
Stakeholders will change. One can only look to the advances in 
molecular biology, and the advances in molecular biology far 
outstrip the manner in which we can socially and morally 
determine the outcomes of those efforts. We don't have to point 
more than molecular biology and the furor over biotechnology in 
general. We don't have to look further than the human genome 
cloning and the issues involving stem cell research to realize 
that there is a major social and moral issue that needs to be 
addressed as we look at the advancements of science. We have to 
broaden the role of stakeholders. We have to broaden who 
stakeholders are to really truly get them engaged in 
determining the outcomes of science and hopefully the 
acceptance. We need to have open dialog with stakeholders so 
that they are aware of scientific advances and the positive 
impacts of those advances on society as a whole. Stakeholder 
involvement, as far as we are concerned, is a very crucial 
point. That is why we strongly support IFAFS because that does 
truly engage participating farmers and growers in those types 
of programs. That is the wave of the research programs of the 
future even with basic research, we need to link them to the 
applications.
    Senator Stabenow. What would you consider to be the key 
areas of research right now in Michigan to really strengthen 
our agricultural economy?
    Dr. Gray. There are specialty crops and we have heard a lot 
about specialty crops. They still continue to be and will 
continue to be a major focus of our research efforts. Molecular 
biology will help a little bit in alleviating some of the 
stresses and concerns of Tom and others. We are making inroads, 
that advances in the last 5 years have been phenomenal. You are 
going to see a greater advancement in the next 5 years in terms 
of the development of disease- and insect-resistant varieties. 
At the same time, we have to have a forward-thinking vision of 
what are the growth areas for Michigan. Well, mainly 
horticulture is a terminology that is used in Ireland. Really 
in terms of floriculture, ornamentals, nursery, sustainable 
agriculture, organic agriculture, organic farming, those are 
growth areas that must be addressed as we look at the future of 
Michigan agriculture. A healthy agriculture will also mean 
healthy rural economics. The interesting thing that is very, 
very important, is the role of agriculture in the 21st century. 
We will see major expansion beyond food, feed and fiber. We are 
going to be entering into a bio-based economy. This is where I 
see major growth advantages for agriculture. It is also going 
to link basic disciplinary research more closely to the applied 
problems and opportunities for agriculture. We will be looking 
at molecular biologists, mechanical engineers, chemists and 
biochemists to develop new products that will form the future 
of Michigan agriculture in terms of increasing the potential 
for worldwide markets and so on. You are going to see--we are 
going to maintain or we are going to still enjoy food security, 
but we are going to see a greatly improved nutrition food. My 
colleague talks about improving the image of nutrition of 
apples, or how do we enhance apples? We are seeing that with 
cherries and blueberries now in terms of the health benefits 
from that. We will see more and more of those types of 
activities as we get into molecular biology. We are going to 
see hopefully less dependency on fossil fuel and looking at 
more bio-based energy derivatives that we can actually apply 
and also enhance our own profitability on our farms. There is 
major impact. We need to be seeing much more activity in 
revitalizing rural communities. Food and health is still going 
to be key because I do think we are still at the tip of the 
iceberg. When we look at food and health, we are looking at 
measuring that by the lost work days and so forth. That has a 
major negative impact on the overall economy in Michigan and 
the United States. As we look at the future of food safety, 
food health, nutritional genomics, nutritional immunology, we 
are at the very entry level of outstanding programs that is 
obviously going to help production agriculture overall.
    Senator Stabenow. Well, on that note, I am going to thank 
each of you for coming in and speaking and appreciate your 
help. We look forward to reviewing all the information that you 
are giving us.
    We have one more group of speakers that we have asked to 
join us, so we will take a break for a moment while we change 
panels. Thank you very much.
    [Recess.]
    Senator Stabenow. We will call the committee hearing to 
order once again and welcome our second panel. We very much 
appreciate all of you being here this afternoon. Let me 
introduce who the four people are that are joining us. Then we 
will ask each one of them to make a 5-minute opening statement, 
and we will go to questions again.
    First, Dennis Fox is joining us. He is an environmental 
policy specialist for the Michigan United Conservation Clubs. 
He works on the issues related to land use, solid wastes and 
hazardous wastes. Prior to joining MUCC, he worked as a policy 
analyst for the Senate Democratic Caucus in Lansing for 7 
years. Dennis received a bachelor's degree from Michigan State 
University, and in the interests of full disclosure, worked for 
me at one point when I was in the State senate. Dennis, it is 
good to have you. Appreciate your being here.
    Ron Williams is the State Conservationist from the USDA, 
Natural Resources Conservation Service for Michigan. The NRCS 
is the Federal agency that works with Michigan's soil 
conservation districts and other Federal, State, and local 
partners to help landowners preserve and protect natural 
resources on private lands. As State conservationist, Ron is 
responsible for the direction and management of all NRCS 
operations within this State. He is a member of several 
professional organizations, including the Soil and Water 
Conservation Society, and we are very pleased to have you with 
us today.
    David Armstrong is the Executive Vice President of 
Marketing for GreenStone Farm Credit Services. He has over 20 
years of experience with Farm Credit Services in Michigan. In 
1985, he transferred to Farm Credit Services of East-Central 
Michigan, assumed branch manager role until 1993 when he was 
promoted to vice president of sales and marketing; in 1996 he 
became Chief Executive Officer of East-Central Michigan and 
served in that role until 1999, when the four organizations 
merged. We are very pleased to have you with us and have your 
expertise today.
    Joanne Werdel is a policy analyst and communications 
specialist at the Center for Civil Justice in Saginaw. The 
Center for Civil Justice is a nonprofit law firm specializing 
in public benefit issues. As a policy analyst and community 
educator, Joanne coordinates much of the center's policy, 
outreach, and training work on hunger issues and serves as a 
resource on food stamp policy issues to nonprofit organization, 
agencies and legal services programs throughout Michigan.
    We are very pleased to have all of you with us this 
afternoon. Dennis, we will start with you.

   STATEMENT OF DENNIS FOX, ENVIRONMENTAL POLICY SPECIALIST, 
               MICHIGAN UNITED CONSERVATION CLUBS

    Mr. Fox. Thank you, Senator. On behalf of the Michigan 
United Conservation Clubs, I want to thank you for holding a 
field hearing on agriculture in Michigan and also inviting 
testimony from the Michigan United Conservation Clubs. My name 
is Dennis Fox. I am an environmental policy specialist for the 
Michigan United Conservation Clubs. We are a conservation 
organization made up of around 100,000 members and 525 
affiliate clubs, and we have clubs and members in every single 
county of Michigan.
    My comments today are going to be on the conservation 
programs contained in the Federal Farm bill. To start off, I am 
going to talk really--my comments will be very brief. As far as 
the Conservation Reserve Program, we would like to see the 
acreage cap raised and also an extension of the contract length 
for CRP. We would also like to see some additional incentives 
for landowners who opened their property up to public access, 
whether it is hunting, fishing, trapping or those types of 
things.
    Conservation Reserve Enhancement Program: This is a 
relatively new program for Michigan. It actually was authorized 
last year, and we would like, as part of the initial 
authorization, it was for three watersheds in Michigan. It was 
three pilot watersheds in Michigan: Saginaw Bay, Lake Macatawa, 
and also River Raisin. The contracts or the authorization 
allows for the enrollment of 80,000 acres in Michigan. We 
believe it is going to be a very successful program, and the 
contracts are set up for all to be enrolled, or it has been 
authorized until December 31st of 2002. We would like to see 
the CREP program for Michigan extended so it is available for 
the entire state.
    Wetland Reserve Program: Michigan currently has 193 
contracts and 21,000 acres enrolled in the Wetland Reserve 
Program. We again would like to see the reauthorization and 
expansion of this program. We would also like to see an 
emphasis on 30-year contracts and permanent easements for that 
program.
    Environmental Quality Incentive Program is one that 
Michigan United Conservation Clubs strongly supports. We are an 
education-based organization, and we believe the best means to 
address and solve and take care of a lot of our environmental 
and conservation programs is by providing people with 
assistance, both technical assistance and education. EQIP is a 
very important program. We would like to see dollars for the 
water quality and comprehensive approaches to farm management 
and the development of comprehensive nutrient management plans. 
As Michigan United Conservation Clubs has been involved with 
the MAEAP program, which is the Michigan Agricultural 
Environmental Assurance Program, which is aimed at working on 
and controlling and solving a lot of on-farm pollutions that 
had to do with runoff, primarily animal manure. We would like 
to see funds available for these types of programs through the 
Federal level. The steering committee--and this is pretty 
ambitious--but the steering committee, we believe, thinks it is 
a very good program. We have identified the needs to have 85 
percent of Michigan's livestock producers insured through the 
MAEAP program will cost about $63 million through 2005. We 
would like to see some dollars as part of the Federal Farm bill 
for those type of voluntary programs, not just Michigan but 
other States also.
    Wildlife Habitat Incentive Program: MUCC would like to see 
the funds at least doubled from the initial authorization. It 
was initially authorized at $50 million. Those dollars were 
essentially spent in 2 years, so there is a great demand out 
there. We would like to see funding increased at least to $100 
million for the entire Nation because we believe there is a 
demand out there.
    With that, I will end my comments, and thank you again for 
inviting MUCC's comments on the Federal Farm bill.
    [The prepared statement of Mr. Fox can be found in the 
appendix on page 131.]
    Senator Stabenow. Thank you very much.
    Ron Williams.

   STATEMENT OF RON WILLIAMS, STATE CONSERVATIONIST, NATURAL 
                 RESOURCE CONSERVATION SERVICE

    Mr. Williams. Madam Chairman and members of the committee, 
I am Ron Williams, State Conservationist for the Natural 
Resources Conservation Service here in Michigan. Thank you for 
the opportunity to appear today and provide an update on the 
conservation programs assisted by the agency that I represent.
    Farmers are good stewards of the land, and NRCS's mission 
is to help them meet the conservation challenges while 
maintaining productivity. The backlog of program requests is a 
testament to landowner interest. Today I would like to 
highlight the many ways our conservation programs are making a 
difference. Our programs are voluntary and help farmers meet 
regulatory pressures. In short, I believe the conservation 
programs are a win-win for the farmer and the country as a 
whole.
    Before I outline those, I want to say a word about the 
cornerstone of our work, the conservation technical assistance 
provided by the NRCS work force. The assistance that we provide 
to land users is contingent upon the talents and technical 
skills of our field staff around the country. They are the 
trained professionals who have the technical tools, the 
standards and specifications to get the job done. The 
partnership we have with individuals and State and local 
governments is as important today as ever before. There is 
still a great demand for the conservation technical assistance 
provided by NRCS's staff. NRCS works with local conservation 
districts, American Indian tribes, resource conservation and 
development councils, and State and local governments, all of 
whom combine substantially to complement NRCS's technical and 
financial assistance.
    Next I would like to highlight the accomplishments of the 
Wetlands Reserve Program, or WRP. WRP preserves, protects, and 
restores valuable wetlands. The WRP is also making a 
substantial contribution to the restoration of the Nation's 
migratory bird habitats. The 1996 act authorized the total 
enrollment of 975,000 acres in the program. At the conclusion 
of fiscal year 2000, the program had almost reached maximum 
enrollment. In fiscal year 2001, the appropriations provided an 
additional 100,000 acres. From inception of the program, 
interest in WRP has been strong. There is five times as many 
acres offered than can be enrolled in the program. WRP 
continues to be very popular and has strong support around the 
countryside.
    The Farmland Protection Program protects prime or unique 
farmland, lands of State or local importance, and other 
productive soils from conversion to nonagricultural usage. It 
ensures that valuable farmland is preserved for future 
generations and also helps maintain a healthy environment and 
sustainable rural economy. The program was initially funded in 
the 1996 act at a level of $35 million. To date, those funds 
have been exhausted, and local interest in the program 
continues to be very strong. For fiscal year 2001, additional 
funding provided in the Agricultural Risk Protection Act of 
2000 will fund the Farmland Protection Program at $17.5 
million. On June 5, 2001, this funding enabled USDA to approve 
grants to 28 States, including Michigan, to protect 
approximately 28,000 acres of farmland nationwide.
    The Environmental Quality Incentives Program, known as 
EQIP, provides technical, financial, and educational assistance 
to farmers and ranchers who face serious concerns with soil, 
water and related natural resources on agricultural land and 
other land. The program continues to be successful. Over 76,000 
farmers and ranchers applied for assistance in fiscal year 
2000. After the applications were ranked based on criteria 
developed at the local and State level, 16,443 long-term 
contracts were approved. Since inception of the program, demand 
for the program has remained high around the country.
    Madam Chairman, in closing, I would note that good 
conservation does not just happen. It takes all of us, 
including Congress, conservation partners in the States, and 
counties, and most importantly, the farmers and ranchers who 
make a living on the land working together to make it happen. 
As exemplified through the many programs and activities that 
are underway, there is a great deal happening on the ground 
here in Michigan. The conservation measures that are being 
applied and maintained on the land are not only helping farmers 
and ranchers build more productive and economically viable 
operations, they are also building a better natural resource 
base for the future. We are proud of their accomplishment and 
look forward to working with you to build on all that has been 
accomplished in the past.
    This concludes my statement, Madam Chairman, and I thank 
you again for the opportunity to appear. I would be happy to 
answer any questions that your committee may have.
    [The prepared statement of Mr. Williams can be found in the 
appendix on page 133.]
    Senator Stabenow. Thank you very much.
    Dave Armstrong.

    STATEMENT OF DAVID ARMSTRONG, EXECUTIVE VICE PRESIDENT, 
           MARKETING, GREENSTONE FARM CREDIT SERVICES

    Mr. Armstrong. Thank you for the opportunity to participate 
today in the Senate Ag Committee field hearing regarding the 
upcoming Farm bill. I commend you, Senator, for seeking input 
as the public policy debate regarding this issue needs the 
input and decision of a wide array of constituents. Again, I am 
Dave Armstrong, and I am the Executive Vice President of 
Marketing for GreenStone Farm Credit Services.
    GreenStone Farm Credit Services is the largest provider of 
credit to agriculture in the Lower Peninsula of Michigan. 
Currently we have loans outstanding of $1.6 billion to over 
10,000 customers and members. We are a cooperative lending 
institution and part of the national Farm Credit System. We 
have had many successes in serving farmers and rural residents 
within the Lower Peninsula of the State. We have built our 
capital, positioned over 15 percent of risk-adjusted assets, 
and maintained a market share that is one of the highest in the 
United States. When totaling lending to agriculture by banks 
and GreenStone, we estimate our market share at over 60 
percent.
    My comments today will cover the following topics: a brief 
overview and status of GreenStone Farm Credit Services, the 
condition of agriculture as seen on behalf of GreenStone, and 
some thoughts regarding agricultural public policy.
    GreenStone FCS is a sound lender to agriculture and rural 
Michigan. GreenStone currently has a capital position of $250 
million. Our net earnings remain sound with a pre-tax ROA of 
near 2 percent while credit quality remains sound at 96.6 
percent acceptable and mention paper. Interest rates are very 
competitive with a majority of rates for commercial lending at 
prime to three-quarters percent above prime with a majority of 
our mortgage lending at three-quarters to one-quarter below 
prime. That is well received by farmers in times of economic 
stress, believe me.
    Agriculture has many challenges as seen through the eyes of 
its lender. One positive for Michigan agriculture is our 
diversification. While many sectors have challenges, others 
continue to perform well. Today significant challenges exist in 
the cash crop or, quote, the ``program crop sectors,'' as we 
call them. Without Government payments, this entire sector 
would be unprofitable, and credit quality would have eroded. 
Other challenging areas, as we heard earlier, are dry beans, 
asparagus, and certainly the apple industry. In general, 
Michigan agriculture remains sound with concerns on the horizon 
regarding oversupply of the basic commodities.
    Agriculture is a dynamic industry, and it has changed 
dramatically over the past 10 to 20 years. Modern agriculture 
has three distinct segments. Commercial farms, which are a core 
set of large operators, produce 70-plus percent of all the 
production. This sector continues to grow and is made up 
primarily of large family operations. The traditional farm 
segment is static to shrinking with lower average annual sales 
with over half of their income derived from nonfarm sources. 
They account for approximately 17 percent of sales. The 
remaining sector is part-time or ag consumers, which make up 82 
percent of the farms, with only 13 percent of sales. These 
market segments are critical for analyzing agriculture and 
serving their needs. The large commercial operations have a 
significantly different challenge compared to ag consumers and 
part-time farmers, a key point that needs to be considered in 
the upcoming Farm bill.
    Thoughts on the agricultural public policy include that the 
commercial farm sector is a very efficient and well-managed 
group of producers that are very few in number. These units 
needs risk management, trade expansion, and the ability to 
participate in or purchase a safety net. Federal crop insurance 
plays a key role and should continue to play this role in the 
future. Government subsidy in this arena can eventually lead to 
self-insurance of risk and decreased Government support 
payments. Key to its success is expanding crops eligible for 
participation and underwriting the coverage appropriately.
    Crop insurance is not a tool to collect government 
payments. The least-cost insurance is always the one in which 
you never collect. Government trade agreements and enhancing 
the opportunities for agriculture to participate in world trade 
are also key areas for Government involvement in agriculture. A 
global economy with fair trade provides opportunities for all. 
Finally, a future public policy that contains supply controls 
has proven unsuccessful as recognized in the last Farm bill. 
U.S. agriculture becomes the world's supply control mechanism 
which, in a global economy, only supports more production 
outside of the U.S. In the long run, our export markets will be 
lost to foreign competitors.
    In summary, there are many challenges facing agriculture, 
ag lenders, and ag businesses. Early discussion regarding 
public policy in the next Farm bill are critical to carve out a 
policy that is market driven with opportunities for safety nets 
for commercial agricultural producers. I commend you, Senator 
Stabenow, for beginning the process and look forward to 
providing additional information as appropriate. Thank you.
    [The prepared statement of Mr. Armstrong can be found in 
the appendix on page 139.]
    Senator Stabenow. Thank you, Dave.
    Joanne.

 STATEMENT OF JOANNE WERDEL, POLICY ANALYST AND COMMUNICATIONS 
              SPECIALIST, CENTER FOR CIVIL JUSTICE

    Ms. Werdel. Good afternoon. My name is Joanne Werdel. I am 
a policy analyst with the Center for Civil Justice. I should 
point out that in addition to our organization and our clients, 
I am also providing testimony today on behalf of the Building 
Bridges Network, which is a statewide coalition of persons and 
organizations concerned about hunger in Michigan. I have the 
honor of being the only person talking about the consumer side 
of agriculture and food issues. We work with low-income clients 
in Michigan.
    I want to talk first about some of the positive things that 
are happening in the food stamp program. As many things as need 
improvement, there are always good things to talk about. The 
food stamp program is a critical program for Michigan. It 
supports Michigan working families, it supports children and 
seniors with special nutritional needs, and it also targets 
very effectively families who need assistance the most. I want 
to touch on each of those a little bit.
    It is written out in my written testimony to you, but we 
have a client who has been very gracious about allowing us to 
share her story. There is often a stigma that is attached to 
food stamps, and she has been able to see the value of sharing 
this story and has been very gracious about letting us do that. 
Her name is Karen Robuck. She and her husband Earl live in 
Midland, Michigan. Earl had, for many years, been able to 
support the family in his work in the construction trades, but 
several months ago injured his back; but he didn't injure it at 
work and so hasn't been able to receive workers' compensation. 
Karen went to work. They have three children. She has been able 
to find part-time work at their local Target and working about 
30 to 35 hours a week at $6 an hour, which, you can imagine, 
doesn't provide enough barely even for shelter expenses much 
less to feed a family of five. Because of their family size and 
her low wages, they have been able to get slightly over $400 a 
month in food stamps, which has been able to keep them housed 
and fed and has been an incredible support for their family. 
She has said, ``You know, if it weren't for food stamps, we'd 
be out on the street. We wouldn't be able to feed our 
children.'' They provide a really compelling example of how 
important food stamps is for families who have low wages, 
generally who are working really hard but struggling, and also 
families who, from time to time, may have temporary emergency 
needs.
    The other thing that the food stamp program does is pay 
special attention to individuals with special nutritional 
needs. It is about food and nutrition and so that is 
appropriate. It pays special attention to very young children, 
especially those whose brains and whose bodies are developing 
at amazing rates and provide special exceptions from work rules 
for parents who have children under the age of 6 because the 
food stamp program understands how important it is to protect 
the nutritional access or access to nutrition for very young 
children. It also provides special rules for individuals who 
have disabilities or for seniors. There is a special medical 
deduction for seniors. There are special housing exemptions for 
folks who are seniors or have disabilities because the food 
stamp program understands that folks who are spending money on 
medicine or have special needs in those groups can't then also 
spend their money on food. Finally, it targets very effectively 
those families who need assistance the most. Through a series 
of different deductions, the program takes into account that 
money you spend on one expense can't then be spent in the 
grocery store to purchase fresh fruits and vegetables and other 
necessities. The biggest deduction for Michigan, hands down, is 
the shelter deduction. You know, we all know how much we all 
spend on our own rents and utilities each month. About 70 
percent of all the households in Michigan who get food stamps 
receive the shelter deduction. Those are some of the good 
things that are happening in the program.
    You will find on the last page of the written testimony 
some suggestions for moving forward, some positive provisions 
that exist in the House bill already, and some areas where we 
feel that the House bill fell short. I will just kind of list 
those really briefly.
    One is that legal immigrants, who are here completely 
lawfully and completely legally, if they have an emergency, 
can't get access to food stamps. This affects not only them but 
also citizen children. We have seen in Michigan, just in the 
last couple of years, the number of citizen children who live 
with legal immigrant parents who have access to food stamps 
drop by about 57 percent. These are folks--these are children 
who should be getting food stamps but are not. Individuals who 
are able-bodied and childless have very restrictive special 
rules in the food stamp program and generally lose food stamps 
after 3 months, even though they may be looking for work, are 
more than willing to work, and would like to work.
    Finally, benefits, because of cuts in 1996 and because of 
inflation adjustments that were stripped from the program, have 
lost value then every year from there on out. We are suggesting 
that on the Senate side the inflation adjustments be restored 
and also that the cap on the shelter deduction for those 
families who don't have senior or disabled members be removed.
    Thank you again for the opportunity. It is an honor.
    [The prepared statement of Ms. Werdel can be found in the 
appendix on page 142.]
    Senator Stabenow. Thank you, Joanne. I will just mention 
that this morning we did have someone from Focus: HOPE who has 
the commodity program there joining us as well. It was an 
important part of the testimony this morning. The nutrition 
title and the issue of food stamps is a very important part of 
the Farm bill, so we appreciate your being here.
    I am wondering if you could speak to how low-income 
families that are working in general are doing in Michigan 
right now and what you see in terms of making the food stamp 
program more effective or accessible for our low income working 
families.
    Ms. Werdel. Sure. I would be happy to. Well, first, folks 
are definitely working. There is no question that families in 
the wake of welfare reform are absolutely at work and working 
hard. Unfortunately, most of them are still struggling. The 
average wage for folks who leave welfare for work in Michigan 
is about $6 an hour. It varies from area to area from $5.85 to 
$6.22, but that is not enough to raise a family, clearly. It 
doesn't bring a family of three or four even to the poverty 
level. Nationwide, studies indicate that about half of the 
working families who should be receiving food stamps or who 
could be receiving food stamps are actually participating. 
There is no State-level data right now for Michigan on that, 
but we do know that pressure from the quality control system 
and the evaluation system in the State has caused Michigan and 
other States to make choices about policies that restrict 
access to working families.
    For example, in 1998, Michigan created a rule that required 
families with earnings to re-apply every 3 months, whereas 
families who have more stable income are not as error-prone and 
only had to re-apply every 12 months. You can imagine that by 
the time you have on food stamps a month goes by, you are 
starting paperwork and interviews all over again, and applying 
for food stamps is a complicated and burdensome process, often 
taking up to 5 or 6 hours reading and interviewing and filling 
out the application. Once that policy was instituted between 
fiscal year 1998 and fiscal year 2000, we saw working families 
drop from, like, 98,000 in Michigan to about 64,000. It clearly 
had an impact in preventing access to the food stamp program.
    Senator Stabenow. Well, thank you very much for being here.
    Ms. Werdel. You are welcome.
    Senator Stabenow. We appreciate all of your testimony.
    Ms. Werdel. My pleasure.
    Senator Stabenow. I know that you are under a time 
constraint so if you----
    Ms. Werdel. I do have to run. I apologize. I feel rude 
but----
    Senator Stabenow. If you need to leave, we certainly 
understand but appreciate your being here.
    Dave, I wonder if you might respond to a couple of 
questions. You have talked about crop insurance and its 
effectiveness as a risk management tool. We know that many of 
Michigan's specialty crops are not covered. That is one of the 
challenges for us in Michigan, is so much of what happens--we 
have too many crops that aren't able to have access to the 
federal programs. We have made some changes last year in the 
reform of crop insurance. There was an effort to both increase 
the federal subsidy but also to expand to some specialty crops. 
In meeting with some folks last night on this issue, one of the 
things that they were talking about was the fact that the costs 
in Michigan, particularly if you are getting up to above 50 
percent coverage, are so much higher that people just aren't 
purchasing those plans. There is a question of how do we expand 
the number of people purchasing to bring the price down. It is 
one of those things where if you only have sick people buying 
health insurance, then the cost is going to be higher than if 
you have healthy people and have everybody participating in the 
insurance pool, then the price goes down. We are seeing that in 
Michigan as it relates to crop insurance right now. I am 
wondering if you might speak for a moment as it relates to 
specialty crops that aren't covered on crop insurance and the 
impact that you see that that has on them.
    Mr. Armstrong. Well, that is a huge question. Certainly, 
crop insurance--we look to crop insurance as a mitigator of 
risk in our loan portfolio. The amount of money that we are 
able to loan to our customer who has high levels of crop 
insurance far exceed those who may not have the financial 
position or safety net of that particular risk management tool. 
When you look at diversity in Michigan, it is very obvious how 
we need to expand it to other crops. As I recall, Michigan is 
second only to California in our diversity. When you consider 
corn, soybeans, and some of the other smattering of crops that 
today are approved in Michigan, it is only a finger in the dike 
of what we need in terms of risk management in this state. We 
need to expand to crops that are already approved in other 
States or crops that are approved in other counties, or we need 
to accelerate pilot testing of different programs. We need to 
be innovative in developing new programs, like the crop cost to 
production policies that were mentioned earlier today. They 
just have a huge impact to manage the risk. It is a good win 
for everyone. The farmer actually puts some dollars down to 
cover their own risk and at the same time, the Federal 
Government is stepping in to subsidize. Then, of course, we 
have a pretty good system of delivery through the partnership 
of the Federal and private delivery system. We just need to 
continue to develop innovative products and make a system that 
is in place today better.
    Senator Stabenow. In general, you are involved with our 
current agricultural economy and see what is happening. What 
would you say in terms of what is happening and how our farmers 
are doing today versus 10 years ago?
    Mr. Armstrong. Well, I would say that they are probably 
doing about as well, if not a little better, as we speak today. 
Our credit quality, as I said, was over 95 percent--96.6 
percent acceptable and mention paper. That is relatively high. 
That compares to that same percentage being in the mid 50's at 
the depths of the crisis of the mid-1980's. Our credit quality 
has improved dramatically for many reasons.
    Of course, in most recent years, those reasons include the 
continual increase in Government payments, ad hoc payments, and 
those have been critical to our core commodities. Certainly we 
have seen some sectors that have had success, poultry and some 
others, whose exports have increased. By and large, most of our 
producers in Michigan are going to have a tough time of it come 
the fall of 2001 because of the weather disasters that we are 
seeing out there and some of the other issues that have hit the 
asparagus growers, the apple growers. When people say, ``How is 
agriculture doing in Michigan?'' we almost have to say, ``Well, 
which crop are you talking about?'' It makes it a very 
difficult problem to solve.
    Senator Stabenow. Well, thank you.
    Ron, let me talk for a moment about conservation. As I 
mentioned earlier, we are going to see an emphasis really on 
strengthening our conservation programs in the country under 
the leadership of Senator Harkin. That is really a priority for 
him and for me and many members of the committee, and I 
appreciate your work. We are going to need your constant 
involvement in this as we move through the process of writing 
this. I am wondering if you could share with me the impact of 
the WRP in terms of the impact on landowners in Michigan and to 
what extent there is a continued need. You spoke about it a 
little bit in terms of WRP, but if you could talk a little bit 
more about that program and the impact and the compelling need 
for landowners and producers to enroll marginal lands in the 
WRP.
    Mr. Williams. Thank you, Madam Chair, once again. We 
certainly do appreciate your continued support for 
conservation. You provide very strong support and leadership, 
and we really do appreciate that.
    As it relates to the Wetland and Reserve Program, or the 
WRP program, this has been a very popular program for Michigan 
landowners, as it has been across the country. There is a large 
amount of altered hydrology that has taken place over the years 
in the State of Michigan. There is a great opportunity for 
wetland restoration. These restored wetlands offer to 
landowners not only environmental benefits related to water 
quality and also wildlife habitat, but there are also economic 
returns for offering an easement into this program.
    Currently the Wetland Reserve Program in Michigan has about 
210 contracts. We have restored about 22,500 acres. This is 
providing about $22.7 million to Michigan landowners. The 
backlog of pending applications to the WRP program, as we speak 
today, is about 110 applications for about $12.5 million. There 
is a continued need for the WRP program to make it very 
important as it relates to the conservation tool kit that 
Michigan has to provide assistance to producers on those types 
of lands. You asked the question also about the marginal 
lands----
    Senator Stabenow. Right.
    Mr. Williams [continuing]. For the WRP program. The 
benefits of restoring and protecting Michigan's wetland 
resources for water quality improvement, sediment filtration, 
floodwater retention, groundwater recharge, wildlife habitat, 
and recreational opportunities are very strong motivations for 
landowners. In addition to these environmental benefits, the 
payments that the landowners receive for the WRP conservation 
easement is very critical to their bottom line from an economic 
standpoint. Many of the lands that go into the WRP program are 
marginal because they are subject to being wet. They are 
subject to flooding. In some cases, producers only may reap a 
crop from those lands once every 3 to 4 years. The WRP program 
does give them some way to manage their land, hold on to it, 
preserve it, conserve it, and at the same time reap some 
economic benefit from it.
    Senator Stabenow. When we look at our conservation 
programs, do you think, when we are looking at the Farm bill, 
that we should be looking at strengthening what we have, or do 
you see gaps and needs for developing whole new programs?
    Mr. Williams. There is probably a need for all of the 
above, certainly for strengthening what we have and as it 
relates to some of the existing program infrastructure, like 
the Wetland Reserve Program, the Conservation Reserve Program, 
the Wildlife Habitat Incentive Program, the Environmental 
Quality Incentive Program. A big concern with the Environmental 
Quality Incentive Program has been that there has not been 
enough dollars there to really provide adequate financial 
assistance to producers. Several years ago, if you combined all 
the programs that went into the Environmental Quality 
Incentives Program, there was probably over a billion dollars 
back some years ago combined. That program was reduced to about 
$200 million annually. There is a need to do that, but I also 
believe that we need to be looking at opportunities, 
particularly with the new technologies that we have and the way 
things that science is currently advancing, we do need to be 
looking for other opportunities as we look to the 21st century 
that we can expand some of the programs and also develop new 
programs and new opportunities for producers.
    Senator Stabenow. Dennis, from MUCC's perspective, when we 
look at the conservation part of the Farm bill, do you see the 
current programs in place needing to be strengthened as the 
major focus, or are there areas that you would see where we 
should be looking to develop something new?
    Mr. Fox. I would have to echo Ron's comments all of the 
above. I mean, strengthen the existing programs, but, there are 
other areas--other conservation areas that could be 
strengthened or even further built upon. One area that we are 
working on at the State level is called a private reserve or 
Private Forest Reserve Act. It is a State program that provides 
technical assistance to private landowners on how to manage 
wood lots, the forest resources on their property. That, on the 
State level, has been a marginal program just simply because a 
lot of the dollars and a lot of the technical assistance isn't 
there. We are working on the State level to buildupon that 
program and probably revise it so that it works better. You 
know, something along the lines of that on the State level or 
on a Federal level would be very beneficial.
    I know another program that I have been reading about--and 
I don't know how much it would impact Michigan--would be 
grassland restorations. There was in Michigan prior to its 
development, a lot of grasslands, prairie lands, in the Battle 
Creek area. I don't know if there is any in existence any more, 
but restoration projects that would look at the grasslands, 
prairie lands in Michigan would be beneficial also. I know it 
would be very beneficial on a national level.
    Senator Stabenow. One of the things that Dennis talked 
about was creating incentives for landowners to open CRP lands 
for public access. Do you have suggestions on the kind of 
incentives that you would suggest?
    Mr. Fox. As you mentioned between 1992 and 1997, we lost 
roughly 200,000 acres of farmland where it went. It is a good 
question: Was it developed, was it turned into forest land or 
what? Our concern is the loss of land for recreational 
opportunities. Our membership relies on land for their 
recreational opportunities, whether it is hunting and fishing 
during the fall and the winter or hiking and biking and 
canoeing. You have to have access during the summer, spring 
months. One of the ways that we could possibly increase or have 
is make public access attractive to private landowners who are 
enrolled in the Conservation Reserve Program would possibly be 
adding some criteria or a criteria to the Environmental 
Benefits Index. We were actually successful last year with 
having additional points added to a person's application for 
enrollment in the state's Purchase and Development Rights 
Program, which is administered through Michigan's Farmland and 
Open Space Preservation Program. We were successful in getting 
two additional bonus points added to a person's application if 
they would open their property up to public access. We think 
those types of incentives can allow people who are interested 
in enrolling in these programs make the cut because a lot of 
these applications are decided by one or two points or certain 
criteria and stuff. That is what we hope would be the type of 
direction to go to enticing private property owners to 
increasing the amount of lands available for public access.
    Senator Stabenow. Anything, Ron, you would want to add to 
that?
    Mr. Williams. I would just like to add something, if I 
could.
    Senator Stabenow. Sure.
    Mr. Williams. Not so much to that, but I would like to make 
a statement. One of the things that I would recommend the 
committee be very cognizant of, as you are moving forward, is 
the need for conservation technical assistance. I mentioned 
that earlier on, and that is the trained men and women who work 
right alongside producers on a day-to-day basis in the field to 
help transfer the technology and the information, provide them 
with good decisionmaking information that we can help them get 
good conservation on the ground. If you look at the Natural 
Resources Conservation Services work force from the national 
perspective over the last probably 20 years, we have lost 
considerable staff. The same, of course, has transcended into 
Michigan from that perspective.
    There is a partnership work load analysis that was 
conducted about a year and a half ago, and that work load 
analysis indicates that there is a need for about one and a 
half times the number of professionals out in the field than we 
currently have. The conservation activities and the issues that 
we are dealing with today are much more complex than they were 
in the past also. We are dealing with nutrient management-type 
issues, livestock waste management-type issues, water quality 
issues really have emerged and come to the forefront--carbon 
sequestration and other kinds of issues. The need to have a 
sound technical assistance work force in place in the field is 
very critical. I would urge you to consider investing in and 
perhaps even restoring the Natural Resources Conservation 
Service work force in the field back to pre-1985 levels. As we 
talk about more programs, as we talk about expanded amounts of 
financial assistance, that also increases the burden on the 
staff to provide assistance in the field.
    Senator Stabenow. David, did you have anything else you 
wanted to add?
    Mr. Armstrong. Yes. Just briefly, I would like to just kind 
of talk about some areas where we believe some attention needs 
to be paid to the credit title of the Farm bill, specifically 
with reference to FSA guarantees. Guarantees are our first line 
of defense, so to speak, against a deteriorating ag economy in 
order to help extend the economic viability of some of our 
customers. We have used these here in Michigan extensively over 
the years. Currently we have about $115 million in guaranteed 
loans in our portfolio, and that is about 7 to 8 percent of the 
portfolio. We expect that certainly to rise as we encounter 
some difficult times ahead in early 2002.
    We have been growing about 10 percent a year, even in good 
economic times, so to assist many of producers. With that, we 
would like to see an increase in the limit on the FSA 
guaranteed loans to any one individual raised from 750,000 to 
1.5 million to just simply recognize this continued 
consolidation in, quote, ``family farm operations.'' Family 
farms are getting larger, and they need that kind of 
assistance. We would like to see increased FSA funding for 
interest rate buy-downs on guaranteed loans to small, 
beginning, and young farmers. That is a critical component of 
our public policy, and those folks need some assistance, and 
that is one way we see we can do that. Also reduce the 
paperwork burden now associated with the assignment of USDA 
benefits.
    We would also like to create a guaranteed lending program 
for on-farm storage in addition to existing direct loan 
programs and raise the ceiling on low documentation FSA 
guaranteed loan apps from 50,000 to 100,000. These steps would 
be great in order for us to better serve our producers during 
tough economic times. Thank you.
    Senator Stabenow. Well, we have come to the close. I want 
to thank our panelists again and everyone who was able to be 
here today. If you were not playing a speaking role today but 
would like to add some information or testimony, we very much 
want to hear from you, as I have indicated before.
    Gloria Dennang, who is over here from my staff, will be 
glad to take whatever you have in writing or you can mail it to 
us. If you don't have something today and you want to followup 
based on something that you feel needs to be stressed or was 
not said today that should be said, we want to hear from you 
and want you to have a chance to do that.
    As a member of the Senate Agriculture Committee, I take my 
assignment very seriously, and we are going to be working very 
hard along with Senator Levin. Senator Carl Levin and I work 
very closely together in partnership on all of these issues. We 
are going to do our very best to make sure that Michigan's 
voice is not only heard but that the final Farm bill reflects 
the needs of Michigan families and Michigan agriculture. We are 
definitely going to take this information back and put it to 
work.
    It has been very, very helpful to me today to have 
everybody participate. We will officially draw this field 
hearing to a close. Thank you.

    [Whereupon, at 3:55 p.m., the committee was adjourned.]
      
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