[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





              PROBLEMS FACING THE SPECIALTY CROP INDUSTRY

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY POLICY, NATURAL
                    RESOURCES AND REGULATORY AFFAIRS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 12, 2003

                               __________

                           Serial No. 108-151

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                            ------
WILLIAM J. JANKLOW, South Dakota     BERNARD SANDERS, Vermont 
MARSHA BLACKBURN, Tennessee              (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs

                     DOUG OSE, California, Chairman
WILLIAM J. JANKLOW, South Dakota     JOHN F. TIERNEY, Massachusetts
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
CHRIS CANNON, Utah                   DENNIS J. KUCINICH, Ohio
JOHN SULLIVAN, Oklahoma              CHRIS VAN HOLLEN, Maryland
NATHAN DEAL, Georgia                 JIM COOPER, Tennessee
CANDICE S. MILLER, Michigan

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                       Dan Skopec, Staff Director
                Melanie Tory, Professional Staff Member
                         anthony Grossi, Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on December 12, 2003................................     1
Statement of:
    Kawamura, A.G., Secretary of the California Department of 
      Food and Agriculture.......................................    32
    Zanger, Joseph, member, board of directors, California Farm 
      Bureau Federation; Jim Bogart, president, Grower-Shipper 
      Vegetable Association of Central California; John D'Arrigo, 
      chairman, Western Growers; and Robert Nielsen, vice 
      president, Tanimura & Antle and United Fresh Fruit and 
      Vegetable Association......................................    51
Letters, statements, etc., submitted for the record by:
    Bogart, Jim, president, Grower-Shipper Vegetable Association 
      of Central California, prepared statement of...............    67
    D'Arrigo, John, chairman, Western Growers, prepared statement 
      of.........................................................    79
    Farr, Hon. Sam, a Representative in Congress from the State 
      of California, information concerning Monterey County......     8
    Kawamura, A.G., Secretary of the California Department of 
      Food and Agriculture, prepared statement of................    36
    Nielsen, Robert, vice president, Tanimura & Antle and United 
      Fresh Fruit and Vegetable Association, prepared statement 
      of.........................................................    95
    Ose, Hon. Doug, a Representative in Congress from the State 
      of California, prepared statement of.......................     4
    Zanger, Joseph, member, board of directors, California Farm 
      Bureau Federation, prepared statement of...................    53

 
              PROBLEMS FACING THE SPECIALTY CROP INDUSTRY

                              ----------                              


                       FRIDAY, DECEMBER 12, 2003

                  House of Representatives,
  Subcommittee on Energy Policy, Natural Resources 
                            and Regulatory Affairs,
                            Committee on Government Reform,
                                                       Salinas, CA.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
the Alisal Room of The National Steinbeck Center, 1 Main 
Street, Salinas, CA, Hon. Doug Ose (chairman of the 
subcommittee) presiding.
    Present: Representative Ose.
    Also present: Representative Farr.
    Staff present: Melanie Tory, professional staff member; 
Yier Shi, press secretary; and Anthony Grossi, clerk.
    Mr. Ose. Good morning.
    Welcome to today's hearing by the Subcommittee on Energy 
Policy, Natural Resources and Regulatory Affairs on the subject 
of problems facing the specialty crop industry.
    I want to ask unanimous consent to welcome to our panel 
today my good friend and colleague from this part of the 
country, Sam Farr. Without objection he will be an able and 
welcome participant in today's hearing.
    I ask unanimous consent to waive the subcommittee's quorum 
requirement. Without objection, so ordered.
    We're here today to examine problems facing the U.S. 
specialty crop industry, not only here in California, but 
across the country.
    Historically, U.S. agricultural policy has focused almost 
exclusively on program crops, such as wheat, corn, cotton, and 
rice. The result is that growers of program crops received 
about $20 billion annually in Federal price supports and other 
Federal assistance programs.
    Conversely, specialty crops, which include fruits, nuts, 
vegetables, forage crops, flowers, and wine grapes, do not 
receive price supports and receive only a small fraction of the 
Federal assistance programs for agricultural purposes. This is 
in spite of the fact that specialty crops contribute more 
annual revenue to the agricultural sector: $58.7 billion 
compared to the $47.9 billion for program crops. Additionally, 
specialty crops are often subjected to unfair international 
trade practices that limit market access, and effectively 
hinder genuine free trade.
    U.S. specialty crop growers take pride in being considered 
the true ``free traders'' in today's global markets. Yet, many 
are concerned with the failure of the Federal Government to 
adequately ensure a level playing field for them in the face of 
increasing globalization. One example of this is that Japanese 
tariffs on U.S. fresh vegetables are an astounding 64 percent. 
In contrast, the United States only has a 5.9 percent tariff on 
fresh vegetables imported from Japan and countries of the 
European Union.
    Foreign support is staggering for specialty crop growers in 
nations of the European Union. Currently, there are annual EU 
price supports of over $2 billion for tomato growers, $1.9 
billion for apple growers, and $500 million for cucumber 
growers.
    In addition to facing unfair trading practices abroad, U.S. 
specialty crop producers also must contend with sometimes 
inadequate regulatory and trading policies at home. For 
example, sanitary and phytosanitary [SPS] regulatory standards 
for U.S. imports, issued by the Department of Agriculture's 
Animal and Plant Health Inspection Service [APHIS], do not 
provide appropriate protection for U.S. growers or the U.S. 
food supply. Additionally, imports of specialty crops into the 
United States have increased sharply over the last 7 years, 
while market access globally has continued to diminish as 
mature, foreign economies flood U.S. markets with cheaper, 
subsidized products. Unfortunately, U.S. trade negotiators are 
considering an agreement with Australia that, if approved by 
Congress, might flood the U.S. market with foreign specialty 
crops, such as wine and table grapes, canned fruit, peaches, 
apricots, pears, and fruit mixes, and may cause agricultural 
pest and disease outbreaks in the United States because of 
inadequate sanitary and phytosanitary standards. Such impacts, 
obviously, would be devastating to the U.S. specialty crop 
industry.
    In my district, and interestingly enough in nearly every 
other agricultural district in the country, specialty crop 
operations are struggling to remain competitive in light of 
these new challenges. Think about that. There are 50 States and 
3 territories, virtually every State and territory including 
Alaska, surprisingly, to one degree or another produces 
specialty crops. What we're trying to do is address the 
challenges that those people face. To do that on October 30, 
2003, I introduced, with my colleague from the Central Valley, 
Cal Dooley, H.R. 3242, the Specialty Crop Competitiveness Act. 
My bill is designed to address all areas of the industry, 
including both fresh and processed fruits, nuts, vegetables, 
floral, and wine grapes. Additionally, it includes needed 
Federal financial assistance and additional Federal focus on 
U.S. specialty crops.
    Today, we will examine the domestic and international trade 
policies and practices that reduce the U.S. specialty crop 
industry's ability to be competitive in today's expanding 
global market. We will shed light on the industry's problems 
and demonstrate that legislative and regulatory changes are 
needed in order to moderate adverse impacts.
    Throughout this administration, the President has 
aggressively pursued increased international trade agreements. 
The agricultural sector has traditionally been a strong 
proponent of free trade and has provided the necessary support 
in Congress to ensure passage of this free trade agenda. And, 
while historically the specialty crop industry has supported 
the efforts on international trade to reduce trade barriers and 
increase market access, there's a direct connection, I think, 
between continued support of that agenda and the ability to 
open of these foreign markets and provide a greater focus for 
Federal assistance.
    Today's witness panels are august. I am pleased to welcome 
the following individuals who will testify as time proceeds.
    First, the new Secretary of the California Department of 
Food and Agriculture, Mr. A.G. Kawamura will be on our first 
panel.
    Our second panel will be composed of Mr. Joseph Zanger, a 
member of the board of directors of the California Farm Bureau 
Federation; Jim Bogart, president of the Grower-Shipper 
Vegetable Association of Central California; Mr. John D'Arrigo, 
chairman of Western Growers; and, Mr. Robert Nielsen, vice 
president of Tanimura & Antle.
    I do want to welcome everybody here. And, as I said at the 
outset, we are pleased particularly to have the company of 
Congressman Sam Farr from this district. I'd be happy to 
recognize him for the purpose of an opening statement.
    [The prepared statement of Hon. Doug Ose follows:]

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    Mr. Farr. Thank you very much, Chairman Ose. I'm really 
delighted that you've come to this district and to have this 
hearing, the first ever of its type, and certainly I think the 
first hearing in the Steinbeck Center.
    And, I want to thank my constituents for coming to this 
hearing, too. Because I think what we get out of this is a good 
learning session, a good educational opportunity.
    I've passed out to several people, staff particularly and 
to you, Mr. Chairman, a copy of Monterey County's crop report 
for 2002. And it's interesting how many times I reach for this 
in Washington to try to explain to people what specialty crops 
are all about.
    When I was on the Ag Committee, the authorizing committee 
and members would go around the room and talk about their 
districts and why they're on the Ag Committee, most of the 
members were there because of one crop in their State. And, I'd 
say in Monterey County we have 85 crops. And, they wouldn't 
believe me. I mean, 85 is more than any other State in the 
United States produces, and we have it just in this county, 
with the exception of the State of California.
    So, the crop report points out that this is almost a $3 
billion industry here. We have 41 crops that are over $1 
million in sales. And, some things that you wouldn't think of 
when you think about specialty crops. Everybody knows the 
Salinas Valley for its sort of the lettuce bowl of the world, 
but they don't think of raspberries in this county being a $38 
million crop, or that cilantro is a $4 million crop, or bok 
choy is a $3.2 million crop, or that squash is a $1 million 
crop in this county. These are just examples of what we mean by 
specialty crops.
    And, where do these crops go? Well, they go to 19 different 
countries plus the EU, which is 22 countries in the EU.
    It's an international business here. It's about all the 
issues that we deal with in Congress on imports/exports 
regulation. But what is unique about it is this is the most 
productive agricultural region of the world, in all due respect 
to the San Joaquin Valley, because we have more variety here, 
more difference than the Valley. And, this area does not 
receive the kinds of supports that some of the crops in the 
Valley receive, nor the water support that the Valley receives.
    In essence, the Salines Valley represents the best of free 
market enterprise and agriculture, I think, in the world.
    As you stated in your opening comments, we have been kind 
of short changed on the big scale of things, especially crops 
and as pointed out to somebody before, it used to be called 
minor crops. Everybody thought well it's minor, it doesn't make 
much money. It isn't big. Well, it is big. It's huge. It's 
very, very important because frankly these are the things that 
everybody eats. And, if you look on all the health charts of 
what you should be eating, whether in schools or hospitals or 
institutions of what the Government tells you are of 
nutritional value, this is the place that's producing that 
nutritional value.
    So, these crops are absolutely essential to the well being 
of the human race and well being of America. And, I think that 
your hearing is giving it the focus and certainly the bill that 
I've co-sponsored with you and Mr. Dooley, the attention that 
the industry needs. I really want to thank you from the bottom 
of my heart for taking time out of your recess here to come 
Salinas and to come to particularly, we're very, very proud of 
this building right here. I think this is trying to teach 
people with the ag museum next door and certainly probably one 
of the best known authors in the world, John Steinbeck who grew 
up here in Salinas, to be able to present the combination of 
land and people in this place and what we're all about. So 
thank you, Mr. Chairman.
    Mr. Ose. You bet. Would you like to introduce in the 
record?
    Mr. Farr. Yes, I would like to enter into the record.
    Mr. Ose. So ordered.
    Mr. Farr. Thank you.
    [The information referred to follows:]

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    Mr. Ose. Now, just for everybody's educational background 
here, the way this committee works is this is a subcommittee of 
the Government Reform Committee. In the Government Reform 
Committee we swear everybody in; that is just standard 
practice. There are no exceptions. If you testify in front of 
Government Reform, we swear you in.
    Government Reform takes a record of this. We share it with 
all of the other committees in Congress.
    We have two panels today. During our first panel, as I 
said, Secretary Kawamura will be testifying. The second panel 
will be the remainder of the witnesses.
    We have received everybody's testimony, and I have gone 
through it. My staff's gone through it. I'm sure Congressman 
Farr has looked at it, and his people have looked at it.
    We provide 5 minutes for our witnesses to summarize their 
testimony. I've got a clock here. There's a green, a yellow and 
a red light on there. The green, obviously, means keep going. 
The yellow means you've got a minute and the red says the door 
underneath your chair is about to open.
    If you could summarize your testimony so we can get to 
questions, I would appreciate it. I know Congressman Farr is 
time constrained. I know many of our witnesses are time 
constrained. We will try to move through this expeditiously. We 
do have some questions that we have thought about in Washington 
preparatory to this hearing, so we are going to go through 
those.
    The questioning after the testimony will go back and forth 
between Congressman Farr and me. To the extent that we have 
questions, we are going to keep asking them. If there is stuff 
you want to offer extemporaneously, I would hope you do so. If 
you have questions about how this works, that would be great; 
if you want to ask those as you come up here do not be bashful.
    We are making a record here and the record will remain open 
for 10 days.
    After we get through the testimony there is likely to be 
questions that come to mind that we would like to submit to our 
witnesses, so we will be giving those to you in writing in a 
subsequent period of time, and we would appreciate a timely 
response.
    And, with that, we are going to proceed. So, Mr. Secretary, 
if you would please rise and raise your right hand.
    [Witness sworn.]
    Mr. Ose. Let the record show the witness answered in the 
affirmative.
    I am particularly pleased today to welcome the Secretary of 
the California Department of Food and Agriculture, Mr. A.G. 
Kawamura. Welcome, Mr. Secretary.

    STATEMENT OF A.G. KAWAMURA, SECRETARY OF THE CALIFORNIA 
               DEPARTMENT OF FOOD AND AGRICULTURE

    Mr. Kawamura. Thank you, Chairman. Welcome, Congressman 
Farr. And,thank you very much for allowing me to have this 
opportunity to speak to you today.
    The famous writer/poet Carl Sanburg made a wonderful 
statement years ago which I think is apropos for today, and 
that is when a nation forgets its hard beginning, it is 
beginning to decay. And, clearly here in California we have 
been struggling with that forgetfulness at the Department of 
Agriculture. We are really concerned that the infrastructure 
which the Department of Agriculture represents and the industry 
itself of agriculture which is here in California is being 
taken for granted and has been forgotten. And, it is clear that 
this nation, which has such an abundance of food, so many 
resources, is suffering from a small case of amnesia in 
remembering how important the domestic food supply really is 
and what that contributes to a nation's economy, well being and 
security.
    In saying that, it is also very interesting that this 
Subcommittee on Energy Policy, Natural Resources and Regulatory 
Affairs is asking us to talk about the specialty crop industry 
because as we all know food, just like water, just like 
petroleum, food and fiber is stored energy. If you would, 
stored sunlight. It is something that the State of California 
is able to produce on an enormous basis with the blessing of 
all the resources we have here. And, it is very critical to 
recognize that we are standing at a moment of decision where we 
are about to export that capacity and ability to produce this 
enormous food supply, this enormous energy supply, to other 
countries.
    Seeing that, I would like to say that at this point in time 
in an enormously complicated world, this is 2003, it's not 
1963, it's not 1973. In 2003, the global competition, the 
exchange of technology is enormous. Formerly countries that we 
would not imagine being competitors with us are overnight 
turning into competitors and our ability to compete in this 
complex world is compromised without some kind of recognition 
that we need help. The State of California is making that turn 
and is ready to start to invest again, we hope, in this 
infrastructure which allows agriculture to be here. And, we are 
certainly hoping that the Federal Government then is able to 
recognize the timeliness of investment into that same 
infrastructure and the same support that would come to the 
specialty crops industries.
    I think one of the things that many people forget is that 
all of us, and I am a third generation farmer from an urban 
area in southern California, who are engaged in the activity of 
agriculture and even though I have a new hat today I still am 
in the agriculture business as a farmer, all of us do so, it is 
a voluntary investment of our personal wealth to be involved in 
business and particularly agriculture. And, when that voluntary 
investment becomes so risky, so full of liability, so full of 
regulation that we cannot see the return on our investment and 
it becomes very clear that maybe that does not work for us, we 
will pick up those tractors and leave to another State. We will 
pick up those tractors and leave to another country. And, 
again, the timeliness of this hearing then is a chance for all 
of us to voice our extreme concern that we have gotten to that 
point commodity by commodity where different players within 
industry are beginning to and are ready to pick up and leave 
unless we do some enormous changes of support.
    The global economy is not going to change overnight as far 
as making things better. We recognize that we have to be able 
to add value to our crops. We recognize that we have to be able 
to reinvent ourselves. This kind of support for specialty crops 
then becomes one of the critical components to allow our 
industry to retool itself, to reinvent itself, to spread the 
word, and I will talk about that later in my remarks, about the 
different, wonderful opportunities that the global environment 
gives us.
    Certainly, we can talk about the global threats. I think we 
all recognize those. But in looking at the different 
opportunities, we know that we are replaceable suppliers of a 
food supply. We would like to be not replaceable suppliers, but 
the contributors and the partners in a food supply that is not 
only dynamic but is contributing to an enormous boom for the 
State of California.
    We talked about a California renaissance, and that 
renaissance cannot take place without a renaissance in 
agriculture in the State of California as well. That being 
said, the Specialty Crop Competitiveness Act 3242 is one of 
those things that can help us get to that point where we go 
from a $30 billion industry with 350 commodities in this State 
to $40, $50 billion. How does that happen? The simple math of 
looking at consumption as an optimistic point in the future. 
Many of us have heard about this five a day program, eating 
five healthy servings of specialty crops. Currently the numbers 
show that the U.S. population eats three servings a day. If we 
go from three to five servings, that is a 60 percent increase 
in consumption.
    Evidently, the Canadians are at seven servings a day. If we 
go from three to seven servings, that's 130 percent increase in 
consumption. And, evidently the French eat 10 servings a day. 
If we go from 3 to 10 servings, that is a 330 percent increase 
in consumption. That would be a sucking sound that would be 
very hard for us farmers to fill, but it would be a nice 
challenge for us to do it, would it not? And, it would 
certainly raise all boats within the agriculture industry.
    Currently, the benefits of the previous specialty crops 
block grants that came to the State of California have been 
judiciously and wisely invested in different aspects of the 
California economy. I will just talk briefly of a few of them. 
The clearest example, of course, is part of this wonderful 
museum that we are having this hearing in. This is a chance 
where this museum is able to educate the public about the 
importance of agriculture. And, we were a small part of that, 
and we thank the wonderful supporters of this museum for making 
this legacy here in the Salinas Valley.
    The California International Market Promotion for 
Agriculture Program [CIMPA], provides 34 agricultural business 
and grants to help the international marketplace.
    The Western Institute for Food Safety and Security in a 
very complex world that has many, many dangers including SARS, 
West Nile Virus and all the other plagues and problems that can 
come into the State, that is an institute with the task of 
looking into the highest level of identification and detection 
of diseases in plant invasions.
    The Nutrition grants, which we are all hopeful that this 
State and the rest of the country will be involved with, is a 
critical aspect. Our nation currently has an epidemic in 
obesity and childhood diabetes. That is driven by a poor diet. 
We recognize that fast healthy food is easily possible. Fast 
healthy food means using a lot of specialty crops, and we are 
looking forward to that.
    We will ignore the drink that you are drinking.
    The LEAF program which is Linking Education, Activity and 
Food is a wonderful example of those block grants at work.
    The California Minor Crops Council received a grant to 
develop successful tools for effective and environmentally 
friendly pest and disease exclusion practices and controls, a 
sustainable movement in the direction that this State and this 
country surely is moving toward. Those are the kinds of 
assistance that we need.
    The momentum created by these 2001 block grants then is an 
excellent start, but it is only a beginning. We are so very 
encouraged to think that around this country the specialty 
crops production States, which basically are all the States in 
one way or another, can look again at a different way of seeing 
agriculture in the year 2003.
    Again, the forgetfulness of not recognizing that 
agriculture is a pillar of support, as the Homeland Security 
Task Force has recognized that the agricultural system, food 
and fiber system, is a critical infrastructure of this country. 
Certainly this is a movement in the right direction. And, the 
funding for these programs would be a wise investment.
    With that, I would like to close and again say thank you to 
Chairman Ose, and for the entire delegation that recognizes 
these important aspects of agriculture today in 2003.
    [The prepared statement of Mr. Kawamura follows:]

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    Mr. Ose. Thank you, Mr. Secretary.
    It is orange juice. It is orange juice. I just want you to 
know that. It is orange juice.
    All right. This is how we are going to proceed here. Again, 
Congressman Farr and I will alternate back and forth asking 
questions. To the extent that you have the answers or you can 
come up with the answers and you can share them with us, that's 
great. If you need to consult with your staff and get back to 
us, that's fine, too. We're keeping track of the questions we 
ask either both in the record and otherwise. And, those 
questions that need further input certainly we'd be happy to 
take them in writing.
    So with that, Mr. Secretary, on page 2 of your testimony 
you state that the block grant program and the Economic 
Assistance Act of 2001 has been successful here in California. 
I think your testimony talks about the wine grape deal. In 
fact, you even list them; there's six or seven you list in your 
testimony.
    I specifically want to ask in addition to the Buy 
California Initiative that you talked about in your testimony, 
what additional plans do you think need to be considered at the 
State level for increasing or implementing the increase in 
marketing and the promotion and consumption of specialty crops? 
Are there additional things that you have on the boards that 
you can share with us?
    Mr. Kawamura. Our plan is, again, to build on the successes 
of what we see happening with the current programs. We have a 
new, as you know, a very exciting Governor that is dedicated to 
the health of children. And, it is interesting that a healthy 
child has to be a well nourished child. We are very hopeful at 
this point that the Governor, and we have had some discussions 
with the Governor and staff, that message is a natural message 
to Buy California, to be involved with California and health 
and eat those five a day or seven a day, nine a day servings 
and get away from those soft drinks and things that are so 
tough on the health of our kids.
    Mr. Ose. Sure it is. All right. Thank you for that.
    Title IV of H.R. 3242 talks about specialty crop research 
and the like. Would it be possible or do you have plans under 
this grant program where some of the funds would go to research 
or would you reply on the authorization within this particular 
title only?
    Mr. Kawamura. Certainly, as you know, many times we find 
ourselves in the middle of a crises similar to the recent 
Pierce's Disease. And, you would always want to leave yourself 
some option to be able to redirect your funding to the 
emergency of the day. In saying that, there's a large section 
in the act to look and focus on the very real problems of pest 
exclusion and that the fact that, again, California is the 
portal to the rest of the United States going back to my 
opening statement about the forgetfulness of how important 
agriculture is or how important are those hard beginnings.
    We have learned a lot of lessons about pest exclusion over 
10,000 years of human history or more, especially in California 
we clearly have well documented studies showing that pest 
exclusion prevention is your best dollar spent. And, as these 
new technologies and new sciences come about that we are able 
to do so even more sustainably than in the past, even more 
effective than in the past, these are the kind of focuses for 
technology that we will need. In addition to that, using that 
same technology and study to make sure that any trade barriers 
that may exist are in other countries that we are able to put 
those dollars to focus to open those markets that currently are 
closed because of scientific technological trade barriers. That 
is another focus that we hope to keep open and focus on as they 
arise.
    Mr. Ose. I want to dwell on this pest and disease exclusion 
issue for a moment. As I understand it, we have spent in 
California nearly $200 million in two particular instances 
dealing with pests--$22 million in one instance and $177 
million in the other instance--is that right? Some of that 
money has come from the State, some has come from the Federal 
Government. From where I sit, the exclusion of pests or disease 
from entering our country is a Federal responsibility. Do you 
share that view?
    Mr. Kawamura. I absolutely do share that view, because it 
is just the history of this United States, actually before the 
formation of the United States. We understand that the bugs and 
the diseases and the pests don't understand borders. They can 
come in from any port. Before the formation of the United 
States, I think the best example is the incursion of the 
explorers with certain diseases, small pox, venereal diseases 
that wiped out entire populations of human beings. Every living 
group, every living population shares that vulnerability, 
whether it is our plant populations or our livestock 
populations, even our pets. So we talk about that all the time.
    There are things that want to eat us, our plant supply or 
our pets, too. And, that is a battle that has been going on for 
millions of years and it knows no borders. And so, yes, the 
Federal Government has that No. 1 priority, each State has its 
own responsibility as well.
    Mr. Ose. Sam.
    Mr. Farr. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary, for your testimony. I would just 
like to followup on a couple of questions that the chairman 
asked on the Buy California Initiative.
    Let me put it into a little bit different context. We are 
here to talk about this Federal legislation. But, what I also 
see is it is very difficult to move this nation. It is so big. 
I mean, move the U.S. Department of Agriculture from a broad 
national standpoint of really committing to the kinds of things 
you are talking about. And, it seems to me there is other 
pressures that can be brought up under experiences; and that is 
California itself as being the populous State, the biggest 
agriculture State and the most diversified agriculture State.
    In the grant program for the Buy California Initiative, I 
am wondering whether the Department is thinking about using the 
results of those grants, the success of those grants to 
essentially tackle the issue of how we really get specialty 
crops into institutional buying programs. If you look at us on 
the Ag Appropriations Committee and every year when we are 
looking at the commodity programs and those commodities that we 
buy end up back in the school lunch program or buy back in 
other kinds of public feeding programs, and those commodity 
programs are not producing the things that are nutritional five 
a day programs suggests we should eat. So essentially the 
Federal Government is not buying what they are telling people 
they ought to eat, and we are going to try to do something 
about that.
    But one of the problems you have is that, frankly, they 
have been buying these things because they are easy to buy in 
commodities. You can put them in big barrels or you can put 
them in big boxes. They do not think about specialty crops 
being packaged the way we are packaging them now. It is just a 
seque on technology. You do not remember that the lettuce in 
the bag was not invented at MIT or silicon valley. It was 
invented in the Salinas Valley. And, the carrots and celery 
that you can get in a package that are party snacks or used and 
served on airplanes, that technology was developed here by the 
men and women sitting in this room.
    So, you do have a technology investment along with this, 
just for the sake of packaging fresh produce. But I would love 
to see if you can as the new Secretary bring together how we 
can have institutional changes in California. If we can change 
our own schools and our prisons. I mean think of the 
institutions that feed a lot of people; our hospitals. And, I 
think the U.S. military is very interested in being right there 
with you, because they want healthy food. That we could from 
California really shape that agenda by not only talking about 
the need to do it, but demonstrating that we can deliver fresh 
produce, fresh crops, specialty crops to the buyers in a timely 
way and in a way in which they can distribute them.
    So it is just more of an observation than needing comment. 
And, I just hope you will be able to pull that together. You 
have already pointed out in your testimony that it has changed 
the school behavior in being able to build facilities to have 
salad bars in schools and milk vending machines, and so on. And 
that is, I think, the demonstration that the rest of the Nation 
needs to see. Because I believe as goes California, so goes the 
country.
    The other point I want to mention on your California 
Agriculture Emergency Response Team just FYI, the only school 
in the United States that is teaching first responders by 
giving them master's degrees in a whole new field called 
Homeland Security, is right here in Monterey at the Naval Post 
Graduate School. I have asked the faculty over there to get 
ahold of our Ag Commissioners and members of the agriculture 
community here to essentially address the thing that you need, 
which is to support the Emergency Response pertaining to food 
safety, pest, disease prevention as they teach these first 
responders who are career people, who are coming over here to 
get a master's degree. And, they do it by coming here for 2 
weeks. They get an initial course and they go back to their 
jobs and do distance learning, and come finally to get their 
degree. I think it's going to seque into a doctoral degree.
    The inventive educational curriculum that is being done in 
Monterey will carry over to universities throughout the country 
because there is demand for that. I hope you can plug into 
that.
    I mean, the Navy will probably come and talk to you. But, I 
will make sure that they ask questions and maybe you can tell 
people to also give them a call.
    Last, the invasive pests that the chairman was talking 
about. When George Brown was alive, who is a good friend of 
yours from southern California, he worked with UC Riverside and 
Secretary Gomes to try to create a center for prevention, 
rather than just respond to disaster. Essentially you and 
science know--we have ideas of what is coming, what is headed 
this way, what may get into the California food chain. We ought 
to be working on the ounce of prevention. We ought to be able 
to know that whenever we have a Pierce's Disease that what is 
the kind of response that is appropriate.
    What happened is that the Federal Government, they were 
going to do a local tax election there, and I think that 
failed, to help this center for disease control and prevention. 
We need to get that back on the agenda, and I think the Federal 
Government needs to support that very heavily. We are pitching 
that with the USDA but your support could be very helpful in 
that.
    Mr. Kawamura. Be very happy to do that.
    Mr. Farr. Thank you very much.
    Mr. Ose. Thank you, Congressman Farr.
    Secretary Kawamura, for the record, I just want to make 
sure I get this here, as I read your testimony you support H.R. 
3242, the Specialty Crops Competitiveness Act?
    Mr. Kawamura. I support it absolutely.
    Mr. Ose. All right. That sounds like a simple statement, 
but you cannot imagine how much weight that carries. I am just 
telling you. That is a powerful message to the rest of the 
country.
    I want to just examine it for a minute. How do you feel 
this bill will benefit the specialty crop industry here in 
California? What do you see coming out of this?
    Mr. Kawamura. Going back to my earlier statement about just 
those dynamics of consumption increase again. If we really do 
find ourselves with five, six, seven servings within a short 
period of time due to a health message, due to a nutrition 
message of eating this healthy, it could be fast food but it is 
going to be healthy fast food. It could be in the school 
systems. It could be food coming down to all the different 
institutional providers.
    In 2003, and this is the right setting to be talking about 
value added food supplies. Value added is basically 
technologies of the day putting food into a new form that makes 
it easier to ship, possibly less perishable, more adaptable to 
a consumer that's on the move, more easily sent abroad. And, 
again, those old conceptions of what a commodity purchase 
program can be need to be reevaluated. In 2003 we see that 
there is a tremendous potential for an increase beyond anything 
we have imagined driven by a nutrition paradigm that can move 
this State and this country forward, not only in the business 
side of it but in the health side as well. So the dual win/win 
of that kind of scenario is something that this kind of a 
specialty crop grant program and this kind of a specialty crop 
act can provide and give the impetus as we move forward to 
reassess the entire Farm bill in 2007.
    Mr. Ose. Your point is that you tie the different pieces of 
this together from the research and the marketing and the trade 
aspects, and then all of a sudden using the USDA's food 
pyramid, you think the demand for specialty crops will increase 
rather significantly?
    Mr. Kawamura. Almost overnight.
    Mr. Ose. Right. Now, I want to go back for a moment if I 
may to the pest exclusion issue. We were talking about the 
Mexican fruit fly or the New Castle Disease. Again, 22 million 
on the Mexican fruit fly, 177 million on the New Castle 
Disease. In terms of the cost of dealing with that, how much of 
those costs is the State bearing today?
    Mr. Kawamura. Going back to Congressman Farr's statement, 
and both of you had mentioned an ounce of prevention and we 
talked about the dollars of a penny wise, pound foolish, an 
ounce of prevention is worth a pound of flesh. The first dollar 
prevention that we can continue to spend in all areas of pest 
exclusion is our best investment.
    These dollars that were spent on Pierce's Disease, the 
dollars that were spent on exotic New Castle disease, those 
numbers are actually amazingly low for the just outstanding 
response that the State working hand-in-hand with the USDA was 
able to provide in getting up to speed and fighting those 
infestations.
    The partnership clearly is something that we understand. 
The question is how much of a role does the Federal Government 
play in this? It is an absolute hand-hold. Our economy 
currently, of course, is impacted. We hope to be back on the 
right track here in California. We are always concerned then if 
dollars are short in areas of prevention, and this time we 
would always hope that the Federal Government would be able to 
help us during a time of financial difficulty. We plan to be 
able to convince our own State of the importance of pest 
exclusion and make sure that our funding is always strong so 
that we are not a drain on the Federal Government by any 
chance. It is something that we are working toward, so we need 
assistance.
    I might remind everyone, it is the experts that are asking 
and encouraging us to seek that assistance. There's some 
tremendous knowledge here in the State, and we should be all 
very wise to listen to that.
    Mr. Ose. $22 million and $177 million is pretty quickly 
$200 million. One thing that has been shared with me is the 
State pays a share of that even though, frankly, much of the 
responsibility might originate at our borders. Am I accurately 
informed on that?
    Mr. Kawamura. Yes, you are. Yes, the State does have a cost 
share within those programs.
    Mr. Ose. What is the cost share arrangement?
    Mr. Kawamura. It depends, I believe and I might have my 
facts wrong, but it should be one for every dollar. I believe 
with the Pierce's Disease it's $8.
    Mr. Ose. We can expand on that, but there is a cost share 
relationship?
    Mr. Kawamura. I can followup? Yes, there is.
    Mr. Ose. OK, so we will followup with you with a written 
question about that to get that on the record.
    Is that cost share relationship equitable?
    Mr. Kawamura. It is in regards to the total amount of, how 
would you say, resource that is preserved or saved for the rest 
of the country. Again, California produces over 50 percent of 
all the fruits and vegetables, for example, in the country. And 
so, this is the food supply for the country that is being 
protected, not just for California. Our specialty crops, where 
they are an enormous amount of the percentage of the food 
supply of the United States in the form of food, specialty 
crops are what California produces for the rest of the country. 
So the whole country benefits from the preservation of this 
industry. And, it is not right to look at each State. It is a 
parallel production within all the States. It is our food 
supply and we must always protect it. Because if we get a 
tremendous flood or some horrendous disaster in California, you 
had better hope that Florida does not have that disaster. It 
is, again, a big picture that we forget many times of what the 
food system of the United States is all about.
    Mr. Farr. I had one more series of questions.
    Mr. Ose. It is your turn.
    Mr. Farr. Just a seque on that also, Mr. Chairman, that was 
a very good question. And, I think, when we get to that and you 
will see that California specialty crops put in more of their 
own private funding matched with a commitment with the State 
than probably any other crop in the country. I mean, we are 
carrying more of our burden, and, I think, that was the 
chairman's question. The Federal Government should have more of 
a responsibility.
    Mr. Kawamura. Congressman Farr, if I may just add, and that 
was an excellent point, part of the reason that the industry 
stepped up to the plate is we deal with perishable living 
things. The bureaucratic process is too slow sometimes for the 
response that we need. And so, to followup on that, we could 
always do better, we could get those response emergency funds 
out faster. When the experts are asking for it, I think we 
should deliver it. That is how fast it should work.
    With hoof and mouth disease, for example, every hour that 
you delay the process to seal it up, it costs millions upon 
millions of dollars. That is one of those estimates that are 
out there.
    So in followup, the reason the industry responded with some 
of their own money is they see the danger to their crops in a 
short timeframe. They cannot necessarily wait for the right 
processes to go through. We would love to modify that process 
and make it a quicker process.
    Mr. Ose. Someone on the second panel talks about the 
cooperative or collective efforts within marketing orders or 
different segments of the industry in terms of dollars 
committed to that. So we will expand on that when we get to 
that.
    Mr. Farr. I have no further questions.
    Mr. Ose. OK. I do want to examine a couple of things, Mr. 
Secretary. With respect to California itself, what do you feel 
are the most important trade priorities for our agricultural 
sector?
    Mr. Kawamura. We have always asked for a harmonized set of 
rules that allows all of us to trade so that our trading 
partners have the similar kinds of rules and regulations into 
their food production that we have to deal with. We have always 
asked our tradeofficials to look for countries that have 
populations that can actually buy our crops.
    Many times we are making trade agreements with countries 
that have nothing to offer us, but their specialty crops and no 
market for our specialty crops. That is a concern.
    Many times within our trade policies we are finding that 
our products are kept out of those countries because of, again, 
technical trade barriers that can be solved if we were to focus 
a little more of our resources on resolving those barriers in 
those countries to open the markets for us instead of focusing 
our dollars on allowing other countries to come into our 
country with their food products.
    So, those are the kind of focuses that we need to followup 
on.
    We have not yet looked into the food assistance dynamics 
and the politics of how we feed a hungry world that sometimes 
is in crises, going back to the fact that we have products now 
in 2003 that used to be very perishable that are now in forms 
that are highly non-perishable and easily delivered. We should 
certainly look at that new function of specialty crops being a 
part of that nutrition program that we give to a hungry world 
that is certainly in many cases in significantly dire straits 
in terms of their nutrition.
    Mr. Ose. You made a very cogent point relative to targeting 
these trade agreements on countries that can afford to buy our 
product. I mean, that is such common sense it is unusual, I 
mean I have to tell you. I have been in Washington for 5 years 
and I do not think I ever heard it put so succinctly. So, I do 
think that is a very good point that gets lost in a lot of our 
discussions.
    Are there countries in particular that we do not have trade 
agreements with today that you are aware of that we ought to 
look at? If you were able to say or wave your hand and say all 
right, we are going here, there, and there; where would you go?
    Mr. Kawamura. Well, again, those countries that could buy 
our products easily. European Union as a trading block, we do 
not have a current open bilateral treaty with them. There is 
all kinds of, as you mentioned earlier, tremendous subsidies to 
their specialty crop sector that basically prohibit us from 
being competitive in their markets. As well as tariffs into 
Japan would be another one. Some products are getting in, some 
products are not.
    So, those countries with the biggest populations of middle 
class and just with the kind of economy that it can afford our 
products, it is an easy demographic that you can see, we should 
be focusing on those for our products.
    We understand many of these trade treaties are driven by 
national security interests. I think we always want to try and 
remind our administrations and our country that food security 
is a security issue for national security.
    Mr. Ose. Right. Thank you.
    We have no further questions at this time. We do have 
things that came up here that will be pleased to forward to you 
and your staff.
    Mr. Kawamura. One last, for the record. Again, and I 
apologize. I am about day 15 here into the job site. I do not 
have all the facts.
    Mr. Ose. You are doing fine.
    Mr. Kawamura. But on the fruit fly infestation recently, 
the Federal Government put up $11 million and California put up 
$11 million. The New Castle disease it was a Federal 
recognizing the danger to the entire State--to the entire 
country on an explosion of New Castle disease into the poultry 
industries. It is $170 million from the Federal side, $7 
million from the State side.
    Mr. Ose. OK.
    Mr. Farr. Just the State?
    Mr. Kawamura. Just the State. And this is just on these 
aside from what private industry might have put in on their 
own, but----
    Mr. Farr. It was $170 million just for California or the 
whole country?
    Mr. Kawamura. $170 million on the Federal side.
    Mr. Ose. For the outbreak that occurred in California?
    Mr. Kawamura. Yes.
    Mr. Ose. Right.
    Mr. Kawamura. On the glassy-winged sharpshooter, it was $6 
million for the State, $24 million Federal.
    Mr. Ose. OK.
    Mr. Kawamura. And then, not to mention the private 
contribution, which was a sizable amount as well.
    Mr. Ose. From industry?
    Mr. Kawamura. From industry.
    Mr. Ose. OK. All right. Well, Mr. Secretary, thank you.
    Mr. Kawamura. Thank you again for your support.
    Mr. Ose. Is this your first testimony before a 
congressional committee?
    Mr. Kawamura. No, and it will not be my last, but----
    Mr. Ose. I tried to get there first.
    Mr. Kawamura. The first in this capacity, yes.
    Mr. Ose. All right. Well, we are pleased you were able to 
join us. We look forward to working with you, and we thank you 
for your support.
    Mr. Kawamura. Thank you for your support. I appreciate it.
    Mr. Ose. Thank you.
    We will take a 5-minute break here.
    If the second panel of witnesses could gather as the 
Secretary leaves, that would be great.
    [Recess].
    Mr. Ose. All right. I want to welcome the second panel of 
witnesses to our hearing today.
    We are joined today by Mr. Joe Zanger, who is a member of 
the board of directors of the California Farm Bureau 
Federation. We are joined by Mr. Jim Bogart, who is the 
president of Grower-Shipper Vegetable Association of Central 
California. We also have with us today the chairman of Western 
Growers Association, Mr. John D'Arrigo. And, we are also joined 
by the vice president and general counsel of Tanimura and 
Antle, Mr. Robert Nielsen.
    Gentlemen, you saw how we handled the first panel. We are 
going to shortly hear your oral testimonies. You have each 
submitted written testimony, which we have received and 
reviewed.
    Each of you will be given 5 minutes to summarize your 
testimony, which ought to be interesting because I read 
everybody's testimony and I do not believe I could summarize 
some of it in 5 minutes, but we will see.
    Then we will go to questions. So, we will have five, five, 
five, five and then questions between Congressman Farr and I. 
The questions will follow the completion of your testimony.
    Do you have any questions?
    OK. If you would all rise so we can swear you in.
    [Witnesses sworn.]
    Mr. Ose. Let the record show that all the witnesses 
answered in affirmative.
    Our first witness on the second panel is a board member of 
the California State Farm Bureau Federation, Mr. Joe Zanger.
    Mr. Zanger, you are recognized for 5 minutes.

   STATEMENTS OF JOSEPH ZANGER, MEMBER, BOARD OF DIRECTORS, 
   CALIFORNIA FARM BUREAU FEDERATION; JIM BOGART, PRESIDENT, 
  GROWER-SHIPPER VEGETABLE ASSOCIATION OF CENTRAL CALIFORNIA; 
 JOHN D'ARRIGO, CHAIRMAN, WESTERN GROWERS; AND ROBERT NIELSEN, 
  VICE PRESIDENT, TANIMURA & ANTLE AND UNITED FRESH FRUIT AND 
                     VEGETABLE ASSOCIATION

    Mr. Zanger. Thank you. I am Joe Zanger, a grower, 
processor, packer and retailer of fruits and vegetables in 
Hollister. I am a member of the California Farm Bureau Board of 
Directors and I serve on the USDA USTR Trade Advisory Committee 
for Fruits and Vegetables. Also, I have been on the Farm 
Service Agency State Committee for the last 8 or 9 years. 
Congressman Farr saw to it that I received that appointment 
back then and with the change of administrations, thanks to 
Chairman Ose, I am still on the State committee.
    On behalf of our Farm Bureau members, I thank you for the 
opportunity to present testimony on problems facing the 
specialty crop industry. And, thank you, Mr. Ose, for 
forwarding the testimony from this hearing to the House Ag 
Committee. Thanks, too, for the Ag Committee staff who are 
present here today.
    While working to provide a reliable food supply through 
responsible stewardship of our country's natural resources, 
growers are attempting to balance numerous issues such as 
global competition, retail consolidation, trade barriers, 
rising input costs and low commodity prices. Specialty crop 
growers are determined to find solutions outside the 
traditional U.S. farm support programs. Solutions can be 
identified through meaningful review of the reform of domestic 
policies that impair the viability and global competitiveness 
of our specialty crop producers. The Specialty Crop 
Competitiveness Act of 2003 offers necessary short and long 
term support for growers of fruits and vegetables and nuts 
throughout America. The bill addresses a wide array of issues 
from threats imposed by imported pests and diseases to 
preparing a strategy to increase U.S. exports.
    I would like to express our appreciation to the bill's 
author, Congressman Ose, and the cosponsors of the bill 
including Representative Farr.
    But today, I would like to briefly comment on international 
trade. The WTO Doha Round presents a unique opportunity for the 
horticultural industry to reform inequitable trade policies 
that place our producers at a competitive disadvantage. Past 
trade agreements have provided more benefits to foreign 
producers than U.S. producers, primarily because of continued 
high tariffs in many countries and substantial foreign 
subsidies. Our competitors enjoy the ease of exporting their 
product into the United States under low and zero tariffs.
    To ensure that issues of interest to the specialty crop 
sector are addressed, a number of U.S. specialty crop 
organizations, including the California Farm Bureau, have 
collaborated to form the HORT Alliance. The HORT Alliance 
stands for Horticultural Organizations for Responsible Trade.
    The HORT Alliance is seeking an overall WTO agreement that 
produces tangible benefits for the fruit, nut and vegetable 
sector. Our objective is to correct disparities that 
disadvantage U.S. growers through the framework negotiations, 
and if necessary to sector-specific negotiations.
    The Alliance is seeking: Aggressive and significant reform 
in market access; new rules that limit trade distorting amber 
box subsidies to horticultural and specialty crops; and 
immediate elimination of export subsidies.
    To summarize, there are significant trade export subsidy 
and domestic support issues that must be addressed if U.S. 
specialty crop produces are to see meaningful reform in the 
Doha Round. California Farm Bureau looks forward to continuing 
its work with the U.S. negotiators and with our Members of 
Congress in an effort to address the trade inequities impacting 
the U.S. specialty crop industry.
    I think I will stop there. I do have additional thoughts 
and perspectives on how the Federal Government can be helpful 
to specialty crops, and I will try to tie them in and bring 
them out during the questioning and answering period.
    [The prepared statement of Mr. Zanger follows:]

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    Mr. Ose. If there is something we miss in the Q&A period, 
just make sure that you get our attention. You do not have to 
raise your hand.
    Mr. Zanger. Thank you.
    Mr. Ose. All right. Thank you, Mr. Zanger.
    Our next witness is the president of the Grower-Shipper 
Association here in Salinas, Mr. Jim Bogart.
    Mr. Bogart, welcome. You are recognized for 5 minutes.
    Mr. Bogart. Thank you.
    Mr. Chairman, thank you for this opportunity to testify on 
behalf of the Grower-Shipper Association of Central California 
to discuss Federal agricultural policy with regard to specialty 
crops. We want to provide a warm welcome to you and the other 
distinguished Members of Congress and congressional staff on 
your visit to Monterey County.
    There is no better place than right here in Salinas to 
discuss specialty crop issues. We are very proud of our growers 
and shippers that they have been able to provide the most 
affordable, abundant and safe supply of fruits, vegetables and 
other specialty crops available anywhere in the world for the 
American public. Monterey County, with over $2.8 billion in 
agricultural output in 2002, produces many specialty crops 
which are an important component of a healthy diet.
    It is commendable of Members of Congress to come here to 
Salinas because today our ability to continue producing the 
most affordable safe and abundant supply of nutritious 
specialty crops is in jeopardy. We face many challenges in 
order to remain competitive in global markets. For that reason, 
the Grower-Shipper Association strongly supports the Specialty 
Corp Competitiveness Act of 2003, H.R. 3242, as it will address 
many of the problems facing our industry. We want to 
particularly commend you, Mr. Chairman, and Representatives 
Dooley, Farr, Cardoza, and others who have cosponsored this 
bill, for your leadership on this legislation.
    Today I want to focus some of the challenges our growers 
and shippers face in the area of international trade.
    Specialty crop growers in California have long known that 
expanding exports is critical to maintaining a competitive edge 
in global markets. However, in recent years, the balance of 
trade for U.S. fruit and vegetable exports versus imports has 
not been positive, as we have seen our exports remain stagnant 
while imports have steadily increased. I have attached some 
statistics and charts to my remarks to bear this out.
    Our growers and shippers have been disappointed with their 
inability to gain access to international markets in recent 
years. The Uruguay Round trade agreement of 1995 was supposed 
to lay the ground work for market access for our specialty crop 
exports. The two primary components of this agreement that 
benefit specialty crops are the dispute settlement and sanitary 
and phytosanitary [SPS], mechanisms. While there have been a 
few bright spots within our industry in efforts to expand 
exports under the Uruguay Round, for the most part our growers 
continue to find access to foreign markets blocked by trade 
barriers.
    There are several key reasons that U.S. specialty crops 
growers have been frustrated in their efforts to increase 
exports. First, we continue to face dozens of SPS trade 
barriers in many foreign markets, many of which are based on 
very questionable scientific data. For example, Japan, which is 
a very large potential market for specialty crop exports, has 
been notorious for using questionable SPS barriers to block 
entry of our products.
    Another major issue that our growers continue to face 
competition from heavily subsidized growers in foreign 
countries. The European Union is the largest problem in this 
regard, providing $11 billion in subsidies per year to its 
fruit and vegetable industries. As you can imagine, it is 
extremely difficult for our growers, who do not participate in 
the USDA subsidy programs, to compete against foreign growers 
who receive generous financial assistance from their 
government.
    Another area of concern is that many of the bilateral free 
trade agreements that have been enacted in recent years are 
with countries that do not have substantial markets per capita 
or per capita income needed to purchase high value specialty 
crop products. If Federal trade policy wants to provide for 
increased specialty crop exports, we need to negotiate trade 
agreements with countries that have larger markets for our 
products, such as the Asian Pacific Rim nations.
    Currently, developments in international trade threaten to 
pose even more challengers or specialty crop growers. Most 
notably, the trade sanctions with the European Union are 
threatening to levy in trade disputes will directly impact many 
specialty crops grown here in Monterey County. Our trading 
partners recognize that specialty crops are very important, and 
we will always be vulnerable to retaliation measures. These 
disputes must be resolved promptly in an amicable manner in 
order to avoid a trade war which could devastate our existing 
exports.
    We do have a few success stories to tell about Federal 
efforts to address the international trade problems our growers 
face today. For example, Congress approved funding for the 
Agricultural Research Service to conduct research for 
controlled atmosphere shipping that has great promise for 
enabling us to overcome SPS trade barriers in some export 
markets. I would like to thank Congressman Farr for his work on 
the Appropriations Committee to bring this project to fruition.
    However, as the challenges that our growers face continue 
to increase, so too must the efforts of the Federal Government 
to enact policies that meet the needs of specialty crop 
growers. Our Federal agriculture policy must do more to address 
this problem of a lack of foreign market access for our 
exports.
    Fortunately, H.R. 3242 will enhance existing programs and 
establish new initiatives that will provide growers with the 
tools and technologies needed to expand exports and remain 
competitive. This bill includes increased funding for the 
Technical Assistance for Specialty Crops program, it will 
direct APHIS to focus more of its resources on processing 
export petitions, and it will enhance the Suppler Credit 
Guarantee Program. With these provisions and others, this 
legislation will assist our growers in boosting exports, and 
ultimately will enable our industry to remain competitive in 
global markets.
    Mr. Chairman, again, I want to thank you for this 
opportunity and commend you for your efforts to improve Federal 
policies for specialty crops.
    [The prepared statement of Mr. Bogart follows:]

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    Mr. Ose. Thank you, Mr. Bogart.
    Our next witness joining us from Western Growers, Mr. John 
D'Arrigo.
    Mr. D'Arrigo, you are recognized for 5 minutes.
    Mr. D'Arrigo. Thank you, Mr. Chairman.
    On behalf of Western Growers, thank you for the opportunity 
to testify at this hearing today.
    As you said, I am currently chairman of Western Growers 
with a membership of nearly 3,000 which represents specialty 
crop growers in California and Arizona that produce 
approximately one-half of our Nation's produce.
    I am president of D'Arrigo Brothers Co. of California, a 
third generation family owned grower of vegetables and fruits. 
And, I'm proud to say we are celebrating our 80th birthday this 
year.
    I wanted to compliment you for coming to Salinas Valley, 
home of the salad bowl of the world, as we like to think of it, 
to discuss the many important challenges facing the specialty 
crop growers. I especially want to commend you, Congressman 
Ose, as well as your colleagues Congressman Dooley, Congressman 
Farr and Congressman Cardoza for your outstanding leadership in 
introducing the Specialty Crop Competitiveness Act of 2003, 
which Western Growers strongly supports.
    Western Growers believes that a competitive specialty crops 
industry is essential for the production of an affordable 
supply of nutritious fruits and vegetables that are vital to 
the health of all Americans. In addition, with the serious 
concerns on food safety and bioterrorism today, a secure 
domestic food supply is a national security imperative, in our 
opinion. If specialty crop growers are to remain competitive in 
today's global markets and continue to provide affordable and 
safe produce to the American public, Federal agriculture policy 
must be substantially improved. Growers of specialty crops face 
a crises of competitiveness that must be addressed by Congress.
    It is extremely difficult for growers to compete against 
foreign produces who are heavily subsidized and minimally 
regulated. As regulation increases to control the impact of 
agricultural practices on air, water and soil quality, 
production costs for growers are increasing rapidly. Growers 
compete in a supply and demand environment. We are price 
takers, not pricemakers. And, therefore, we are unable to 
merely increase prices to cover increased input costs. Simply 
put, we cannot pass increases on.
    While specialty crop growers make a substantial and 
important contribution to our Nation's economy, as well as our 
health, we have different needs compared with the Federal 
program crops. As such, Western Growers and the Florida Fruit 
and Vegetable Association has co-chaired an effort of specialty 
crop organizations throughout the United States to develop 
comprehensive legislation that will meet the needs of growers 
in all States producing specialty crops; whether you are a 
grower in Texas, Washington, Michigan, Georgia, New York. The 
challenge of competitiveness is a universal concern to all 
growers. These proposals are embodied in the Specialty Crop 
Competitiveness Act of 2003. I applaud you for including these 
important provisions in your bill.
    I would now like to briefly highlight a few of the major 
issues that are important to Western Growers.
    First, marketing order promotion programs have come under 
legal and Constitutional challenges in recent years, and thus, 
the benefits they provide to growers and consumers are in 
jeopardy. We need to research and identify new concepts and 
tools that can assist growers in remaining competitive in this 
area.
    Western Growers recommends that the Federal law be changed 
to prevent marketing order committees to implement food safety 
programs. This would allow growers to implement good 
agricultural practices designed to keep fruits and vegetables 
free from adulteration or microbial contamination. This would 
help meet the public's demand for greater levels of food 
safety.
    Another issue that needs to be addressed is the adverse 
impacts on growers and shippers of the inspection scandal at 
Hunts Point Terminal Market in New York. Under the procedures 
of the Perishable Agricultural Commodities Act [PACA], even 
though a grower/shipper may have received a damage award 
through the packer administration process, the wholesaler in a 
procedure can appeal the packer ruling and receive a new 
hearing in U.S. Federal District Court. In many cases, the 
dollar amount of the award to the grower/shipper may be only 
$10,000 or less and therefore would make it not feasible to 
invest legal fees to pursue action in Federal court. In some 
cases, the wholesaler involved in illegal activity simply went 
out of business and the grower/shipper had no opportunity to 
collect any money on the packer damage award. Clearly, the 
current system is not working for our growers and shippers in 
order to make them whole from this scandal. Western Growers 
recommends the development of an arbitration proceeding that 
could be established and utilized to effect a more cost 
efficient and timely resolution of this problem.
    I also want to stress the importance of improving foreign 
market access that we can increase specialty crop exports. 
Based on data from the U.S. Department of Commerce over the 
last 7 years, U.S. imports in fruits and vegetables have 
increased by almost 60 percent while U.S. exports have 
increased only 7.3 percent.
    There are a number of reasons for this, such as the $11 
billion in subsidies which the European Union provides to its 
agricultural industry annually. Additionally, the recently 
completed Free Trade Agreements, the FTAs with countries such 
like Chile and those currently in the process of being 
negotiated with such as Latin America, Morocco and the South 
African Customs Union offer United States and vegetable growers 
only limited export opportunities. Many of these countries are 
not economically developed enough to be able to afford high 
value products, and therefore the market for our exports is 
negligible.
    Western Growers believes that the international trade 
provisions in your legislation, Mr. Chairman, will address this 
problem of limited foreign market access providing growers with 
the tools such as the market access and technical assistance 
programs needed to increase exports. In addition, Western 
Growers would like to see free trade agreements in the Asian 
Pacific Rim countries that currently have high tariff rates and 
significant phytosanitary barriers so that these implements to 
our exports can be removed.
    In closing, I urge you to review these issues discussed in 
my written statements which are addressed in Specialty Crop 
Competitiveness Act. Western Growers again wants to thank you, 
Mr. Chairman and the cosponsors of the bill for your strong 
leadership. Cannot say that enough. We urge Congress to enact 
this legislation and look forward to working with you toward 
this goal.
    Thank you.
    [The prepared statement of Mr. D'Arrigo follows:]

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    Mr. Ose. Thank you, Mr. D'Arrigo.
    Our final witness on the second panel is Mr. Robert 
Nielsen, the vice president and general counsel for Tanimura & 
Antle. Welcome.
    Mr. Nielsen. Thank you, Mr. Chairman.
    Mr. Ose. You're recognized for 5 minutes.
    Mr. Nielsen. Thank you.
    Mr. Chairman, Congressman Farr, ladies and gentlemen, I 
want to thank you for this invitation. I want to thank you, 
too, for your being here. I want to thank you also for your 
work on the specialty crops issues that this country and its 
industries are facing.
    I am appearing today on behalf of Tanimura & Antle here in 
the Salinas Valley, and also on behalf of United Fresh Fruit 
and Vegetable Association, which is headquartered in 
Washington, DC.
    At the outset I would like to say that we support the 
Specialty Crop Competitiveness Act and we applaud you for your 
efforts. The first time, as far as we can determine, that such 
a comprehensive effort has been made to address the issues that 
specialty crop producers in the United States face. This is 
commendable. We are pleased that Congress is on record as both 
you members pointed out, that the volume of specialty crops 
produced in this country now exceeds the volume in dollar terms 
of the crops that receive Federal assistance. We are no longer, 
as Congressman Farr pointed out, minor crops. We are the 
biggest player in the game.
    That being said, I would like to talk to you in behalf of 
and in the context of Tanimura & Antle, which I represent, as 
being one of the players in this industry, along with the 
D'Arrigo Brothers and many of our other neighbors here in the 
Salinas Valley. We are the people who produce these specialty 
crops. And, I think it is helpful for the Congress, for the 
committee, for the staff to understand what we who bear this 
burden, if you will, or cease these opportunities face 
everyday.
    Tanimura & Antle, headquartered in Salinas, is one of the 
largest privately owned produce companies in the United States. 
We ship a full line of fresh vegetables and value added 
products, i.e. specialty crops, grown on 56,000 acres in 
California and Arizona. We have cooling facilities in Salinas 
and Huron, CA, as well as Yuma, AZ. In addition, we have two 
value-added salad-processing plants here in Salinas, one in 
Yuma and one each in Jackson, GA, Plymouth, IN, and Boisbrind, 
Quebec. We sell our products throughout the United States and 
Canada, and also in Europe and Asia.
    We are players and we deal with the issues that have been 
raised by the three previous speakers on this panel.
    Founded in 1982, Tanimura & Antle, is owned 50/50 by two 
families, and it prides itself on being a leader in responsible 
farming that respects the land and produces specialty crops of 
the highest quality. We are consumer-oriented, as all the major 
companies and all the farmers in our industry are, and at the 
same time we value the contributions of our other constituents; 
that is our employees, our growers and the communities in which 
we operate.
    Tanimura & Antle is a leader in the application of 
technology to farming, being extensively committed to drip 
irrigation, as well as the use of satellite technology, 
advanced plant-breeding techniques, and labor-saving machinery 
and equipment, much of which we develop within our own country.
    As part of our technology and the efforts we do, we produce 
these, which the chairman was gracious enough this morning to 
indicate he might be interested in consuming. Loaded with 
vitamins and minerals, these are aimed at helping kids in this 
country eat healthy products on a snack basis. Carrots or 
celery that kids can get, and they're nutritious and they are 
good for you. This is an example of the technology that our 
industry, as Congressman Farr pointed out, has been pursuing 
with breathable films, with manufacturing techniques that 
permit this crop to have a self life and to be exported, and to 
be shipped around the country.
    As I mentioned, I am also appearing on behalf of United 
Fresh Fruit and Vegetable Association, which has been around 
since the early part of the 20th century and is a strong voice 
representing the views of producers, wholesalers, distributors, 
brokers and processors in Washington.
    Tanimura & Antle also as part of the activities that it 
engages in, is an owner of a company by the name of Natural 
Selection Foods, which is the major organic producer in the 
United States. We are a grower for Natural Selection, and we 
market and ship products under their label, which is Earthbound 
Farms.
    The produce industry is unique. Our products are highly 
perishable. In fact, a son of Salinas, John Steinbeck described 
in ``East of Eden'' one of the first lettuce shipments from 
Salinas to the East Coast. Although the book is fiction, his 
narrative is based on facts that actually occurred. The 
enterprising packer/shipper who sent the rail car eastward, 
lost everything when it was parked over the weekend on a siding 
in Chicago and all the ice inside melted.
    This early story is an example of the constant risk taking 
that we in the produce industry continue to engage in. We put 
millions of dollars worth of working capital into the ground 
with every crop that we plant never knowing for sure whether 
Mother Nature, retail channels, the marketplace or any other 
number of issues will or will not stand in the way and cause us 
to lose or gain from the investment that we have made.
    Our markets are highly volatile, as you have heard today, 
yet we have never relied on traditional farm programs to 
sustain our industry. Instead, we look to Adam Smith's 
``invisible hand'' to promote efficiency and reward the 
entrepreneurial risk-taking that so marks our industry. And, it 
is in this context that we greatly welcome the Specialty Crop 
Competitiveness Act and the efforts that you, Mr. Chairman, and 
your committee and the Congress are undertaking.
    I would be pleased to answer more questions further on.
    [The prepared statement of Mr. Nielsen follows:]

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    Mr. Ose. Well, thank you.
    I thank all the witnesses for their cogent and, frankly, 
comprehensive summaries of their testimonies.
    We are going to go again, as we did during the first panel, 
just back and forth with questions.
    Do you want to go first this time?
    Mr. Farr. Well, thank you, Mr. Chairman.
    Let me point out an observation you all made about the need 
for a good stable labor supply. A bill has been introduced in 
Congress by Mr. Cannon and Mr. Berman from California on the Ag 
Labor worker program and get some benefits to those who are 
here now to provide some temporary status while they are 
pursuing permanent status. That bill has gotten broad based 
support in both the House and the Senate, both Republicans and 
Democrats. The one person that I have heard that is opposed to 
it is Senator Feinstein, and I think we need to use the 
industry to talk to her office about why this bill really is 
beneficial to California. I think what the reaction is that in 
the first instance there will be an increasing in population in 
California from the guest worker program. All the fears about 
that are sort of good. But it is, I think, the only hope that 
we can address this issue and I just urge you all to bring that 
attention to our Senator here.
    I wanted to ask Joe Zanger, the regulation area. Monterey 
County I saw in the paper just adopted the right to farm 
ordinance creating, which I always thought was a smart idea, 
that we talked about in the Endangered Species Act of why you 
have to preserve a critical mass of habitat in order for a 
species to survive. If you think about agriculture being an 
endangered species, then we ought to create a protective 
habitat for agriculture to survive. You are going to do that 
through Federal roles and State roles. But the real land use 
issues are local.
    Are these ordinances having an effect? I am sure that the 
reason that the County Board of Supervisors adopted it is 
because of the interest in agriculture in Monterey County? Is 
the Farm Bureau pursuing in each of the ag counties in 
California?
    Mr. Zanger. Yes. You know, land use and land zoning is very 
important. You know, we support keeping agriculture on the 
prime ground. But it is just not enough to draw the lines. At 
the same time while we are farming, we need to have a means of 
being profitable. And, you know, if you are not profitable, 
then you know all the rest hardly matters. So in conjunction 
with the land use and the zoning, you know there is a number of 
other things that can be done both locally and State wide and 
federally that help with the profitability standpoint for the 
industry.
    Mr. Farr. You know, the difficulty though with just doing 
it that way, is there is no guarantees. We have created in the 
Williamson Act in California essentially a commitment by the 
landowner to keep their land in agriculture for whatever the 
contract period is, and that seems to have worked well. It's a 
quid pro quo for that you get a reduction in your property 
taxes.
    It seems to me that we need to make more of those quid pro 
quos. I mean, I am supporting you, but I think that the right 
to farm, I would like to see that in each county in California. 
Because I think that protects at least from the notice 
requirements to land buyers and to neighbors. You are moving 
into an area where there is going to be noise, there is going 
to be dust, there is going to be spraying, there is going to be 
activity that are necessary for productive agriculture.
    You brought up the regulations, and that is why I am really 
wondering how far the State Farm Bureau was carrying those 
kinds of issues. We will try to address these issues at the 
Federal level.
    Mr. Zanger. Well, as I say, we are supportive of the right 
to farm. I think predominately most counties do have 
ordinances. Now, how well they stand up to litigation, that is 
another question.
    I think farmers and ranchers are more than willing to do 
all they can to protect the environment and to be part of the 
environment. But it sure helps if you are making a dollar so 
you can afford to do that. A lot of problems are solved when 
you have money in your checkbook.
    Mr. Farr. Well, I think that whole idea of protection of 
farmland has to be consistent with protection of economic 
return on the investment. It has to be sustainable.
    Thank you.
    Mr. D'Arrigo. I would like to weigh in on your question, if 
I may.
    Mr. Farr. Certainly.
    Mr. D'Arrigo. I think it is an excellent question. I farm 
right up to a lot of urban areas. They have encroached on my 
property. I have people at night who go out into my farms from 
the surrounding urban environment and neighborhoods that have 
moved into the area after we have been farming there for 
decades. They turn off our pumps. They sabotage our equipment. 
They do not like the noise. They do not like the dust. They 
call the Ag Commissioner and complain. They want us to shutdown 
our farming operations. And, you try to explain to them, well 
we were farming here first. You moved into a nice area because 
you thought it would be nice and pretty to move around a farm 
and look how nice it is out there, and then you realize what it 
is like to live around a farm.
    So I really support these ordinances of a right to farm and 
right to exist and Western Growers is working on behalf of 
trying to find a balance there, but clearly farmers do have a 
right to produce. We have to keep reminding people as the 
cities grow that we need to be able to do this.
    Mr. Farr. Well, I appreciate that. I mean, this county, Mr. 
Chairman, has made incredible strides. We were the first county 
to require posting. It was not a State law. The ag community 
was supportive of that.
    The regulations are setbacks are debated county-by-county 
and chemical-by-chemical. But, I think this county, and perhaps 
Mr. Nielsen could comment. The one thing that was in his 
testimony he did not talk about is what you do for the labor 
community that you hire, the farm labor community. I think 
outside of California and perhaps outside of the specialty 
crops.
    Specialty crops probably employ more people than any other 
part of agriculture. More shipping. I mean, there is more 
touching and handling of small stuff than the big stuff, which 
is all combines and can be shipped and put in big grain 
elevators.
    I once had a staff member from Montana who was a wheat 
farmer; when we drove in the Salinas Valley, she said what are 
those people doing out there in the fields. I said, well how do 
you harvest your wheat. And, she said, we just hire equipment 
and my kids drive it.
    The point is that there is so much unknown about this 
industry that is so important to the big economic picture of 
America. I mean, you could comment on Tanimura & Antle does for 
your workers.
    Mr. Nielsen. Well, Congressman Farr, the backbone of any 
specialty crop farming operation is the people. The 
infrastructure that you bring to the process is essential.
    Our two families are committed to the workers that we 
employ, well over 3,000. We pay among the highest wages in the 
industry. We have a health care plan, vision care, dental care, 
prescription drug plan for all of our employees and their 
dependents. We have a 401(k) plan for every field worker. We 
have a company profit sharing plan and the profits that we give 
to our employees go into the 401(k) plan for them. We have a 
scholarship fund for some of our employees' children.
    We also, this past year, opened a preschool daycare 
facility in concert with Monterey County on our premises here 
in Salinas. We provide full daycare for children of our farm 
workers and the staffing comes from the county with assistance 
from the State. The kids receive nutritious meals, they receive 
preschool education, which is bilingual and is moving them in 
the direction of learning English. And, it's proven to be very, 
very effective. In fact, we had a ceremony celebrating that 
earlier this past week.
    Our take on all of this is that if you invest in human 
capital, which is the most important capital component in any 
business operation, the returns more than justify the 
investment you make. It is on the basis of that investment that 
we have, I think, good relationships with our employees as do 
many, many other participants in the specialty crop industry. 
It is for that reason that we--and we mentioned it in our 
testimony--support the various attempts that are being made to 
facilitate lawful immigration into the United States for field 
workers and other people. It is a very important part of the 
industry. We have a great deal of faith in our employees. We 
respect them, and I believe, they respect us and our company 
and our country. I do not think there are a more committed 
nationally supporting people that I have ever seen in a work 
force than in our industry. These folks work very hard, some of 
them holding down two jobs, driving long distances, living in 
poor quality housing that is a long away from where they work 
and yet they still keep coming and they still work hard and 
they pursue the American dream. Their kids generally do not 
work for us. They go to college and law school. But that is the 
way it works. We are very pleased to be part of that.
    So in a long response to your question, I would say that 
the people you work with are the most important part of your 
operation and they are to be cared for and respected.
    Mr. Ose. Thank you. Each of you testified about the issue 
of open markets and the impact of such on yourselves and your 
colleagues. And, we have had discussion about what countries 
the USTR should focus on relative to new trade agreements and 
the like.
    I want to turn that question around a little bit. With 
respect to the specific trade agreements, I mean we can talk 
about sanitary, phytosanitary things, we can talk about tariff 
levels or we can talk about subsidies or what have you. At the 
risk of having each tell me well they're all co-equal, which 
one is most important? Which one does the USTR really need to 
focus on first? And, it might be 1A, 1B and 1C, but when next 
the members of the Ag Committee meet with Ambassador Zoellick, 
what do you want us to tell him?
    Mr. Zanger.
    Mr. Zanger. Well, sure, I will start.
    That is probably the toughest question you could ask today. 
Because from country to country and product to product, you 
know that answer is going to change. It depends on your 
industry.
    Mr. Ose. We are talking about specialty crops today.
    Mr. Zanger. Specialty crops.
    Mr. Ose. Yes.
    Mr. Zanger. Probably the largest concern is the domestic 
subsidies in Europe. Because we are competing against them in 
other markets, in third party markets. They are able to produce 
at a loss, but then they are backfielded by the government. And 
then, their product is ending up in third party markets while 
we are trying to quote prices and get there.
    Mr. Ose. So Spanish clementines, Greek pares.
    Mr. Zanger. Peaches, olives. It goes on and on.
    Mr. Ose. OK. Just right down the list?
    Mr. Zanger. Yes.
    Mr. Ose. The subsidies to growers of those kind of crops?
    Mr. Zanger. Right.
    Mr. Ose. All right. Mr. Bogart.
    Mr. Bogart. Yes, I would agree with Joe, although I think 
SPS is right up there with subsidies. It is 1A/1B as far as I 
am concerned. I mean, there is a reason why I mentioned it in 
my remarks, and I mentioned subsidized crops as well. I mean 
those are barriers, those are imbalances that we are trying to 
overcome.
    We are not here before you testifying for handouts and 
subsidies.
    Mr. Ose. Right.
    Mr. Bogart. I mean, this is an investment as you both up 
there know. It is an investment that I feel that the return 
could be tenfold, a hundredfold. We are just asking to compete 
on a level playing field. We are innovators. We are very 
creative here. As Congressman Farr mentioned with the bag 
salads; that were invented here. We are just asking for the 
opportunity to compete on an equal basis. We would never ask 
for subsidies, anyway.
    Mr. Ose. Right.
    Mr. Bogart. We have always been opposed. My association has 
been opposed. I know Western Growers. I mean the producers of 
specialty crops we do not want subsidies. We want access. We 
want the ability to get into the game. And, I think, that these 
phytosanitary barriers have been used to deny us access to 
important market opportunities, as well what Joe mentioned, the 
subsidized countries. So they are right, they are both right 
there as far as I am concerned.
    Mr. Ose. All right. Mr. D'Arrigo, amongst your 3,000 
members what is the input?
    Mr. D'Arrigo. I think those two issues are your answer. 
Enabling us to be more competitive in the world market with 
free market access, eliminating these unofficial trade 
barriers, which when I say that, I used to go to Japan. Anytime 
the local markets had a surplus of broccoli, well then I got 
inspected, rejected and kicked out of the country because of 
whatever reason they wanted to come up. This level playing 
field does not exist. So, that and the subsidies are the issue.
    Mr. Ose. I mean, you suggest that the day-to-day knowledge 
of the government agency in some of these other countries is 
such as to be able to say on that specific day or that specific 
week there is a surplus or a deficit in this product. Yet, we 
do not have that here. There is no way that USDA tracks it that 
closely here.
    Mr. D'Arrigo. Well, absolutely. I quit Japan because I used 
to send dozens if not 20 to 30 loads a week there. When they 
had a surplus in their local markets, in their domestic 
production, the inspections phytosanitary things came out of 
the woodwork, and I clearly had rejected loads that were 
unsubstantiated. I flew over there to personally inspect my own 
loads.
    They have a system there that works to protect their local 
farmers, and these kind of unofficial things killed my business 
over there.
    Mr. Ose. OK. Mr. Nielsen.
    Mr. Nielsen. Mr. Chairman, the whole post World War II free 
trade structure is built on an embodiment of the law of 
comparative advantage, which reflects the fact that some 
nations, as you know, produce better than others. For that law 
to work there has to be not only free trade but fair trade.
    We are active in markets in Asia and in Europe. We support 
the WTO, but we support fair trade. The concerns we have are 
the protectionist distortions that arise from agricultural 
interests within the country that we are exporting to.
    We do not mind the fact that Chinese broccoli in certain 
times of the year sells way under ours in Japan. The Chinese 
have lower labor costs, it is a shorter distance to ship. What 
we do mind is when phytosanitary barriers are imposed on our 
products coming into Japan. And, those barriers are imposed on 
an ad hoc basis without consistency, and they are imposed 
because they are found in products coming from California the 
very same kind of bugs, if you will, that exist in Japan.
    I should say that progress is being made in this regard 
with the Japanese Government and with governments in other 
parts of the world, but it is long and slow and hard. These 
distortions which unlevel the playing field, which corrupt if 
you will the law of comparative advantage are what have to be 
addressed. We strongly support the act's proposal to have the 
USTR have at least one person--I do not think one is enough--
but at least one person in there whose focus is going to be on 
specialty crops who can get into the process with Ambassador 
Zoellick and just make sure this gets raised so that we do not 
get lost in the need to sell super computers or Boeing aircraft 
or whatever else is more important to the United States in a 
large big picture.
    Mr. Ose. OK.
    Mr. Farr. Your problem in Japan is unique because it is a 
perishable crop. So just the delay?
    Mr. D'Arrigo. Exactly. You are dead.
    Mr. Farr. Kills your product? I was just thinking, we have 
never put perishability into the jargon that we use in trade.
    Mr. D'Arrigo. It's critical.
    Mr. Farr. Because it is probably the only thing that we 
export that is a living thing that dies within a certain time. 
I mean it decays. Let me just suggest something. Because the 
bill that the chairman's authored, along with Congressman 
Dooley, has six titles in it. There is some heavy lifting in 
this bill.
    Essentially what it is going to do is what you stated, is 
that the specialty crops need to be treated as a major crop in 
America. Need to be treated as probably the major crop because 
it employs more people and all the things that we have talked 
about. It is healthy, and this kind of stuff that we ought to 
be supporting.
    But, this is about getting more money in a zero-sum game; 
we ought to have more money for grants, more money for loans, 
it is a bill about marketing. It is about food safety, 
phytosanitary issues. It is about international trade. It is 
even about changing position in the U.S. Trade Representative's 
Office so a specialty crop representative could be there. It is 
for market access, technical assistance, supply of credit 
guarantees. It is about specialty research, more money; robbing 
from Peter to pay Paul. It is about the invasive test stuff and 
disease that we have talked about here; food safety issues. 
And, it is about a sustainability practice which I have applaud 
you and applaud the chairman for getting into the bill because 
that is really, I think, what all of this from land use to 
being economically viable talked about; is how do you do this 
over a time particularly in the State of California which is 
the most populous State in the United States, and growing that 
way.
    What the chairman cannot say but I can sit here among 
friends and say, and this is just political advice, we have got 
a lot of people that will look at this bill as a threat. Why? 
Because it is going to cost more money. You are going to have 
to put some personnel in there and, frankly, there is some 
competition for that.
    In this trade issue is the stool of the economics of 
agriculture in the United States. As I said in the opening, we 
have traditionally been treated as a minor crop or, you know, 
we do not exist. There is one time when we do exist. Only one 
time. That is the politics of trade. It is not because of the 
crops you grow, it is because California is the biggest ag 
State. So anybody in the trade business, whether it is the 
financial markets of New York or the computer industry in 
Silicone Valley, they always want the lobbyists for trade to be 
agriculture because every Member of Congress has some 
agriculture in their district. I guess, except the city of New 
York and here the city of L.A. But Willie Brown was always fine 
in just saying well they grow crops there they are just not put 
in the ag report.
    But, the point is that you are the front lines for the 
lobby for trade for everything that is in trade. And, I think, 
that California agriculture needs to sort of hold its cards a 
little tighter, and particular if this bill is going to be 
successful.
    You ought to start letting the world know that if they 
going to come here, this is the only time they come to you and 
say will you help us. We say ``Yes, we will, but here are our 
conditions.'' Because everything you have outlined is needed to 
be done, but it will not be done unless we change the politic 
in Washington to do it.
    So, hold back and negotiate a good deal for yourselves.
    Now that I have that off my chest, but it comes about 
because Mr. Bogart in his testimony put out the Agriculture 
Coalition on Trade, and there is a way you have a way you can 
hold those cards tight.
    I did have one question for John D'Arrigo, which was the 
arbitration in the PACA, suggesting that we have an 
arbitration. Could you explain that a little more? Would it be 
binding arbitration you are suggesting? I mean, again, we have 
gone through that fight when I was on the Ag Committee, and we 
were able to beef up the cutback in that or stop the cutback in 
that area. It is an area that I found when we discussed it in 
Washington, nobody knew about. They did not know PACA existed.
    Mr. D'Arrigo. They did not know it existed? That tells you 
something.
    Well, what I'm suggesting is we have to find a way that the 
Hunts Point scandal brought out the problems that you could get 
your ruling against that receiver and still they could bring it 
into U.S. Federal Court, it is economically inviable to go that 
route. So we have to find some other method and arbitration is 
one method that would preserve your assets and you could get 
your money back and not basically spend everything and more to 
prove that you were right and go broke doing it.
    Arbitration may or may not be the method, but we need some 
method to do that. I am suggesting arbitration.
    Mr. Ose. May I?
    Mr. Farr. Sure. Please.
    Mr. Ose. If the party on the other side of the arbitration 
or whatever process it is, goes out of business then it doesn't 
make any difference. It seems to me that the party who brought 
the action is just kind of cutout whether the antagonist 
collapses in an arbitration hearing or collapses in a judicial 
hearing. It seems to me like, if you will, the plaintiff is 
still kind of left out in the cold?
    Mr. D'Arrigo. Well, that is a tactic that is used. However, 
in the PACA laws what happens is the rights of the shipper are 
protected in a first position. So if the assets are ceased 
properly, including the receivables, we have first shot at it.
    Mr. Ose. OK. So you have a priority claim?
    Mr. D'Arrigo. Yes.
    Mr. Ose. All right.
    Mr. Farr. The problem we have is, again, the perishability.
    Mr. Ose. Right.
    Mr. Farr. If you have a PACA situation with corn or wheat, 
you could resell it.
    Mr. D'Arrigo. You hit the nail on the head.
    Mr. Farr. You cannot resell something that it's perished.
    Mr. D'Arrigo. Right. Within a couple of weeks, we are dead.
    Mr. Nielsen. Mr. Chairman, if I might add, we had an 
experience in which we were dealing with a wholesaler in New 
Jersey who basically disappeared on us. We knew where he was. 
We knew where the moneys were. We went into Federal court to 
exercise our rights under PACA to confirm the statutory lien 
that we were entitled to, and the Federal court there refused 
to grant it. We lost a lot of money and, indeed, we appealed 
the decision and went up to the circuit court and made some law 
in the United States which says that Federal district courts 
can grant injunctions under PACA. It is not clear under the 
statute, but about 4 or 5 years ago we had to do that.
    It is an act that does help this industry incredibly well. 
There are folks on the other end of the chain who do not like 
it because we trumped them. But I think the key in the proposed 
act and the bill language with regard to Hunts Point is that 
what you are seeking to do is to vindicate our faith in the 
people we look to help us in this industry.
    I think the problem with Hunts Point is that it is a 
scandal, it is a debacle and for a while there were some folks 
in the Federal Government saying, ``Well, yes.'' This act would 
seek to go beyond that and to reenforce the efforts of good and 
like minded people in the government who did try to help us.
    I think the thing is that Hunts Point really just is a 
black mark and we need to have our faith restored. I think that 
is what you are trying to do with this part of the legislation.
    Mr. Ose. If I might, I would be interested in your 
collective feedback regarding the efforts in Japan and 
Australia in effect to impose sanitary and phytosanitary 
standards on America exports there. Are those standards 
scientifically based? I mean, does anybody have any input on 
that? Mr. Zanger.
    Mr. Zanger. Well, that has been a critical issue. The SPS 
issues on all these FTAs that are going on right now. We have 
made a stand, especially with Australia, because lots of times 
it is not science, to answer your question. We heard that about 
Japan. It is not the science or is it a dispute in scientists 
among scientists, they will dispute it. And so, you get into 
that.
    So, there are committees now while they are negotiating 
these FTAs that are dealing with the ongoing issues, and they 
have set up mechanisms in anticipation of future issues that 
come up. But that has been one of our greatest concern is that 
the SPS issues are going to slip through again and you can fix 
the other things, but if they put down artificial barrier 
because they cry foul, then it is all for not.
    Mr. Bogart. If I could chime in there, Mr. Chairman?
    Mr. Ose. Mr. Bogart.
    Mr. Bogart. Yes, I agree with Mr. Zanger again completely. 
The problem is, in our view, a lot of these phytosanitary 
barriers are not grounded in sound science. That is what we are 
pushing for through this legislation and any other way that we 
can, is have these things based and grounded in science. That 
is the main problem, as I see it.
    Mr. Ose. Mr. D'Arrigo, Mr. Nielsen, anything?
    Mr. D'Arrigo. I concur.
    Mr. Ose. OK.
    Mr. Nielsen. I would add that I think that science often 
depends on someone's perspective. It is difficult. I mean, we 
have run into in Japan the issue of people saying well science 
supports the conclusions that are reached by the regulators 
there. It is a very difficult proposition.
    I should recuse myself with regard to Australia, because 
that is where I am from. But my ancestors were specialty crop 
farmers, some of them in New South Wales. I do not believe that 
the folks that I know and my family down there are 
protectionists. Australians do not receive agricultural 
subsidies. The Canns Group has been supporting efforts to 
eliminate subsidies worldwide.
    I would believe that in the longer run the CSIRO, which is 
the Commonwealth Scientific Organization down there would be 
able to work with Americans. We speak slightly different 
languages. But I think that they could reach accord and develop 
scientific agreement on what the issues are.
    Mr. Ose. One of my objectives in Section 4.2 of this bill 
is to try and set up a mechanism by where we can get money 
authorized to create, if you will, a template for sanitary and 
phytosanitary standards so that you can take it from here to 
there, and it is always generally the same template. You might 
tweak it here and there. But is that something we need to 
basically convey either directly within the legislation or 
within a report on the legislation?
    Mr. Zanger. Well, that SPS committee system within the FTA 
agreements, they set it up as a template in Chile. Now they are 
applying it to negotiations in Australia and Morocco, and lots 
of countries. So in that sense, you know, the USTR trade 
negotiators are using that template method.
    It is a matter of whether the teeth are there, though, 
Congressman.
    Mr. Ose. Until you enforce it, it does not mean anything?
    Mr. Zanger. Yes.
    Mr. Ose. Are the standards in the existing agreements being 
enforced?
    Mr. Zanger. I do not know.
    Mr. Ose. Well, that says something in itself.
    Mr. Zanger. No. I think producers would say no, but when 
you look to the GATT agreement and Uruguay Round and the 
standards and the rules there. You know, with Australia I do 
not know if it took 10 or 12 years to straighten out the table 
grape thing; that is a long period of time for enforcement, to 
have enforcement work.
    Mr. Ose. Yes. But if I might, just come back to the 
question: Do you all agree that it is important to have 
specific SPS standards in the trade agreements?
    Mr. Zanger. Yes.
    Mr. Bogart. Yes. Absolutely.
    Mr. Ose. All right.
    Mr. Nielsen. Yes, Mr. Chairman, I think it is analogous to 
generally accepted accounting principles. Generally accepted--
well the GASP would be the acronym, so you would not want that. 
But something like that, that we and the country with whom we 
have the bilateral or the multilateral agreement agrees these 
are the principles. And then, there should be no argument and 
if there disruption or distortion that occurs, then you can go 
to the WTO. That is where we would need this special crops 
person in the STR's office to help us make the case.
    Mr. Ose. Sam.
    Mr. Farr. Let me shift for a moment on two issues that came 
up before Congress right now; one is the country of origin. As 
you know, we were able to in the appropriations bill delay for 
2 years the implementation. As I have been discussing with Bob 
Nielsen and others, and the chairman can reflect on this, too, 
let me just tell you the attitude.
    I think that post-September 11 there is a big push in 
America to buy American, be America; everything is American. We 
put riders on everything saying you got to buy--military has to 
buy American, State Department has to buy American. I mean, it 
gets difficult to implement, but it points out that there is a 
political sentiment there that we are going to do that. That 
runs sort of contrary because we have over time, particularly 
the automobile industry, has a requirement every single part in 
your car has to be labeled. Things like spark plugs that you do 
not even look at. Your ties and your coats, and everything in 
clothing in America is labeled. So, the American consumer has 
been getting accustomed to looking at labels. And, I think, 
that is what feeds this politic in Washington.
    Obviously, just saying ``Buy American'' and then writing 
regulations and put the oneous on you as the growers and the 
shippers doesn't work. And, that is why we have delayed it.
    The question here is do you think the industry can find a 
way to create a voluntary program or something that might meet 
that political demand that I sense, and maybe it will fade in 
time? But I do not see it immediately happening. Because there 
was a lot of people very critical of the fact that we delayed 
the implementation of the ``Buy America.'' We delayed it 
because it would not work and it was not fair to put all the 
oneous on you.
    Mr. D'Arrigo. Well, Western Growers, we believe in the 
concept that the consumer does have the right to know where 
their produce is coming from. That is the big picture. Now, the 
rules of engagement and implementation serve to complicate the 
matter tremendously because the pressure that the retailer has 
put on incorrectly to the shipper saying well that is your 
problem and trying to label these things at the farm level, 
such as a picture behind you, trying to label a head of romain 
and something presents quite a problem of cost and really it is 
not feasible, to tell you the truth.
    Now, one possible solution that people are talking about is 
produce grown in this country in the supermarkets, does it have 
to be labeled? Can it be presumed to be American, U.S. grown 
and foreign product brought in will be labeled with a placard 
up on top so at least you know that if it is not labeled, it 
is----
    Mr. Farr. It is imported?
    Mr. D'Arrigo. If it is not labeled to be United States, if 
it is imported then the retailer would have to put up that this 
did come from Mexico or wherever. Trying to cut the costs out 
of the equation a little bit. Kind of like who is going to pay 
for it kind of thing and nobody wants to pay for it.
    You could see the problem at the labor side, speaking of 
the labor issue, trying to get all these farm workers to label 
all these heads of lettuce. The cost would be so prohibitive, 
you might as well just not go in the field.
    Mr. Farr. So, leave it to a country a generic or could you 
just say that it is imported produce. The problem is that the 
groceries then say well we cannot do that because we do not 
know. We just buy this stuff and we do not know what comes 
from--actually the box, as you know, because we are very proud 
of saying, the box tells you where it comes from. Just take the 
label off the box.
    Mr. D'Arrigo. Well, that is one of our arguments is that a 
lot of stuff today is packaged and that is easily printable and 
you can put on USA or some other place. But when it is a bulk 
item, I mean who is responsible for that? Well, I really think 
it is in the retailer's corner to put that up there and just 
have a simple placard up on top of the whole display saying 
this came from Chile or wherever. And, that is provided to the 
retailer.
    Mr. Farr. People might be surprised to find out that 
bananas are not grown in the United States.
    Mr. D'Arrigo. You are exactly right. You would be 
surprised--they do not know where a lot of things are coming 
from.
    Now, speaking of that issue, a lot of people have called, 
they are interested in knowing more where their produce is 
coming from in the light of the recent problems with the 
Mexican green onions.
    Mr. Farr. Yes.
    Mr. D'Arrigo. People want to know and have a choice that if 
I do not want to get produce from a certain country because 
their record may be suspect, I think they have that right to 
know that.
    Mr. Nielsen. Congressman Farr, the fact of the matter is 
the Farm bill mandates country of origin labeling now in 2 
years. The ``Buy America'' concept I think from our perspective 
is a bit of a red herring. I mean, we do not buy only American 
oil or American electricity, or American high tech parts 
because they come from China. This is a global economy and a 
global world. We bring in products from other countries.
    My company has a manufacturing plant in Quebec. We ship 
California lettuce in bulk up to Quebec, combine it with local 
carrots and then we bring them here. But, we do do bilingually 
label because we sell those up there too.
    We bring those products then down and sell them in the 
northeast. Well, under the earlier proposed regs there was no 
space on a bag to put all the information required.
    I think the issue that we have here is that consumers do 
have a right to know where their products come from if they 
want to know under Customs laws as they now stand. As you said, 
the boxes have to be labeled. The country of origin is known. 
It is the bulk product that does not have that right now. What 
has happened is that the Congress, we presume the Senate will 
vote on January 20th to agree with the House, the Congress is 
providing our industry with 2 years within which to work 
something out. The retailers who are the reason why we are 
price takers now, as Mr. D'Arrigo said, are the folks who have 
said to the farmer you tell us where this is coming from. And, 
it has backed up the chain to us.
    What we believe as a company, and I think some others in 
the industry believe, is that there has to be 2 years now worth 
of hard work under this umbrella that we have been given by the 
Congress presumably when the Senate votes, and we think it is 
important somehow maybe in this act to authorize and direct 
USDA conduct research that would give us on an unbiased and 
factual basis what do consumers want.
    Our own research in our company indicates that with regard 
to some crops, they do not care where it comes from. They just 
want it seasonally and they want it fresh, and it has to taste 
good. It could come from Mongolia. It does not, but it could. 
That is where I think where we need to go.
    The law as it now stands is very limited. The green onion 
problem would not have been reached by the country of origin 
labeling law as it now stands because it does not apply to food 
service. It does not poultry. We think a voluntary consumer 
driven approach is the way to go, but we need to find out what 
consumers want, and we think that is where the USDA, if perhaps 
guided by this act and funded, could give us some help.
    Mr. Zanger. Can I chime in here?
    Mr. Ose. Sure. Go ahead.
    Mr. Zanger. I am going to take a little bit different 
perspective. And, you know, myself and California Farm Bureau 
has the utmost respect for companies like Tanimura & Antle. No 
question about what they do.
    We just concluded our annual meeting in Long Beach on 
Wednesday. And, Wednesday morning we voted and reaffirmed our 
policy for country of origin labeling to be implemented as soon 
as possible. Congressman Farr, you have been supportive of that 
for a long time now, and thank you for that.
    The way we see it is the import lobby and the domestic 
retailers, there is about five chains that control perhaps 65 
percent, 67 percent of the domestic market here. They do not 
want to do the country of origin labeling. They want to be able 
to buy product from wherever they can get it to satisfy their 
customers and make their highest margin.
    U.S. producers figure if every product is labeled or the 
display is labeled, domestic consumers will have the 
opportunity to make a choice. We think they will choose more 
often, not always, but more often to buy U.S. product over 
imported product. That will help us with our oversupply 
situation that keeps our prices down. It is over supply that 
keeps the prices down.
    You know the cost to label this stuff, every apple has a 
sticker on it. Every orange has a sticker on it. Broccoli 
bunches have rubber bands on it. Carrots and celery stalks have 
these little wire strip things on it. Cauliflower, you see it 
wrapped. Lettuce you see wrapped.
    We are already doing it. I think that is a red herring that 
the import lobbyists and the domestic retailers are throwing at 
us saying it is going to cost too much, the growers are going 
to have to pay for it and they cannot afford it, they are 
already not making it. We would like to see implementation 
immediately. We are reviewing the rules that are going to be 
discussed in January before Congress. We are ready to go with 
this now.
    Mr. Farr. Two things that I would just like some comments 
on. Perchlorate a big problem. It gets sort of back to this 
whole--I mean, as in origin labeling is, is who is liable and 
what should the growers and--where is their role in this.
    Let us speak for perchlorate, and then I will have my last 
question.
    Mr. D'Arrigo. What specifically do you want to know about 
perchlorate?
    Mr. Farr. Well, yes. It is raising a lot of eyebrows as to 
how we treat it, how we eliminate it.
    Mr. Ose. The question is how it manifests itself in 
specially crops and its impact on your ability to produce and 
sell your product. Is perchlorate truly a threat that has been 
described in some of the more hyperbolic things or is it 
something else? How do we get to a conclusion on this?
    Mr. D'Arrigo. Well, on perchlorate, clearly it is a water 
quality issue. OK? All of us who produce product down the 
Imperial Valley and also over in Yuma, we are using the 
Colorado River basin water. That water has been contaminated by 
rocket fuel producing plants primarily, who have dumped 
perchlorate or leached or who now closed and the residual is 
leaching into the water system. That needs to be addressed 
ASAP. We feel it is a Federal problem. A Department of Defense 
problem.
    Sound science is needed. That clearly is the answer: What 
are the risks? What are tolerances needed on perchlorate? None 
of that has really been developed yet. How it manifests itself? 
Some say it concentrates in certain types of produce more than 
others. This is a national problem because the food supply, as 
we said earlier, 50 percent of it comes from these shippers 
that produce not only here or there. Here we do not really have 
the perchlorate problem in the Salinas Valley. However, it is 
right up the street here in Morgan Hill, I understand.
    I think Congress should get into this with a very heavy 
hand and not let the responsibility be waived away or exempted. 
I think that Department of Defense with these contractors who 
produce this should be responsible for cleaning up this 
problem. And then, direct sound science to determine what are 
the safe tolerances for perchlorate, because it is not going to 
go away for a while.
    Mr. Bogart. Yes, if I could be heard on this just briefly. 
I agree a lot with what John just said. That term keeps coming 
up over and over again, and it is ``sound science.'' I mean, 
yes, it is there. Yes, it is been detected in a percentage of 
samples of lettuce that were taken. But what is the risk? Is 
there a risk at all? We do not know. We need studies. We need 
science. And, you know, the industry and ag associations have 
stepped up to the plate to fund and pursue and assist in this 
research. Because if it is bad, we want to know. But that is 
the thing, it is like perception governs. And, perception 
impacts markets. Perception impacts our ability to be a viable 
industry. If the general public thinks that their lettuce is 
laced with rocket fuel, they are not going to purchase it. They 
are not going to eat it. They hear that. It is a crescendo. 
And, you say, ``But wait, but wait. We are trying to conduct 
these studies. There are no studies that even validate what 
some people are telling you about this lettuce.''
    It is again sound science. It is making rational, informed 
judgments. That is what we want. perchlorate is a darn good 
example of it. You can see examples of this everywhere. And so, 
I think the perchlorate question is a good one with respect to 
this ``sound science.''
    Mr. Ose. I have done some research on this. I probably do 
not know as much as some of the other people in this room. We 
are a little bit afar afield on this, it is tangential but not 
central to the issue we are dealing with today.
    As I understand it there are few if any studies as to what 
the threshold of human toxicity is relative to perchlorate. 
There are a few if any studies establishing which crops, if you 
will, might be suspectable to the lodging of perchlorate in 
their end product. And, in fact, there are studies if I am 
correct in this--I am reaching far afield here. But I think the 
chemical equivalent of perchlorate in the medical industry is 
used to treat hypothyroid.
    Mr. D'Arrigo. That is correct.
    Mr. Ose. Hypothyroid.
    Mr. D'Arrigo. You are correct in that case.
    Mr. Ose. I am more than a little confused as to, if you 
will, some of the more boisterous claims about the dangers that 
perchlorate may pose, especially when the levels found in the 
lettuce are less than the levels used to treat hypothyroid.
    Mr. D'Arrigo. You are sounding like a rational person. The 
rest of the country is not so rational about this issue. But 
you are right on every case there.
    Mr. Ose. Yes. The fact of the matter is, we are lacking 
some significant amounts of information here.
    Mr. D'Arrigo. That is correct.
    Mr. Ose. All right.
    Do you remember your other question?
    Mr. Farr. No. My cold and my age, I have forgotten my last 
question.
    So, I just want to thank you very much for having this 
hearing here. It is probably the first that we have ever had 
that sort of highlight specialty crops. But it is interesting 
that a person who is not a member of Ag Committee is doing it. 
And I really do respect and thank you for----
    Mr. Ose. I am a member of the Ag Committee.
    Mr. Farr. Well, I mean the committee----
    Mr. Ose. Oh, Government Reform?
    Mr. Farr. Government Reform and you are chairman of the 
subcommittee. In this room we are preaching to the choir, but 
we are trying to get specialty crops on the national 
recognition list. To me it is the motherhood of agriculture. It 
is the apple pie. And, we in America do not know that. We have 
all this big advertising about the big corn belt. We are even 
going to have use corn now. I mean, what Congress determined 
this year in their energy bill is that corn is for driving cars 
and specialty crops are for eating.
    Mr. Ose. How is that?
    Mr. Farr. Thank you, Mr. Chairman.
    Mr. Ose. Here is the connection for those struggling with 
why is Government Reform doing this. This subcommittee also has 
jurisdiction over national economic regulatory issues, meaning 
how does Government policy effect the ability of this or that 
regional economy to contribute to the national economy as a 
whole. And, while I straddle the two committees as well as 
Financial Services, I can tell you that this issue especially, 
crops and the success therein, is not only important on the ag 
side, it is also important regionally here in Salinas, and, 
from an economic standpoint it is important here in this State. 
We are the fifth or sixth largest economy in the world. We have 
35 million people here. So it is not curious that we are having 
this hearing. I just wanted to clarify that.
    I do want to come back to----
    Mr. Farr. But thank you.
    Mr. Ose. I want to come back to one other thing if I may. 
Mr. Bogart, one of the things effecting the ability 
particularly of specialty crops to put their product into 
foreign markets is the ability to say to those foreign markets, 
for instance, this product is clean. We do not have pests. We 
do not have disease. That gets me to the use of methyl bromide 
and our request for some increased number of critical use 
exemptions under the Montreal protocols. How has the recent 
decision to decline to increase those number of critical use 
exemptions from methyl bromide affected the specialty crop 
industry?
    For that matter, I mean I would open that to anybody on 
this panel for any input.
    Mr. D'Arrigo. Well, I think it is going to render us 
uncompetitive. Until we find a viable alternative to methyl 
bromide, we will have serious problems competing. Our costs are 
going to skyrocket. The people we are competing against are 
still using methyl bromide. Again, the playing field becomes 
increasingly unlevel and I see disaster looming.
    Mr. Ose. OK. So you would advocate that the position of the 
Federal Government, until we have an appropriate and----
    Mr. D'Arrigo. Effective?
    Mr. Ose [continuing]. Effective and efficient substitute 
for the properties that methyl bromide brings, we ought to be 
adamant about demanding critical use exemptions?
    Mr. D'Arrigo. Absolutely.
    Mr. Ose. OK. Mr. Nielsen, do you agree with that?
    Mr. Nielsen. Yes, Mr. Chairman. Either that or we ban its 
being used in the Third World. I mean, this is an example of 
the unlevel playing field where free trade, the law of 
comparative advantage is distorted because environmental laws 
are not being applied uniformly around the world.
    Mr. Ose. OK.
    Mr. Bogart. As Mr. D'Arrigo said in response to one of my 
earlier comments, I concur.
    Mr. Ose. Mr. Zanger.
    Mr. Zanger. I agree with them.
    Mr. Ose. OK. I just wanted to get that on the record here.
    One of the things in our hearing in Washington, which Mr. 
McInerney attended, that we spent a lot of time talking about 
was the interaction between the Department of Homeland Security 
and APHIS at the border, this one face at the border kind of 
thing. And, I know the industry has been meeting with DHS to 
try and address some of the concerns that have been 
highlighted. Have you been making progress? Are any of you 
involved in that or cognizant of what is going on?
    Mr. Nielsen. No, I am not personally involved in that. I'm 
not.
    Mr. Bogart. I am not.
    Mr. Ose. Mr. Zanger.
    Mr. D'Arrigo. I'm not.
    Mr. Zanger. We feel that progress is being made. I do not 
know the specifics of it, but we were very concerned when 
Homeland Security was being formed as an agency and APHIS was 
going in that direction. But we have been receiving assurances 
on how that--how this new makeup is and that we are getting the 
proper attention.
    Mr. Ose. Well, I am very concerned about how it gets 
implemented. Because I am also aware that originally they were 
talking about 2 days of training for their one face at the 
border people to deal with this, and then they had some bogus 
argument about dogs being multi-tasked, and what have you. We 
are not going to go there today. But, I just want make sure 
that we keep our focus on how important APHIS' role is in 
bringing food in and out of this country as it effects our 
Department of Homeland Security.
    Congressman Farr, we are at the point where we are ready 
for closing statements. I am talked out. You indicated you 
might have one.
    Mr. Farr. Well, I want to wish you happy holidays and 
remind you that people will eat more specialty crops during 
these holidays than any other kind of crop in America. And, I 
would like to suggest that we all go out and enjoy a very 
health lunch in the valley of the sun.
    Thank you very much.
    Mr. Ose. Thank you, Congressman Farr for hosting us today. 
It is always great to come down here. This really is just one 
of the wonders of the world to come to your district and see 
this kind of production in agriculture.
    Today we focused on the domestic international issues 
facing the specialty crop industry. Obviously, the decline that 
we have seen in U.S. exports coupled with the rise in imports 
to this country has effected us rather dramatically. We have 
talked about how foreign trade barriers, subsidies, tariffs, 
and sanitary, phytosanitary standards all affect our people and 
how these factors may twist what might otherwise be a natural 
outcome in the industry.
    Congressman Farr and I have heard your concerns, not only 
here but also in Washington. We are aware of the vulnerability 
of the industry and the challenges you face. The purpose of 
H.R. 3242 is to try and bring Federal policy to bear to address 
those. I want to reiterate that I am most appreciative of your 
support of that legislation. We now have 52 cosponsors from 21 
different States. You can see the breadth of interest in this. 
We will continue to work toward getting that magic triple digit 
number of a 100. This is going to be a heavy lift. I just want 
to be clear, there is not a single one of these cosponsors who 
thinks it is program crops or specialty crops. This is not a 
competition. It is not A or B. It is A and B. All right. I want 
to be very careful that we make that clear to people; it is A 
and B. Because the people who grow A, they or their neighbors 
also grow B. So, it is not mutually exclusive.
    Anyway, it is always a delight to come down to this part of 
the State. I mean, you ordered up Chamber of Commerce weather 
for me. I am most grateful.
    Mr. Farr. It did not rain today.
    Mr. Ose. That must be because you are on the Appropriations 
Committee. Because you are powerful.
    So, anyway, I want to thank our witnesses for joining us 
today. We are going to leave the record open for 10 days. We 
may have questions that occur to us as we travel back to D.C. 
here in the next couple of days. And, we will forward them. We 
would appreciate a timely response.
    Anything you want to add? You are set? OK.
    With that, we thank you all for joining us. This hearing is 
adjourned.
    [Whereupon, at 12:19 p.m. the field hearing was adjourned].

                                 
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