[Senate Hearing 107-884]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 107-884
 
                            FARM BILL ISSUES
=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION


                               __________

                            OCTOBER 27, 2001

                               __________

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


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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                       TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont            RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            JESSE HELMS, North Carolina
THOMAS A. DASCHLE, South Dakota      THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH McCONNELL, Kentucky
BLANCHE L. LINCOLN, Arkansas         PAT ROBERTS, Kansas
ZELL MILLER, Georgia                 PETER G. FITZGERALD, Illinois
DEBBIE A. STABENOW, Michigan         CRAIG THOMAS, Wyoming
BEN NELSON, Nebraska                 WAYNE ALLARD, Colorado
MARK DAYTON, Minnesota               TIM HUTCHINSON, Arkansas
PAUL DAVID WELLSTONE, Minnesota      MICHEAL D. CRAPO, Idaho

              Mark Halverson, Staff Director/Chief Counsel

            David L. Johnson, Chief Counsel for the Minority

                      Robert E. Sturm, Chief Clerk

              Keith Luse, Staff Director for the Minority

                                  (ii)








                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

Farm Bill Issues.................................................    01

                              ----------                              

                       Saturday, October 27, 2001
                    STATEMENTS PRESENTED BY SENATORS

Crapo, Hon. Mike, a U.S. Senator from Idaho......................    01
Otter, Hon. C.L. ``Butch'', a Representative in Congress from 
  Idaho..........................................................    03
                              ----------                              

                               WITNESSES
                                Panel I

Ball, Gary, Past President, National Potato Council..............    06
Little, Brad, Sheep Producer.....................................    09
Pline, Clinton C., Minor Crop Producer...........................    07
Takasugi, Pat, Director, Idaho State Department of Agriculture...    05

                                Panel II

Evans, Jim, Chairman, USA Dry Pea and Lentil Council.............    26
Hayes, Evan, Wheat Grower, on behalf of Duane Grant, President, 
  Idaho Grain Producers Association..............................    22
Kauffman, Clark, Chairman, Idaho Barley Commission...............    24
Meuleman, Perry, President, Idaho Sugarbeet Growers Association..    20

                               Panel III

Davis, Eric, Past President, Idaho Cattle Association, Current 
  Vice President.................................................    36
Vander Stelt, Dennis, United Dairymen of Idaho...................    34

                                Panel IV

Hopkins, Tim, Chairman, Idaho Chapter of the Nature Conservancy; 
  accompanied by Jeff Eisenberg, World Senior Policy Advisor, The 
  Nature Conservancy.............................................    49
Hubbard, Douglas, Idaho Ducks Unlimited..........................    51
Koester, Kevin, Director, Idaho Association of Soil and 
  Conservation Districts, Division Five..........................    47
                              ----------                              

                                APPENDIX

Prepared Statements:
    Otter, Hon. C. L. ``Butch''..................................    70
    Koester, Kevin...............................................    72
Document(s) Submitted for the Record:
    Anderson, Joe................................................    88
    Bedke, Bud...................................................    90
    Chambers, Bonnie.............................................   110
    Clugey, KC...................................................   106
    Esplin, Keith................................................   115
    Glanbia Foods, Thomas, Dave..................................   100
    Glover, Arnold...............................................   111
    Idaho Fish & Game, Rod Sando.................................    86
    Idaho Honey Industry Association.............................   112
    Juarez, Adelaita.............................................   107
    Kempthorne, Hon. Dirk........................................    98
    Merrill, Susan...............................................   105
    Northwest Federation of Community Organizations, Terri 
      Sterling...................................................   104
    Spears, Rose.................................................   109
    Travis, Hank.................................................   108
    ``When the well's dry, we know the worth of water'', William 
      Graves.....................................................   116



                            FARM BILL ISSUES

                              ----------                              


                       SATURDAY, OCTOBER 27, 2001

                                       U.S. Senate,
         Subcommittee on Forestry, Conservation, and Rural 
Revitalization, of the Committee on Agriculture, Nutrition 
                                              and Forestry,
                                                    Washington, DC.
    The subcommittee met, pursuant to Notice, at 9:22 a.m., in 
City Council Chambers, Boise City Hall, 150 North Capitol 
Boulevard, Boise, Idaho, Hon. Mike Crapo, [Chairman of the 
Subcommittee], presiding.
    Present: Senator Crapo.

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

    Senator Crapo. This hearing will come to order. This is a 
hearing of the Senate Agriculture Subcommittee on Forestry, 
Conservation, and Rural Revitalization. It's a formal hearing 
of the U.S. Senate Agriculture Committee being held today in 
Boise City Hall at the City Council Chambers. This is Saturday, 
October 27th.
    We are glad to welcome with us today from Idaho from the 
House of Representatives, Idaho's First District 
Representative, Representative Butch Otter.
    Mr. Otter. Good morning.
    Senator Crapo. Good to have you with us.
    Ladies and gentlemen, we're sorry for our late start. We 
were going to be under the gun time-wise anyway, but now we are 
even more so under the gun. Let me just lay out a few of the 
rules of the hearing and so forth we would like to follow, and 
then we'll get immediately into the testimony.
    As you may be aware, this is the first formal hearing of 
the Farm bill that the Agriculture Committee has held since the 
attacks on September 11th, and I think that there are two 
significant things that have happened that have made this 
hearing extremely timely. The first is that the terrorist 
attacks have literally changed the entire paradigm within which 
we are operating within the country, which is impacting 
virtually every aspect of our lives in the country; and our 
food and fiber policies, our domestic farm policies, our food 
stamp policies, and the like, are all very significantly 
impacted by the new circumstances that we face.
    Second, this hearing is also the first hearing that has 
been held since the House bill was evaluated by the White House 
and the White House indicated it did not support the approach 
the House took in its Farm Bill. This is the first opportunity 
since then and since Senator Lugar and others have been able to 
put out their proposals, and it's become evident that the 
administration and the Senate are probably going to be looking 
at some type of revision or other approach, although who knows 
just how much and if that will take place.
    This is the first time really for people to kind of comment 
on the dynamic that has developed since those things took 
place, and so we here in Idaho I think are very fortunate that 
just by the circumstances of the timing of this hearing that 
was authorized by the Chairman of the Committee, we have the 
first formal opportunity to weigh in with the Senate Committee 
on the development of the policy of the nation.
    I want to apologize that time today doesn't permit a more 
comprehensive hearing. We have I think nine titles in the Farm 
bill and we're only going to be covering formally a couple of 
them today, although all the witnesses can certainly discuss 
any aspect of the bill they would like to discuss.
    I want to state that we do encourage written statements. 
The record is going to be held open for 10 days following the 
hearing, and any written statements can be sent to my office at 
111 Russell Senate Office,well, maybe that wouldn't be a good 
address to send it to.
    [Laughter.]
    Senator Crapo. If you send it there, it's probably not 
going to get delivered. You better send it to my Boise office 
and I don't have the immediate address for that, but I can get 
that to you and it's easily available right here in the phone 
book. Those should be in within 10 days of the hearing if you 
have written statements to submit.
    I want to give an apology for the Governor of the state of 
Idaho, Governor Kempthorne. His schedule would not allow him to 
attend in person, but he is submitting testimony for the 
record.
    I also want to specifically point out there are a lot of 
people who are submitting testimony, but Joe Anderson in 
particular who's a canola grower from Potlatch has provided 
testimony, and his insight into the needs of Idaho's oilseed 
industry are going to be very helpful to us.
    As we craft the Farm Bill, I think it's very important for 
us to remember that it's about much more than just farming. 
It's about our national domestic food and fiber policy, and 
consumers are the ultimate beneficiaries of this legislation. I 
think there were a lot of unmet obligations that we intended to 
achieve with the FAIR Act with the 1996 Bill, things like tax 
relief and tax reform, and free and fair trade, and regulatory 
reform, and the like, which we still need to work on. Despite 
the criticism of Federal farm policy, Idaho is fortunate to 
have very friendly and devoted and effective USDA employees and 
those from the FSA and the NRCS, as well as our rural 
development officials.
    I'd like to also, finally, just to express appreciation for 
those who have traveled a long way to get here and taken their 
time out on a Saturday to help us develop this policy.
    In conclusion, I want to just say that one of the most 
common questions we're being asked right now is whether we will 
be able to finish the Farm bill this year. I don't know what 
your perspective in the House is, Butch, you may want to 
address that, but if the Senate is able to conclude its 
business by mid November, which is right now a target date that 
everyone is working on, I think it's going to be difficult for 
us to achieve the complete finalization of a farm bill in the 
Senate if a new approach is being worked out and then have that 
vetted with the House and have something come out of 
confidence. On the other hand, if there is a decided order for 
leadership that that has to happen, then of course we could 
stay in as long as it takes to get it done. Right now, the 
answer to that question is a bit up in the air, but I think, to 
be candid, we have our work cut out for us to achieve that 
objective. I think it would be good to be able to get a farm 
bill done this year, but I'm trying to be honest with you about 
what I see as the political dynamic that we're facing in the 
Nation right now.
    With that, let me turn to Representative Otter for any 
comment.

  STATEMENT OF HON. C.L. ``BUTCH'' OTTER, A REPRESENTATIVE IN 
                      CONGRESS FROM IDAHO

    Mr. Otter. Well, thank you very much, Mr. Chairman. I 
appreciate being a part of this hearing. Even though I don't 
serve on the Agriculture Committee of the House, there are a 
few things and I have a full statement that I would like to 
submit, without objection, for the record. I do want to 
associate myself with the Senator's remarks about not only the 
climate that has considerably changed in Washington, D.C.
    When I raised my hand and took the oath of office on 
January 3rd of this year, I was one of 45 new freshmen of 29 
Republicans and 16 Democrats, and we were the freshmen in the 
House, we were the freshmen class of the 107th Congress; but as 
of the events of September 11th, we now have 435 freshmen in 
the House, and the reason for that is because nobody has ever--
in fact, I don't even think Strom Thurmond has faced this, this 
environment that we have today.
    Let me say that the work of the House, the people's House, 
has continued to go on, and Mike Simpson has done a Hercules 
job. As you know, he does serve on the House Agriculture 
Committee and they did pass the House Resolution No. 2646, 
which is the Farm Security Act, providing for $73 and a half 
billion over the next 10 years, trying, if you will, to cover 
all the bases. That is the, I would say, the nucleus of the 
bill that is now being considered at least as part of the 
Senate's consideration.
    I've always believed that we've got the best farmers in 
Idaho, and my experience certainly around the world as 
representing the state but also representing one of the larger 
agribusiness companies in the state, I found it pretty easy to 
sell groceries around the world because of our ability not only 
to produce the best on the farm, but also to add the shelf life 
to preserve portability with our ability to produce our crops 
in this state.
    That is going to be my emphasis. We've got the Trade Bill 
that's coming up, 3005, H.R. 3005 for a trade promotion, and I 
really believe that's the answer that is to get us into the 
markets around the world, and that's going to be the place 
where I'm going to spend most of my time, trying to get us back 
into the negotiating rooms where we're actually negotiating the 
contracts and the trade agreements.
    Trade agreements in the last I can't remember how many 
years right now, there's been 128 of them and the United States 
has been part of two of them because we have not been in at 
that table, and I think giving the President, especially this 
president, this administration, the opportunity to sit at that 
table and to provide for the environment in which we're going 
to conduct fair trade is terribly important, so I'm going to 
work very hard to make sure that 3005 does pass and we do get 
our seat at the table, so that we can sell the groceries that 
we can produce here in this state.
    [The prepared statement of Congressman Otter can be found 
in the appendix on page 70.]
    Thank you very much again, Mr. Chairman, for letting me be 
part of this hearing.
    Senator Crapo. Well, thank you for making the effort to get 
here. I should have said at the outset as well that Senator 
Larry Craig and Representative Mike Simpson wanted to be here, 
but as you know, we all have very busy schedules, and they had 
prior commitments that they simply were unable to change in 
order to be here. They are, nevertheless, very much, every bit 
as much, interested in all of the development of these policies 
as Butch and I are, and will be very closely following the 
input that is received here today.
    Let me just make a couple of other comments about how we'd 
like to run the hearing and then we'll get right on with it.
    I believe all the witnesses have been told that you're 
allocated 5 minutes for your verbal testimony. My experience is 
that there are some people who can say everything they want to 
say in 5 minutes, but there's not very many. I'm willing to bet 
that most of you are going to get to the end of your 5 minutes 
before you're to the end of what you want to say, and because 
of that, we have to ask you to try to pay attention to the 
time. Your written testimony is going to be read. I've already 
read all of it that has been submitted and it will be 
thoroughly evaluated, so don't think that your oral testimony 
is the only shot you have on this. Arlen up here is going to 
show you some little cards.
    Does that little thing ding at the end of the 5-minutes?
    Mr. Lancaster. Yes.
    Senator Crapo. When you hear the little bell, try to finish 
your thought.
    Then also understand that one of the reasons that we want 
to try to keep you to your 5 minutes is that we are going to 
try to get in some dialog with you from up here, so that will 
give us the time to do that. You will have the opportunity as 
we ask questions to continue to make statements or points that 
you may not have had the opportunity to do in your formal 
presentation. I am going to be pretty tough on the clock, and 
if any of you tend to go over, I may rap the gavel and remind 
you that you need to just finish that thought and wrap up.
    With that, our first panel is Pat Takasugi, the director of 
the Idaho State Department of Agriculture; Gary Ball, a potato 
grower here in Idaho; Clinton Pline--they've got this down here 
as a minor crop producer. I always smile when I see that 
``minor crop,'' because they are major crops in my opinion, but 
I know what it means; and Brad Little, who's a wool grower. 
They have ``sheep producer.'' I don't know if you go by ``sheep 
producer'' or ``wool grower.''
    Mr. Little. It's up to you.
    Senator Crapo. Or Senator.
    Mr. Otter. Senator.
    Senator Crapo. But, gentlemen, let's go in that order, and, 
Pat, why don't you start.
    Mr. Takasugi. Thank you.

STATEMENT OF PAT TAKASUGI, DIRECTOR, IDAHO STATE DEPARTMENT OF 
                          AGRICULTURE

    Mr. Takasugi. Senator Crapo, Representative Otter, thanks 
for the opportunity today to present testimony and address the 
Farm bill issues. I believe I'm the example to be set on the 5-
minute curfew, and I'll be watching Arlen methodically.
    In my testimony today, I'd like to quickly cover three 
areas: And, one, the National Association of State Departments 
of Agriculture Farm Bill Proposals; two, the need for 
innovative programs to fit the changing agriculture markets; 
and the need to safeguard our national food supply, especially 
in light of the incidents of September 11th.
    In my capacity as Director, I represent Idaho at NASDA. I 
believe our Farm Bill, the recommendations that are decidedly 
out-of-the-box type of thinking, go a long ways to address the 
new markets that we face today.
    You have copies of the executive summary in my testimony in 
the written form, but let me point out a few key components:
    There includes a 90 percent Cost of Production Insurance 
Program that helps farmers make more decisions on the farm and 
assures them of having a true safety net.
    The Countercyclical Commodity Program that offers support 
during the lean times and addresses those times when farmers 
need it the most.
    We also propose an Agricultural Stewardship Block Grant 
that puts tools for conservation in the hands of people on the 
ground and addresses regional diversified needs at the State 
level.
    Trade and marketing programs we propose that levels the 
international playing field, something that we really don't 
have today.
    We also seek to assure food safety for all of America's 
security.
    An agriculture flexibility and partnership plan termed Ag-
Flex to improve on the efficiencies of the Federal resources.
    Yet the Farm bill alone will not sustain American 
agriculture. Tax policy reform would go a long way in giving 
farmers tools to better compete and to manage their own fiscal 
matters. Specifically, I recommend an expanded agricultural 
savings account that would also serve as a medical savings 
account and educational savings account and a retirement 
account.
    We also propose increased annual capital expensing; and 
investment tax credits for research, promotion of U.S. 
products, conservation, and other programs needed in 
agriculture today.
    Finally, and I say this not only as a farmer, but also as a 
consumer, that we must establish a national food policy that 
secures a safe food supply, encourages and funds environmental 
and conservation efforts, and promotes a sustainable, homegrown 
American food supply.
    In summary, we must have a new Farm Bill, new not only in 
letter, but also in concept, and agricultural policies that 
assist in promoting a fair and meaningful sustainability and 
viability of our American agriculture.
    Again, thank you for this opportunity.
    Senator Crapo. Well, I don't even think you went 5 minutes, 
Pat, but that's OK.
    Mr. Takasugi. You know that was new.
    Senator Crapo. Gary.

STATEMENT OF GARY BALL, PAST PRESIDENT, NATIONAL POTATO COUNCIL

    Mr. Ball. Thank you. My name is Gary Ball, and I'm a potato 
grower from Rexburg, Idaho, and I'm the past president of the 
National Potato Council, and I'd like to mention that I also 
serve as a representative to the National Potato Council at the 
North American Plant Protection Organization, and also I serve 
on the Agricultural Technical Advisory Committee. I mention 
this because of an item in my testimony that I want to give 
later on. And, Representative Otter, I appreciate your comments 
on trade, because trade is vital to the potato industry.
    First of all, I'd like to say that for potato growers, 
probably the single most important provision in the Farm bill 
pertains to the Flex Acres Program. The 1996 Farm bill gives 
producers of program crops limited flexibility with regard to 
plantings on flex or contract acres, but expressly prohibits 
the planting of any fruit or vegetable crop. Potatoes were 
specifically mentioned as a crop that could not be planted on 
flex acres. The National Potato Council was instrumental in 
getting this language inserted in the 1996 Farm Bill, and 
strongly supports its inclusion in the new Farm Bill.
    We are pleased that this language was included in the 
House-passed Farm Bill. Economic studies show that for every 1-
percent increase in acreage planted in potatoes, income is 
reduced by 7 percent. Any scheme which directly or indirectly 
results in subsidizing additional potato production is strongly 
opposed by the National Potato Council.
    The proposal by Senator Lugar appears to call for a 
phaseout of contract payments followed by full planting 
flexibility, and for a safety net, reliance on crop insurance 
policies. We have not studied the details of the Lugar proposal 
and without taking a position on the bill as a whole, we would 
be concerned over the availability of any revenue protection 
policies that also allow full planting flexibility. As you 
know, with the support of the National Potato Council, language 
was put in the Crop Insurance Reform Bill prohibiting the 
development of any revenue protection policies for potatoes. If 
a program crop grower could purchase a revenue protection 
policy with no restrictions and then be able to plant potatoes, 
we would still be faced with subsidized overproduction.
    The Market Access Program is a cost-sharing partnership 
between the Federal Government and private industry to promote 
U.S. farm exports. MAP has been particularly successful in 
helping high-value products like potatoes gain greater access 
and recognition in foreign markets. The MAP program is legal 
under the GATT, and the National Potato Council therefore 
strongly endorses the House-passed Farm Bill's annual 
authorization level for the MAP of $200 million.
    The National Potato Council also supports various food aid 
programs that are reauthorized in the House bill.
    The National Potato Council worked with the United Fresh 
Fruit and Vegetable Association which submitted a group of 
testimony to the House and the Senate, and these include 
emergency authority to combat invasive pests and diseases, 
surplus commodity purchases, technical assistance for specialty 
crops, environmental quality incentive programs, and country of 
origin labeling.
    With regard to the country of origin amendment, the 
National Potato Council strongly supports language in S. 280 
that applies to fresh produce, and urges this language be 
included in the Senate Farm Bill. The Consumer Right to Know 
Act of 2001, S. 280, would mandate point-of-purchase labeling 
for fruits, vegetables, and other fresh perishables. Food 
service establishments would be exempt. The bill grants USDA 
authority to coordinate enforcement with each state.
    In closing, one other item that I mentioned before is the 
Technical Assistance for Specialty Crops, and H.R. 2646 creates 
a fund of over $30 million to address nontariff trade barriers 
and related technical obstructions that hinder foreign market 
development and international market expansion efforts of U.S. 
specialty crop producers. The purpose of that is to provide 
direct assistance through public and private sector products to 
facilitate increased exports of U.S. specialty crops within the 
global marketplace. With the NAFTA coming to terms in January 1 
of 2003 with Mexico, we're already seeing the vital sanitary 
issues raised strongly; and with the meeting we just held in 
Canada 2 weeks ago with the North American Plant Protection 
Organization, it was really brought to the forefront that we 
are severely underfunded to deal with these problems as they 
arise, and if we're going to expand the foreign markets for our 
specialty crops, we're going to have to have funding in this 
area that we can deal with those vital sanitary issues as they 
come up.
    Thank you for your time, and appreciate the opportunity to 
testify today.
    Senator Crapo. Thank you very much, Gary. Appreciate that.
    Clinton.

       STATEMENT OF CLINTON C. PLINE, MINOR CROP PRODUCER

    Mr. Pline. Yes, Mr. Chairman, Senator Crapo, before I get 
started, I faxed over my testimony to Arlen last night. I 
happened to notice that I left out one of my four points, so 
the copy you have now is the updated version.
    Senator Crapo. Well, you're lucky we have 10 days.
    Mr. Pline. Everything you have up to that point has not 
changed, as I said, it's just that.
    Senator Crapo. All right. Thank you.
    Mr. Pline. You're welcome.
    Mr. Chairman, Representative Otter, I appreciate you 
bringing this hearing process out to the people here in Idaho. 
My biography, which is written out for you there in testimony, 
basically is that I was raised on a farm that I still farm 
today. We've been there over 41 years.
    You mention specialty crops. I raise quite a few of those. 
Primarily, concern would be hybrid carrot seed, hybrid onion 
seed, hybrid sweet corn seed, alfalfa seed, sugar beets, wheat, 
alfalfa, hay, we run a small dairy operation and small beef. 
Sometimes in the morning if I wake up confused, that's why: Too 
much going on.
    The four items I want to talk about just very briefly is, 
one, the separation and classification of specialty minor 
crops, seed crops included, from the traditional crops 
addressed in the past Farm Bills.
    The second one is support in the field of plant and animal 
genetics.
    Third item would be Senate support for the funding for a 
10-year USDA Farm Protection Plan, FPP, already approved by the 
House of Representatives.
    Then if I have a little time, talk about conservation 
measures in turn for subsidy.
    Whereas, both of you are fairly familiar with agriculture 
in Idaho, I don't need to get into too much discussion of what 
I have written here as how minor crops, and in particular where 
I raise seed crops--it's a whole different ball game from major 
crops. The analogy I like to draw particularly with seed crop 
is that I have to take that plant to a different stage of 
maturity, and it's often like how we find ourselves in our own 
health field where we get the more maintenance it takes.
    In the field of plant genetics, what I do with these seed 
crops, what I have produced, that seed, is genetics and that is 
tomorrow, and everything that we can do to propagate these new 
ideas into concepts puts us in a position of producing better-
quality, healthier, and safer food for the entire nation and 
parts of the world.
    In Farmland Protection Programs, and I want to read this 
part into the record with my testimony, I am including a letter 
from Richard Sims, State Conservationist for the State of Idaho 
NRCS addressed to Mr. Lynn Tominaga. Mr. Tominaga is Chairman 
of the Idaho Food Producers, which in a nutshell is an 
organization or organizations that represent different aspects 
of agriculture. Over the last several months, I have served as 
chairman of a committee looking into programs to help counties 
in our state deal with the rapid growth and urban sprawl that 
has been taken over in our prime ag land areas. As you are 
probably aware, this is a nationwide problem, and we intend to 
do what we can to resolve it.
    Earlier this October, Mr. Sims' letter apprised us of a 
proposal that is within the Farm bill coming from the House 
side that will provide funding under proper circumstances to 
create a Farmland Protection Program for states on the either 
state or even county level. I believe that we can put those 
resources to work. The tumbling economy we're seeing now is 
going to make it very difficult to implement on the state side, 
but it is recognized pretty much throughout the entire 
government bodies, be they local or national, that this urban 
sprawl thing is a major problem and we need to begin to work on 
it.
    In closing, on the conservation subsidies, the farm that I 
have grown up on over the course of my 41 years has seen lot of 
changes, and a lot of those have come about through 
conservation plans that we have participated in. Originally, I 
didn't think too much of those kind of programs, but over time 
I've seen what those programs have done for us, and they have 
been a benefit to either ourselves as our farming operation, 
the general public, and the environment, and I encourage 
Congress to, as a means of making farm programs more palatable 
for the general public, finding ways to tie those incentives 
for conservation I believe is a good proposition.
    Thank you.
    Senator Crapo. Thank you very much, Mr. Pline.
    Brad.

            STATEMENT OF BRAD LITTLE, SHEEP PRODUCER

    Mr. Little. Thank you, Mr. Chairman, Congressman Otter.
    These are very trying times for both the U.S. and the Idaho 
sheep industry. Myself, personally, after 110 years our family 
being in the sheep industry, I'm no longer a sheep producer. 
I've elected to sell out.
    In June, the market for sheep and lambs in Idaho was about 
90 cents, which was about break even. Today, the price is 
somewhere between 35 and 50 cents, if you can sell your lambs. 
I've got a lot of my lambs in Denver and I can't get them sold. 
They won't even kill them and they're too fat and they're just 
basically--I don't know if they're worth the freight. Yet in 
that same period of time, retail prices appear to be unchanged.
    What's happened? Well, one thing was the September 11th 
disaster. The lamb industry, as small as we are in the United 
States, we're very dependent upon the white-tablecloth 
industry, and with the loss of the tourism industry and the 
travel industry, the consumption of high-quality lamb has gone 
way down.
    The other thing which has been something that started in 
1996 was an enormous surge in imports. In June alone, imports 
were up 36 percent.
    Wool, one of our other commodities, ironically the 
commodity that my grandfather started producing 110 years ago, 
is now an expense. It's not worth even the cost of shearing.
    The other thing that's happening in the sheep industry with 
the 25 percent reduction we've had since 1996 in numbers is 
we're losing our infrastructure. Lamb processing companies, 
wool processing companies, we've lost 80 percent of our ability 
in the United States to process wool. I blame this precipitous 
fall on two things, neither one of them the Ag Committee has 
jurisdiction over, unfortunately, but I'm going talk about them 
anyway with your patience. One of them is the most important 
one to me, is exchange rate, and the other one is foreign 
subsidies and quotas.
    1996, 10 percent of our consumption was imported lamb. Now 
it's somewhere between 34 and 40 percent if we can get our 
hands on it. In that same period of time, lamb and sheep 
numbers are down 25 percent.
    Foreign protectionism. In the European Union, the European 
countries write a check for $2 billion a year to their sheep 
producers over there in price supports and subsidies. They have 
permanent quotas, so other lambs produced elsewhere in the 
world has to come to America because it can't go to Europe, and 
that exacerbates our problem.
    The most important thing is the exchange rate issue. In 
1980, the Australian dollar was $1.18. We didn't have any 
problems competing.
    1982 to 1996, it was 70 to 80 cents. We were at a 
disadvantage, but we could compete.
    Today, the Australian dollar is 50 cents, the New Zealand 
dollar is 40 cents. They have a two-to-one advantage over us. 
You can read their press. Those guys are making record profits. 
The farmers are making record profits, the exporters are making 
record profits, the processors are making record profits, and 
we're starving to death here in America.
    That problem exists for my other constituents in my other 
job: The timber industry that we've lost out of Central Idaho, 
the grain farmers.
    I think that if you could carry this message back to the 
House and Senate Banking Committee, that's where the action is, 
that's where we've got to do it.
    Why do we have this imbalance? There's two big 
beneficiaries of the strong dollar: One of them is the 
consumers that buy cheap imported food, electronic goods, and 
oil; and the other one is investors. The overnight Fed funds 
rate in Japan this week is one one-thousandth of 1 percent. If 
my bank loans your bank a million dollars for a year, you pay 
me $100. That's all it is. All that money is coming here, 
strengthening our dollar, and ruining the market for 
agricultural goods.
    That's all there is, Mr. Chairman, and Congressman Otter. 
If we don't address those two issues, we're dead in this 
country.
    Thank you.
    Senator Crapo. Thank you very much. We're going to give 
ourselves a 5-minute clock too, but then we might take rounds 
if we want to keep going. Let me start out, and first of all, 
I'll start with you, Pat.
    I note that you have been working on a cost-of-production 
insurance proposal. We've talked about that in the past and as 
you're probably aware, Senator Lugar has recently put out a 
whole farm insurance proposal to utilize in connection with 
phasing out our commodity programs.
    Could you just compare for me, if you know, any of the 
details of Senator Lugar's proposal? Could you tell me the 
difference between what you're talking about and what he's 
talking about?
    Mr. Takasugi. I think Senator Crapo, I believe his may be 
more in line with one of the pilots they have out there, the 
adjusted growth revenue, which is a whole farm policy. 
Understand that the cost of production is probably just one 
tool under the risk management tools available, and that what 
we're presenting is an option that provides that safety net. 
What he's providing I believe goes beyond safety net, and when 
you delve into revenue insurance, I think you run the risk of 
doing exactly what Gary Ball talked about in encouraging people 
to raise higher-revenue crops and then get compensated and then 
flood the market.
    I believe that cost of production at 90 percent where there 
is no advantage to raise a high-cost crop, you run the risk of 
losing 10 percent; and with our formula, if you're a new grower 
of a different crop, you run a higher risk in premium, and it 
discourages that very thing. That's probably the biggest thing.
    Senator Crapo. You moved right into the question that I was 
going to have, because it seemed to me like, as you have said, 
that if we are doing a whole farm insurance approach, if we 
were to move to that approach, that there would be a strong 
incentive for people to make the higher cost production crops.
    Explain to me a little bit the reasoning why you believe 
the cost of insurance production approach would not generate 
that tendency.
    Mr. Takasugi. Senator, for the same reasons: The premiums 
will go up. If you're a new potato producer, never raised 
potatoes before--we use actual production history in compiling 
the premium, and if you don't have actual production history, 
then we default to a different formula and your premium will be 
higher.
    And, two, you can establish the 5-year record. That won't 
change.
    It discourages people from jumping from, say, wheat into a 
higher-priced commodity like potatoes because of that very 
issue. We are very cognizant of that, and that's why cost of 
production provides a safety net from falling out the bottom 
and losing everything, but it doesn't encourage people to take 
advantage of the program, which we found out in other parts of 
the country. Some farmers tend to farm the programs instead of 
farm the crops.
    Senator Crapo. Before I move on to Gary, I want to kind of 
ask you some of the same questions from your perspective--but 
before I do that, Pat, what is your thought about the portion 
of Senator Lugar's proposal which phases out the commodity 
programs? I realize you're saying that the replacement he has 
is not something that you think is the best idea, but if a good 
replacement were achievable, do you think that the idea of 
moving to a different approach like he is suggesting is a good 
idea or a bad idea?
    Mr. Takasugi. Senator Crapo, I think, I believe, we're 
quickly running out of the rope that we have to enjoy 
unquestioned subsidies of agriculture products, and that's why 
in our proposal, the stewardship initiative and the block grant 
concept which I believe consumers can relate to in clean air, 
clean water, endangered species preservation, are a lot more 
sellable than to look at defending outright grants or 
subsidies. The proposal that we put forth is one that I believe 
is defensible, and affords producers an offset to their 
regulatory costs and compliance issues.
    Senator Crapo. And, Gary, I want to move to you before I 
run out of time with my first 5 minutes here. I recognize and 
appreciate the concern you've raised about flex acres, and if 
we move ahead with a perspective like the House does, I'm 
confident that the Senate will continue that language, 
protecting it.
    The question I have is do you agree with Pat's perception 
of the two different insurance approaches and the cost of 
production insurance would be the better approach to take if an 
insurance approach is taken?
    Mr. Ball. I would have to say that I really don't believe 
we agree. The 90 percent is a form of a subsidy, because you 
put a floor under it and a guy is going to guarantee he's at 
least going to get 90 percent back. I appreciate the position 
the Department of Agriculture has to try to cover a farm that 
has molded it due to crops, various crops, but we still think 
each crop should stands on its own.
    The crop insurance has done a pretty good job with that so 
far and we have to work our way through those, and that's why 
we do not oppose insurance for potatoes. I mean, you have your 
multiperil, I think you have a loss from hail or insurance or 
even quality and yield, those things are all available, but 
it's the revenue protection side which is just market 
distorted, and we oppose very strongly and we find that that 
really doesn't work probably in any of your perishable 
commodities.
    Senator Crapo. OK. Thank you. I just heard my time run out, 
so Representative Otter.
    Mr. Otter. Well, thank you once again, Mr. Chairman.
    Pat, in your earlier testimony and also in your written 
testimony that I've had a chance to at least review a little 
bit, you spoke to the conservation issue. In the House-passed 
bill, I think we dedicated $16 billion to the conservation side 
of the Farm bill out of the 73 billion; I think it was 16 
billion that we put into that. Is that going to be enough?
    Mr. Takasugi. Representative Otter, unfortunately, we 
assessed that the last two years we've been working on this 
proposal, and the closest figure we could come to the cost of 
compliance for producers would require, as we propose, an $8 
billion annual appropriation. No, what was appropriated in the 
House version we feel is not enough. The requirements that we 
have to comply with today and in the future with TMDLs and ESA 
issues has grown and will continue to grow and be an extreme 
burden on our producers, and we felt that that figure was more 
realistic in trying to offset the costs of production.
    Mr. Otter. Reason I ask that question, because there was a 
huge effort in the House to amend the conservation side of that 
and to add a lot more money back into the conservation. 
However, that money would have been lost forever in terms of 
agriculture pursuits, because that would have gone for 
government acquisition for wetlands use, and also marginal 
lands to be reviewed and returned back into habitat use. so 
that farm ground, quote/unquote, would have been lost forever, 
not only to the pursuit of the agriculture industry, but more 
importantly, as far as I was concerned, to the detriment of the 
local level of government, the counties and cities who actually 
need those tax bases for their continued revenue stream.
    We will be hearing, I'm quite confident, from certain 
elements that we passed up a chance to add to the conservation, 
and probably add up to $8 billion a year instead of what it 
came out to was a little less than $2 billion a year, but I 
just want to remind everybody here that that's where it would 
have gone, and that was a dangerous thing as far as I was 
concerned. Fortunately, we defeated the amendment.
    Mr. Takasugi. Representative Otter, we agree with you. We 
didn't agree, as an organization, to support that effort. Our 
proposal is a block grant to the states to be determined and 
dispensed at the state level according to the needs of the 
commodity organizations, so we would not, especially in Idaho, 
tie up that money in purchasing and laying aside land. We would 
be looking at compensating for conservation issues much like 
the dairymen had in the last 5 years, the beef cattle are going 
to be doing in the next five, and row crops soon to be. That 
was what we were looking at. We agree with you totally.
    Mr. Otter. Thank you.
    Gary and Clinton, my question goes to the kinds of crops 
that you were talking about and their relativity to House 
Resolution 3005, which is going to be the Trade Bill. One of 
the largest artificial trade barriers that I've seen around the 
world is the invention of the GMO, the genetically modified 
organism, and I can't think of anything in my short 59 years 
and the time that I spent farming and the time that I've spent 
in trade where we haven't improved. 1935, the average yield on 
potato crops in the state of Idaho was 6,500 weight to the 
acre. Now, certainly with nutrients and things like that and 
farm practices, we've been able to increase on that 
considerably, but the largest increase came when we genetically 
modified the plant itself.
    One of the attacks that we're going to have--one of the 
approaches, I should say, that we're going to have to take on 
the Farm bill and on farm trade, farm commodity trade, is going 
to be to answer this question on genetically modified 
organisms. Every time something comes up, and as you know, it 
recently did with corn, we have this tremendous question as to 
the health side of the food. We have the same question with the 
production side of the seed commodity, and Idaho produces, I 
know when I was involved it used to produce about 75 to 85 
percent of our total seed for vegetable crops in the United 
States. I was a big onion seed producer, and, you know, I could 
go out and count those umbels and know just about where my crop 
was going to come down. It's a 2-year crop, as you correctly 
spoke to.
    I think one of the things that we're going to----
    Is that my time up?
    Mr. Lancaster. You're up.
    Senator Crapo. You didn't let him answer the question.
    [Laughter.]
    Mr. Otter. Let me just ask you the question: How are we 
going to answer----
    The Senate clock is much shorter than the House.
    How are we going to answer the question on genetically 
modified, because that's going to be the key for us.
    Senator Crapo. We only give House members half the time.
    Mr. Ball. If I may, there was a little fanfare, a study 
released from the EU something like twoweeks ago, and it was a 
15-year, $64-million study on biotechnology, and in essence, 
what it said was the findings were that genetically modified 
foods were probably safer than natural. We were glad to see 
that. I think----
    Mr. Otter. What's that report?
    Excuse me, Mr. Chairman.
    What's that report?
    Mr. Ball. I forget the name. It came out of Brussels. I can 
get you a copy that I got out of the Post Register if you would 
like, I'd fax that to you.
    Mr. Otter. I would ask, without objection, that that report 
be made part of the official record.
    Senator Crapo. Without objection, please do.
    Mr. Otter. Thank you.
    Mr. Ball. I'll fax it to your office, Senator Crapo.
    Senator Crapo. Good.
    Mr. Ball. Along with that, I see a softening on the biotech 
approach, more and more need for it. The National Potato 
Council and I think agriculture in general support 
biotechnology that is done on the basis of sound science; that 
we do adequate studies by our Federal agencies to preserve the 
integrity of the food, that it is safe; and I think that we 
finally will break through this barrier and we will use 
biotechnologies as we should do, and the ground swell seems to 
be moving somewhat in that direction.
    Senator Crapo. Do you want Clinton to respond to that?
    Mr. Otter. Clinton, would you respond to that too from the 
seed side?
    Mr. Pline. From the seed side, Mr. Chairman, Representative 
Otter----
    I was going to ask earlier, What was your question? You ran 
out of time.
    I believe really it boils down to a public relations 
situation. One is we need to convince the public that we have 
been cross-pollinating plants for years, and that is a genetic 
modification.
    We had a tour early last month for legislators of the state 
of Idaho, and I told some of them, if your mother is Swedish 
and your father is Italian, you're genetically modified.
    The frustrating part too is that particularly to watch some 
of the news reports on the technology and the genetic 
management of medicines today and things and how beneficial 
they are, and the people just pick that right up, they think 
that's great. We start talking about food, they're afraid of 
it. Again, it's an education process.
    As Mr. Ball mentioned, I see a softening as well, and I 
think the time will come along. As you will see in my 
testimony, I pretty simply state we need the support of the 
government to help us make sure there are safe products that 
come out and to help promote them, help assure the public that 
here's what we're doing and it works, and here's why it's safe.
    Senator Crapo. Thank you.
    Mr. Otter. I yield back the balance of my time.
    Senator Crapo. Thank you.
    [Laughter.]
    Senator Crapo. Obviously, before I go on to some of my 
additional questions, I want to say that the GMO is something 
that the government has to take a strong stand on in our trade 
negotiations, and I believe our trade negotiators as well as 
the Department of Commerce are prepared to do that, which is 
kind of relevant to another question I want to get to in a 
minute; but before I get there, Clinton, you talked at the end 
of your testimony about the importance of trying to get away 
from this perspective of farming for subsidies and maybe 
utilizing conservation programs more effectively to achieve 
some of the same objectives of getting resources to the 
farmers, but also doing so in a way that is a win-win for the 
environment and for the public.
    As you may know, I've introduced for those very reasons, 
I've introduced a conservation title to the Ag Bill which I'm 
working very aggressively on.
    Senator Harkin has introduced, I don't know if he's 
actually introduced it yet, but he's working on another 
conservation title approach called the Conservation Security 
Act.
    My approach basically takes existing conservation programs 
like the CRP and EQIP and WRP and the many others--the 
grasslands program that Senator Craig has been working on--and 
reforms and strengthens them and gives a new revitalization to 
them.
    Senator Harkin's, as you may be aware, thinking-outside-
the-box new approach which says that we want to--essentially if 
I could describe it, and I probably won't describe it as well 
as he would--be flexible and allow conservation resources to go 
to producers, agricultural producers, for positive conservation 
improvements in their area, and it's much more specific to 
what's worked out in the area where the farmer is operating.
    Do you have an opinion on where we should head with regard 
to the approach we take with regard to conservation dollars in 
this Farm Bill?
    Mr. Pline. Yes. It depends on, of course, what part of the 
country you're in. I have a color photograph in here of a map 
of the United States and it shows kind of a pictorial water 
graph of where all the water is used in this country, and it's 
the volume of water used per capita, and I'll get that to you 
later. In our valley here where we use--or I should say 
Southern Idaho--where we use irrigation the way we do, there's 
a lot of ground to be made up in water conservation. You know, 
we have a lot of rolling hills and whatnot that can be 
irrigated, so there's soil conservation measures.
    There's going to need to be a lot of work put into air 
pollution. North Idaho is experiencing the wrath of the general 
public over that, and I have a great deal of sympathy for them. 
We don't see it as much here from agriculture, but as we have 
more people live in this valley and we create more pollution, 
we are all the cause of that.
    I appreciate hearing you say that--which is what I was 
thinking, that the technology, particularly in the last 10 
years, have made a lot of things achievable as far as 
conservation goals are economically feasible, and a mannerism 
of just coupling that technology and programs that are out 
there with subsidies, that's--you're on the right track.
    Senator Crapo. Thank you.
    Brad, you know, you indicated that the two issues you 
raised weren't the jurisdiction of this Committee, although I 
do sit on the Senate Banking Committee so I'm very aware of and 
concerned about your first and major issue, namely, the 
exchange rate. What I would like to ask you about that is, 
simply, how do we solve it? I know you said that the way to 
solve it is in the arena of international financing and so 
forth, and we do have international authority in the Banking 
Committee as well over a lot of economic policy, but as you 
know, getting a handle on dealing with the exchange rate 
problems is not only and clearly one of the most important 
things we must do, but one of the most difficult things, 
because every solution that we might come up with runs into 
very strong opposition right here in this country from the 
consumer-oriented interests or from the security- and 
investment-oriented interests, and so I just wanted to give you 
an opportunity to expand on that a little bit, tell me what we 
should do.
    Mr. Little. Well there's actually four--and I'm a farmer, 
not an international banker, but there's four things that can 
be done and have been done before, and that's fixed exchange 
rates, monetary unions to where currencies are blocked 
together, and if you're going to pursue the North American Free 
Trade Agreement, that would be an obvious one would be to fix 
those three exchanges so there's some consistency in it. You 
know, when you get the big imbalance that we have now, it just 
devastates an industry like we have in the sheep industry where 
we compete with New Zealand and Australia with this huge 
imbalance, it just wipes us out.
    Countercyclical adjustment, which I understand are a 
violation of the World Trade Organization, but that's part of 
the negotiation that Congressman Otter talked about, and 
temporary market intervention to crop up.
    Everybody in their wildest dream thought that at September 
11th, the value of the dollar would collapse, but what happened 
is all the other currencies and the variation didn't change. 
Those are the things, like I say. The 20, 30, $40 billion in 
the farm program doesn't make a hill of beans difference to the 
sheep industry.
    I know there's a deal on there for the wool thing. If we 
can't take care of the exchange rate, and it's just--you know, 
the Statesman issue on rural agriculture just broke my heart. 
They just said Rural America is dead. Well, the reason Rural 
America is dead, in my mind, is because of this exchange rate 
issue. Until we address that, frankly I don't think the rest of 
it is going to make a lot of difference.
    Senator Crapo. Well, frankly, as you know, for the last 
three years, I--and frankly through Don Dixon of my office 
primarily--have been holding county meetings and other farm 
meetings around the state of Idaho, and it is clear to me that 
you're right. I think there would be virtually unanimous 
agreement that the exchange rate problem is central to the 
issues that we are dealing with in agriculture right now. There 
are some other big ones too, but the exchange rate is right 
there at the top. It's also right there at the top of being the 
most difficult one to get the political momentum to solve. I 
appreciate that.
    Let me move on quickly to another issue, and the second 
issue you raised was subsidies and import quotas that are being 
provided by the governments who are basically, in my opinion, 
engaging in predatory trade conduct and the United States has 
to respond to that. We are working very pressingly. We 
recognize in Washington that another one of those extremely 
high, critically important issues is our international trade 
posture and what we're dealing with there, and I believe that 
we are at a point where, frankly, with the last administration 
we were getting there quite well with Charlene Barschesky and 
the trade negotiators, and in this administration we have 
pretty strong commitments from not only the trade 
representative's office but also from the Department of 
Commerce to stop using agriculture as a trading ship and to 
start getting much better policies toward getting parity on the 
subsidies and tariffs and other related issues.
    I have, to this point, not yet supported giving the 
President trade promotion authority, or fast track authority as 
we used to call it, for the very reason not that I don't 
support the idea and see the importance of giving the President 
that authority, but because I had not yet been confident that 
giving the President that authority--well, that the President, 
through his trade negotiators, would negotiate adequately for 
agriculture and for other critical issues in America. My point 
being that I'm not against trade negotiations, I'm not against 
trade agreements; what I'm against is bad trade negotiations 
and bad trade agreements that don't protect us adequately. I 
have told both administrations that at the point where I am 
convinced that they understand that well enough and they are 
willing to negotiate as tough as they need to negotiate and not 
concede issues, that I'm ready to then consider giving trade 
promotion authority.
    The question I have for you--and actually when we get time, 
I'd like to ask everyone on every panel today this question--is 
it time to give trade promotion authority to the President, or 
do we still need to have a little bit of proof as to whether 
the administration is going to negotiate tough enough? What are 
your thoughts, Brad.
    Mr. Little. Well, Mr. Chairman, I think bad trade authority 
is when you lose and the other guy wins, and so if you win, 
then it's all good trading. That's what trading is, is trading, 
so somebody wins and somebody loses.
    You know, don't get me wrong. I'm all for, like Congressman 
Otter--world trade is the absolute, quintessential--we have to 
have it. I mean, we wouldn't have our sons and daughters in 
Afghanistan if Afghanistan was a big trading partner with the 
rest of the world. Trade is essential. Somehow--and it's just 
tough. It's just sit down across the table. It's like me 
selling Congressman Otter potatoes: You just sit around and 
slug it out until you come up with a deal.
    That trade authority, you know, and particularly we minor 
crop people are very concerned about it because we look at New 
Zealand and Australia, there's 250 million sheep and goats in 
China, and there's four million sheep in the United States. 
Who's going to win? Who's going to win and lose at that point 
in time?
    The alternative of not having trade is worse, so I'll give 
you a real good answer like, I don't know.
    Senator Crapo. My time is up and I don't want to take 
another round because we are running busy, but can I--if you 
don't mind, Butch, let me just ask for a one-sentence answer 
from the rest of you. Do you think we should support trade 
authority and trade promotion authority now? Clinton.
    Mr. Pline. Well, kind of depends on who your president is.
    You mentioned agriculture being used as the bargaining 
chip. The more elements you put in as element chips, I think 
the better blend you're going to get. You're not going to see 
the catastrophic effect it has on the ag industry.
    Senator Crapo. Thank you. Gary.
    Mr. Ball. Senator, I agree with your statement 100 percent 
and the National Potato Council has been that way. We think 
trade agreements are good, however, you may not like the rest 
of my statement. You've got to, in my opinion, make some 
serious changes in the tradeoffs, because if you go in there 
tomorrow and say, I want to do something, and the first thing 
they'll say to you, What do you want to tradeoff in order to 
get what you want? You feel like slapping the guy upside the 
head and say, No, you're the United States, we're the United 
States, we've already traded off everything we got; you go to 
work for us and not the other country. Every time you sit down 
with those people, you feel like, first of all, they're working 
against you and for the other country, and in essence, they 
are. We need to really get that philosophy all the way down to 
the bottom through the Trade Department.
    Senator Crapo. Thank you. Pat.
    Mr. Takasugi. Well, I'd like to agree with Brad. It's a 
difficult question.
    What I could throw out is if we don't get the trade 
promotional authority, the countries are going through Canada 
and Mexico to ship into us anyway. They're going around the 
horn.
    I think we need to look at possibly granting money to the 
states so that they can develop a domestic marketing program, 
because we I think need to differentiate between Idaho-produced 
and foreign-produced. If we can maintain our domestic market--I 
would advocate we're losing our domestic market, and we need to 
maintain and regain our foothold in our own market. We are the 
biggest market. In that line, I would say TPA is probably a 
nonissue because they're going to come in anyway, but I would 
say we need to look at supporting our domestic marketing 
programs.
    Senator Crapo. Thank you.
    Butch, do you have another round?
    Mr. Otter. Yes.
    Brad, it breaks my heart that you're going out of that 
business, it really does. I know that it's probably what little 
romance there is left in the agriculture business, it's in that 
business, and so I feel for you and I'm sorry to hear that, I 
truly am, because we've had, between my ground and your ability 
to graze, I've had an awful lot of wildfire that I prevented, 
an awful lot of noxious weeds I've had removed as a result of 
your grazing my ground. I question or I wonder now if we do 
remove four million sheep in the United States and we no longer 
graze some of the public ground, some of the Forest Service 
ground, how are we going to control the $1.6 billion noxious 
weed backlog program that we already have just on public ground 
if we don't do it with your industry?
    Mr. Little. Well, the sheep are still there. There's a 
tougher guy than me that ended up with it, so he might be 
tougher to trade with than I was.
    Mr. Otter. My point goes back to your point that there's 
half a billion in China and there's four million in the United 
States, and to the extent that those dropped even more. We have 
the tendency to think of sheep as just producing meat and wool 
when they do a lot more, and they do a lot more good for us and 
especially on areas like public land. I just wanted to make 
that statement.
    One of the problems that we've got in setting fixed rates 
and in setting the exchange rate is the World Bank, which we 
subsidize, and it seems to be we're subsidizing ourself--and I 
served on the Agricultural Advisory Committee for the World 
Bank for two years, and we could not get them obviously to 
listen to our side, nor could we get the foodstuffs, the food 
security for the United States--was an advisory committee--I 
also served in--to get them to understand that we were actually 
subsidizing all these foreign producers.
    When we hand out the billions to the people of food stamps, 
the people that need it, they go into that grocery store and 
they buy an item off that grocery store. It doesn't say 
Produced in the United States of America, so we end up 
subsidizing an awful lot of these crops from other countries. 
In Albertson's 67,000 square feet, 44,000 items, to the extent 
that some of those are foreign produced and foreign 
commodities, our dollars through the Food Stamp Program are 
actually subsidizing these foreign produces, which is--and I 
don't know how you sort that out, I really don't.
    It seems to me that the World Bank is part of the problem, 
but yet the World Bank does an awful lot of good. It's kind of 
like AID. AID is--it causes a lot of problems in being able to 
sell our commodities around the world by going over and 
subsidizing, if you will, through capitalization, farmers in 
other parts of the world to compete against our farmers.
    If we were, what would it look like? Who should control 
this on the exchange rate? I tell you right now, the Banking 
Committee can't control it. I think they would like to, but 
they can't control that, because if--unless you take all your 
money back and all your support away from the World Bank.
    Mr. Little. Well, Mr. Chairman, there are things that the 
Treasury Department can do to narrow up that gap, that exchange 
rate. They have done, you know--well, look what Japan is doing 
every day to try and keep the value of their dollar, their yen, 
low, and it would be worse, but then you go through that 
washout, and you go through that washout and things will 
equalize.
    As far as trade promotion authority if the commodities are 
close, we're going to be able to compete market-wise, so if we 
get the exchange rates close, then--and get those big 
discrepancies out of there, then they'll buy our product 
because it's the best product and reasonably priced. Right now, 
they're not buying our product because it's so high-priced. 
That's the problem.
    The problem with the exchange rate is there's so much debt 
in the United States, we've got to have that foreign money to 
come in and augment our debt. One thing about it, you can't 
wipe out that debt. It's a big problem.
    That's why I left the sheep industry: I don't see any 
solution to it. Because I can compete on the cattle deal on the 
world market, I can compete on the dairy, I can't compete on 
the grain deal but the USDA helps me out there, but the sheep 
deal, the discrepancy is so wide I don't see--that's why I left 
is--and the fact that we're a minor crop and I know we're going 
to get out traded.
    Mr. Otter. Pat, and the whole panel, I'm going to get back 
on trade here with my remaining time because I think it's 
terribly important. Pat, I want to remind you of a trip that we 
took to Argentina and Chile and Brazil. When we hit Argentina, 
we had a problem getting Idaho cherries into Chile.
    Senator Crapo. There's your time.
    Mr. Otter. One of it was because--and we sat at that table 
and said, Now listen, why won't you adopt for Idaho cherries 
the brown sugar test on the--what was it, the fly or the worm 
or the larva that was inside the cherry and they have a brown 
sugar test, and we sat right there and got the deal done 
because we had the authority. You were there, I was there, and 
we had the cherry guy there.
    One of the things that I've been trying to promote in House 
Resolution 3005 is that when our USTR people do sit there at 
the table--and I've talked to Ann Veneman about this and I 
talked to Huntsman about it in the USTR Office--is that I want 
a commodity person at the table when they're negotiating these 
agreements, because quite frankly--and I've got a lot of faith 
in Veneman and Huntsman, but the people they put on are trade 
specialists, they're not agricultural specialists, and that 
really concerns me that we've got somebody that sits there that 
eats potatoes and think they know everything about potatoes and 
are willing to go back on the basis of that knowledge.
    If I came to a day and I could fashion a USTR final 
package, it would be that they never negotiate a agreement 
without a commodity person. Maybe it's the executive director 
of your national association, but we've got to have our voice 
at the table so that we know what all of the nuances and 
considerations and passions that go into these agreements.
    I guess that was more of a statement.
    Senator Crapo. I'll agree with you. Well, because of time, 
we're going to conclude with this panel. We have other 
questions--at least I do; I would suspect that Butch does, and 
if you all don't mind, we might submit some questions to you in 
writing to ask if you would just supplement the record with 
them at some point. We'd like to thank you all for coming. Your 
input today and in the past and I know we will receive in the 
future has been and will continue to be very helpful to this 
committee.
    Thank you very much.
    Senator Crapo. Our second panel is Perry Meuleman, sugar 
beet grower--and come on up as I call your name; Evan Hayes, 
wheat grower; Clark Kauffman, a barley grower; and Jim Evans, a 
pea and lentil grower.
    Before we begin this panel, I mentioned earlier that 
Senator Craig and Representative Simpson could not be here. 
I've just been notified that they do have some of their staff 
here. Ken Burgess and Mike Matthews are here for Senator Larry 
Craig, and Charlie Barnes is here for Representative Mike 
Simpson, so we appreciate them being here with us.
    Perry, why don't you begin.

STATEMENT OF PERRY MEULEMAN, PRESIDENT, IDAHO SUGARBEET GROWERS 
                          ASSOCIATION

    Mr. Meuleman. Thank you, Senator Crapo.
    My name is Perry Meuleman. I'm a third-generation Idaho 
farmer in Nampa. I operate our family farm that was homesteaded 
in 1904. I farm 560 acres of irrigated land on which I grow 
sugar beets, alfalfa, and small grains. I presently serve as 
president of the Idaho Sugarbeet Growers, and treasurer of the 
American Sugarbeet Growers Associations.
    Today, I'm representing over 775 farm families who raise 
over 175,000 acres of sugar beets in Idaho. In addition to 
their land and specialized equipment, our growers have a direct 
investment in our cooperatively owned sugar processing company. 
Senator, I know that you are very aware of the issues facing 
this Idaho sugar beet industry and have been working hard to 
help resolve our problems. Want to publicly thank you and your 
staff for all the support and hard work you have done for us.
    In preface to my comments on the proposal of the sugar 
policy of the new Farm Bill, I'd like to re-emphasize three 
basic points:
    First, the U.S. sugar industry is efficient and globally 
competitive. Beet sugar produced in the U.S. is the second 
lowest cost among sugar producers worldwide.
    Second, the world sugar market is a dump market. The price 
of sugar on the world market does not reflect its cost of 
production. Sugar policy in the U.S. has been a proper response 
to the predatory trade practices of other nations.
    Third, lower sugar prices are not passed on to consumers. 
Over and over, this fact has borne out. Low prices for farmers 
mean higher profits for big commercial users of sugar and not 
lower prices for consumers.
    American sugar producers, including Idaho sugar beet 
growers, are in a crisis. We face economic, domestic policy, 
and trade policy crises that profoundly threaten our existence. 
Producer prices for sugar began falling in 1997 and 1998, and 
plummeted in 1999 and 2000. Last year, for the first time in 
nearly two decades, sugar producers forfeited a sitting 
quantity of sugar to the government. The government is no 
longer able to limit sugar imports sufficiently to support 
prices and avoid sugar loan forfeitures. Barring resolution of 
the import problems with Mexico, no domestic policy solution 
for the U.S. sugar will work.
    The policy that we recommend has four basic elements:
    One, continuation of a nonrecourse loan program with wheat 
and sugar cane loan rates increased.
    Two, retention of the Secretary's authority to limit 
imports under the tariff rate quota system consistent with WTO 
and NAFTA import requirements.
    Operation of the program at little or preferably no cost to 
the government.
    Four, an inventory management mechanism administered by the 
government to balance domestic sugar markets with domestic 
demand and import requirements, and provide stable market 
prices at a level sufficient to avoid sugar loan forfeitures.
    The Farm Security Act approved by the House on October the 
5th includes most of the sugar provisions that we would like to 
see in any Farm Bill. We are generally pleased with its 
structure and only add a few changes to fine-tune it and bring 
it into greater alignment with the industry recommendations. 
They are:
    A, do not renew the one-cent forfeiture penalty.
    B, renew the grower bankruptcy provisions similar to those 
contained in the 1985 Farm Bill.
    C, revise the minimum grower payment for sugar beets so 
that it shall not exceed the rate of payment provided under 
contracts negotiated by the sugar beet growers with processors.
    D, clarify the methodology to be used by the Secretary to 
divide the beet allocations to individual companies and the 
transferability of all allocations.
    Increase the loan rate.
    We have also been asked to respond to Senator Lugar's farm 
bill proposal. We strongly oppose this proposal for the 
following reasons:
    One, the bill does not recognize the need to maintain a 
viable sugar processing industry. Without a processor, growers 
are out of business.
    The bill is antifarmer cooperative. By driving wholesale 
prices substantially lower, more money from the market will 
have to be kept by the cooperative to cover costs to survive, 
leaving virtually no returns to the grower.
    The banking industry would avoid investment in our industry 
because of substantial higher risk and lower return.
    Prices for sugar--prices for sugar farmers have been at 20-
year lows for three of the last five years, and growers 
received no direct government payment or assistance for those 
losses during that time. Using the last five years of average 
gross farm revenue to calculate the producers' annual voucher 
value would set government income transfers at levels that will 
not sustain producers.
    Five, the proposal unilaterally disarms U.S. producers 
against unfair foreign trade practices.
    The proposal would eliminate leverage that can be used to 
force other countries to reform or eliminate their unfair trade 
practices that distort the world market.
    In conclusion, thank you very much for convening this 
timely hearing and providing opportunity to present testimony.
    Senator Crapo. Thank you very much, Perry.
    Evan.

   STATEMENT OF EVAN HAYES, WHEAT GROWER, ON BEHALF OF DUANE 
      GRANT, PRESIDENT, IDAHO GRAIN PRODUCERS ASSOCIATION

    Mr. Hayes. I'm Evan Hayes. I'm a barley producer from Soda 
Springs, Idaho. I'm reading the testimony for President Duane 
Grant, president of the Idaho Grain Producers Association. 
Duane would like to apologize for not being here: He had a 
death in the family and he's at the funeral today.
    Thank you for organizing this hearing and for the 
opportunity to provide our comments on what Idaho's wheat and 
barley growers would like to see included in the next Farm 
Bill.
    The Idaho Grain Producers Association maintains a 
membership organization in each of the 24 largest grain-
producing counties in Idaho. IGPA is the only grass-roots 
voluntary membership organization in Idaho whose sole purpose 
is to develop policy and represent the needs of the Idaho wheat 
and barley farmers. IGPA is active both in the National 
Association of Wheat Growers and the National Barley Growers 
Association.
    Senator we've been busy doing our homework for the past 
three years, holding meeting after meeting with members, 
hammering out agreement on what is required for Idaho wheat and 
barley producers to survive and prosper under the new Farm 
Bill. The position and views I express here today are the fruit 
of this long debate. IGPA, along with NAWG and with the 
National Barley Growers Association, have presented the same 
information at official hearings in both the U.S. Senate and 
the U.S. House of Representatives.
    Under the farm policy part of it, I would begin by saying 
we must elevate the discussion and importance of this new Farm 
bill to be included as part of the nation's renewed focus on 
security. The ability of our farmers to produce safe, abundant 
food for the U.S. and our trading partners is of paramount 
importance to the security and state stability of our citizens 
and our global friends. Full care and precaution should be 
taken in writing the new Farm bill so that we do not jeopardize 
the ability of our nation's farmers to supply our food.
    Senator Crapo, we will use our limited time to present 
comments on just three aspects of the Farm Bill, the first 
being the commodity title. ``A'' under that is the decoupled 
fixed payments.
    IGPA believes that decoupled fixed payments for traditional 
farm program crops must continue as part of the next Farm Bill. 
These decoupled payments are treated favorably under WTO rules, 
and more importantly, provide a much-needed measure of 
financial stability to producers. IGPA has endorsed the fixed 
payment schedule suggested by the NAWG's farm bill proposal. 
For wheat growers, this fixed payment would be set at 64 cents 
a bushel, and for barley at 27 cents a bushel.
    Under B, wheat loan rate, the commodity-specific marketing 
loan program has served producers well under the 1996 Farm 
Bill, enabling producers to obtain much-needed liquidity during 
the marketing season; however, the caps placed for budgetary 
reasons on loan rates under the 1996 Farm bill are too low, in 
many cases not covering cash expenditures for producers. In 
order to provide greater liquidity to producers during the 
marketing season, IGPA supports an increase in the wheat loan 
rate floor to $2.85 a bushel.
    Under the barley loan rate, barley producers in Idaho and 
the U.S. have been especially disadvantaged under the 1996 Farm 
bill because our barley loan rate has been tied to corn. This 
artificial lowering of the value of barley has resulted in a 
shift by producers away from planting the crop. IGPA, the Idaho 
Barley Commission, and the National Barley Growers all support 
a loan rate for barley that is calculated by using the same 
formula as for other crops. The rate should be 85 percent of 
the Olympic average barley price for the previous five years, 
with a floor of $2.04 a bushel. Without this change, U.S. 
barley production will continue to decline.
    Countercyclical support system. The IGPA, NAWG, and 
National Barley all support the development of a 
countercyclical support system to provide stability to 
producers in times of serious depressed prices. We propose 
using $4.25 a bushel as a support level for wheat, and 72 cents 
for barley.
    Under planning flexibility, IGPA, NAWG, and National Barley 
continue to support the planning flexibility that is included 
in the 1996 Farm Bill.
    Under the conservation side of it, IGPA opposes Farm bill 
proposals that convert traditional program support payments 
into conservation payments as proposed by the Senate. IGPA 
policy supports conservation programs like the program you have 
proposed, which is very close to the proposal in the House 
bill.
    Senator Crapo, Congressman Otter, we certainly appreciate 
the opportunity that we've had today to come and visit with 
you. You have our full testimony in the written testimony. The 
only thing I would like to add to make special emphasis to, if 
it is at all possible for us to complete this Farm bill in this 
year, it would certainly be advantageous to the agricultural 
industry of Idaho.
    Thank you.
    Senator Crapo. Thank you very much, and we understand that 
too. Clark.

 STATEMENT OF CLARK KAUFFMAN, CHAIRMAN, IDAHO BARLEY COMMISSION

    Mr. Kauffman. Senator Crapo, Representative Otter, it's a 
pleasure to be here today and provide this Idaho Barley 
perspective on the new farm Federal legislation.
    My name is Clark Kauffman. I farm in Twin Falls County. I 
grow barley, hay, alfalfa seed, beans, sugar beets, and sweet 
corn. I also currently serve as chairman of the Idaho Barley 
Commission, an organization that represents nearly 5,000 barley 
producers in research, market development, grower education, 
and policy formulation. We are also members of the National 
Barley Growers Association.
    US barley harvested acres have plummeted 18 percent this 
year to under five million acres, the lowest in 50 years. I 
guess our message today is simple: U.S. barley is fast becoming 
an endangered crop. With acreage steadily declining in the past 
15 years from 13 million acres to less than five million today, 
this is largely the result of inequitable Federal farm supports 
that favor competing crops in our traditional northern growing 
regions, and today we'd like to invite you to help us restore 
equity to the Federal Barley Farm Program, specifically in the 
Marketing Assistance Loan Program.
    Modification of the Marketing Loan Program is the top 
priority of the National Barley Growers Association for very 
good and transparent reasons. Without these adjustments, 
Federal farm programs will continue to provide economic 
incentives to shift barley acreage into wheat in the Western 
United States, and into corn and soybeans and other oilseed 
crops in the Northern Plains.
    The National Barley Growers Association has proposed a 
simple solution, as Evan said. The barley rate should be 
decoupled from corn. Instead, it should be based on 85 percent 
of the most recent 5-year Olympic average of USDA's all-barley 
price. We believe this is the simplest and fairest way to put 
barley on the same footing as other grain crops, and will go a 
long way in removing the current planting disincentives that 
are crippling the U.S. barley production.
    I guess the main point I want to state today is that it is 
both inappropriate and unfair to continue to base the barley 
marketing loan rate on barley's feed value in relationship to 
corn. The reason for this is because barley is a food crop as 
well as a feed crop. In fact, more than half of the U.S. barley 
crop is expected to move into malt and food channels, and this 
higher value is totally ignored by the barley loan rate formula 
that we have now. Recognizing the true market value of barley, 
however, should not be an excuse to create a separate rate for 
malting and feed barley. Such a two-tiered rate system would be 
totally unworkable and is not required of any other program 
crop.
    National Barley Growers Association urges a marketing loan 
floor be established at $2.04 a bushel, and urges the committee 
to adjust that rate upward appropriately if other rates are 
rebalanced in the new Farm Bill.
    Unfortunately, the House-passed Farm Security Act of 2001 
didn't take these necessary adjustments--didn't make these 
necessary adjustments--in the barley loan rate, and, in fact, 
we think they took a step in the wrong direction by 
establishing a separate loan rate for feed barley and malting 
barley. We urge the Senate Ag Committee to take immediate steps 
to modify the barley loan rate provision.
    Finally, we urge the Senate Ag Committee to establish a new 
Marketing Loan Assistance Program for peas and lentils also.
    On trade promotion tools, we strongly support the 
provisions in the House bill to boost the funding authorization 
for both the Market Access Program and the Foreign Market 
Development Program. We'd like to encourage the committee to go 
one step further though and make sure that the funds that are 
authorized for the Export Enhancement Program but which remain 
unused during the course of the Federal fiscal year be 
redirected to other useful export programs. These could include 
the MAP and the FMD programs, as well as specific tools such as 
the Quality Samples Program. We'd like to urge you to include 
specific language directing the Secretary to transfer unused 
EEP funds midway through the Federal fiscal year to other 
appropriate Green-box type export programs that will help move 
U.S. grains and oilseeds into world markets, including all 
grains and oilseed crops and their products. We would welcome 
the opportunity to work with you on specific language that 
would enable us to work--put these funds to work for U.S. grain 
farmers, handlers, and exporters in this great country.
    In summary, the barley producers support the continuation 
of the Market Loan Assistance Program but at a more equitable 
rate for barley and decoupled from corn, the continuation of 
fixed decoupled payments, and the development of a 
countercyclical program similar to the House-passed bill.
    I want to thank you for the opportunity to bring this 
testimony to you today.
    Senator Crapo. Thank you very much, Clark. Good timing.
    Jim.

 STATEMENT OF JIM EVANS, CHAIRMAN, USA DRY PEA & LENTIL COUNCIL

    Mr. Evans. Thank you, Senator Crapo and Representative 
Otter, for the opportunity----
    Senator Crapo. Pull that microphone a little bit closer.
    Mr. Evans. Excuse me. I want to thank you for the 
opportunity to speak today, both Senator Crapo and 
Representative Otter.
    My name is Jim Evans. I'm a fourth-generation dryland 
farmer from Genesee, Idaho. I produce wheat, barley, dry peas, 
lentils, and chickpeas on my farm. I am the chairman of the USA 
Dry Pea and Lentil Council Grower Division, and it is an honor 
for me to present this statement on behalf of the nation's dry 
pea, lentil, and chickpea industry.
    My statement today is the reflection of the Council's 
desire to be included as a full and equal program crop in the 
2002 Farm Bill. Dried peas, lentils, and chickpeas--pulse 
crops--should be treated equitably and included for eligibility 
in the continuation of the Marketing Loan Program and 
production flexibility contracts, as well as any new 
countercyclical or conservation-based programs.
    Dry peas and lentils are facing historically low prices. 
Since 1996, dry pea prices have dropped 49 percent, lentil 
prices 42 percent, and chickpeas 25 percent. This dramatic 
price decline has forced farmers to shift acreages into program 
crops that have a safety net, such as wheat and oilseeds. 
Production of dried peas, lentils, and chickpeas will continue 
to decline if these crops are not included in the 2002 Farm 
Bill.
    Planting flexibility. One of the positive outcomes of the 
1996 FAIR Act was increased planting flexibility. The Council 
fought hard to include dry peas and lentils as an eligible crop 
under the 1996 Farm Bill. We asked to be included as an 
eligible crop because we believed that farmers needed to have 
planting flexibility to respond to market signals and maintain 
a good crop rotation. Our crops are subject to the same price 
volatility as program crops, but without the safety net to 
assist us when times are rough.
    Acreage shift. We estimate that our industry pumps over 
$100 million into the rural economy of the Pacific Northwest. 
The dry pea and lentil and chickpea industry competes with 
spring wheat, spring barley, and spring canola for acreage. The 
table below shows that our industry is losing the fight for 
acreage in the Pacific Northwest. Since the 1996 Farm Bill, 
acreage has shifted to spring wheat and canola, and the Pacific 
Northwest has increased the loan deficiency payments by over $3 
million. Prices are low for all of these commodities. The 
difference is our industry does not have a safety net in 
periods of low prices. The importance of establishing a safety 
net for our crops is critical to the short- and long-term 
health of the entire dry pea and lentil and chickpea 
infrastructure.
    Operating loans for pulses. Agriculture loan officers 
across the state are encouraging farmers to cover their risk by 
planting program crops. Many growers are reporting that bankers 
are refusing to loan money to plant dry peas or lentils because 
it does not have a Marketing Loan/LDP Program.
    Recommendations. The U.S. Dry Pea and Lentil Council 
supports the inclusion of a Nonrecourse Marketing Assisted Loan 
Program for dried peas and also chickpeas in the next Farm 
Bill. The marketing loan for these legumes should be equivalent 
to the other crops in the program. Based on current loan rates, 
we support Senate Bill 977, co-sponsored by Senator Craig, 
Senator Crapo, and other senators across the northern tier.
    Loan deficiency payment. Establishment of the Market Loan/
Loan Deficiency Payment will allow growers to respond to market 
conditions while taking into consideration a sustainable crop 
rotation. Without a Pulse Marketing Loan/LDP Program, acres 
will continue to shift out of legumes because it does not 
provide a safety net in periods of low prices. The Council 
estimates the cost of an LDP Program to be about eight and a 
half million dollars.
    AMTA payments. The USA Dry Pea and Lentil Council supports 
being included and treated equally with other program 
commodities in a continuation or reformulation of AMTA-type 
payments in the next Farm Bill. The Council recommends that the 
next Farm bill include guaranteed payment for dried peas and 
lentils and chickpeas equal to the value of these commodities 
compared to other commodities receiving an AMTA payment. We 
support the 1999 AMTA payment as a baseline.
    Countercyclical programs. The Council supports the concept 
of a countercyclical program. If Congress decides to pursue 
this form of payments, the Council recommends that dried pea 
and lentils, chickpea farmers, be included and treated 
equitably with other crops in this program. If we use the House 
Countercyclical Program as a model, we recommend that target 
prices be set at the following rates: Wheat, target price of 
$4.04 a bushel, on the average of 1996 to 2000 marketing years.
    Conservation Title. Pulse crops provide an excellent 
rotation crop for wheat, barley, and minor oilseeds. The plants 
fix nitrogen in the soil and help with weed management, and 
break disease cycles in cereal grains like scab and foot rot. 
Field burning has become a major issue in the Pacific 
Northwest, and with the continuation of planting more cereal 
crops, field burning is increasing in the Pacific Northwest.
    In conclusion, I'd like to say that we support the National 
Wheat Growers Association to improve wheat and barley loans. 
Our organization joins with them in support of a floor rate of 
2.85 per bushel and a loan rate for barley based on $2.04 a 
bushel.
    In closing, I want to say we need to get peas and lentils 
and chickpeas included in the 2002 Farm bill to give us a good 
rotation and good farming practices.
    Thank you for your time.
    Senator Crapo. Thank you very much, Jim.
    We'll start the questions this time with Representative 
Otter.
    Mr. Otter. Thank you very much, Mr. Chairman.
    I want to thank the panel for being here this morning. It 
has been an educational process for me, especially in the dry 
pea and lentil and chickpea industry. Although I'm familiar 
with it, I've never produced those crops or never dealt with 
them directly. I do have a couple of questions, and if anybody 
on the panel feels like they want to put some input to this----
    Perry, you said your No. 3, or ``C,'' I guess I should say, 
was that the support payments not exceed the sugar beet price 
negotiated between the growers' association and the processor. 
Explain to me what you meant by that. Do we have--maybe I 
should ask, do we have a situation where the government support 
payments have gone over what the negotiated price was?
    Mr. Meuleman. Yes, on what the processors borrow the money 
through the CCC at a certain rate, and if you set a limit over 
what they can borrow, then they have to go elsewhere. It just 
puts the added burden on the financial part end of it, and we 
just feel like that's an added burden that we can't have right 
now.
    Mr. Otter. I see.
    Clark, in the barley, do you have that same problem in the 
barley?
    Mr. Kauffman. I don't think so.
    Mr. Otter. In other words, if we satisfied Perry's 
problem--if there is a way to satisfy that--if we satisfied it, 
do we cause a problem then for the barley folks?
    Mr. Kauffman. I'm not sure I understand Perry's problem.
    Mr. Otter. Well maybe I don't either.
    Mr. Meuleman. Well, maybe I don't. Typically----
    Mr. Otter. Now we're really in trouble: Nobody understands 
it.
    Mr. Meuleman. Well, when they borrow the money to CC to 
start with, you can only borrow money on crystalline sugar.
    Mr. Otter. I see.
    Mr. Meuleman. You've got to have that in storage. At the 
start of the season when the payments come due and, you know, 
October, November, that you haven't got the sugar, the syrup, 
processed in crystalline sugar to put enough of that under 
loan, so if they--when the payments come out, if you have to 
pay more than what you've got to be able to have in your 
storage tanks, it presents a problem. That's why we kind of 
would like to have it be able to borrow on syrup.
    Mr. Otter. Your price then is set on a partially processed 
commodity.
    Mr. Meuleman. Yes.
    Mr. Otter. Your price would not be.
    Mr. Kauffman. That wouldn't affect us, no.
    Mr. Otter. All right. Now I think I understand the problem.
    Let me ask you a question on malt barley versus feed 
barley. Is there a difference--tell me what it costs to grow an 
acre of malt barley.
    Mr. Kauffman. I could tell you that----
    Mr. Otter. Let me tell you why I'm asking this question.
    Mr. Kauffman. Yes.
    Mr. Otter. If we're talking about two different kinds of 
barley and we're setting the price different on two different, 
is that a reflection of the cost of production, or is that just 
a reflection of the market forces?
    Mr. Kauffman. That's a reflection of the market forces. The 
thing you've got to remember, that the unfairness of the two-
tiered system is I grow malt barley, but if my barley is 
rejected, it's feed barley. You've got one commodity, the same 
input costs, just a different end value, market value, because 
it's going for a different use. The two-tiered system is a bad 
idea.
    Mr. Otter. OK. I understand that now.
    Jim, what would your proposal for dried peas and lentils 
and chickpeas look like? Would it look like the other commodity 
programs?
    Mr. Evans. Pretty much what we've gone over. We've went 
with models on the countercyclical program to--off the House 
models. We haven't come up with our own specific proposals 
because we're not in a program with anything yet, so it's kind 
of hard to come up with our own specific ideas.
    Mr. Otter. What would your floor price be on those three 
commodities?
    Mr. Evans. Basically on the loan rates, we're looking at 
$5.83 a hundred for dried peas, and 11 cents a hundred for No. 
3 lentils, and 15 cents for large Kabuli chickpeas, and smaller 
Desi types would be seven cents.
    Mr. Otter. OK. Thank you.
    Thank you, Mr. Chairman.
    Senator Crapo. Thank you very much.
    Let me start out by saying, Perry, with regard to your 
testimony on the sugar program, as you know, we've been in one 
context or another battling over the sugar program on a yearly 
basis for, well, at least the last nine years since I've been 
in Congress and probably enter 20 years before that, and I 
assure you that we are working very hard to make certain that 
the U.S. sugar policy remains strong and stable in whatever the 
Senate does do, and appreciate the very helpful suggestions 
that you've made in terms of how it can be improved; and that 
any actions that we take in the Senate should be aware that we, 
one--I know you are aware, but we're working closely with the 
U.S. Trade Representative and Department of Commerce to make 
sure that they adequately protect us in the predatory things 
that we're seeing come out of Canada and Mexico right now. I 
appreciate the very excellent testimony you provide, and I just 
want to tell you that it's been heard in the Senate and we're 
advocating that.
    Mr. Meuleman. One added on there that the Craig-Breaux Bill 
I think is essential----
    Senator Crapo. Yes, I agree with you.
    Mr. Meuleman [continuing]. To stop circumvention of the 
sugar.
    Senator Crapo. Yes. That's the molasses.
    Mr. Meuleman. Yes, the molasses. I feel like we don't have 
the legislation, but somebody will figure out how to go around 
it.
    Senator Crapo. Right. I just want to ask a couple of 
questions with my remaining time to anybody on the panel who 
would like to respond.
    The dynamic we face right now is that the administration 
has rejected the general approach of the House bill by saying 
that they think our existing commodity programs distort markets 
too much and don't give the needed help to the right places in 
the agriculture community, and they have some other objections 
as well. In the Senate there are those, as you know--Senator 
Lugar, for example--who share that perspective and who has, 
himself, put out a proposal which phases out the commodity 
programs.
    I'd just like to know what the perspective is for those of 
you on the panel with regard to that entire issue. Should we 
try to stick with--do you think that our best objective here 
should be to try to stick with the existing programs and maybe 
try to refine a little better, get the dollars where they need 
to be in a little better way; or should we try to start 
thinking outside the box to see if there is a better approach 
to getting the resources where they need to get? Anybody have 
an opinion there? Evan.
    Mr. Hayes. Oh, I certainly would support the program passed 
by the House, the three-legged-stool approach of fixed payment 
to loan rate and countercyclical. This year, I could give you a 
personal experience.
    I did take revenue assurance insurance on my farm. Dry 
year, you know, I thought that was going to be a necessary 
item. We had an unusually good crop for the weather that we 
had; however, just before harvest, we had a hailstorm, and none 
of my farms north of Soda Springs was spared without having 
hail. I thought probably out of my pocket, probably about 
$40,000 out of that crop came out of my pocket to a loss; 
however, the insurance coverage that I had did not pay a dime, 
because of the fact that the crop was a fairly good crop. It 
was above--still above my average yield.
    Now, under thinking outside the box, are these coverages 
covering the real crop that we have, or are they simply trying 
to cover the bases? I understand with the problems that we have 
with the people molding the rules to fit themselves it's 
difficult to do, but from the producer perspective, you know, 
we need to be insured for what we produce. In other words, 
going back to the three-legged approach, the AMFA ends up in 
our pocket and we keep it. The countercyclical is a downside 
coverage. The loan gives liquidity. That's why we support the 
NAWG proposal, or the three-legged approach, so completely.
    Senator Crapo. Thank you. Anybody disagree with that or 
have a different perspective on the panel?
    I do want to just say to both Clark and Jim that your 
testimony as well--and, Evan, we've been working very closely 
with the NAWG proposal and I understand that very well. I do 
agree and I assume Representative Otter doesn't have any beef 
with it either, the problem, the issue, of including barley and 
including the other crops that we need to include to make sure 
that we aren't essentially driving production from one area to 
another and not achieving the objectives that we want to 
achieve in our farm policy.
    Let me just ask each of you the question I asked the other 
panel with regard to trade promotion authority. I won't go 
through the whole routine----
    I guess I got my question started before the time ran out, 
so I can toss it out there.
    Mr. Otter. You're the Chairman.
    Senator Crapo. Yes, that's correct. I've got the gavel. 
Right.
    Is it time to give the administration trade promotion 
authority, or should some of us who have those concerns about 
whether the negotiators for the United States are truly going 
to do the job well enough that we can relinquish Congressional 
oversight, were those concerns valid? I'm interested in your 
perspectives on that, if any of you have any.
    Mr. Meuleman. Well, I think at this point in time, I can't 
see that we can give him the trade authority on the reason on 
our past trade agreements. I think before we go in certain 
perimeters that we've got to clean up the mess we've already 
got.
    Senator Crapo. Well, the sugar program is certainly 
evidence of that.
    Mr. Meuleman. Yes. The other thing I think very strongly 
of, I think we, as American farmers, have been shortchanged 
from our negotiators, and I think some of the negotiators 
really don't understand what we, as farmers, need, and as well 
we can see now. At this point, I think we've got to clean up 
the matter before we start on a new one.
    Senator Crapo. Thank you. Any other answers and 
perspectives? Yes, go ahead, Clark, and then Jim and then Evan, 
if you want to continue, you can.
    Mr. Kauffman. I don't disagree with Perry, other than the 
fact that I think trade promotion authority should be granted. 
I like what Congressman Otter said: Put a commodity person at 
the table negotiating these. I don't think if we don't have 
trade policy authority, it's going to be hard for the United 
States to exert its leadership in these policies. We need to 
remember that it's just authority to negotiate trade, it's not 
the final agreement. That always comes back to the economy. As 
long as we have some guarantees with the commodity person at 
the table to represent ag's interest, I think we should go 
ahead and grant the authority.
    Senator Crapo. OK, Jim.
    Mr. Evans. Our organization supports the TBA authority, but 
the present administration came out at the summer's recess and 
said that farmers are better off than they were a year ago. 
That's not, in my particular business, it's not true.
    The way that the administration's come out with their ag 
policies that we haven't seen, how could we endorse something 
that we have no idea what their ideas are? Yesterday, President 
Bush came out with his press conference that he should have TBA 
because the previous presidents had it. There was no reasoning 
beyond that to--I want to see more before I buy into it.
    Senator Crapo. I understand. Evan, if you have anything 
else to add?
    Mr. Hayes. I was just going to say I certainly second what 
your feelings are on it that we can support it--didn't say that 
we did, but we can support it--as we watch the administration 
and we see the direction that we want to go with it, and I 
think we just have to be a little cautious about this one, a 
free hand.
    Senator Crapo. Thank you.
    Did you want another round?
    Mr. Otter. I've just got a couple things, very short, Mr. 
Chairman.
    Let me make it very clear in--and I was not successful as 
far as the House, I have not been successful, and I am hoping 
that perhaps I can get me a champion in the Senate to include 
that. It's not unprecedented, because Mike Crapo and several 
others in the Senate on the loan, on the moneys that we gave to 
the World Bank to provide for moneys to go to Korea, we set a 
very important precedent there on our relationship and on that 
agreement, and none of that money could be used to bail out the 
high-tech chip industry in Korea. I've been told right now by 
the USTR that it's going to take about six and a half billion 
dollars in new money in the chip industry in Korea in order to 
get Hynix back up and running. The only place they can--I don't 
know of an investor that would invest in a company--or, in an 
industry that's already lost $5 billion, is $11 billion in 
debt, and needs another six and a half billion dollars in order 
to just get up and running. The only place they can get that 
money happens to be the stopgap that Mike Crapo--or, that 
Senator Crapo and his colleagues in the Senate put in in that 
case. That's frankly where I got my idea of putting a 
negotiation at the table. A trade agreement is a treaty and 
it's a treaty that outlines the rules by which we're going to 
engage in Congress, and that's why it has to come back to the 
House--or, back to the Congress.
    It should not be unusual when we negotiate a treaty at the 
end of embattlement we have the right kind of people sitting at 
that table, saying we're going to take care of nuclear waste 
here and bioterrorism here, and all of the nuances that go into 
the final package, the final agreement to bring peace, and I 
think that's--we ought to--we ought to duplicate that when we 
have a trade agreement.
    My trade agreement, Perry--and you're the only one I've got 
to work on here. I'm kidding.
    Mr. Meuleman. I wanted to clarify one point here: I stated 
I couldn't approve it now until some of these conditions were 
met. I didn't state I never would.
    Mr. Otter. Yes. Senator Craig's bill is fashioning a 
reasonable approach to some of those problems that we've had in 
the past. Quite frankly, I have to tell you that had I been a 
Congressman in the 1990's, I would not have given that 
administration--because as Evan knows at least in serving on 
the House and chairman of the Commodity Commission for the 
state of Idaho in trade and following NAFTA, GATT, and Canadian 
free trade and all the rest of our efforts to engage in 
commerce from around the world and all the problems we had, we 
could never get the administration to budge on it. They wanted 
a cheap food policy in the United States but they didn't want 
to pay for it. They got the cheap food policy, and you all paid 
for it and are continuing to pay for it.
    I just want to make that point that on trade, I think it's 
important that we know what the rules are, but that the people 
who know the disciplines that's needed know that all of the 
other nuances that approach these things, are setting at the 
table as well and say that won't work, so that when they do 
bring it back to Congress--because we've got a lot of people in 
Congress that's never engaged in international trade, 
unfortunately, and they would probably be willing to accept 
most of those packages carte blanche. We need to set that in 
now, and I'm hoping that when the Senate gets with it after we 
pass it--and I believe we will and I believe it will be next 
week, but I don't believe it will have the Otter Amendment 
attached to it because I think we've got a closed rule coming.
    With that, I just wanted to make it clear where I was 
coming from and why I was trying to establish that as a 
precedent, and that I was actually using our high-tech 
agreement in the loan moneys that we provided to Korea as a 
predicate to the final trade agreement.
    Thank you, Mr. Chairman.
    Senator Crapo. Thank you. Let me just say I see this trade 
promotion authority as one of the most difficult decisions that 
we have to make, and probably in the short term if we can get 
it to the floor of the Senate as well for all the reasons it's 
hard for every one of the panelists to answer my question, 
because there are really good reasons that we need to give the 
President trade promotion authority. But, in the end, if the 
President comes back to us with another agreement like we've 
seen in the past, we will rue the day that we ever put that on 
the floor of the Senate or the House because even though we do 
get to vote on it, the reality is at that point it's pretty 
much a done deal. You know, we can't change it and we pretty 
much can't stop it. I have been waiting for the time and trying 
to create the time when we could have the confidence in the 
United States Trade Negotiators and the Department of--
Department of Commerce that we could feel like we could give 
them that kind of authority. I want them to have that kind of 
authority and I want to vote for it, and I may vote for it, but 
I really struggle.
    I do have to tell you I was in Seattle with the last effort 
to jump start the WTO negotiations, and you all know the kind 
of riots and everything that took place there. Following 
Seattle, there was a tremendous amount of criticism of what 
went on there, saying that it was a failure, and in some ways I 
think it was. Frankly, I think that the administration came out 
and tried to insert some issues into the negotiating process 
that caused a tremendous amount of difficulty worldwide and so 
forth.
    I felt there was one very dramatic element of success in 
Seattle that was totally overlooked, and that was for the first 
time, in my experience, the United States walked away from the 
table without caving in. The reason, notwithstanding the riots 
and notwithstanding everything else, the reason we did not have 
a so-called success, meaning that we didn't come away from 
Seattle with a deal--was because Europe and Japan and--the 
European Union and Japan--walked away surprised that they 
hadn't been able to get from the United States what they had 
gotten every time in the past, and that was concessions on 
agriculture that would give them the kind of incredibly 
imbalanced trade negotiation postures that we're now dealing 
with in the United States. I was starting to feel that we were 
getting to the point where the administration is setting a 
track record and maybe we could trust these guys to stay tough.
    Now we've got a new administration and we just haven't had 
enough of a new track record with the new people for me to feel 
totally confident. On the other hand, I'm more confident in 
general in this administration. I'm just kind of thinking out 
loud with you about where I'm coming from and that's why I'm 
asking this question, and I won't go into it in as much detail 
in the future, but I'm going to ask the other panelists today 
their perspective on it, because hopefully at some point we're 
going to get a chance to vote on it in the Senate.
    Anyway, I don't have any other questions. Do you have any 
other questions?
    Mr. Otter. Get this machine.
    Senator Crapo. President Bush doesn't allow cell phones in 
his meetings.
    [Laughter.]
    Senator Crapo. I can't do that because I've got staff here 
with cell phones and there are people all over here trying to 
conduct business, which is what we do.
    Anyway, I thank this panel, and I appreciate very much the 
attention and the advice that you have given this issue, and we 
will seriously consider it.
    Thank you.
    Senator Crapo. Our third panel is only going to be two 
people, and that is Dennis Vander Stelt who is with the dairy 
industry, and Eric Davis with the cattle industry. I suspect 
that this panel will probably take us up to around noon, maybe 
before that. We have planned a break at noon, and we actually 
have to do that for a short period of time, like maybe a half 
hour, so for the fourth panel I--just so you can get a feeling 
on timing, we might be able to get at least the testimony of 
the fourth panel in before noon, it just depends on how fast 
things go, and then do the questioning at around 12:30 or so. 
Or we may just start the fourth panel right at 12:30, but I 
don't think that we will be able to finish the fourth panel 
before we have that break at noon that we are going to have to 
take.
    We're going to take a very short break here while our court 
reporter changes paper.
    [Recess.]
    Senator Crapo. OK. Dennis, would you like to begin?

   STATEMENT OF DENNIS VANDER STELT, UNITED DAIRYMEN OF IDAHO

    Mr. Vander Stelt. Yes, thank you. Thank you, Senator Crapo, 
Representative Otter, members of the Idaho delegation for 
holding this hearing and inviting me here today.
    My name is Dennis Vander Stelt, and my brother and I own 
and operate a dairy farm in Kuna, Idaho. My testimony today is 
on behalf of the United Dairymen of Idaho. That's a joint board 
of the Idaho Dairy Products Commission and the Idaho Dairymen's 
Association.
    Dairy has now become the largest agricultural enterprise in 
Idaho, and we have also been the fastest-growing dairy state in 
the country. First, I'd like to say that my testimony today 
reflects a need for government involvement in the dairy market 
to assure long-term stability for producers, processors, 
retailers, and consumers alike. We are in a cash-intensive 
business producing a highly perishable product. An adequate 
dairy producer safety net implemented fairly, and on a 
countercyclical basis, is critical for the survival of our 
dairy families.
    The key element of a dairy producer's safety is the Dairy 
Price Support Program. United Dairymen of Idaho supports a 
long-term extension of the Dairy Price Support Program at 9.90 
a hundred weight for the duration of the next Farm Bill. 
Experience has taught us that the 9.90 support price is the 
right level to provide an effective countercyclical safety net 
without the danger of stimulating overproduction. No other 
proposal for a dairy producer's safety net that we have seen to 
date offers both of these advantages.
    If I could refer you to the charts on Appendix A, maybe you 
can better understand the problem we face as producers.
    Due to better management, genetics, et cetera, production 
per cow has risen 21 percent over 10 years.
    The next chart shows a total production increase of 14 
percent over those same years, which is approximately what 
consumption of dairy products has increased.
    In order to balance the supply that can grow faster than 
demand, Appendix B shows that it has required a reduction in 
milk cows, which, in turn, reduce dairy producer numbers.
    The bottom line is that we will either have to increase 
sales of dairy products faster, or continue to reduce cow 
numbers and dairy farmers.
    With this market dynamic, Idaho is still growing at a brisk 
pace. The last Farm bill required a major overhaul of the 
Federal milk marketing order system, and that work was only 
completed last year. With the Class IV powder correction made 
by Secretary Veneman this past June, we feel that this program 
is good for Idaho.
    I need to make a correction. There was a lawsuit under the 
Federal milk marketing order yet that was still pertaining to 
that. USDA came out either yesterday or day before yesterday 
with a recommended final rule. Our dispute was over the butter 
formula in the Class III cheese, and USDA's correction to that 
will probably increase producer pay prices on cheese in Idaho 
by about 25 cents per hundred weight in the future. We are very 
happy with that.
    OK, a critical factor in helping make the Dairy Price 
Support Program work, however, is recognizing that U.S. dairy 
producers are being disadvantaged by low-cost, often-
subsidized, imported products in the form of milk protein 
concentrate. These imports increase the amount of product the 
Commodity Credit Corporation must purchase by displacing 
domestically produced nonfat dry milk powder. United Dairymen 
of Idaho encourages the committee to support Senate Bill 847, 
which would establish tariff rates and quotas for imported MPC. 
This legislation is very generous in the amount of product that 
could come into the country with no tariff, because nonfat 
powder cannot substitute in every application.
    The legislation is also consistent with our commitments 
under international trade agreements. MPC is simply a product, 
but for all intents and purposes did not exist when those trade 
agreements were negotiated. Enacting tariff rate quotas for 
products that were not anticipated in trade negotiations is 
entirely fair, and fairness to U.S. dairy producers is what S. 
847 is all about.
    Industry experience shows that--a 600-percent increase in 
imported MPC over the past six years. Even worse, however, is 
that MPC came into this country at its highest rate in the year 
2000. U.S. producers saw the lowest milk prices in two decades. 
Undoubtedly, those unrestricted imports contributed to lower 
milk prices here, kept them lower for a longer period of time, 
and resulted in increased purchases of nonfat powder by the 
CCC. To solve this situation where producers and taxpayers both 
lose, simply agree to play fair with us and pass Senate Bill 
847.
    United Dairymen of Idaho also want to go on record in 
strong support of continuing the Dairy Export Incentive 
Program, Beef Program, and increase in Market Access Program 
funding to help us do a better job of increasing consumption.
    In the animal health area, we would appreciate your full 
support of the Johne's Program. Also, the EQIP Program.
    Is my time up?
    Mr. Lancaster. Yes, sir.
    Mr. Vander Stelt. If you have any questions, I'd like to 
help you out.
    Senator Crapo. Thank you very much, Dennis.
    Eric.

     STATEMENT OF ERIC DAVIS, PAST PRESIDENT, IDAHO CATTLE 
ASSOCIATION, CURRENT VICE PRESIDENT, NATIONAL CATTLEMEN'S BEEF 
                          ASSOCIATION

    Mr. Davis. Thank you, Senator Crapo, Representative Otter. 
Appreciate the opportunity to be here today. I'm kind of 
wearing two hats today.
    My name is Eric Davis, and I'm a rancher in a family 
operation, cow-calf feedlot farming operation down in Bruneau, 
but today I'm representing both the Idaho Cattle Association 
and the National Cattlemen's Beef Association in my testimony 
here. I had the opportunity earlier in the year to testify 
before the Committee on behalf of NCBA, so my introductory 
remarks will be, I hope, very brief. Arlen might have to flag 
me down once I get going.
    I again appreciate the opportunity to be here. I'm not as 
organized as I should be today, and so forgive me as I bounce 
around a little bit.
    In terms of the beef cattle industry in this country, I 
think our position has been well known and hasn't changed a lot 
over the years regarding the commodity program part of the Farm 
Bill, the various Farm Bills as they have come along. We 
believe firmly that they should be as market-oriented as 
possible. Understand that there have been problems in the past 
between commodities. I guess our bottom line has been and 
remains today we feel that the last Farm bill was an 
improvement over the one prior to it in terms of removing some 
of those inequities, but again, our bottom line will be that we 
don't do anything in the commodity part of the programs or the 
commodity title that balances one segment of industry's books 
against another. We don't want to be hurt by the program, nor 
do we want other commodity producers to be hurt by placing 
unfair advantages or disadvantages, one against the other.
    With that said, we are keenly interested in and supportive 
of the conservation title of this Farm bill as it was passed in 
the House, and your efforts in the Senate, Senator Crapo, we 
greatly appreciate. We do think--and that's detailed in the 
written testimony.
    We strongly support doubling of the ag research funds to 
the 2.4 billion per year over the next five years, with a lot 
of that--well, $350 million for an update of the Ames research 
center for diagnostics and surveillance and whatnot. I think 
some of the world situations that we've seen in the past year 
or last 10 years that we've been preparing for indicate that we 
need to stay up to speed in those areas.
    We see a need for an overhaul of the EQIP Program so that 
it works more efficiently at helping people implement those 
regulatory--helping us respond to regulatory programs that we 
are seeing come down the road more every day.
    Also, especially dear to our ICA is we agree in the 
Livestock Assistance Program that the administration of those 
disaster programs need to make or look at a major overhaul to 
get those decisions more closer to the local level.
    With that, before I get flagged out, Mr. Chairman, I'd be 
happy to respond to questions, and sincerely appreciate being 
here today.
    Senator Crapo. Thank you very much, Eric.
    Let me start out first with you, Dennis. You know, one of 
the questions that we continuously deal with under the EQIP 
Program is there are those in Washington who feel that the 
funds are going to the corporate farm, so to speak, or that the 
small operators are not getting the adequate mention under it. 
And, you know, we are aware that--my understanding is that in 
Idaho, that the size of the herds in the dairy industry is much 
larger than some of the limit levels that are being discussed 
in Washington. Could you discuss with me a little bit about 
what the--I don't know if you know averages, but what the size 
of the operations in Idaho are that we are dealing with?
    Mr. Vander Stelt. Right now, the average dairy size is 
about 389 cows per dairy. Approximately. One of the problems 
that we have with EQIP and most of these programs is, as you 
say, they are geared toward the smaller producer. Consequently, 
there's caps in the EQIP fund.
    For instance, in my situation, we were milking about 700 
cows and looking at totally redoing our whole waste management 
system under the Clean Water Act. I was looking at a project in 
excess of $150,000. To justify that type of an expense, I 
expanded to 1,200 cows to make sense out of it. Where it's 
capped and because of our larger size dairies, yes, we need--if 
you're going to help, the caps for sure need to be either 
eliminated or increased.
    Senator Crapo. Your position would be to eliminate the 
caps?
    Mr. Vander Stelt. Yes.
    Senator Crapo. Best solution will be to eliminate the caps, 
and that way you can help all of the operators here in Idaho. I 
assume what you're saying is that you think the caps don't 
really achieve the objective that they're seeking in the first 
place.
    Mr. Vander Stelt. No, for most dairymen in Idaho with this 
cap, they wouldn't even bother to mess with it. They would do 
their own entirely.
    Senator Crapo. All right. Do you have any suggestions at 
all--if not, then just waive the question or whatever--but do 
you have any suggestions at all as to a better way for us to 
price the Class III milk that we're currently using?
    Mr. Vander Stelt. No. I am president of Western States 
Dairy Producers Trade Association, which is the seven western 
states. We hired an attorney to present testimony at the 
hearing in Virginia on Class III form pricing, spent a lot of 
time on this issue. The truth of the matter is what we have 
under Federal milk marketing orders where we have a 
deliberative process as in this process, we have an attorney, 
you have a judge presiding, and testimony is given under--and 
it is testimony that you swear an oath to tell the truth. It's 
a very deliberative process. That's really important that if 
you want to determine what your milk is worth based off of 
cheese, you need a process like that that's honest, it has a 
lot of integrity, and it's transparent.
    I do believe we had some problems with as regards Idaho 
under Federal milk marketing reform on the Class III issue. For 
the most part, they have been resolved because of that 
deliberative process, and I think at this point Idaho is 
looking very good and that's why we started to recommend that.
    Senator Crapo. Thank you.
    Eric, let me ask you a question about the country of origin 
labeling issue. How does it work under the proposal that you're 
supporting in terms of identifying beef that is American beef, 
basically? I mean, isn't there a question as to how you 
determine what qualifies and what doesn't qualify?
    Mr. Davis. Yes, Mr. Chairman, there is, and that's a 
conundrum that the industry is in and there is not widespread 
consensus within the industry. I'll be the first to admit that.
    Senator Crapo. Well I'm glad to know that, because I'm 
sitting here trying to figure it out myself and I'm not feeling 
so bad now, but go ahead.
    Mr. Davis. I would say that there is consensus from the 
consumer right to know standpoint to label our product as US-
produced. There is consensus that that's not a bad deal.
    I--where the hang-up in the industry is--and my two-hat 
approach here today is going to get me in trouble right now, 
because the two organizations I'm sitting here for have 
somewhat different polices--comes down to the definition of 
what is U.S. beef, and from the National Cattlemen's 
perspective, that definition is different between a voluntary 
program and a mandatory program. From the Idaho Cattlemen 
perspective, their definition is 90 days or more in the U.S. 
would qualify as U.S. produced.
    That is acceptable to other parts of the industry on a 
mandatory basis, but on the voluntary program that we also have 
a policy in support of, under strictly a voluntary system for 
fresh muscle cuts and including all other meat products, not 
just beef, then we had, well, that, and I think it's going to 
hold consensus on born, raised, and processed.
    Senator Crapo. Born, raised, and processed in the United 
States.
    Mr. Davis. On a voluntary basis.
    Senator Crapo. All right.
    Mr. Davis. The identification part of that, how to track 
that through, frankly, I think that's why--and I'm speaking as 
an individual now that's watched that and been involved in it, 
not a policy position from either one of the groups I'm 
representing--but the ramifications of what we may do here in a 
mandatory program, I don't believe the industry is ready for 
it, personally. I don't think we've thought it through far 
enough in terms of whether we go beyond fresh muscle cuts and 
include ground beef. Our latest experience with the mandatory 
program that we ask for on mandatory price reporting, if we 
don't think this through very carefully before we go mandatory, 
I'm afraid we might not get where we're trying to get. I 
personally would rather see us take the voluntary approach at 
this point, let us work some of these bugs out, before we jump 
into a mandatory system.
    Senator Crapo. All right. I have another couple of 
questions, but my time is up and I'll go to Representative 
Otter.
    Mr. Otter. Dennis, when I was growing up, we milked about 
84 head of cows, nothing like, obviously, the operations are 
today. I think our yield was probably around 52 pounds and 
about three-eight butterfat, because we mixed Jerseys and 
Guernseys in with Holsteins. The Holsteins gave us the volume.
    Mr. Vander Stelt. Right.
    Mr. Otter. The Jerseys and Guernseys gave us the butterfat.
    What is the per-cow--I didn't do the math; I should have 
done the math myself--what is the per-cow production today?
    Mr. Vander Stelt. In nationwide, it's about 18,000-pound 
average, and in Idaho, it's about 20,000-pound average.
    Mr. Otter. What would that be, 100--little over 100 pounds 
a day?
    Mr. Vander Stelt. No, it wouldn't be that high. The 
national average would be on 18,000 pounds of milk probably 60 
pounds of production per day. Idaho's average would be closer 
around 68, 67.
    Mr. Otter. I'm glad I didn't try to do the math. I was 
really off.
    What's the butterfat content?
    Mr. Vander Stelt. Oh, I generate around three-five, three-
six, but we run all Holsteins.
    However, we are seeing because of Federal milk marketing 
order reform and they no longer pay you for your nitrogen--you 
know, like a urea-based nitrogen, not a protein nitrogen, there 
we go, they have tests done, they discount not protein 
nitrogen--Jerseys are coming back big time, because Holsteins 
do run a little higher.
    Mr. Otter. The reason I go to that question, because I also 
noticed that there are probably not very many 84-head dairies 
left.
    Mr. Vander Stelt. Not a lot, no.
    Mr. Otter. Dennis, the last time we had tried to reduce the 
herd, what we did was called the poor producers and then we 
butchered them and gave them to Eric's industry, more or less a 
little competition. In an effort to settle one problem, we 
created disaster in the beef industry.
    How would you propose that we would do it this time, 
because if you mentioned a dairy--maybe you didn't mention the 
term ``dairy buyout,'' but ``reduction in herd size.'' How 
would you propose that that be done without something similar 
to the disaster that we had last time?
    Mr. Vander Stelt. Actually, Representative Otter, what I 
was saying is that the herd continues to decrease on a national 
basis under Federal milk marketing orders.
    When we did the buyout, there was approximately 11 million 
dairy cows. Currently, there are 9,085,000. There has been just 
about 20 percent reduction in dairy cows.
    Mr. Otter. What was the per-capita production, per-cow 
production, when we had the dairy buyout?
    Mr. Vander Stelt. Probably around 15,000 or 50 pounds a cow 
a day, 15,000-pound average.
    Mr. Otter. The rest of it then is importation?
    Mr. Vander Stelt. Yes, we used to be, as you know, under 
dairy under Section 22 where 2 percent of our market was open 
to imports. It was raised to 5 percent. I know from the mid 
nineties, we've gone from about 2.8 million pounds milk 
equivalent imported under that; now we're up to five point--
well, projections for this year are somewhere around 5.3, 5.4 
million pounds, but sitting amount of increased milk. If you do 
the numbers on an 18,000-pound herd--or, cow--you're looking 
probably at 100--that displaced 120-, 130,000 cows a year.
    Mr. Otter. I see.
    Eric, what are we killing a day, 130,000 head?
    Mr. Davis. No way I've been doing that well, but we should 
be.
    Mr. Otter. Have we got a lot of overweight cattle?
    Mr. Davis. We've got a front-end supply problem, yes.
    Mr. Otter. I did do the math quick and dirty on your 90 
days. It seems to me that if you had a 90-day animal and you 
locked them up at a light weight, let's say at six--a feeder, 
you locked them up at 600 pounds and you've got three and a 
half pounds of dag meat--which is not unusual, right--you need 
107 days. Your suggestion then, that they would be coming in 
actually off cow-calf operations in foreign countries, they'd 
be coming in as light, light feeders. Right?
    Mr. Davis. In order to meet the requirement to be labeled 
as U.S.-produced, yes.
    Mr. Otter. Is that a reasonable standard? I mean, what are 
the cow-calf operators thinking about it? You're a cow-calf.
    Mr. Davis. I'm one of those too, but that's Idaho's 
position. There are those who don't think that's strong enough. 
We hear it all the time from different parts of the country and 
there's a certain amount of regionalization, and a lot of it 
goes back to trade and their perception of whether it's free 
and fair basically on the Canadian border. A lot of the people 
think it should be defined as ``born and raised,'' but again, 
the consensus in the industry, and NCA has policies supporting 
both mandatory or voluntary, ICA supports the definition of 
``90 days or more.''
    Mr. Otter. I have not been a supporter of the old country 
of origin standard, but because I can also see the problems 
that that would cause in the retail business. It would really 
cause a lot of not only in the retail business, but in the 
fast-food industry.
    Mr. Davis. Food service.
    Mr. Otter. A lot of other industries. We try to solve one 
problem in one place, we create all these other problems other 
places because we're getting away from the market.
    But, I have supported an idea of country of origin in that 
the USDA not be allowed to stamp any carcass that comes in with 
the USDA stamp. I think a lot of people get very confused when 
they go to the grocery store and even though this carcass may 
have come from Argentina----
    I began my question ahead of the----
    Senator Crapo. You've got it.
    Mr. Otter [continuing]. Wouldn't--if we did not allow the 
USDA to use the USDA stamp on not only beef, but on any of the 
imported red meats, wouldn't that then not be giving the wrong 
impression to anybody shopping at the grocery store when they 
see the USDA seal on that portion of the carcass that is now 
for sale in the meat counter?
    When I see the USDA seal, I just make an assumption. That 
assumption is that it's United States-produced beef. If we 
didn't allow USDA to use that seal on just any other meat, 
wouldn't that at least satisfy a lot of the country of origin 
problems?
    Mr. Davis. It would to some degree, Congressman, but first 
off, let me make the distinction between the inspection seal 
and the grade seal, because it has to be inspected but it 
doesn't have to pack a USDA grade, and I think that's the issue 
you're getting to.
    We have policy in both organizations that strongly supports 
the repeal of the use of the USDA grade on imported carcasses. 
We have a policy that would support not using the grade on 
cattle imported for immediate slaughter. We understand that 
that may raise--what's the term--``national treatment issues'' 
under WTO, and actually have asked for Office of General 
Counsel--is that right--opinion on the legality of not using 
the grade for cattle imported for immediate slaughter because 
of the way that the grading law is written. It says that 
grading will be done at the plant of kill and first chill. We 
think it's a given that you can't use it on imported carcasses, 
but we're----
    Mr. Otter. That's not the practice.
    Mr. Davis. That is the major part of what's coming into 
this country.
    Mr. Otter. Let me just, in conclusion, that's not the 
practice; that may be our understanding of what goes on, but 
that's not the practice, is it?
    Mr. Davis. Today.
    Mr. Otter. Yes.
    Mr. Davis. We have petitioned USDA to stop that, but there 
is a certain amount of that happening.
    Mr. Otter. Thank you, Mr. Chairman.
    Senator Crapo. Thank you.
    Let me go back just quickly, Eric, to the question I was 
asking you: You had indicated you personally--I don't know if 
you were speaking for either the NCBA or the Idaho Cattlemen--
but that you personally had some concern about whether we were 
ready for a mandatory country of origin labeling requirement. 
Is that something that is the position of either of the 
organizations you're representing here? In other words, are 
you--I'm hearing from you----
    Mr. Davis. I'm crossing myself I think.
    Senator Crapo. Did I get you in trouble?
    Mr. Davis. No, I'll get myself in trouble.
    NCBA has a policy supporting mandatory and also has a 
policy supporting voluntary. ICA's policy supports I believe 
it's voluntary with the 90 day. It may be mandatory, I'm sorry. 
I'm blank right now. The hang-up is the definition of what is 
U.S. produced.
    Senator Crapo. What you're saying is you don't----
    Mr. Davis. What I said personally, I meant personally, not 
either organization. Personally, the lack of consensus in the 
industry on the definition and what I fear to be a rush to 
judgment for maybe the wrong reasons, I'm fearful--I don't 
believe we're ready to implement a mandatory system.
    Senator Crapo. All right. Let me switch gears a little bit 
and for both of you go back into the areas that we've been 
talking about with some of the other panels. First, trade 
promotion authority. Like I promised, I won't give my speech 
again, but do either of you have an opinion on whether we 
should grant the President trade promotion authority at this 
time?
    Mr. Vander Stelt. I would not--as far as the dairy industry 
is concerned, we believe in fair trade. However, as my father 
always says, Don't follow the rhetoric, follow the money. Who's 
the wealthiest man in this country? Mr. Wal-Mart. Why? They 
import over 70 percent of their stuff. The money today is 
outsourcing and importing cheap goods for the consumer. The 
consumer does well, the stockholder does well.
    Under that environment, trying to trade or sell with the 
strong dollar which satisfies that stockholder, that consumer, 
is not really very viable. Instead of talking free trade, we 
should be talking protection.
    Now, I don't like protection; I hate that word. I'd love to 
free trade. Until the United States comes to a determination 
are we going to be a consumer country or a producing country, 
that determination and that economic policy has to be done to 
make trade work. Until you come to a conclusion what our 
country is going to be about, is it going to be consuming or 
producing, that would depend on whether you're going to be 
protecting as trade as far as ag is concerned, or go back to 
the Nixon years with planning where we were pushing 
agricultural products.
    We want free trade and we don't want to go to 
protectionism, but as Mr. Little expressed earlier, with our 
strong dollar against New Zealand and Australia, can we really 
come up with a better deal? We've already lost from 2 percent 
to 5 percent, plus we've got the MPC issue which brings in 
another couple percent. We're losing ground.
    Everybody in the world wants the American consumer. He's 
the wealthiest person in the world. He's got the most money. If 
I was producing anyplace else in the world, I'd want a piece of 
that American consumer, and that's what we're fighting.
    Senator Crapo. Eric.
    Mr. Davis. Thank you, Mr. Chairman. Again, I have a two-
billed cap on this particular question.
    Idaho Cattle Association's position is very similar to 
yours. Until some of the problems we see that confront the 
industry today are taken care of, they oppose--the terminology 
is ``fast track'' but today it's ``TPA'' I guess, but in the 
policy, they oppose the fast track until some of the last or 
the former mistakes have been fixed.
    NCBA strongly supports granting the President trade 
promotion authority, and the arguments I think are valid on 
everything that's been said here today.
    I guess my question back to you, if I can answer a question 
with a question, as I understand what I've heard today, you 
don't have a lot of faith that Congress would stop what 
agriculture may perceive as a bad deal if the President 
negotiated that or his people did under fast track or TPA. That 
concerns me.
    Senator Crapo. I'll answer that question, and the answer 
is, you are correct. I don't have a lot of confidence that 
Congress would be able to stop a bad deal for agriculture. The 
reason I say that is the experience we had with NAFTA where we 
clearly identified some really bad pieces of the deal and the 
pressure to move NAFTA forward at the point when the deal was 
struck was overwhelming, and I believe that the same would be 
true with regard to any other agreement that the President 
might negotiate. There are a lot of other pieces of the 
American industry than just agriculture. Agriculture is going 
to be the central focal point of this round of negotiations, 
but that is because a lot of us have drawn a line in the sand 
and said, You're not going to do another deal like last time.
    Mr. Davis. We appreciate that, but can we do another deal 
at all if we don't move away from being stuck with what we've 
got?
    Senator Crapo. That's the conundrum that we're dealing 
with, because there are really strong arguments on the side of 
giving the President the authority to do this, and there's a 
lot of good reasons that we better get involved, you know, 
because other nations are going to be doing it and all the 
reasons that I won't go back into. On the other hand, somehow 
we have to be sure that this administration, as well as the 
past administration, are prepared to stand tough. You know, in 
Seattle, the European Union and Japan and some of the other 
nations were flabbergasted that for the first time, they were 
not able to walk out of the trade negotiation round and 
basically have what I call this, you know, the U.S. agreeing--
what they wanted was for them to have their tariffs and 
subsidies which average something like over ten times what ours 
are stay in place, and have us leave ours at a place low and 
have us agree to pro rata reductions so our average of 5 
percent would go down to 4.5 percent and their average of 50 
percent would go down to 45 percent. When our trade negotiators 
said, No, we're working for parity, the deal fell apart. Well, 
as long as we can be confident that our negotiators are no 
longer going to basically agree to this, then I'm fine with 
trade negotiation authority.
    Mr. Davis. You get no argument out of me on that either; 
however, the best way to get there is where we need to go.
    Senator Crapo. Right. On the other side is we can't just 
sit here and not negotiate it, so it's a really, really 
difficult question.
    To give you a little more positive confidence there, as I 
said at the outset, I am getting to where I am getting the 
confidence in our negotiators. I was getting there with 
Charlene Barschesky under President Clinton, and I think that 
Ambassador Zoellick has shown to this point that he gets it. 
I'd like to see him in action a little bit more before I'm 
sure, but at least from what he's saying and some of the other 
things like that, he's showing that he gets it. Maybe we're at 
a point where we can do it.
    Mr. Otter. Just a couple things, Mr. Chairman.
    Dennis, when I was still here as Lieutenant Governor, I 
know we went through about three years where we really worked 
on the high nitrates and the pollution problem, quote/unquote, 
that we had with the larger the dairies, the bigger the problem 
got, the more concentrated obviously the problem was. Is there 
anything in this Farm bill that's going to help solve that 
problem?
    Mr. Vander Stelt. I think probably some of the dairies will 
use some of the funding to increase their waste management 
systems; however, in Idaho, we have, as far as I know and being 
president of the Western States Group, we do a lot of comparing 
on environmental issues. The joint MOU we have with EPA, DEQ, 
Department of Ag, we pretty much have put ourselves on a zero 
runoff standard anymore. I know I was just at a conference with 
the Texas Association of Dairymen and their problems in Texas, 
Waco Lake, and they could not even fathom how we had a zero 
runoff standard in Idaho, and they said, That's not possible. 
We do. As far as Idaho solving our discharge, our nitric 
problems, we've probably been the leader in the country in a 
proactive way.
    Mr. Otter. Thank you.
    Eric, one other question, and of course this has to do with 
the trading and where we're going with it. Would you feel more 
comfortable if we did have our trade folks sitting at the 
table; that you, representing the National Cattlemen's Beef 
Association, were also sitting at the table and could listen to 
the questions, could listen to some of the solutions and the 
resolves that they were arriving at? Would you feel a little 
more comfortable with that?
    Mr. Davis. You bet. I would feel more comfortable with 
somebody besides myself, but----
    [Laughter.]
    Mr. Davis [continuing]. But, yes, I think that's a grand 
idea, and if that's part of what it takes to put that pressure 
on the administration, I think that's a step in the right 
direction.
    Mr. Otter. Well, I would agree with Senator Crapo that 
there's not much we can do when it comes back, because the push 
is just so great and we don't want all the work and everything 
to go to waste, so there's 51 percent good and 49 percent bad 
and away we go. All they need is 217 or 218 in the House and 
it's gone, and they need 51 in the Senate and it's gone. We can 
condition the people that sit at that table, and I think that 
is our best source of input from a Congressional point of view 
that this is going to be a treaty, and we can say who goes to 
discuss the treaty and I think if we condition the whole 
concept of trade on who is going to be doing the negotiating, 
and I've got a high level of comfort. Quite frankly, Eric, I 
disagree with you: I'd like to have you at that table.
    Thank you, Mr. Chairman.
    Senator Crapo. Thank you. You know, you mentioned John 
Huntsman. I should tell you, he does have roots in Idaho, as 
one of the other members of that team. I think his father is 
from Blackfoot, I believe.
    Mr. Otter. Blackfoot.
    Senator Crapo. There are some people on that team that have 
some common sense developing in there, and I really do believe 
that we're getting a team together that we can start to have 
more confidence in, it's just that I want to see something 
first. I'd like them to play the first game so we can see if 
they're really as good as they look.
    I just have one other question that I'd like to go into and 
it gets back to again a question that I've talked about with 
some of the other panels, and that is the new dynamic that 
we're facing right now in Washington with regard to the fact 
that the administration has opposed the House bill and is 
suggesting a whole new look at commodity programs and safety 
nets and so forth, raises the question of is that perception 
something that is supported out here. In that context, I also 
throw into my question Senator Lugar's bill if you know it very 
well or have a position on it. If either of you have an 
opinion, I just appreciate you sharing it.
    Do you believe that we should push for the House bill or 
something along the same model as the House bill, or should we 
look at something like the Lugar Bill or some other approach to 
our farm policy?
    Mr. Vander Stelt. Last week when Senator Lugar's draft 
version of his bill come out, I received a call from Carol 
DeMar from Senator Lugar's office. A conference call was set up 
with I believe Texas, Idaho, California, and New Mexico were 
involved in that conference call with Carol. We went over it as 
far as the dairy industry is concerned.
    Some of the things that it presses for is an 80-percent, 5-
year average of guaranteed income level. We can already do 
those things and many people do through forward contracting 
either directly through plants or we work futures. We already 
have those mechanisms.
    They have a cap system here once again, and because of our 
larger-size dairies, we never get much benefit out of a capping 
system.
    There was some other issues we discussed in there.
    She took a poll at the end of that conference call, and it 
was unanimous that we would probably not support that; that we 
would prefer the Federal milk marketing system, which we really 
believe was written to product producers.
    Senator Crapo. All right. Eric, do you have a thought on 
that?
    Mr. Davis. I don't. I have not seen Senator Lugar's 
proposal; I've heard bits and pieces.
    The beef industry was not unhappy with the House version of 
the bill in general, I think that's safe to say.
    At this point in time--and NCBA has signed on to the letter 
saying it's OK to put it off till 2002, and that's going to be 
the Senate's call. I think at this point in time, both from the 
State and National organizational standpoints, it's more--
timing is probably not as important as knowing where we're 
starting in the Senate--whether it's the House bill, whether 
it's Mr. Harkin's, whether it's Mr. Lugar's, whether there's 
something else out there--and nobody have time to have a good 
delivery and process, and not just jump into things that we 
haven't already talked about I guess.
    Senator Crapo. Well let me just take that as a question and 
give you this perspective on where we are in the Senate: There 
are a number of senators who support the House version or 
something along the House version; there are a number of 
senators who don't and support the administration's perspective 
that we need to start creating a new approach to farm policy, 
Senator Lugar being one of those, and there are some who 
support his bill; and as you indicated, Senator Harkin is also 
working on some other approaches. It is right now very hard to 
tell if there is a majority position in the Senate on the Ag 
Committee, and it's also very hard to tell whether that would 
translate into a majority position on the Senate floor. Things 
are very much in the developmental stage in the Senate right 
now. In fact, I think we were closer to being able to bring 
something together six or eight weeks ago than we are now in 
terms of knowing what the mood of the Senate Ag Committee is.
    Do you have any other questions?
    Mr. Otter. I would only say about that, Mr. Chairman, that 
it's been my impression thus far that if we wait until next 
year, if the Senate waits until next year, you're going to see 
an entirely different texture vote come out of the House. 
Budget restraints as a result of the last six weeks are going 
to be huge in terms and there's no way that I could possibly 
conceive that a 2002 Agriculture Bill is going to be near as 
generous, even close to as generous, and is going to hurt in a 
lot of areas, including conservation that we were just talking 
about and some of the other problems.
    Senator Crapo. I think that's a very significant concern 
that a lot of us share.
    Mr. Davis. We too.
    Mr. Vander Stelt. We also.
    Senator Crapo. All right. We would like to thank this panel 
very much. We appreciate it.
    Mr. Davis. Thank you, Mr. Chairman.
    Mr. Vander Stelt. Thank you also, Mr. Chairman.
    Senator Crapo. We have one more panel; however, as I 
indicated earlier, we must break at noon for about 30 minutes, 
so I apologize to our last panel. We're going to have to have a 
break now for about 30 minutes. Hopefully that will give you a 
chance to run out and get a bite to eat or something. I'm going 
to try as close to 12:30 as we can to crank it back up, and we 
encourage everybody to come back. We're going to be focusing on 
conservation elements and issues in this last panel.
    At this point, we'll be recessed until 12:30.
    [Luncheon recess.]AFTERNOON SESSION
    Senator Crapo. The hearing will come to order. We 
appreciate everyone's patience, and we will now move to our 
fourth panel, which is Kevin--is it Kuster----
    Mr. Koester. Koster.
    Senator Crapo. I've never been quite sure if I've got it 
pronounced right. I thought it was ``Kuster.''
    Mr. Koester. Kevin Koester with the Idaho Association of 
Soil and Water Conservation.
    Senator Crapo. Tim Hopkins who's here from Idaho Falls, but 
he's here representing the Idaho Chapter of The Nature 
Conservancy.
    Mr. Hopkins. Yes, Senator. Thank you.
    Senator Crapo. Douglas Hubbard who is with Ducks Unlimited 
from Boise.
    We appreciate all of you being here with us. Before we turn 
it over to you, I'll remind everybody we want to try to get you 
to keep your oral testimony to 5 minutes so we could have a lot 
of give and take, and if the little beeper goes off, just try 
to finish your thought and we will proceed.
    What I want to say just as a kickoff for this panel is 
quite often when people in the country hear us say we're 
working on the ``Farm Bill,'' they think we're talking about 
commodity programs for farmers; and definitely that is a part 
of the Farm Bill. The Farm bill really has a number of titles 
that are very critical and reach much more broadly than that, 
and frankly I believe that the Farm bill is probably the most 
significant pro-environmental piece of legislation that 
Congress works on on a regular basis. It also has sitting other 
elements such as the credit title, the conservation title I 
just mentioned, the rural development aspects, market 
promotion, research, the food and nutrition issues which we 
talked about a little bit about this morning with some of the 
food stamp folks who were here concerned with the food stamp 
program, and energy matters. This is a bill that has a very 
broad range of concern. The focus we have right now on this 
panel which will be on the conservation title, again, I say is 
one of the most sitting things that we do in this country with 
regard to environmental improvement and conservation, and so we 
welcome all of you to the panel.
    Let's just start out with--we don't have you sitting in the 
order that I said it, but we'll go in the order I said it, and 
that will be Kevin and then Tim and then Douglas.

          STATEMENT OF KEVIN KOESTER, DIRECTOR, IDAHO 
        ASSOCIATION OF SOIL AND CONSERVATION DISTRICTS, 
                         DIVISION FIVE

    Mr. Koester. Thank you, Senator, Congressman Otter, and 
staff members. It is my pleasure to be here to talk a little 
bit about conservation, especially in Idaho.
    My name is Kevin Koester, and I am currently serving as the 
director of the Idaho Association of Soil and Conservation 
Districts from Division Five, which is in Southeastern Idaho. I 
also serve on the board of directors of the National 
Association of Conservation Districts, and as a member of that 
board, I'm currently in my second term as Pacific Region 
chairman, which is an area of nine western states and 
territories. In the past, I have served as IASCD director for 
eight years, and just last week led to another 2-year term. In 
those eight years, I have served two years as vice president, 
and the last two years as Idaho's director to NACD. With and 
because of this experience, I would like to direct my comments 
to the conservation title of the Senate Farm Bill.
    With the great diversity of Idaho ag products and land 
uses, I would not presume to speak to all of their needs and 
wishes. The one thread that ties all of them together is 
conservation and its many forms. These include, and by no means 
are limited to, land treatment in the North, to better water 
management in seed-growing regions, to better management in the 
row crop areas, to livestock waste and nutrient management 
throughout the state. The one constant is conservation.
    Over the last several years, ag, in general, has taken many 
and varied hits, from poor or stagnant prices to weather-
related disasters, to numerous increases in our cost of 
protection. As if that weren't enough, the public and 
government, both Federal and State, are making requests, and in 
some cases demands, for clean water, clean and better-smelling 
air, clean water, with the added burden of protecting species 
that may or may not be endangered. Unfortunately, in most 
cases, the choice was to write laws and regulations without 
providing the necessary funds or technical support to help land 
users and ag producers to comply with their issues. A few 
examples would be TMDLs and ESA.
    While the previous Farm bill did provide some Federal 
funding for conservation, many of those programs were a good 
place to start, but now we have an opportunity to improve on 
them and take them forward. EQIP was a good starting place, but 
like many new programs, it needs some improvement.
    NRCS can continue in making these improvements and apply 
them in a practical way. Senator Crapo's suggestions go a long 
ways to addressing all those needs, and we would like to see 
them go farther.
    When EQIP was first promoted in 1996, we all hoped it would 
be the answer, but experience has shown the program was good 
but underfunded. For example, Idaho's needs alone amount to six 
and a half million dollars a year, current requests exceeding 
funding by a three-to-one ratio.
    One of the examples of how EQIP can and should work in 
Idaho happened in Idaho. Many small dairies would have not been 
able to implement their dairy waste and nutrient management 
plan without EQIP assistance, which could potentially have cost 
$8.4 million in revenue because of State laws. Because of the 
focus from NRCS to use those EQIP dollars to enable those 
dairies to stay in business, they had to focus their entire 3-
month effort on EQIP funding and were unable to do other 
projects in the state. If CTA, or Conservation Technical 
Assistance, is not available, then the process stops or at the 
very least slows down.
    One way to address this problem is to provide full funding 
for technical assistance for all conservation programs. Third-
party vendors that had the ability to contract with outside 
sources could help to speed this process along. Of course, we 
would like to recommend that local soil conservation districts 
serve as that third-party vendor. No one has the network of 
information and the history of cooperation that we do.
    We would also recommend that NRCS, our Federal partner, 
have technical oversight for those vendors. After all, we work 
with them every day.
    We would all like to eliminate priority areas, but the 
reality is without adequate funding, we cannot. EQIP could be 
compared to a part-time employee: Very skilled, good worker. If 
we could just support him or her, where could we go?
    One of the issues that we talked about in our NACD Farm 
bill Task Force is conservation initiatives. An example of this 
would be develop producers, convert to no-till or direct seed. 
It's a very expensive conversion, but it can have a sitting 
effect on air and water quality.
    As far as conservation goes, we believe the following basic 
principles need to be addressed in the 2002 Farm bill to 
effectively and efficiently address our nation's conservation 
concerns for the next five- to 10-year period:
    We need a flexible, locally led, incentive-based program;
    A well-funded technical assistance program that will reach 
our land users regardless of program or nonprogram 
participation;
    Provide adequate funding;
    Allow for programs to use for technical assistance in the 
event that CCC technical account funds are not adequate to 
fully support the financial assistance program;
    Funding a farm safety net;
    Broad-based incentive programs.
    Let us all remember that the American consumer needs to be 
reminded: Food does not come from Albertson's, and the only way 
we can keep a plentiful supply that is safe and inexpensive and 
readily available is with a strong agriculture.
    I thank you.
    [The prepared statement of Mr. Koester can be found in the 
appendix on page 72.]
    Senator Crapo. Thank you very much, Kevin.
    Tim. Why don't you pull that microphone over too.
    Mr. Hopkins. May I have a water?
    Mr. Koester. Everybody wants my water.
    Mr. Hopkins. It's a very valuable commodity.
    Senator Crapo. I'll tell you, water is going to become an 
increasingly scarce commodity worldwide, I think.

STATEMENT OF TIM HOPKINS, CHAIRMAN, IDAHO CHAPTER OF THE NATURE 
CONSERVANCY; ACCOMPANIED BY JEFF EISENBERG, WORLD SENIOR POLICY 
                ADVISOR, THE NATURE CONSERVANCY

    Mr. Hopkins. Thank you, Senator, and thank you, Congressman 
Otter, for the opportunity to be here and to present testimony 
on behalf of The Nature Conservancy to your committee.
    The Nature Conservancy strongly believes that conservation 
should play an important role in agriculture policy. 
Conservation programs under the Farm bill are an important 
component of the future for Rural America, programs that 
promote healthy rural economies while conserving the natural 
resources they rely on.
    With me today is Jeff Eisenberg, who is senior policy 
advisor of The Nature Conservancy throughout the world. He will 
help me when it comes time for your questions to make sure 
we're responding adequately to what you may be interested in.
    The Nature Conservancy of Idaho has been a part of Idaho 
for over 25 years and, as Idaho's largest conservation 
organization, has more than 6,500 members in this state. In 
cooperation with landowners in communities throughout Idaho, 
The Nature Conservancy has helped preserve some of the state's 
most beautiful and biologically rich places: Kootenai Valley, 
for example, in Northern Idaho; Henry's Fork in your own 
Eastern Idaho, Senator Crapo; and the Owyhee Canyonlands in 
Southwestern Idaho that I know Congressman Otter is close to.
    Our conservation work is grounded in sound science, built 
on strong partnerships, and committed to tangible results. The 
Nature Conservancy's 50 years of experience in private land 
conservation has taught us that habitat protection in a strong 
farming and ranching economy can go hand in hand. One of the 
chief threats to wildlife facing Idaho and the Nation is the 
fragmentation of habitat resulting from subdivision of existing 
farms and ranches for nonagricultural uses. Maintaining working 
farms and ranches helps protect existing wildlife migration 
corridors, winter range, and other crucial habitat features. 
Moreover, we find that habitat enhancement efforts, whether 
through private initiatives or public programs such as the 
Wetland Reserve Program, are far more effective on large, 
intact landscapes than areas where lands are held by a 
multitude of owners in a variety of uses. Our conservation work 
will find lasting success only where there is strong support in 
the local community.
    In the Farm Bills that you are considering, The Nature 
Conservancy is seeking authorization and funding for three 
programs: The Wetland Reserve Program, proposed Grassland 
Reserve Program, and the Conservation Reserve and Conservation 
Reserve Enhancement Programs. These programs and activities 
benefit agriculture and the environment, and deserve the 
thoughtful support of the committee in formulating long-term 
agricultural policy for the next Farm Bill.
    Because of its many important benefits, The Nature 
Conservancy considers the Wetland Reserve Program to be the 
most important conservation program authorized by the Ag 
Committee, and the case for expanding the program is strong. At 
one time, there were more than 220 million acres of wetlands in 
this country. This number has now been reduced to 110 million 
acres on private land and approximately 20 million acres on 
public land. To date, the Wetland Reserve Program has restored 
one million of these acres, and demand for participation in the 
program far outstrips the availability of funding. In Idaho, 
for example, 1,200 acres of emergent marsh and forested wetland 
were restored in this past year. Pending Idaho landowner 
requests for enrollment in that program are now valued at more 
than $5 million.
    In Idaho, as elsewhere, wetland protection and restoration 
can play a crucial role in achieving water quality goals by 
filtering out sediment and nutrients. For example, the Idaho 
Chapter has worked with the Northside Canal Company to 
establish wetlands to treated agricultural return flows before 
they reach the Middle Snake near Twin Falls.
    We have also used wetland reserve to restore wetlands for 
water quality and fishery enhancement in the Henry's Fork area 
in Eastern Idaho.
    Producers embrace the WRP for a number of reasons. Some 
producers simply love the land; they have worked all their 
lives on their land and want to reserve its natural character. 
Some producers decide to retire flood-prone or marginal lands 
and use WRP money to purchase more productive land. Others use 
the money to make additional capital investments in their 
operations or to contribute to their retirement. Many producers 
generate additional income through the program by renting WRP 
land to hunting groups. Regardless of their motive, farmers 
have found ways to integrate wetlands restoration into their 
farming businesses, a true win-win outcome for both agriculture 
and conservation.
    Senator Crapo. Time always runs out before you do, but take 
another.
    Mr. Hopkins. Senator Crapo, we both share the laws of 
profession. I know of the importance of those red lights in our 
Supreme Court and I respect them in this branch of government 
as well, a limitation that is imposed for good reasons.
    Let me conclude by saying simply that we likewise endorse 
the Grassland Reserve Program that was, we are proud in Idaho 
to say, introduced by Senator Craig and co-sponsored by Senator 
Crapo, and we believe its elements are essential to the future 
of conservation in the state of Idaho, for that matter 
throughout America, and particularly throughout the West where 
that program is uniquely important.
    Then in addition, the Conservation Reserve Program that is 
a well-known tool for conservation purposes within the 
agricultural framework, and again, we endorse its continuation 
and its expansion, and recommend 45 million acres for 
enrollment in that program.
    In conclusion, let me thank Senator Crapo and 
Representative Otter for your attention and for the opportunity 
to present this testimony to you today, and Mr. Eisenberg and I 
will be prepared to address your questions when ready.
    Senator Crapo. Thank you.
    Douglas.

      STATEMENT OF DOUGLAS HUBBARD, IDAHO DUCKS UNLIMITED

    Mr. Hubbard. Senator Crapo, Representative Otter, I 
appreciate the opportunity to speak here today. I would like 
to, on behalf of Ducks Unlimited, give a special thank you to 
Senator Crapo and his staff for holding this important hearing 
on the 2002 Farm Bill, and for their splendid help and 
cooperation in bringing this bill closer to a reality.
    As a farmland owner, I know firsthand the importance of a 
comprehensive farm bill even though my land does not qualify 
for any voluntary program such as CRP, WRP, GRP.
    America has now lost half of its original wetlands and 
continues to lose the most productive vegetated wetlands at a 
rate of more than 100,000 acres per year. Since the loss of 
jurisdiction by the Corps of Engineers over the draining and 
filling of prairie potholes and other wetlands, I fear this 
loss may even be greater in the future. Not only must we keep 
pace with these losses, but we must reverse the total of 170 
years of loss of wetlands and upland habitat. The goals of CRP, 
WRP, GRP, and WHIP can do this. CRP and WRP are very popular 
programs for farmers, as you well know, farmers and ranchers, 
and the demand to enroll far exceeds the amount of acreage to 
be enrolled.
    While CRP and WRP are conserving millions of acres of 
critical wildlife habitat, we must not forget the economic 
safety net for thousands of small family farmers. With 
commodity prices falling to historic levels, the payments 
associated with CRP, WRP, and hopefully GRP help farmers to pay 
farm mortgages and living expenses. These payments are a 
dependable source of income during times of drought and poor 
crop production, and, conversely, during periods of good 
production and low market prices.
    Since most of the acreage enrolled especially in CRP and 
WRP are at high risk for erosion, flooding, and poor crop 
production, these programs provide farmers, ranchers, and 
taxpayers a more cost-effective and sustainable option for use 
of that land.
    American agriculture is a victim of technology. It can 
produce far more from the land and marketplace--than the 
marketplace can support. American agriculture needs this 2002 
Farm bill to provide good living from the land, and satisfy the 
checks and balances found in nature and in economics. We must 
remember that soil and water are not renewable resources.
    I believe it's beneficial to note that the economy and 
ecology have the same Greek root word--oikos--which means 
``house.'' We assume then a wise decision like the 2002 Farm 
bill would be beneficial for the economy and for the house 
which we Americans reside. All Americans benefit from these 
programs, and we should be proud of their successes. The value 
received by society is greater than the cost to the taxpayer.
    I thank you very much for your time.
    Senator Crapo. Thank you very much.
    Before I turn to Representative Otter, I need to correct an 
oversight here. I have not made note to the audience that we 
have with us Idaho Representative Doug Jones, who is the 
chairman of the House Ag Committee. Thank you for being here 
with us.
    Representative Otter is going to go first. He's got a 
meeting that he needs to get to, so I told him that he could go 
first. Then I'll get you all to myself after he leaves.
    Mr. Otter. Thank you very much, Mr. Chairman. I appreciate 
the testimony from this panel, as I have enjoyed and appreciate 
the testimony from all the previous panels, but let me start my 
questioning period with a different aspect pretty unique to me 
and I'm sure pretty unique to the hearing process, and I'd like 
to start off my portion of this with an apology. I made this 
apology to Tim in his capacity as the chairman of The Nature's 
Conservancy, and I've also made it to Ducks Unlimited on a 
national basis.
    Forgive me, as a freshman, a poor choice of words that I 
used during a press conference on my endorsement of a group 
called Green Watch. Green Watch, which limits some--or, lists 
some 528 agencies--or groups, I guess I should say--I used the 
word ``extremist,'' and I used that in a very poor way. What I 
should have said and what I meant to say was that this list had 
some people, had some groups on it, that held some extreme 
positions. I have apologized to Tim and I have apologized to 
Doug and Ducks Unlimited for those poor choices of words, and I 
do again publicly. Having said that, let's move on.
    I certainly appreciate your comments about the Farm Bill, 
especially in light of I think we all share the enthusiasm for 
the Farm bill because it is an environmental bill, because it 
is a national security bill in terms of our foodstuffs, and it 
is a bill which I believe could provide an awful lot of 
economic stimulus.
    We did have an effort during the negotiations and the 
debate in the House on considerably broadening the conservation 
part of it, and I don't know if you folks are aware of this, 
but Idaho I think's would have gone up I think 40 percent of 
the funds that would have been available.
    One of the things that that amendment offered by my good 
friend from Maryland Wayne Gilberts, one of the things that it 
didn't address is that in the process of saving the wetlands, 
in the process of conserving these other areas, when that 
became the sole use, how were we going to provide for the 
aspect of private property, No. 1. No. 2--because I believe 
wetlands is a great natural filter for problems in our water, 
but on the other hand, if the government, any level of 
government, wants some of my land to build a road on, they have 
to pay me for it. That comes under the Fifth Amendment, just 
compensation for property taken. When we limit the use to such 
an extent in some cases, I think we're going to have to make a 
provision for paying for the private format that we want to put 
to a natural use such as all you folks suggest.
    My first question would go to how do we provide for an 
erosion of the local tax base, which I know my property out 
along the river--I've got 60 acres--a lot of it is taxed on the 
basis of its potential development even though it's all in the 
floodplain where we would actually be planting houses instead 
of crops, but it concerns me that when take the property for a 
much less use, the tax receipts for local county and to the 
local city, local units of government who only count primarily 
on property tax for their revenue streams, this amendment to 
the Farm bill did not provide for that. I have not seen a Farm 
bill in the conservation side which by and large provides for 
keeping the local tax base whole, and at the same time, 
providing for just compensation to the private property owner.
    I guess, that's a question for all of you, but, Tim, I 
would start with you.
    By the way, I am very familiar with the Kootenai County 
project, and your folks up there have just done a tremendous 
job. In fact, I brag about that project several times in 
several of my committees.
    Would you respond to my question?
    Mr. Hopkins. I will indeed, Congressman, and pleased to 
have the opportunity to do that.
    As you know, The Nature Conservancy is an organization 
whose efforts in conservation are really cooperative and 
collaborative. While our reputation may have been developed 
originally for privately purchasing lands and then doing 
conservation on those lands, that is not necessarily the only 
thing we do. We collaborate with a number of other private 
organizations, private landowners, as well as public agencies, 
in efforts of conservation. That work continues.
    Specifically with respect to the tax base, which obviously 
is a concern, would be a concern of government at any level, 
The Nature Conservancy in Idaho has, as a matter of policy, 
always left all of the lands it acquires for conservation on 
the tax base so that they are taxed and continue to be taxed 
exactly as they had previously been taxed as private farms or 
rangelands, whatever their use may have been prior to the time 
that they were taken for conservation. I say that to agree with 
you that there is concern in that respect and to say to you 
that The Conservancy, as a matter of policy, continues to pay 
its tax on the lands it continues to own.
    Of course, with respect to lands that may be subject, for 
example, to a Federal program, like the Wetlands Reserve 
Program, oftentimes that compensation for the purpose of 
reserving wetlands and characterized that way for a special 
purpose that does not have to do with production like the 
remaining farmlands may for that given farmer, nonetheless 
provide a source of income to him for those lands that he would 
not have had otherwise and they are, so long as they remain in 
his private ownership, taxed by the County in the same fashion 
as they may have been taxed previously. The only thing that is 
not being done is reducing those wetlands to production 
agriculture, which would take them away from the conservation 
purpose and add to the subsidy problem that you all face on 
another side of the Agriculture Bill.
    It's not a matter of a taking in the sense that it goes 
into public ownership. It remains in private ownership. There 
is compensation paid which presumably sees a tax on the income 
tax side, and it leaves it in a place that it continues to be 
taxed on a local basis.
    While it may not have been addressed specifically in the 
debate in the House that you've described for us, I believe 
there is a rationalization of those interests in a very logical 
way between these programs and the interest of the government 
in maintaining a tax base of its operations.
    Mr. Otter. Kevin.
    Mr. Koester. Congressmen, as you're both aware of, the 
National Association of Conservation Districts did not support 
any amendments to the House Ag Bill as it came out. I guess in 
fairness, I should add that we also told the House Ag Committee 
that once that bill was passed, all bets are off. We do not 
think that is necessarily the starting place for conservation 
on this next Farm Bill. We did not support any of the 
amendments that were presented at the time it was voted on.
    Mr. Otter. Doug.
    Mr. Hubbard. Ducks Unlimited's policy is very nearly the 
same as The Nature Conservancy as far as the tax base is 
concerned. Ducks Unlimited rarely buys the land outright. It's 
on a small percentage, very small percentage, if we do that. 
The land that we develop or enhance is generally under some 
type of a Federal program that we're looking at through grants 
and others like that, so that remaining tax base at least 
involving the land that we're involved with still remains there 
for the County or whatever jurisdiction that it's in.
    From the Federal standpoint, the grants that we get to 
retire marginal land or other nonproductive land I think 
reduces the amount you have to pay out in commodities for that, 
so given inflation and a few other things, I don't think it's a 
wash, but it really reduces the commodity dollars that are paid 
out when we go to these grants like that.
    For the most part that the tax question that you have for 
revenue, we've pretty much taken care of that just like The 
Nature Conservancy does. We're aware of that, we're aware of 
that, taking that out of the rolls, especially in today's 
environment.
    Mr. Otter. Let me just ask the question I guess generally 
in a different way: If in the event that a public policy such 
as could have been created with the Farm Bill--the amendment, 
Kevin, that your organization didn't support, which did, in 
fact, provide for a taking by strictly limiting the use, would 
your organizations support payment for that taking at a 
reasonable market price for what that land that we might take 
from a private property owner, would your agencies or would 
your organizations then support the Federal Government paying 
for whatever paid for that land?
    Mr. Hubbard. Yes, we would.
    Mr. Koester. I don't believe so. That's one of the problems 
that NACD's had with the caribou is that there is some language 
in there that involves taking, and we have several resolutions 
we passed, we passed not in support of that document.
    Mr. Hopkins. Congressmen, Mr. Eisenberg is specifically 
familiar with this privilege, and I'd like him, if he may, to 
respond.
    Mr. Eisenberg. Just, I'd like to say that something like 
WRP is a voluntary program and the only people who are being 
involved are those who decided that this is the best economic 
use of their land. To the extent there's any diminishment in 
their use of the land, that's specifically what they are being 
compensated, and so of course we agreed with you that they 
should be compensated for the diminishment of the land just as 
a practical matter. We don't believe it's a taking situation in 
the first instance, because the only people who are doing it 
are those who want to, and they have the best property rights 
protection they could have, which is just to say ``no'' if they 
don't want the program.
    Mr. Otter. I agree with you, and as long as all the 
agencies approach that on a willing and a voluntary base, but 
we happen to have agencies that don't approach it that way.
    Mr. Eisenberg. Where's the point of voluntary conservation.
    Mr. Otter. Thank you. Right.
    Mr. Chairman, my apologies to the panel for having to leave 
early and to those folks in the crowd, but I want to thank you 
very much for including me in this hearing, and it's good to 
work with you.
    Senator Crapo. Well, thank you. We appreciate you being 
here with us today, and you are certainly excused to get on to 
the next one.
    Mr. Otter. OK.
    Senator Crapo. Let me start out my questions first of all 
with you, Kevin.
    You indicated in your testimony a number of improvements to 
the conservation title of the Farm bill that could be made, and 
each of them I thought was very helpful in terms of those 
suggestions. No. 6 was that you would be in favor of including 
a broad-based incentive program that would provide rewards to 
farmers and ranchers for practicing good stewardship in private 
land areas. That sounds, to me, similar to the concept that 
Senator Harkin is talking about. Am I correct in that, that 
concept is the same one you're talking about?
    Mr. Koester. Yes, Senator. In fact, I don't know if it's 
accurate, but we're very proud that we have that support of 
Senator Harkin.
    Senator Crapo. You mean his is very similar to yours?
    Mr. Koester. Yes, that's the way we're going to look at it.
    The bottom line for that is that we feel that it's time 
that society starts rewarding those farmers who are willing to 
participate in best management practices even though there may 
be an added cost burden to protect soil, water, and air; and in 
the past, sometimes the commodity programs, under past 
programs, have rewarded all farmers. We think it's time we make 
that difference between the good farmers and those who are just 
farming for the programs, and that's what we're considering is 
calling conservation issues.
    Senator Crapo. As I understand it, you're not suggesting 
that existing conservation programs be phased out in terms of 
instituting a new program like this, but that we supplement 
existing programs with a new program like this?
    Mr. Koester. Senator, that would be correct. We feel like 
we have a real good base but we need to build on, and now is 
the time to do that.
    Senator Crapo. Well, as I'm sure you are aware, I have 
introduced a conservation title that focuses on reforming and 
strengthening the existing programs, many of which you all have 
talked about here today, and Senator Harkin has either 
introduced or is formulating a program along the lines of these 
incentive-based programs that you have discussed. I don't 
believe it's his intent either that we replace existing 
programs, but that we supplement them.
    I guess the question I have, which is just to ask you to 
speculate on this a little bit if you would: I am assuming that 
if we have a limited number of dollars, that we may run into a 
problem in terms of how much strengthening of existing programs 
do we do versus funding of a new approach to these voluntary 
incentive programs. Do you have a position on that?
    Mr. Koester. Senator, I do, and I have several, 
unfortunately. I have one position as a small grain producer in 
Southeastern Idaho. I, particularly after two years of extreme 
drought, I'm highly in favor of commodity-based programs. As a 
conservationist and becoming a devotee of that, I think there 
are other things we can spend the money on.
    I realize that there is probably going to be a finite 
amount of dollars. I'm not certain that we need to support only 
those traditional commodity programs. I think we can support 
better farm practices through a conservation incentive program, 
and we may have to split the pie up, but the better corn 
farmers if they're using no-till practices are still going to 
have approximately the same amount of dollars in return, it's 
just we're going to reward them for doing better practices.
    Senator Crapo. If I understand what you're saying, you 
know, please correct this or improve it--you're saying that the 
notion of the broad-based incentive programs, if correctly 
implemented, could reward farmers financially in ways that 
could benefit their bottom line in terms of the economic 
operation of their farms, while also improving the environment 
through proper farming practices or conservation incentive 
programs.
    Mr. Koester. Exactly, Senator. That's one of these things 
that we've been beating on this drum for several years now and 
it's just finally getting out there. With public demands for 
clean water, clean and better-smelling air, there are farm 
practices out there that can help and do promote those ideals. 
As we've discussed in the past, one way that society can 
participate in that is with Federal dollars, and if society 
demands that upon agriculture and upon source polluters, then 
the way they can participate and help to solve that is through 
sharing of dollars.
    Now, I'm not suggesting that one program has to suffer 
because of the other. I think there is a way to make everyone 
happy. That isn't going to happen, I'm sure, because we've had 
some interesting floor fights in our own National organization 
based on this very conversation.
    It's not an easy element to discuss, but we firmly believe 
a conservation incentive program, now is the time to start that 
and to fund it in a mechanism that would be preferred.
    Senator Crapo. Tim or Doug, do you have any desire to jump 
in on this?
    Mr. Hubbard. I can't add too much to that, because I agree 
with both of these gentlemen. I think in the past that our 
guaranteed price support systems that we had for agriculture 
was an incentive for agriculture to produce a lot more at 
taxpayers' expense. That has since not become near of an 
abusive thing that was seen before, but I think because the 
conservation efforts in agriculture itself are so intertwined 
together that agriculture is good for the land, it's good 
diversity. The thing we've got to avoid is the monoculture or 
intensive agricultural farming. That's going to lead to not 
only ecological problems, but certainly low market prices 
similar to what we're certainly seeing now. What Tim and Kevin 
have said now, I think we'd have to echo 100 percent with them.
    Senator Crapo. Tim, did you want to add anything?
    Mr. Hopkins. I wasn't sure I'd been heard yet, but if Doug 
thought it was good----
    Mr. Hubbard. I'm thinking back to the last one, I guess. 
I'm sorry.
    Mr. Hopkins. I would like to say, Senator, that we are here 
today, of course, to really endorse the programs that we know: 
Wetlands Reserve, Grasslands Reserve, and the Conservation 
Reserve Programs that have worked well. I think at this point 
we're not familiar enough with the new proposal contained in 
Senator Lugar's legislation to really comment.
    Senator Crapo. All right. Thank you.
    Tim, let me move to you for just a minute. In the context 
of the Grasslands Reserve Program, could you expand a little 
bit on the issue there of resource protection versus 
development potential of these lands and what we're seeking to 
achieve? It's my understanding there's a pretty sitting concern 
with regard to the fact that given the current economics and 
the environmental pressures and so forth that our ranchland 
owners and the grassland owners face, that they don't have the 
resources to continue, many of them, continue operating them 
effectively as ranch or grazing land and there's pressure to 
develop them, and that there's a way we could maybe solve some 
of that concern by the Grasslands Reserve Program and other 
efforts in that context.
    Mr. Hopkins. Well, the Grasslands Reserve Program really is 
designed for the large-scale landscape of the type that we know 
in Idaho, of the type the West knows, and we're particularly 
well-suited to understand the value of extensive grassland 
areas. Not so much concerned with the intrusion of suburb or 
even recreational development into those lands, because while 
in more populous areas that probably is the principal concern 
in terms of conservation, here we're talking about areas like 
the Owyhee Canyonlands, for example, where there are literally 
millions of acres of land that are covered by sagebrush and 
junipers and serve as grazing base for the economy of that 
region but which are not threatened in a direct way or 
certainly in any immediate way by suburban development, and 
neither has recreational development taken an interest in that 
kind of landscape.
    The Grasslands Reserve Program, as certainly you know well 
and Senator Craig knows well, is something designed to protect 
those genuinely vast areas of open country that Idaho still 
has, Nevada still has, and other regions in the West still 
have, and not so much concerned about the intrusion of Suburban 
America that other programs, frankly, address.
    I do understand there is some thought in the Congress that 
existing programs could accommodate the idea of this grasslands 
protection, and we're of the mind that that isn't the case, 
that these really or that this proposed legislation is focused 
on different kinds of land, the type I've described.
    Senator Crapo. Thank you.
    Doug, this is for the whole panel really, in the context of 
the entire issue of whether we should stick with existing 
conservation programs or move to new, more-general conservation 
incentive programs, I'm hopeful that the budget that we deal 
with ultimately will not have to cause us to make a choice 
between programs such as the one I've proposed to strengthen 
existing portfolio of programs, versus the effort to try to 
move into some of the new areas that you discussed, Kevin.
    If we have to face a difficult budget decision and decide 
between the two, should we pair back the dollars that can--the 
additional dollars that can be moved into the existing programs 
in order to try establish an incentive-based program, or should 
we wait for a time when we have a better budget climate in 
order to do that and to try to really bolster as much as 
possible our existing programs?
    Mr. Hubbard. My feeling is that we need to stick with the 
programs, bolster what we have, because these programs like WRP 
and CRP have been wildy successful. They have probably been 
some of the most successful government programs that have ever 
existed, and they benefit everyone. They're not just narrowly 
focused on the farmer or the conservationist or anybody, 
because they benefit everybody, right down through the 
taxpayers, and certainly environment.
    My feeling is given the prospect that we may have a limited 
budget to deal with, as you say, then I say we need to 
reinforce these programs and wait until the later time to 
expand upon the incentive programs and those type which I think 
do show some merit.
    Senator Crapo. Right.
    Kevin.
    Mr. Koester. Senator, before I answer this question, would 
you look behind me and see how many consumer groups are back 
there?
    [Laughter.]
    Mr. Koester. If there are some commodity groups, I may be 
in a little bit of trouble here.
    Senator Crapo. Since it's after the lunch break, you're 
actually pretty lucky.
    Mr. Koester. I may be in good shape.
    If it comes down to it--and my gut tells me that it 
probably will come down to a choice, it will be an either/or 
situation--one of the problems they're having back in the 
Midwest with land values is that land values are increasing 
very rapidly because of high commodity incentive programs, so 
what's happening, according to some information I've received 
from some friends of mine back there, these smaller operators 
are being pushed out because they can't afford to land rent or 
the purchase of property. The larger operators are buying 
because of the commodity programs, subsidy programs.
    Given that, we need both, and I still think there's a way 
to share that. If we have to make a cut in the traditional 
commodity programs, I think that the individual producer can 
still retain that same value by practicing good conservation.
    Maybe that's not a very good answer, but it's safe.
    Senator Crapo. I hear you. What if we, in the conservation 
arena though, as opposed to commodity programs between the 
broad-based incentive programs and the existing programs like 
CRP and WRP and so forth, do you feel we would have to make a 
choice there?
    I guess the question is we're probably going to have some 
amount of budget. If the amount of money we have in that part 
of the budget is not enough to do all the bolstering we would 
like to do on the existing programs, should we back off a 
little bit on that and fit in a new section for the broad-based 
incentive conservation programs, or should we push for the 
maximum strengthening of the existing programs?
    Mr. Koester. Senator, if I may, our National Association is 
on record that we are not very enthusiastic about any further 
land retirement programs, and we count CRP in that type of 
program. We think there are better ways to manage that land 
through conservation and still keep it productive, and so, 
therefore, if it came down to increasing a delay on CRP or 
conservation issues, we would support conservation issues 
rather than land retirement programs.
    Senator Crapo. OK.
    Tim.
    Mr. Hopkins. Senator, if I may, I'd like to defer again to 
Mr. Eisenberg, because I know this is an issue he is currently 
dealing with and has a national position to express.
    Senator Crapo. OK. Go ahead, please.
    Mr. Eisenberg. Tim has basically said, you know, we're 
supporting those three programs, and that's the case. We think 
the incentive program has merit, but believe that we're really 
seeking to support the resource-oriented programs.
    I'd like to say something: It's a little bit inconsistent 
to say that, I recognize, and also talk about the Grassland 
Reserve Program which has not been out of the gate yet.
    Senator Crapo. New program, right.
    Mr. Eisenberg. To say something on its behalf, which is 
basically that it's a rare example when you have a commodity 
and conservation groups working hand in hand to pull something 
together that's going to address common problems and, you know, 
they want big ranches and we want big grass, maybe that's not a 
good enough reason to support that program and not others. 
Budget-wise, grass is much, much smaller than the incentive 
program is. We think the Conservation Incentive Program is a 
good--I mean, Harkin's proposal is a good thing, but really 
we're really looking at resource-oriented programs that are 
going to better serve our mission.
    Senator Crapo. Well, thank you. Senator Harkin and I have 
talked about this issue, and he believes and I believe and I 
hope that we are right, that we're going to have the ability to 
do both. But, I'm just trying to get a feel for how people feel 
in the event that it doesn't turn out that way, because it's 
clear that we're going to be in deficit spending this year. 
Eight weeks ago we were looking at over $170 billion surplus; 
and now with the terrorist attacks and the response to that, 
plus the impact on the economy and the adjusted economic 
numbers in any event, we're looking at only having about a $52 
billion surplus at this point; and that is even going to go 
down, in my opinion, when they adjust the economic numbers the 
next time, and we're talking about $100 billion surplus or 
economic stimulus package. When you do the math on that, it's 
pretty clear that Congress is contemplating deficit spending 
right now.
    Now, in one sense, as one who was elected to Congress and 
has fought for the 9-years I've been in Congress to balance our 
budget and has been very proud that we've balanced our budget 
for the last five or six years, I don't like to see that 
happen. On the other hand, one of the exceptions that we have 
always acknowledged is time of war, when you have to do what 
you have to do to protect your national security.
    But, still, leaving all of those broader budget issues 
aside, I'm just a little concerned that as we look at the 
commodity programs versus the conservation programs versus the 
nutrition programs versus the rural development programs, the 
energy programs, and so forth, all of which are in this bill, 
there's going to be a competition for limited dollars, and 
already there's a big debate on Capitol Hill with regard to the 
money that was allocated in the budget that we had agreed to 
before September 11 that we have over the next 10 years 
provided somewhere in the neighborhood of $75 billion of new 
dollars for these types of programs and now that's all up in 
the air and up for questioning.
    That's the reason I'm postulating this. We've got to decide 
how to make the balance again between the commodity side and 
the conservation side and the rural development side, the 
research side, the energy side, and the food stamp and 
nutrition side, and it's going to become difficult, in my 
opinion. I don't think that we had yet grappled with it to the 
level that we are going to end up having to face it.
    I was just trying to get a feel from you as to where you'd 
come done on some of these priorities, and I think I have a 
good answer there. If anybody wants to elaborate on that at all 
before I move on to another issue, please feel free to do so.
    OK. I don't have a whole lot more right now, other than to 
say that as we move forward, it will be very helpful to have 
input from you on the way things are developing. What I mean by 
that is each of you has very effectively pointed out the areas 
where you think we ought to put our emphasis on and our focus, 
and I think you provided very wise counsel. I know that, for 
example, in the conservation title that I have suggested that 
most of you are happy with what I have done and would be 
happier if I did more, and there may be an opportunity for that 
or there may be a requirement that we do some adjusting, 
depending on what develops, and so I look forward to your 
continued input on this as it moves along.
    I'd like to conclude by talking a little bit on something 
that is really not specifically related to the Farm Bill, and 
that is the collaborative effort which we've kind of hit on 
here a little bit; and, in other words, in the context of the 
agreement that has been worked out between the grassland owners 
and those who are advocating conservation efforts on the 
grassland and have come up with the Grasslands Reserve Program. 
To me, I see that as a collaborative success on a very broad 
scale in terms of finding a win/win solution for at least two 
pieces of the equation here.
    We've just started the Owyhee initiative, which I want to 
thank The Nature Conservancy for its involvement and effort in 
trying help make that possible and to help make it work, and 
the ranching community who has been so willing to work together 
and try to find a way to get across or get past some of the 
more difficult issues that we face.
    I guess maybe this question is coming mostly to you, Tim: 
You said that you believe very strongly that habitat protection 
and a strong farm economy can go hand in hand, and I think that 
in one way or another that's what Kevin and Doug have said 
also, which I strongly agree with. I personally believe that 
the way we will get there is through collaborative 
decisionmaking, and let me tell you what I mean by that and I'm 
just going to ask you each to give your thoughts on this.
    My opinion, collaborative decisionmaking is not just 
decisionmaking where we invite everybody in like this. In my 
opinion, this is not collaborative decisionmaking that's going 
on right now. I'm listening to what you have to say, but then 
I'm going to go back with the Senate Ag Committee and we're 
going to do what we're going to do. This is a public hearing in 
which you have the opportunity to give input and comments, and 
if I do my job right, your input and comment will have an 
impact on the policymaking that happens at another time in 
another place.
    What I'm talking about in terms of collaborative 
decisionmaking is if we were all sitting around the same table 
with our different perspectives on an issue, and we had 
everybody at the table in the sense that we would have all of 
the interest groups at the table and entities at the table who 
were involved in making that decision and we talk through 
issues, which is a sometimes very difficult process. In fact, 
just figuring out who should be sitting at the table is often 
an issue that becomes so divisive that it almost makes it 
difficult to achieve the collaboration. But, I'm--when I say 
``collaboration,'' I mean creating that table and then having 
the work product of the people sitting at that table be binding 
in a sense that it is what the policy is. When they develop it, 
they achieve the consensus, then it's not submitted to somebody 
else for approval; it is the decision. And, I contemplate that 
that table is generally going to be made up of people who are 
from the area where the issue is. Now, it's not always going to 
be the case, because there will be Federal agencies sitting at 
that table and there will be State agencies sitting at that 
table and there will be others sitting at that table, and it's 
not going to be 100 percent local, but I believe the people who 
live where the issue is have the best ability to figure out the 
way to solve the problem and to identify the common ground.
    Anyway, with that description of what I mean when I say 
``collaborative decisionmaking,'' I would just like to toss it 
out and see whether you feel, each of you, that, A, that that's 
the way that we should be moving; and if so, what we might be 
able to do, whether it's in the Farm bill or in some other 
context of regulatory reform or whatever, to facilitate that 
happening in our Federal system.
    I know that's a tall order, but an important question. 
Anybody want to jump up first?
    Mr. Hopkins. I'm----
    Senator Crapo. Go ahead, Tim.
    Mr. Hopkins. Senator, thank you for the opportunity really 
to speak to that question, because, firstly, it gives us an 
opportunity to thank you for your leadership in the Owyhee 
Canyonlands, because that is genuinely an example of 
collaborative effort. You have the farmer/rancher community--
principally ranchers--you have the conservation community, you 
have the various Federal agencies that have extensive interests 
in that area, and you have the public officeholders as yourself 
who are bringing together that kind of a diverse group for the 
purpose of collaborative problem solving and hopefully 
decisionmaking that will result in some solution for the 
problems that beset that area.
    The Nature Conservancy endorses that and strongly endorses 
what you have suggested was so essential to planning of this 
kind, and that is community-based conservation. It has to be 
close to the assets that people generally value for 
conservation purposes. I don't believe that's done at a 
distance. I believe that's done in our back yard, so to speak, 
where we know the problems, where we love the mountains, where 
we fish the streams, and where we otherwise revere the place in 
which we live. Collaboration in working toward those solutions 
is something that is essential I think to the philosophy of The 
Nature Conservancy, and one that we want to endorse as a part 
of your efforts at problem solving with us and with the other 
agencies and the people involved.
    A perfect example of that I'm sure you're well aware of is 
the Henry's Fork Watershed Council which has operated in the 
upper reaches of the Snake River on the Henry's Fork in exactly 
that fashion. No one could possibly have dreamed of a group as 
diverse as that coming together to genuinely make decisions 
that affect the water flows and the management of that great 
river which is so essential to the agricultural community, and 
at the same time such a revered asset of the sportsmen's 
community and all of which needs to be conserved for future 
generations of people to be thrilled by and to be utilized. 
We're for it.
    How exactly the Federal Government comes together with that 
spirit and that sense to genuinely lead it I think depends, 
frankly, on the initiatives of people, Senator, in places like 
your own who can give genuine personal energy and leadership to 
the collaboration of those very diverse groups, because there 
has to be a catalyzing force, there has to be someone who 
brings together those people displaying an open mind and an 
interest in problem solving above partisan issues and politics, 
someone who can bring together those people in a way that they 
are inspired to collaborate to solve the problems.
    Senator Crapo. Thank you.
    Kevin.
    Mr. Koester. Senator, for the want of a different term, in 
soil conservation, we call that ``locally led,'' and we've been 
doing that now for 60-some years. Yes, we do favor that 
collaborative process.
    Maybe in answer, I'd like to read just a portion of our 
mission statement for the Idaho Association of Soil 
Conservation Districts. It says Providing action at the local 
level to promote growing wise and beneficial conservation of 
natural resources, with emphasis on soil and water.
    One of the things that has been very interesting over the 
last 10 or 12 years is our emphasis no longer is strictly 
agriculture. For example, in the Portneuf Soil and Water 
Conservation District, which I am the supervisor on it, the 
last 18 months our focus has been almost entirely on rural 
lands and rural development.
    We are no longer strictly an ag-based organization. We are 
using the collaborative process in dealing with cities, the 
small ranchette type operations, as well as food producers.
    We think the process works. The only thing we're not too 
happy with is when someone from Connecticut tells us how to use 
grazing lands in Idaho.
    Senator Crapo. I understand that feeling.
    Mr. Hubbard. I think collaboration is the only way to go. 
Conservation organizations in the past when I first got really 
interested in this stuff, which was about 40 years ago, you 
know, it was a big deal then. There was a lot of hand ringing 
and headbutting in the organizations themselves, and then you 
got to realize we're basically going for the same basic thing 
that we wanted to say, although come around to it in a 
different direction. Now it's come to a point, I'll trade you a 
cow for two mallards. You can't beat it.
    Ducks Unlimited is a good example of that. The original 
founding of that was strictly for waterfowl, but now it's 
branched off into everything. It's even involving fish.
    And, Tim, your example of the Henry's Fork project is a 
shining example of collaboration if there ever was one out 
here.
    We take this so much for granted out here in our wide-open 
expanses as compared to your Connecticut example, that we've 
got to bring it all in in this collaborative effort. That's the 
only way to do it. That's the only way you can do it in today's 
environment, political, economical, and otherwise. You have to 
collaborate, you have to get together and ring it out and beat 
your head on the wall for a while, but it will all come 
together and I'm encouraged.
    We're extremely fortunate in this state to have the 
representatives that we have in Washington like yourself and 
Representative Otter and Senator Craig that we're just really, 
really fortunate, and I think we should really count our 
blessings there. I hope that doesn't sound like a hyperbole, 
but that's my feeling on it anyway.
    Senator Crapo. Well, I could sure agree with that 
testimony.
    [Laughter.]
    Senator Crapo. You know, I appreciate your comments on 
this, and I realize that this isn't specifically Farm bill 
related, although I'd like to figure out a way to put something 
in the Farm bill to promote this; but every time I have an 
opportunity to establish more of a record in the Federal 
proceedings on this I take the opportunity, because I really 
believe that after having been involved in Idaho politics now 
for a long time and from even before I was elected to office 
being involved in Idaho politics in one context or another, I 
am increasingly convinced that we see conflict between people 
who in their hearts agree on an awful lot of stuff, and the 
conflict is, in my opinion, sometimes created and even 
orchestrated by the rules and the laws which force us into the 
decisionmaking modes that we have to fit into.
    What I mean by that is that I think most Idahoans believed, 
as you have all three said, that we have a tremendous heritage. 
I mean, we live here because of the beautiful, beautiful 
environmental heritage that we have, the clean water and the 
clean air, the mountains, the rivers, the streams, the hunting, 
the fishing, the kayaking, whatever it may be. It's a quality 
of life. Whether you're a rancher or a farmer or someone who 
works in an urban area like Boise, there is a commonality there 
among us in terms of wanting to preserve and protect this, and 
yet we seem to have conflict so often. I've stepped back and 
looked at it, and I actually believe that it happens a lot 
because we have rooms set up like this where there's somebody 
up here making a decision and everybody down there trying to 
influence the decisionmaker, and the decisions are often very 
rigid in terms of how they have to be achieved. I'm 
increasingly convinced that we've got to find a way to get the 
Federal system of environment law to facilitate a different 
mode of decisionmaking than we now facilitate. We've looked at 
a lot of different things, we've tried a lot of different pilot 
projects, and we're starting to win.
    I'll tell you just another little bit of this, and then 
we'll wrap this up.
    Back about five years ago, I won't tell you the issue or 
details or I'll start another fight, but there was an issue on 
which I approached supporting in a collaborative approach and 
actually we had some people together who were going to 
collaborate, and I and the collaborator just got beat to a pulp 
from all sides. Everybody thought that we were trying to pull 
one on them. I learned a lesson then. In fact, I learned the 
first time I tried it. That's why it was hard to even figure 
out who should sit at the table.
    The first time I tried it, I got beat up because I didn't 
have all of the right people at the table. The second time, I 
had everybody I could think of at the table, but then we got 
beat up because nobody trusted what was going on. At that time, 
I concluded that we had to get some successes in place so that 
we could point to something and say, OK, this is what we're 
talking about and it works, and we now do.
    The Henry's Fork situation is a good example. That's why 
I'm so hopeful that the Owyhee initiative that is now started 
will succeed. I recognize there's a lot of distance that has to 
be traveled there before it can be declared a success, but 
that's what this is all about.
    I'm convinced that once we get enough examples in place--
and they're happening around the country now--once we get 
enough examples in place, then the trust level will be a little 
easier to achieve and we can maybe try to get some things 
established at the Federal level where we actually promote this 
rather than have to figure out a way to get around the Federal 
system in order to get it to happen.
    I'll just finish my little tirade on this by saying that, 
again, going back about six years now when we first started to 
try to really go in in a gung ho way to change some of the 
Federal decisionmaking processes, one side didn't want to 
change it because they thought they were starting to get an 
advantage they hadn't had for a long time, and another side 
didn't want to change it because they didn't trust State and 
Local governments to care about the environment, and another 
side didn't want to change it because they had the advantage 
and didn't think the other side was going to get the advantage.
    I sit back and think as long as we approach this from the 
perspective that we don't trust people who live where the 
issues are, who care about where they live, and we are trying 
to figure out a win/lose scenario where we win and somebody 
else loses, then we're just not thinking about it in the right 
way, and I still believe that we're not out of that mode yet. 
We're starting to break out and we're starting to find 
successes that can help people see that there is a win-win.
    Said another way, I believe that there are solutions in the 
Owyhees and everywhere else that are better for the environment 
and better for the economy than what we are doing right now, 
and it's those kinds of solutions that we need to achieve.
    Anyway, I appreciate you taking that little trip with me 
off of the Farm bill into that area, but one of these days 
we're going to get that so that it's a part of the Federal law 
in a better way, and it's going to be because of the work of 
people and organizations like you and yours and the others who 
have testified here today that we're going to make it happen.
    Anybody want to have a last word before we wrap up?
    Mr. Koester. Senator, if I may--and this is for Don Dixon; 
I hope he's in the room. When it comes time to title the new 
Farm Bill, I am going to be so bold as to suggest that you call 
it the Consumers' Food Protection Act, because that's what it 
is.
    Senator Crapo. That's right. I appreciate that, and I have 
heard that 100 times from Don; in fact, it's on my notes here 
for this hearing.
    Mr. Koester. We've made sure that Don's heard that too.
    Senator Crapo. Well, that's so important.
    Did either of you want to make a comment before I wrap up?
    Mr. Hopkins. Only to thank you, Senator Crapo, for the 
opportunity.
    Senator Crapo. Well, thank you.
    Mr. Hubbard. Thank you very much. It's most appreciative.
    I like to look at some Federal agencies. I was the chairman 
of Southwest Area Focus on the part of the North American 
Waterfowl Management Act.
    I had to try to get together the Forest Service and on and 
on and on, and it was the most frustrating experience I ever 
had in my life because they don't talk to each other.
    Senator Crapo. I know.
    Mr. Hubbard. I thought a good analogy to that--and it's 
probably something you experience every day--is that if I run 
up and I hit my head on a brick wall, I back off and there's a 
little blood and a little skin left there. Now if I run into 
this Federal agency, it's like a huge chocolate pudding wall: I 
run into it, go clear up to my shoulders, I back out; I can't 
even see where I've been.
    It's changed. It certainly has changed.
    Senator Crapo. I'll maybe use that some day.
    Mr. Hubbard. Feel free to.
    Senator Crapo. Well, it certainly creates an image, doesn't 
it?
    Mr. Hubbard. Yes, a mental image.
    Senator Crapo. Again, thank you all very much for coming 
today. We're facing some really tough times in America right 
now, and without trying to get overly emotional about it or 
whatever, I'm not sure that we've seen all of what we're going 
to see in terms of the reality of the fact that we are at war. 
That is something that I, in my lifetime, have not experienced 
even with the Vietnam War being in my time. It was not fought 
on American soil, and part of this war will be fought on 
American soil. The Vice President said this may be one of those 
times in which the civilian casualties exceed the military 
casualties, and it's a very, very difficult dynamic for us to 
deal with emotionally and even intellectually, but it's also 
having its ramifications in virtually every other 
decisionmaking element that we are in. I mean, in the Small 
Business Committee on which I sit, it's security issues that 
are now critical or things to help the small businesses deal 
with the economic ripples of the terrorist activities. In the 
Farm Bill, significant focus is now there on food safety. And, 
you know, you just cannot underestimate the way that this is 
going to impact a change in our lives, and it's going to have 
an effect on the Farm bill itself, if in no other way than the 
budgetary impacts that we've talked about.
    I believe it's important for us, as Americans. I believe 
the way we'll avoid the panic and the very exact response that 
the terrorists would like us to have is to be informed and to 
recognize that we are living in the greatest nation in the 
world, and that although we are not necessarily prepared for 
it--we probably weren't prepared for everything when World War 
II started--but we are a nation that knows how to deal with and 
grapple with problems, and we are a nation of strong people; 
and although we probably have some difficult times ahead of us, 
we are a strong people who can deal with those difficult times, 
and the way we will deal with them is by being prepared so that 
we can know that we are doing and that our government is doing 
the things that are necessary to protect us.
    Once again, I think that issues like those we are grappling 
with in the Farm bill arena right now are very, very intimately 
related to us maintaining that strength as a nation, and in our 
economy, and in our response to protecting ourselves in a new 
paradigm of threat in the world.
    I again thank you all for coming here today, and I look 
forward to working with you in the future on this. Unless 
there's anything else, we will conclude the hearing.
    Mr. Hubbard. Thank you.
    Senator Crapo. This hearing is adjourned.
    [Whereupon, at 1:46 p.m., the committee adjourned.]
      
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