[Senate Hearing 107-879]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-879

THE ADMINISTRATION PERSPECTIVE WITH REGARD TO THE NEW FEDERAL FARM BILL

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                           SEPTEMBER 26, 2001

                               __________

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


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


                                 ______

85-327              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001


           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 Administration Perspective with Regard to the New Federal 
  Farm Bill......................................................    01

                              ----------                              

                     Wednesday, September 26, 2001
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee 
  on Agriculture, Nutrition, and Forestry........................    01
Lugar, Hon. Richard G., a U.S. Senator from Indiana, Ranking 
  Member, Committee on Agriculture, Nutrition, and Forestry......    03
Baucus, Hon. Max, a U.S. Senator from Montana....................    14
Conrad, Hon. Kent, a U.S. Senator from North Dakota..............    06
Crapo, Hon. Mike, a U.S. Senator from Idaho......................    16
Dayton, Hon. Mark, a U.S. Senator from Minnesota.................    18
Hutchinson, Hon. Tim, a U.S. Senator from Arkansas...............    09
Leahy, Hon. Patrick, a U.S. Senator from Vermont.................    05
Lincoln, Hon. Blanche, a U.S. Senator from Arkansas..............    19
Miller, Hon. Zell, a U.S. Senator from Georgia...................    11
Nelson, Hon. E. Benjamin, a U.S. Senator from Nebraska...........    08
Thomas, Hon. Craig, a U.S. Senator from Wyoming..................    21
Wellstone, Hon. Paul, a U.S. Senator from Minnesota..............    12
                              ----------                              

                               WITNESSES

Veneman, Hon. Ann M., Secretary, United States Department of 
  Agriculture, Washington, DC, accompanied by J.B. Penn, Under 
  Secretary, Farm and Foreign Agriculture Service, United States 
  Department of Agriculture......................................    22
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    62
    Lugar, Hon. Richard..........................................    64
    Conrad, Hon. Kent, (chart submitted).........................    66
    Helms, Hon. Jesse............................................    87
    Roberts, Hon. Pat............................................    89
    Veneman, Hon. Ann M..........................................    67
Document(s) Submitted for the Record:
    Cochran, Hon. Thad...........................................    96
    Stabenow, Hon. Debbie........................................    98
Questions and Answers:
    Questions submitted for the record (no answers provided).....   104

                              ----------                              


 
THE ADMINISTRATION PERSPECTIVE WITH REGARD TO THE NEW FEDERAL FARM BILL

                              ----------                              


                     WEDNESDAY, SEPTEMBER 26, 2001

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:03 a.m., in 
room SD-106, Dirksen Senate Office Building, Hon. Tom Harkin, 
[Chairman of the Committee], presiding.
    Present or Submitting a Statement: Senators Harkin, Leahy, 
Conrad, Baucus, Lincoln, Miller, Nelson (of Nebraska), Dayton, 
Wellstone, Lugar, Helms, Roberts, Fitzgerald, Thomas, 
Hutchinson, and Crapo.

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

    The Chairman. The U.S. Senate Committee on Agriculture, 
Nutrition, and Forestry will come to order.
    This morning, we are having a hearing on the 
administration's views on food and agricultural policy, and 
this morning I am pleased to welcome Secretary Veneman, 
accompanied by Under Secretary Penn and Dr. Keith Collins, to 
our committee for this hearing.
    We look forward to this morning's testimony and discussion 
of the report the administration released last week, and I have 
to tell you in my 27 years now on the House and Senate 
Agriculture Committees I have read a lot of reports. We used to 
have the annual book that came out on agriculture. Of all of 
them, this is perhaps the most comprehensive and forward-
looking that I have seen in all these years.
    I recommend it highly to any member of the committee who 
has not read it. I read it on the train going up to New York 
last week and back, and perused it a little bit last night. I 
recommend it highly. It is a great report, and I commend you 
for that, Madam Secretary.
    Just yesterday, the distinguished ranking member, Senator 
Lugar, and I issued a set of joint policy objectives for the 
Farm bill. So I believe the stage is set for a good hearing and 
an airing of views.
    Farm families and rural communities across America have not 
shared in our Nation's prosperity. We need new directions in 
Federal agriculture, food and rural policies. I welcome this 
report, Secretary Veneman, because it clearly indicates a 
willingness to examine critical issues in rural America and in 
our food and agriculture system, and to explore new ideas and 
policy proposals. To be sure, there are details to be filled 
in, and I look forward to working with you and your team on 
these specific policies.
    In your written testimony, which I went over last evening, 
I was pleased to read your part in there when you talked about 
a comprehensive review of ag policy is urgently needed. I 
couldn't agree more.
    Farm income protection is, of course, a fundamental part of 
the Farm bill. We need a better system to provide adequate 
income protection without requiring annual emergency 
legislation. However, protecting agricultural producers against 
income losses is not enough by itself. The Farm bill must also 
help farmers and rural communities create and realize 
opportunities for the future.
    If the legislation fails to lay a foundation for new 
opportunities, rural America will be no better off 5 or 10 
years from now. Farmers will be just as dependent on Government 
checks and rural communities will still be falling behind.
    The new Farm bill should help farmers earn better returns 
and a larger share of the consumer dollar in the market. Value-
added processing ventures, new biotechnology products, 
innovative marketing channels, and increased exports all can 
help. If independent farms are to survive, though, we must 
ensure that agricultural markets are open, competitive and 
fair.
    America's farmers, ranchers and landowners have a strong 
stewardship ethic, but margins are tight and they too often 
lack the financial resources to conserve natural resources as 
they want to do. The new Farm bill should extend and strengthen 
USDA's current conservation programs, and it should create a 
new system of incentive payments for maintaining or adopting 
new conservation practices on land that is in production. The 
bipartisan legislation that I have offered will, I hope, 
improve producers' incomes and help them conserve soil, water 
and wildlife.
    We have barely scratched the surface of the potential for 
producing farm-based renewable energy and raw materials, 
including ethanol, biodiesel, biomass, and even wind power. 
Anything we can make from a barrel of oil we can produce from 
farm commodities. I am proposing a special title to promote 
renewable energy in the Farm bill. It has never been done, but 
the time is right. Quite frankly, I believe this area could 
represent the largest potential market for income growth for 
farmers and ranchers, along with products made from 
agricultural crops, such as soy-based building materials and 
things like that.
    We also need to strengthen the foundation and 
infrastructure of our Nation's food and agricultural sector. 
That includes support for research, protecting the safety and 
security of our food supply, safeguarding plant and animal 
health. We must meet our responsibility to help fight hunger 
and malnutrition at home and in developing countries, 
especially among children.
    We will not have truly healthy rural communities unless 
both farms and small towns do well. Rural America is too often 
at a disadvantage when it comes to basics like enough good 
water, electric power, telecommunications, loans for 
businesses, and equity capital for investment. A critical part 
of the Farm bill, I believe, is helping to revitalize rural 
economies, generate more good jobs and improve the quality of 
life in rural communities.
    Last, let me just say, Madam Secretary, that the events of 
2 weeks and a day ago also compel us to examine the Farm bill 
in the light of the safety of our food and animal and plant-
based food products in this country, to take a strong 
examination of our whole system, from producer to the store, to 
make sure that our people have the utmost and the highest 
confidence in the safety of our food in this country.
    To that end, I will examine with you any advice or 
suggestions you might have for changes that need to be made, 
but I also believe that this is going to have to be something 
that we are going to have to focus on in this Farm bill. I 
welcome any suggestions and advice that you might have for us 
along this pathway. Again, I welcome you to the committee and I 
look forward to your testimony.
    [The prepared statement of Senator Harkin can be found in 
the appendix on page 62.]
    With that, I would recognize my distinguished ranking 
member, Senator Lugar.

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

    Senator Lugar. Thank you very much, Mr. Chairman.
    I congratulate you on ``Food and Agriculture Policy'' and I 
am going to quote from this extensively. For those who want to 
know where we are heading, page 46, Chapter III, is an area 
that is very significant as we consider farm legislation.
    The publication of the United States Department of 
Agriculture book on Food and Agriculture Policy is a signal 
event. I congratulate Secretary Ann Veneman for this timely 
intervention into preparation for the next Farm bill, and I 
join Chairman Harkin in welcoming her and her colleagues to the 
committee today.
    Chapter III of the new USDA book merits special attention. 
The chapter begins by pointing out, and I quote, ``the farm 
sector is diverse beyond the imagination of those who farmed 
the New Deal legislation. On average, farm family incomes no 
longer lag, but rather surpass those of other U.S. households. 
Most farms are run by people whose principal occupation is not 
farming...domestic demand alone is no longer sufficient to 
absorb what American farmers can produce.'' These are all 
direct quotes.
    On the next page Chapter III continues, and I quote, ``Many 
of the program approaches since the 1930's proved not to work 
well or not at all, produced unexpected and unwanted 
consequences, became far costlier than expected, and have been 
continually modified over time in a long succession of farm 
laws. Some major, and still highly relevant, lessons learned 
include,'' first, and I quote, ``History has shown that 
supporting prices is self-defeating.''
    That is a remarkable statement on the face of it. ``History 
has shown that supporting prices is self-defeating. Government 
attempts to hold prices above those determined by commercial 
markets have simply made matters worse time after time. 
Artificially higher prices encouraged even more unneeded output 
from the most efficient producers at the same time they 
discouraged utilization pushing surpluses higher and prices 
lower.'' This is all a direct quotation from page 47.
    ``Supply controls proved unworkable too...the remaining 
land was farmed more intensively, and supply was rarely cut 
enough to boost prices to politically satisfactory levels. The 
programs were costly to taxpayers and consumers and the unused 
resources were a drag on overall economic 
performance...limiting our acreage was a signal to our 
competitors in other countries to expand theirs, and we lost 
market share that is always difficult to recapture...''
    Continuing the quotation, ``Stockholding and reserve plans 
distort markets enormously...because such stock eventually must 
be returned to the market, they limit the recovery of prices in 
the future. Moreover, time after time, stocks have proven 
costly to maintain, distorted normal marketing patterns, ceded 
advantage to competitors, and proved tempting targets for 
political tampering...''
    I continue the quotes: ``Program benefits invariably prove 
to be disparate, providing unintended (and unwanted) 
consequences. The rapidly changing farm sector structure 
produced a wide array of farm sizes and efficiencies. Many 
farms were low cost and the programs were of enormous benefit, 
enabling them to expand their operations. Others did not 
receive enough benefits to remain viable and thus were absorbed 
along the way.''
    The book credits the FAIR Act of 1996 with removing much of 
the decades-old program structure, providing unparalleled farm 
decisionmaking and becoming the least distorting of markets and 
resource use. USDA states that the FAIR Act's ``direct payments 
to share some unintended effects with price support programs, 
namely the artificial inflation of farmland prices. The effect 
has been exacerbated by the size of payments in recent years, 
some $28 billion in the last 4 years above the amount provided 
in the 1996 law.''
    The book goes on to point out that only 40 percent--40 
percent--of farms receive these payments because they are 
largely directed to specific commodities. In fact, 47 percent 
of the payments--47 percent--went to large commercial farms 
which contributed nearly half of the commodity production and 
had household incomes of $135,000. A color chart illustrates 
this on the next page.
    Another interesting discussion surrounds the fact that 42 
percent of farmers rented land in 1999, and commodity payments 
capitalized in higher land values often led to higher rents.
    Secretary Veneman, the farm legislative process is in 
motion, and the book of principles makes an important 
contribution, but I ask you and your associates to do more. 
Please begin to comment specifically on the wisdom of farm bill 
ideas which are now being formulated or debated in the House 
and the Senate. Please enlist the assistance of OMB to identify 
how much money is now available in a war economy with dire 
predictions that prospective surpluses are vanishing or gone. 
The need for that timely intervention by the Bush 
administration and USDA is apparent. I look forward to your 
testimony.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Lugar can be found in 
the appendix on page 64.]
    The Chairman. Thank you, Senator Lugar.
    I will now turn to, in order of appearance, Senator Conrad.
    Senator Conrad. I would be happy to yield to Senator Leahy.
    The Chairman. Senator Leahy.

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

    Senator Leahy. Mr. Chairman, I appreciate the courtesy very 
much. This is an extremely important hearing.
    Secretary Veneman, I have had a chance to go through your 
report. It is excellent, which is nothing less than what we 
have grown to expect from you in both administration and 
previously when you were here.
    Also, incidentally, I want to thank you for the briefing 
you gave yesterday to a number up here on the question of 
agriculture's role in anti-terrorist activities. Looking around 
this committee, I know we have some who are on the Judiciary 
Committee here. We were over with Attorney General Ashcroft, or 
I would have been there. Actually, we were here in this room 
with Attorney General Ashcroft, or I would have been there, but 
I have been briefed about what you raised.
    Your report highlights some of the inequities of the 
current Farm bill which is directed toward specific commodity 
producers. The benefits reach only about 40 percent of our 
farms. There are concerns a lot of us have raised over the 
years about large benefits going to a small number of very 
large producers, and you refer to that in here.
    It implies that farmers throughout the Northeast and Mid-
Atlantic States receive relatively few benefits in the current 
Farm bill. In fact, throughout the Northeast and Mid-Atlantic, 
we produce about 7 percent of this Nation's agricultural 
products. Most people don't realize it is that large, but we 
receive about 1 percent of Federal farm programs under the 
current laws. We produce 7 percent and get about 1 percent of 
the benefits.
    I am very pleased that the report highlights the value of 
promoting conservation. That actually benefits farmers, but it 
benefits everybody else in the country, and I hope this will 
mean that we are going to have adequate funding for voluntary 
agricultural conservation programs on private lands. Every one 
of our 50 States has a backlog now and an overwhelming need.
    Your emphasis on nutrition and food assistance is so 
important, and on the need for more WIC funding. The WIC 
program is one of the finest social programs, health programs, 
nutritional programs, whatever you want to call it, this 
country has ever had. We are the wealthiest, most powerful 
Nation on Earth. We spend hundreds of millions, and probably 
even billions of dollars storing excess food. Yet, we have to 
understand there are a lot of poor pregnant women who get 
adequate nutrition during their pregnancy and adequate 
nutrition for them and the child after the child is born.
    With this really tiny investment, the child is going to be 
able to learn better, he is going to grow better. The health of 
both the mother and the child are going to be better. It is a 
win-win situation for the taxpayers, for society, and for the 
mother and the child.
    We have had rising unemployment, so national participation 
has risen substantially. We have to look at that because we 
can't have hundreds of thousands of eligible women and children 
go unserved next year. WIC has always gotten strong bipartisan 
support up here, and I hope, Madam Secretary, we can work 
together on that.
    I am concerned, as I have stated before, about the 
increasing concentration among agricultural processors, 
especially Suiza Foods in my area. A recent University of 
Connecticut study showed that much of the increase in consumer 
milk prices in New England is attributable to concentration at 
the processor or store level.
    Last, to go back to the terrorism thing, don't hesitate to 
tell us what USDA needs. We have had several meetings of the 
joint bipartisan leadership, and at one of those meetings it 
was raised the fact that we are talking about Justice and the 
military and everybody else has an interest in terrorism. The 
point was raised, what about agriculture? Everybody stopped for 
a moment and realized, of course, there are some very real 
needs there. Don't hesitate to raise it. You are going to find 
strong bipartisan support here.
    Again, and I will yield with this, Mr. Chairman, with 
thanks to both Senator Conrad and to you, I for one am very, 
very pleased that the Secretary is where she is.
    Thank you.
    The Chairman. Thank you, Senator Leahy.
    The order of appearance I have is Senator Conrad, Senator 
Nelson, Senator Hutchinson, Senator Miller, Senator Baucus, 
Senator Thomas. We will go in that order, then.
    Senator Wellstone. Tom, you have order of appearance. Is 
that order of when we came in?
    The Chairman. Yes.
    Senator Wellstone. You didn't see me come in, then.
    [Laughter.]
    Senator Wellstone. I will talk to you if you want to do it 
that way.
    The Chairman. Senator Conrad.

STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM NORTH DAKOTA

    Senator Conrad. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for being here and for putting 
together this basic document that reviews farm policy. As I 
went through the book, there are a couple of things that aren't 
there that are important to understand about what our farmers 
are currently facing, and let me just share those with you and 
with the committee.
    As I look at what is happening in a State like mine, one of 
the most agricultural in the Nation, and I see the cost of 
everything that farmers buy going up, and in some cases up 
dramatically, especially those that are energy-related, and 
look at the prices that farmers receive and see those prices 
almost on a straight line down in real terms since the passage 
of the last Farm bill, it is no wonder that there is such an 
air of hopelessness in farm country.
    In the time I have served North Dakota, I have never seen 
just a sense of hopelessness out there. I just had a group of 
farmers come on a fly in to Washington, and in the meeting that 
we had one leader after another said, what do we say to our 
young people, what do we say that gives them any hope, because 
we ourselves have lost hope.
    I had a leader of one of the major farm organizations in my 
State, one of the most efficient, productive farmers--won every 
farm award--sit next to me on a plane several months ago. He 
said, Senator, I don't want this broadly known, but I tell you 
if I don't have a good year this year, I am done. I can tell 
you people in my State would be absolutely shocked if they knew 
the identity of that person. This is as good a farm operator as 
you will find, I would speculate, anywhere in the country.
    We are in a circumstance in which our major competitors, 
the Europeans, have a totally different approach to farm 
policy. They have made a judgment they want people out across 
the land. They don't want everybody to go to town, and they 
have put their money on the line to support a policy like that. 
It is expensive, it is very expensive, but it creates a 
circumstance in which there is an unlevel playing field for our 
producers.
    This is the most recent data from the OECD comparing 
support for U.S. farmers by our Government to what European 
farmers receive from their governments. This is per-acre 
support, the 1996-to-1999 average. The blue bar there is the 
United States; that is an average of $38 an acre. The European 
support level is $313 an acre. Anybody could make it on $313 an 
acre of support, but you can see the extraordinary disadvantage 
our farmers face.
    Some would say, well, we want a free market. There is no 
free market in world agriculture. Every one of these 
governments support their producers, and they do it for a 
reason. The Europeans have been hungry twice and they don't 
intend to be hungry again, and they are willing to put the 
money out to make certain that happens. In addition, they have 
made a determination that they want people out across the land 
and they are spending to make it happen.
    Let me just go to the next chart, and I am going to go 
through this quickly. It is not just in terms of support for 
individual producers, but in terms of export assistance for the 
most recent year that we have full figures, 1998, this pie 
chart shows world agricultural export support. The Europeans 
are the blue part of the pie. 83.5 percent of all world 
agricultural export subsidy is accounted for by the Europeans. 
Our share is that little red sliver, less than 3 percent. They 
are out-gunning us here 30 to 1.
    It is no wonder, to me, that we are in severe difficulty as 
we move to write a new farm bill. In essence, we have abandoned 
our producers in a fundamental way, in comparison to what our 
major competitors are doing.
    Finally, I would leave this chart with my colleagues for 
their consideration. This shows the percentage of farm income 
contributed by Government payments by State, and we just 
selected States at random, the States that are represented by 
members on this committee. I guess that is a random way of 
picking them.
    We didn't put Vermont on there, Pat.
    It is very revealing here: Wisconsin, 174 percent of net 
farm income is Government payments; Montana, North Dakota, 
Kansas, Illinois, Michigan, all more than 100 percent; Indiana 
more than 100 percent; Nebraska, right on the line, 99 percent, 
and on down to South Dakota, at 56 percent. Nationwide, 40 
percent of net farm income is coming from Government payments, 
but in these States it is far more dramatic.
    When we write new farm policy, we have to be not only 
cognizant of what you have provided in this really excellent 
book, and I applaud you for it, but we have also got to be 
aware of what is going on with respect to our major 
competitors. If we want to negotiate a more level playing 
field, the only way I have seen anybody be successful in 
negotiation is that they have leverage, and this next Farm bill 
has to be seen in that context.
    It has to be a plan that gives leverage to our negotiators 
to negotiate a more level playing field. It won't happen 
without leverage, and right now we have none. I believe this 
Farm bill has to be one that puts us in a position to negotiate 
successfully a more level playing field.
    With that, I thank the chairman and I thank my colleagues.
    [The prepared chart submitted by Senator Conrad can be 
found in the appendix on page 66.]
    The Chairman. Thank you, Senator Conrad.
    Again, I will go down the list: Senator Nelson, Senator 
Hutchinson, Senator Miller, Senator Wellstone, Senator Baucus, 
Senator Thomas, Senator Crapo, Senator Dayton. I have the clock 
set for 5 minutes, but I haven't enforced it really hard.
    Now, we will go to Senator Nelson.

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

    Senator Nelson. Thank you, Mr. Chairman, and thank you for 
convening this hearing.
    I am happy to welcome back to the Senate Ag Committee you, 
Madam Secretary, and your colleagues. You have already heard 
from several of the members, so I will try to keep my comments 
brief.
    The Food and Agriculture Policy report which you issued was 
timely and full of useful information, and I certainly don't 
agree with all the conclusions, but they provide fodder, as you 
might imagine, for discussion of farm policy. That they are a 
useful tool in providing us with ideas and certainly insight 
into the priorities of your administration.
    I want to commend you, in particular, though, for the food 
safety and rural communities discussion because that is an 
important part of farm policy, although we don't often think of 
it as being part of agriculture policy, but it certainly is. In 
fact, most Americans have no idea that food safety is part of 
the USDA's mission. As a matter of fact, there are some folks 
who would like to have it elsewhere, and some are very happy 
where it is.
    We all know how critical food safety and safe food is, and 
the perception that our food is safe. They are a part of the 
economic well-being that agriculture can enjoy. If consumers 
here and abroad question the safety of the food supply, it is 
disastrous for our entire agricultural sector. The level of 
subsidy in Europe is already disastrous to international trade 
as it relates to American agriculture. If you add any question 
about food safety, you only make matters that much worse, and I 
was pleased to see the prominence that you gave it, as well.
    Rural communities in a State like Nebraska or many of the 
States that are represented in this committee are a very 
important part of the fabric of life in a State. I have said 
that in Nebraska, if we end up with only Omaha and Lincoln, it 
won't be Nebraska anymore, if we lose the rural areas. That is 
why it is so extremely important to work.
    There are a couple of things that I am concerned about, and 
that is how we hang on to family based agriculture and the 
effects of concentration in agriculture. Those are two issues 
that I hear most about from Nebraskans, and I didn't see any 
reference to that in the report, that agricultural production 
is comprised in Nebraska of 55,000 farm families, or that these 
families, in addition to growing more than enough food for 
everyone in the country, are responsible for preserving and 
enhancing the environment and supporting their communities.
    I didn't see any indication, and this is probably an 
oversight, that the administration supports family farming. I 
would hope that we could think about this not simply in pure 
economic terms, but in terms of social policy, as well as 
policy that is aimed at rural States.
    What I would like to do is have you think about this: In 
terms of what happened 2 weeks ago, can the USDA be a vital 
voice in the administration for the removal of sanctions that 
involve food in the war that we are about to engage in with 
certain countries that have joined together with us for common 
purposes where there already may be sanctions, certainly food 
sanctions?
    The trade barriers are a matter of great concern, and I 
guess I would like to know if the U.S. Department of 
Agriculture is going to work with our trade Ambassador to 
equalize the impact of trade barriers against agriculture. When 
we talk about free markets in agriculture and it relates to 
these areas of significant support, it translates into U.S. 
agriculture unilaterally disarming. We have to think about it 
in terms of reducing the barriers in other parts of the land.
    Then with regard to farmer-owned reserves, I agree with you 
as to the economic impact, but if we are going to move to food 
and fuel as part of an agricultural policy, then the farmer-
owned reserve may be an energy reserve as much as it is a food 
reserve, if we are going to be focusing on biofuels.
    A lot of things for you to consider. I don't expect you to 
respond to all of those, but I hope that you will focus on 
those as you move forward. Thank you very much. I appreciate 
you being here.
    The Chairman. Thank you, Senator Nelson.
    Senator Hutchinson.

 STATEMENT OF HON. TIM HUTCHINSON, A U.S. SENATOR FROM ARKANSAS

    Senator Hutchinson. Thank you, Mr. Chairman, and thank you, 
Madam Secretary, for your appearance here today. I also want to 
join my colleagues in thanking you for the excellent briefing 
yesterday on what the Department is doing and where we stand on 
the possibility of agri-terrorism. I appreciated that very 
much. It was very, very helpful.
    I also just want to weigh in, as I have in the past, Mr. 
Chairman, with what the House has done and what the Secretary 
has done, that it is important, it is urgent that our committee 
move ahead expeditiously in the writing of the Farm bill and 
that that be done as deliberatively, but as quickly as possible 
because as we look at a Nation that is in an economic slowdown, 
if not recession, if you look at farm country, it is a 
recession or a depression in many parts.
    Madam Secretary, you have come to Arkansas before. I want 
to invite you back. The Mississippi Delta country of Arkansas 
is in depression today and it is an agriculturally based 
economy. I am glad Senator Conrad provided the chart. He passed 
it out. I couldn't see where Arkansas was on there, but I see 
it now. We are right down there with South Dakota, way over to 
the right.
    Because I may not have an opportunity to ask all my 
questions, I want to raise two issues that dramatically impact 
my State right now. One is the catfish farming issue, in which 
we have a very serious problem with imports of Vietnamese basa 
which are coming in. If it were any other product, it would be 
called dumping on the American market. It has gone dramatically 
up to about a quarter of the market now coming in from Vietnam, 
a different kind of fish that is being sold in American 
restaurants and being sold on the American market as if it were 
American farm-grown catfish.
    Part of this is a labeling issue and we are working with 
the FDA. I understand that that is a separate issue, but I have 
been told that as many as 25 percent of producers could be 
forced into bankruptcy by next year if something isn't done to 
assist them.
    Catfish farming has been one of the bright spots in the 
last decade in the Delta because it provides some 
diversification and some hope. Yet, these are the farmers today 
that, because of these dramatic increases in imports, are 
facing bankruptcy.
    Back in 1992, there was a purchase program through the 
Agricultural Marketing Service for domestic farm-raised catfish 
for distribution in Federal feeding programs. It was in some 
ways a comparable situation and there was, in 1992, action 
taken to provide some relief on that, and I would like you to 
consider that.
    Another issue that I would raise is an issue that our rice 
farmers are facing, and the failure, I believe, of the 
Department in meeting its rice food aid programming 
commitments. I have written you concerning that. I have also 
written the President about that.
    We have our largest rice harvest in years, but the plan to 
purchase 261,400 metric tons of rice for food programs--we are 
falling woefully short of that this year. We are at about 
161,000, 62 percent of the planned tonnage, as we come to the 
end of the fiscal year, which exacerbates this situation of 
having a very plentiful harvest at a time that the Department 
has not met the commitments that it had made in the food 
program. At the appropriate time, I would like you to respond 
to that.
    I do thank you for the report and its recommendations 
regarding a farm bill and I hope that we can address, as we 
talk about this war on terrorism--and that is a very real war, 
but we also simultaneously, and related to it, face a war in 
our economy and trying to stimulate this economy. Certainly, a 
big part of that is what is happening in agriculture today. I 
look forward to working with you as we write a new farm bill 
and as we address these very pressing issues with our farmers.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Hutchinson.
    Senator Miller.

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

    Senator Miller. Thank you, Mr. Chairman.
    Madam Secretary, I thank you for testifying before this 
committee, and also for the briefing yesterday. I also want to 
add a thank you again for speaking at the Southeastern 
Agriculture Symposium in Athens, Georgia, in August. Largely 
because of your presence, the Symposium was a great success, 
and that the lessons learned there will help us as we develop a 
new farm bill.
    You and the entire administration are working diligently to 
get this Nation back on its feet. We all appreciate that hard 
work. As our Nation rebuilds and regroups, the security of our 
Nation has become the priority of all Americans, as well it 
should, and increased support for agriculture should be 
considered a very important part of this plan.
    We all know that an army travels on its stomach and you 
must feed an army to fight a war. We have heard all those 
things, and we all know that America's family farmers produce 
the safest and most efficient food supply found in this world. 
I see no better argument for the continued support for our 
Nation's farmers.
    Madam Secretary, the agriculture crisis we have faced over 
the past 3 years remains. Even with the continued assistance 
Congress has provided in the past, the farmers of my State 
continue to struggle more and more every year. I have heard 
from many of my constituents in recent months and they foresee, 
after their crops are sold and equipment is put up for the 
winter, that this year will turn out to be even worse.
    Farmers across this country are exhausting the resources 
that they have worked for years to build, and without a new 
farm policy that allocates additional assistance, the family 
farms in my State will disappear.
    Our first priority of farm policy should be to provide an 
adequate safety net for our farmers when natural or economic 
disasters strike. Over the past 3 years, our farmers have 
experienced both crises. This sector provides a stable food 
supply and the economic engine for many rural communities.
    A lesson we can learn from history is that when our economy 
begins to waver, our agriculture industry often provides the 
backbone of support that carries us through difficult times, 
and I hope that this administration will take this objective 
into serious consideration.
    In the policy statement which you issued last week, a 
strong emphasis was made on increased need for conservation 
support. The farmers of my State have utilized current 
conservation programs well, but they have a continued need for 
improvement in programs such as CRP and EQIP.
    I agree with you that more can be done in regard to 
conservation, and I look forward to working with the 
administration and with this committee to create conservation 
policies that adapt to farming operations in States such as 
Georgia.
    I mentioned earlier that our farmers produce the safest and 
most efficient food supply to be found in the world. It is a 
food supply that every American should have access to. As a 
former Governor, I understand the importance of school and 
elderly nutrition programs, and agree with you that 
improvements in these programs should be pursued. There are 
many other aspects such as rural development, trade expansion, 
research and energy needs that we must improve upon as we 
consider a new farm bill.
    I look forward to working with you and this committee to 
craft a new agriculture policy that secures the economies of 
rural America and places our Nation's family farmers on a 
positive road into the 21st century.
    Thank you, Madam Secretary.
    The Chairman. Thank you, Senator Miller.
    Senator Wellstone.

STATEMENT OF HON. PAUL WELLSTONE, A U.S. SENATOR FROM MINNESOTA

    Senator Wellstone. Thank you, Mr. Chairman. I know that we 
want to move forward, so I am going to move fairly quickly 
here.
    Thank you for being here, Madam Secretary.
    I want to first of all say to the Senator from Georgia that 
I quite agree with his remarks, and I especially think that 
food security certainly can be connected to national security. 
We always talk about oil, but I can't think of a more precious 
commodity than food, and we need to view agriculture within 
that framework.
    The second thing I want to say is that Senator Dayton and I 
had hearings back home, and I am sure many colleagues did as 
well; huge turnouts. This was in August and people were there. 
It was mainly, Madam Secretary, because they really do have 
their backs to the wall and they desperately want to see a 
change in farm policy. People more than anything else are 
focused on the price crisis and they want to get a decent 
price. I mean, they want to be able to get a decent price so 
they can support their families. It is that simple.
    My passion is for the family farm part of agriculture and I 
really think that we need to see really significant changes 
from the farm policy that we have had, especially when it comes 
to making sure that family farmers get a decent price.
    I am really interested in something I wish the House had 
done. There is a lot of consensus in the countryside, and among 
a good many of us on both sides of the aisle--and you allude to 
this; I mean, your criticism of some of the subsidy in inverse 
relationship to need is right on the mark.
    We have to put more competition back into the food 
industry. I mean my battle cry is to put free enterprise back 
in the free enterprise system. I have been kidding my 
colleagues on the other side that I am becoming the 
conservative on the committee.
    In particular, we need to have a section of whatever final 
farm bill that is passed that deals with concentration; we 
absolutely do. There is a direct connection here between the 
whole issue of whether there is competition and whether family 
farmers are going to have a shot at getting a decent price. I 
mean, if you are at an auction and there are two buyers, you 
don't get a very good price.
    I can't see moving forward, Mr. Chairman, without really 
focusing on the problem of concentration. I will tell you, you 
will find farmers and people who live in rural America on all 
sides of the political equation who agree with that. I would 
really like to see that focus.
    We talk a lot about rural economic development in relation 
to agriculture and value-added products. I just want one more 
time to say, especially given the situation we now find 
ourselves in on September 11 and afterwards, that on the energy 
front and on the energy independence front, an awful lot of 
people in rural America feel like they have part of the answer, 
and part of it is biomass electricity and clean fuels and 
biodiesel and ethanol and wind. I want to just say that that 
can very much be a part of our future and I don't think can be 
disassociated from a farm bill.
    Finally, I want to say to you, Mr. Chairman, your work--and 
I know the Secretary has focused on this as well and I was very 
pleased to see it. Above and beyond some of the really good 
programs like CRP, with the full backing of Pheasants Forever 
and Ducks Unlimited, all of which has been win-win, this notion 
of environmental credits is extremely important. We ought not 
to give up on that. It is the right thing to do. It brings more 
support from people who don't live in rural communities for a 
good farm bill. It is something the administration can take the 
lead on. Senator Harkin has taken the lead on it and I just 
want to express my strong support for this as well.
    Then, finally, I want to ask you to do something that is 
gutsy because we don't focus on this as much as a committee. 
Senator Leahy started on it when he talked about WIC. WIC is 
important and WIC has bipartisan support, but with all due 
respect, we are in hard economic times. We need for the USDA to 
be an advocate for the food stamp program.
    Let's just get real about it. You talk about citizen 
children. What the Secretary is talking about, colleagues, are 
all the children of legal immigrants, since we cutoff their 
benefits, who are not receiving any help. That is wrong.
    I ask for the Food and Nutrition Service to do a study. 
They came back and they told us that over 50 percent of the 
people are not receiving it. We have seen like a 30-percent 
decline, Mr. Chairman, in food stamp participation, and the 
reason has not to do with people no longer need it or are no 
longer eligible. We don't have outreach out in our counties 
anymore. We are not telling the working poor that they are 
eligible.
    Colleagues, this is the major nutrition safety net for 
children in our country. This is an extremely important program 
for working poor people. Working poor people are getting killed 
in these hard economic times.
    You are in a position, Madam Secretary, to take the lead. 
This committee is in the position to take the lead, and I want 
to argue that in whatever economic stimulus package we have, 
and we will have to have one, we have to face up to the fact 
that all kinds of people who are eligible aren't receiving it. 
All kinds of children are no longer getting the help that they 
need.
    Frankly, it is an economic stimulus. It is an economic 
stimulus because people right away purchase, and then when they 
have some help to help them purchase food they have some other 
money they can spend in other ways in the economy. Don't, 
Senators on both sides of the aisle, leave food nutrition 
programs and the food stamp program over here. We need your 
strong leadership.
    We have to be honest about some of the cuts we made in that 
program that we shouldn't have made. We have to be honest about 
people who are eligible who are not receiving it, and we have 
to make sure that we fully support this extremely important 
safety net program, lifeline support program for working poor 
people and for children in our country. We are not doing it 
now. Now is the time to do it.
    The Chairman. Thank you, Senator Wellstone. I would just 
add as a postscript, I know in my State and several other 
States, as the food stamp participation has gone down, the 
demand on food banks has gone up, an interesting juxtaposition.
    Senator Wellstone. A dramatic increase.
    The Chairman. Senator Baucus.

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

    Senator Baucus. I thank the Chairman. I appreciate him 
holding this hearing.
    Thank you, Madam Secretary, for attending today. You have a 
problem. With all the testimony I have heard thus far, a lot 
of, not complaints, but deep, deep concerns about what is going 
on in the country. I don't envy your position, and I know you 
take these comments in the spirit that they are meant, namely 
this is a huge problem in large parts of our country.
    I really have two points I want to make. One is with 
respect to the commodities I am a bit familiar with, that is 
those in Montana. Off the top I will tell you, if you don't 
already know, Montana per-capita income is at the bottom of the 
barrel. In 1946, Montana ranked 10th in per-capita income. Ten 
years ago, we were 38th. Today, we are 49th in wage per-capita 
income, and in total per-capita income we are about 47th. We 
are down at the bottom. It is because of the changing nature of 
the economy, globalization. There are a lot of factors, but it 
is a fact.
    Our largest industry is agriculture. That is our largest 
industry, and if our per-capita income is going down so much, 
clearly agriculture income is also going down dramatically.
    I know you are from California and those are the crops that 
you are most familiar with. I have to tell you, when it comes 
to wheat, when it comes to barley and some livestock, that is 
not California at all. There is no comparison, none whatsoever. 
We so much rely upon a decent income from wheat or from barley, 
basically. We have some specialty crops, but it is basically 
wheat and barley and cattle and sheep, which is declining, as 
you know, and hogs.
    Over the years, let me just tell you what I have learned 
and what the problems really come down to and what the 
solutions are in this. You have been Secretary now about a 
year. You have done a great job, but I just want you to hear 
from me, somebody who has been on this committee many years, 
representing my State for many years, what I have seen for many 
years.
    I associate myself with the remarks of the Senator from 
North Dakota, Senator Conrad. He is right on target. A lot of 
this is unfair foreign competition, and it is the dramatic 
subsidies that other countries have, particularly export 
subsidies that are trade-distorting, and they are particularly 
European compared with other countries. We know a bit about the 
Canadian Wheat Board. That, too, is trade-distorting, but the 
European subsidies are just over the top.
    He said, and it is true, that based upon deep, bitter 
experience in working out trade agreements with other countries 
on various items, we are not going to get very far with the 
Europeans until we have leverage. No country, in my deep 
experience, altruistically, out of the goodness of its heart, 
will lower a trade barrier. They just don't. Why should they? 
They don't unless they are persuaded to. You need leverage.
    Senator Conrad has some ideas about what that leverage 
should be. They are good ideas, but if you truly want to do 
something for producers, you are going to have to find the 
leverage and your associates are going to have to find the 
leverage so that in the next year or two or three we get 
meaningful reduction in trade-distorting overseas subsidies. 
You are going to have to find it. We will work with you to try 
to find it, but we are going to have to have it if we are going 
to be successful.
    As you know, in the meantime our smaller towns are dying on 
the vine, losing population, in eastern Montana, western South 
Dakota. I can only speak for our part of the country, but I am 
sure that is true in other rural parts of the country as well.
    The second major problem here--I mentioned trade--the 
second is concentration of economic power. Producers are left 
the dregs. It is those further up the food chain, all the way 
up to the grocery stores, et cetera--that is where the money 
is. We all know that.
    As Senator Wellstone and others on this committee have said 
today, more and more and more people in agriculture know that 
is part of the problem. I hear it everywhere. A few years ago, 
you would just hear it from a few. Now, you hear it just 
constantly. Farmers know that one of the reasons their profits 
are getting squeezed is because there is too much concentration 
of economic power higher up which takes their money away from 
them and fills the pockets of those higher up. They know that, 
and there is a near revolution brewing because so many people 
know that to be the case. I strongly urge you to get on it 
right now, not give it lip service.
    We have known for years what the problems are, and for 
years, to be honest, we really haven't done a lot about it. It 
cuts across all administrations. It is not Republican or 
Democrat; it is all administrations. If you address those two 
concerns, that would go a long way.
    Third, the passage of a farm bill that truly has a safety 
net so that those farmers who are working hard and doing a 
reasonably good job just don't fall between the cracks. We are 
not trying to save all farmers; we are just saying those who 
are working hard and doing a pretty good job who fall between 
the cracks.
    Mr. Chairman, just one more quick point. Thank you.
    You have a harder charge right now, too, because of the 
crisis that is going on. You have to work harder to get the 
attention of OMB and the administration to do these things, a 
lot harder. That is why at the top I said you have a tough job. 
We want to help you.
    One very important, but very small second point. I have to 
mention this, Mr. Chairman, because it is very, very important.
    When I was back home not too long ago, I was at Fort Peck 
Indian Reservation and have had diabetes hearings across the 
State. As you know, diabetes incidence in our country has gone 
up significantly in all States across the Nation.
    On Fort Peck Indian Reservation, kids there are on the 
reservation working for the newspaper went on strike; they 
boycotted because of the school lunch program, because of the 
content of the food in the school lunch program, which 
encourages diabetes. It doesn't minimize it or prevent it, but 
encourages it. They have been trying like the dickens to try to 
do anything to raise the profile of USDA's failure thus far to 
address the composition of the food in the school lunch 
program. I would just urge you very strongly to take a big step 
to help reduce diabetes in this country by addressing the 
quality of food in the school lunch program.
    The Chairman. Thank you, Senator Baucus.
    Senator Crapo.

    STATEMENT OF HON. MIKE CRAPO, A U.S. SENATOR FROM IDAHO

    Senator Crapo. Thank you very much, Mr. Chairman. I, too, 
will try to be brief in my remarks. I see the need for that.
    I want to again thank the Secretary for coming up here 
today, and just say that I believe you have already heard from 
those who have spoken today some of the critical concerns. The 
events of the last couple of weeks have highlighted the 
critical importance of our focus on food safety and food 
security. We appreciated your briefing yesterday.
    I just want to highlight a few points that frankly I was 
extremely pleased to see well covered in your statement and in 
the excellent materials that you have provided to us. I agree 
with and with Senator Conrad on the focus that you have made on 
international trade. As has already been said by Senator 
Baucus, the fact is that one of the most significant problems 
we face in American agriculture today is the unfair trade, the 
trade barriers, the tariffs, the subsidies, and so forth, that 
we face in international competition in the most important, 
expanding area of markets for our farmers. I appreciate your 
focus on that.
    I believe many of us from the ag sector, as we have dealt 
with trade relationships, including trade agreements like 
NAFTA, and so forth, over the last few years, are very 
interested in seeing how the administration will respond to the 
challenge that we are faced with from the unfair trade 
circumstances that we see in the world, particularly focused on 
agriculture.
    As you know, there is a WTO ag caucus, bipartisan, House 
and Senate, here in the Congress that is very much focused on 
assuring that we work closely with the administration on trade 
issues. We want to work closely with you. I frankly believe 
that the issue of trade promotion authority is closely tied to 
how those who focus on ag issues feel the administration is 
doing with regard to protecting our interests in international 
trade.
    Second, I was very pleased to see your focus on the need 
for a safety net for our farmers and the recognition that you 
gave to the fact that price supports and supply controls are 
not the way that we should seek to pursue a safety net policy. 
I look forward to working with you in putting together that 
basic safety net.
    As you probably know, I too am one of those who is working 
very closely on conservation issues, and I was pleased to see 
your comments last week on that as well. It is very critical 
that we recognize that as we craft a farm bill and we look at 
our national food and fiber policies that we also recognize 
that, in my opinion, the Farm bill has been probably one of the 
most significant pro-environmental pieces of legislation. Our 
national farm policy is probably one of the most significant 
environmental pieces of legislation that we deal with in this 
Congress. We need to recognize that that is one of the 
important aspects of and objectives of our work now on the farm 
bill.
    Again, just to quickly wrap up here, I also appreciated 
your focus on what you called ag infrastructure. It is critical 
that we recognize the role of stabilizing and strengthening the 
agriculture infrastructure in this Nation, and I am talking 
there about things such as research, information, inspection, 
monitoring, testing, promotion of our products, those things 
that help protect our farmers against emerging threats and help 
to promote their products in the world climate.
    Last, I just want to thank you also for your strong focus 
on rural communities. I have found it very interesting to see 
your analysis of the source of farm income and the diversity of 
farm income in our rural communities. I believe that one of the 
focuses that we must have in this committee is on how we can 
help develop a national food and fiber policy that will best 
address the growing need of strengthening our rural 
communities.
    It seems to me that in America right now, in a very real 
sense, we are seeing two different economies emerge. If you 
will, I would call it the urban economy which seems to be a lot 
more stable and stronger, notwithstanding some of the recent 
events, and on a more stable course than the rural economy that 
we see. It is almost like two different economies in the United 
States. We have to recognize that what we do here in this 
committee and what we do as we work with you on farm policy can 
be critically important to those rural communities.
    Again, I thank you for coming here today, and I look 
forward to working with you on these and other issues and I 
look forward to your testimony.
    The Chairman. Thank you, Senator Crapo, for being succinct. 
You came in under the 5-minutes. I appreciate that very much.
    Senator Crapo. I hope I get some points for that along the 
way.
    The Chairman. You will get a lot of points for that.
    Senator Dayton.

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

    Senator Dayton. Thank you, Mr. Chairman, and I want to 
thank you, along with Senator Wellstone, Mr. Chairman, for 
giving us the opportunity to hold field hearings of this 
committee in Minnesota. As Senator Wellstone said, they were 
extremely well-attended. We had over 200 at one and about 150 
at another, and the input was very, very valuable. Thank you 
for that.
    Madam Secretary and the members of your administration, I 
want to thank you for being here as well. Much has already been 
said that I am not going to repeat it if I can help myself, but 
Senator Conrad's chart here, it seems to me, really captures 
the essence of the challenge that we face in moving our farm 
economy forward. It is also, to my mind, a very effective 
measure of the success or lack thereof in our future 
agriculture policy.
    It seems to me that if we can get net farm income up or 
keep it at the present level and bring the percent of that 
which is provided by Government payments down, that, to me--and 
if you agree or disagree, I would be interested in your 
comments--ought to be a very good index of whether or not our 
programs are successful, and the need for market prices to 
reach levels where farmers can make profits in the marketplace 
rather than depend on Government subsidies.
    I hope we can have the kind of candid dialog in this 
hearing and hereafter that I believe is called for, because we 
give lip service to that, but I don't know that that is really 
the conviction held by everyone in your administration, nor is 
it held by everyone in the agriculture industry. Clearly, there 
are some people whose economic interest benefits from having 
lower prices. Some farm producers, livestock producers and 
dairy producers benefit from lower grain prices.
    Certainly, farther up the processing and distribution 
lines, as others have said, starting with a lower price base 
for raw commodities is going to mean greater margins for 
profit. Some believe that we have to keep our market prices 
lower in order to increase our competitiveness with export 
sales.
    We can't gloss over our difference here and get to the 
really bottom line of American agriculture. Are we going to 
make it profitable in the marketplace? Is that a goal of farm 
policy? If it is not, for whatever reason, let's admit that it 
is not, and therefore that we need some form of Government 
subsidies or we need to go through a wrenching out in the 
industry or in the whole sector of some producers.
    It seems to me the inability to come to terms, to hard 
grips with that is something we have been able to gloss over 
because we have $20 billion now going into prop up the economy, 
resulting in this kind of distortion. If we take this money 
out, as we try to avoid doing and may have to do just because 
of the cost, what are the effects going to be? Are we going to 
ameliorate those effects or are we simply going to say to 
farmers, as Freedom to Farm intended 6 years ago, you are on 
your own out there and if you can't make it with the 
fluctuating market prices, then you are simply going to go out 
of business? That, to me, is the question we all try to avoid. 
That is the elephant in the closet or whatever that we are 
going to have to let out and face up to.
    The Farmers Union just recently produced figures on what 
they estimated the cost of production was for a bushel of corn, 
soybeans and some of the other basic commodities. I would be 
interested, and you probably can't respond today, Madam 
Secretary, whether in your estimation those numbers are 
accurate, reasonably so, generalized across the country, or 
not.
    If they are accurate and they are far above the market 
prices of those commodities today, then I would be interested 
to know whether, in your view and the administration's view, 
those are appropriate target prices we are setting as a clear 
public objective to get the market prices of these commodities 
above that cost of production point so farmers can make a 
profit in the marketplace or whether, in the balance, that is 
not our policy, that is not our objective, in which case then 
we could talk about alternatives we posit.
    If we don't get to the crux of that issue as a driving 
factor in creating this farm bill, Mr. Chairman, then we don't 
know what our goal is and we are not going to be in a position 
to know whether or not we have accomplished it.
    Finally, I just want to say, Mr. Chairman, I commend you 
for your focus on conservation. Your new initiatives in that 
area, in addition to the CRP and the wildlife reserve and some 
of the other programs, really heralds a new day where we can 
try to encourage farmers to adopt more conserving practices, 
while at the same time still producing our Nation's foodstuffs.
    I thank you, Mr. Chairman.
    The Chairman. Thank you very much, Senator Dayton.
    Senator Lincoln.

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

    Senator Lincoln. Mr. Chairman, thank you. Thank you for 
holding this hearing today. I also want to thank our Secretary, 
Secretary Veneman, as well as Dr. Collins and Dr. Penn, for 
appearing before us today.
    The work of America's farmers continues, and so does the 
work of this committee toward a better and more effective 
agriculture policy in this Nation. The Secretary's appearance 
and the presentation of the administration's views on 
agriculture today show us that despite the very, very serious 
matters that they are dealing with and that we are all dealing 
with, they have not forgotten the needs of rural America, and 
we appreciate that.
    We have all heard suggestions over the past several days 
that development of a new farm bill should be delayed until 
next year, or put off. Concerns about the Federal budget are 
even greater now than they were in August, and I feel very 
confident that Senator Conrad has mentioned some of that 
already. If not, he will later.
    Yet, while we focus our attention on our national defense 
and the fight against terrorism, we must also keep an eye on 
the daily needs of our citizens in this country. In many cases, 
as it is in the case of agriculture policy, these daily needs 
actually relate in a very direct way to our Nation's basic 
ability to respond in times of crisis.
    The soundness of our Nation's economy relies in large part 
on the health of rural America, and as we all know, our rural 
economy is in serious trouble. This makes our work toward a new 
farm bill that much more urgent, in my opinion. Many in 
Congress are talking about an economic stimulus package. For 
Arkansas, a boost to the farm sector would be one of the most 
effective forms of economic stimulus we could see. This is 
true, of course, for many parts of rural America, certainly for 
each of the States that is represented here on the Agriculture 
Committee.
    Over the past several months, the Agriculture Committee has 
debated the different forms of support that the next Farm bill 
should include. Sometimes, the debate has taken somewhat of a 
divisive tone. I know that in some of the recent articles we 
saw this summer I, for one, was very disappointed to see how 
some people have chosen to really sensationalize some of the 
programs that are there.
    To the extent that they included some of us who are farmers 
in those articles, it was concerning to me, especially, again, 
the way that it was sensationalized. I find myself as one of 
nine grandchildren of a grandfather who left a trust, and yet I 
was categorized as one of the big farmers on the committee, 
very inaccurately. I found that I was responsible for the 
entire farm, as opposed to just the one small part that is my 
part, being one of nine grandchildren, which is only about a 
quarter of the entire farm.
    It is very important for us to be realistic and to be 
honest about what we are talking about and being able to 
produce the safest and most abundant and affordable food supply 
in the world. My family is engaged in farm programs because, 
after all, they are farmers. It is important for us in this 
Nation to be able to provide the kind of safety net that 
agricultural producers need to be competitive in a world 
marketplace.
    I raise this issue to point out how some people wish to 
carry out the Farm bill debate. Rather than bringing the 
different segments of the agricultural community together to 
find a comprehensive solution that can work for all parts of 
our very diverse rural economy, some people seem to think that 
the best approach is to drive a wedge between the members of 
the farm coalition. That is devastating.
    I use the word ``coalition'' for a reason. All of us in 
this room are part of this farm coalition. We are all from farm 
States that depend very heavily on the strength of the farm 
economy. We all farm very different crops, in very different 
manners, but we don't have the time to waste on divisive 
approaches to the Farm bill debate. Our farmers need a farm 
bill, and they need it very, very soon.
    I am pleased that my colleague from Arkansas has already 
mentioned some of the things that we hope to be focusing on, as 
well: the unbelievable problems that we are seeing in our 
catfish industry, where they are facing the misleading labeling 
of the Vietnamese basa fish, and certainly the needs of our 
rice farmers for greater shipments of rice in the food aid 
program.
    When I visited with farmers throughout Arkansas during 
August, I found farmers who had been in business since the 
1940's and they were getting the same price for their rice that 
they got in the 1940's. They cannot survive that way. They have 
a good crop. There are ways that we can be helpful to them, and 
I hope that we can use those food aid programs to do just that.
    The House has almost finished their debate and is close to 
putting a bill on the House floor for consideration, and the 
time is really drawing near when the Senate needs to do the 
same.
    Again, I applaud the Senator for the charts that are 
provided. They are always excellent and I always use them.
    I hope that we will recognize that we are at a critical 
juncture of whether or not we make the choices on behalf of the 
American people, of whether or not we want to provide the kind 
of safety net that is going to allow us the kind of domestic 
production in agriculture that we need not only in good times, 
but also in times of crisis.
    I hope that we will all come together in this committee, as 
well as in the farm community, to ensure that what we come up 
with is something that will allow us to be able to do that, and 
that is to keep our farmers active, to keep them competitive in 
an international marketplace, and provide them the tools, 
conservation and otherwise, that they need in order to do the 
best job that they can and continue to produce for us the 
safest and most abundant and affordable food supply, as they 
have over the years.
    I thank you, Madam Secretary, for coming today to help us 
get a strong start to a very strong farm bill here in the U.S. 
Senate. I hope that we can work with you in this process to 
provide something on behalf of production agriculture.
    Thank you.
    The Chairman. Thank you, Senator Lincoln.
    Senator Thomas, I apologize. I thought you had gone.

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

    Senator Thomas. Not at all. I did leave for a minute, but I 
thought maybe the Secretary would get a chance pretty soon.
    Thank you for being with us and for meeting with us last 
week. I appreciate.
    There have been a lot of changes in agriculture, no 
question about it. The focus has been on the program crops. You 
point out that now only 30 percent of the farms are really in 
there; 20 percent of the value comes from program crops. We 
need to be broader. We need to talk about conservation. My 
friend from Arkansas talks about catfish and rice. In Wyoming, 
we would have to talk about something else, probably sheep and 
sugar. It is a broad thing. Concentration is very important, 
and fair trade, and those are the things I hope we can, in 
addition, talk about.
    Thank you for being here, and I hope you get a chance to 
talk.
    The Chairman. You get the prize for being the shortest of 
all. It wasn't even 30 seconds, hardly. Thank you.
    Madam Secretary, you have been very kind and very patient. 
As I was just saying to Senator Lugar, it is important for 
Senators to be able to have at least 5 minutes to speak about 
their own particular interest and about their States.
    I noticed you taking notes, and I was taking some, too, 
Madam Secretary, because we have a lot of expertise here. We 
have a lot of people around this dais who have been involved in 
agriculture for a long time. We all represent different sectors 
of the Nation, different types of crops, different kinds of 
production. It is important to hear these Senators. I 
appreciate your patience and your attention to the comments 
that they have made, and I know you will take them to heart.
    Again, we welcome you here and please proceed with your 
testimony.

  STATEMENT OF HON. ANN M. VENEMAN, SECRETARY, UNITED STATES 
           DEPARTMENT OF AGRICULTURE, WASHINGTON, DC;

        ACCOMPANIED BY J.B. PENN, UNDER SECRETARY, FARM AND 
            FOREIGN AGRICULTURE SERVICE, UNITED STATES 
            DEPARTMENT OF AGRICULTURE
    Secretary Veneman. Thank you very much, Mr. Chairman. I am 
pleased to be here this morning with the committee, and I 
appreciate the attendance of so many of the committee here 
today.
    I want to thank you, Mr. Chairman, and Senator Lugar as 
well, and all the members for this invitation to discuss our 
views on the future of food and agriculture policy. I want to 
make this short statement and then I will be pleased to respond 
to your questions, and would ask that our longer statement be 
included for the record.
    The Chairman. Without objection.
    Secretary Veneman. The past 2 weeks have been very 
difficult and an extremely sad time for all Americans. The acts 
of terror were cowardly acts on innocent human lives and will 
certainly have a long-lasting impact on every one of us.
    Americans are strong and unyielding in our defense of 
freedom, our culture, our way of life, and our people. While 
our hearts go out to the victims and their families and we 
mourn those who lost their lives, we salute the courage of 
those who saved lives and admire the countless volunteers, 
firefighters and police who have been working around the clock 
in the search and rescue efforts.
    In the wake of this tragedy, our Nation is stronger and 
more unified than ever. As the President said last week in his 
address to Congress, we will not tire, we will not falter, and 
we will not fail.
    At USDA, we have been assisting, where possible. Five of 
our Forest Service incident management teams have supported the 
search and rescue operations. These teams are providing 
equipment, supplies, tents and food to thousands of workers and 
volunteers. In addition, our Food and Nutrition Service is 
working with impacted communities to assure food assistance is 
available to those in need. Other USDA staff are helping in 
various ways, and I want to assure you that all of our 
personnel continue to operate our programs. We are back to 
business, not as usual. We are being extra vigilant in all that 
we do. As the President said, all of this was brought on us in 
a single day and night fell on a different world.
    I would like to begin my remarks by commending the 
committee for starting a wide-ranging discussion on the future 
of our food and agriculture system. Likewise, as has been 
mentioned here today, the House has been moving on a farm bill 
as well.
    Since the beginning of the year, the occurrence of several 
major events has convinced me of the urgency of a comprehensive 
review of all of today's agriculture, all of the policies, all 
of the programs, and other supporting public infrastructure.
    The foot and mouth disease outbreak in the United Kingdom 
and on the European continent was a major threat to our 
livestock sector. Fortunately, we have maintained our 72-year 
record of keeping the U.S. foot and mouth disease-free. As a 
result, this year we have significantly increased our 
resources, our personnel, our dog teams, our inspections to 
protect U.S. agriculture.
    Also, the spread of BSE in Europe and the recent find in 
Japan has enormous implications for beef and feed markets. Our 
policies to regulate feeding practices and actively test for 
BSE have protected our consumers and ranchers and farmers. We 
continue to review these programs and the science to ensure 
that strong firewalls are in place.
    The emergence of ag biotechnology and its widespread 
adoption in this country is posing new challenges throughout 
the food system and the global trading complex. Ag biotech 
holds tremendous promise, as illustrated by the StarLink 
incident. However, it is important that we continue to assure a 
coordinated and rigorous science-based approach to this 
emerging technology.
    Our food system continues to stand the test of these events 
and they serve to reemphasize just how valuable our public 
infrastructure of specialists, institutions and facilities are 
to our farmers and ranchers and to the ag economy as a whole. 
Our policies, regulations and supporting institutions must keep 
pace with new technology, the shifting business environment, 
and our industry structure. These and other reasons led us to 
decide to take a longer view of the needs of the entire food 
and ag system.
    Throughout my career, I have participated in many strategic 
planning exercises and policy analysis, which is why our first 
step in preparing for the future policy discussion has been to 
develop a profile of the industry today, where it is heading, 
and to identify the major drivers of change.
    Last week, as has been mentioned today, we released a 
report entitled ``Food and Agriculture Policy: Taking Stock for 
the New Century,'' and most of you have seen the report. This 
review and the suggested principles hopefully will guide the 
tenure of our administration as it serves as the basis for 
strategic planning, for decisionmaking within USDA, for our 
budget proposals, and for our input into the Farm bill process.
    We did not attempt to prepare detailed proposals for the 
Farm bill. We decided that we could best contribute to the 
deliberations by taking this approach rather than developing 
detailed proposals. There is an abundance of highly creative 
thinking that can develop alternative approaches to the various 
issues that would be consistent with the principles we have put 
forward. We look forward to working with the Congress as 
specific proposals are discussed.
    Now, I want to briefly outline the report. In our report, 
we begin by noting that fast-paced changes are occurring and 
how these have fundamentally reshaped the market environment 
for our farm sector. We then examine a wide range of critical 
issues that impact our food and agriculture system.
    We recognize the rapidly changing food and agriculture 
system. We put forward an understanding that trade expansion is 
critical to the future of agriculture. We examine farm sector 
structure in today's global environment. We recognize that more 
than ever, enhanced infrastructure is necessary to protect the 
very core of agriculture and the products that our farmers and 
ranchers produce.
    We recognize the different role that the conservation and 
environment are playing in today's production agriculture. We 
talk about how to strengthen rural communities and how to 
ensure strong nutrition and food assistance programs. Finally, 
we talk about the importance of integrated programs as we move 
the Department into a 21st century workplace for delivering the 
services to the customer base that we serve.
    Let me briefly touch on some of the key findings of our 
stock-taking exercise on the evolving food and agriculture 
system before turning to our principles.
    Today, American farmers operate in a global, 
technologically advanced, rapidly diversifying, highly 
competitive business environment that is driven by increasingly 
sophisticated consumers. We have shifted from the commodity-
based, surplus-oriented production focus of the last century to 
one now defined by products, services, markets and consumers.
    Increasingly, our consumers insist on defining what is 
produced, how it is produced, how the production takes place 
and with what effects. American consumers are only part of the 
contemporary picture, though. As I have said before, more than 
96 percent of the world's population lives outside the United 
States. Exports already account for some 25 percent of total 
farm sales and represent the largest potential growth market 
for the future.
    Access to these markets requires overcoming barriers 
created not only by high tariffs, but also by different 
cultures, languages, and preferences for food in a diverse, 
technologically driven farm sector that faces the new realities 
of consumer-driven agriculture at home and abroad.
    Today, about 150,000 American farmers produce most of our 
food and fiber. These commercial operations make up just one 
segment of U.S. agriculture. USDA counts another 2 million-plus 
farmers who meet the criterion of a farmer; that is, at least 
$1,000 of agriculture products sales annually, many of whom 
have other occupations but who enjoy rural lifestyles.
    A vast diversity of businesses and households emerges out 
of this multitude--niche farms, hobby farms, hunting preserves, 
dude ranches, you-pick operations, farms that sell directly to 
consumers through farmers' markets, bed-and-breakfasts, and 
many more.
    Our report analyzes the current realities of our market and 
our farm structure in more detail, and also identifies the 
small number of very powerful forces that are propelling the 
fast-paced changes occurring in every single component of the 
food system.
    Let me be very clear. We must help our farmers expand into 
new markets if we are going to succeed in the ever-changing 
environment. Otherwise, they will be left behind. We need tools 
like trade promotion authority to open new markets and reduce 
tariffs.
    Globalization has increased competitive pressure from 
closer integration of business all around the world. Better, 
faster, more reliable communications and transportation systems 
facilitate business' abilities to produce, source and sell in 
the locations that give them the best advantage, even if it 
means operating in multiple locations around the world.
    A broad range of new technologies--precision agriculture, 
e-commerce, biotechnology, and food system technologies such as 
new packaging materials--continue to expand our markets by 
creating completely new demands for ag products. These are 
powerful forces and they will continue to drive our food and 
agriculture system. Another change that has been constant in 
the evolution of the U.S. farm and food sector is rapidly 
evolving consumer demands driven by globalization and new 
technology will increase the pace of change in the new century.
    Mr. Chairman, how we approach these issues will set the 
course for American agriculture of the future, and I would like 
to discuss our central principles.
    Trade policy leads off the critical importance of global 
markets. Trade policy must focus on gaining access to foreign 
markets through tariff reduction and the elimination of trade-
distorting subsidies, and be supported by domestic policy that 
meets our existing international obligations and provides ample 
latitude to pursue ambitious goals for trade negotiations.
    Domestic farm policy must not inadvertently reduce 
competitiveness at the same time that trade policy seeks 
expanded export market opportunities for our farmers. Farm 
policy and programs must be tailored to reflect wide 
differences among farms with respect to production costs, 
marketing approaches, management capabilities and household 
goals.
    Farm policy, including providing a safety net, must promote 
more sustainable prosperity for farmers through market 
orientation without engendering long-term dependence on 
Government support. This does not rule out helping farmers and 
ranchers when unexpected events beyond their control occur and 
cause output or income to plummet.
    The infrastructure that supports market growth and 
efficiency, which includes everything from border inspection 
services to research endeavors, must be renewed and reoriented 
to fit today's realities, with input and cooperation from every 
link in the food chain.
    Conservation policy must both sustain environmental gains, 
but also accommodate new and emerging environmental concerns. 
The need for sources of renewable energy and the potential for 
reducing greenhouse gas emissions are emerging environmental 
issues. In addition, reducing nutrient runoff from livestock 
production, addressing conflicts over scarce water supplies, 
and protecting open space have gained momentum as issues to be 
addressed.
    Conservation policies should adapt to emerging 
environmental and community needs, and incorporate the latest 
science. Conservation policies should be market-oriented in 
order to ensure the maximum environmental benefits for each 
dollar spent. This requires a portfolio of instruments, 
including land retirement, but also stewardship incentives on 
working farmland.
    Now that the economies of seven out of eight rural counties 
are dominated by non-farm activities, commodity-based policies 
do not address the complexities of rural life and rural 
business. Rural America is diverse, and tailored policies must 
create conditions that will attract private investment, 
encourage education of the rural labor force, and promote non-
farm uses of the natural resource base, including through 
development of renewable energy sources and carbon 
sequestration to reduce greenhouse gas emissions.
    Commitment to ensuring the access of all Americans to a 
healthy and nutritious food supply must continue, with 
particular attention to improvements in delivery of food 
assistance to low-income families who still face food 
insecurity.
    Recognition of emerging diet quality issues is of paramount 
importance, and it was mentioned this morning, as the Nation's 
concern shifts from under-consumption and under-nutrition to 
provision of the proper varieties and quantities of foods and 
nutrients to promote health and well-being.
    Public sector management, and that of the U.S. Department 
of Agriculture in particular, must overcome the tendency of 
traditional agency hierarchies that inhibit the coordination 
and collaboration necessary for effective delivery of food and 
farm programs and citizens' access to public services.
    There are, no doubt, many policy options and program 
designs consistent with these principles for the new century. 
Selection of the best among them will require continued 
attention to the realities of the farm and food sector, and a 
dedication to fair and effective operation of the Federal 
Government.
    Mr. Chairman, as we enter a new century, this is the most 
opportune time for leaders in agriculture to take the long 
view, to step back and determine as best we can the future 
requirements of this industry, and to put in place the plans 
and investments that will be necessary to enable our food 
system to serve us well in the decades ahead as it has in the 
past.
    I appreciate the opportunity to discuss our vision and to 
share our guiding principles that we have developed. We look 
forward to working with you in the future and I will be pleased 
to answer your questions.
    [The prepared statement of Secretary Veneman can be found 
in the appendix on page 67.]
    The Chairman. Madam Secretary, thank you very much for your 
statement, and your prepared statement will be made part of the 
record in its entirety.
    We will just have 5-minute rounds for some questions, and 
again we will go in order of appearance, as we did before, 
except that I would try to go from one side to the other in the 
question period.
    Madam Secretary, I am sure it comes as no surprise to you 
that I want to focus a little bit on conservation in my opening 
question. I am really pleased at your statement about focus on 
a new stewardship on working lands. Certainly, the land set-
asides that we have had in the past, the CRP and WRP and 
others, have indeed provided a lot of benefits to a lot of 
areas. We have new industries in my home State that are taking 
advantage of that in terms of hunting, wild fowl production, 
wildlife habitat, things like that. It has been very 
beneficial.
    However, I do agree with you that we need to have a new 
focus on how to support farmers and ranchers in conservation 
practices, and how to be good stewards on the working land. In 
this way, I see that we can indeed support our farmers and 
ranchers, to give them income support that they need in a way 
that is non-trade-distorting, gives a benefit not only to them, 
but also to all of society, and preserves our valuable 
resources for future generations.
    Now, in your report, you mentioned the importance of 
creating programs that are non-trade-distorting. This is 
reflected throughout your entire policy report. You support the 
conservation incentive program for working lands.
    However, in describing a potential approach for 
implementing the program, you talked about using a bidding 
system. I am talking about now page 86, on which you talk about 
designing a market-based stewardship program. This report 
indicates that bidding would lead to rates reflecting costs of 
implementing practices, and that is referred to as a WTO 
requirement for green box.
    Well, I am not certain. As I read the Uruguay Round, the 
cost limitation is not a requirement for green box treatment 
for direct payments of the type not contemplated at the time of 
negotiation or ones that provide decoupled income support, even 
if they are connected to conservation. Therefore, the cost 
limitation mentioned in this report for green box treatment is 
not the only way a conservation incentive program may qualify 
as WTO green box.
    In other words, what I am saying is a bidding system may be 
one way, and that is correct that it would be WTO-compliant. If 
you look at the language of the Uruguay Round, there may be 
other ways of doing that. It could be a contractual system, for 
example, rather than just a bidding system.
    Is that consistent with your interpretation?
    Secretary Veneman. Yes, It is. Obviously, it is very 
complicated as you begin to look at a variety of these things. 
What we tried to do on this page that you referred to in 
looking at a market-based stewardship program is give some idea 
of just one concept that might be piloted as a part of a new 
program that would really look at costs and benefits, and give 
some value to a new environmental concept.
    It is certainly one of the tools that we discuss in the 
tool box of possible environmental programs, many of which we 
already are using. You are correct. There are different ways to 
look at green box consistency, and while this is correct, there 
are also other ways to look at green box consistency as well.
    The Chairman. I am glad to hear that, and I look forward to 
working with you on ways to do that.
    I just have one more question. They didn't run the clock, 
but I just have one more question before I move on.
    It would be helpful to me and other members of the 
committee to know what the administration's position would be 
on some of the following existing conservation programs: the 
EQIP program which has been very successful and which I also 
think needs expanding. There has been some talk about moving 
that from the Natural Resources Conservation Service to the 
Farm Service Agency.
    I am wondering if you have developed a position on that 
yet; if so, if you could tell us whether you would approve of 
that type of a move or whether you are still examining it? Have 
you developed a position on that as of this time?
    Secretary Veneman. Well, the EQIP program has proven to be 
one of the very effective tools that we have in that 
conservation tool box of existing programs. I frankly haven't 
had any discussion of moving the program. I guess some have, 
but we certainly haven't taken any kind of position in our book 
or in any other way on that issue.
    The Chairman. You don't have a position right now on where 
that should be located?
    Secretary Veneman. No. I mean, it has been operated in NRCS 
and it has a lot of components of technical components, and 
that is certainly where one of their core competencies is.
    The Chairman. I appreciate that. Just one last thing: 
limiting USDA technical services, as you just mentioned, 
primarily to producers who participate in Federal land 
retirement or cost-share programs. If we did that, if we just 
limited these technical services to producers who participate 
in Federal land retirement or cost-share programs, according to 
the National Association of Conservation Districts, it could 
cause up to 90 percent of the Nation's ag producers to lose 
most or all of the conservation technical assistance they 
currently receive.
    Again, I am just wondering if you have a position on that 
and whether or not we should limit it or should we keep it 
broad, as it is today?
    Secretary Veneman. I am not familiar with anything that 
would indicate that we have wanted to limit technical 
assistance.
    The Chairman. I appreciate that.
    Secretary Veneman. That as we move forward and we talk 
about the environmental issues that farmers are facing today, 
it is a broader range of issues--water quality and quantity, 
issues of livestock waste.
    That one of the things that is recognized throughout 
agriculture and agriculture groups, as well as in many 
environmental groups, is there are a lot of issues where we do 
need both technical assistance and programs to help address 
some of these issues and help farmers be successful; as you 
say, have programs that allow farmers to be successful as 
farmers, not just taking land out of production.
    The Chairman. I appreciate that. It ought to be broadly 
based, too, and I appreciate hearing that.
    Senator Lugar.
    Senator Lugar. Thank you very much, Mr. Chairman.
    Secretary Veneman, I am informed that on Monday House 
Agriculture Committee staff members briefed commodity groups in 
this city on their continuing assumption that $73.5 billion 
above baseline would be available for programs supporting the 
Farm bill over the next 10 years of time. The plan they 
suggested was they thought that the House would act 
immediately, maybe next week, leaving to us the reality work of 
taking a look at what money, in fact, is here.
    Now, the assumption of $73.5 billion over 10 years sees 
agriculture in America in perpetual crisis for a decade. It 
sees $7 billion, on average, every year over and above all that 
we are doing now. It suggests surpluses in those 10 years, or 
at least in some of them, I presume, from which this money 
might come, or it will come from Social Security, Medicare, 
education programs, or other offsets.
    It is time really, Madam Secretary, for the administration 
to give a pretty clear idea of what the money situation is if 
there is to be a debate next week in which an assumption is 
being made that $73.5 billion is about to go for agricultural 
subsidies, or at least $45 billion according to estimates, at 
least, from House authorities.
    Second, I would just say, Madam Secretary, that the 
suggestion is being made that it is appropriate to discuss this 
next week, even in the face of debates we are having about the 
internal security of the country; specifically, powers for the 
FBI to detain suspects, for example, large civil rights issues; 
questions everyday of moneys that may be required additional to 
the $40 billion that we appropriated for the war and for the 
rebuilding of New York City and the Pentagon, in addition to 
the moneys we appropriated last week simply to keep our 
airlines going, without any idea whether that will be adequate, 
given the very sharp decline.
    The sense of reality about this, Madam Secretary, is this 
country has enormous economic problems that have not been 
fathomed one iota in terms of the estimates coming from anybody 
thus far. Now, let us say theoretically that it turns out the 
administration says not to worry, that there is $73 billion 
clearly there, $7 billion for agricultural emergencies. Then it 
seems to me it would be very useful to take a look at the 
chairman's idea of how should these be distributed.
    Your report says the distribution now means that moneys go 
to large commercial farms. It means they grow and small farms 
decline. Yet, around this table today we have heard about the 
plight of the small family farm. Of course, it is difficult. 
The programs we now have almost guarantee it will be difficult. 
They guarantee concentration of ownership, not of farmers, but 
everybody else, for that matter. They guarantee distortion of 
markets that you have illustrated to a fare thee well.
    Therefore, to proceed down the trail with more of this, on 
top of more, seems to me inadvisable. The Department needs to 
speak up, or someone in the administration needs to do so 
promptly if there is to be any consistency with the report that 
you have.
    Now, if we are to distribute money, perhaps it should be 
through conservation payments. They might go to small farmers, 
as well as to large ones. It may be that the risk management we 
adopted last year in crop insurance has some viability with 
regard to all types of people in farming, not just the 40 
percent who now get the commodity payments. Sixty percent do 
not, so all of the rest of the rhetoric is useless with regard 
to a majority of farmers, however you define them.
    These are serious problems, Madam Secretary. We are all 
kidding ourselves if we do not see that at least a schedule 
seems to be on track to debate a farm bill, inconceivable as 
this might be, on the House floor next week in the middle of a 
war. We had better wise up.
    Finally, this idea that somehow an army marches on its 
stomach, that food security means that this is vital--let's 
come off of it. The fact is 90 percent of our conservation 
payments now go to retire land. We have gone to desperate means 
to curtail supplies in this country. To imply somehow we need a 
farm bill in order to feed our troops and to feed our Nation is 
ridiculous, and I hear that subject being raised again and 
again.
    The facts of life are we have it coming out of our ears. As 
you have pointed out, if we can't trade it, if we can't export 
it, we are going to have low prices perpetually, given these 
policies, while we lament low prices.
    Madam Secretary, I am sorry to go into an oration, but 
nevertheless you can tell I feel strongly about these things, 
and you should too. This is why I hope you will testify 
promptly on each of these issues.
    I thank you.
    Secretary Veneman. Thank you, Senator. Let me first go back 
to the purpose of the book really was to bring a larger and 
broader debate about farm policy, about the fact that it is not 
a single sector.
    Somebody brought up, what is the definition of a family 
farmer? Well, one of the reasons that we talked about the 
differences in the farm sector in this book is to really show 
that there isn't a single kind of farmer in today's 
environment. There are people of all sizes, at all parts of the 
spectrum, and most of them are family farmers, but families 
structured differently. Part of this is looking at the huge 
diversity of farms that we have.
    You talked about conservation payments being a way to reach 
more of the farmers. As you know, one of the things this report 
points out is that only 30 percent of the land is owned by 
about 150,000 people that are producing about 70 percent of the 
production. Conservation programs do reach probably a broader 
range of people that are in the agriculture sector.
    I agree with you that risk management tools are important, 
as well, whether it is crop insurance types of programs, or we 
haven't talked today about things like the farm accounts, the 
risk management accounts, where we would use the Tax Code as 
well to give farmers some assurance of being able to get 
through the difficult times. That also has to be part of the 
Farm bill debate.
    As far as the timing is concerned, I understand very well 
your concerns because, again, as this report points out, there 
is a very diverse farm sector that is changing. The food and 
fiber sector is changing all the time because of technology and 
globalization and a variety of other factors.
    People who say that agriculture isn't high-tech are wrong. 
I mean, this is a high-tech industry that is being driven by 
new forces, like other sectors of the economy, and it is going 
to take time to take a deliberative approach as to how we 
really should address all of the factors that impact our food 
and fiber sector and our farm sector today.
    I might add that this Farm bill does not expire until just 
over a year from now. The budget at this time is uncertain. I 
can't speak to you about the budget. I have been talking with 
Mr. Daniels. It is important to work out at this point. I can't 
talk to you about where the budget is going to go with regard 
to anything because of the uncertainty of what has happened in 
the last 2 weeks.
    I might add that I commend the Congress, both the Senate 
and the House, for acting quickly before the August recess to 
give farmers some needed help. We have been able to get that 
help out to farmers, most of it already before the end of the 
fiscal year, and so we have had some assistance this year.
    Again, the purpose of what we have tried to do here is, 
like you would in a strategic plan, to frame the debate around 
what does the farm sector today look like and what are the 
factors that are driving it. We hope that we have been helpful 
in doing that.
    I would also commend both you and Senator Harkin for the 
principles that you put forward yesterday. Those are quite 
consistent with the principles that the administration has put 
forward, and we certainly look forward to working with you to 
advance programs that would be consistent with the principles 
that we have all put forward.
    The Chairman. Senator Conrad.
    Senator Conrad. Mr. Chairman, thank you, and thank you 
again, Madam Secretary. Let me come at this a different way 
because Senator Lugar feels strongly on one side and I feel 
just as strongly on the other side. This economy is in trouble. 
It is not just the broader economy; the farm economy is in 
desperate trouble.
    I am going to a meeting in 10 minutes with the leaders of 
the House and Senate Budget and Finance Committees for a review 
of our current financial position. One of the questions that is 
going to be asked at that meeting is what is the 
administration's position with respect to the money that is in 
the budget to write a new farm bill.
    As Senator Lugar correctly described, there is $73.5 
billion that is in the budget resolution to help write a new 
farm bill. The administration in its mid-session review said 
that that money would have to be offset, that that money would 
have to be made available by cuts in other places in the 
budget.
    The question I would ask you is what is the 
administration's position? Can the money that is in the budget 
to write a new farm bill be used or not? This goes beyond an 
academic question. In 10 minutes, the leaders of the House and 
the Senate Budget and Finance Committees are going to be 
grappling with that question, among others, as we attempt to 
determine our current financial circumstance.
    Let me just say that I just held a hearing in my State and 
one of the major farm group leaders, when I asked him if this 
money were not available what does it mean, said, Senator, if 
this money is not available to help write a new farm bill, 
there will be a race to the auctioneer, a race to the 
auctioneer. I know that is true. I don't think that serves any 
economic purpose at all.
    I heard in your response to Senator Lugar that you are not 
prepared to answer the question. When will you be prepared to 
answer?
    Secretary Veneman. Well, again, the budget situation is an 
uncertain one, as we all know, and I certainly appreciate the 
position that you are in and the Members of Congress are in. 
Again, this is an issue that you will be working with OMB on.
    No one could have predicted what was going to happen 2 
weeks ago. No one can prepare for that from the standpoint of 
many parts of our lives, but at this point I can't speak for 
the administration on what is going to happen on particular 
aspects of the budget, and would ask that you work with OMB in 
that regard.
    I know that there are farmers in this country who are 
struggling. At the same time, it is important to point out that 
this year it is projected that net cash farm income will be at 
an all-time high, at a total of $61 billion. Farm real estate 
values have increased 21 percent since 1996.
    It is important when we talk about the farm sector that we 
recognize that some of the economic considerations have 
changed; that some of the prices, particularly on livestock, 
have been getting better.
    Senator Conrad. My time is rapidly leaving and I have to go 
to this other meeting. I would just say to you I hope the 
message from this administration is things aren't fine in farm 
country because that just defies the reality that I see 
everyday as I go around my State.
    I mean, if the farm community in my State were to hear the 
message that everything is fine and getting better, they would 
go through the roof, Republicans, Democrats, independents, 
because that is not the reality of their lives. I have never 
seen in my life of public service a sense of hopelessness as 
deep as what I see in farm country.
    Let me go back to the fundamental question. You are the 
Secretary of Agriculture. If you can't tell us whether or not 
the administration supports the use of the money that is in the 
budget to write a new farm bill, I don't know where we get that 
answer. I would say to you I hope you go back and talk to the 
White House and talk to whoever else needs to be talked to and 
deliver us an answer quickly. We have to know as we construct a 
budget plan for this country what the administration's position 
is.
    It is a lot of money, $73.5 billion. It is in the budget. 
Does the administration support the use of the money that is in 
the budget to write a new farm bill or not? It is a simple 
question. We need an answer.
    Secretary Veneman. I understand, Senator. I do want to just 
say that I understand, and I don't mean to imply in any way 
that rural communities don't need assistance. As we state in 
our principles book, it is important to recognize that rural 
communities need assistance not just in terms of farm programs, 
but to strengthen rural communities, whether it is education or 
it is water systems or electrical systems or Internet access 
and broadband.
    That we need to be looking at the way we support rural 
America as a holistic approach, as I have said many times 
during this debate, and that we in no way mean to undermine--as 
you were somehow saying that we don't understand the plight of 
people living in rural America and our farmers. We think it is 
very important.
    As I have been out in farm country all around the country--
I have been not to North Dakota, but I have been to South 
Dakota. I have been to Iowa, I have been to Nebraska, I have 
been to Indiana, I have been to Arkansas. I have been to a lot 
of places and when we talk to farmers about the need to 
strengthen rural communities, the need for more research, the 
need to make sure our infrastructure is strong with good pest 
and disease and food safety and research programs to support 
that, there is so much support for making sure that we have 
good systems in place so that they can do the business that 
they do. That is, again, why we talk about more than just the 
farm program part that you are talking about. We need to really 
support the whole sector in a holistic way.
    Senator Conrad. I would just say to you that all of that is 
true. It is also true that the money is a central issue. You 
can't do any of these good things without money. You can't have 
leverage for trade negotiations, in my judgment, without money. 
The money is in the budget and the question is does the 
administration support the use of the money that is in the 
budget or not. That is the critical question.
    Madam Secretary, thank you very much for your appearance 
today and I look forward to the answer to that question.
    The Chairman. Thank you, Senator Conrad.
    Senator Thomas.
    Senator Thomas. Thank you.
    Let me followup a little bit, Madam Secretary. It is my 
understanding that this year basically through disaster 
payments and the last several years we will have spent more on 
agriculture than the $7 billion that he is talking about. In 
order to then accomplish what you have in mind, and I share 
your view, how would you change that?
    The money has been going out in disaster payments. How 
would you change that basis, assuming we have $7 billion to 
spend? I know that is a broad question, but generally how would 
you change that, rather than disaster payments?
    Secretary Veneman. Well, again, I agree with you that it 
has been a difficult kind of means by which to give assistance 
to farmers to do it on an ad hoc disaster basis. We all agree 
that that is a difficult way to respond every year, year after 
year.
    That is, again, why what we tried to put forward was a 
broad look at agriculture, one that would not only have an 
economic safety net for farmers that is market-oriented, one 
that is strong in terms of trade policy and opening up new 
markets, because that is where the markets of the future really 
are; a strong infrastructure, as I have talked about, 
supporting pest and disease and food safety programs; programs 
that enhance our research abilities; conservation and 
environment programs, additional ways to support farmers in 
that regard; and rural development programs that are really 
responsive to the needs of today's rural communities. As we 
look at, again, the whole approach to the farm policy in the 
future, it is important to look at all aspects of it.
    Senator Thomas. My new conservative Senator from Minnesota 
indicated that there were fewer people in the food stamp 
program. Is that a fact, or do you know offhand?
    Secretary Veneman. I believe that is true. Let me just make 
a few comments about the feeding programs because it is 
important.
    In the food stamp program, we have a new Under Secretary, 
Eric Bost, who ran the food stamp program in Texas and has very 
strong feelings about what will make the food stamp program 
more effective and he is working on ideas now to increase the 
effectiveness of our food stamp program, in particular, and our 
delivery systems in that regard. We are working hard to try to 
determine how we can consistently improve delivery systems and 
make sure that our programs are available for those in need.
    Also, as I pointed out earlier, when you have times of 
disaster as we do right now, we have ways that we can 
accelerate the delivery of our feeding programs, and we are in 
the process of doing that right now to victims and families and 
people who are unemployed who are now in need. Our feeding 
programs are extremely important in that regard. That is an 
important component of what we are talking about here as well.
    Senator Thomas. Of course, if the numbers have gone down 
because people are less needy, that is great, if that is the 
case.
    One of the things obviously that we are looking for is 
trade strengthening and fair trade. We met yesterday with the 
Trade Representative on sugar, as a matter of fact, but I guess 
my point is when you are negotiating trade agreements, what is 
the role of the Department of Agriculture?
    Secretary Veneman. Well, we have had a strong partnership 
role with USTR, and Ambassador Zelleck and I worked together in 
the previous administration and we have a strong working 
relationship now. He and I at the beginning of this month went 
together to Punta del Este, Uruguay, to attend the Cairns Group 
meeting, the meeting of agricultural trade-exporting countries 
who are very interested in beginning a new round and getting 
significant reform.
    We have traditionally in the U.S. had positions that are 
quite similar to those of the Cairns Group, things like 
eliminating export subsidies that have been talked about here 
today, and, additionally, reducing trade-distorting domestic 
support. That as we go forward, we are planning a very active 
role in trade and we will continue to work very closely with 
the USTR to advance the issue of agriculture.
    I might add that the President feels very strongly about 
agriculture and trade. He never talks about trade without 
talking about agriculture, nor does he talk about agriculture 
very often without taking about trade. I can tell you that in 
my working with Ambassador Zelleck, he clearly understands the 
importance of trade and agriculture, and how important trade 
will be to agriculture in the future.
    Senator Thomas. My time has expired, but it just seems like 
we still have a lot of trade barriers, and with the kind of 
leverage that it would seem we would have, with the deficit we 
have on exports, people coming to this place, that we would 
have a little more muscle in terms of like, for instance, the 
tariffs on beef in Japan. We don't seem to be able to move 
those things, and yet we all tend to agree that if we are going 
to have more production and continue to have agriculture do as 
well, we have to have some new markets.
    Yet, we seem to continue to allow those impediments to 
continue. I know it is a tough one, but----
    Secretary Veneman. Well, let me just make a comment on 
that. When you talk about tariffs on beef in Japan, clearly the 
Japan beef market was improved substantially when we got the 
beef and citrus agreement, it was back in 1986 or somewhere in 
the mid-1980's.
    The fact of the matter is you are right. Agriculture 
tariffs worldwide average about 62 percent. In this country, 
they are about 12 percent, and that is why it is so important 
to get additional trade agreements so that we can reduce those 
tariffs, so that we can get greater access to those markets 
abroad.
    Japan is our No. 1 export market for food and we certainly 
appreciate their business. Again, there are certain areas--rice 
is one--where we would like to get additional access because 
there is a market there.
    Senator Thomas. One of the frustrations, as you know, is we 
keep hearing we need more agreements, and yet we get agreements 
and we don't see any real, substantive change in terms of 
agricultural obstacles.
    Secretary Veneman. Well, one of the things that is 
important to understand about trade agreements--I mean, you 
like at NAFTA. Our exports to Mexico have doubled since we 
implemented NAFTA in 1994. Our agricultural exports to Mexico 
have doubled. Canada and Mexico are now our No. 2 and three ag 
markets.
    There are those who talk about the difficulty of entering 
into new trade agreements. The fact of the matter is countries 
all over the world are moving forward with trade agreements. 
There are over 130 bilateral and regional trade agreements in 
the world today and we party to only two of those.
    What does that mean? It means that when other countries 
negotiate a trade agreement and give that country preferential 
access through lower tariffs, we lose market share. We have 
seen that already as Canada has negotiated an agreement with 
Chile and has taken away some of our markets for wheat and 
potatoes, as just two examples, and other products as well 
because they now have lower tariffs going into Chile than we 
do. We have talked for 10 years about negotiating a free trade 
agreement with Chile.
    One of the important things to recognize today about trade 
is that if we are not a player at the table, we will be left 
behind, and that is one of the reasons this administration and 
the President have felt so strong about getting trade promotion 
authority passed as quickly as possible.
    Senator Thomas. We have to be sure we implement those--for 
instance, molasses, stuffed molasses, things like that--and 
take away a little of the enthusiasm about it, as does the 
Mexican letter on sugar.
    Thank you.
    Secretary Veneman. I understand that, and we are working 
very hard on some of the trade irritants as well.
    The Chairman. Thank you, Senator Thomas.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman.
    It might not seem like it, but this is still a friendly 
audience, Madam Secretary. We want to work with you and your 
staff to deal with many of these issues--in fact, all of the 
issues that have been raised. The fact that so many feel so 
very strongly at the dais here is a good indication of how 
significant the problems are and how important it is that we 
work together to find solutions.
    I would like to continue in this area of trade. That while 
there is a lot of interest in NAFTA, it was misspelled. We 
didn't have the second ``f'' in it, where it is fair. We focus 
here on free trade, and it should have had a second ``f'' in it 
for ``fair.''
    Quite frankly, there is concern about whether it is stuffed 
molasses and you have to go to court. Fortunately, the court of 
appeals has now ruled in conjunction with the Canadian 
agreement. Honestly, when you look at the barriers that are out 
there and the unfair trade practices of our trading partners, 
you get very concerned.
    As a matter of fact, on page 40 of the book you indicate 
that our producers and the industries they support can see the 
value of U.S. agricultural exports grow 19 percent if we had 
the removal and the elimination of the barriers.
    What I would like to ask is what can we do specifically. It 
is important that you join together with Ambassador Zelleck. 
That is an excellent opportunity and I hope that you will 
continue to do it and raise the level of consciousness of the 
importance of agriculture as part of trade policy. I am pleased 
that the President speaks in the same sentence about 
agriculture as well as other trade areas.
    What I would like to hear is what are our specific plans, 
and ``specific'' is important here, to deal with the trade 
distortions caused by the barriers in the world. Either our 
trade partners in other parts of the world bring their barriers 
down or we have to bring our support up. You can't have this 
continuing unlevel playing field working against our producers 
and have trade be any part of the answer. The more we trade, 
the worse it gets in the sense that we can't send products to 
Europe because of the barriers. Yet, products from Europe seem 
to find their way into our markets very easily.
    I am not against trade. I have taken 12 trade missions in 
my prior professional life as a Governor, so I believe very 
strongly in trade. Somehow it just doesn't work out for 
agriculture, and it is because of the barriers. What we need to 
do and what I would like to hear from you is find out what the 
specific proposals are to either bring those barriers down, 
raise our support levels up to be competitive, or some 
combination, because it isn't going to work if we are only 
talking about it.
    Secretary Veneman. Probably the best way to remove barriers 
is through trade negotiations. Some of the biggest barriers 
that we have, of course, are high tariffs.
    Senator Nelson. You see, that didn't even work with the 
Canadians in conjunction with sugar because they found a way to 
make into molasses to get it down here and get around the 
barrier.
    Secretary Veneman. I understand, but we do have dispute 
settlement mechanisms. We have been able to take that one to 
court. I mean, there are trade irritants, but one of the 
important things about the WTO system is that it gives us a way 
to address some of these issues. We have dispute settlement 
mechanisms within the North American Free Trade Agreement. That 
it is----
    Senator Nelson. It takes time, and I understand. I don't 
mean to cut you off, but I am wondering if there isn't a way--
and I have spoken to Ambassador Zelleck about this, and that is 
to have the equivalent of a referee that can make more 
immediate decisions that then get appealed so that you can 
start the process, because my sugar beet farmers are delighted 
with the result in the court of appeals, but in the meantime 
they have suffered losses because of the adverse trade practice 
of our trading partner.
    Secretary Veneman. I understand the frustration. We all are 
very frustrated by some of these trade irritants that take some 
time to resolve and are difficult to resolve. The fact of the 
matter is the system does work. I agree with you, it does take 
a tremendous amount of time.
    I know when you are talking about barriers, you are talking 
about some of the trade irritants.
    Senator Nelson. Tariffs; well, irritants and tariffs, yes. 
Tariffs are irritating, too.
    Secretary Veneman. Obviously, some of the biggest issues we 
have to face are high tariffs. Again, as I said in response to 
the previous question, 62 percent average food and ag tariffs 
around the world; we have twelve.
    Our proposal for agriculture in the WTO right now really 
would talk about bringing those tariffs around the world down 
to more equivalent levels. We have to get those tariffs down so 
we can get greater access to markets. Again, I am very 
concerned that if we don't enter into a new WTO round and try 
to do this globally that we will continue to see free trade 
agreements negotiated all around us--Europe has almost 20 
ongoing right now--and that those countries will enter into 
free trade agreements, getting preferential tariff access, and 
we will be left behind.
    That needs to be a big concern to our farmers and ranchers 
who depend so much on the export market. We export about 25 
percent of what we produce and our exports continue to go up. 
They are about 53.5 this year; they are projected to be $57 
billion next year. Obviously, the global market is extremely 
important. We produce much in excess of what we can eat in this 
country. We can't consume much more, so we have to open up 
markets and continue to give our farmers the opportunity to 
trade abroad.
    We are clearly on the same page and I understand your 
frustration with getting some of these irritants resolved more 
quickly. Certainly, we are working closely with USTR to do 
everything we can to assist in that.
    Senator Nelson. I hope the sugar farmers are able to 
recover some of their damages because of these irritants and 
trade barriers that are used against us.
    Thank you.
    The Chairman. Thank you, Senator Nelson.
    Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman.
    Madam Secretary, I am going to begin by asking you a very 
highly Idaho-specific question which I don't even expect you to 
know the answer to, but I just can't resist this opportunity 
because you will be able to go get me the answer and it is very 
critical that we get an answer to this.
    As you may know, Idaho is facing a drought right now, and 
one of the very significant impacts of that is that we have had 
a very significant reduction of the grazing and haying 
opportunities. The Department of Agriculture has given 
permission for the CRP lands to be utilized for grazing and 
haying.
    We have recently, as a delegation, requested that this 
emergency grazing permission be continued until December 31, 
2001, and have not yet received an answer. We need an answer 
fast, so if you have an answer right now, I would love to hear 
it. If not, I would like to ask you if you could get us an 
answer as quickly as possible.
    Secretary Veneman. Senator, I have been told that as of 
this morning we have approved that for an additional 30 days.
    Senator Crapo. That is great news, but that doesn't get us 
to December 31. I will take that news back and continue to work 
with you to see if we can't get this expanded to the end of the 
year, and I do significantly appreciate that.
    Let me now with the rest of my time just continue. There 
are a lot of questions I would love to ask you, but since we 
have been talking trade in the last couple of rounds I would 
like to give you my perspective on it because it is very 
similar to that which you have been hearing.
    You yourself have pointed out today a couple of times the 
disparity in just tariffs. Senator Conrad pointed out the 
disparity in subsidies. Just using the tariff example--62-
percent average tariff on our products and a 12-percent average 
tariff that we charge on products coming into our Nation--it is 
an incredible disparity.
    As I indicated to you before, there is a WTO ag caucus or 
coalition here in the Congress between Republicans and 
Democrats and House Members and Senators, and I have been to 
enough of those meetings to tell you that there is a pretty 
strong consensus among that group that we have to reach parity 
on these kinds of issues.
    Let me just, as I discuss that, move on to Seattle. I was 
at Seattle for the WTO round that was attempted to be started 
there. A lot of people said they thought that what happened in 
Seattle was a disaster. Of course, a lot of the rioting and 
those kinds of things were unfortunate, and it was unfortunate 
that we weren't able to get a good start to a new round of WTO 
talks there.
    I actually left Seattle pleased in one sense, thinking it 
was the first time that I had seen the United States say no to 
a bad deal. I thought that it was finally time for the United 
States to tell the rest of the nations that we would no longer 
agree to a trade agreement that continued these disparities.
    In my opinion, for years the United States trade 
negotiating policy has been that agriculture was basically a 
trading chip. There seems to be give-and-take in many other 
areas. In terms of the negotiations, there is give-and take, 
and we seem to take in manufacturing and in information 
technology and other industries, but use as what we would give 
our ag policy. Other nations that seem to be more focused on 
their ag interests would want to take in the ag areas and give 
in information technology and manufacturing and the like.
    I don't know if that is exactly what happened, but the 
ultimate outcome was--you mentioned there are over 100 trade 
agreements and the U.S. is party to only two. The agreements 
that we are a party to basically put into place this, and that 
is one of the reasons you are seeing resistance here to trade 
promotion authority and further trade agreements.
    It is not that there is a disagreement with your point that 
we need to be at the table in this global environment. We do 
need to be at the table. The point that a lot of us are very 
concerned with is that we need to be at the table with tough 
negotiators who are not going to trade away agriculture again.
    One of the things that a lot of us are looking at--and 
hopefully you won't take any of this here as a personal attack 
because we are talking about a history of trade negotiating 
under many different administrations, and we are hoping to see 
this administration do what The last administration began to 
show us it was ready to do, and that is stand tough and 
negotiate strongly for agriculture.
    I have said a lot of times no deal is better than another 
bad deal. We can all agree that we want a good deal, and we can 
debate over whether what we have had in the past are good deals 
or bad deals. The reality is that today we still have trade 
agreements in place that allow other nations to have their high 
tariffs and their high subsidies, and cement the United States 
into its low tariffs and low subsidies which continue to 
disadvantage our producers.
    I just wanted to give you my perspective on that and to 
tell you that from what I have seen so far it appears that the 
administration, both in terms of the Department of Agriculture 
and our U.S. Trade Representative, do understand this and have 
committed that agriculture will be our highest priority in this 
next round of WTO negotiations.
    I would just like to ask you if you would comment on that.
    Secretary Veneman. Certainly. I applaud the WTO caucus and 
the fact that it has been working on the trade issues because 
it is important that we have an understanding in the Congress 
of how important trade is to our economy and to agriculture in 
particular. I have had the opportunity to visit with the WTO 
caucus.
    In talking about Seattle, one of the things that we are 
prepared to do and preparing for at this point in time is the 
launching of a new round post the Seattle failure. We think it 
is very important to launch a new round, not to have another 
failure, that we need to advance WTO discussions so that we can 
reach further trade-opening opportunities for our farmers and 
ranchers based upon what was agreed to in the Uruguay Round.
    It is significant what we were able to accomplish in the 
Uruguay Round because agriculture has been really left out of 
trade agreements previously. We were able to get some global 
disciplines on export subsidies. We were for the first time 
able to get some global disciplines on internal supports.
    Now, there are still big disparities, particularly between 
the U.S. and the EU and the U.S. and Japan. The proposal that 
the U.S. has put forward for this proposed round is one that 
would try to bring the support of other countries down more, 
because rather than tie it to a historical base period, it 
would tie it to the value of production, so that it would bring 
down the support of other countries more quickly than our own 
support. We think that is an important difference, but it does 
buildupon what was agreed to in the Uruguay Round. Obviously, 
the more you put support into a green box, it doesn't count 
against your caps, and so forth, and that is another important 
issue to remember as we debate new farm programs and new farm 
bills.
    The other thing is that we got significant changes in the 
tariffs, in that all of the quotas, and so forth, were turned 
into their tariff equivalents with a process called 
tariffication. There was market-opening of a certain access, 
and then the beginning of bringing those tariffs down. We don't 
have those bans to deal with anymore and those are tariffs from 
which we can now negotiate, which is another important 
accomplishment.
    Finally, the thing that we accomplished that is so 
significant in the Uruguay Round is the sanitary and 
phytosanitary agreement that gave us the ability to really have 
a dispute settlement mechanism for things like some of the 
trade disputes that we so often have, whether it is the beef 
hormone dispute or it is a variety of other things.
    It basically requires that any kind of regulation be based 
on sound science, and we have taken several of those cases; we 
have been involved in several in the WTO and we have won most 
of them. It is important that the Uruguay Round achieved rules 
requiring science-based approaches to these issues and giving 
us a dispute settlement mechanism with which to deal with them.
    The Chairman. Thank you very much. You see, Senator Crapo, 
it paid to stay around this long.
    Senator Crapo. That is right. That was great. I got 30 
days, at least.
    The Chairman. That is right.
    Senator Dayton.
    Senator Dayton. Thank you, Mr. Chairman.
    Madam Secretary, if I could refer to a couple of pages of 
your statement here, on page 11 of your testimony today you 
say, ``History has shown that supporting prices is self-
defeating. Government attempts to hold prices above those 
determined by commercial markets have made matters worse time 
after time.'' Then on page 11 you go on to say, ``Supply 
controls proved costly to taxpayers and consumers, and the 
unused resources were a drag on overall economic performance.''
    Then going on to page 12 you state, ``The Federal 
Agricultural Improvement and Reform Act of 1996 proved to be 
historic by removing most of the decades-old program structure, 
provided unparalleled farmer decisionmaking flexibility through 
decoupled payment benefits, and set a new example throughout 
the world for providing domestic farm sector support. While 
that approach still is arguably the least market and resource 
use-distorting approach available, its decoupled payments do 
share some unintended effects with price support programs, 
namely the artificial inflation of farmland prices. The effect 
clearly has been exacerbated by the size of supplemental 
payments in recent years, some $28 billion in the last 4 years 
above the amount provided in the 1996 law.''
    If I take those sections, then, and boil them down, it 
seems that you are against price supports, against supply 
controls, and against the size of the supplemental payments. If 
we remove all three of those props, we are back to essentially 
the original Freedom to Farm concept, which leaves us with 
market prices well below the cost of production, as 
traditionally defined--and again I would repeat my request to 
know what those numbers are in your calculation--with the 
premise, then, that increased exports are a solution to these 
low prices. They, in turn, require in the construct that I am 
aware of also fairly low domestic market prices in order that 
our commodities be competitive on the worldwide market.
    I guess I don't see the way out of this box under your 
proposal for most American farmers, and I wonder if you can 
show me where the way out is, or the way to prices that you 
believe are appropriate, and are those prices domestically ones 
where most American farmers can make a profit and not need the 
subsidies.
    Secretary Veneman. Well, first of all, I would just like to 
say that the testimony is based upon what was in the principles 
book. We are not against anything. We are just trying to point 
out some of the economic consequences of some of the programs, 
and we want to make sure that some of the benefits of various 
programs are recognized as well. We are really trying to give 
an all-encompassing look at the sector.
    Now, having said that, certainly when we talk about things 
like supply controls, those have made us less competitive. We 
clearly live in a global economy. We need to be part of that 
global economy because we are very efficient producers. If you 
have supply controls, you tend to be less competitive and you 
only give away the production and market share to other places.
    Senator Dayton. We removed price controls under Freedom to 
Farm and the farmers generally liked that. Then we have a 
greater level of production because there aren't price 
controls. Under the basic law of supply and demand the prices 
go down, and then we either revert, as we did under FAIR, to 
these additional payments to keep farmers afloat or we pull 
them back and the farmers collapse.
    Again, where does that leave us?
    Secretary Veneman. Those are some of the difficult issues, 
and obviously we have not made a proposal for an economic 
safety net for farmers. We have said that there are a variety 
of ways to do that, but whatever way it is done, it should be 
done in a way that is market-oriented that does not impact our 
trade agreements.
    Senator Dayton. What does that mean in the real world? What 
does that mean?
    Secretary Veneman. Well, again, I don't have a proposal for 
you today. There are a number of proposals that have floated in 
various years, and again I don't have that kind of proposal. I 
talked to some extent about some of the tax proposals that may 
be available. We have talked about farm accounts giving people 
the ability to have that kind of means by which to control 
their income in ways that will give them the ability to have 
some kind of safety net that they set aside for themselves. I 
mean, that is one kind of example.
    Let me go back for a minute to the cost of production issue 
because the cost of production is a very difficult one in 
today's environment. When you look at the different sizes of 
farms, the different kinds of operations, the different 
technologies that are used today, it is very difficult to put a 
single cost of production on a specific commodity because of 
the differences in the way that farmers across the spectrum 
farm.
    When we talk about cost of production, we can talk about 
average costs of production, and so forth, but the variables 
are really quite great. I mean, you look at the productive 
capacity on an acre of land in one State and compare it for the 
same commodity in another State or another area and it can be 
double.
    Senator Dayton. A fair point, a fair point.
    Secretary Veneman. It is very difficult to talk about cost 
of production per unit in today's environment.
    Senator Dayton. A fair point, so let me rephrase it because 
I see Dr. Penn nodding his head in agreement with what you are 
saying.
    Secretary Veneman. Oh, good.
    Mr. Penn. I always agree.
    Senator Dayton. We have an honest difference of opinion.
    Secretary Veneman. I always like it when my economists 
agree with me.
    Senator Dayton. Right. You can be reassured; he was nodding 
his head, and sincerely so.
    Maybe you could respond today or I could ask in writing in 
the next couple of days, but what do you believe the 
appropriate market prices are for basic agricultural 
commodities--corn, wheat, soybeans, sugar, milk, hogs, beef 
cattle?
    If we are trying to construct an economy that balances out 
farm income on the one hand and competitiveness on the other, 
that balances out export viability versus imports, what prices 
or what range of prices for these commodities do you believe, 
does USDA believe, are the right ones?
    If we know where we want to go or what we want to try to 
accomplish, then it seems to me we can try to devise policies 
that can get us there. If we disagree on that, as Senator Lugar 
and Senator Conrad do, then we can have that debate. Right now, 
we all throw out these homilies about this, that and the other. 
Meanwhile, we have a total decoupling or disconnect between our 
rhetoric and what is happening out there in the real world.
    Secretary Veneman. Well, I don't have prices for you.
    Senator Dayton. No. I am asking USDA to formulate them.
    Secretary Veneman. We have talked about the importance of 
the marketplace and the market deciding the prices, and that is 
important. The other thing that you have to recognize in 
today's environment----
    Senator Dayton. Madam Secretary, my time is up. I want an 
answer to my question. I want an answer from USDA. This is what 
everybody tiptoes around. My family was in the retail business 
and they knew what prices they had to have in various areas--
shoes, socks, the like--if they were going to stay in business, 
and then how to achieve those prices versus the volume. That is 
the basic law of economics--supply and demand.
    We are so far removed from that as a result of the 1996 
trade bill and all these additional payments which we agree we 
can't sustain. We have to get back to figuring out what our 
objective is for prices in the marketplace and then whether we 
are going to make up the difference or whether we are going to 
tell farmers this is what you are going to get, and if you 
can't achieve the efficiencies with that price to stay in 
business, then you are going to have to go out of business.
    Farmers out there really want somebody to talk the truth to 
them because the realities are talking the truth to them and 
all they get from us is either a bail-out or avoidance of the 
problem.
    I am sorry I have to leave, but I would repeat the request. 
What are your target prices? What, on balance, do you think the 
right prices are that we should be striving to achieve, 
balancing all these forces? If we don't know that, it seems to 
me we can talk about this stuff for the next 7 years and we 
will all try to avoid the responsibility for what is going to 
occur out there anyway.
    Thank you. Sorry, I have to leave. I have a press call.
    The Chairman. Thank you, Senator Dayton.
    We have a vote on final passage of the military 
construction bill right now. Senator Lugar just went to vote 
and then when he comes back, he will chair the hearing and then 
I will come back, because we do want to take up the nominees. 
We have a couple of nominees that I know the Secretary wants to 
get through and we want to get through, also. We will continue 
the hearing process.
    Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman.
    Madam Secretary, just a few points that have already been 
made. You have said on several occasions that the net farm 
income is at an all-time high. I would just also point out that 
the net costs are at an all-time high, as well, the input costs 
of what it takes to farm, especially for those of us in a 
region of the country where you have pretty capital-intensive 
crops.
    When you look at the energy situation and you look at 
chemical application and you look at all the other things that 
we are faced with in our region, those input costs are also at 
an all-time high. That is critical to remember, and I hope that 
you will as you move forward in those thoughts because I have 
heard you make that statement. I have taken it to heart, but I 
just want to make sure that we look at the other part of that 
equation.
    To Senator Lugar, with all due respect, in terms of the 
corporate farming, it is so important for us to remember that 
if we eliminate the farm program, we are going to have nothing 
but corporate farms. We have family farms who have now in many 
ways tried to compete. They have tried to keep their head above 
water, and yet they just end up renting their land to a larger 
neighbor who is incorporated who can be more effective in their 
costs and mitigating their costs out. That is very important 
for us all to remember.
    I appreciate also the points that you have made about the 
importance of open markets globally. They are essential. 
Exports are a crucial source of income for our farmers in 
Arkansas and across the Nation, and I certainly believe that 
any comprehensive approach Congress takes to farm policy must 
identify the opening of foreign markets as a very high 
priority. We did that in Freedom to Farm. Unfortunately, we 
haven't seen the markets materialize as we need.
    I am also concerned, however, that policymakers sometimes 
focus so narrowly on the importance of foreign markets that 
they lose sight of the need for sound domestic farm policy. Our 
farmers truly do need a foundation of support that is bedrock 
strong. Otherwise, the unfair trading practices of our 
competitors become all the more effective against us. Senator 
Conrad has very eloquently explained many times how the 
relatively low level of support found in U.S. farm policy 
leaves our farmers extremely vulnerable to our overseas 
competitors who typically enjoy a much higher level of support, 
and we have seen that.
    As a member of the Senate Finance Committee, I have already 
stated my general support for trade promotion authority. You 
have brought it up a couple of times today. However, a strategy 
based on opening foreign markets and lowering trade barriers 
worldwide is a very slow and long-term approach. It is a very 
necessary approach, without a doubt, but it cannot be done in a 
vacuum.
    We have to really first ensure that our farmers have that 
bedrock support of a sound farm bill, with a reliable safety 
net, before we can expect a trade strategy to be very 
successful. We cannot strip our farmers of the support that 
they need from a strong farm bill and then simply wait for our 
trading partners to reply in kind. That, again, Senator Conrad 
has made that point over and over. That would be 
catastrophically counterproductive.
    Somewhat of where we went with Freedom to Farm was waiting 
and anticipating to see those markets materialize, and there is 
a great deal of fear about such a catastrophic event happening. 
I know when I was home in Arkansas, many of my agricultural 
producers approached me about trade promotion authority with a 
great deal of doubt at this point, having been supportive prior 
to that--doubt about the success of current trade agreements 
and how they appear to have kept many of our farmers out of the 
market. Even those that one would ordinarily expect to be 
supportive of an expansive trade policy, it has kept them 
somewhat from offering their support on TPA.
    I guess really one question would be, as the administration 
has asked our farmers to support the trade expansion of TPA, 
what assurances does USDA give our farmers that you will 
actively be seeking and actively supporting passage of a strong 
farm bill with an adequate safety net for them?
    Secretary Veneman. Thank you. You made a statement that we 
were talking about eliminating farm programs. We are not 
talking about eliminating farm programs. We are talking about 
really being broader in our approach to looking at what helps 
both farmers and rural communities, and that is an important 
distinction that I didn't want to let go.
    We are talking about a variety of things that help farmers 
and rural communities, whether it is rural development programs 
and looking at how they can be better structured to serve the 
rural communities that we have today, looking at conservation-
type programs and the assistance that farmers are asking for in 
terms of having assistance to be the best stewards of the land 
that they possibly can be, because we know there are so many 
new challenges today.
    These programs actually reach a broader number of farmers 
than do some of the current commodity programs, and part of 
what we are trying to do is say let's take a broader look here 
and not be only focused on just farm programs. I don't want it 
to look like we are trying to get rid of something. We are 
trying to be broader in the approach.
    I would also note that as you look at what we did in our 
principles book, we pointed out the very strong diversity in 
farms that we have today. One of the things that are seeing is 
more and more farms and farmers that are producing to niche 
markets, that are producing to new kinds of marketing 
arrangements where they are forming cooperatives or other 
business arrangements to sell specific kinds of products, 
value-added products, value-added processing.
    We see a lot more of this happening, and we have used a lot 
of our programs to assist in that regard and we need to look at 
what works and what can be used to enhance the value that the 
farmer gets out of the consumer dollar, whether it is in new 
and alternative uses for agricultural products. All of our 
programs need to be, again, broad-based as we look at this.
    I appreciate your support, in concept, for the trade 
promotion authority. When you ask how do we get farmers to 
understand the importance of trade promotion authority, one of 
the main arguments is, first of all, trade promotion authority 
does nothing more than allow the country to enter into new 
trade agreements. The trade agreements aren't yet negotiated, 
but if we are not a player at the table, how do we get the 
kinds of advances that we need--the reductions in tariffs, the 
market openings--that will allow our farmers to have better 
access?
    That is one of the strongest arguments in terms of talking 
to your farmers back home about why we need this authority and 
why we need to be at the table, in addition to the arguments 
that I talked about earlier about being left behind and losing 
out market share, as other countries have negotiated free trade 
agreements and gotten the benefit of lower tariffs.
    There are some very strong arguments to be made to our 
farmers and ranchers about why trade agreements and trade 
openings are so important to their future, and we can all play 
a very active role in helping people in the countryside 
understand that.
    Senator Lincoln. Well, I don't disagree. You are exactly 
right that we have to be at the table, but in the mind's eye of 
the producers that are out there, particularly some of those in 
my State have somewhat of a lack of confidence in who is going 
to be standing up for them in those agreements.
    When we look at the problems we are having with trade in 
poultry down in South Africa, when we look at the softwood 
lumber problems that we have had out of Arkansas from Canada, 
when we see the catfish issue which has been tremendous for 
us--we sat and watched while our neighbors in Louisiana lost 
their entire market for crawfish in less than 3 years to China. 
We are seeing the same thing happen to us in the catfish 
industry, and yet we can't get the immediacy of the 
administration to work with us on this issue. I mean, we are 
losing catfish aquaculture farms hand over fist.
    The problem is not one of convincing people that we need 
someone at the table, but more importantly that we are going to 
have not only the bedrock support in farm policy, but also we 
are going to stand up for agriculture at those tables when we 
get there. I just think that that is really critical.
    I would just say in terms of the broad sense of those 
programs, they are important, without a doubt, the cooperatives 
and the other ways that we can diversify, but they do take time 
and they take a great deal of technical assistance. I hope that 
we don't just put all of our eggs in one basket, but look at 
how we can really work through that.
    The last thing I would just like to touch on is the low 
prices that are hurting virtually every commodity.
    The Chairman. Senator, I might just say we have only got 2 
minutes left in the vote.
    Senator Lincoln. All right.
    Rice, just so I can put that on the top of your list, is 
unfortunately no exception, without a doubt. We know that there 
were seven Senators, along with myself, who wrote a letter to 
the President about the increased food aid program. We have yet 
to get a response.
    I know that General Powell has mentioned other ways that we 
can work through the disasters and the diplomacy. Food aid 
might be one of those. I certainly would like to encourage a 
response to our letter and to that issue of increased food aid.
    Thank you, Madam Secretary.
    The Chairman. Thank you.
    Secretary Veneman, Senator Lugar and Senator Fitzgerald 
were coming right back. They had some followup questions, as do 
I. We will just take a short recess here and when they return, 
we will resume our hearing.
    [Recess.]
    Senator Lugar.
    [presiding.] Chairman Harkin has asked me to call the 
hearing to order. He will be back shortly from voting on the 
floor.
    I want to mention that Senator Roberts was unavoidably 
detained for a national security briefing, and I ask unanimous 
consent that his statement be placed in the record.
    [The prepared statement of Senator Roberts can be found in 
the appendix on page 89.]
    Senator Lugar. Likewise, Senator Helms, who was unavoidably 
detained, has asked that his statement be made a part of the 
record and, without objection, that will occur.
    [The prepared statement of Senator Helms can be found in 
the appendix on page 87.]
    Senator Lugar. Madam Secretary, let me just continue with 
the questioning as we wait for other members to return, and we 
thank you for your patience and your longevity in this process.
    Mention has been made during the hearing about farm income. 
You have indicated that it may be that we will have a record 
farm income of $61 billion this year, and you have heard a 
challenge to that from one member who said, well, don't be 
saying that in farm country because people are angry.
    The two situations are not necessarily contradictory. There 
are many persons in various States and various counties who are 
having very difficult times, but at the same time it is 
important in some perspective that the payments that we 
authorized in the Senate and the House during August that were 
paid to farmers in my State, and likewise the crop insurance 
that we have--for example, on my farm we are able to insure 80 
percent of the average income for the last 5 years. That is 
quite a bit of safety net.
    Now, all farmers may not have availed themselves of that, 
or of the 70 percent or various other levels, but that is 
available, and so are futures markets. That requires a certain 
degree of sophistication and education, but this is one way 
that farmers make money.
    The problem, as you have pointed out, is that 170,000, more 
or less, farms are commercial farms. They are making money, to 
the extent that agriculture gets a return at all. Maybe 2 
million others are involved in other sorts of difficulty.
    Now, it has been suggested this morning particularly by 
Senator Conrad, as he has in other of our hearings, that the EU 
is a formidable situation, and it is and the subsidies are 
enormous. But I would question whether our response ought to be 
to raise our subsidies by $50 or $60 billion a year to match 
that. Your testimony is that the subsidies that we are doing 
now may be distorting.
    Now, the facts of life are that the EU is attempting to 
expand. The end of the $50 billion for France and Germany comes 
with the answer of ``Poland,'' and as Poland accesses to the EU 
the whole picture changes dramatically. I visited with the 
German agricultural minister just last month and he pointed out 
that in his country and in France, the entire situation alters 
simply because there has to be a flow of money. Others who are 
newly accessed to the EU are deeply worried about that, too--
Spain, Portugal and others. That is going to happen because of 
the realities of Europe.
    What we need to do, as you have pointed out, is to try to 
get tariffication, to try to get the end of non-tariff 
barriers. The phytosanitary issues are very, very important, 
particularly biotechnology, and these are of great meaning to 
farmers in terms of getting demand up and getting exports and 
sales.
    Finally, I would just comment again that Americans as a 
whole need to have an interest in this Farm bill. We have been 
discussing it today from the standpoint of production 
agriculture, the 2 million farms, but the fact is that we will 
have a broad base for our bill if we do some things to protect 
the soil and water of this country in perpetuity.
    As farmers, we are stewards for a short period of time, but 
it is fundamental that we have clean water around our farms and 
it is fundamental that we upgrade our top soil. These are 
things for which the public is prepared to spend some money in 
terms of the interests of all of us.
    Likewise, the nutrition programs. The work that Senator 
Harkin's staff and my staff have been doing together is going 
to enhance those very substantially, whether it be WIC, food 
stamps, or eligibility of Americans who are in need. That is of 
great interest to millions of Americans who are outside of 
production agriculture.
    It is tremendously interesting the credit ideas we have for 
young farmers because they have been hurt by our current 
policies. If rents go up, it is tougher for them to rent land 
or to get into the game at all, and so as a result we have to 
do something for the entry level if we want to be competitive, 
if we are not simply blowing smoke about competition in America 
with young people who want to do this.
    These are areas of the Farm bill that we have really not 
gotten into today. We are talking about the money. Is $73.5 
billion out there? Now, the answer is, no, it is not, and it 
probably was never there. If you parse carefully President 
Bush's State of the Union message, he said there is $5 trillion 
in surplus. About $1 trillion is out there for contingencies; 
among the contingencies: Medicare reform, prescription drugs 
for the elderly, Social Security reform. And, oh, by the way, 
if agriculture needs some more money, that is probably where 
you have to look for it.
    Right now, there is not $5 billion in surpluses. The last 
estimate in August was $3 billion, and my guess is even as we 
speak that is melting away. The $1 billion is gone. If we are 
going to do Social Security or Medicare, it is going to be at 
the expense of something else, unless this country gets real 
prosperous in a hurry and, as opposed to having zero GNP, gets 
to 3 or 4 again, which we all pray will occur.
    Now, for us to be debating $73.5 billion next week in this 
context is irresponsible, in my judgment. Having said that 
about three different ways, I say it again because somehow it 
isn't getting through. There are people that are still having 
meetings in Washington and a suggestion by a spokesperson for 
one group who shall remain nameless that said as soon as the 
House passes that bill, we will be over on the Senate like a 
ton of bricks.
    Well, welcome to the party, because we are not going to be 
moved by a sudden urge of persons who suddenly catch religion 
on a bill that, in my judgment, has a lot of work still to do 
simply to pick up the pieces and to work out the fiscal 
responsibility of it.
    Madam Secretary, I thank you again for your indulgence in 
allowing me to make these remarks in my time.
    I look forward to recognize now Senator Fitzgerald, of 
Illinois.
    Senator Fitzgerald. Well, thank you, Senator Lugar.
    Welcome, Madam Secretary. Your report is very good that you 
put together. It would have been even more helpful if you could 
have proposed how we solve this big conundrum and draft a farm 
policy that really works and doesn't cause distortions.
    I want to ask a couple of things. I am sure you have seen 
all the media reports about large Fortune 500 corporations or 
NBA stars who have been receiving farm subsidies from Joe 
Taxpayer. I wondered if there is anything we might be able to 
do in the Farm bill to address that situation.
    Secretary Veneman. Well, that obviously what we do at USDA 
is carry out the law, as it is currently on the books, and that 
is what we have done. People who own land obviously get some of 
the benefits of the programs if they have some of the base 
acres, as laid out in the law.
    That one of the things that some of those articles also 
indicate is a point that we make in that book, and that is that 
today there is not just this uniform farmer in the countryside, 
that there is a wide diversity in the types of farms, and that 
probably farm policy can't be really looked at as a one-size-
fits-all solution.
    One of the reasons in our book that we talk about a broader 
base of programs and we talk about a more holistic approach, 
that we recognize the importance of rural development programs, 
of conservation programs, of pest, disease, food safety and 
research programs, and what we call infrastructure, is all of 
these things help farmers in rural America. They probably help 
to some extent a broader base because many farmers and much of 
the production is ineligible for the subsidy programs that we 
spent a lot of time talking about today, only about 20 percent.
    It is important as we move forward to really again look at 
this more holistic approach that we are talking about, and that 
certainly the principles that the chairman and Senator Lugar 
put out yesterday also recognize that there is a broader 
approach to be looked at in terms of the discussion of how we 
move ahead in farm policy.
    Senator Fitzgerald. Your report points out the conundrum 
that we have that some farmers at the lower end who are 
inefficient and very small, we can probably never pay them 
enough to help them earn a good income. If we are paying the 
same support across the board, then if we were trying to help 
the inefficient, small farmer earn a good living, we would be 
over-compensating the real large, efficient producers so that 
they would be stimulated to over-produce even more.
    Do you think we should consider moving toward a bifurcated 
program in some way? Some could actually read your report as 
suggesting we shouldn't be making eligible the small, 
inefficient producers. I don't think that is what you intend, 
but some could read the report that way. Do you think we should 
bifurcate our treatment?
    Secretary Veneman. Again, when you talk about bifurcating, 
it talks about just farm programs, and what we are trying to do 
in our report, and what the chairman and Senator Lugar's 
principles talk about is the diversity of the farm sector today 
and the diversity of programs that help various parts of that 
diverse farm sector.
    Support programs that help program commodities is one 
aspect. Certainly, trade is something that helps everyone. Pest 
and disease prevention and research programs and food safety 
programs help the whole spectrum of the food chain. Rural 
development programs help rural communities which support our 
agriculture, and yet our rural communities also support many of 
our farmers.
    There are really only about 150,000 farmers that get the 
bulk of their income, or maybe 175,000 or so that get the bulk 
of their income from farming. Much of the farm household income 
today is supported from other off-farm jobs in rural 
communities. The strength of rural communities is extremely 
important.
    That it is also important to look at the number of programs 
that we have that help farmers get more value out of the 
marketplace. Those are important programs, value-added types of 
things and opportunities that we have through some of our rural 
development programs, for example, where we assist farmers.
    We have certainly utilized a lot of those programs for 
ethanol production, which I know is an interest of yours. 
Again, that points to the importance of looking for new and 
alternative uses for agriculture. The important role that 
agriculture can play, for example, in being a renewable source 
of energy is an important part of the conversation that we need 
to have, whether it is ethanol or biodiesel or biomass for 
energy production, or wind power that we can use in conjunction 
with ag lands. All of these are issues that we need to discuss 
in a broader debate about policy today.
    Senator Fitzgerald. We are really on a treadmill on our 
overall farm policy because what farmers would like most, I 
suppose, is just good prices for their crops. All of our 
programs, no doubt, keep us producing a lot and then over-
production further depresses the prices, and if we could find 
some way off that treadmill, we would be a whole lot better 
off.
    I wanted to turn to another subject. Your report states 
that, ``Our domestic and export policy must support our 
existing international obligations.'' With regard to U.S. sugar 
policy, can you explain our commitments under NAFTA and what 
effect this might have on our high-fructose corn sweetener 
dispute that we are now having with Mexico?
    Secretary Veneman. Well, I believe the high-fructose corn 
syrup dispute is in the process of dispute settlement at this 
point. There is a long history of this whole sugar issue. 
Obviously, during NAFTA, one of the things that was decided was 
that they would try to have greater access for sugar.
    There is a dispute about what is allowable in terms of 
coming in from Mexico. That is still being debated, the 
validity of a side letter, and so forth, and then there is the 
issue of corn sweetener going into Mexico. All of these are 
very contentious. Ambassador Zelleck, as well as people from 
our staff, have been working very hard to try to sort out some 
of the issues pertaining to sugar.
    We had a discussion earlier on about the stuffed molasses. 
That comes into the equation of the North American sugar market 
and what is going on with that as well, but it is very 
complicated at this point. We are in the process of trying to 
negotiate some agreements with regard to all of this, but at 
this point it still is not resolved.
    Senator Fitzgerald. Does the administration have a position 
on the overall sugar program?
    Secretary Veneman. Well, no, we haven't taken a specific 
position, although we have set forward principles that talk 
about market orientation of programs. The sugar program, is one 
that needs to be examined primarily because we have taken sugar 
over the last--well, last year, before I was here, we actually 
took sugar into inventory. We had to do set-asides on sugar. I 
would certainly say that that is a program that needs to be 
examined and one that needs to be made more workable so that we 
don't run into those difficulties.
    Senator Fitzgerald. How about dairy? Forgive me if someone 
has asked this question. Does the administration favor or 
oppose the dairy compact, which I guess is going to be an issue 
still that we will have to confront this year? We have had that 
battle before you were Secretary and we may be having that 
battle for many years to come, but do you have a position on 
that? Do you support the continuance? I am opposed to dairy 
compacts, but I would be interested to find out the 
administration position.
    Secretary Veneman. The administration has not taken a 
position on dairy compacts. I mean, obviously, again we have 
principles laid out that talk about market orientation, and I 
would simply say that dairy compacts ought to be examined in 
that light.
    I will say again, and I said it the last time I appeared 
before this committee at my confirmation hearing when we talked 
more about dairy policy--as I said at that time, and I continue 
to believe, dairy is one of the most difficult issues that we 
have to deal with in agriculture. It is very regional. We 
produce dairy in almost every State.
    Virtually everybody has a different idea about how we ought 
to deal with dairy and dairy policy. I have said many times 
that I would love to see the processing industry come together 
with the producers and come up with a dairy policy that 
everybody can agree to. Now, whether or not that will ever 
happen is yet to be seen. I haven't seen a lot of movement in 
that regard. Again, dairy is a very difficult issue, but I can 
only say that we would like to look at all of our farm 
programs, be they the commodity programs or dairy or sugar, and 
move in a more market-oriented direction.
    Senator Fitzgerald. I would encourage you to take a firm 
position on that. President Bush came out against the dairy 
compacts explicitly in 1999 when he was campaigning in Vermont, 
and this is going to be one issue where we would be best served 
by the administration taking a firm stance.
    The Senate is very closely divided historically on this 
issue and your weighing in would be appropriate because I do 
think that with the precedent we have with the New England 
Dairy Compact, either our whole country is going to go toward 
these compacts or we are going to go away from these interstate 
compacts.
    With that, I want to thank you for being here. Just one 
final question on a real practical matter. Maybe two years ago 
I and Congressman LaHood, from Peoria, Illinois, passed a bill 
called the Freedom to E-File bill which would require the USDA 
to develop a system for farmers to access and file their USDA 
paperwork over the Internet.
    I was just wondering if you might be able to update the 
committee on your implementation of the legislation, and I am 
hoping you will be able to meet the June 2002 deadline for 
implementation. In our research we found that farmers were 
highly computer-literate and many farmers would love to have 
the opportunity to file their paperwork over the Internet, and 
in the long run it could really save both the farmers and the 
Government some money.
    Secretary Veneman. Senator, I appreciate you asking me that 
question because it gives me the opportunity to talk about the 
last chapter of our principles book which I haven't had the 
opportunity to talk about today, and that is a chapter that 
really says we want to be able to integrate our programs and 
make sure they are efficiently administered, and that would be 
part of it.
    Obviously, one of the things that we can do is better get 
our data bases into a computerized environment that is 
connected. We have an initiative for a common computing 
environment that would put our NRCS programs, our Farm Service 
Agency and our Risk Management Agency programs together in 
common data bases. We think that is extremely important, and 
part of that is to bring the whole concept of e-filing and 
allowing our customers to do business with us over the 
Internet, as so many businesses are doing today.
    In addition, we have a project ongoing to look at how we 
integrate our maps for the agencies as well. We have maps in 
the Farm Service Agency, we have NRCS maps, we have RMA maps of 
farms, and those should be consistent and integrated so that 
they can be accessed easily by both farmers for making farm 
decisions, as well as for program administrators. We feel very 
strongly about program administration and how we can take steps 
to make programs more effectively administered in our 
Department.
    Senator Fitzgerald. Thank you.
    The Chairman. Thank you, Senator Fitzgerald. I might just 
say that the whole issue of the compact really is not even in 
our jurisdiction. That comes under the Judiciary Committee, so 
it is not really ours to deal with. It is up to the Judiciary 
Committee. No committee has ever dealt with it. It just came on 
the Senate floor several years ago.
    Senator Fitzgerald. It is normally a rider on an 
appropriations bill, isn't it?
    The Chairman. Yes.
    Senator Fitzgerald. Yes.
    The Chairman. t has never been dealt with on the committee 
level, but this is not the proper jurisdiction for the compact 
itself. As you know, the Northeast Compact expires at the end 
of this month. Again, it is not our jurisdiction to do one 
thing or another about it. That is the Judiciary Committee. If 
they want to do something, they will have to do something about 
it.
    Now, overall dairy policy as it relates to the Farm bill, 
yes, then we can set up certain structures. If we want, and we 
can deal with various kinds of structures in the Farm bill. As 
the Secretary said, this is so diverse, I don't know. I mean, 
dairy policy is going to be something to grapple with, I can 
tell you that.
    Madam Secretary, you have been very kind and very patient. 
I just have two rather specific types of questions in closing 
and then we want to get on to the nominees.
    As a clarification on conservation, I want to ask this 
question specifically to get a clarification to make sure that 
I clearly understand this. Pertaining to the question I asked 
earlier about green box, a conservation incentive payment 
program where the payment is not directly based on costs may 
qualify as green box under the WTO.
    Do you agree with that?
    Secretary Veneman. Yes.
    The Chairman. I appreciate that. I just wanted to get that 
clear.
    Secretary Veneman. I know that you are looking at some 
specific programs, and we stand ready to work to look at any of 
these programs with you and try to determine how they would fit 
with our WTO commitments or any other program that is designed. 
We appreciate the fact that the committee is looking at where 
these programs would fit within our existing trade obligations 
because we do feel that that is an important part of this 
discussion.
    The Chairman. As we are looking at it, at least in terms of 
what I have been promoting anyway in terms of conservation and 
working lands, it may not be directly associated with the exact 
costs. It may have some other things in there that for which we 
may want to give incentives. For example, and I just wanted to 
clarify that that still may qualify as green box. I appreciate 
that.
    Second, there have been various questions asked about the 
House bill. If the House does indeed take up its bill next 
week, we need to know the Administration's position. If you are 
not prepared to state that today, will you, representing the 
Administration, be prepared to state the Administration's 
position on the House bill prior to the House consideration of 
the bill?
    Secretary Veneman. Senator, my understanding is that if the 
House bill is taken up, there will be the standard statement of 
administration policy, or SAP, as it is normally referred to, 
which is normally issued by OMB.
    The Chairman. That will be prior to the House taking up the 
bill?
    Secretary Veneman. My understanding is that that would be 
the case.
    The Chairman. I appreciate that.
    Last, just a little bit of soapbox if I might, and I know 
Senator Wellstone wants to ask one last question. On the trade 
promotion authority, I have in the past supported all of the 
so-called fast tracks and things like that, but quite frankly I 
am having some reservations in terms of this.
    As I have looked into what is called fast track, or now 
trade promotion authority, I just want to comment on something 
you might have said, that we need this to have a seat at the 
table in negotiations. It is my understanding of the laws that 
are now existing that any Administration under the 
constitutional framework of our Government has the power to 
negotiate any treaty with any country. They do not need our 
prior approval. They don't need us to give them any kind of 
authority.
    This Administration can go and negotiate any treaty that 
they want, trade or otherwise. The only constitutional mandate 
is that the Senate advises and consents. That means that any 
treaty struck by any administration must come to the Senate for 
its approval. That means that we, representing our constituents 
and the country, then can take a look at it and can voice and 
perhaps even vote the concerns of our constituents.
    Fast track, or trade promotion authority, is the Senate 
saying we are giving up that constitutional prerogative of 
ours; we are giving that up. We are saying to the 
Administration you can negotiate, but then when it comes here 
we cannot change it, we cannot amend it. All we can do is vote 
up or down on it, so we have given up the advisement part of 
the advise and consent. We can consent or not consent, but we 
can't advise. We do have a seat at the table, we do have a seat 
at the table, and the administration can proceed on that basis.
    However, I am beginning to think that as we continue down 
this road, that we as a Senate need to ensure that we keep that 
``advise'' part of the ``advise and consent,'' and that we be 
partners in these kinds of negotiations.
    I would just repeat again, regarding trade, what Senator 
Roberts said, and he said it here at a committee hearing back 
in July or June when he made the statement that maybe we have 
listened to the siren song of trade long enough.
    As I have watched this over the years it has always been an 
accepted fact or accepted belief that if we cut down our 
production, other countries will promote their production; they 
will increase their production. That is true.
    It is also true that if we increase our production, they 
increase their production. I have the data going back 20-some 
years to show that no matter what we do, Brazil is going to 
produce more, China is going to produce more, and Argentina is 
going to produce more. It makes no difference, and there is 
plenty of data to show that. Countries are going to do what 
they think is in their own best interest, regardless of what we 
do.
    Last year, When I was in China traveling around 
agricultural areas, seeing mile after mile after mile of corn 
and beans and sorghum--I remember when Freedom to Farm was 
passed China was going to be one of our big markets for our 
grain. Last year, China exported corn. They not only fed a 
billion people, and they are pretty well fed, but they exported 
corn. They may have exported oilseeds and some soybeans, too. I 
am not certain about that.
    Then I look at the land over there and there is all this 
land and here are these farmers out there farming it. Guess 
what their input costs are? Almost nothing. The land is all 
owned by the government. They don't have to buy land. A lot of 
the machinery is owned by the government, a lot of the 
marketing is done by the government, and they just work the 
land.
    I don't like that system at all, but you have to face 
reality. That is what it is, and to put my corn farmer in Iowa 
who has to buy land, pay interest rates, pay high prices for 
equipment, and the input costs that Senator Lincoln talked 
about--to compete against that kind of a system, you are asking 
my farmer to compete against the Chinese government. It can't 
happen.
    Trade, yes, I am all for trade. We have to promote trade 
and do as much as we can on trade, and we ought to be getting 
into more value-added trade, not just the bulk commodities. We 
have to be thinking about what can we do to get into that 
value-added market. That is where we are good. We are good at 
that and we can do it better than anybody else in the world in 
terms of taking commodities and making them into something very 
valuable, something desirable. Whether it is how we cut it, 
chop it, dice it, or how we package and process it, we can do 
it better than anyone else. Those are the kinds of markets we 
ought to be looking at abroad, not just the bulk commodities.
    I would also say that as we look ahead, biotechnology is 
coming and I have been very supportive of it. What that means 
is that in a lot of these areas of the world which we thought 
would be our markets in the future because they can't grow 
anything, they are now going to be able to grow more of their 
grains, feed and food grains, on arid lands. Biotechnology is 
doing it; it is going to increase their production. I don't 
know that they are going to be that big of a market for us. 
They will be in terms of some of the biotechnology, but in 
terms of bulk commodities I am not so certain.
    Again, where do I come back? I come back where we do agree, 
and that is we have to have a broader look at how we are going 
to support farmers in rural America. Much broader than what we 
have done in the past. That is where we agree. There may be 
some little things on which we may disagree, but in that 
contextual framework we do agree.
    Two other things. Again, because of our system, we have to 
think about how are we going to enable younger farmers, younger 
people, to get into agriculture in this country. The average 
age of farmers now--I don't know--it is 50-something; at least 
out in my area it is. That is probably true nationwide.
    It is almost impossible for a young person to get into 
agriculture, unless you inherit it. There is no other way, or 
you just work for someone. To own land, to actually invest in 
it, buildup equity over a lifetime and have your own land and 
your own farm, is just literally impossible to do unless you 
inherit it.
    There has got to be some way that we can structure this for 
young people who are smart, who have been to our ag schools--
they know how to produce, they know how to be good 
conservationists--to be able to buy land and buildup their 
equity over the years. That is one of the most perplexing 
things that we have facing us right now, how we break that down 
and how we provide for that kind of support for young and 
beginning farmers?
    Last, the question I keep asking all the time, and it kind 
of gets back to what you said in your book here, in your report 
last week: should we as a Nation continue to support every 
bushel, bale and pound that is produced in this country? If we 
should, I want to know the arguments for it.
    Should we continue to support every bushel, bale and pound 
produced? If so, give me the arguments. I would like to see 
them. If not, then perhaps we need a different approach as to 
how we are going to support agriculture.
    That is my soapbox and if you have some response--I know 
Senator Wellstone had a question, but if you have a response, 
we would be glad to hear it.
    Secretary Veneman. Well, you said a lot, so I will try to 
be brief. Let me start with the whole issue of trade promotion 
authority and why it is important, and particularly about the 
advise and consent.
    First of all, this is a trade agreement and they have been 
treated a little bit differently than treaties, because 
treaties are only approved by the Senate and trade agreements 
are approved by both Houses.
    Trade promotion authority, or traditionally fast track, 
what it has done is given the negotiators--we talk about trade 
negotiating authority. It is actually giving the negotiators 
the ability to negotiate agreements and bring them back and be, 
as you say, voted on up or down.
    Now, a couple of things in that regard. One is that it is 
anticipated with trade promotion authority that this would done 
with a tremendous amount of advice from the Congress. We have 
traditionally had a lot of advice from the Congress in 
negotiating trade agreements. I know that this administration 
feels very strongly about the importance of getting advice from 
Congress as we go forward with negotiating trade agreements. I 
know that Ambassador Zelleck feels strongly in that regard, 
too, and that in granting trade promotion authority we would 
expect to work very closely with the Congress as we proceeded 
with negotiations.
    What it does is it gives us the ability to have credibility 
with our trading partners that if we negotiate something, it is 
going to stick. It is either going to go away completely or it 
is going to stick, and that is the critical issue, is the 
ability to have the credibility with our trading partners.
    I talked a little bit earlier about the fact that I went to 
Uruguay earlier this month and went to the Cairns Group. I 
mean, we meet with people from other countries all the time 
about trade issues and they are all asking, are you going to 
get trade promotion authority? They are looking at that as 
something that will give us the ability to take a leadership 
role in the negotiations, which we should.
    I would certainly pledge to you on behalf of the 
administration that any trade agreements that we work on will 
be done with a lot of consultation with the Congress, both the 
House and the Senate.
    Let me talk for a minute about the value-added trade issue 
because I couldn't agree with you more, but it is happening. 
There is a chart on page 40 of our book that shows, since 1990, 
how the share of value-added trade has increased. About 60 
percent of our trade now is in high-value--meats, processed 
products, fruits and vegetables. That is the trend, and it 
continues.
    When you export pork from Iowa, you are also getting 
benefit, though, from the bulk because you are exporting pork 
and corn or soybeans. It is important that we recognize that 
when we export high-value, we not only get the benefit of that 
export, but we get benefit to agriculture for what is going 
into that higher-value product. I just wanted to point out that 
that is a trend. I agree with you on that, but that is 
extremely important that we focus on the higher-value products, 
not forgetting our bulk, of course.
    On China, just a word. That it is important to understand 
China is a big customer, particularly for oilseeds this year. 
We have seen tremendous increases in their oilseed imports, and 
we have negotiated a very good agriculture access agreement as 
part of the China WTO accession--I mean we, the U.S. 
Government; it was done before we were here. One of the next 
steps was taken last week in terms of getting China into the 
WTO, and hopefully that will happen soon because we have a good 
access agreement for many agricultural commodities for China 
and the WTO.
    Just one word about younger people in agriculture. I agree 
with you that it is difficult today for some younger people to 
get into agriculture in terms of farming and owning land. One 
of the interesting things that I find when I talk to deans of 
agriculture schools if how many young people are now going into 
agriculture.
    It is fascinating because one of the things they cite is 
the high-tech nature of agriculture, the biotechnology, the new 
products, the nutrition aspect, the intersection of those, and 
the fact that agriculture is offering so much promise now for 
young people in terms of a career and there is a lot of 
excitement about food and agriculture as a career.
    Maybe it is hard, as you say, to get money to get land, but 
there are so many exciting career opportunities that people are 
finding in the food and agriculture system today that is 
something we ought to recognize, that young people are coming 
back to the ag schools in new and different ways, ways to 
integrate technology and business into the function of the 
production and the food system. That is important as well.
    Finally, that I just want to say that another piece of all 
of that and getting young people involved as well is the 
importance of things like research we have talked about today, 
and the whole infrastructure issue and the importance of how 
that supports all of our food system here, whether it is pest 
and disease prevention, food safety, and all the research that 
supports that.
    As we go forward, I do hope we can continue to talk about 
this broader approach and how all of these things will help, 
and do help agriculture, and need to be updated and integrated 
into the system we have today.
    The Chairman. Thank you, Madam Secretary. I know Senator 
Wellstone had one last question.
    Senator Wellstone. Thank you, Mr. Chairman, and I 
understand that Senator Lugar asked the question earlier about 
what kind of money we have to work with, so I won't go over 
that ground.
    My apologies. I mentioned to Senator Harkin earlier that at 
the same time the HELP Committee had a hearing on September 11 
and some of the post-traumatic stress syndrome needs and 
support of children in the mental health area, which is an area 
I work in. I apologize that I had to step out.
    I will just do this very briefly because you have been here 
a long time. There is a quote from your report that captures my 
imagination and goes back to my earlier comments about 
competition: ``While the structural change in agriculture 
clearly is advantageous for some, it also prompts concerns 
about competition, market access and the use of market power by 
some participants, to the disadvantage of others. Moreover, 
reduced competition could limit society's gain from structural 
change by stifling innovation or tilting the market results in 
favor of those that have the greatest market power.''
    This is on page 21 of the report. It is an excellent 
summary, and as any number of us have said, we really think 
that in the countryside there is quite a bit of unity about the 
need to deal with the problem of concentration. This is the 
part of the Farm bill that I certainly want to work on, so I 
wanted to ask you kind of how the administration is going to 
respond to the problem of concentration, reduced competition, 
the market power of large agribusinesses, and what your 
priorities are going to be in this area.
    Secretary Veneman. Well, one of the things that we talk 
about in this book is, again, the issue of getting bigger is 
happening in certain parts of the whole food system, whether it 
is some of the farms that are getting bigger or more 
concentration in terms of the processing or even the retailing 
side, as was mentioned earlier in the hearing.
    Let me just say that we have Packers and Stockyards that is 
very involved in concentration issues, as well as we work 
closely with the Justice Department to see whether or not there 
are competitive issues with regard to mergers and acquisitions 
and that kind of thing. The Department plays a very active role 
in that regard.
    At the same time, we need to recognize that there are 
programs that give farmers some choices. We talk a lot about 
the importance of giving farmers opportunities in the value-
added area, whether it is the ability to come together in a 
cooperative structure or other business with the help of some 
of the programs that we have.
    We have seen a lot of success in this area. We have the 
Dakota Past Growers up in North Dakota that has become the 
third largest pasta producer. There is a beef cooperative in 
30-something States that has been very active. We have seen a 
number of business entities be formed to really give the 
producers the opportunity to get value out of the food system 
in ways that they feel helpless to do otherwise.
    That we develop new products through biotechnology, giving 
producers the opportunity to find value products that they can 
produce and get more value, all of these are opportunities, 
that give people the ability to take a road other than maybe 
the larger players, and that is one of the things that we can 
help and a assist in doing.
    Senator Wellstone. To be honest about it, when you mention 
Packers and Stockyards, I don't really think that family 
farmers in Minnesota or around the country believe that they 
have gotten much help from Packers and Stockyards or that much 
help from the Justice Department.
    I understand the kind of niches, but what I want to know is 
whether or not you are willing to take this on. We have all 
these mergers and acquisitions on both the input side and the 
output side. I mean you have oligopolies, at best. I could 
recite the figures, but you know them. The farm-retail spread 
grows wider and wider, and what I am saying is I don't think 
there is a future for family farmers unless there is some real 
competition.
    Do you all have some plans to put some competition back 
into the food industry? Do you have some plans to challenge 
some of these acquisitions and mergers in terms of their impact 
not just on consumers, but on our independent producers? To say 
that we are active right now, to be honest I just think that 
that right now in the countryside has no credibility at all 
because people don't believe that.
    Secretary Veneman. Well, again, one of the things we need 
to promote is more value-added opportunities for farmers. We 
have programs that do that. We may want to look at additional 
opportunities to develop things that will allow farmers to 
participate in those kinds of arrangements and get more value 
out of the food system.
    Senator Wellstone. Will you challenge some of these 
acquisitions and mergers that lead to more and more 
concentration? Are you willing to look at their impact on 
producers and have Packers and Stockyards be more active?
    Secretary Veneman. Again, the Packers and Stockyards 
Administration has been active. We have been active with the 
Justice Department over the years, or at least the Department 
has. Again, it is a question of evidence. I mean, these are 
very legalistic kinds of investigations, and certainly we have 
cooperated in the investigations in trying to produce evidence 
in the various investigations into these mergers.
    Again, it falls within what the law requires today and we 
work very closely with Justice. I believe Justice has an ag 
person over there. In addition, we have had people at the 
Justice Department, making sure that they understand the 
structure of the agriculture industry, to make sure that the 
proper things are taken into account, and we will continue to 
do that.
    Senator Wellstone. I will finish on this. Madam Secretary, 
I would love to later on--I don't want to take any more time--
talk to you about the food stamp program. I touched on that in 
my opening comments, and you could play such a positive role.
    You talked about we are operating within this framework. 
Are there some changes in law that we need to make that would 
enable you to do a better job?
    By the way, I am being scrupulously bipartisan here. I 
don't think we have done much in past administrations on this 
question, because the mergers and acquisitions go on with a 
vengeance. If there are changes that we need to make that could 
give you more authority to do the job you need to do to give 
our independent producers a chance to compete, that is really 
my question.
    Secretary Veneman. Well, again, we have not put forward 
specific proposals in our book. We will certainly look at that 
issue to determine whether or not we need additional authority, 
and if people here have ideas for authorities that might be 
granted, we would be happy to analyze them and work with you.
    Senator Wellstone. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Wellstone.
    Well, Madam Secretary, you have been very kind and generous 
with your time and your expertise today. We do appreciate it. 
Again, I congratulate you on a fine publication on the policy 
book that you put out last week. We look forward to working 
with you as we develop our legislation here and we will wait to 
see what the House has to do, I guess.
    Secretary Veneman. Thank you, Mr. Chairman, and I just want 
to also thank you for your timely consideration of our 
nominees, whom I now know you will take up two of them.
    The Chairman. We are going to bring up two more right now. 
Senator Lugar and I have agreed that we have asked to discharge 
the committee. We are going to try to bring them up under 
unanimous consent this afternoon and get them through before we 
go home today.
    Secretary Veneman. Thank you very much. We really 
appreciate that. We are counting on these people to start work 
soon.
    The Chairman. Exactly. Well, thank you, Madam Secretary.
    Secretary Veneman. Thank you.
    The Chairman. Thank you, Dr. Penn, Dr. Collins.
    [Whereupon, at 12:45 p.m., the committee was adjourned.]
      
=======================================================================


                            A P P E N D I X

                           September 26, 2001



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

[GRAPHIC] [TIFF OMITTED] T5327.001

[GRAPHIC] [TIFF OMITTED] T5327.002

[GRAPHIC] [TIFF OMITTED] T5327.003

[GRAPHIC] [TIFF OMITTED] T5327.004

[GRAPHIC] [TIFF OMITTED] T5327.039

[GRAPHIC] [TIFF OMITTED] T5327.005

[GRAPHIC] [TIFF OMITTED] T5327.006

[GRAPHIC] [TIFF OMITTED] T5327.007

[GRAPHIC] [TIFF OMITTED] T5327.008

[GRAPHIC] [TIFF OMITTED] T5327.009

[GRAPHIC] [TIFF OMITTED] T5327.010

[GRAPHIC] [TIFF OMITTED] T5327.011

[GRAPHIC] [TIFF OMITTED] T5327.012

[GRAPHIC] [TIFF OMITTED] T5327.013

[GRAPHIC] [TIFF OMITTED] T5327.014

[GRAPHIC] [TIFF OMITTED] T5327.015

[GRAPHIC] [TIFF OMITTED] T5327.016

[GRAPHIC] [TIFF OMITTED] T5327.017

[GRAPHIC] [TIFF OMITTED] T5327.018

[GRAPHIC] [TIFF OMITTED] T5327.019

[GRAPHIC] [TIFF OMITTED] T5327.020

[GRAPHIC] [TIFF OMITTED] T5327.021

[GRAPHIC] [TIFF OMITTED] T5327.022

[GRAPHIC] [TIFF OMITTED] T5327.023

[GRAPHIC] [TIFF OMITTED] T5327.024

[GRAPHIC] [TIFF OMITTED] T5327.025

[GRAPHIC] [TIFF OMITTED] T5327.026

[GRAPHIC] [TIFF OMITTED] T5327.034

[GRAPHIC] [TIFF OMITTED] T5327.035

[GRAPHIC] [TIFF OMITTED] T5327.036

[GRAPHIC] [TIFF OMITTED] T5327.037

[GRAPHIC] [TIFF OMITTED] T5327.038

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


                   DOCUMENTS SUBMITTED FOR THE RECORD

                           September 26, 2001



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

[GRAPHIC] [TIFF OMITTED] T5327.027

[GRAPHIC] [TIFF OMITTED] T5327.028

[GRAPHIC] [TIFF OMITTED] T5327.029

[GRAPHIC] [TIFF OMITTED] T5327.030

[GRAPHIC] [TIFF OMITTED] T5327.031

[GRAPHIC] [TIFF OMITTED] T5327.032

[GRAPHIC] [TIFF OMITTED] T5327.033

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


                         QUESTIONS AND ANSWERS

                           September 26, 2001



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

[GRAPHIC] [TIFF OMITTED] T5327.040

[GRAPHIC] [TIFF OMITTED] T5327.041

[GRAPHIC] [TIFF OMITTED] T5327.042

[GRAPHIC] [TIFF OMITTED] T5327.043

