[Senate Hearing 108-155]
[From the U.S. Government Publishing Office]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2004
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THURSDAY, MAY 8, 2003
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:58 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Cochran, Specter, Burns, Craig,
Stevens, Kohl, Harkin, Dorgan, Durbin, Johnson, and Byrd.
DEPARTMENT OF AGRICULTURE
Office of the Secretary
STATEMENT OF ANN M. VENEMAN, SECRETARY OF AGRICULTURE
ACCOMPANIED BY:
JAMES R. MOSELEY, DEPUTY SECRETARY
KEITH COLLINS, CHIEF ECONOMIST
STEPHEN DEWHURST, DIRECTOR, OFFICE OF BUDGET AND PROGRAM
ANALYSIS
Senator Bennett. The subcommittee will come to order.
Let me apologize, Madam Secretary, to you and your team and
to the others who are interested in the hearing for the fact
that we are starting so late. We had a historic vote on the
floor of the Senate. The leader reminded us that this is the
58th anniversary of VE Day, which makes me feel a little old
because I remember VE Day.
But for those who do not understand, that stood for Victory
in Europe, and was the day when the Nazi war machine
surrendered and ended the war in Europe, and of course, a day
of great rejoicing and excitement.
And symbolically on this day we have just ratified the
treaty that expands NATO and brings into NATO those former
Soviet Republic, nations that were under the Soviet yoke, that
have now become part of NATO. The leader asked us all to be on
the floor and vote in the traditional fashion, standing at our
desks. I think that was worthy delaying the hearing for.
So we again thank you for your indulgence and your patience
while we went through that.
This is my first hearing as chairman of this subcommittee
and I very much appreciate the support and openness which we
have received from the Department of Agriculture. I have been
down to the Department and met with Secretary Veneman and her
staff, and am impressed with the depths of her bench as they
deal with the very significant problems that we have here.
I am looking forward to working with Senator Kohl, who
chaired this subcommittee in the previous Congress and with
whom I have had very productive conversations in anticipation
of this new assignment.
The Department of Agriculture, I discover, has a very
diverse jurisdiction. It is not just about corn. There are all
kinds of things going on in the Department which require our
attention and funding. So we are looking forward to hearing the
Secretary discuss this.
The situation in which we meet is somewhat unusual in that
the request for fiscal year 2004 was written before the
legislation adopting appropriations for fiscal year 2003 was
completed. I do not remember any previous situation where that
was true. That leads to some confusion. That leads to some
uncertainty as to where we are and what we will be doing.
To further add to that, we have still not nailed down the
allocation that we will receive from the full committee for
this subcommittee. We have had some preliminary numbers but the
chairman of the full committee has been unable to reach
complete agreement with the chairman of the House. We do not
know what number the House is going to come up with. We do not
necessarily have to have the same number but that, I think, is
a byproduct of the confusion that arose because the fiscal year
2003 bill had not been enacted when the 2004 request was being
put together.
So we are going forward with our hearing. We want to get
the information that the Department has to offer to us
available and in front of us. But we are going forward with a
little more uncertainty than would normally be the case. So
that is why we are looking forward to this year with much
anticipation, because it will be tremendously informative.
I look forward to learning more, both at this hearing and
in a continuing dialogue with the Secretary and the members of
the Department that are here.
Senator Burns, we are grateful that you are here with us.
Senator Burns presides over the Interior Subcommittee which
presides over a good chunk of the Department of Agriculture's
budget, so maybe he is here to ask those kinds of questions as
well. But Senator we appreciate your being here and we are
happy to hear whatever you have to say.
PREPARED STATEMENTS
Senator Burns. Thank you very much, Mr. Chairman, and thank
you, Madame Secretary, for being here this morning. Thank you
for a lot of good work along the way, drought assistance being
one of those. I know that was a painful thing that went on
downtown and we appreciate your good work on that.
I have come this morning to take all the Ag money and put
it over in Interior, so you guys who have all those books, can
go on back to work now.
When we take a look and see what the President proposed,
and I am going to put my statement in the record, Mr. Chairman.
Senator Bennett. Without objection, it shall be included.
[The statements follow:]
Prepared Statement of Senator Conrad Burns
Good Morning: Thank you, Mr. Chairman for holding this hearing on
Ag Appropriations and welcome committee members and new member Mr.
Bennett.
Secretary Veneman--welcome--thanks for coming and I would like to
thank you for your continued hard work and efforts in helping America's
producers provide a food supply that is safe, reliable, abundant and
affordable.
Thanks for drought assistance. It was a long hard battle, but you,
worked well with myself and farmers and ranchers from Montana.
However, there is still work to do. The Farm Bill greatly increased
the number of farmers and ranchers eligible for price support payments,
conservation funding and farm program payments. Wood, mohair, honey and
pulse crops became eligible for price support payments through loans
and LDP's. Milk producers are receiving direct payments based upon milk
production and price for each month. I welcome the increased
participation which means that farm programs are helping more farmers
and ranchers, especially those small and mid sized producers in rural
areas.
USDA's Farm Service Agency (FSA) has had the largest proportional
reductions in permanent staffing at USDA during the past 9 years. FSA's
personnel cuts have resulted in the loss of 5,694 permanent positions
or a 38 percent reduction of staff since 1994. Temporary staff years
have been reduced since 1996 by 1,424 staff years or a 41 percent
reduction. President Bush's new budget proposal for 2004 further
reduced 2 temporary staff years or an additional 15 percent while
keeping permanent employee levels current.
The shortage of staff is also resulting in delayed implementation
of the Direct and County Cyclical Program, a major component of the
Farm Bill. As of February of 2003, 39.3 percent of the nation's farms
have been enrolled in the Direct and Counter-Cyclical Program with 79
percent of the enrollment period completed. The shortage of employees
and increased demands create the likelihood of errors by overworked
staff resulting in increased inefficiencies in the FSA County Offices.
Clearly, we have many challenges to face in the critical time of
agriculture. Thanks again for being here today and thanks for all you
support and hard work in helping the American farmer and rancher. Thank
you, Mr. Chairman.
______
Prepared Statement of Senator Byron L. Dorgan
Ms. Secretary, I welcome you and your staff to our subcommittee and
I thank you for your appearance before us today. I recognize the
challenges of putting together any Departmental budget during these
tough budgetary times. As you point out, this budget is ``highly
constrained.'' I would call this budget more than ``constrained'' and
argue that it fails to meet the commitments that we made to the
American people in the 2002 farm bill.
This budget proposes to take many programs, recommended for
mandatory funding in the farm bill, and make them discretionary
programs. These include the rural broadband loan program, which I think
is critically important to deploy technology to rural America, and many
of the renewable energy programs. Given the tough times facing rural
America, funding for rural development programs are really critical.
Some of these areas have taken a pretty big hit in your budget
recommendation, and I would urge the Subcommittee to take another look
at your recommendations. Tight limits on discretionary spending will
force the subcommittee to make some difficult decisions, and I hope
that we will be able to work together to carry through on the promises
made in the Farm Bill.
This budget also contains some artificial offsets that will
complicate our jobs. Proposals for new user fees, loan sales and caps
on delivery expense reimbursements for crop insurance companies have
been proposed before and rejected by Congress. These prospects for
using these offsets to provide us some relief on limited discretionary
spending are not good.
One of my top priorities on this Subcommittee remains robust
funding for agriculture funding. Unfortunately, the fiscal year 2004
budget moves us in the wrong direction. Funding for ARS's research
programs ($987.3 million requested) is down from an estimated $1
billion in fiscal year 2003, and there is also a slight decrease in
formula funds for agriculture research and extension at the land grant
Colleges of Agriculture. I hope that we will be able to continue moving
this research in the right direction.
Finally, I hope that USDA becomes more aggressive in pursuing trade
violations and I am hopeful that the slight increase of $6.6 million
that this budget requests to deal with trade issues will result in more
action. I have a question about wheat trade with China that I will pose
to the Secretary, but I hope that any increase we provide will yield
results in the area of trade enforcement.
Ms. Secretary, I look forward to your testimony.
______
Prepared Statement of Senator Richard J. Durbin
Chairman Bennett, thank you for holding this important hearing
today. I look forward to working with you, Senator Kohl, and my
Subcommittee colleagues on the fiscal year 2004 Agriculture budget. Mr.
Chairman, I'd like to welcome USDA Secretary Ann Veneman to this
morning's hearing. Madam Secretary, I look forward to working with you
and the rest of the USDA team. I'm certainly familiar with the three
gentlemen you've brought with you today, Deputy Secretary, James
Moseley, Chief Economist Keith Collins and Budget Officer Steve
Dewhurst--who all testified last March before this Subcommittee, along
with the Secretary. I always enjoy their budget insights.
I'd like to take a few minutes this morning to talk about some very
important issues that affect the Department, and my home state of
Illinois. When I go back to Illinois, one of the things I hear from
farmers is: How can we get the rural economy back on track? As you
stated in your testimony, there are over 60 million people that call
rural America home. Illinois has a significant rural community so I am
pleased to see USDA is committed to creating new economic opportunities
and improving the quality of life for a diversified rural population.
One way in which we can improve the rural economy is through
providing farmers with incentives for things such as biodiesel and
ethanol.
The expanded role for ethanol and biodiesel means more than a boost
to industry; it means jobs to rural America, and increased energy
security. In my home state of Illinois, roughly one in every six rows
of corn, approximately 280 million bushels is the source for ethanol.
Illinois ranks second in the nation in corn production, with more than
1.5 billion bushels produced annually, and is the nation's leading
source of clean-burning ethanol. Corn grown in Illinois is used to make
40 percent of the ethanol consumed in the United States.
Illinois farmers are the foot soldiers in our battle for energy
independence. Farmers throughout the country have come together to
build ethanol production facilities that, in many instances, have
become the backbone of a regional rural economy. In fact, farmer-owned
ethanol plants, taken together, are the single largest segment of the
U.S. ethanol industry. As we look for solutions to rural economic
stability, we must remember that renewable fuels are part of the
solution. Replacing Mideast oil with Midwest ethanol is winner for
everyone but the oil sheiks. When we can use our Illinois agricultural
expertise to reduce our dependence on foreign suppliers, the whole
nation benefits.
In short, we must also work to become less dependent on foreign oil
by opening and broadening markets for American agricultural products
and find appropriate alternative uses. We need to create incentives for
our farmers to produce and develop more efficient ways to make
biodiesel and ethanol. I will continue working with my colleagues in
Congress, and in the Bush Administration, to make every effort to
expand the role of biodiesel and ethanol. Expanding biodiesel and
ethanol's role is a win for our farmers, a win for the environment a
win for the rural economy.
Madame Secretary, I would like touch on an issue of great
importance, food safety. Each year in the United States, food borne
illness sickens 76 million Americans and causes more than 5,000 deaths.
Tragically, 40 percent of the victims are children. Parents have had to
watch their children die terrible deaths from E. coli 0157:H7
contamination, and countless others have seen their children suffer
after eating food contaminated with pathogens such as Listeria or
Salmonella.
Madame Secretary, I know you have heard these statistics before,
and I know you share my belief that 5,000 deaths each year from
illnesses we can prevent is simply unacceptable. All of us have been
frustrated by court decisions that have stripped the Department of
important enforcement powers, needless delays in cleaning up dirty food
processing plants and industry resistance to increased food safety
inspections. The time has come for us to provide the necessary
resources and adequate regulatory framework to ensure the safety of the
food eaten in our homes, the safety of food sold in our stores and the
safety of food served to our schoolchildren.
While I applaud the proposed $42 million increase for the Food
Safety and Inspection Service to hire more plant inspectors and expand
the pathogen testing program, the Administration makes these
improvements contingent on Congress approving $122 million in new fees
on the industry. As you know, similar user fees have been rejected in
the past primarily because requiring industry to pay for its own
regulation, particularly critical food safety regulation, brings into
question the independence of such vital safety programs. Food
inspections have historically been considered an essential government
function and they should remain so. And, of course, industry simply
passes the cost of user fees on to the consumer.
If these fees are rejected as they have been in the past, we would
be forced under the administration's program to either wring $80
million out of other vital programs to pay for these critical inspector
positions and testing program, or let them go unfunded. I would ask
your commitment to fully fund the expansion of FSIS programs without
relying on industry fees, and I support your efforts to expand pathogen
inspection, testing and training programs to ensure the safety of our
food supply.
I also seek your support of legislation that will significantly
bolster the safety of our food supply. One important measure, the Safe
School Food Act which I introduced earlier this year, would improve the
inspection, purchasing and preparation of food served in our nation's
schools. Since 1990, there have been more than 100 reported outbreaks
of food borne illness in schools that have sickened more than 6,000
children nationwide. The Centers for Disease Control and Prevention
tells us that 10,000 more children were sickened in school-related food
outbreaks during that time, although those children never learned what
food or pathogen made them sick. And those numbers are likely a
fraction of the true amount since food borne illness in schools is
seriously under-reported in this country.
In fact, the Chicago Tribune recently reported that countless
Illinois schoolchildren were served ammonia-contaminated chicken,
hamburgers and potatoes over the course of several months last year
contaminated food that apparently both Federal and State officials knew
about but allowed to be served. In one Illinois elementary school, 42
kids and teachers became so ill after eating chicken with ammonia
levels 133 times the acceptable amount, that several were rushed to the
hospital. I understand, Madame Secretary, that your agency has worked
to improve the safety of food in our schools, but when our
schoolchildren are being sent to the hospital after eating the food we
provide, inspect and regulate, then obviously much more needs to be
done.
The Safe School Food Act fills the numerous gaps in our school
lunch food safety program through increased inspection of foods donated
to schools by the USDA, increased cafeteria inspections, improved food
safety planning at the local level, helping schools incorporate food
safety requirements in their purchasing contracts, sharing information
on food suppliers' safety records and perhaps most important, giving
your agency the authority to ensure that tainted food is removed from
schools through mandatory recalls. Some say that the number of food
borne illness outbreaks in our schools is relatively insignificant
compared to the number of meals served each year. But I believe, as do
many others, that when our schoolchildren are being hospitalized
because of the food we serve them, we are breaking our promise that we
will provide them with a safe and secure learning environment.
Chairman Bennett and Senator Kohl, thank you again for the
opportunity to talk about these issues and the fiscal year 2004 Budget.
FSA PERSONNEL CUTS
Senator Burns. I want to bring up a point that really
caught my attention and I think it is something that is
indicative of the Department and it is something that I have
been saying all along about the Department of Agriculture. It
is the reduction in FSA, in staff, and their ability to get
their work done. That concerns me.
FSA's personnel cuts have resulted in a loss of 5,694 jobs
or a 38 percent reduction since 1994.
I do not know whether any other department in the
Department of Agriculture has taken cuts like that or not. You
can fill me in on that if you would. But temporary staff years
have been reduced since 1996 by 1,428 staff years or a 41
percent reduction.
The President's new budget, proposed for 2004, further cut
temporary staff years an additional 15 percent while keeping
permanent employees' level current. When you look at those
numbers, the shortage of staff is also resulting in delayed
implementation of the Direct and Countercyclical Program, a
major component of the Farm Bill. As of February of 2003, 39.3
percent of the Nation's farmers had been enrolled in the Direct
or Countercyclical Program with 79 percent of the enrollment
period completed. The shortage of employees and increased
demands, I think, is creating a likelihood of errors, number
one, by overworked staff resulting in increased inefficiencies
in our FSA county offices.
I think it points to an attitude towards producer. We are
here for the producers and we are just not doing things in that
respect that would assist them or to do originally what the
Department of Agriculture was created for in the first place.
So I think we are in a time where we have critical
challenges. I really believe this wholeheartedly. If somebody
can clear me up on this, I would sure stand corrected and I
will feel better about the whole thing. But that is the only
gun I am going to fire this morning.
Thank you, Mr. Chairman, for allowing me to get on with
that sermon. I will pass the plate later.
Senator Bennett. You took careful aim. Thank you.
Madame Secretary, we appreciate very much your being here
and we look forward to hearing what you have to tell us.
STATEMENT OF ANN M. VENEMAN
Secretary Veneman. Thank you very much, Mr. Chairman. I
appreciate the opportunity to be here with you and the members
of the committee and it is an honor to appear before you today.
We have with us today our Deputy Secretary Jim Moseley, our
Chief Economist Keith Collins, and our Budget Officer Steve
Dewhurst, as well as a number of our staff who are here in the
audience as well.
I want to thank this committee again for your support of
USDA this year and for the long history of effective
cooperation between this committee and the Department in
support of American agriculture. I look forward to working with
you and continuing to work with you, Mr. Chairman, in your new
role as chairman of this subcommittee, as well as the other
members, to make progress on issues during the 2004 budget
process and to ensure strong programs for our Nation's farm
sector and the many other USDA mission areas that we have as
well.
I submitted a formal statement that discusses in detail the
Administration's 2004 budget and particularly, that of
Department of Agriculture. I would be grateful if this would be
included in the record.
Senator Bennett. It will be.
FISCAL YEAR 2004 BUDGET OVERVIEW
Secretary Veneman. In the next few minutes I want to
provide a quick overview of our budget proposals.
First, the fiscal year 2004 budget focuses on key
priorities for USDA, enhancing protection and safety of the
Nation's agriculture and food supply, continuing rapid
implementation and diligent administration of the 2002 Farm
Bill including providing record amounts of conservation funding
and protecting natural resources, providing unprecedented
funding for our food and nutrition safety net, expanding
agricultural trade, expanding housing for rural citizens,
investing in America's rural sector, and improving USDA's
programs delivering customer service.
The 2004 budget calls for $74 billion in spending, an
increase of $1.4 billion or about 2 percent above the level
that was requested in 2003. This is approximately $5.4 billion
higher than the actual level in 2001 and represents a growth of
8 percent since this Administration took office.
Discretionary outlays are estimated at $20.2 billion, about
a 1 percent change or $300 million below the 2003 requested
level.
The request before this committee for fiscal year 2004
amounts to $15.5 billion. The budget seeks record level support
for USDA's Food Safety and Inspection Service, or FSIS as we
refer to it, our meat and poultry food safety programs, as well
as increases to strengthen our agriculture protection programs.
These areas of our budget have been top priorities for this
Administration since we came into office and particularly since
the tragic events of September 11th.
FSIS funding will increase to a program level of $899
million, an increase of nearly $42 million over the 2003
requested level. This represents $117 million or a 15 percent
increase in these food safety programs since 2001 when the Bush
Administration came into office.
The $899 million for FSIS is comprised of $797 million in
appropriated funds and new fees for inspection services
provided beyond an approved primary inspection shift. Existing
user fees are expected to generate approximately $102 million.
This will fund 7,680 food safety inspectors, an increase of 80
inspectors, and provide specialized training for the inspector
workforce, increase microbiological testing and sampling,
strengthen foreign surveillance programs, and increase public
education efforts.
Regarding homeland security and agricultural protection
programs, the budget includes nearly $47 million in new funding
to strengthen laboratory security measures, conduct research on
emerging animal diseases, improve biosecurity, develop new
vaccines, create new biosecurity database systems, and continue
development of the unified Federal/State Diagnostic Network for
identifying and responding to high-risk pathogens.
For the Animal and Plant Health Inspection Service, or
APHIS, we are requesting increases of about $30 million above
our 2003 request for inspection services. This is to expand the
availability of foot and mouth disease vaccines, provide
additional protections against chronic wasting disease and
poultry diseases, and expand diagnostic and other scientific
technical services.
In addition, $200 million is requested for the National
Research Initiative, including funding for genomics.
The President's 2004 budget supports the continued
implementation of the 2002 Farm Bill, which provides a
consistent economic safety net for the next several years for
our Nation's farmers and ranchers. We have continued to make
good progress in implementing the Farm Bill. All of the Title I
commodity programs have been implemented and producers have
received payments of over $7.7 billion since the bill was
enacted. Signup for base and yield adjustments formally ended
on April 1st and our county offices are now working very hard
to ensure producers have Direct and Countercyclical Program
contracts in place by June 2nd.
On April 22nd, we announced the Conservation Reserve
Program general signup which began May 5th and runs through May
30th. We also announced for fiscal year 2003 the allocation to
States of $1 billion in CCC funding for Farm Bill conservation
programs and another $800 million in discretionary funds to
provide conservation assistance on working farmlands.
In February, the Department issued the proposed rule for
the EQIP program for public comment. The comment period has
closed and we are about ready to issue the final rule. Also in
February, we issued an Advanced Notice of Proposed Rulemaking,
or what is referred to as an ANPR, to receive public comment on
how to proceed with the Conservation Security Program. That
comment period closed on April 3rd.
We have an extremely heavy workload at USDA but we are
making good progress. It should be remembered that we could not
have done this without the tremendous efforts and hard work of
our staff in Washington, in the field offices, and our county
service centers all throughout the country.
In 2004, the primary focus will be on Farm Bill
conservation programs. Total program level funding for Farm
Bill conservation programs increases from about $2.2 billion in
2001, when this administration took office, to almost $3.9
billion in 2004. This includes $3.5 billion for financial
assistance and $432 million for conservation technical
assistance in 2004 in support of Farm Bill implementation, an
overall increase of $582 million over 2003. In total, this
represents an unprecedented investment in conservation that
will have significant and lasting environmental benefits.
The fiscal year 2004 budget reflects the Bush
Administration's continued commitment to the nutrition safety
net by including a record of $44.2 billion for domestic food
assistance programs, a $2.4 billion increase over the requested
level for fiscal year 2003. The President has often said this
is a compassionate administration and our continued support for
these programs demonstrates that continued commitment.
The budget supports an estimated 21.6 million food stamp
participants. It supports a record level of 7.8 million low-
income, nutritionally at-risk WIC participants. It supports an
average of 29 million schoolchildren each day in the National
School Lunch Program. With food stamps, WIC, and school lunch
programs, we are reaching more Americans and helping educate
more people about healthy eating and stressing the importance
of balanced diets. This is part of the President's HealthierUS
Initiative.
The budget also includes $2 billion contingency reserve for
food stamps and $150 million contingency reserve for the WIC
program to be available to cover unanticipated increases in
participation in these programs.
A high priority of the Administration is reauthorization of
the Child Nutrition Programs and WIC this year to ensure stable
and adequate funding for the programs and to improve nutrient
intakes of participants. In February, we unveiled some of the
Administration's principals regarding reauthorization to
include ensuring that all of those eligible have access to
these important programs, working to provide more incentives to
schools to provide healthy choices and examining innovative
approaches to do so, and ensuring continued program integrity.
The fiscal year 2004 budget continues a strong commitment
to export promotion and foreign market development efforts by
proposing $6.2 billion in spending. Included in our trade
budget is funding for USDA's market development programs
including the Market Access and Cooperator Programs, which are
increased by $15 million. Since this Administration took
office, funding for market development programs has experienced
significant growth, a 37 percent increase since fiscal year
2001.
The budget requests a new centralized fund of $6.6 million
to support agencies' work in addressing important cross-cutting
trade issues, compliance monitoring, dispute resolution, and
biotechnology activities within the Department.
A program level of $4.2 billion is provided for the
Commodity Credit Corporation export credit guarantee
activities. Nearly $1.6 billion is requested for U.S. foreign
food assistance activities, including $50 million for the
McGovern-Dole International Food for Education and Child
Nutrition Program which builds upon the pilot Global Food for
Education Program.
We have worked hard in this budget to provide funding to
increase rural home ownership and to enhance the economic
opportunities and the quality of life in rural America. The
Administration proposes spending of $11.9 billion for rural
development programs. The budget supports the President's home
ownership initiative with particular emphasis on minority
family home ownership. The initiative provides for more than 40
percent increase for single-family housing. Nearly $4.1 billion
is requested for direct and guaranteed Section 502 single-
family housing loans compared to an estimate of $2.8 billion
for fiscal year 2003.
The President's budget will provide 49,000 new home
ownership opportunities for low--and moderate-income families
in rural areas. In addition, the water and waste disposal
program is being maintained at the requested 2003 level of $1.5
billion.
The budget supports the Department's strategic plan and
supports several management initiatives to better integrate
computer systems and technology to provide the Department's
constituents with enhanced ability to access records, to sign
up for program benefits, to access USDA studies and economic
information and to respond to USDA surveys.
These initiatives will also provide USDA employees with the
necessary tools to officially operate and deliver services.
Our attention to financial management paid off with the
first-ever clean opinion on the Department's fiscal year 2002
financial statements and a significant reduction in delinquent
debt, something that we are very proud of.
We are providing greater focus on efforts to eliminate
discrimination. Our budget requests $800,000 to fund the new
Office of the Assistant Secretary for Civil Rights. We
appreciate the funding that was provided by the Congress in
2003 for this new office, and we appreciate the Senate
confirming our new Assistant Secretary for Civil Rights, Mr.
Vernon Parker. We are very excited to have him as part of the
team and I can tell you that he is already doing a very good
job.
Finally, I want to give you a brief update on the $3.1
billion disaster assistance that was included in the 2003
Omnibus Budget package that was signed by the President on
February 20th. The same day that the President signed the
legislation, I established a Disaster Assistance Working Group
within USDA to begin work on the disaster assistance programs.
Their charge is very clear, to make implementation of disaster
assistance a farmer-friendly process and to make sure the
program benefits reach producers as quickly as possible.
I am pleased to announce that the signup for the tobacco
crop losses began on March 17th. Signup for the additional
benefits associated with the Livestock Compensation Program
began on April 1st. The Cottonseed Payment Program signup began
on May 2nd. Signup for the Crop Disaster Program will begin on
June 6th.
USDA has launched a disaster assistance implementation web
site that contains basic program information, the announcements
on program signup, questions and answers, as well as a comments
and suggestions section to encourage interested parties to
provide input to USDA on how best to move implementation
forward in a timely and expeditious manner.
PREPARED STATEMENT
Mr. Chairman and members of the committee, that completes
my overview of some of the key points in this budget, as well
as an update on some important issues in the Department of
Agriculture.
Again, I want to thank you for the opportunity to be here
this morning. We look forward to working with the committee as
we move forward on the fiscal year 2004 budget proposals, and
our team at USDA is available in the coming months to provide
details and information on all of these important issues.
Again, thank you Mr. Chairman and members of the committee
and I will be happy to answer your questions.
[The statement follows:]
Prepared Statement of Ann M. Veneman
Mr. Chairman, Members of the Committee, it is an honor for me to
appear before you to discuss the fiscal year 2004 budget for the
Department of Agriculture (USDA). I have with me today Deputy Secretary
Jim Moseley, our Chief Economist, Keith Collins, and our Budget
Officer, Steve Dewhurst.
I want to thank the Committee again this year for its support of
USDA programs and for the long history of effective cooperation between
this Committee and the Department in support of American agriculture. I
look forward to working with you, Mr. Chairman, and all the Members of
the Committee during the 2004 budget process.
As you know, the President's Budget was released on February 3rd.
Total USDA outlays for 2004 are estimated to be $74.1 billion. This is
an increase of $1.4 billion above the level requested in 2003.
Departmentwide discretionary outlays are estimated at $20.2 billion,
about $300 million below the 2003 requested level. The Department's
request for discretionary budget authority before this committee is
$15.4 billion.
This year's budget is consistent with this Administration's policy
book: Food and Agricultural Policy for the 21st Century and supports
the Department's 5-year strategic plan. This plan outlines long-term
goals and strategies for providing leadership in food, agriculture,
resource and related issues, and the 2004 budget is designed to help
accomplish USDA's strategic goals of: enhancing economic opportunities
for agricultural producers; supporting increased economic opportunities
and improving quality of life in rural America; enhancing protection
and safety of the Nation's agriculture and food supply; improving the
Nation's nutrition and health; and protecting and enhancing the
Nation's natural resource base and environment.
Because of fiscal realities, this budget is highly constrained.
However, it maintains and enhances critical programs that supports the
Department's strategic goals by:
For 2004, this budget supports the following key initiatives:
--Providing necessary funding for the continued implementation and
administration of new and expanded programs enacted as part of
the Farm Security and Rural Investment Act of 2002 (Farm Bill).
--Implementing the largest and most wide-reaching Farm Bill
conservation title ever which represents an unprecedented
investment in conservation that will have significant
environmental benefits.
--Providing record funding to support record levels of participants
in the Special Supplemental Nutrition Program for Women,
Infants and Children (WIC) and covers the anticipated increases
in participation in the Food Stamp Program, including legal
immigrants and others newly eligible for benefits under the
2002 Farm Bill.
--Providing record level funding to strengthen protection against
harmful bacteria in meat and poultry products. The request
funds additional food safety inspectors and supports continued
implementation of a science-based food safety inspection system
by providing specialized food safety training to inspectors and
other food safety professionals, increasing microbiological
testing, and enhancing the information available to inspectors
for evaluating food safety hazards that threaten the food
supply.
--Supporting the Department's strategic goal of expanding
international marketing opportunities by providing over $6.0
billion for the Department's international programs and
activities.
--Protecting American agriculture from threats to plants and animals
and transfers necessary inspection and research functions to
support the new Department of Homeland Security (DHS).
--Providing continued support for fundamental and applied sciences in
agriculture, including advancing research on agricultural
genomics and on animal and plant pests and diseases.
--Providing over $11 billion in loans, grants, and technical
assistance for rural development needs, including electric and
telecommunications systems, water and waste disposal systems,
rural housing, and business and industry.
--Improving the management and delivery of the Department's programs.
With this as an overview, I would now like to discuss the details
of our budget proposals for 2004.
HOMELAND SECURITY
The Department is transferring the border inspection functions of
the Animal and Plant Health Inspection Service's (APHIS) Agricultural
Quarantine Inspection (AQI) program and the Plum Island Animal Disease
Center to the new DHS. The transfer involves $247 million and nearly
2,700 staff years. A Memorandum of Understanding will ensure that USDA
has access to AQI employees in the event of future outbreaks of plant
and animal pests and diseases.
The budget requests an increase of nearly $42 million over that for
fiscal year 2003. It will support 7,680 food safety inspectors, an
increase of 80 inspectors, and provide specialized training for the
inspection workforce, increase microbiological testing and sampling,
strengthen foreign surveillance programs and increase public education
efforts. In addition, $30 million will fund efforts by APHIS to expand
inspection services, increase the availability of foot-and-mouth
disease vaccines, provide protection against chronic wasting disease
and poultry diseases, and expand diagnostic and other scientific/
technical services. An increase of $47 million will strengthen
laboratory security measures, fund research on emerging animal
diseases, develop new vaccines, create new bio-security database
systems, and continue development of the unified Federal-State
Diagnostic Network for identifying and responding to high risk
pathogens.
The fiscal year 2002 Emergency Supplemental provided the Department
with $328 million for 2002 and 2003 to protect American agriculture and
its food supplies from terrorism. The supplemental provided $15 million
to APHIS for moving laboratory operations from a strip mall in Ames,
Iowa, to the main National Veterinary Services complex. It is under
construction. The supplemental of $50 million to ARS at Ames, Iowa, is
being used as part of the $124 million appropriated by Congress in
recent years for modernization of the research facility. It is awaiting
construction. Another $23 million was allocated to Plum Island, New
York. It is being transferred to DHS for laboratory improvements.
Funding of $115 million was allocated to improve physical and
operational security at USDA labs and facilities, undertake security
related research, and improve cyber security. The planning for this
effort is largely completed. The remaining $125 million was allocated
to improve security for food and agriculture by expanding pest
detection and animal health monitoring, emergency preparedness training
and exercises and strengthening the regional laboratory network. As of
March 2003, $143.7 million has been obligated with the remainder to be
spent during 2003.
FARM AND FOREIGN AGRICULTURAL SERVICES
The farm sector in recent years has experienced lower market
returns for several major commodities and recurring losses from various
diseases, pests and other natural disaster-related causes. While the
situation is showing signs of improvement, market returns in some areas
of the farm economy are still low. The new Farm Bill enacted in 2002
provides additional financial support for the farm economy if market
conditions weaken. The President's budget for 2004 reflects the new
Farm Bill which added new countercyclical programs to the farm safety
net, reformed other farm programs and substantially expanded the
Department's conservation programs. In addition, the budget supports a
strong crop insurance program and an aggressive international trade
program that will be critical to improving the farm economy in the next
few years.
Farm Program Delivery
Farm Service Agency (FSA) salaries and expenses are funded at $1.3
billion in 2004. This would support staffing levels of about 5,900
Federal staff years and 10,800 county non-Federal staff years,
including about 1,500 temporary staff years. Temporary staff will be
reduced from the high level required in 2003 because of the heavy
workload associated with the initial implementation of the new farm
programs. However, we expect the workload for FSA to remain at
significant levels in 2004, particularly because of Farm Bill
requirements in the conservation area. Therefore, permanent county non-
Federal staff levels are protected at current levels.
In order to help FSA meet its workload challenges, improve service
to farmers, and enhance operating efficiency, the budget provides
increased funding of $41.9 million for FSA's information technology
efforts related to the Service Center Modernization Initiative. This
includes continued installation of geographic information systems (GIS)
and other Common Computing Environment (CCE) initiatives to help move
the delivery system into the e-Government era. The budget presents
these funds as well as funds for the other Service Center agencies
under the CCE appropriation to ensure that these activities are well
coordinated.
Management initiatives to modernize farm credit program servicing
activities and to streamline information technology and related
administrative support for the Service Center activities of FSA, the
Natural Resources Conservation Service (NRCS), and Rural Development
(RD) will also be undertaken in an effort to improve our ability to
provide services at less cost.
International Trade
One of the key objectives set forth in the Department's new
strategic plan is the expansion of international marketing
opportunities. As the strategic plan and our earlier review of the U.S.
food and agricultural system in the 21st century make clear, expanding
markets is critical to the long-term health and prosperity of American
agriculture. With 96 percent of the world's population living outside
the United States, future growth in demand for food and agricultural
products will occur primarily in overseas markets.
The Department is moving ahead aggressively to achieve our trade
expansion objectives. At the center of these efforts is negotiation of
trade agreements that will reduce trade barriers and increase market
access overseas. At the World Trade Organization, the United States has
presented an ambitious proposal for reform of global agricultural trade
that will eliminate export subsidies and reduce market access barriers
and trade distorting domestic support. At the same time, the Department
is actively engaged in efforts to establish regional free trade
agreements with countries in Central America and southern Africa, as
well as the Free Trade Area of the Americas. Work also has begun to
reach comprehensive trade agreements with Australia and Morocco.
Our trade policy activities are not limited to negotiating new
agreements, however. As these agreements are implemented, it is
essential that we bolster our efforts to monitor compliance and ensure
that U.S. rights are protected. These efforts are critical to
preserving markets as evidenced by the Department's work over the past
year to resolve trade disputes, such as China's restrictions on soybean
imports and Russia's ban on U.S. poultry imports.
The Foreign Agricultural Service (FAS) is the lead agency in the
Department's international activities and plays a critical role in our
efforts to expand and preserve overseas markets. To support its
activities, the 2004 budget provides a program level of $145 million
for FAS. This is an increase of nearly $10 million above the 2003
request level and supports a number of important trade-related
activities. Among these is a trade capacity building initiative that
will allow FAS to work with other countries in their implementation of
the Cartagena Protocol on Biosafety. The Protocol is intended to
provide uniform standards for ensuring the safe transport and use of
products derived from biotechnology. Through a series of regional
seminars, training sessions, scientific exchanges, and related
activities, FAS will work to ensure that the Protocol's provisions are
properly interpreted and applied. This is intended to facilitate the
adoption of science-based, transparent, and non-discriminatory
standards and, thereby, help to avoid potential disruptions in
agricultural trade.
The FAS budget also includes funding for a USDA contribution to the
Montreal Protocol Multilateral Fund. Established in 1991, the Fund
assists developing countries switch from ozone-depleting substances to
safer alternatives. Agricultural issues are expected to become
increasingly important in the Montreal Protocol process, particularly
as the scheduled phase-out date for the use of methyl bromide
approaches. The USDA contribution will help to further U.S.
agricultural interests in the Protocol implementation process.
Additional funding in support of FAS trade agreement negotiation,
enforcement, and standards-setting activities will be made available
from funds requested for the Office of the Secretary to conduct USDA
cross-cutting trade negotiation and biotechnology activities. These
funds also will be available to bolster efforts by FAS, APHIS, and
other USDA agencies to address market access constraints related to
biotechnology.
The Department's export promotion and market development programs
are another key component in our efforts to expand international
marketing opportunities. The 2002 Farm Bill increased funding for many
of these programs in order to bolster our trade expansion efforts, and
the President's budget fully reflects those increases.
For the Commodity Credit Corporation (CCC) export credit guarantee
programs, the budget includes a program level of $4.2 billion which
continues the programs near their current level. For the Department's
market development programs, including the Market Access Program and
Cooperator Program, the budget increases funding to $163 million in
2004. This includes $2 million to continue the Technical Assistance for
Specialty Crops Program authorized by the Farm Bill and implemented by
FAS last year. The budget also includes $57 million for the Dairy
Export Incentive Program and $28 million for the Export Enhancement
Program.
The budget supports a total program level for U.S. foreign food
assistance activities of nearly $1.6 billion. Of that amount, just over
$1.3 billion is provided for the Public Law 480 Title I credit and
Title II donation programs. It also includes a projected $151 million
for the CCC-funded Food for Progress programs which, based on current
price projections, should support 400,000 metric tons of assistance as
required by the Farm Bill. The budget also requests $50 million in
appropriated funding for the new McGovern-Dole International Food for
Education and Child Nutrition Program. As the Committee is aware, the
program is funded through CCC in 2003, but beginning in 2004 is to be
funded through appropriations. This funding level will provide
continuity to new program activities that will begin to be implemented
in late 2003.
Farm Credit
The budget also supports a program level of about $3.7 billion in
farm credit programs to enhance opportunities for producers to obtain,
when necessary, Federally-supported operating, ownership, and emergency
credit. The program level is down slightly from last year due to higher
subsidy costs for the direct loan programs. In addition, funding has
been reallocated from guaranteed operating loans to the direct loan
programs to better accommodate the actual demand in these programs. No
additional funding is being requested for the emergency loan program.
Based on current estimates, the budget assumes that carry-over funding
in the emergency loan program will be sufficient to meet demand.
Crop Insurance
The budget also includes full funding for the crop insurance
program. The budget includes ``such sums as necessary'' for the
mandatory costs associated with program delivery and the payment of
indemnities. The program is delivered by private insurance companies,
and the Federal Government reimburses the companies for their delivery
costs. The companies may also receive underwriting gains on policies
for which they retain the risk of loss.
In 2000, Congress substantially reformed the crop insurance
program, in part, by providing for substantial increases in the premium
subsidy available to producers, especially at higher levels of
coverage. Producers have responded by purchasing higher levels of
coverage. As a result, the premium earned per policy has increased from
about $1,500 to over $2,300. However, the number of policies sold has
remained virtually steady at about 1.3 million policies, indicating
that most policies are renewal business which requires less sales
effort than does the solicitation of new customers. In addition,
technological advances mandated, in part, by the 2000 reforms have
provided producers the opportunity to access information and to apply
for crop insurance electronically.
The Administration recently announced that the 2004 book of
business would be delivered under the Standard Reinsurance Agreement
that has been in place for a number of years. However, the budget
includes a proposal to cap the amount of delivery expense reimbursement
the companies may receive at 20 percent of the premium. The existing
cap of 24.5 percent has been in place since 1998. This proposal is
expected to save about $68 million in 2004. These savings are
achievable because of improvements in the cost-effectiveness of the
delivery system through the establishment of e-commerce procedures,
higher premium dollar policies for insuring the same number of acres,
and more business being done on a renewal basis.
MARKETING AND REGULATORY PROGRAMS
Marketing and Regulatory Program agencies provide the basic
infrastructure to protect and improve agricultural market
competitiveness for the benefit of both consumers and U.S. producers.
Pests and Diseases
Helping protect the health of animal and plant resources from
inadvertent as well as intentional pest and disease threats has been a
primary responsibility of APHIS. The Department is entering into a
Memorandum of Understanding with the DHS regarding the transfer of the
AQI border inspections program. In this regard, APHIS will retain
responsibility for promulgating regulations to protect against
agricultural pests and diseases. DHS will provide access to the AQI
inspectors in the event of future outbreaks. USDA will retain the role
of inspecting passengers and cargoes traveling from Hawaii and Puerto
Rico to the mainland for compliance with specified regulations to
protect the health of the agricultural sector on the mainland.
The 2004 budget proposes a program level of slightly more than $800
million for salaries and expenses, an increase of about $10 million
from the current comparable 2003 estimate. Notable programmatic
increases would double efforts against chronic wasting disease,
increase the availability of foot-and-mouth disease vaccines to protect
against a potential outbreak, fund a low-pathogenic avian influenza
program, enhance the ability to track animals and animal products
entering and leaving the country, and expand regulatory enforcement.
Further, bio-security and physical and operational security efforts
would be bolstered, as would veterinary biologic and diagnostic support
for the livestock sector. About $32 million is reduced from specific
pest and disease management programs assuming an increase in cost-
sharing for emergency pest and disease outbreaks by some cooperators. A
proposed rule will be published for comment which will provide the
criteria for cost-sharing for all cooperators.
Marketing
Another important proposal in the marketing and regulatory programs
area involves the Grain Inspection, Packers and Stockyards
Administration (GIPSA). The 2004 budget requests $13 million to help
ensure efficient market functioning. An increase of almost $1 million
would fund a new pilot program to audit the top four steer and heifer
meatpackers. The audits are anticipated to result in substantially
better financial protection to the regulated industries through
heightened financial scrutiny. An additional $500,000 would enhance
compliance with the Packers and Stockyards Act and fund a review of the
Act. GIPSA will implement a General Accounting Office recommendation to
provide industry participants with clear information on agency views of
competitive activities. The GIPSA budget also proposes user fees to
recover the costs of establishing and amending U.S. Grain Standards, as
well as license fees to recover costs of the Packers and Stockyards
program.
For the Agricultural Marketing Service the budget proposes a
program level of $297 million of which over 65 percent will be funded
through user fees with the remainder funded through appropriations. An
increase of $1 million in appropriated funds for increased pay costs is
included in order to maintain existing program operations in Marketing
Services and Payments to States.
FOOD SAFETY
USDA plays a critical role in safeguarding the food supply and its
policies have contributed to the recent decline in pathogenic
contamination of meat and poultry products and the level of foodborne
illness as reported by the Centers for Disease Control and Prevention.
This Administration believes that continued investment in the food
safety infrastructure is necessary to ensure that the appropriate
personnel, tools, and information are available to address the emerging
food safety hazards that threaten public health and the viability of
our agricultural system.
For 2004, the budget for the Food Safety and Inspection Service
(FSIS) provides a program level of $899 million, an increase of nearly
$42 million over 2003. The budget includes increases for pay and
inflation, the resources necessary to support approximately 7,680 meat
and poultry inspectors, an increase of 80 inspectors from 2003. These
inspectors are necessary to provide uninterrupted inspection services
to the growing poultry industry. Increased funding for domestic
inspection programs is also requested to take into account Virginia's
decision to terminate its State inspection program and Maine's decision
to implement a State inspection program.
The budget includes an increase of approximately $16 million to
support programmatic improvements aimed at achieving USDA's strategic
objective to reduce the prevalence of foodborne hazards from farm-to-
table. These program improvements will permit FSIS to continually
assess and update food safety systems in order to ensure the highest
level of safety possible. The following programmatic improvements will
be supported by the budget.
The budget includes an increase of $2 million to intensify the
oversight of foreign inspection systems and inspection of the meat and
poultry products which are exported to the United States. As more
countries seek permission to export meat and poultry products to the
United States, greater efforts will have to be made by inspection
personnel to determine that their inspection systems ensure the level
of safety that we expect here at home. With this funding, the number of
countries being evaluated will increase from 33 to 40.
The budget also includes a programmatic increase of $6 million to
strengthen FSIS's microbiological testing program. First, consistent
with recent directives issued by FSIS concerning the control of E. coli
O157:H7 and Listeria monocytogenes, FSIS will significantly increase
the level of testing of meat and poultry products for the presence of
these pathogens. With this funding, the number of tests of ready-to-eat
meat and poultry products samples for Listeria and Salmonella will
increase by 50 percent; environmental sampling for Listeria
monocytogenes in firms processing ready-to-eat meat and poultry
products will be initiated; and samples of raw ground beef and ground
beef products will more than double. This level of sampling will give
consumers greater assurance that establishments are effectively
controlling or eliminating the presence of pathogens in meat and
poultry products.
In order to handle the increased level of testing and to develop
the emergency surge capacity in the event of a bioterrorist incident,
the budget includes funding to improve the agency's laboratory
infrastructure and to increase the number of highly trained chemists
and microbiologists. These improvements are necessary to provide FSIS
the capability it needs to ensure the safety of the products on a daily
basis and to respond effectively to national emergencies involving the
products it regulates.
FSIS will also conduct nationwide microbiological baseline studies
to provide the long-term data necessary to assess the ongoing risks
presented by the products FSIS regulates. Improved risk assessments
will make inspection decisions more science-based. Consistent with the
Administration's policy on outsourcing, this laboratory testing would
be conducted by outside laboratories.
The budget also provides a programmatic increase of $6 million to
improve the scientific and surveillance skills of FSIS workforce. This
represents approximately a 33 percent increase in FSIS' training budget
and a commitment to raising the base level of skill of the FSIS
workforce. Training will be provided to in-plant inspectors to enhance
the consistency and effectiveness of inspection. Inspectors highly
trained in the latest food safety science and technology, including
skills in assessing establishment Hazard Analysis and Critical Control
Point systems and Sanitation Standard Operating Procedures, must be the
backbone of our food safety infrastructure. In addition, training needs
to be provided to food safety professionals, such as microbiologists,
toxicologists, and risk assessors, in order to improve the development
and enforcement of more science-based regulations.
An increase of approximately $2 million is requested to evaluate
and design a mass media campaign aimed at improving the safe food
handling practices of consumers. A well educated public is better
prepared to understand and address the food safety hazards they face
and, therefore, will be more confident in the food they buy and eat.
The 2004 budget also proposes legislation to collect an additional
$122 million in user fees annually by recovering 100 percent of the
cost of providing inspection services beyond an approved primary shift.
Recovering a greater portion of these funds through user fees would
result in savings to the taxpayer. These fees will have a minimal
impact on prices received by producers or prices paid at retail by
consumers.
FOOD, NUTRITION, AND CONSUMER SERVICES
The budget includes $44.2 billion for USDA's domestic nutrition
assistance programs, the highest level ever requested. The budget will
ensure access to food assistance for all eligible recipients, it will
help improve nutritional intakes and reduce obesity, and it will
provide support for those recipients working toward economic self-
sufficiency.
The Special Supplemental Nutrition Program for Women, Infants and
Children is budgeted at $4.8 billion. This is a record high funding
request, which funds record levels of at-risk, low-income participants.
This request also includes additional funding for program initiatives,
including State information systems, breastfeeding peer counselors, and
childhood obesity prevention projects. WIC reauthorization is a
priority and is assumed in the budget. Ensuring an appropriately funded
WIC program with the best possible outcomes is a top Administration
priority. Further, the budget includes $20 million for the WIC Farmer's
Market Nutrition Program and another $15 million in CCC funds for the
Senior Farmers' Market Nutrition Program.
The Food Stamp Program, which is the cornerstone of America's
effort to ensure low-income people have access to an adequate diet, is
funded at $27.5 billion. This covers anticipated food cost inflation
and participation growth of about 1 million participants, including
legal immigrants and others newly eligible based on legislative changes
in the 2002 Farm Bill. Included is a $2 billion contingency reserve,
$1.4 billion for Nutrition Assistance for Puerto Rico, and funds to
improve integrity and Electronic Benefit Transfer. Significant progress
has been made in reducing over and under payment error in the program
such that average State payment accuracy is now 91.34 percent, and
overpayment error averages 6.37 percent of benefits. The budget
maintains the emphasis on program integrity and seeks to reduce error
further.
The Child Nutrition Programs would be funded at $11.4 billion, also
a record for these programs. Increases are provided for food cost
inflation, growth in the number of meals served and program integrity.
Reauthorization of the Child Nutrition Programs is a priority for this
coming year, and the Administration believes the focus should be on:
--Ensuring stable and adequate funding for program benefits,
especially for eligible meals served to low-income children who
are eligible for free or reduced price meals;
--Ensuring access to meals for all children;
--Providing financial incentives to schools that serve meals
consistent with the Dietary Guidelines; and
--Streamlining program administration, minimizing administrative
burden, ensuring adequate resources for program oversight,
reducing error and improving program outcomes, while
reinvesting any savings in strengthening the programs.
The budget also includes a proposal specifically to explore policy
changes to help ensure that all free and reduced price meal eligibles
are correctly certified. USDA studies and national survey data suggest
that a significant number of children approved for free and reduced
price meals are from ineligible households. Correct certifications are
a priority not only because they affect about $7 billion in school meal
funds, but also because a wide array of Federal, State, and local
education resources, totaling considerably more than meal
reimbursements, are targeted to low-income children and schools using
the same data. More accurate certifications will help ensure that these
resources are all targeted correctly. The Administration would fully
reinvest any savings that result from improved payment accuracy to
strengthen the programs.
NATURAL RESOURCES AND ENVIRONMENT
The 2002 Farm Bill contains many new conservation programs designed
to protect and enhance the environment. The Department is now faced
with the demanding task of implementing this Farm Bill which provides
nearly $17.1 billion in new conservation funding over the next 10
years. The 2004 budget request in the conservation area recognizes the
importance of this task, as well as the need to continue to support
underlying programs to address the full range of conservation issues at
the national, State, local and farm level.
The 2004 budget request for NRCS includes $1.2 billion in
appropriated funding, and $1.4 billion in mandatory CCC financial
assistance funding for the Farm Bill conservation programs, including
$850 million for the Environmental Quality Incentive Program. The
appropriated request includes $577 million for conservation technical
assistance for the base programs that support the Department's
conservation partnership with State and local entities. One new element
in the NRCS appropriated account structure, proposed initially in a
2003 budget amendment, is a new Farm Bill Technical Assistance Account
that will provide all technical assistance associated with the
implementation of all the Farm Bill conservation programs. In 2004,
this new appropriated account is funded at $432 million.
The 2004 budget for NRCS will also enable the agency to maintain
support for important ongoing activities such as addressing the
problems associated with polluted runoff from animal feeding operations
and providing specialized technical assistance to land users on grazing
lands. In addition, limited increases will be directed to other high
priority activities such as addressing air quality problems in
noncompliance areas, more fully implementing the Customer Service
Toolkit, and establishing a more effective and meaningful monitoring
and evaluation regimen to oversee the implementation of Farm Bill
programs.
The budget also proposes certain other changes for the watershed
programs. With emergency spending being so difficult to predict, the
budget proposes to not seek appropriated funding for emergency work
while partially restoring the ongoing watershed planning and Public Law
566 programs. This will help address the backlog of unmet community
needs that these programs are designed to meet. Disaster funding will
be addressed as emergencies arise.
The Department's 2004 budget request maintains funding for the 368
Resource Conservation and Development areas now authorized. The ongoing
program will continue to improve State and local leadership
capabilities in planning, developing and carrying out resource
conservation programs.
RURAL DEVELOPMENT
Over 60 million people call rural America home and relatively few
of them are farmers and ranchers. USDA must embrace this reality and
commit to creating new economic opportunities and improving the quality
of life for a diversified rural population. Rural America needs to
share in the Nation's economic prosperity, in terms of good jobs and
earning potential, homeownership and infrastructure for community
services, including telecommunications to participate in a highly
technological, global society.
The Administration is committed to bringing new ideas, new
solutions and new approaches to rural America. The 2004 budget reflects
this commitment. It includes new programs that are being implemented
using the mandatory funding provided by the 2002 Farm Bill, and
maintains the traditional loan, grant and technical assistance programs
for rural development purposes at realistic levels of funding while
offering new ways to operate these programs. For example, on January
29, 2003, USDA announced the availability of over $1.4 billion in loans
for broadband telecommunication. This initiative started as a pilot
program in 2001 and is on the verge of becoming one of USDA's most
important programs. It could make the same difference to rural America
as the railroads did in the 19th century and the highway program did in
the 20th century.
The 2004 budget proposes $11.9 billion for USDA's rural development
programs, including $680 million for administrative expenses. This
program level is estimated to cost the Government $2.3 billion in
budget authority, which compares to about $2.6 billion in the
President's 2003 budget. Because interest rates have declined, the
subsidy costs for most direct loan programs are lower than those
reflected in the 2003 budget. The 2004 budget maintains these programs
at their 2003 levels, which results in a savings in budget authority.
The 2004 budget maintains the water and waste disposal program at
an overall program level of $1.5 billion. However, it proposes that the
amount of grants included in this level be reduced from $587 million to
$346 million. Because the subsidy rate is only about 3.33 percent for
direct loans, compared to 100 percent for grants, the shift toward more
loans would maintain the same program level as the 2003 President's
budget while achieving a substantial savings in budget authority. The
lowest interest rates in a decade should allow more communities to
repay loans rather than rely on grants. In addition, mandatory funding
provided by the 2002 Farm Bill was used to fund a backlog of projects
that needed a substantial portion of their funding through grants in
order to be viable. Recent applications indicate that more projects can
be funded through loans alone or with only a moderate grant.
Electric loans are maintained at a $2.6 billion level. However, the
amount available for direct loans at the 5 percent interest rate would
be increased from $121 million to $240 million. This increase is
intended to serve areas with low density and high consumer costs as
well as other hardships. Further, USDA intends to ask electric
borrowers, most of which qualified for eligibility based on service
areas defined decades ago, to recertify that they are still serving
rural areas, rather than urban or suburban areas.
Loans for broadband access were initiated as a pilot program in
2001. The 2002 Farm Bill provided the statutory authority and mandatory
funding for this initiative. The 2004 budget provides for an increase
in discretionary funding for broadband loans from $80 million in the
2003 budget to $196 million for 2004. This increase reflects the
Administration's support for bringing internet and broadband services
to rural areas, and its belief that this activity should compete for
funding under the annual budget process. Therefore, the 2004 budget
proposes rescinding the mandatory funding for broadband loans that the
2002 Farm Bill makes available for 2004. The mandatory funding relating
to the January 29, 2003, announcement is reflected in the budget as
being used in 2003. However, this funding remains available until
expended.
The 2004 budget also includes $2 million for broadband grants. As
has been the policy since 2001 when the program was established, these
grants will be used to assist a few small communities that lack the
repayment capacity for loans.
With regard to the rest of the telecommunications programs, the
budget includes $495 million for telecommunication direct loans, and
$50 million in direct loans and $25 million in grants for the distance
learning and telemedicine program. These levels are the same as those
requested for 2003. Further, the 2004 budget contains the
Administration's prior proposal to stop funding the loan-making
activities of the Rural Telephone Bank (RTB). The RTB is fully capable
of obtaining funds to make loans through commercial channels as soon as
it is privatized through the redemption of its Class A stock, which the
Government holds.
The business and industry guaranteed loan program is funded at a
program level of $602 million, down from $733 million in 2003. The
decrease reflects an increase in subsidy costs due to both increased
losses on guarantees made in prior years and technical adjustments.
Section 502 direct loans for single family housing would be
increased from $957 million in 2003 to almost $1.4 billion in 2004.
This increase would contribute to meeting the President's goal of
increasing minority homeownership. In addition, the 2004 budget
includes $2.725 billion for Section 502 guaranteed loans, including
$225 million for refinancing. While there have been shortfalls in
demand for these guarantees in prior years, the Administration recently
lowered the fees to bring them more in line with what other Federal
agencies charge. This change is expected to ensure a strong demand for
the program through 2004. Section 502 direct and guaranteed loans are
expected to provide about 49,000 homeownership opportunities in 2004.
Consistent with last year's budget proposal, the 2004 budget does
not include funding for new construction of Section 515 rural rental
housing projects. This proposal reflects concern about the long-term
cost of the Government for maintaining the existing portfolio of 17,800
projects, and the need to find more cost-effective ways to provide
housing support for rural residents with very low income. Many of these
projects are over 20 years old and in need of repair or rehabilitation.
They also require substantial amounts of rental assistance payments to
remain viable. USDA has already initiated a review of alternatives for
servicing the portfolio and developing options for making loans for new
projects at less cost to the Government. Direct loans for repair,
rehabilitation and preservation would continue to be made. The 2004
budget would support $71 million for these purposes. Further, the 2004
budget provides $740 million for rural rental assistance payments,
which is sufficient to renew all expiring contracts and to support new
construction of $59 million of farm labor housing projects.
In addition, the 2004 budget includes an estimated savings of $5
million for sales of loan assets. USDA's RD mission area, along with
FSA, will be evaluating the potential for conducting such sales on a
regular basis.
RESEARCH, EDUCATION, AND ECONOMICS
Publicly supported agricultural research has provided the
foundation for modern agriculture and is an important component of
virtually all of our strategic objectives. Research will lead to
commercially feasible renewable energy and biobased products with
benefits to the environment, national security, and farm income.
Genetic and molecular biology hold promise to reduce plant and animal
diseases that threaten U.S. agriculture as the movement of plants and
animals increases and as bioterrorism becomes a matter of increasing
concern. There are technology-based opportunities to make our food
supply safer and more wholesome that need to be exploited to address
serious human health-related problems.
The 2004 budget for the four Research, Education and Economics
agencies is approximately $2.3 billion, nearly the same as 2003 budget
level. The 2004 budget follows the general pattern of the 2003 budget
with reductions in earmarked programs and program increases in areas
where needs and returns are the greatest. The budget also includes
increases for pay costs, homeland security related activities,
information technology and other infrastructure requirements.
The centerpiece of the 2003 budget was the proposal to move
aggressively towards the full authorization level for the National
Research Initiative (NRI). The proposal in the 2004 budget is based on
the same underlying policy objective, but in a way that is consistent
with the greater overall constraints of the 2004 budget. The proposal
for $200 million for the NRI will finance work that will have an
immediate impact on such issues as emerging diseases of plants and
animals, biosecurity, air quality, and food and nutrition. The NRI
provides critical support for mapping and sequencing the genomes of
organisms of importance to agriculture. These projects are carried out
in the major Federal genome sequencing centers in cooperation with
other agencies including the National Institutes of Health, the
Department of Energy, and the National Science Foundation, where USDA
funds are highly leveraged.
The 2004 budget for the Agricultural Research Service (ARS) calls
for increases to support participation in genome mapping and sequencing
projects and enhance the agency's bioinformatics capacity to transfer
this information into research programs. There are increases for work
on animal diseases and biosecurity to develop new vaccines, rapid
diagnostic tests, and genome data on biosecurity threat agents. The
research will lead to improved vaccines and therapeutics against foot
and mouth disease and the newly emerging and most threatening swine
disease, known as porcine reproductive respiratory syndrome or PRRS.
The budget includes funds to install security countermeasures in
ARS laboratories. Security assessments and initial investments in
countermeasures were funded through the 2002 emergency supplemental
funding. Assessments of all ARS facilities are being completed and
funds in the 2004 budget will be used for the highest priority
projects. At this time, such security measures represent the highest
priority for the Buildings and Facilities account. Congress has
appropriated a total of $124 million in recent years for implementation
of the animal health facilities in Ames, Iowa. No funding is proposed
in the 2004 budget as security of existing facilities is the higher
priority for this year. The Administration will reconsider the full
range of options for future modernization of these facilities and
present recommendations in the fiscal year 2005 budget.
The 2004 budget for the Cooperative State Research, Education, and
Extension Service (CSREES) includes funds to continue the formula
programs for the 1862 institutions at current levels and increase
formula payments to the 1890 institutions as a step towards funding
these programs at the higher authorization levels established in the
2002 Farm Bill. There are also proposed increases in funds for the 1994
Tribal Land Grant schools and an increase in the CSREES graduate
fellowship program that will allow more funding for fellowships at the
masters degree level which is especially important for recruiting
minority graduate students. Finally, there is an increase in the
Outreach and Technical Assistance Program authorized under Section 2501
of the 1990 Farm Bill which is now being administered by CSREES. Our
goals for the 2501 program are to encourage and assist socially
disadvantaged farmers and ranchers own and operate farms and ranches
and participate in USDA programs. With increased funding to $4 million
we will be making more awards, for longer periods of time, to a wide
range of community-based entities.
The budget for the Economic Research Service (ERS) includes an
increase for two initiatives. An increase of $1 million for a Security
Analysis System for U.S. agriculture (SAS-USA) to provide information
critical for the mitigation of security threats and attacks to the
Nation's agriculture and food supply. The system will integrate spatial
and economic data with analysis functions to deliver security
assessments and recommendations to key decision makers within a short
timeframe. An increase of $1.1 million will allow ERS to investigate
consumer behavior, particularly in U.S. export markets, towards foods
modified by genomic and other agricultural biotechnology innovations.
The budget for the National Agricultural Statistics Service (NASS)
includes an increase for three initiatives and a decrease of $16.5
million for the Census of Agriculture, reflecting the decrease in
staffing and activity levels to be realized in 2004 due to the cyclical
nature of the 5-year census program.
An increase of $4.8 million is requested to help restore and
modernize NASS core survey and estimation program for U.S. agricultural
commodities and other economic, environmental and rural data. These
data are used by a variety of customers for business decisions, policy
making, research, and other issues. They are also necessary for the
calculation of national countercyclical payments rates provided under
the 2002 Farm Bill.
An increase of $1.6 million for NASS Locality-Based Agricultural
County estimates program continues the improvements included in the
2003 budget request. These local estimates are one of the most
requested data sets, and are especially important to the Risk
Management Agency (RMA) for their risk rating process, (affecting
premium levels paid by producers), and to FSA for calculating national
loan deficiency payments.
Finally, an increase of $3.25 million is requested to support NASS
efforts as the lead agency for two of USDA's enterprise-wide e-
Government initiatives, Survey Capability and Data Management. This
funding will allow NASS to develop the infrastructure necessary for
electronic data reporting for its surveys, thereby reducing the
reporting burden on farmers and ranchers.
DEPARTMENTAL MANAGEMENT
The Departmental staff offices provide leadership, coordination and
support for all administrative and policy functions of the Department.
These offices' are vital to USDA's success in providing effective
customer service and efficient program delivery. Salaries and benefits
often comprise 90 percent or more of these offices' budgets, leaving
them little flexibility to reduce other expenditures needed to continue
their operations. The 2004 budget proposes funding required to ensure
that these offices maintain the staffing levels needed to provide
management leadership, oversight and coordination.
These offices also have key responsibilities related to the
President's Management Agenda and other departmentwide and agency-
specific management reforms, which are crucial to making the Department
an efficient, effective and discrimination-free organization that
delivers the best return on taxpayers-investments. The Department has
made significant progress in improving management. Examples are:
--The Department has a new strategic plan which is being used to
communicate and drive our programmatic, budget and management
priorities.
-- The Department received its first-ever unqualified or ``clean''
opinion on the fiscal year 2002 financial statements,
significantly reduced delinquent debt and all of the
Department's agencies now use a single financial information
system that meets Federal standards.
--The Department's National Finance Center was one of four winners of
a governmentwide competition to streamline payroll service
providers. It also helps nearly 3 million Thrift Savings Plan
participants manage and track their investments.
--USDA's customers can increasingly conduct business with the
Department online, saving them and the Department time and
money over the long term.
The fiscal year 2004 budget builds upon that progress by continuing
funding levels for these offices and providing key funding increases in
order to:
--Provide $6.6 million to appropriate agencies, such as APHIS, FAS,
and GIPSA, through the Office of the Secretary to address
cross-cutting trade related challenges. Additional resources
are needed for trade negotiations and enforcement actions, as
well as in solving biotechnology issues related to market
access and regulatory standards. This request will allow
Secretarial level coordination, flexibility and resource
sharing to target current trade issues.
--Meet demands for Departmental coordination of homeland security
efforts, including emergency planning and strengthened physical
and cyber security in light of the September 11, 2001, attacks.
--Continue efforts to modernize the Service Center agencies (FSA,
NRCS, and RD) to improve efficiency and customer service. A key
element in these plans is the maintenance of a CCE for the
Service Center agencies and RMA acceleration of our efforts to
acquire and use Geospatial Information Systems (GIS). The CCE
and GIS are critical to providing electronic services to USDA
customers.
--Continue renovations of the South Building to ensure that employees
and customers have a safe and modern working environment.
--Enable the new Assistant Secretary for Civil Rights to guide civil
rights activities. The President nominated Vernon Parker as the
Department's first Assistant Secretary for Civil Rights and he
was confirmed by Senate on March 27.
--Enhance outreach efforts to provide all of our customers with
information about our programs.
--Enable the Offices of the General Counsel and the Inspector General
to provide needed services to the Department.
That concludes my statement. I look forward to working with the
Committee on the 2004 budget so that we can better serve those who rely
on USDA programs and services.
Senator Bennett. Thank you very much, Madame Secretary.
As you have seen, as the vote has concluded, a number of
members of the subcommittee have joined us. I want to
particularly welcome Senator Kohl, who was chairman of the
subcommittee and set a high standard of excellence for us all
to try to follow.
Senator, if you have an opening statement, we will be happy
to hear that and then I will begin the questioning in the
normal round.
Senator Kohl. Go ahead.
BIOTECHNOLOGY TRADE-RELATED ACTIVITIES
Senator Bennett. Thank you very much.
Madame Secretary, I noted that you requested an additional
$6.6 million in your own budget to fund cross-cutting trade
relating and biotechnology programs throughout the Department.
As we have talked to members of your staff, you plan to use
this money for the Foreign Agricultural Service, the Animal
Plant Health Inspection Service, and the Grain Inspection,
Packers and Stockyards Administration.
Could you tell us how you arrived at this figure of $6.6
million? And how much of this amount do you plan to give to
each of these agencies? Why didn't the Department request that
the increases be provided directly to these accounts instead of
coming through your office? Do you have an established criteria
for distribution of the funds?
We are just trying to get a better understanding of all of
this. And if you do not have those specific members right at
your fingertips, you can supply them for the record. But I
would appreciate any comment that you would have on this
general approach.
Secretary Veneman. Mr. Chairman, I appreciate that
question. This is a new proposal, something that has not
appeared in our budget before. As you know, there are a number
of new developments with regard to biotechnology. We are
encountering trade issues, as we have worked to open up markets
in the European Union. That continues to be a very big issue,
not only with the EU but with other countries as well.
As we worked through the budget, one of the things that was
apparent was that a number of these agencies were requesting
additional funds to work on issues related to biotechnology on
the trade side and on the regulatory side as well. We have had
issues come up over the course of the last year where we have
had to deal with the cleanup of an issue relating to Prodigy,
for example. We also had to deal with the Starlink situation,
in 2001.
So these are cross-cutting issues with regard to
biotechnology. They are trade related. They are regulatory
related. The concept is to have a fund under which we can
really utilize the resources that we have in a coordinated
manner, in a cross-cutting manner, and have some flexibility as
these issues arise.
At this point, is not possible for me to give you the exact
break down by agency. Some of that will continue to remain
undetermined because we will need some flexibility in this
account to address issues that we may not anticipate. But we
will be happy to give you what detail we can on this particular
proposal.
[The information follows:]
Funding for these activities will be allocated in a coordinated
manner to address issues related to trade and biotechnology that are
very fluid. It would be premature to make allocations at this time,
though we would expect funding to be used to respond to World Trade
Organization and regional and bilateral trade negotiation demands, as
well as trade and regulatory issues associated with biotechnology.
Examples of the types of activities to be funded include:
--work to minimize market constraints related to biotechnology;
--expand efforts to exchange information relating to the implications
of implementing laws and regulations related to biotechnology;
--deal with issues that may disrupt trade;
--address increased trade negotiation workload associated with the
World Trade Organization's multilateral negotiations to reform
world agricultural trade practices, as well as the negotiation
of regional trade agreements, including the Free Trade Area of
the Americas, and numerous bilateral free trade agreements; and
--ensure that introduced genetically-modified organisms, including
those in field testing, do not pose a risk to American
agriculture.
CRP/WRP TECHNICAL ASSISTANCE
Senator Bennett. We would appreciate that.
In the 2003 supplemental, this subcommittee provided
direction your Department regarding funding of technical
assistance and clarifying the intent of Congress and an area. I
understand there has been some confusion about that or at least
some dispute about it.
Can you tell us how the Department interprets the language
that this subcommittee included in the 2003 supplemental on
that issue? And how much money will be required to fund
technical assistance for the Conservation Reserve Program and
Wetland Reserve Program in fiscal year 2004?
Secretary Veneman. Mr. Chairman, as you indicate, there was
some dispute about how the technical assistance would be
funded. Ultimately, there was a decision by the Justice
Department as to how the law should be interpreted and we are
bound by that decision.
There was $333 million in the 2003 budget and we are asking
for $432 million in the 2004 budget for technical assistance
for the conservation programs.
Senator Bennett. Mr. Dewhurst.
Mr. Dewhurst. Senator, let me just add to the Secretary's
answer. As you said, in the Omnibus Bill that the Congress
enacted, the Congress clarified the law with respect to
technical assistance, and specified that funding from certain
of those mandatory programs, provided for in the Farm Bill,
should be used to provide technical assistance for the
conservation programs, not withstanding what we know as the
Section 11 cap, which had been a problem in the past.
The approach that the Congress adopted in the Omnibus Bill
is different from the approach that the Administration had
recommended in its budget in the sense that the Administration
had recommended the creation of a discretionary account to
provide this money and the action of the Congress specifies the
use of mandatory money for this purpose.
Senator Bennett. That is why we asked the question.
Mr. Dewhurst. One of the things that happens here under the
operation of that law is that four of the programs that are in
the Farm Bill, the EQIP Program, the Farmland Protection
Program, the Grasslands Program, and the Wildlife Habitat
Incentives Program essentially are asked to provide the
technical assistance money to support all of those programs. So
you have some of these programs being used as a source of
technical assistance money for other conservation programs, and
that has become controversial.
The $333 million that the Secretary talked about remains
the amount of money that the Department thinks is needed in
total to support these programs in the current fiscal year.
That money, under the law, will come out of the mandatory
programs, out of those four programs I mentioned. It will be
used to provide the technical assistance to support all of the
Farm Bill programs, including programs such as the Conservation
Reserve Program.
So the Administration is continuing to recommend, in its
2004 budget, the creation of a discretionary account for this
purpose and the issue resides in where you get the money from
and whether or not you want the money from one program to, in
effect, subsidize another program. It is quite a complicated
and controversial issue.
Senator Bennett. Thank you. That is a clear explanation of
where we are and obviously the determination will have to be
made by this subcommittee as to where we go.
Let me ask what might be a parochial question but I think
it affects everyone, and then I will go to my colleagues and
come back on a second round for my additional questions.
EMERGENCY WATERSHED PROTECTION PROGRAM
I say parochial because the situation occurred in
Santaquin, Utah. A wildfire burned the hills in that rural area
and Utahans were able to work with NRCS and receive funding
through the Emergency Watershed Protection Program. The
community was threatened with mud slides and funding helped to
avert that potential disaster, and we are naturally very
grateful.
The USDA budget now does not include any funding for the
Emergency Watershed Protection Program. We may not be having
mud slides this year because we are in the 5 year of the worst
drought in history, and maybe we would like enough water to
perhaps threaten us with a mud slide. But there is no funding
for that particular program.
You state that ``emergency assistance will be evaluated and
addressed as disasters arise.'' The age-old question how do you
address disasters if you have no prior funding, especially in
the light of potential devastating fire season that we may
have. The flip side of being free from mud slides is that we
are threatened with serious fires.
Unfortunately in the West right now we have the worst of
all possible scenarios. We have had, as I say, the worst
drought since they started keeping records. And then this
spring it rained just enough to create a very significant
sprout of grass. When the rain goes away and the grass is
there, it is tinder, and then the rest of the landscape is
tremendously dry.
So I am concerned, not just for my own state but for all
states in the West where this situation exists. With your
statement that emergency assistance will be evaluated and
addressed as disasters arise, should we not consider putting
some money in that fund in advance of the disaster to give you
a faster response time to this particular kind of challenge?
Secretary Veneman. Mr. Chairman, let me first address the
issues that you raise with regard to the West and the drought
and fire danger. This has been something we have been following
very closely, both because of the impacts of the drought on
agriculture but also because of the impacts of the drought on
firefighting, and our fire season.
Obviously, last year was one of the worst fire seasons we
have ever had. We are continually, through our drought task
force, not only implementing the drought assistance provisions
but really following this issue of the drought. We are very
concerned about what the fire year is going to look like. We
are very thankful for the rain we have had but obviously this
is a high priority, and also a very strong reason why the
President has put forward his Healthy Forests Initiative. We
will continue to work through the budget process to try to get
that implemented.
Senator Bennett. Senator Burns will address that in his
subcommittee.
Secretary Veneman. I know, but I just wanted to remind
everyone that that is a very high priority for us.
As far as this program, let me have Mr. Dewhurst address
how we have typically used this in the past, in terms of the
funding for the disasters.
Mr. Dewhurst. Senator, your question, of course, highlights
one of the most difficult dilemmas we have when we put a budget
together for the Department in areas such as firefighting and
the emergency watershed conservation program that you
mentioned. We also have an emergency conservation program in
the Farm Service Agency.
In most years that we have emergencies, we are not very
good at anticipating the true magnitude of those emergencies.
Funding that we provide in advance counts against the
discretionary budget targets for the Department.
So in most years that I have been here, most
administrations have chosen, although we do provide money in
advance for firefighting to some extent, not to budget the
Emergency Watershed Program or the Emergency Conservation
Program in advance.
What happens is that after we have emergencies, evaluations
are done at the local level, and estimates of damages are
provided to the Administration and to the Congress. These
programs are almost always dealt with through supplemental
funding after those evaluations are available.
It may or may not be the best way to do it, but it is in
fact what has happened over many years.
Senator Bennett. We may think about changing that. Thank
you very much.
Senator Kohl, you have been very patient. We appreciate
your support.
Senator Kohl. Thank you very much, Senator Bennett.
I would like to offer a very warm welcome to Senator
Bennett as he assumes his responsibilities as chairman of this
subcommittee. He is someone that I and other members of this
committee have come to know, respect and admire for his
fairness.
Senator Bennett, we will all be looking to you for
leadership, advice, and counsel as the subcommittee proceeds.
DAIRY PRICE SUPPORT ACTIVITIES
Secretary Veneman, America's dairy farmers and those in my
state of Wisconsin, which has more dairy farmers than any other
state by far, are suffering hugely from low prices and a dairy
pricing system that often works against the farmers best
interests. In fact, if it were not for the new dairy program in
the Farm Bill, then dairy farmers would be going out of
business all across this country at a historical and therefore
devastating rate.
We know that there is no single solution to the problems
faced by dairy farmers, but as Secretary of Agriculture, you
have a number of authorities which you can use to help these
hard working men and women stay in business. Expanded dairy
research, innovative marketing alternatives, enhanced risk
management options, sound conservation practices, rural
development strategies, and a strong voice in international
trade policy are all necessary to support the dairy industry.
I have listed just a few of the tools that you can use to
assist dairy farmers. Please share with us, if you would, how
you can use these and other authorities to strengthen the dairy
sector and help our struggling dairy farmers survive.
Secretary Veneman. Senator Kohl, I appreciate the difficult
situation the dairy farmers are faced with regard to prices in
recent times. It is something we have heard continuously about
and I do appreciate your bringing up some of the various kinds
of programs that we have that assist farmers across the board
from research to marketing programs and international trade.
Obviously, all of these kinds of programs can be used to
help a variety of farmers and rural communities throughout
America and we continue to use them. We are working through our
international trade negotiations to open up more markets for
our farmers and ranchers. We have used some of our tremendous
stocks of non-fat dry milk that we have in storage for
humanitarian purposes.
You also mentioned the conservation programs, which are
increased by about 80 percent in this Farm Bill. Much of that
will be available for animal agriculture to help ranchers
comply with some of the environmental regulations such as
Consolidated Animal Feeding Operations (CAFOS). So we are using
a number of these programs to assist dairy farmers and
ranchers.
I will call upon our Chief Economist, Mr. Collins, to just
give a quick overview of the situation with regard to the
economics of the dairy industry, as well.
Mr. Collins. Thank you, Madame Secretary.
Senator Kohl, I agree with your comment about the economic
distress dairy producers are in. April milk prices were the
lowest since 1978, and that has caused the greatest concern in
25 years.
You outlined the key areas, I believe, where things can be
done to help dairy producers. And, we have tools in all of
those areas and we are doing some things that people may not
know about and may even be surprised about.
If I were looking at how to help dairy producers, I would
focus on trying to help them manage the risks they face,
starting with the input they buy.
If you take the State of Wisconsin, for example, we have
over 700,000 acres of corn that is used for silage for dairy
producers. Unfortunately, only about 18,000 acres of that is
insured. So we could do a lot better job on developing
insurance tools for forage and pasture and silage-type of
crops.
On the output side, we have the milk program, the Milk
Income Loss Contract Program. We have paid about $1.3 billion
to dairy producers since that program began under the 2002 Farm
Bill.
In addition to that, we have a couple of interesting
programs that are now in operation that are helping small dairy
producers. We have Whole Farm Insurance Programs and the
Adjusted Gross Revenue Pilot Program which is available in a
number of states. Unfortunately, it has a limit as to how much
milk can be covered by that program. However, the State of
Pennsylvania has a program called Adjusted Gross Revenue Lite,
in which 100 percent of the income can come from milk on a farm
and be covered. You have to have at least two commodities
because it is a whole farm product. But most of it could be
milk and could be covered under a Whole Farm Insurance product.
These are new things. These are new tools that are
evolving. The Risk Management Agency at USDA is working on
those programs, and they hold some potential for providing new
crop insurance and risk management tools for dairy producers.
We also have a new product that has been submitted to the
Federal Crop Insurance Corporation by a private insurance
provider for a price insurance product for milk. So there are
things going on that can help producers. But they do not happen
overnight. They are taking time. But in the meantime, we have a
price support program. We continue to support milk marketing
orders. We also have DEIP, the Dairy Export Incentive Program,
and we have the Milk Income Loss Contract Program, all
providing a range of support to dairy producers.
STRENGTHENING DAIRY PRICE SUPPORT
Senator Kohl. I would like to ask one additional question,
Madame Secretary.
The Dairy Price Support system requires that USDA purchase
certain dairy products when the Class III price falls below
$9.90 per hundredweight. As has been said, since January 2003,
the Class III price has remained at record lows and below that
support level. In fact, we reached a low of $9.11 per
hundredweight in March.
What can you do to strengthen the price support program to
prevent the market price from falling below the support level?
Mr. Collins. Senator Kohl, this is an interesting case. We
have seen this happen before. This is not new this year. It has
happened a number of times over the years, that the price has
temporarily fallen below $9.90 per hundredweight.
The law requires us to support the price of manufacturing
grade milk at $9.90. It can happen that for a particular class
like Class III or Class IV, or for a particular region of the
country, the milk price can fall below $9.90.
As a whole, the manufacturing grade milk price in the
United States has been running close to $9.90. The April
average price was, in fact, exactly $9.90.
But the question you raise does point toward the price
support program. There may be some things we can do there.
There is concern when you see prices on exchanges fall well
below $9.90, or the product prices fall way below our purchase
prices, for example, like the cheese price or the butter price.
One of the things that we are looking at is the extent to
which there are unique costs borne by those who sell their
products to us. For example, cheese. If you are talking about
the Class III price, that is the price of the milk that goes
into producing cheese. When we buy cheese, we impose certain
requirements on those that supply cheese to us.
We are reviewing right now what cost those requirements are
imposing on the suppliers. And to see whether we have properly
accounted for those costs in establishing our purchase price
for cheese.
To the extent that we have not properly accounted for those
costs, then suppliers would in fact be selling cheese to us at
a milk price less than $9.90.
So we are reviewing that right now, trying to look at that
dimension of the dairy price support issue you raised.
Senator Kohl. I thank you and I have additional questions,
Mr. Chairman, but we will get back to that on the second round.
Senator Bennett. We will go through a second round. Senator
Burns.
CONSERVATION RESERVE PROGRAM
Senator Burns. Thank you, Mr. Chairman. I have a couple
questions regarding CRP. You just closed the applications for
CRP; is that correct?
Secretary Veneman. No, sir. We just opened them on May 5th
through the end of May.
Senator Burns. Do you have any expectations whether or not
you will hit the 39 million acre cap? Is it not capped at 39.3
million acres?
Secretary Veneman. It is capped at 39.2 million acres.
Senator Burns. Do you think you will hit that cap?
Secretary Veneman. No, sir, not yet.
Mr. Collins. Senator Burns, we are a long way from that
cap. Under the 1996 Farm Bill, the statutory cap was 36.4
million acres. We are still a couple of million acres away from
that cap.
In addition to that, this fall we will have about 1.5
million acres that will expire. The contracts will expire and
come out of the CRP or have to rebid to come in. So we will
have a tremendous amount, something on the order of 7 million
acres, of potential room under the 39.2 million acre cap.
For the purposes of our budget that has been presented, we
estimated about 2.8 million acres would be enrolled in this
signup. Now that is not a target. That is just a placeholder
that we used to be able to project the budget costs for the
CRP. We can go above that, we can go below that, depending on
the quality of the bids.
CROP DISASTER PAYMENTS
Senator Burns. The next question is, of course we went
through the drought thing. And I know that you have had to do a
lot of work in software and do a lot of things in your county
offices in order to get that money out the door.
Give me an idea right now, if you have an idea, when
producers can expect some sort of relief or receipt of some of
those checks?
Mr. Collins. If you are referring to the crop disaster
payments, the signup begins June 6th and payments can be
expected within a couple of weeks after producers come in the
door, provided they come in that first week.
Senator Burns. It is going to be that quick?
Mr. Collins. Yes, sir.
Senator Burns. Those are the questions I had. I have got
some questions here that I would like to just relate to you if
that is all right, in some areas. There is a couple of areas
that I do not know what I am talking about. There are more than
that, really, but two that I have identified this morning.
But they are programs that are ongoing. I will convey my
questions to the people here and we will try and get that
ironed out and get some answers because they are parochial and
I know there are other folks here that are going to talk about
overall budgets and programs. So I think we should move on to
that.
I thank the chairman.
Senator Bennett. Thank you very much.
HEALTHY FORESTS AND FOREST STEWARDSHIP
Senator Burns. The fire situation, I will tell you, right
now we are looking at a pretty normal year. We are getting rain
in Montana. You guys have got to hold your mouth right. But you
have to hold it right for 5 years. It is tough to do.
Right now, we are getting moisture in Montana and it is
pretty good moisture. The old prairie is trying to green up a
little bit.
We would hope, in all your planning, but that does not mean
that there are not other areas out there that is a high risk.
As far as your USDA, the Forest Service is concerned, we
sure need that money budgeted for Healthy Forest and forest
stewardship, because what we are finding is you can have more
moisture that we normally had in our forest, but they need
thinning. The growth that is in these areas are just taking
that moisture and they are just sucking it out. So it takes
more snow and more rainfall to sustain us through the season.
So I am particularly interested in that money as it goes to
forest health and to our forest stewardship programs.
They are working, by the way. Those programs are really
working, and I think will have an impact on our fire season and
how we manage our forest.
Senator Bennett. Thank you very much.
We appreciate the ranking member of the full committee,
Senator Byrd, being with us. And I will go out of the early
bird order to recognize Senator Byrd and thank him for his
participation.
Senator Byrd. How is the PA system working?
I often comment, Mr. Chairman, that our country has been
able to put a man on the moon and bring him back to Earth
safely, but it has never been able to perfect a public address
system.
But you know, Mr. Chairman, I think there is a postscript
to that, if I might add. I am having great difficulty in
opening milk cartons. I follow the instructions to open on one
side, and I turn it around, and it says to press on both sides.
And I cannot get the darn thing to open.
So I think our country needs to work hard on producing a
milk carton that works.
Senator Burns. Senator, I suggest you get a bigger hammer.
Senator Byrd. Mr. Chairman, you are very kind to call on
me. I am an ex officio member, as you pointed out, but I want
to wait my turn and let the regular members have their turn. I
do appreciate your kindness. Thank you.
Senator Bennett. Thank you, sir, for your courtesy. Senator
Johnson.
Senator Johnson. Thank you, and I thank Senator Byrd, as
well, for his leadership and guidance and his courtesy here.
Congratulations to Chairman Bennett, and also thank you to
Senator Kohl for your leadership on this subcommittee. It has
been extraordinary and something that I have valued a great
deal.
Welcome, of course, to Secretary Veneman. The Secretary and
I played some telephone tag here this past week and I apologize
that somehow or another I was not able to quite get things
squared away that way. But the Secretary has been very
accessible and willing to sit down and work through issues, and
I am very appreciative of that.
Let me just, at the outset, make more of a comment than a
question. And that is as we review the President's fiscal 2004
budget proposal, I have to say that there are a number of areas
where I feel some concern.
PROPOSED ELIMINATION OF CERTAIN FARM BILL PROGRAMS
One is that the USDA budget would zero out a great many of
our rural development initiatives that Congress included in the
Farm Bill. This is a point of great concern to me.
Frankly, this zeroing out, I think, has largely to do with
making room for the President's massive tax cut which largely
will be borrowed in order to compensate for the cost. but also
will come out of the hide of other domestic programs.
Among those I am concerned about is the elimination of $200
million from the water and sewer grants to small communities at
a time when frankly, the backlog of communities at our doorstep
looking for help on these water and sewer issues is just
immense. These communities have virtually nowhere else to go.
PREPARED STATEMENT
Also the Value-added Development Grant Program, the
Bioenergy Program, and the Renewal Energy Program all wind up
zeroed out. And this is a source of great concern to me.
In my limited time, let me ask the chairman for consent to
submit a full opening statement, that is more comprehensive and
I want to expedite things by doing that.
Senator Bennett. Your statement will be included in the
record.
[The statement follows:]
Prepared Statement of Senator Tim Johnson
Thank you Chairman Bennett and Senator Kohl, I join you in
welcoming Secretary Veneman to discuss the President's Budget request
for agriculture in fiscal year 2004. Senator Bennett, congratulations
on your appointment as Chair of the Agriculture Appropriations
Subcommittee, I look forward to working with you. I want to briefly
outline some concerns about the U.S. Department of Agriculture's (USDA)
budget proposal for fiscal year 2004, then, discuss issues such as
implementation of the farm bill and disaster aid.
I am concerned that in order to accommodate the President's
proposed $726 billion tax cut, the Administration has made significant
cuts to critical programs that benefit farmers, ranchers, and all
American citizens.
Of greatest concern, the proposed USDA budget would zero-out many
rural development initiatives that Congress included in the farm bill.
Overall, the Administration is seeking $1.4 billion less for rural
development programs than 1 year ago. The cuts would result in the
following problems:
--$200 million would be eliminated from water and sewer grants to
small communities. These towns have nowhere else to go, and the
cuts will leave them with inadequate or no water and sewer
service;
--The Value-Added Development Grants program would be totally
eliminated;
--$50 million would be cut from the very successful Bio-Energy
Program which pays new and existing renewable fuel refineries
for purchasing corn, soybeans, and other biomass for renewable
fuel production;
--Funding would be prohibited under the new Renewable Energy program
in the farm bill.
Combining the cuts to the value-added program and the new energy
title in the farm bill, the Administration is suggesting that renewable
fuel production and other value-added agriculture development just
aren't very important when the exact opposite is true. Finally, I am
concerned that conservation programs would be reduced and a Rural
Firefighters grant program would be eliminated.
Once again, I am disappointed by these cuts and by the
Administration's priority for a $726 billion tax cut that would not
serve the interests of South Dakota and rural America, and I desire to
help restore some of the severe cuts made by this budget proposal.
I want to congratulate Secretary Veneman and her fine staff,
however, for a job well-done in implementing the new farm bill. I am
particularly proud the Farm Service Agency staff in South Dakota
virtually led the nation in farm bill sign-ups relative to updating
producer information for bases and yields. As the June 2nd deadline for
participation in the 2002 and 2003 direct and counter-cyclical program
nears, and a new CRP sign-up begins, I anticipate producer concerns
will arise and I encourage you to keep a watchful eye for these
implementation issues.
I am disappointed with the lack of seriousness the Administration
has taken with respect to the ongoing drought and its effect on
producers across the country. Suggesting the President will veto a $6
billion disaster package while at the same time pushing for billions of
dollars in tax cuts for the very wealthy is irresponsible policy and
sends the wrong message to hard working farmers and ranchers.
The $3.1 billion of disaster relief included in the fiscal year
2003 omnibus appropriations bill, shortchanged nearly every producer
who has suffered substantial losses from the drought. Livestock
producers in South Dakota, who received a minimal assistance in 2002,
can expect little if any further assistance as they enter into the
third year of severe drought. It is simply unrealistic to expect
producers to recover from the losses they have endured without any
real, comprehensive assistance.
On February 20, 2003, the President signed the Agricultural
Assistance Act of 2003 into law. Yet, producers have received no
indication from USDA when the $250 million for the Livestock Assistance
Program (LAP) will be made available to them. It is my hope that at the
conclusion of today's hearing, I will have a commitment from you to
release the $250 million for LAP in the very immediate future.
Further, I'm troubled by the new feed assistance program you
announced on April 8th, 2003 that excludes over three-fourths of the
counties in South Dakota at the same time the drought continues and
feed supplies have been nearly depleted. While it is true many parts of
South Dakota have received timely rains in the last 2 months, it
doesn't make up for a serious lack of meaningful precipitation in the
last 2 years. These producers may need additional help to cope with the
drought.
Finally, I want to comment on USDA's role to implement the
mandatory country-of-origin labeling (COL) provision for meat, produce,
fish, and peanuts contained in the farm bill. Madam Secretary, the
livestock producers I represent believe passage of COL may be the most
important law enacted since the adoption of the Packers and Stockyards
Act of 1921 they want it to work.
Nevertheless, the Bush Administration and USDA have made it clear
that you oppose the mandatory COL law that I and others successfully
attached to the farm bill. I am very disappointed about the signals
that USDA and others have been sending regarding COL. Recent testimony
from USDA Undersecretary Hawks says, ``the new labeling requirements
will not have a positive effect overall and the potential impact on
trade and the unintended consequences on producers could be
significant.'' USDA issued cost estimates that were excessively high
and have since been refuted. Documents from USDA indicate that you only
consulted with three persons outside USDA to make the overblown cost
estimates, and those persons were lobbyists for organizations that
oppose labeling. Recently, you sent me a letter indicating it was not
just three, but rather twenty-nine organizations that USDA consulted
concerning COL costs I would like to know the twenty-nine groups to
identify how many of them were consumer and/or producer groups
supporting COL.
The negative statements about COL from the Administration cause me
great concern with regard to the credibility and the agenda of USDA in
the implementation process. I had a substantial part in writing the COL
provision of the farm bill. We intend for consumers to be informed
about where food comes from and for USDA to use existing programs to
implement the program (i.e. USDA quality grading system, school lunch
program, Certified Angus Beef program, current voluntary program for
the California producer using a ``Born and Raised in the USA'' label,
and HACCP among others).
None of those programs requires third party verification. Yet, in
your voluntary guidelines for voluntary COL, USDA suggests that self
verification is not sufficient, implying that an expensive third party
verification system is required. I did not intend that result, there is
no language in the law to support that interpretation, and none of the
existing programs set forth as examples for your agency require it. I
encourage USDA to re-examine the logic behind negating self-
certification, I also hope USDA will analyze how to reduce costs of COL
by tracking only imports of livestock.
Further, USDA has never recognized or studied the benefits of COL.
However, a study by five university law professors and economists was
released yesterday by the University of Florida saying that the
benefits for selling beef alone were almost $6 billion because
consumers are willing to pay for labeling because they desire it so
strongly. $6 billion for beef alone! That does not include the consumer
willingness to pay for labeling of pork, lamb, fruits, nuts, fish or
vegetables.
The report also indicates USDA's suggestion that COL will cost $2
billion is overblown and based upon errors in legal and economic
assumptions. The University of Florida report estimates the cost of COL
is more likely in a range between $70 million and $200 million,
depending upon the implementation system employed. The economists
writing the report believe USDA can implement COL at a cost of less
than one cent per pound of food covered by the law. That is very
inexpensive. Importantly, the report indicates consumers are willing to
pay a premium for beef with a COL. That does not mean I believe COL
will increase the cost of beef I am not sure it will.
The food industry currently keeps voluminous records on each and
every unit of product in their supply chains. COL should not require an
expensive new record keeping system for those involved in the process.
The law professors and economists in the Florida study also said that
the most inexpensive means of implementing the labeling law was to
recognize the on-the-ground fact that the vast majority of U.S. product
is produced and processed in the United States and that the USDA should
presume that all product comes from the United States while tracking
existing marks of origin that are already on virtually all relevant
food products coming in to the country.
I want to believe you will carry out the law as intended by
Congress and that it is done so as to minimize cost, record keeping
requirements, and other regulatory burdens. I have directed my office
to work in good-faith with your staff and USDA to ensure the COL law is
implemented in a common sense fashion. I have confidence in the staff
at the Agricultural Marketing Service that they will write a reasonable
final rule upon which to base COL implementation.
Thank you for holding the twelve COL listening sessions across the
country and I appreciate the time that USDA will need to put into this
law to make it work. I encourage USDA to review this thorough cost-
benefit analysis from the University of Florida and use it as you
develop the final rule to implement COL. I hope that USDA will be able
to focus on the benefits of labeling, the fact that nearly thirty major
trading partners already have COL, the fact that the United States has
not issued a WTO challenge against another country's COL law, and that
every major consumer and agriculture group in the United States
supports COL.
Madam Secretary, I appreciate you taking the time to appear before
this subcommittee. You have been quoted describing USDA's budget for
fiscal year 2004 as ``constrained,'' and I look forward to working
together to reconstruct some of the important initiatives reduced or
cut by the budget.
Mr. Chairman, thank you, I conclude my remarks and look forward to
asking Secretary Veneman questions.
COUNTRY OF ORIGIN LABELING
Senator Johnson. Let me focus on one issue that is, I guess
tangentially involved with the budget, at least, but a matter
of great concern to me. And that, Madame Secretary, as you know
there is a widely held and growing view across much of America
that the Department of Agriculture is teaming up with the
packers to sandbag country of origin labeling for meat. There
is a sense among many of my producers that USDA is consciously
seeking out ways to complicate such a program and to cause it
to be far more expensive than need be.
Now whether those views are legitimate or not, they are
widely held. I appreciate the listening sessions that USDA has
been having, and I know that people with greatly diverse views
have shared their views with you. And I think those listening
sessions no doubt will be of some value.
But it seems to me that a workable efficient country of
origin labeling program for meat, and obviously the law applies
to fruits and vegetables as well, is not rocket science. Many
other countries already do this. It has been pointed out to me
that under Article 9 of GATT, live cattle entering the United
States can be marked as to the country of origin so long as the
mark does not discriminate against, materially reduce the value
of, or unreasonably increase the cost of the imported item.
Indeed, last year the United States imported 800,000 calves
from Mexico and most of these calves were branded with an M to
differentiate them from domestic cattle. The practice is in
compliance with Article 9.
Several organizations have made a very compelling case to
me that one way to reduce the implementation and tracking costs
associated with country of origin is to have USDA require
markings similar to what already is done with imports of
Mexican cattle on all imported livestock. The rationale is that
tracking these markings on imports will reduce overall cost for
implementation.
I believe the costs associated with tracking only imported
animals for country of origin implementation is a common sense
approach to pursue, which is permissible under the law, and
which would reduce implementation costs because imported
livestock are already marked as such.
The law that we passed forbids third party verification.
And as you know, there are mailings going out as we speak from
some of the packers raising questions and fears among livestock
producers that what USDA is going to do is to require expensive
recordkeeping and alternative methods which would, in effect,
destroy the credibility of the entire program.
And so my question to you is to what extent has USDA
analyzed Article 9 to determine how to implement country of
origin labeling? Does it have a position on using this as a
rational to track only imported animals? And do you agree that
virtually all imported covered commodities are currently marked
as to country of origin, and that such marks are specifically
allowed under GATT and WTO?
In general terms, the United States only imports around 2
million head of live cattle but slaughters 28 million head.
Obviously, obviously of most of the cattle we slaughter are of
U.S. origin. It does it not make sense to the USDA that
tracking the 2 million imported cattle would be less costly
than keeping track of 28 million that are born and raised in
the United States?
Secretary Veneman. Mr. Johnson, I appreciate your question
because, as you indicate, this has been a very controversial
provision in the Farm Bill, one that was controversial as it
was discussed in the context of the Farm Bill, and one that the
Administration did not support. But as it was passed in the
Farm Bill, we have worked to implement what the law has
required.
We announced the voluntary program last fall, as was
provided in the law. That voluntary program then became the
framework from which we have begun to discuss a proposed rule
for the mandatory program that the law requires us to implement
by 2004.
There is a lot of controversy surrounding this provision,
particularly as you point out with regard to livestock, because
the law does require that livestock be born and raised in the
United States, and the retailers and the packers, to some
extent, are concerned about how do they ensure that. So, we
decided, as you mentioned, to have these listening sessions
around the country. And I think, by all accounts, they have
been very helpful in helping to identify some of the issues
that have come up with trying to implement a Country of Origin
Labeling program that will be workable for the long-term.
As we pointed out, this is not an easy program to
implement. We pointed that out in our Statement of
Administrative Action. We certainly want to get all of the
information from these listening sessions and from the comments
that we received on the voluntary rule, before we put forward
the proposed rule.
But as we move forward, this program is something that has
been difficult to implement and is of increasing concern to
many of the producer groups. As I go around the country, I am
hearing more and more from the meat producers themselves. They
indicate that they would like to see this remain as a voluntary
program. But, we cannot do that without a Congressional change.
Senator Johnson. The reason you are hearing that is because
they are scared to death of extraordinarily bureaucratic, red-
tape filled, expensive recordkeeping requirements that the
packers are telling them USDA is going to require. And so that
is, I think, the resistance you are finding from the producers.
I think they support the concept of country of origin labeling,
that our consumers deserve to know the origins of the products
they feed their families. But what they are worried about is
this threat that USDA and the packers are going to team up on
them and create a monumental red tape problem and recordkeeping
problem.
What we need from you is assurances that you are not only
going to implement this program, but that you are going to seek
out ways which will minimize the cost and minimize the
recordkeeping. One of the suggestions is to follow the model
that we already do on imported livestock. But there may be some
other things that you can do, as well. I think that is the
thrust of what I hear from livestock producers around the
country.
Secretary Veneman. We are doing everything we can within
the law. The problem is that the law is very specific on
country of origin labeling, in terms of what USDA can and
cannot do. I have discussed this extensively with our legal
counsel and I am told that the way we are looking at this and
implementing it is in accordance with what the law requires.
Senator Johnson. And I would only conclude that among the
things the law requires is that there not be third party
verification requirements for every animal in the country.
Secretary Veneman. I understand that.
Senator Johnson. And that self-verification is indeed what
we do in many other labeling circumstances, whether it is
school lunch programs and all kinds of other things, Black
Angus, you name it. There is nothing new about this. And that
self-verification or some variation on that is indeed one of
the opportunities that USDA has, would be within the law, in
fact is required by the law.
So I thank you for sharing your thoughts with me on this
and I know that there are other members here who want to go on.
If I may, I have a number of other questions on this and
some other issues. And if you would be so kind, I would submit
those to the Department in writing for your response.
Secretary Veneman. We would be happy to work with you on
that.
Senator Johnson. Thank you very much, Madame Secretary.
Senator Bennett. Senator Cochran, who is responsible for my
being here. Happy to hear from you, sir.
Senator Cochran. Mr. Chairman, thank you very much.
Madame Secretary, welcome to the committee. We appreciate
your presence but more especially your good assistance in the
efforts to implement the Farm Bill and to assist us as we work
to reauthorize the child nutrition programs.
FSA STAFFING LEVEL
One specific responsibility that we have is getting the
Farm Service agencies staffed and carrying out their
responsibilities to conduct the signups. I wonder if you could
give us a report on the status of that and whether or not this
budget contains sufficient funding to staff these offices and
give them the equipment and the other things they need to carry
out the intent of the Congress as reflected in the Farm Bill?
Secretary Veneman. Senator, I appreciate the question and I
appreciate your compliments on the Farm Bill implementation. I
must say that our team has worked extraordinarily hard on
implementing the Farm Bill with Keith Collins and Scott Steele
and Hunt Shipman, before you stole him away. And we appreciate
the working relationship that we have with your Committee on
the work that we are doing on the reauthorization of the Child
Nutrition Programs.
When the Farm Bill was passed, the Department asked for, I
believe, $110 million in implementation money. We received just
over $50 million. Additional money was provided in the 2003
appropriation, which gives us the ability to hire some
additional staff.
But I have to say, we have done extraordinarily well under
the circumstances with the staff we have. We have got over 90
percent of the signup completed. It is nearly complete. We are
in the middle of the CRP signup in addition to the disaster
assistance program and so forth.
The other things that we are trying to do is to incorporate
more and more new technologies that will allow us to better
serve our farmers and ranchers with online forms that are
understandable and usable, and access to all of the maps. We
are trying to get all of the maps, both for the Farm Service
Agency and NRCS digitized and onto the computer, which, we
believe, will make it much easier for both the delivery of
programs as well as the utilization of them by farmers.
So as we move forward, I think it is important to recognize
what an extraordinary job our Farm Service Agency people and,
our NRCS people have done, as we have implemented this Farm
Bill. And we will continue to work to make sure that we have
the tools necessary to carry out these programs.
But we do believe that we have budgeted for an appropriate
number of additional staff as we go forward because once we get
beyond the initial signups, obviously the workload will change.
FOOD SAFETY TRAINING INITIATIVE
Senator Cochran. One of your other high priorities is food
safety. You have taken steps to improve the food safety system.
In your statement you suggest that inspectors are the backbone
of our food safety system. Could you tell us about your
training initiative and how this will improve the food
inspection system?
Secretary Veneman. We feel very strongly that we need to
continually find ways to enhance our training for our food
safety inspectors. In the mid-1990s, the Department implemented
HACCP. We want to make sure that we have the best possible
training under this relatively new methodology. We are
conducting food safety inspections to make sure that training
is up to date and appropriate for our inspectors and that they
fully understand how to inspect for and implement HACCP. So we
have asked for additional money in our budget for food safety
training.
I might add that this has been something that has been
strongly supported by the industry groups, the processors
themselves, consumer groups, as well as our Department. We want
to work together to enhance the training programs that are
available to our inspectors and we are working hard in FSIS to
do that.
Senator Cochran. We noticed that a recent report from the
National Academy of Sciences entitled Scientific Criteria to
Ensure Safe Food concluded that the HACCP inspection system's
progress in reducing food-borne illness is, and I quote,
``decidedly favorable.''
Do you agree with the findings in this report?
Secretary Veneman. We agree with much of what was in that
report and there are things that we do not agree with. We are
going to have a more formal response to the report. But there
are findings that we certainly do agree with.
There were some questions in that report about whether or
not we had legislative authority to enforce performance
standards. We continue to use performance standards in our
plants, and in our HACCP reviews. We are also using them to
evaluate issues in plants to determine whether or not we need
to do further inspections.
So that report does have a lot of very good information but
we have not had a formal response to it as yet.
Senator Cochran. Mr. Chairman, thank you very much for your
recognition.
Senator Bennett. Thank you, and thank you for giving me
this opportunity when you moved from this committee to the
Homeland Security Committee.
We should take note, as the first hearing without Senator
Cochran, of his service as both chairman and ranking member of
this subcommittee for a number of years.
Senator Harkin.
Senator Harkin. Thank you very much, Mr. Chairman. Madame
Secretary, welcome again.
CONSERVATION SECURITY PROGRAM
I would like to, if I might in my limited time, I have two
or three items. I hope to get through them in this round, if
not maybe another round. But the most important thing I would
like to discuss with you is the Conservation Security Program
that was included in the 2002 Farm Bill.
As I have said before, this program is consistent with the
goals that were spelled out in your farm policy book. When the
President signed the Farm Bill into law, he specifically
pointed to conservation as one of the major provisions of the
Farm Bill.
There is strong nationwide interest in making sure that CSP
is implemented soon and correctly. Congress set funding for CSP
at $3.773 billion in the Omnibus Bill, not at the $2 billion
level included in the President's budget. So there is no basis
anywhere for the $2 billion in any law ever passed by Congress.
So I am asking if you can commit that the Department will
move ahead and issue regulations based on delivering the full
$3.773 billion to producers that was in the Omnibus Bill? Will
that form the basis of your regulations? That figure, rather
than $2 billion?
Secretary Veneman. Currently, we are looking at the 4,500
comments that we received in response to the Advanced Noticed
of Proposed Rulemaking in the formulation of this program. This
has been an extraordinarily complicated program to implement
with a number of questions that need to be answered.
One of the things you said is that we want to make sure
that we do it correctly. We are absolutely in agreement that we
want to do this program right because there was a lot of
questions that we needed to have answered, so we went out with
this request for comments. It is an extraordinary number of
comments that we have gotten in.
The $3.773 billion that was included in the fiscal year
2003 budget, I believe, is a number that authorizes up to that
amount in terms of expenditures for this program. The
President's budget does include a $2 billion figure for 2004
and that number, of course, was proposed before the 2003 budget
was enacted. We had an unusual situation this year, in that we
developed the fiscal year 2004 budget without a 2003
appropriation.
I cannot commit to a number today, but I do recognize that
the 2003 Omnibus does allow the program to spend up to $3.773
billion. It does not mandate, as I understand it, the spending
$3.773 billion.
Senator Harkin. Let me try it again.
I understand what you are saying about the budget came up
before the Omnibus. I understand that. I am just saying that
the law that we passed, signed by the President, allows funding
for CSP at the $3.773 billion level.
All I am asking, and I am going to get into the rules here
in a little bit and the Advance Notice of Proposed Regulations.
I am just asking that in your implementation, as we move ahead
this year, because I hope we are going to be signing up people
this year, will it be based upon the full $3.773 billion? Or
will it be based on $2 billion or something else? What will it
be based on?
Secretary Veneman. We are still working on the regulations
and what they will ultimately be. But what we want these
regulations to do is to be based on principle, not a level of
funding. We want to get the principle and the program right.
It is going to be very difficult to develop a regulation
that promises to spend an exact amount of money. We want to get
the principles right so that they comply with the level of
funding authorized for the program.
Senator Harkin. Principles. Do you agree, Madame Secretary,
that the principle that we are operating under for the
Conservation Security Program, the principle is written in
statute? That statute is the Farm Bill. And, as written, as a
statute, it is a mandatory open-ended program. Do you agree
with that? As written in statute.
Secretary Veneman. It is a complicated budget issue because
there are certain budget scores that have been attached to it.
So it has certainly been limited by what the Congress has
specifically passed.
Senator Harkin. I agree that there is a cap of $3.773
billion. But the statute provides it as a mandatory open-ended
program. It is just that the Omnibus Bill put a cap on it. I am
talking about principles now. The principle that we are
operating under is an open-ended mandatory program. Is that
right or not? That should be very straightforward.
Secretary Veneman. As far as I understand it, that is
correct.
Senator Harkin. Thank you.
So that, again, if farmers do the work, the conservation
work, to earn up to the $3.773 billion, then they should not be
denied access to that money. That is how the law is written. At
least that is how the law is written with the cap that we put
on it. Now I am working to get the cap removed, as you know.
But I am just talking about what you have to deal with right
now.
Secretary Veneman. I would agree that the fiscal year 2003
law allows us to implement the program and use up to $3.773
billion.
Senator Harkin. Thank you.
I understand that you have got 700 letters that had up to
4,500 comments, but a lot of these comments were involved in
the letters. And I understand that you did get a big response.
And again, I do want to say that in February I met with
Secretary Moseley and Mr. Collins, Ms. Waters, and Mr. Knight.
We had a very good meeting on this in the Capitol. I understand
full well the problems of moving ahead with this. It is a new
program. I was more than willing to overlook the fact that the
Farm Bill stipulated 270 days for final rules. I understand
that. Fine, we move on beyond that.
But what I want to ask now is you had 700 letters that came
in. A lot of those came in early, so you have had at least a
month or so to look at them. I am not certain that there is 700
different points of view. There are just 700 letters came in.
I think perhaps a lot of them have the same points of view
on it. This does not mean you have to look at all the different
ones.
I know that you have been working on this, but I want to
know when can we expect that we are going to have the final
rules promulgated? And will USDA meet its goal of having sign
up this year, this fiscal year?
Secretary Veneman. We are doing everything we can to get
these comments reviewed in order to put in place a proposed
rule. We believe it is important to issue a proposed rule
because of the complexity of this. As you know, there are a
number of review processes that occur with these rules and we,
in the Department, have worked very hard to get our Farm Bill
rules out as quickly as possible. It also depends on external
forces like how quickly things get through OMB, as well.
I believe that when the USDA representatives met with you,
they did present you with a time line. We are still working
under the time line that was presented to you.
Senator Harkin. Correct me if I am wrong, Jim, but I think
the time line was to try to get the final rule sometime towards
the end of the summer so that we can have sign up before the
end of the fiscal year.
Mr. Moseley. Yes, that is correct. When we met that was the
discussion we had. And that would still be a reasonable time
frame.
As the Secretary pointed out, though, when you get involved
in these things, you find out there are more hoops to jump
through than you anticipated. If we could control everything,
that would be reasonable. But, we cannot control everything. So
we are moving along and trying to process this is quickly as we
can.
As I stated to you that day, there is no, absolutely no
intent on the part of USDA to slow down the adoption of CSP. We
think, in principle, it has some things that farmers want. And
so we are moving forward as quickly as we can.
At the same time, as the Secretary has pointed out, and you
and I have discussed, this is a very complicated piece of
legislation. There are a lot of views and opinions out there
and I hear them all the time from farmers when I travel.
Trying to bring all of that information together and to say
that this is the best way to proceed is not a simple process.
As I pointed out to you that day, the most important thing
is to get it right. We would like to get it right soon and
quick. But those two things, quick and right, may not
necessarily be compatible.
I think the important thing and the message that I would
share is that there is no intent on the part of USDA to slow
this down at all. We are trying to keep this on track and get
this out.
Senator Harkin. As I said once before, I think, to the
Secretary, I am not aiming at you. I am talking to you but I
think the aim may be at something called OMB. I have detected
that the Department is interested in this. You are moving
ahead, but my senses pick up that there is some hanky-panky
going on at OMB that are really, Mr. Chairman, trying to
misinterpret the law as we wrote the statute. I do not think it
is at the department level but I think it is at OMB.
So I might be pointing the questions at you but really I
think my remarks are probably more applicable to OMB.
Thank you very much. Again, I appreciate your working with
us. Senator Smith and I wrote you a letter, and I hope you will
look at that because we took a lot of care and time in looking
at how we had envisioned this program and how we brought it
through the Farm Bill. So I hope you will take look at those.
Mr. Moseley. We will do that.
Senator Harkin. Thank you. Thank you, Mr. Chairman.
Senator Bennett. We have been joined by the chairman of the
full committee. Senator Stevens, we appreciate your
participation.
CONSERVATION SECURITY PROGRAM
Senator Stevens. Thank you very much.
I am glad I came in during that discussion because, Madame
Secretary, I do want to have a discussion with the Senator from
Iowa and you about what the Senator from Iowa just said.
I do not envision the program he mentioned to be an
entitlement that is unlimited. We did put a cap on it. As a
matter of fact, I think we ought to have a review of that
program. I know of no other program in the country where a
landowner can make what he or she considers to be conservation
improvements and automatically get totally repaid for the cost
of those improvements without any limitation, without any kind
of restriction at all.
I am opposed to entitlements in appropriations bills. I am
opposed to the concept that we can have, named through the
appropriations process, a type of program that we do not have
the right to control or limit.
I want to put some limits on that and I want to know who is
getting that money. Are people that have 10,000 acres getting
it? Or is it a 160 acre limitation? What is it?
I think it needs some better definition. And it certainly
does not amount to what the Senator from Iowa said, to a
program where everybody is entitled to money without regard to
the amount of money we put up. You have a limit, and I want to
see that limited.
We are facing considerable opposition to a lot of the
moneys which we should be appropriating for conservation
programs in other areas. And to have an agricultural
entitlement in an appropriations bill, I think, is wrong.
I would just make that statement. I am not here to have a
debate. But I do want to go it in the future.
I am sure Senator Byrd is doing what I am doing. We have
got several appropriation subcommittees meeting this morning
and I would ask that the questions I do not have time to ask be
submitted to the Secretary for a response.
Senator Bennett. Without objection.
SALMON PRICES
Senator Stevens. But I have two specific issues. One is
very close to the heart of all of the people in the North
Pacific. We have a problem with regard to salmon prices,
primarily because of the enormous amount of imports now that
are coming in from Chile and from other countries.
The questions I am filing are about the programs we have
instituted, organic seafood and country of origin labeling. I
would be happy to have your response to those.
But right now there is a half million cases of canned
salmon in warehouses in Seattle. They are not owned by my
constituents. They are owned by the people in Seattle. But the
fact that they are there is an overhang on the market so that
the prices for salmon this year are really endangered.
We specifically included language, at the request of the
Senators from Washington and myself, to give the Department the
authority to purchase surplus salmon products.
I was recently informed that your Department people have
told us that there were not funds for those purchases. We
thought there was money for purchase of surplus foods. This is
the first time salmon has been included in that category. But
you have enormous amounts of money to purchase surplus foods.
Why can't you use that for the purchase of this salmon and make
it available under the food program?
Secretary Veneman. Senator, we do have money for purchases
of surplus foods. We have been purchasing surplus foods just in
the last few weeks. And we do have salmon under active
consideration, as I understand it.
Senator Stevens. This is about the best buy in the country.
Canned salmon is probably the most beneficial food that a woman
can eat because when salmon is canned, the bones are calcified
and it is the highest level of natural calcium in the world, in
any food.
But as a practical matter, until that salmon is taken off
the shelf, they are not going to buy any salmon this year. And
it is a result of the recession and the economic conditions.
But I would urge you to use your authority to remove that
impediment to the purchase of salmon this year. If those cases
stay there, there will not be any salmon canned this year. I
would just make that request.
DISTANCE LEARNING GRANTS
Secondly, our committee included $15 million for a distant
learning account to help rural public television stations meet
the Federally mandated deadline, which is this month, to
convert from analog to digital broadcasting. The exact language
is $15 million in grants for public broadcasting systems to
meet that goal of digital conversion.
Now, the House specifically agreed to that in conference.
But I am now told that your staff has advised us that the
Congressional intent is not clear. I do not know how much
clearer we can have it. It is a very short statement.
It was the Senate committee who vote that provision and
those grants are to public broadcasting stations to allow them
to install the digital translators that are necessary to send
digital broadcast signals to rural America. They have a
deadline of this month. There are over 100 translators in
Alaska alone. The money is not solely for Alaska, but it is for
the country.
We hope we will get additional money in 2004. What this
means is that some of the broadcasting systems will no longer
get public funds if they do not meet the requirement of being
able to specifically deliver the digital signal along with the
analog.
We hope that they will all become digital soon but those
that remain that have some analog capability must show that
they have digital capability to continue to get assistance from
the public broadcasting system. This money was to your
department to help rural public television stations.
Could you tell me why you cannot proceed?
Secretary Veneman. Mr. Chairman, I will look into this
issue for you. As I understand it, there may be some argument
with the lawyers here. And I will commit to you to look into
this and get back to you as quickly as possible.
Let me say this, though. We have been strong proponents of
using our rural development programs and expanding them for
technology advances for rural America. We think that is
important. If rural America is going to compete in the 21st
century, they cannot be left behind with regard to the
technology infrastructure.
So I agree with you that these kinds of issues are very
important as we move forward.
I will commit to you that we will get back to you as
quickly as possible on what the potential issues may be with
regard to this $15 million. But I do understand your sense of
urgency and we will work on this immediately.
Senator Stevens. Just to make sure what happened, we
started out with the $15 million. The House did not have that.
But in the conference we had $42.813 million for distance
learning and telemedicine grants and grants to broadcast
digital signal for conversion.
So the $15 million does not stand there all alone but is
part of the larger sum. And we specifically, in the law, said
it was for the digital signal conversion.
I hope that you will look at it and I hope you will
recognize the deadline these people are under, which is the end
of this month.
Secretary Veneman. I understand your concern and we will
look at it immediately.
Senator Stevens. I am sorry to come in so quickly and get
out, but thank you very much. Mr. Chairman, I thank the
committee for its courtesy.
Senator Bennett. Thank you. Senator Byrd.
Senator Byrd. Thank you, Mr. Chairman.
I also want to thank my colleague, Senator Stevens, the
chairman of the full committee, for his contribution today.
By the way, his charming daughter Lilly is going to receive
a bachelor's degree in history from the University of Stanford
within a short time. I know how proud Senator Stevens is of
this fine young woman, and he has every reason to be. She is,
likewise, so proud of him. He is the idol of her eye.
HUMANE SLAUGHTER INSPECTORS
Two years ago The Washington Post detailed the inhumane
treatment of livestock in our Nation's slaughterhouses. The
Humane Methods Slaughter Act of 1978 stipulates that cattle and
hogs are to be stunned prior to their slaughter, rendering them
senseless to the pain.
However, as the article revealed, many slaughterhouses do
not abide by the humane practices outlined in the Federal law.
Thus, unimaginable pain is forced upon these defenseless
animals. They cannot speak. They cannot tell us to be merciful.
In the fiscal year 2003 Omnibus Appropriations Bill, $5
million was secured for the hiring of at least 50 new humane
slaughter inspectors within the Food Safety Inspection Service
at the USDA. The report language in that bill instructed these
new inspectors to work solely on the enforcement of the Humane
Slaughter Act.
Prior to the $1.25 million that I added to the fiscal year
2001 Supplemental Appropriations Bill for the hiring of 17
District Veterinary Medical Specialists at the Food Safety
Inspection Service, there was not a single USDA inspector
employed exclusively for the purpose of enforcing the Humane
Slaughter Act. Not one.
In the book of Proverbs, it is written that a righteous man
regardeth the life of his beast. We are stewards of God's
creatures and, as stewards, we are called to treat all animals
with kindness, empathy, and a merciful spirit. At least, our
domesticated animals.
Despite the laws on the books, chronically weak enforcement
and intense pressure to speed up slaughterhouse assembly lines
reportedly have resulted in animals being skinned, dismembered,
and boiled while they are still alive and conscious.
Due to the late date on which the fiscal year 2003 Omnibus
Appropriations Bill was signed into law, language in the bill
permitted the funding for inspectors to be used into fiscal
year 2004. What is the intention, Madam Secretary, of the USDA
with reference to the hiring of at least 50 new humane
slaughter inspectors with the funds that were provided?
Secretary Veneman. Senator, I certainly appreciate your
strong interest in this issue and share your concern for the
humane slaughter of animals. As you indicated, we have, in the
last couple of years, hired 17 new district veterinarians to
work on these issues. I have recently talked with my staff in
the Food Safety and Inspection Service about their
implementation progress with regard to this $5 million and the
50 humane slaughter inspectors.
We are in the process now of defining exactly how the
position descriptions would be put together and how we would
proceed with hiring additional people.
I had a question from Senator Cochran earlier, about our
training initiative. We have in this 2004 budget, a training
initiative for our food safety inspectors. As part of that
training initiative, there will be additional training on
humane slaughter for the personnel that are in the plants
because it is important that they are cognizant of the humane
slaughter practices in the plants. So we are working on this
from a number of different perspectives.
I noted also that there was an L.A. Times article on this
issue just about a week or two ago talking about the progress
that has been made in humane slaughter. An independent
consultant said that in 1996 just 36 percent, according to her
studies of the beef plants, had effectively knocked out the
cattle before slaughter. Last year her statistics showed that
94 percent of the plants were doing it properly.
This is an outside study that was reported in the press,
but it is something I think shows some progress in this area on
an issue that I know is of great concern to you, sir.
Senator Byrd. Madam Secretary, I am astonished. You did not
answer my question. Let me repeat the question.
What is the intention of the USDA with regard to hiring at
least 50 new humane slaughter inspectors with the funding it
has been provided? That is a straightforward question, and I
would hope that we would get a straightforward answer.
Secretary Veneman. Sir, I thought I did answer your
question.
Senator Byrd. No, you did not. With all respect, I do not
want to appear to be discourteous but I listened carefully. Why
don't you answer that question?
Secretary Veneman. As I think I said, we are in the process
of working on the position descriptions to comply with
implementation of this particular provision in the 2003 bill. I
will be glad to get you a more complete description of how we
intend to carry this out. But this was a provision that was
just recently passed. Our folks are working on the details of
how we intend to implement this initiative and carry forward
with the hiring. We will work to brief you or your staff on the
specifics or get you written information on that.
Senator Byrd. We have talked about this before. And with
all due respect, I heard you say that you recently met with
your staff and discussed this.
We talked about this a year ago. I think we talked about it
2 years ago. Here is what the language says in the omnibus
appropriations conference report, dated February 13, 2003.
The conference agreement includes $5 million to remain
available through fiscal year 2004 to hire no fewer than 50
FTEs for enforcement of the Humane Methods of Slaughter Act
through full-time antemortem inspection, particular unloading,
handling, stunning and killing of animals at slaughter plants.
Now how many do you have on board? How many of these
inspectors do you have on board at this time?
Secretary Veneman. My understanding is none, sir. We are
still in the process of developing these positions. Again, this
has been a relatively short amount of time since this provision
was implemented or signed into law but we are working to
implement this provision of the 2003 Omnibus bill.
Senator Byrd. This is not something new, and the very
distinguished Secretary knows that, because I added $1.25
million to the fiscal year 2001 Supplemental Appropriations
Bill. At that time, there was not a single USDA inspector
employed exclusively for the purpose of enforcing the Humane
Slaughter Act.
I am really surprised that we have to talk about this a
second time. I was very, I thought, serious in my discussion of
this last year with the Secretary. How many are on board at
this time?
Secretary Veneman. We have the 17 on board that were hired
previously. As I mentioned earlier, we do have 17 district
veterinarians who are overseeing the issue of humane slaughter.
The issue of the 50 new additional inspectors is still, as I
indicated, being reviewed in our Department to determine the
position descriptions. My understanding is that these are 50
FTEs for enforcement activities but are not necessarily
veterinary personnel.
Senator Byrd. That is right.
Secretary Veneman. And so it is a different position
description than the 17 that we have previously hired. We are
in the process of developing this program to effectively carry
it out as specified in the conference report.
Senator Byrd. How long does it take? The suffering of these
animals is going on.
Let me read this conference report just a bit further. It
mentions the 17 District Veterinary Medical Specialists. It
says the conferees also support the ongoing activities of the
17 District Veterinary Medical Specialists and expect that
their mission be limited to HMSA enforcement.
So aside from those, the conference report includes $5
million to remain available through fiscal year 2004 to hire,
no fewer than 50 FTEs for enforcement of the Humane Methods of
Slaughter Act.
Do you not think that there is a responsibility to pursue
the course set out by the Congress, through the workings of its
two Appropriations committees in the Senate and the House,
respectively, according to their instructions in the conference
report that was issued in February? Do you not think that the
Department has a responsibility to follow-up on this, and to do
it quickly?
There is a manifest need, a great need, for these
inspectors. I called attention to it last year and I have done
it again today, most respectfully. I have called attention to
The Washington Post articles.
Mr. Chairman, I ask unanimous consent to include in the
record two articles here, one entitled, ``An Outbreak Waiting
to Happen,'' and the other entitled, ``Big Mac's Big Voice in
Meat Plants.''
Senator Bennett. Without objection, they will be included.
[The information follows:]
[From the Washington Post, April 10, 2001]
Big Mac's Voice in Meat Plants
Never mind the bad old days, when slaughterhouses were dark places
filled with blood and terror. As far as the world's No. 1 hamburger
vendor is concerned, Happy Meals start with happy cows.
That was the message delivered in February by a coterie of
McDonald's consultants to a group of 140 managers who oversee the
slaughter of most of the cattle and pigs Americans will consume this
year. From now on, McDonald's says, its suppliers will be judged not
only on how cleanly they slaughter animals, but also on how well they
manage the small details in the final minutes.
Starting with cheerful indoor lighting.
``Cows like indirect lighting,'' explained Temple Grandin, an
animal science assistant professor at Colorado State University and
McDonald's lead consultant on animal welfare. ``Bright lights are a
distraction.''
And only indoor voices, please.
``We've got to get rid of the yelling and screaming coming out of
people's mouths,'' Grandin scolded.
So much attention on atmosphere may seem misplaced, given that the
beneficiaries are seconds away from death. But McDonald's, like much of
the meat industry, is serious when it comes to convincing the public of
its compassion for the cows, chickens and pigs that account for the
bulk of its menu.
Bloodied in past scrapes with animal rights groups, McDonald's has
been positioning itself in recent years as an ardent defender of farm
animals. It announced last year it would no longer buy eggs from
companies that permit the controversial practice of withholding food
and water from hens to speed up egg production.
Now the company's headfirst plunge into slaughter policing is
revolutionizing the way slaughterhouses do business, according to a
wide range of industry experts and observers.
``In this business, you have a pre-McDonald's era and a post-
McDonald's era,'' said Grandin, who has studied animal-handling
practices for more than 20 years. ``The difference is measured in
light-years.''
Others also have contributed to the improvement, including the
American Meat Institute, which is drawing ever-larger crowds to its
annual ``humane-handling'' seminars, such as the one in Kansas City.
The AMI, working with Grandin, issued industry-wide guidelines in 1997
that spell out proper treatment of cows and pigs, from a calm and
orderly delivery to the stockyards to a quick and painless end on the
killing floor.
But the driving force for change is McDonald's, which decided in
1998 to conduct annual inspections at every plant that puts the beef
into Big Macs. The chain's auditors observe how animals are treated at
each stage of the process, keeping track of even minor problems such as
excessive squealing or the overuse of cattle prods.
The members of McDonald's audit team say their job is made easier
by scientific evidence that shows tangible economic benefits when
animals are treated well. Meat from abused or frightened animals is
often discolored and soft, and it spoils more quickly due to hormonal
secretions in the final moments of life, industry experts say.
``Humane handling results in better finished products,'' AMI
President J. Patrick Boyle said. ``It also creates a safer workplace,
because there's a potential for worker injuries when animals are
mishandled.''
Not everyone is convinced that slaughter practices have improved as
much as McDonald's surveys suggest. Gail Eisnitz, investigator for the
Humane Farming Association, notes that until the past few months, all
McDonald's inspections were announced in advance.
``The industry's self-inspections are meaningless,'' Eisnitz said.
``They're designed to lull Americans into a false sense of security
about what goes on inside slaughterhouses.''
But Jeff Rau, an animal scientist who attended the Kansas City
seminar on behalf of the Humane Society of the United States, saw the
increased attention to animal welfare as a hopeful step.
``The industry has recognized it has some work to do,'' Rau said.
``The next step is to convince consumers to be aware of what is
happening to their food before it gets to the table. People should
understand that their food dollars can carry some weight in persuading
companies to improve.''
______
[From the Washington Post, April 9, 2001]
An Outbreak Waiting to Happen
``Did your daughter eat meat that was pink or red?''
The nurse's question puzzled Connie Kriefall. In an intensive care
ward a few steps from where the young mother stood, doctors were
struggling to save her only daughter, a 3-year-old with sapphire eyes
and a mysterious disease.
In 6 days, tiny Brianna Kriefall had gone from a healthy
preschooler with a tummy ache to a deathly sick child with advanced
organ failure. Her kidneys had quit. Her heart was faltering. And now a
nurse was asking: Could this be E. coli?
Kriefall's mind raced back to dinner at a Sizzler restaurant the
previous week. Brianna had chosen the children's buffet, she
remembered. Watermelon, cantaloupe, cheese. Nothing likely to carry E.
coli. ``That just couldn't be possible,'' she said.
But the outbreak that killed Brianna and sickened more than 500
others here in July was not only possible, it was foreseeable. A series
of systemic failures by government and industry all but guaranteed that
potentially deadly microbes would make their way into a kitchen
somewhere in America. It was simply a question of when.
For decades, the familiar purple ``USDA-inspected'' stamp has given
Americans confidence that their meat supply is safe. But for the
Kriefalls, like thousands of other families stricken by meat-borne
pathogens each year, this veneer of safety proved dangerously
deceptive.
Wisconsin health investigators later concluded Brianna Kriefall
died from eating watermelon that Sizzler workers had inadvertently
splattered with juices from tainted sirloin tips. The meat came from a
Colorado slaughterhouse where beef repeatedly had been contaminated
with feces, E. coli's favorite breeding ground. Federal inspectors had
known of the problems at the plant and had documented them dozens of
times. But ultimately they were unable to fix them.
Nearly a century after Upton Sinclair exposed the scandal of
America's slaughterhouses in his novel ``The Jungle,'' some of the
nation's largest meatpacking plants still fail to meet Federal
inspection guidelines to produce meat free of disease-carrying filth,
an investigation by The Washington Post and Dateline NBC has found.
U.S. Department of Agriculture inspectors who patrol the nation's
6,000 meatpacking plants today are armed with more modern tools and
tougher standards than ever. But the government's watchdog agency often
has lacked the legal muscle and political will to address serious
safety threats. It cannot impose civil fines or recall meat even when
its inspectors see problems that could lead to outbreaks.
In the Milwaukee case, one of the nation's largest, most modern
meatpacking plants--Excel Corp.'s Fort Morgan, Colo., facility--was
cited 26 times over a 10-month period before Brianna Kriefall's death
for letting feces contaminate meat, documents show. Despite new
government controls on bacteria launched 3 years ago, the plant shipped
out beef tainted with E. coli on at least four occasions. The last
shipment delivered the pathogens that ended up in the children's buffet
at the suburban Milwaukee Sizzler.
``It was like making Fords without brakes,'' said Michael
Schwochert, a veterinarian and retired Federal inspector who worked at
the Excel plant. ``We used to sit around the office and say, `They're
going to have to kill someone before anything gets done.''
Excel officials said they were unable to talk about the Milwaukee
outbreak, citing litigation. In a statement, Excel said it uses
cutting-edge technology to prevent contamination, but food must be
properly cooked and handled to ensure safety. ``Excel is committed to
providing safe food for people,'' the company said.
A lawyer for the Sizzler franchise in suburban Milwaukee said the
restaurant owners still did not know how the outbreak occurred, but had
reached settlements with numerous sickened customers. ``The owners have
been devastated by this outbreak,'' attorney Ron Pezze Jr. said.
Criticism of the USDA's enforcement record comes as domestic E.
coli outbreaks and epidemics of mad-cow and foot-and-mouth disease in
Europe heighten concerns about America's meat supply. Contamination
similar to that found at Excel was documented at several other plants
around the country in an internal agency report a month before the
Milwaukee outbreak.
The USDA's inspector general, in a sharply critical review of the
agency's inspection system, said the government's safety net for
consumers was being compromised by confusing policies, blurred lines of
authority and a lack of options for enforcement. At some plants,
regulators frequently were finding tainted beef but doing nothing
because they simply ``were unaware of any actions to take,'' the report
said.
``How long does it take for a `bad' plant to be listed as bad? We
can't tell you,'' USDA Inspector General Roger Viadero said in an
interview, ``because [the USDA] has not told the inspector what's
bad.''
USDA officials at the Excel plant were still searching for that
line last June 14 when they sent the last in a series of warnings to
the plant's management. Nine days later, records show, a package of
contaminated meat left the factory and ended up at the Sizzler in
Milwaukee.
``It was like a ticking time bomb by the time it got to the Sizzler
restaurant,'' said William Cannon, attorney for the Kriefall family.
``And unfortunately, this ticking time bomb killed Brianna Kriefall.''
A Safer System
The internal struggle over beef quality at the Excel plant would
likely have never attracted public attention were it not for two
headline-generating events.
The first came in August 1999 with the chance discovery--in a USDA
random survey--of E. coli in Excel beef at an Indiana grocery store.
The second was the Milwaukee E. coli outbreak last summer. In one
of the worst such incidents in state history, more than 500 people got
sick, 62 with confirmed E. coli infections.
What happened between the two incidents starkly illustrates how
problems at modern meat plants test the limits of the USDA's new
inspection and meat safety system.
Located on a dry plain 80 miles northeast of Denver, the Excel
factory is an imposing agglomeration of smokestacks and aircraft
hangar-sized buildings covering 2 million square feet. The only outward
sign that the plant produces beef is the line of trucks delivering
cattle to the stockyard. That, and the ubiquitous smell--cow manure
with a hint of decaying meat.
Inside, much of the butchering is done the old-fashioned way, by
workers using various sorts of knives. At the front of the line is the
``knocker,'' who uses a pistol-like device to drive a metal bolt into
the steer's head--the law requires that animals be rendered insensible
to pain before slaughtering. Another worker slits the animal's throat
to drain the blood. Others in turn remove limbs, hide and organs.
At line speeds of more than 300 cattle per hour, things frequently
go wrong. Organs tear and spill their contents. Fecal matter is smeared
and splattered.
The presence of fecal matter greatly increases the risk of
pathogens, which is why USDA inspectors enforce a ``zero-tolerance''
policy for fecal contamination on meat carcasses. Meat smeared with
fecal matter is supposed to be pulled off the line and cleaned by
trimming. But there is no law that requires raw meat to be free of
pathogens; the exception is for ground beef. Thus, raw meat must carry
a label that specifies it must be properly cooked.
In 1993, the Jack in the Box food poisonings on the West Coast
killed four children and awakened Americans to E. coli 0157, a mutant
bacterial strain that lurked in undercooked ground beef. Three years
later, the Clinton administration officially scrapped a century-old
system that relied on the eyes and noses of Federal inspectors--called
``poke and sniff''--in favor of a preventative system of controls
developed by the industry with federal supervision.
That system, supported by food safety experts and many consumer
groups, was called the Hazard Analysis and Critical Control Point
system, or HACCP (pronounced hass-ip). Under HACCP, companies create
their own plans for addressing safety threats--a ``hazard analysis''--
and their own methods of dealing with threats--``control points.'' The
theory is that hazards arise at many points in the production process,
and steps can be taken to minimize risks from pathogens. The measures
can range from lowering room temperatures to dousing meat with a
chlorine rinse to kill germs.
In a nod to consumer groups, HACCP introduced mandatory testing for
microbes for the first time. Plants would be subjected to testing for
salmonella and a benign form of E. coli, but not the deadly E. coli
0157:H7.
Three years into HACCP implementation, the reviews are decidedly
mixed. The rate for deadly E. coli illness remains steady, with 73,000
people stricken and 61 killed a year, according to the U.S. Centers for
Disease Control and Prevention.
But a steady decline in disease rates for salmonella and several
other pathogens since 1996 has prompted UDSA officials and many
consumer groups to declare HACCP a major success.
``The nation's food supply is safer than ever,'' Thomas J. Billy,
administrator of the Food Safety Inspection Service, said in a
statement in response to questions about HACCP's performance. ``Our
data shows the level of harmful bacteria has been markedly reduced.''
But pathogens remain a major concern. The USDA estimates that
salmonella is present in 35 percent of turkeys, 11 percent of chickens
and 6 percent of ground beef. Each year, food-borne pathogens cause 76
million illnesses and 5,000 deaths, according to the CDC.
According to critics, gaps in HACCP still allow too many pathogens
to slip through.
The report by the USDA's inspector general last summer said meat
companies were manipulating the new system to limit interference from
inspectors. For example, by their placement of control points, plants
can effectively dictate which parts of the process inspectors can fully
monitor.
Viadero said the agency was ``uncertain of its authorities'' and
had ``reduced its oversight short of what is prudent and necessary for
the protection of the consumer.''
``After what I've seen,'' Viadero said in an interview, ``if my
hamburgers don't look like hockey pucks, I don't eat them.''
Meat inspectors and consumer groups like HACCP's microbe-testing
requirements, but some argue the new system is an ``industry-honor
system'' that puts consumers at greater risk. Under the old system,
meat with fecal matter on it was trimmed to remove pathogens. Now,
inspectors say, chemical rinses can wash off visible traces of fecal
matter without removing all the pathogens.
``It's the biggest disaster I've seen,'' said Delmer Jones,
president of the National Joint Council of Food Inspection Locals,
which represents most of the government's 7,600 meat inspectors.
``We're vulnerable to more deaths and no one seems to care.''
Last fall, two Washington watchdog groups, the Government
Accountability Project and Public Citizen, released results of an
unscientific poll of 451 inspectors. While a majority approved of HACCP
in concept, more than three-fourths said their ability to enforce the
law had declined.
One inspector scribbled these words:
``HACCP ties our hands and limits what we can do. If this is the
best the government has to offer, I will instruct my family and friends
to turn vegetarian.''
Schwochert, formerly the night shift inspector-in-charge at Excel's
Fort Morgan Plant, worked 15 years in private business before joining
the USDA. He prided himself on his ability to work with industry, but
he felt that HACCP made his job even tougher.
``I've never seen anything so slow to respond,'' he said.
``Nothing in my professional training or life gave me the tools for
dealing with what was going on. It was a calamity of errors. If it
weren't so serious, it would be funny.''
Showdown at Excel
By the late summer and fall of 1999, Schwochert was accustomed to
tussling with Excel's managers over problems ranging from filthy,
urine-soaked employee washrooms to occasional findings of fecal matter
on carcasses. But the skirmishes intensified dramatically on Sept. 13,
after the USDA found E. coli 0157 in a package of Excel beef at the
Indiana grocery store.
The discovery, part of a routine survey of grocery stores and
meatpacking plants, triggered a series of reviews of the Excel plant's
food-safety practices.
The measures began with 2 weeks of E. coli testing. Inspectors
found E. coli--not once but twice, in the first 3 days of testing. The
USDA ordered the contaminated meat seized, but it was too late. Some of
the meat had been loaded onto a delivery truck.
``Not only were those samples positive, but that meat had left the
plant,'' Schwo-chert said. Excel tracked down the truck and returned
the meat to the plant.
USDA documents show the combination of E. coli positives and the
improper shipment of the contaminated beef prompted the government to
impose its harshest sanction: A district supervisor ``withheld
inspection'' from the plant, forcing Excel to shut down for 3 days. On
Sept. 28, the plant reopened under the threat of another suspension if
new violations occurred.
They did, but no suspension followed. By Sept. 29, inspectors were
finding so much fecal contamination on carcasses that Schwochert said
he tried to close the plant again, even though he felt he lacked the
authority to do so. At the last minute, the plant's top supervisor
agreed to shutter the factory voluntarily for the rest of the day,
Schwochert said.
Excel promised to retrain its workers and fine-tune its carcass-
dressing system, although details of its plan are considered
proprietary information. But more contaminated carcasses turned up 2
days later, and regularly after that, agency records show:
Oct. 1: ``Fecal contamination observed . . . sample failed to meet
zero-tolerance requirements.''
Oct. 2: ``Identifiable fecal deficiencies on two carcasses (out of
11).''
Oct. 4: ``Fecal contamination splotched in an area 1 inch by 4
inches . . . carcasses retained.''
Oct. 9: ``Deficiencies were observed on six carcasses (out of
11).''
In company memos, Excel responded that the inspectors were focusing
on ``unrelated'' and ``isolated'' incidents. But USDA district
supervisors took a different view. One USDA letter called the company's
explanations ``incredible, frivolous and capricious.'' Another
specifically suggested Excel was putting its customers at risk.
``In the light of recent E. coli positives, I would think that food
safety and preventive dressing procedures would be of utmost importance
on your corporate agenda,'' Dale Hansen, the FSIS's circuit supervisor
in Greeley, Colo., wrote on Nov. 29 to Marsha Kreegar, Excel's
regulatory affairs superintendent.
USDA's enforcement records contain no response to that letter.
Excel has declined to make officials at the Fort Morgan plant available
for interviews.
For 5 months, the USDA chose not to impose new sanctions, despite
14 additional citations for fecal contamination and a host of other
problems. Government records also describe mice infestation, grease and
rainwater leaking onto meat; unsanitary knives; equipment sullied with
day-old meat and fat scraps; and carcasses being dragged across floors.
USDA inspectors asked their supervisors for guidance. How many
violations before the plant is suspended again? Three? Five?
``The question was asked by myself or in my presence at least 10
times,'' Schwochert said, ``and we never got a clear answer.''
On May 23, the USDA threatened another suspension. ``Recent
repetitive fecal findings on product produced by your firm demonstrates
that the HACCP plan at your facility is not being effectively
implemented to control food safety hazards,'' USDA District Manager
Ronald Jones wrote to Excel General Manager Mike Chabot.
Excel was given 3 days to make changes--then a 3-day extension,
after Excel's initial proposals proved less than convincing.
Finally, on June 14, based on Excel's promise to improve its
process, USDA withdrew its threat with an additional warning. ``Your
firm will be required to consistently demonstrate that your slaughter
process is under control, meeting food-safety standards,'' the agency
wrote.
On June 23, a sealed package of sirloin tips contaminated with E.
coli was loaded into an Excel truck bound for Milwaukee.
A Family's Ordeal
The Sizzler restaurant on South Milwaukee's Layton Avenue was one
of Brianna's favorite places, even if she could never quite remember
its name. To her 3-year-old mind it was just the restaurant ``up the
hill.''
``We used to pass it all the time, and she'd have a fit if we
didn't go there,'' her father, Doug Kriefall, recalled.
On the night of July 17, her parents were happy to oblige. It was
the end of a harried workday for a young family juggling two careers
and two kids, and the lure of a quick and inexpensive night out was
irresistible. As a bonus, Sizzler offered an adult menu as well as a
special salad bar stocked with kids' favorites: macaroni and cheese,
fresh fruit, dinosaur-shaped chicken nuggets.
Emotionally, the family was still in shock from the loss of a baby
girl just 7 weeks earlier. The girl the family calls Haley was
stillborn. The loss reopened old wounds: Connie Kriefall had lost six
fetuses in 8 years before finally giving birth to Brianna in May 1997.
``She was my miracle baby,'' the mother said. ``It was the best
Mother's Day present any mom could ever get.''
The couple's difficulty in having children made Connie Kriefall an
exceptionally careful mother. She knew improperly cooked meat can carry
E. coli, a microbe sometimes fatal to young children. So at Sizzler,
the Kriefalls' buffet choices reflected caution: watermelon,
cantaloupe, cheese, ham cubes, a meatball or two.
But on that night, the bacteria was hidden not in meat but in
watermelon, an investigation concluded. A state health task force would
determine that E. coli entered the restaurant in sealed packages of
sirloin tips.
The USDA inspection stamp on the package read ``XL Est. 86R''--the
code assigned to the Fort Morgan plant. Unopened packages of Excel beef
in the restaurant's cooler would test positive for the same genetic
strain of E. coli 0157 found in the bodies of Brianna Kriefall and
other restaurant patrons.
Once loose in the restaurant's cramped kitchen, the task force
found, the bacteria easily made the jump from raw meat to raw fruit.
Health officials discovered that kitchen workers had violated the
restaurant's rules by preparing watermelon and meat on the same counter
top. A meat grinder used to convert steak trimmings into hamburger was
located inches from the same counter, close enough to splatter juices
on other foods.
The recycling of salad bar items over several days eventually
exposed hundreds of people to the bacteria. The first symptoms surfaced
on July 14, three days before the Kriefalls' dinner. By July 24,
Milwaukee health officials were tracking an epidemic. Twenty-three
victims were hospitalized. The intensive care unit at Milwaukee's
Children's Hospital was already jammed with sufferers before medical
investigators confirmed the cause of the illness and its source.
``I knew it was bad. I just didn't know how bad,'' recalled Judy
Fortier, a Milwaukee mother whose oldest daughter, Carly, was among the
most seriously ill. For days, Carly, 8, suffered painful bouts of
bloody diarrhea so severe her intravenous line was moved to the
bathroom so she could nap during the brief lulls between attacks. ``She
would lean against me,'' Fortier said, ``and that's how she slept.''
Like many other parents, Connie Kriefall assumed her children had
picked up a summer virus when both came down with stomachaches on a
Wednesday evening, 2 days after their meal at Sizzler.
By Friday, Chad had recovered, but Brianna's condition had taken a
frightful turn. Severely dehydrated from diarrhea, she was admitted to
the hospital the next morning.
For her parents, the next 7 days unfolded with deepening horror. On
Sunday, the family learned Brianna had developed a life-threatening
complication. By Tuesday, doctors had begun dialysis to prop up the
girl's failing kidneys. The normally bright, playful child had become
nearly unresponsive, uttering only a single, mournful phrase for hours
at a time.
``It was just `Ow-wee, Mama, Ow-wee, Mama,' '' Connie Kriefall
recalled. ``And those eyes. I'll never forget how she looked at me.''
The crying would end abruptly. On Wednesday morning, Brianna was
placed on a respirator after her heart briefly stopped beating.
Finally, on Thursday, she suffered a catastrophic stroke and lapsed
into a coma.
With all medical options exhausted, the Kriefalls decided to allow
the doctors to disconnect Brianna's life support.
``Thursday night we both stayed up with her, and took turns
crawling in bed with her, telling her how much we loved her and reading
her stories,'' her mother said. ``I couldn't hold her, and I wanted to
hold her so bad. And her heart was racing all night--her heart rate was
so high.''
On Friday, just before 7 a.m., Brianna's heart stopped.
Forward
The months since the Sizzler outbreak inevitably brought
investigations and lawsuits, as both victims and governments tried to
parcel out blame. An early casualty was the Sizzler restaurant on
Layton Avenue, which was permanently closed.
Excel lawyers have maintained in court documents that the
corporation was not at fault, since it had no control over Sizzler's
food-handling practices.
``Excel is continuously seeking ways to eliminate or reduce food
hazards,'' the statement said. ``For the benefits of those efforts to
reach the consumer, it is essential for food preparers to follow safe
handling practices.''
Pezze, the lawyer for the Sizzler franchise, said he had seen the
USDA documents from the Excel plant and found the reports of fecal
contamination surprising. ``Obviously, if suppliers and producers could
nip this problem in the bud, we wouldn't need to rely purely on
preparers.''
Industry trade groups and the USDA also argue that it is impossible
to make meat germ-free, so consumers bear responsibility for using
proper preparation techniques and fully cooking their food.
It's an argument that William Cannon, the Kriefalls' attorney,
finds especially galling. The Kriefalls have joined other victims in a
lawsuit that names Sizzler and Excel.
``They have blamed other people for not catching their mistakes,
but the blame starts with them,'' Cannon said of Excel. ``They knew or
should have known they were sending out meat that contained this
bacteria. And that there was a substantial risk that somebody,
somewhere, in America would end up eating this meat.''
But others find more disturbing the government's ineffectiveness in
responding to chronic lapses at plants such as Excel's. It's a problem
nearly as old as meat inspection itself, said Carol Tucker Foreman, the
assistant secretary for food and consumer services in the Carter
administration.
``There is almost no notion of shutting down a plant for failing to
meet standards,'' said Foreman, now a distinguished senior fellow at
the Washington-based Food Policy Institute. ``The regulations help
ensure that plants stay just above the level that requires sanctions.''
USDA officials are promising change. After devoting 3 years to
implementing HACCP, the agency is beginning an extensive review to
determine how the system can be improved.
Congressional supporters of stronger food safety protections say
they will press again this year for a law giving meat inspectors more
effective enforcement tools, including the power to impose civil fines
and order mandatory meat recalls. But after similar legislation failed
in the last three sessions, backers acknowledge their prospects are far
from certain.
``The American people would be shocked,'' said Sen. Tom Harkin, an
Iowa Democrat and sponsor of several previous bills, ``to learn that
the USDA does not have the fundamental authority to protect public
health.''
Anger and Grief
The memorial card for Brianna Kriefall is a collage of things the
little girl liked best: Barney and Barbies, dancing and Dr. Seuss, the
little watering can that was Brianna's delight on summer days when the
flowers were in bloom. The card's verse is written in a child's words.
``Mom and Dad, don't cry that I didn't stay,'' it begins. ``I know
you'll be lonesome for me for a while, but time heals all wounds and
again you will smile.''
For now, though, the promise of healing seems a hollow one. At the
Kriefalls' neatly kept home in middle-class South Milwaukee, every day
brings searing reminders. Pictures of Brianna adorn almost every wall.
The little girl's room and toys remain just as she left them. Their son
Chad, now 2\1/2\, asks about his sister and sometimes loses patience
with his parents' explanations. `` `Nana come home--now!' '' he wails.
For Connie Kriefall, just knowing that Brianna's ordeal might have
been prevented fires emotions too intense for words. Like her son's,
the mother's grief is tinged with an anger she suspects is beyond
healing.
``They need to be aware that this has completely destroyed our
lives,'' she says in a whisper. ``Our daughter was a miracle child we
waited 8 years for. And now she's gone, and we'll never get her back.''
Senator Byrd. These 17 veterinary inspectors do not count
toward the 50. Now, I take it from your answers to my questions
that you do not have any of the 50, aside from the 17
veterinary inspectors?
Secretary Veneman. That is correct, sir. We have not begun
the hiring process on the 50 new inspectors. But I respectfully
disagree with your statement that we do not intend to carry out
this provision.
Senator Byrd. I do not think that I said you did not intend
it. I asked you what the intention was of your department.
Secretary Veneman. We are in the process of implementing
this provision by putting together the specifications for the
50 FTEs. It has been a relatively short amount of time since
the passage of the 2003 Omnibus Appropriation. It was not
passed last September, as normally we would see these.
And so I will commit to you that I will work with our Food
Safety and Inspection Service to get this implemented as
quickly as we possibly can.
Senator Byrd. I appreciate what you said.
Mr. Chairman, I think we ought to write it into the bill.
The language has been in the report. It is there for all to
see. And reports are important. If the courts carry out the
legislative intent of this bill, or that bill, or some other
bill, and there is a suit, the courts resort many times to the
committee reports, as well as, to the legislative history on
the Senate floor and House floor, to determine, or to construe
the intent of the Legislative Branch. It is right here in plain
language.
Secretary Veneman. I do not think, sir, that we have a
dispute on the intent.
Senator Byrd. Very well.
Let us carry out that commitment, and I think that we may
as well put it into the bill. If the report does not speak
loudly enough, we can put it into the bill. And the Department
can pursue the carrying out of the purposes of the bill. We
should not have to meet a third time on this matter, and I am
sorry we have had to talk about it today.
Mr. Chairman, I do not want to impose on the committee. I
have one more question, if I may.
This question has to do with outsourcing.
Senator Bennett. Senator, Senator Dorgan has not gone a
first round. Could we hear from Senator Dorgan and then to your
question?
Senator Byrd. Absolutely. I would like to hear from Senator
Dorgan, also.
Senator Dorgan. Mr. Chairman, thank you.
I was interested in the questions Senator Byrd has been
asking. Let me just ask a couple of brief questions.
FAS TRADE WITH CHINA
I would like to ask a couple of questions about trade, FAS
trade with China. First of all, is the Foreign Agricultural
Service at USDA a part of the Trade Policy Review Group? I
believe it is. Does anybody know that?
Secretary Veneman. USDA is part of the Trade Policy Review
Group. It is not necessarily just the Foreign Agricultural
Service, but the Undersecretary's office as well.
Basically, the way that the trade interagency process works
is that, at the principles level, you have the USTR and the
cabinet secretaries that are involved in trade, which would
include USDA. Then you have the Trade Policy Review Group and
then the Trade Policy Subcommittees. Through FAS, we are
thoroughly involved in that process.
Senator Dorgan. Let me tell you why I asked the question.
On March 17th, a USTR official in charge of agricultural trade
with China, this was the week this person left the employ of
the United States. He had been in charge of agricultural trade
at USTR.
He stated that the United States would be well justified in
filing a WTO case in China for failing to live up to its
commitments on wheat trade. The official said that the evidence
of unfair trade by the Chinese was ``undeniable'' and that the
Chinese themselves privately acknowledge that they are cheating
on agricultural trade.
He then said that the Interagency Trade Policy Review Group
has given USTR the green light to march forward with a WTO case
against China. But this official said the administration was
reluctant to do that because the Chinese might be offended. The
administration was worried that a WTO case would be seen as an
``in your face'' thing to do to China so soon after China
joined the WTO.
Let me tell you why I believe he says that it is undeniable
that the Chinese are cheating with respect to wheat trade. When
we did the bilateral trade agreement with China, China agreed
that it would set tariff rate quotas for imported wheat at 8.5
million metric tons. That means 8.5 million metric tons a week
could enter China at very low tariffs.
According to the CRS, China's imports were less than 8
percent of that from the United States. The Chinese decided
that they would issue licenses for imports, but most all of the
licenses, over 90 percent, were retained by the Chinese
government. Less than 10 percent were given to private
interests. And for that reason we have sold very little wheat
to China.
So if the Chinese government decides it does not want
American wheat, then it retains these licenses in the
government and does not import the wheat.
So we have a USTR official, and the USTR of course is part
of the Trade Policy Review Group, saying that there ought to
have been a WTO case. And what he said is there was a green
light given by the Trade Policy Review Group to take action
against China.
Would that have been the position of USDA, as well, as a
part of the Trade Policy Review Group? Who serves on that group
for USDA?
Secretary Veneman. It depends on the issue. That is why I
say that the USDA is part of the Trade Policy Review Group, and
it would depend on the issue as to who attended the meeting on
behalf of USDA because we have various specialties.
I have to say, I am not familiar with those remarks of the
USTR official, but we will be happy to get back to you on it.
As you know, China entered the WTO as a result of the Doha
meeting in November 2001, which provides tremendous market
potential for the United States, as you point out. We have had
a continuing number of issues with China as they seek to
implement their agreements with regard to agriculture and the
WTO.
I was in China just the summer. We discussed a whole range
of these issues, including the licensing arrangements, with
Chinese officials and we talked about the importance of making
sure that they had transparent trading systems if they are
going to be credible members of the WTO.
We are continuing to press the Chinese officials very hard
on a wide range of issues, including wheat. Obviously, options
will be considered if we do not make progress.
INTERAGENCY TRADE POLICY REVIEW GROUP
Senator Dorgan. Madam Secretary, we have been pushing on
the Chinese for years. They now have a $103 billion trade
surplus with us. We agreed to a bilateral trade agreement with
them. We agreed to a bilateral trade agreement with the Chinese
a couple of years ago. On that basis they were able to enter
the WTO.
The fact is an official in USTR, the week before he left,
said publicly it is undeniable they are cheating. And he also
said that the Trade Policy Review Group, a group that is made
up of USDA as one member, had given the green light to take a
WTO case against China.
I had intended to try to get to you about this so that I
could give you some warning. Can we find out whether that is
the case? This is an administration official speaking on the
record, so he is saying it is the case.
When did that happen, the Interagency Trade Policy Review
Group? And if it did happen, if that group signaled somehow
that they believe that a WTO case was brought against China on
the issue of wheat, it seems to me there are plenty of other
areas that we can use to bring actions against China. Because
China--you make the point that this is a great opportunity for
us. But there is no opportunity in China if China will not buy
our products. There is no opportunity.
Secretary Veneman. That is correct, although I must say
that they have become about a billion dollar soybean market for
us, and that is a relatively recent development in our trade
with China. They have been a very good purchaser of soybeans,
although we have had some difficulties with some regulations.
Senator Dorgan. How big is that market?
Secretary Veneman. It is about $1 billion.
Senator Dorgan. You look at trade with China, and I will
not talk about Mexico and Canada and Europe and Japan. But just
look at China today. $103 billion and in virtually every single
area, when you look at the promise of the bilateral 2 years
ago, you find out that the promises were never kept.
The agriculture minister of China went to South China to
Guang Zhou, and in the South Asian Post was quoted as saying
yes, we have this 8.5 million metric tons but that does not
mean we are going to buy that from the United States.
And now what we have discovered 2 years later is they are
not buying wheat from us because the Chinese government does
not want to, despite the fact they have this huge surplus. And
if someone inside the administration, officially a Trade Policy
Review Group, has decided that we should take action,
officially take action and pursue a WTO case, should we not do
that? And should we not do that immediately?
Secretary Veneman. Again, I am unfamiliar with the remarks
that you are referencing. We will look into that and get back
to you. I just had not seen that particular report.
Just to correct the record, we did not enter into a
bilateral agreement, per se. We entered into various agreements
with China as part of their accession to the WTO, as opposed to
a bilateral free trade agreement.
Senator Dorgan. But we got those agreements bilaterally
from China?
Secretary Veneman. Right. They were bilateral discussions
with regard to the accession to the WTO.
However, we continue to have a number of issues, wheat
being one of them, with China that we are having trade
difficulties with. USTR officials were scheduled, along with
USDA officials, to go to China and discuss some of these issues
but unfortunately, a lot of the recent travel to China has been
postponed because of the SARS issue.
But we do take these and other trade issues very seriously
and we are having a number of discussions regarding trade
issues, as you point out, around the world, whether it is
Mexico or Canada or other countries.
China, again, has been an area that we are watching very
closely because they did commit, in their WTO accession
negotiations, to certain things. We want to make sure those are
implemented properly. And obviously, we will work with you on
this wheat issue.
Senator Dorgan. But Madam Secretary, we already know they
are not implemented properly. We already know that the Chinese
are cheating.
And with respect to these trade negotiators, I must say,
for Democratic administrations and Republican administrations,
I have seen them get on airplanes for 20 years and move off.
And frankly, you can put them all in a barrel and roll it down
a hill, you are always going to have a lower on top.
The fact is they cannot, within 1 week, fail to lose a
trade association. They come to us with these negotiations, in
this case the Chinese bilateral, and they say look what this is
going to do for our country. And then 2 years later we discover
we are moving backwards.
This is not your fault, but I am asking the question about
the policy review group. If, in fact, we have a group now that
says we ought to be taking action against China on trade from
wheat purposes only, then let us do that. Let us decide to have
a backbone, a spine, some stiffness of spirit here, and stand
up for the wheat producers in this country.
It is more for USTR and Commerce than it is for you, Madame
Secretary, but I am just asking having a vote or a membership
on the Trade Policy Review Group, I hope that you go in there
and start swinging, to say on behalf of American farmers, by
God, we have the right to demand fair trade, whether it is with
China, Japan, Europe, Canada. We have a right to demand it.
Secretary Veneman. I agree with you and, as I said, I will
definitely look into the comments that you have attributed to
this USTR official and determine, if there was some kind of
decision made, what that decision was and where it has gone
since then.
Senator Dorgan. Would you get back with me?
Secretary Veneman. I will get back to you.
[The information follows:]
USDA is part of the interagency Trade Policy Review Group (TPRG),
which also includes the USTR, State, Commerce, Treasury, NSC, and
several other agencies. USDA's representative's at these meetings can
vary depending on the topic, but generally includes high-level
representation from either the Office of the Secretary, the Office of
the Under Secretary for Farm and Foreign Agricultural Services, or the
Foreign Agricultural Service.
At the TPRG meeting that preceded the February high-level dialog
talks, USDA expressed support, absent a timely resolution of
outstanding concerns, for pursuing a WTO case against China over its
overall administration of its tariff-rate quota (TRQ) system. The TPRG
deferred a decision to initiate a WTO case, pending the outcome of
further discussions with the Chinese to resolve the issues. Ambassador
Zoellick and Ambassador Johnson raised our concerns at the highest
levels during their subsequent visit to Beijing in February. A follow-
up meeting, which was delayed by the SARS situation, is expected to
occur in the very near future. Absent a satisfactory outcome, it is
expected that the TPRG would reconvene to revisit the issue of
initiating a WTO case. Wheat is one of the nine agricultural
commodities covered by China's TRQ system and USDA believes that
improvements in China's TRQ system would lead to greater market access
for U.S. wheat and other commodities.
Senator Dorgan. Thank you, Madam Secretary.
Senator Bennett. We have been joined by two other members
of the Subcommittee. We will go to Senator Specter, then
Senator Durbin, and Senator Byrd will follow up.
Senator Specter. Thank you, Mr. Chairman. I regret being
here so late but we had a meeting of the Judiciary Committee. I
was about to compliment all my colleagues for not being members
of the Judiciary Committee until I saw Senator Durbin walk in.
He is a member of the Judiciary Committee. We have just been
wrangling for a long time and we are going to do so for a lot
longer. Senator Byrd used to be member of the Judiciary
Committee.
Madam Secretary, just a couple of questions. A letter was
written to you on April 8th by about a dozen Senators inquiring
about the requirements of the Agriculture Marketing Agreement
Act which specifies taking into consideration regional costs of
feed, feed availability, and other specific economic factors.
The price of Class I fluid milk has dropped precipitously. I
would very much appreciate--I am not going to take the time
now--if you would review that letter and respond to it.
DAIRY COMPACTS
Also when you--you were nice enough to call me in advance
of the hearing and I raised the issue of dairy compacts. I
would like a response for the record on the proposals to have a
dairy compact. I am on the verge of introducing legislation on
it. We had one for the Northeast and we tried to expand it to a
number of other States including Pennsylvania. It has been
represented that it would provide stability, not be a cost to
the taxpayer. I would like to have your position on that in
writing.
[The information follows:]
There are a number of concerns with attempting to implement a dairy
compact at this time. A first concern with starting a new program is
that considerable Federal support is already being provided to the
dairy industry. We are now beginning to see milk production slow down
and expect to see farm milk prices increase as we move through the rest
of this year. The Dairy Price Support Program (DPSP) is supporting
prices through the purchase of manufactured dairy products. In
addition, the Dairy Export Incentive Program (DEIP) has supported
substantial exports of manufactured dairy products. This fiscal year,
the DPSP and DEIP will remove from the market an estimated 35 million
pounds of butter, 50 million pounds of cheese and 730 million pounds of
nonfat dry milk. Federal Milk Marketing Orders continue to help assure
orderly marketing and equity in returns among producers. And, the Milk
Income Loss Contract program will provide an estimated $2.5 billion to
dairy producers in income support payments this fiscal year. We are
also making substantial efforts to distribute surplus nonfat dry milk
through humanitarian assistance and domestic drought assistance
programs.
A second concern relates to the effects of a compact as revealed
through the experience of the Northeast Compact and analysis of
proposed regional compacts. The 1996 Farm Bill gave the Secretary
authority to approve the Northeast Compact, a regional pricing plan
intended to increase milk returns for Northeast dairy farmers, maintain
local milk supplies, and reduce the decline in the number of dairy
producers. Six New England states, accounting for 3 percent of U.S.
milk production and 3 percent of dairy farms, implemented the Northeast
Compact on July 1, 1997. Authority for the Northeast Compact expired on
September 30, 2001. Compacts, such as the Northeast Compact, establish
minimum prices fluid handlers must pay for milk. Our review of the
economic effects of compacts shows that farm milk prices and dairy farm
income increased in compact states, when the Federal order minimum
price is below the compact-established price. There appears to be no
evidence that the Northeast Compact reduced the decline in the number
of small and medium-sized dairies in New England. Milk production
increases above what it would otherwise be in compact states as dairy
farmers react to higher prices by expanding their dairy herds and
increasing feeding rates both of which lead to higher milk production.
The Northeast Compact experience provides strong evidence that
handlers of fluid milk pass along the higher prices imposed by a
compact to consumers. Immediately following implementation of the
Northeast Compact, the retail price of fluid milk increased by about
$0.20 per gallon in New England, while retail prices fell nationally.
Higher retail prices for fluid milk cause consumers to reduce fluid
milk consumption in a compact region. Farm milk prices and income
decline outside of compact states because higher milk production and
lower fluid milk consumption in the compact states results in more milk
available for processing into manufactured dairy products, leading to
lower prices for milk and manufactured dairy products in non-compact
states. This is the reason producers in the Upper Midwest opposed the
Northeast Compact. The Northeast Compact regulations required
reimbursement of WIC state agencies for increased program costs, and
the Northeast Compact adopted provisions to reimburse schools for
increases in the cost of fluid milk caused by regulation. Other low-
income households, however, were not compensated for higher fluid milk
prices resulting from the Northeast Compact.
The administration does not have a position on any future
legislative efforts to establish dairy compacts at this time. However,
there are numerous programs already in operation to support dairy
farmers and the Administration is concerned that compacts stimulate
milk production, adversely affect consumer milk prices and retail
demand for fluid milk, have disparate regional effects on farm income
and reduce the effectiveness of the Federal dairy programs already
directed by Congress. Legislation authorizing compacts should address
such concerns.
Senator Specter. Thank you, Mr. Chairman.
Senator Bennett. Thank you very much.
Senator Durbin.
Senator Durbin. Mr. Chairman, it is a pleasure to be here
with you again in your new capacity. I hope you will enjoy this
committee. It is an assignment I had in the House and in the
Senate and I think it is an excellent opportunity.
Madam Secretary, Mr. Dewhurst, Mr. Collins, Mr. Moseley,
thank you for being here today. I am going to just ask one area
of questioning very briefly. I have my statement that I would
like to submit for the record and my questions.
FOOD SAFETY IN THE SCHOOL LUNCH PROGRAM
But I would like to speak to you for a moment and ask your
thoughts on the question of the safety of the food in the
school lunch programs of America. Since 1990 there have been
more than 100 reported outbreaks of foodborne illness in
schools that have sickened more than 6,000 children across our
Nation. The Centers for Disease Control and Prevention tell us
that 10,000 more kids were sickened in school-related food
outbreaks during that time, although these kids never learned
what food or pathogen made them sick. Those numbers are, I am
afraid, just a fraction of the true amount, since foodborne
illness in schools is seriously underreported across America.
Recently the Chicago Tribune reported that countless
Illinois schoolchildren were served ammonia-contaminated
chicken, hamburgers, and potatoes over the course of several
months; contaminated food that apparently both Federal and
State officials knew about but allowed to be served. In one
Illinois elementary school, 42 kids and teachers became so ill
after eating chicken with ammonia levels 133 times the
acceptable amount that they were rushed to the hospital.
I understand that your agency has worked to improve the
safety of food in schools, but when our schoolchildren are
being sent to the hospital after eating the food that we
provide, inspect, and regulate then obviously more needs to be
done.
MANDATORY RECALL OF UNSAFE FOOD
I would like to ask you a few specific questions.
Currently, recalls of unsafe food in the school lunch program
are performed on a voluntary basis. Let me repeat that. Recalls
of unsafe food in the school lunch program are performed on a
voluntary basis. Complicating the recalls is the fact that
schools do not know the identity of the producers who supply
the food due to the complicated chain leading up to the school
door. In the Illinois case, it appears some of the food was
pulled from cafeterias. Several schools were not even notified
they were serving potentially dangerous food until it was too
late. In any event, the process in place now failed to protect
our kids.
First question. Are there any reasons recalls of
contaminated food served in the school lunch program should not
be made mandatory if a voluntary recall effort fails?
Secretary Veneman. Senator, I appreciate your concerns
about the school lunch food safety. It has been something that
we have been concerned about as well. In fact, let me just give
you a little bit of background on some of the things that we
are doing in the Department.
We basically have three agencies involved in the school
lunch program. We have the Food and Nutrition Service, the
Agricultural Marketing Service, who purchases a lot of the
products, and we have the Food Safety and Inspection Service
when it comes to the safety of meat and poultry. We have
started, within the Department, an interagency dialogue on all
of these food safety issues so that the minute we have any
issue that involves food safety, we know whether or not there
were products that went into the school lunch program. That is
part of our notice now.
That is something that was not done before. I just bring
this up to tell you that I share your concern.
With regard to the case you cited that happened recently in
Illinois, my understanding is that there were specific disposal
orders that went out that were not followed by the school
district. In fact, there are school district officials who have
been indicted in this case.
Senator Durbin. That is true.
Secretary Veneman. So while we need to be looking at that
case as an example of where we can do better, I do not think
the fault lies with the Federal agencies since they issued the
disposal orders and they were not followed through on by the
school district.
Now what does that mean for us in the future? It means that
we are going to go back the next time and make sure that
officials do what they say they are going to do.
Senator Durbin. I would just say, you know that my passion
is food safety.
Secretary Veneman. It is one of mine as well.
Senator Durbin. I know that there are a dozen Federal
agencies in charge of food safety, and 35 different laws, and
25 different committees on Capitol Hill. It is madness. The
only people that I can get to support a single food safety
agency to try to consolidate this are people who have not been
appointed Secretary of Agriculture or those who were former
Secretaries of Agriculture. I cannot get any incumbent
Secretary of Agriculture to agree with it until they leave
office and then they think it is a great idea. Secretary
Glickman fought me all the way, and now he is with me all the
way.
I do not know what it takes, but there is something about
going into that building that leaves you in a state of mind
that you cannot think in terms of consolidating food safety.
But what I just heard you say was, you are starting to realize
you have to. You are bringing together within your own agency
groups that were not talking to one another.
But what about the basic question? Should we have mandatory
recall of contaminated food in the school lunch program rather
than voluntary?
Secretary Veneman. We have not, to my knowledge, had
difficulty getting firms to recall any product when necessary
because, as you know, the U.S. Department of Agriculture,
through the Food Safety and Inspection Service, has the ability
to shut down a plant if they do not put forward a recall order
as we recommend.
In addition, I would also note that the Department of
Agriculture itself, through our Food and Nutrition Service, has
used recall authority when necessary. We are able to do that as
the customer.
So the issue of whether or not we need additional
legislative authority I think is one that is, in our view, not
necessary. We believe we have the legal authorities necessary
to carry out recalls, if needed, and we have never had an
instance where we were unable to get a recall carried out.
Senator Durbin. I ask you, please do not rule out the
possibility until we can talk about it a little more, because I
think it may give you some authority that will protect some
children.
SUPPLIER DISCLOSURE
I would also like to suggest to you, and this will be my
last question, Mr. Chairman, we have had recommendations from
the General Accounting Office that we need to give school
districts and school authorities who are purchasing food, more
information about food suppliers.
In other words, if you have gathered information, USDA FDA,
that suggest that some suppliers to the school lunch program
have had a questionable history of providing safe food, I would
think it obvious that school authorities should have that
information so that when they contract with these same people
they have the benefit of this Federal information, and that
they can purchase the safest foods for the school lunch
program.
I have some legislation along this line and I would like to
bring it to you in the same context if I can.
Secretary Veneman. If I might also make one comment, just
last week we released our new Agricultural Marketing Service
standards for the purchase of ground beef. Those are much
stricter standards. They are standards which are consistent
with those that the fast food restaurants use. So we now have a
much stricter standard that we just released last week with
regard to purchases of ground beef for the school lunch
program.
Senator Durbin. Good. Thank you. Thanks, Mr. Chairman.
Senator Bennett. Thank you very much, Senator.
Senator Byrd, you have been very patient. Appreciate your
participation. Glad to give you a second round.
Senator Byrd. Mr. Chairman, you have been very patient. My
experience over my 45 years on this committee is that the
Chairman is usually left to the last. He is constrained to give
other members of the committee an opportunity, and he usually
waits until everybody else has a chance. So, I respect your
situation, and I will be perfectly happy to wait until you have
an opportunity to ask some questions.
Senator Bennett. Go ahead.
HUMANE SLAUGHTER INSPECTORS
Senator Byrd. Thank you, Mr. Chairman.
A brief follow-up on the subject that I was pursuing
earlier. In order to ensure that adequate funding is available
to maintain no less than 50 humane slaughter inspectors
throughout fiscal year 2004, the future funding needs must be
determined. Given that the $5 million provided in the fiscal
year 2003 omnibus appropriations bill for no less than 50 new
humane slaughter inspectors has been made available through
fiscal year 2004, Madam Secretary, will any additional funding
be needed to fulfill and maintain this requirement in fiscal
year 2004?
Secretary Veneman. We do not anticipate that we will need
additional funding for the period of time through fiscal year
2004. That should be adequate funds according to our budget
analysis that has been done.
Senator Byrd. Very well. I thank you. I will be pursuing
this with interest, and I hope that the Department will proceed
expeditiously to get the 50 new humane slaughter inspectors on
board. I will be back later if you need additional funds.
In the meantime, I would appreciate it if you let me know
if you are having any problems.
Secretary Veneman. We will do that, sir. We will keep in
touch with you.
COMPETITIVE OUTSOURCING
Senator Byrd. Now as to outsourcing, the OMB scores
agencies on how well they comply with the President's
management agenda. Agencies are encouraged to submit management
plans to the OMB which incorporates the competitive sourcing
quotas outlined in the President's budget. I understand that
agencies within the Department of Agriculture are currently
studying their workforces to find places where it would be
appropriate for private contractors to take over agency
functions. One example relates to potential outsourcing of
technical specialists, such as soil scientists and other
conservation specialists of the Natural Resources Conservation
Service. These are the people who are responsible for
transferring public conservation policy to private landholders
through what has been one of the most successful public/private
partnerships in history.
Another example, which many of my constituents are
concerned about, is the privatization effort within the U.S.
Forest Service. I believe that this is an important issue for
every agency in your Department. Regardless of the agency or
the activity, the uncertainty at the employee level as to how
agency outsourcing will evolve is having a horrific effect on
morale. Given the loss of experienced agency personnel that
will occur as a large number of employees reach retirement, we
should be thinking of ways to retain experienced workers, not
engage in practices that will erode their trust in personnel
management.
It is my understanding from OMB that these competitive
sourcing plans, once they are submitted to the OMB for approval
can be released to the public at the discretion of the agency
heads. If the Congress is to appropriate substantial funding
for private sector employment opportunities, will you first
provide Congress, and in particular this committee, with a copy
of any management plan or a competitive sourcing proposal that
the Department of Agriculture submits to the OMB?
Secretary Veneman. Senator, first let me just say that I
have served in Government a long time and I have a great
respect for career civil servants and the job that they do. It
is certainly not a philosophical position on my part to reduce
the career workforce.
I think, though, that you do bring up a very good example
of where competitive sourcing is appropriate, and that is in
the technical assistance area through the NRCS for some of the
conservation issues in the Farm Bill that was specifically
authorized by the Congress. We recognize the fact that we are
going to need substantial new resources in technical
assistance. It is not going to take away current jobs, we do
not believe, in the NRCS, but recognize that we should have the
opportunity for the private sector or the non-profit sector to
compete with regard to technical assistance.
This has been something that has been very well received
both on the side of the provider community as well as by the
farmers themselves having the opportunity to work with a
variety of sources in terms of this kind of technical
assistance. We are working with OMB on where the appropriate
areas are to potentially look at outsourcing, and we will
consult with this Committee as we move forward.
But I do think that the technical assistance issue with
regard to the NRCS is a very important one because it was
specifically authorized by the Congress. And, it has been very
well accepted in the agricultural community. It is one that we
have done in conjunction with a lot of public input and public
meetings to best see how to do this.
Another area where we do a lot of outsourcing, and it has
been very effective, is in the whole area of technology and
technology development. It is very difficult to get the kind of
technology expertise in-house in the Government. We need the
expertise of various providers, whether it is in GIS mapping or
in some of our computer systems. But these are the kinds of
things that I think are appropriate as we move forward and
looking at the kinds of things that would be appropriate
outsourcing in our Department.
Senator Byrd. You did not exactly answer my question. Let
me ask a different question.
When do you expect to submit a management plan to the OMB?
And, how soon can you make that plan available to this
committee, if it requests such?
Secretary Veneman. We are working with OMB. I do not know
that we have a specific timetable for submission of a
management plan but we will certainly work with this Committee
as we move forward on any specific plans with regard to the
outsourcing provisions.
Senator Byrd. Do I understand you to say that you will
provide this committee, if it requests such, a copy of any
management plan or competitive outsourcing proposal that the
Department of Agriculture submits to the OMB?
Secretary Veneman. Yes, we would provide this Committee
with any plans to restructure the kinds of activities that we
were proposing.
Senator Byrd. Very well.
Mr. Chairman, I thank you for your courtesy and your
patience. And I thank you, Madam Secretary, and Mr. Dewhurst,
and Secretary Moseley, and Mr. Collins. Thank you very much.
Secretary Veneman. Thank you, sir.
Senator Bennett. Thank you, Senator.
Senator Harkin, do you want a second round?
Senator Harkin. If you had some----
Senator Bennett. I am going to submit some of mine in
writing. I will say, the Secretary has a lunch appointment with
the President of Spain as I understand it. So I am going to
submit mine in writing so that she can meet her appointment.
She and I talk perhaps more often than some of the others of
you, so go ahead, sir.
Senator Harkin. I will keep mine real short. I just want to
know, is he buying or selling?
If he is buying, I will be real short.
AMES, IOWA ANIMAL RESEARCH FACILITY
You are very nice, Madam Secretary. You have been very
patient. Mr. Chairman, you have been very patient and I
appreciate that. I just have three very short ones. One has to
do with the Ames Animal Research Facility. In 2001, USDA came
to the conclusion that modernizing the Ames facilities was
essential. You have visited the facilities. Three Secretaries
of Agriculture have come to the same conclusion. As I read your
testimony I am concerned that there may be some going back and
reevaluating USDA's carefully developed plans to rehabilitate
and renovate these facilities. Delay means increased costs and
leaves our Nation without the facilities it needs to respond to
future natural or terrorist threats to our meat supply.
I understand that construction will start this fall on the
large animal holding facility and I just want to know, should
we be concerned about any delay in moving forward with this
project? Should we be concerned about any delay?
Secretary Veneman. We are absolutely committed to moving
forward with the Ames modernization program. The question is
funds. As you point out, if we delay and do this in increments,
it could substantially increase the cost of the program.
Senator Harkin. Could increase it.
Secretary Veneman. So, at this point, we intend to stay on
the accelerated program. We received some additional monies in
the 2003 omnibus bill, and that is certainly helpful. We are,
as you say, going to begin construction on the one portion of
it this fall.
Senator Bennett. Senator Harkin is responsible for your
giving additional monies.
Secretary Veneman. Thank you, sir.
Senator Harkin. I do not know about that. We all worked
together on that, I think, to get that done.
Mr. Chairman, as you know, you have been in business. They
are building--everyone is committed to getting this thing
rebuilt. There is a large animal facility. Then there is
another biocontainment facility, then a small animal facility.
The contractors and constructors will be there this fall
starting on the large animal facility. If they can then
continue to build the others, they have got all the equipment
there, they have got the people there. But if they have to
close that down, go away, then come back, the costs just
escalate. That is what we are trying to get to in terms of
getting the funds out there. Once the contractor is there,
finish the job and get it done. That is what my comments went
to.
FARM BILL ENERGY PROVISIONS
On energy, Madam Secretary, you along with your staff and
the President have stated your support for farm-based renewable
energy including the landmark energy provisions in 2002 farm
bill. Yet the Administration in the budget has proposed to cut
or eliminate funding for some of these very popular
initiatives. The 2004 budget of the President effectively zeros
out funding for the renewable energy and energy efficiency
program. That is Section 9006, which provides cost-share
assistance to farmers and rural small businesses for renewable
energy systems like wind turbines, methane digesters, and to
make valuable energy efficiency improvements to their own
operations to save money. Your budget also reduces funding for
the critically important bioenergy program under the Commodity
Credit Corporation which assists our ethanol and biodiesel
producers. Again, these programs were funded in the Farm Bill.
So can you--again, if you cannot now, if you want to
respond in writing, that is fine. I know you have got to get to
your lunch, but I am just interested in where you are headed
with this and whether or not we are going to get the funds
necessary for the cost-share programs and for the bioenergy
programs.
Secretary Veneman. Senator, you and I have talked a lot
about programs for rural America and for renewable sources of
energy. Obviously, we are very supportive of moving ahead with
new markets for our agricultural producers.
One of the issues that came up with regard to the Farm Bill
is that there were funds that were provided for some of these
programs, and we will get some of the specifics to you in
writing as you indicate, but some of these programs were funded
for the first year of the Farm Bill with mandatory funds and
then it was left to discretionary funds in the outyears. We are
limited in terms of the amount of discretionary funds we have
to put toward new programs, which made it difficult to make
some of these choices. I understand that the Farm Bill
authorized these programs but they were funded initially with
mandatory funds and we have had difficulty coming up with
discretionary funds to continue some of the funding.
The other thing I would like to point out is that some of
these programs were funded with mandatory funds in fiscal year
2002 with program funds that would go into fiscal year 2003. So
some of the funds that were provided as mandatory funds are
continuing funds that can be used for these programs to allow
them to proceed into the outyears.
Senator Harkin. Please check with your staff. I think the
two programs I mentioned, 9006 and the bioenergy program are
both mandatory. Those do not rely upon discretionary funds.
Mr. Collins. Senator Harkin, that is correct, they are both
mandatory. What happened with the CCC bioenergy program, the
Administration did propose capping that at $100 million. The
authorization is for $150 million a year. However, it is funded
at 77 percent of $150 million, or $115.5 million by the
appropriations bill. We just announced the final rule on that
program this week. We are operating that program with $115.5
million for fiscal year 2003 and at $150 million in future
years. That is the operating regime we are under.
With respect to the other program you mentioned, the
renewable energy systems and energy efficiency program, that
program was funded at $23 million in mandatory funds.
Senator Harkin. That is that cost-share program.
Mr. Collins. Correct, that is a cost-share program. It was
funded at $23 million a year in mandatory spending for each
year of the life of the Farm Bill. The Administration is
implementing that program at the $23 million level for fiscal
year 2003. It was proposed at $18 million in fiscal year 2003
but it is being implemented at $23 million.
Senator Harkin. I thought it was zeroed out.
Mr. Collins. In the future, in fiscal year 2004 it is
proposed to be shifted to discretionary funding. If I am not
mistaken, I think the discretionary funding level is $3 million
a year. That was simply a function of the tight budget
environment and very tough trade-offs in trying to make a
difficult decision about where to focus the money.
Senator Harkin. So it goes from 23 down to three.
Mr. Collins. Correct.
Senator Harkin. And shifted from a mandatory program to a
discretionary.
Mr. Collins. Correct.
Senator Harkin. Can you do that?
Mr. Collins. No, you have to do that.
Senator Harkin. That is what I thought.
Mr. Collins. We can only propose that.
Senator Harkin. That is what I thought. You cannot do that.
So you are proposing to do that.
Mr. Collins. Yes, sir.
Senator Harkin. Mr. Chairman, I would say, I hope we do not
do that. That is why it was written into the bill that way, was
to keep it on that level and keep it moving as a mandatory
program. If I remember right in the farm bill, that had pretty
broad support.
Senator Bennett. Do we do that or does the authorizing
committee do that?
Senator Harkin. I do not know.
Senator Bennett. If you do not know, I certainly do not
know.
Senator Harkin. It would have to be that the authorizing
committee. The appropriations can only do on the funding, but
to change it, to shift the nature of it would have to be done
by the authorizing committee.
Senator Bennett. That would be my thought.
Senator Harkin. The authorizing committee would have to
approve of that. So again, I hope Appropriations Committee
will--but how can they do that? You have requested us to do it,
but I do not think we can do that. I am told by my staff they
can do it through limitations and obligations. And we would
oppose that, obviously.
Senator Bennett. That was redundant.
Senator Harkin. That statement did not have to be made.
That was all I really had, and I do not want to delay you. I
know you have got to go to lunch.
Technical assistance, I will write you a letter on that
because I think some things were said here. We specifically
undid the Section 11 cap, specifically in the omnibus bill,
specifically. I have got it here. I can read it to you. So I do
not know why we are having so many problems with that because
we specifically we wrote it out in the omnibus bill. So I do
not know why we are having problems on the technical
assistance.
Lastly, Mr. Chairman, it seems I do have some work to do
and I will have to talk with Senator Stevens about the CSP to
clear up some misperceptions. As we all know, it is not an
uncapped entitlement. There are rigid caps in there.
Secondly, it is not rely an entitlement. There are things
you have to do in order to qualify for it. It is just that it
is open to all. But you still have to meet certain things and
it is very strongly capped. So I will have to talk with him
about that.
ADDITIONAL COMMITTEE QUESTIONS
Thank you all very much. Thank you, Mr. Chairman, for your
kind patience.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
BIOTECHNOLOGY
Question. Madam Secretary, I noted that you have requested an
additional $6.604 million in your own budget to fund cross-cutting
trade-related and biotechnology programs throughout the Department.
According to your staff, these funds will eventually be distributed to
the Foreign Agriculture Service, the Animal and Plant Health Inspection
Service, and the Grain Inspection, Packers and Stockyards
Administration.
How did you arrive at this figure? How much of this amount do you
expect will be made available to each of these agencies? Why didn't the
Department request that the increases be provided directly to those
accounts?
Answer. This figure was arrived at by considering the priority
needs for these activities and overall budget constraints. We request
appropriations for the Office of the Secretary so funding may be
allocated in a coordinated manner to address issues related to trade
and biotechnology that are very fluid. It would be premature to make
allocations at this time, though we would expect funding to be used to
respond to World Trade Organization and regional and bilateral trade
negotiation demands, as well as trade and regulatory issues associated
with biotechnology.
Question. What are the established criteria for distribution of
these funds? What are the established procedures to seek Congressional
approval for these transfers?
Answer. Funds would be used for high-priority Departmental needs
related to trade and biotechnology, such as World Trade Organization
and regional trade negotiation demands and trade and regulatory issues
associated with biotechnology. Authority to transfer the funds is
included in proposed appropriation language that was submitted with the
President's budget.
REVIEW OF RURAL DEVELOPMENT OFFICES
Question. I understand Rural Development is performing a review of
all of its offices nationwide. Could you please share your expectations
of this review with us, the reasons behind it, and the status?
Answer. Rural Development went through several reorganizations
during the 1990's that resulted in a variety of different
organizational structures, positions and titles in the States. While
there is great diversity in geography and needs among the States, the
variety of field structures has resulted in confusion to our customers,
especially those who work with more one State office, and to the
national office staff as it works to implement national programs. An
advisory committee composed of 10 Rural Development State Directors
reviewed the various organizations and recommended two organizational
models, one of which could be adopted in all States. The committee also
made several recommendations related to responsibilities, titles, and
the minimum size of staff at an office location to ensure quality
customer service is provided. Each Rural Development State Director has
developed a plan for achieving the recommendations of the advisory
committee's report and those state plans are currently being reviewed.
Implementation of those plans will result in greater consistency in the
delivery of our programs and improved efficiency and effectiveness in
the delivery of our programs.
IMPLEMENTATION OF AGRICULTURE EMERGENCY ASSISTANCE ACT OF 2003
Question. What is the status of the implementation of the
Agriculture Emergency Assistance Act of 2003? When do you expect the
Livestock Assistance Program signup to begin? When do you expect
payments to begin?
Answer. The implementation status is as follows:
--2001/2002 Crop Disaster Program.--Signup begins June 6, with
payments to begin by the end of the month.
--Livestock Compensation Program (LCP).--2,149 counties in 42 States
were already eligible for LCP under the original program
announced September 19, 2002 (LCP-I). An additional 779
counties in 30 States have become eligible under the
Agricultural Assistance Act of 2003 (LCP-II). Signup began
April 1 and will continue through early June. Payments began in
early May.
--Hurricane Loss Assistance for Sugarcane Growers and Cooperatives
and Sugar Beet Disaster Program.--Signup will begin for both
programs once the program provisions have been finalized.
--Tobacco Payment Program.--Signup is under way March 17 through May
16, with payments to be completed by the end of May.
--Cottonseed Payment Program.--Signup began May 2 and will continue
through May 23. Payments will be issued in early June.
Signup is expected to begin in August and continue through the end
of October.
Because the program is limited to $250 million, signup must end and
a payment factor be determined before payments can be issued. Once the
factor is determined, payments should begin within 2 weeks.
FOOD STAMP PAYMENT ACCURACY ACTIVITY
Question. In your testimony, you mention funds to improve the
integrity and accuracy of nutrition programs. According to your
testimony, the current average State payment accuracy is now 91.34
percent. How does the Department expect to improve on that number and
improve the integrity of nutrition programs?
Answer. The Food and Nutrition Service (FNS) implemented a priority
project plan beginning in fiscal year 2001 to reduce eligibility errors
and assure program integrity in the Food Stamp Program. The intended
outcome was to initially achieve, for fiscal year 2001, a payment
accuracy rate of at least 90.8 percent. As noted above, the agency
exceeded its payment accuracy goal, by achieving an accuracy rate of
91.34 percent in fiscal year 2001. Preliminary quality control data for
fiscal year 2002 suggest there has been even further improvement in
this fiscal year. These rates will be released in June 2003.
FNS continues to employ a variety of strategies and activities to
improve payment accuracy and assure program integrity. For the past
several years, the agency has received $1.9 million in funding per year
to augment its staffing and efforts to increase payment accuracy
nationwide. FNS also allocates nearly $400,000 annually to support
State travel to conferences, workshops, and other meetings between
States, to facilitate the sharing of best practices of effective and
efficient program management techniques.
Fiscal year 2003-2004 current and planned activities include:
--Creating and maintaining a national team of experts to monitor and
evaluate payment accuracy progress, analyze error rate data,
and exchange information on payment accuracy best practices and
program improvement strategies.
--Targeting high issuance/high error rate states for enhanced Federal
intervention and technical support. This is accomplished by
establishing a tier methodology for states (based on error rate
performance) to support effective and consistent deployment of
limited FNS resources for intervention and technical
assistance.
--Continuing the exchange of best practices information through the
State Exchange Program, and the publication of a Best Practice
Guide.
--Further facilitating the commitment, involvement and collaboration
among State partners and leadership at all levels through the
utilization of a web-based environment dedicated to the
exchange of information and discussion forums on error
reduction issues and strategies.
--Continuing to work with States to optimize analysis based on
quality control data in an effort to develop and monitor
corrective action.
WIC PARTICIPATION ESTIMATION PROCESS
Question. The Administration's budget supports a record level of
funding for the Women, Infants and Children Program (WIC) to cover
anticipated increases in participation. What process is used by the
Department of Agriculture to determine the additional participation?
Also, will the Department make another participation estimate prior to
Committee action on the fiscal year 2004 Agriculture Appropriations
bill?
Answer. USDA tracks WIC participation throughout the fiscal year
and makes projections for the following fiscal year based on
anticipated demand for services. Based on current and projected fiscal
year 2003 participation levels, we consider it unlikely that we will
revise our participation estimate prior to Committee action on the
fiscal year 2004 Agriculture Appropriations bill.
FOOD SAFETY EDUCATION
Question. The Department recently launched a campaign to educate
and reinforce to consumers the importance of food safety. A food safety
mobile actually travels the country to educate the public. According to
your testimony, an increase of approximately $2 million is requested
for a mass media campaign aimed at improving the safe food handling
practices of consumers. What other resources are available through USDA
to educate the public when it comes to food safety?
Answer. One of the key public health missions for FSIS is to
educate the public about the hazards of foodborne illness, as well as
to teach safe food handling techniques to ensure the safety of meat,
poultry, and egg products. The $1.5 million requested in the budget
will be used to evaluate and develop effective strategies for a
comprehensive and sustainable mass media food safety education
campaign.
FSIS has already started to develop this campaign with the new USDA
Food Safety Mobile. The Food Safety Mobile is traveling the country to
educate the public about the importance of food safety, but at the same
time, we are learning important lessons about the best way to get our
message across in order to reach the most people through events and the
media. We will use the information that we learn from this new campaign
to determine how to best utilize our resources, meet our food safety
education goals and communicate our food safety message with all
segments of the population.
Other USDA agencies such as the Food and Nutrition Service (FNS)
and the Cooperative State Research Education and Extension Service
(CSREES), also offer programs to promote food safety and make
educational materials available. Trying to share food safety messages
with all segments of the population, such as consumers, food preparers,
educators, children, physicians, public health officials, and industry,
is a formidable task. However, partnerships between USDA agencies,
other State and Federal entities, as well as private and public
organizations facilitates a wider dissemination of life-saving public
health information about food safety.
REIMBURSEMENT RATE FOR CROP INSURANCE COMPANIES
Question. In the Risk Management Agency portion of the
Administration's budget, the reimbursement rate for crop insurance
companies is reduced from the current level of 24.5 percent to 20
percent. Recently, one crop insurance company failed and others have
commented on the thin profit margins due to 2 years of drought
conditions. If this proposal is enacted, do you expect participation in
the crop insurance program to lower due to this change?
Answer. The number of companies participating in the Crop Insurance
program has been on a steady decline due to a variety of reasons. As
recently as 1993 there were 24 companies in the program compared to 18
today. It is likely that market dynamics will further reduce that
number. To protect the integrity of the delivery system, each new
company will need to satisfy a higher minimum standard of operating and
financial condition to be admitted into, and remain in, the program.
A reduction in the reimbursement rate will increase the financial
pressure upon the companies to adjust their operating approach. Each
company will strive for increased efficiencies without sacrificing
service. This of course is a healthy exercise. However, if the company
is not successful in driving down cost and generating sufficient
returns to satisfy shareholders, consolidation or departures will be
the result.
CROP INSURANCE FRAUD AND ABUSE
Question. It is my understanding that crop insurance fraud and
abuse is a concern for both the Department of Agriculture and crop
insurance companies. A number of individuals are experimenting with
various methods that could be used to combat fraud and abuse. Does the
Risk Management Agency have additional ideas on how to increase the
awareness or combat program fraud and abuse?
Answer. The Risk Management Agency (RMA) continues to regard
technology, visibility and preemptive actions as a major element of our
program to improve the way we address fraud and abuse. This approach
takes advantage of the advanced tools that are becoming available
through various USDA initiatives such as data mining, remote imagery,
and geographical information systems (GIS) technology. We have only
started to explore and use the possibilities of leveraging the use of
GIS technology and data mining to identify potential program abuse and
increase the cost/benefit for the funds currently dedicated to
compliance activities. In particular, GIS capabilities will be expanded
in concert with the Farm Service Agency to benefit program compliance
with other farm programs in addition to crop insurance. RMA also
benefits from FSA field office spot checks in priority areas and from
continual review and revision of product structures and program design
to preempt and prevent abuse. Regarding program awareness, RMA
continues to publicize high profile cases to make farmers aware of the
penalties associated with program abuse. Future RMA reviews will also
include more field visits with producers to promote compliance program
objectives.
______
Questions Submitted by Senator Ted Stevens
ORGANIC STANDARDS FOR WILD SEAFOOD
Question. In the fiscal year 2003 Supplemental Congress just
approved, a provision was included directing you to permit wild seafood
to be labeled ``organic''. Under prior law, seafood could not be
labeled organic because it was not grown on a farm. What are the plans
for implementing this new law, and when can we expect new regulations
to be in place?
Answer. Our plans at the present are to begin a public dialogue on
standards for seafood later this fiscal year. We will publish
information on the National Organic Program web site seeking comments
and input from interested parties to determine the scope of work
involving the development of organic standards for seafood.
COUNTRY OF ORIGIN LABELING
Question. In the 2002 Farm Bill, Congress passed a provision
directing the USDA to develop a country of origin labeling program for
several commodities, including salmon. You recently announced that your
department would hold listening sessions in several communities. My
colleague Lisa Murkowski and I wrote you a letter requesting that you
schedule a session in Alaska. What are your plans for listening
sessions in our State?
Answer. We are pleased to inform you that we have been in contact
with representatives of the Alaska seafood industry and will join them
in Kodiak, Alaska, on June 12, 2003, to hear their views and concerns
on country of origin labeling.
Question. Because of the importance of this program in Alaska and
in the lower 38, I would like to know what the timeline is for
implementation of this program?
Answer. The law required USDA to issue guidelines for voluntary
country of origin labeling by September 30, 2002, which USDA published
on October 11, 2002. To meet the law's deadline for implementation no
later than September 30, 2004, we expect to promulgate the rules for
the mandatory country of origin labeling program in early 2004.
______
Questions Submitted by Senator Christopher S. Bond
COMPETITIVE SOURCING
Question. With respect to the A-76 process, please outline in
detail a comprehensive description of the status of all affected USDA
employees in Missouri, including but not limited to the following
information: how many employees are on the inventory; a description of
their duties; how they were determined and by whom to not be considered
``inherently governmental''; how many employees on the job are already
privatized/contracted out and what they do and what they cost; any
available analysis suggesting that service is not compromised and that
the cost to the Federal Government is reduced; what the plans are for
the future; and how functions placed on the inventory before enactment
of fiscal year 2003 appropriations are in compliance with language
included in Senate Report 107-41 noted below.
``The Committee expects that none of the funds provided for Rural
Development, Salaries and Expenses should be used to enter into or
renew a contract for any activity that is best suited as an inherent
function of Government, without prior approval from the Committees on
Appropriations of the House and Senate. Such activities may include,
but are not limited to, any function that affects eligibility
determination, disbursement, collection or accounting for Government
subsidies provided under any of the direct or guaranteed loan programs
of the Rural Development mission area or the Farm Service Agency.
Further, the Secretary shall provide a report to the Committees on
Appropriations of the House and Senate by March 1, 2002, on all plans
by the Department to enter into contracts to carry out any of the
previously stated activities.''
How many total FTEs at Rural Development currently exist relative
to levels 10 years ago?
Answer. The Rural Development Mission Area FTE ceiling is 7,024 for
fiscal year 2003. In 1993, our records show that the precursor agencies
that now constitute Rural Development had the following staff year
ceilings.
[The information follows:]
------------------------------------------------------------------------
1993 STAFF
AGENCY YEARS
------------------------------------------------------------------------
Rural Utilities Service, formerly Rural Electrification 890
Administration.........................................
Rural Housing Service, formerly Rural Housing and 8,144
Community Service......................................
Rural Business-Cooperative Service, formerly Rural 435
Business and Cooperative Development Service...........
---------------
TOTAL............................................. 9,469
------------------------------------------------------------------------
This represents a reduction of 2,435 staff years from the staff
year ceiling over the 10-year period.
Question. How many contract employees at Rural Development
currently exist relative to levels 10 years ago?
Answer. Due to the temporary nature of contracts and contract
employees, Rural Development does not track this information.
Question. Federal Programs at USDA to provide loans to the rural
poor were authorized by Congress because private lending institutions
were not willing to expose themselves to the significant financial
risk. It is my understanding that those bidding under A-76 to take over
the public loan program functions carried out by the USDA are large
multi-national banks. Do you think it is appropriate to turn over
lending programs to those who have already elected not to serve these
poor citizens?
Answer. The Rural Development mission area has not identified any
public loan program functions in its competitive sourcing plan approved
by the Department in May 2002.
Question. Do you believe it is a good Federal policy to have big
private banks conducting activities such as determining eligibility,
disbursement, collection or accounting for Government subsidies
provided under any of the direct or guaranteed loan programs of the
Rural Development area or the Farm Service agency?
Answer. The Rural Development mission area has not identified for
competitive sourcing, any function related to the determining of
eligibility, disbursement, collection or accounting for Government
subsidies functions under any of its direct or guaranteed loan
programs.
FOOD SAFETY ASSESSMENT PROCESS FOR BIOTECHNOLOGY
Question. Under current law, it is clear that there is latitude to
administratively establish an early food safety assessment process for
biotechnology derived food and feed products, which is often referred
to as the Adventitious Presence issue. It is also clear that USDA would
have a lead role to play in coordinating this process with EPA and FDA.
Could you elaborate upon the progress that the three agencies have made
to move forward on the OSTP notice, which was issued in the summer of
2002?
Answer. The expansion of biotechnology-derived crops is expected
to result in net benefits to producers, consumers, and the environment.
The Federal regulatory agencies--the USDA Animal and Plant Health
Inspection Service (APHIS), the Food and Drug Administration (FDA), and
the Environmental Protection Agency (EPA)--must maintain appropriate
regulatory oversight, adjusting its requirements based on scientific
developments and industry trends.
The Office of Science and Technology Policy has requested public
comment on proposed Federal actions. In anticipation of the expansion
of the development and commercialization of agricultural biotechnology,
these proposed Federal actions would establish a coordinated regulatory
approach to update field testing requirements of biotechnology-derived
plants and to establish early food assessments for new proteins
produced by plants intended for food and feed use. The comments
received in response to the proposal are still under review and the
agencies continue close coordination.
EARLY FOOD SAFETY ASSESSMENTS
Question. Expanding agricultural exports is critical to the
viability of the American farmer and to a robust economy. It appears to
me that it is critical to establish an early food safety assessment
process in a timely manner to leverage greater access for U.S.
agricultural products in international markets while simultaneously
protecting our credibility with trading partners. I would appreciate
your view on this and what plans the Agencies have to address this
issue in international markets.
Answer. Regarding the value of an early food safety assessment for
products of modern agricultural biotechnology, USDA coordinates closely
with the Food and Drug Administration and the Environmental Protection
Agency under the U.S. Government's Coordinated Framework for
Biotechnology to address these types of important issues. In addition,
USDA operates a host of activities and participates in many others to
promote the development, responsible regulation and use of agricultural
biotechnology around the world in order to preserve market access for
U.S. agricultural products.
BIO-BASED PRODUCTS
Question. Secretary Veneman, I appreciate the enormous task you and
your staff at USDA have had last year in implementing the 2002 Farm
Bill. I commend you for your diligence and hard work in getting these
critical programs up and running for our nation's farmers and rural
citizens. However, there is one area that has lagged behind in
implementation and that is Section 9002 of the Farm Bill. This section
gives USDA the central role in leading the Federal Government's use of
bio-based products. I would like to know the status of the proposed
regulations.
Answer. Currently, the draft proposed regulation is in final
clearance. We expect to have the proposed regulation published by
autumn. A 60-day public comment period will follow, to give
stakeholders and the public an opportunity for comment. The draft
regulations have taken longer than anticipated for several reasons:
The program is complex, with many issues to be resolved, ranging
from the types of renewable materials that can be used in bio-based
products that qualify for procurement, to how a labeling program would
work, to how bio-based content is measured. As bio-based products are
such a new field, there is no obvious blueprint to follow.
Addressing the range of responsibilities the statute gives the
Secretary is especially challenging. Before qualifying items for
procurement, the Secretary must consider the availability of the items
and the economic and technological feasibility of using the items,
including the life-cycle costs. Moreover, the statutes also require
that the Secretary provide information as to the availability, relative
price, performance, environmental and public health benefits, and--
where appropriate--a recommended level of bio-based material contained
in the items to be procured. To meet these criteria, we have been
working to identify the appropriate testing and evaluation procedures
to be used and how to ensure the integrity of test results.
Another necessary complication is that the statute requires
consultation with a number of Federal agencies, and that takes time
because of differing views.
Question. I would also like to encourage USDA's own internal use of
bio-based products. I feel USDA can and should be leading this
government-wide effort. Bio-based products help develop new markets for
our agriculture products and should be fully utilized by USDA. Please
let me know the status of USDA's activities in this area.
Answer. USDA has been an enthusiastic user of bio-based products,
as well as a leader in spearheading new bio-based research and
applications.
Our Beltsville Agricultural Research Center (BARC) has been at the
forefront of this effort. In fact, BARC won the prestigious White House
Closing the Circle (CTC) Award for environmental achievement in 2001,
in recognition of the Center's innovative utilization of bio-based
products. The 2001 CTC Award specifically lauded the BARC Biodiesel
Demonstration, the permanent fuel program of the Center in which all
150 diesel-powered vehicles at BARC use a blend of 20 percent biodiesel
and 80 percent diesel fuel referred to as B20. The Center has worked
closely with the Defense Energy Supply Center, to purchase large
quantities of pre-blended B20, which reduced costs and made it easier
for Defense and civilian agencies to purchase the fuel. BARC is now
demonstrating the use of B20 in back-up generators at the facility, and
is using another, B5, blend in its boiler plants in an effort to reduce
use of #2 home heating oil.
In addition to biodiesel, the Center utilizes a variety of bio-
based products on a regular basis. In fact, the use of these products
as part of an innovative Environmental Management System helped BARC
win the CTC award for 2002 as well. Specific examples of bio-based
products utilized include: soy-backed carpet; bio-based 2-cycle oil;
gear lubricant; hydraulic fluids; lithium grease; anti-wear hydraulic
oil; chainsaw bar and chain lubricant; oil cutter; penetrating fluid;
power steering fluid; and engine oil. All shops utilize bio-based hand
cleaners, parts cleaners, and metal cleaners. A recently-implemented
BARC janitorial contract requires the use of bio-based and/or
environmentally preferable cleaning materials, restroom hand soaps, and
other products on a daily use basis in all the Center's facilities.
Across the Department, other activities are ongoing to expand our
internal usage of bio-based products. USDA is committed to using
alternative domestic biofuels in our fleet vehicles, and has an
internal Departmental education and promotion strategy in place to
annually increase the level of usage of these fuels, especially
biodiesel and ethanol. In fiscal year 2000, USDA fleets used 66,550
gallons of alternative fuels and by fiscal year 2002 the fleets were
using over 133,000 annually. For fiscal year 2003, we expect an
estimated 8 percent increase over fiscal year 2002 usage levels. Also,
we expect to soon initiate a biodiesel fuel educational outreach grant
program, as directed by the 2002 Farm Bill's Section 9004. In another
product area, this past spring, USDA purchased carpet for various
Departmental offices that utilizes soy-based carpet backing.
Finally, we are involved in government-wide projects to create
markets for bio-based products. In addition to the aforementioned
Federal bio-based preferred procurement program of the Farm Bill's
Section 9002 that we are leading, we are actively participating in the
``Buy Bio'' inter-governmental working group, developing additional
strategies for government-wide procurement and promotion of bio-based
products.
VALUE-ADDED DEVELOPMENT GRANT PROGRAM
Question. On another note, the Administration's proposed budget
eliminated funding for the value-added development grant program, which
was authorized in the last farm bill. Many Missouri farmer groups are
utilizing this program to jump start value-added ventures, which are
desperately needed to rejuvenate rural economies and create jobs. While
Missouri producers were successful last year in securing some funding
to assist their projects, many projects are still seeking assistance.
With the proposed elimination of funding, how does USDA intend to
assist producer groups who are seeking to help themselves and their
communities through value-added agriculture?
Answer. USDA provides support to producer groups for value-added
activities through a number of its programs. One means is through
technical assistance. Rural Development's Cooperative Services program
has many years of experience in working with producers to organize
cooperatives, many of which involve value-added activities. There are
cooperative development specialists assigned to the National Office, as
well as to many of the State Rural Development offices. Rural
Development also offers other funding programs to assist producers who
wish to enter value-added activities. These include the Business and
Industry Loan Guarantee Program, the Cooperative Stock Purchase
Program, and the Rural Business Enterprise Grant Program.
______
Questions Submitted by Senator Conrad Burns
UPDATE ON LIVESTOCK FEED PROGRAM
Question. Much of the State is still in extreme drought conditions.
Your announcement on it was last month--can you provide an update on
how the program is running, and whom it affects?
Answer. The Secretary will add seven counties in southeastern Idaho
and an additional four counties in northwestern Utah, under the 2003
Livestock Assistance Nonfat Dry Milk Program to those experiencing
continuing drought. This makes livestock producers in a total of 130
counties in 11 States eligible to apply for surplus stocks of nonfat
dry (NDM) milk. These surplus stocks cannot be used for human
consumption.
This program was designed to be dynamic and adjust as conditions
change to help meet the needs of America's foundation livestock owners
experiencing the worst conditions.
Other States already included in NDMFP are Arizona, Colorado,
Kansas, Montana, Nebraska, New Mexico, South Dakota, Utah and Wyoming.
These stocks are provided at a minimal cost to the States and Tribal
Governments who are responsible for providing distribution points for
the eligible producers. The Commodity Credit Corporation will bear the
expense of and be responsible for transporting the NDM to distribution
points.
The program uses USDA's surplus NDM stocks that are out of
condition. The allocation of NDM for a county is based on a renewable,
30-day supply equivalent to 2 pounds of NDM per day for beef cattle and
buffalo, and \1/2\ pound of NDM per day for sheep and goats. Eligible
livestock include foundation herds of beef cattle, buffalo, sheep and
goats. National Agricultural Statistics Service (NASS) data is used to
determine the number of eligible livestock in each county. Eligibility
is determined based on the U.S. Drought Monitor found on the Web at
http://www.drought.unl.edu/dm/monitor.html.
The addition of 11 counties required an obligation of 12 million
pounds of NDM. A total of 232 million pounds of NDM is now obligated to
producers in the States that have been hardest hit by the ongoing
drought.
Question. When will checks for Crop Disaster (CDP) be going out?
Answer. Signup started on June 6 and the issuance of payments began
on June 30.
Question. What are the views on the Ewe replacement program?
Answer. The Lamb Meat Adjustment Assistance Program including the
ewe lamb expansion payment program is scheduled to expire July 31,
2003. The overall program has provided some much needed assistance and
sheep producer returns have improved since the initiation of the
program in 1999. In general, the program seems to have fulfilled its
objective. Ewe lamb payments have been made on over 1.3 million ewe
lambs to increase the quality and size of U.S. flocks. However, serious
drought conditions have discouraged expansion in many areas. We will
reevaluate the overall condition of the sheep industry as we consider
proposals to extend the program.
HARD WHITE WHEAT INCENTIVE
Question. How will USDA handle this program?
Answer. The final rule for the Hard White Wheat Incentive Program
(HWWIP) is published in the Federal Register. Key components of the
HWWIP include:
--Signup for 2003 HWWIP began March 3, 2003, and will continue
through the marketing year.
--Both hard white winter wheat and hard white spring wheat are
eligible for payment.
--A production incentive in the amount of $0.20 per bushel is
provided for a minimum of #2 or better hard white wheat, as
established by the Federal Grain Inspection Service.
--Payment can be earned on a maximum of 60 bushels for each planted
acre.
--An additional incentive in the amount of $2.00 per acre is provided
for each acre planted to certified seed.
--Producers are eligible to earn both the production incentive and
the certified seed incentive in the same year.
--Total Commodity Credit Corporation outlay for the 3 years is to be
based on not more than 2 million acres or equivalent volume of
production.
--Settlement sheets must be provided to FSA upon disposal of the
production certified on the application, to be eligible to earn
the production incentive.
--The end use of the hard white wheat may not be for feed.
Question. When can producers expect to get paid for their certified
seed tags?
Answer. The certified seed incentive payment and the production
incentive payments will be issued, as applicable, as soon as payments
software development and testing is complete.
As you are aware, the HWWIP provisions were included in the 2002
Farm Bill. Due to the massive resources required to implement the
Direct and Counter-Cyclical Program, livestock assistance programs,
other programs included in the 2002 Farm Bill, and the programs
included in the Agricultural Assistance Act of 2003, program delivery
and implementation was prioritized according to the potential numbers
of affected producers, as well as other determining factors.
All available resources are currently being utilized and a certain
portion allotted to final development of the HWWIP, so that payments
may be timely issued. We are anticipating that we will be able to begin
issuing payments as soon as possible during the summer of 2003.
______
Questions Submitted by Senator Herb Kohl
FARM BILL IMPLEMENTATION
Question. The new farm bill expanded program crops to include
soybeans as an eligible commodity to receive direct and counter-
cyclical payments. I have heard from constituents that this has had the
unintended effect of restricting the ability of growers to produce
anything other than program crops once their acreage becomes
``program'' acreage and they are thereby prohibited from producing
commodities such as fruits and vegetables. I do recognize that the
Department has attempted to address this problem administratively.
Are there additional authorities at your disposal to address this
problem, or does a remedy require legislation?
Answer. The 1996 Act established bases acres for wheat, feed
grains, cotton, and rice. Nationally, base acres equal 212 million
acres. Because producers of these crops can update their bases and
bases may be established for oilseeds for the first time under the 2002
Farm Bill, total base acres could increase by 50 to 75 million acres.
These additional base acres potentially reduce the ``pool'' of acres
available for fruit and vegetable plantings.
The provisions that allow owners to update base acres and establish
base acres for oilseeds is statutory; the Administration has no
discretion when it comes to implementing these provisions.
However, the 2002 Farm Bill allows producers to opt out of the
program for any year and be allowed to plant unlimited acres of fruits
and vegetables on that farm. The producer will not receive any direct
and counter-cyclical payments for that farm; however, the farm may be
enrolled in the in succeeding years and receive full program benefits.
We have heard compelling arguments from those who think the fruit
and vegetable restrictions and penalties are too severe and from those
who think the opposite. The Secretary has used any discretionary tools
available to her to strike a balance between opposing viewpoints. We
believe in the principle of planting flexibility; however, we are
concerned about how small increases in fruit and vegetable acreage can
be devastating to the traditional growers of these crops, especially if
the increase is a result of government programs.
After listening carefully to all sides of the arguments, we have a
rule that implements the statutory provisions of the 2002 Farm Bill and
minimizes the government's role in influencing a producer's decision to
plant fruits and vegetables. The rule gives the industry the ability to
attract new acres if market conditions warrant, without giving the
program participant an unfair advantage in being able to receive both
government payments and fruit and vegetable income on the same acres.
HOMELAND SECURITY/OFFICE OF HOMELAND SECURITY
Question. What are the responsibilities of the Department's Office
of Homeland Security?
Answer. The Department does not have an Office of Homeland
Security. The Department established a Homeland Security Council and a
Homeland Security Support Staff. The Council is chaired by the Deputy
Secretary and includes all of the Under and Assistant Secretaries, the
Inspector General, select staff office directors, and the
communications director. This Council is responsible for protecting the
food supply and agricultural production, protecting USDA facilities and
other infrastructure, and protecting USDA staff and managing emergency
preparedness.
USDA's Homeland Security Staff is delegated authority for the
following primary functions of:
--coordination with mission areas for policy formulation, response
plans, reporting and action assignments to meet acute and major
threats to the food and agricultural system, and key USDA
assets;
--activating the USDA incident management system and the Federal
Response Plan responsibilities in the event of a major
incident;
--oversight of USDA nationwide policies and procedures related to
homeland security;
--coordination with the White House Homeland Security Council,
Department of Homeland Security, other Federal agencies, and
public and private organizations, as necessary;
--collaboration with the National Security Council, the Homeland
Security Council, the Office of Management and Budget, USDA
mission areas, the Office of Budget and Program Analysis, and
the USDA Homeland Security Council on the development and
submission of a coordinated budget request for homeland
security; and
--staff support to the USDA Homeland Security Council.
TRANSFERS TO PLUM ISLAND
Question. The President's budget proposes to transfer $7.8 million
in fiscal year 2004 to the Department of Homeland Security (DHS) for
research and diagnostic activities currently funded through ARS and
APHIS respectively at the Plum Island Animal Disease Center at
Greenport, NY.
What assurances do you have that once this funding is transferred
to DHS, research and diagnostic priorities will continue to support the
animal health issues as they have in the past and as anticipated by the
livestock sector?
Answer. The fiscal year 2004 Budget provided funding for Plum
Island activities to both USDA and DHS. We are working with our
partners at DHS to create a research and diagnostic program that
reflects the priorities of both departments. Communications between
USDA and DHS, in relation to the DHS fiscal year 2004 budget, reveal
that they share a strong interest in rapid detection of pathogens and
vaccine development. These two areas of ongoing research by USDA are
designed to meet the need of the livestock industry and the American
public.
Question. Please summarize any communications you have had with the
livestock sector in regard to concerns they may have that
responsibilities for these activities may fall out of the jurisdiction
of USDA.
Answer. USDA personnel have visited with various stakeholder and
consumer groups representing the livestock sector during which the
transition at Plum Island has been discussed. Within these groups there
is a broad array of opinions as to how the changeover is perceived.
Some groups express apprehension that their priorities will not be
reflected in research programs conducted by DHS and are further
concerned about how the changes in funding will impact current USDA
research. Others, however, see it as an opportunity to bring new
resources into agriculture to meet high priority needs.
HOMELAND SECURITY UNOBLIGATED BALANCES
Question. You state in your written testimony that of the $328
million provided to USDA for Homeland Security purposes, $184.3 million
remains to be obligated. Documents from the Administration indicate
that USDA is one of the Departments to have obligated the smallest
percentage of Homeland Security-related appropriations since the
terrorist attacks of September 11, 2001.
Please explain why USDA has taken longer than most Departments to
obligate these funds and provide specific information on how and when
the $184.3 million which remains will be obligated.
Answer. I wanted to make sure the Department took the time
necessary to intensively review our needs and direct the funds where
critical security gaps were identified.
Many of the activities being funded through the Homeland Security
supplemental require significant levels of planning prior to the
obligation of funds. In the case of laboratory enhancements, which
represent 27 percent of the funds provided, significant planning and
design work must precede construction. Additionally, we have allocated
funds to cover salary and benefit costs for new employees. Although we
have made good progress in recruiting and filling these positions,
obligations will appear incrementally as salary payments are made.
The Department plans on obligating the majority of the remaining
funds by the end of fiscal year 2003. However, certain funds, including
those for construction and those awaiting the results of security
assessments are expected to be obligated in 2004. Additionally,
approximately $30.8 million of the $328 million is being transferred to
the Department of Homeland Security for the laboratory at Plum Island.
EXTENSION DISASTER EDUCATION NETWORK
Question. It has been noted that the USDA Extension Service, with
its state and county network, can provide substantial contributions to
Homeland Security in the nature of a first-responder in rural areas. In
fact, the Extension Disaster Education Network (EDEN) is in place to
serve in this capacity.
Does USDA intend to utilize the EDEN system as a Homeland Security
tool, and if so, in what manner?
Answer. USDA is currently utilizing the EDEN system as a Homeland
Security tool and intends to support efforts to increase that
utilization in the future. The EDEN system is an internet based tool
for providing relevant information on disaster preparedness, mitigation
and recovery to Extension educators throughout the Nation. USDA is
using the system to provide relevant information on homeland security
to Extension educators who can use it for training and educating
farmers, ranchers and others who are likely to be first responders in
rural areas.
Question. What level of funding is in the President's fiscal year
2004 budget for the EDEN system?
Answer. Approximately $500,000 of the $16,000,000 in the Homeland
Security Program line of Integrated Activities in the CSREES fiscal
year 2004 President's Budget will be used to support EDEN homeland
security efforts.
Question. Has the EDEN system, or any other USDA program, been used
to improve Homeland Security preparations at the farm level? What
evidence is there that individual farmers are taking steps to improve
homeland security? Please describe funds in the President's fiscal year
2004 budget to help individual farmers be better prepared in the area
of Homeland Security.
Answer. EDEN system based information has been used to educate
farmers and farm advisors on the identification and appropriate
responses to suspected introductions of plant and animal diseases. This
is being done through linking EDEN with the Plant and Animal Disease
Diagnostic Networks and with APHIS information systems. EDEN is being
used to survey Extension educators on their use of EDEN based
information in their farmer and rancher education programs. In addition
to the direct funding for EDEN, education programs will be developed
through funding of integrated activities in the National Research
Initiative (NRI). $500,000 in fiscal year 2003 NRI funds are being used
for a National Training Program for Agricultural Homeland Security.
More funds could be allocated for this purpose in fiscal year 2004
depending on the fiscal year 2004 appropriation language, and if the
number and quality of proposals indicate it would be a good investment.
FOOD SAFETY
Question. The President's budget request includes an increase of
nearly $5 million, in part, to develop the laboratory capability to
respond to chemical terrorism. This increase will include the
construction and equipping of a Biosafety Level 3 (BL-3) facility
within FSIS's Microbiological Outbreaks and Special Projects Unit in
Athens, GA.
Has construction on this lab already started? When will it be
completed?
Answer. In order to protect laboratory staff and to minimize the
probability that the laboratory complex will become contaminated, FSIS
will renovate existing laboratory space at the Russell Research Center
in Athens, Georgia. Renovation of this facility began in March of 2003,
and is expected to be completed in February of 2004.
Question. What will the total cost for lab construction and
equipment be? Will additional increases be requested in the future?
Please provide the planned timeline and budget for completion and
equipment of this laboratory.
Answer. The total cost for renovating existing space to construct
the Biosafety Level-3 facility is $2.1 million. The President's 2004
Budget does not request additional funding for this laboratory. The
planned timeline and budget for completion and equipment of laboratory
are as follows:
------------------------------------------------------------------------
Performance
Dates milestones Budget
------------------------------------------------------------------------
Mar 2002.......................... Purchase lab $117,000
equipment.
Jun 2002.......................... Purchase lab 66,000
equipment.
Aug 2002.......................... Purchase lab 68,000
equipment.
Sep 2002.......................... Construction 1,660,000
Contract to bring
to BL-3 level.
Other Costs......... 140,000
Feb 2004.......................... Construction
Completed.
---------------
Total Costs................. .................... 2,051,000
------------------------------------------------------------------------
Question. What, specifically, will the laboratory be used for?
Answer. In the event that there is a major threat condition, the
BL-3 laboratory will be a critical resource that will allow FSIS to
handle and screen large numbers of food samples for the presence of
biological, chemical, and radiological agents. It will also give FSIS
the capability to handle samples potentially contaminated with unknown
and mixed agents. This facility will also protect staff and minimize
the probability that the entire laboratory complex will become
contaminated during the analysis of agents that would mostly be used to
contaminate the food supply.
FSIS REORGANIZATION
Question. The January, 2003 FSIS report on the Food Security
Initiatives currently being undertaken by FSIS mentions the Food
Biosecurity Action Team, and states that ``a planned reorganization of
FSIS is underway that includes a new homeland security office that will
serve as a center for this team's functions.'' However, I see no
specific mention of this Team or any planned reorganization in the
President's budget request.
Is a reorganization being planned for FSIS? If so, please provide
information on when will it take effect and what is being planned.
Answer. FSIS has developed a reorganization plan, which is
currently under review.
Question. Will Congress receive prior notification of any
reorganization?
Answer. Congress will be notified as required by the 2003
Appropriations Act.
Question. Will this reorganization result in the need to reprogram
any of the funds requested in the President's budget?
Answer. The reorganization plan is under review. Therefore, we have
not determined if there will be a need to reprogram any of the funds
requested in the President's budget.
FOOT AND MOUTH DISEASE
Question. Please contrast the level and type of preparations the
United States now has to contain an outbreak of Foot and Mouth Disease
from those which the British had available at the time of the outbreak
in the United Kingdom in 2001. How have the British modified their
level of preparation since then? What actions have the United States
taken since then?
Answer. Since the British experience with foot-and-mouth disease
(FMD) and the terrorist attacks of September 11, 2001, USDA has
strengthened its guard against FMD and other animal health threats.
USDA has bolstered the Emergency Management System (EMS), a joint
Federal-State-industry effort to improve the ability of the United
States to deal successfully with animal health emergencies ranging from
natural disasters to introductions of foreign animal diseases. In March
2001, APHIS announced the availability of fiscal year 2001 funds for a
grant program for the National Animal Health Emergency Management
System to increase the level of animal health emergency preparedness
for the entire United States. Of the 67 grant applications received,
APHIS was able to award 38 of them, totaling $1.8 million.
During the FMD outbreak in the United Kingdom, the United States
responded to the United Kingdom's request for assistance on disease
diagnosis and carcass removal. More than 200 veterinarians from State
agencies, private practice, universities, and other organizations from
the United States took part in the control efforts. Another 125 Federal
veterinarians from several agencies also participated, and the U.S.
Environmental Protection Agency provided support for carcass disposal
and burial. ARS scientists visited the main UK reference laboratory at
Pirbright and assessed sampling protocols and diagnostic tools utilized
throughout the outbreak. This experience, as well as the practice USDA
gained in coordinating such a diverse group, will be beneficial in the
event of future emergencies.
In fiscal year 2002, APHIS distributed approximately $18.5 million
in cooperative agreements to the States and Tribal Lands to help
bolster foreign animal disease (FAD) surveillance and preparedness.
Currently, APHIS is working on distributing additional funds to the
States and Tribal Lands to be used to help further bolster their FAD
surveillance programs.
Additionally, APHIS developed and participated in many State level
test exercises to increase the confidence and capability of the first
responders to an animal health emergency in the United States. APHIS
also participated in the development and implementation of an
international animal health test exercise in Australia. In fiscal year
2002, APHIS offered FAD awareness and incident command system training
to State veterinarians.
APHIS and the Cooperative State Research Education and Extension
Service initiated a cohesive and coordinated national animal health
laboratory network (NAHLN) in fiscal year 2002 with Homeland Security
Supplemental funds. The network emulates a national strategy to meld
the Nation's Federal, State, and local resources in order to respond to
any type of animal health emergency, including bioterrorist events,
newly emerging diseases, and FAD agents that threaten the Nation's food
supply and public health. During fiscal year 2002, APHIS provided a
total of $15.25 million in Homeland Security funding to 12 State
diagnostic laboratories for activities such as improving biosecurity of
facilities, communication of results, equipment, standardization of
methods, and quality assurance.
Question. Please provide the USDA position on the need to make
available a rapid test to detect the presence of Foot and Mouth Disease
and the need to stockpile vaccines.
Answer. The availability of a rapid test to detect the presence of
foot-and-mouth disease (FMD) would greatly help contain an outbreak
should one ever occur here. ARS Scientists at Plum Island have
developed and bench validated a rapid detection assay. The assay will
be further validated by APHIS. In addition, two other rapid detection
assays for FMD (one developed by the California Animal Health
Diagnostic Laboratory System in conjunction with the Lawrence Livermore
National Laboratory and one commercial assay developed by Dupont) will
also be validated by APHIS.
Stockpiling is already occurring through the North American FMD
Vaccine Bank, which stores FMD antigens that keep indefinitely and may
be formulated into vaccine rapidly should an FMD outbreak occur. Given
the many subtypes of the FMD virus, APHIS continues to add antigens to
the Bank for needed subtypes.
Question. Does such a rapid test exist, and if so, why is it not
deployed? If it does not exist, what is USDA doing to develop one?
Answer. ARS Scientists at Plum Island have developed and bench
validated a rapid detection assay for foot-and-mouth Disease (FMD).
This assay has been taken to the field and tested on samples from
clinical cases of the disease, but more data and testing is required
before these tests can be accepted as fully validated. The assay will
be further validated by APHIS, via testing on samples of positive and
negative controls. In addition, two other rapid detection assays for
FMD (one developed by the California Animal Health Diagnostic
Laboratory System in conjunction with the Lawrence Livermore National
Laboratory and one commercial assay developed by Dupont) will also be
validated by APHIS.
Question. To what extent are vaccines available? If there was a
reported outbreak, how quickly could vaccines reach the effected herds?
Answer. Presently, our contributions, along with contributions from
Mexico and Canada, assure the availability of 14.5 million doses of
four strains of FMD vaccine. During fiscal year 2003, APHIS expects to
add additional strains and bring the total number of available doses to
19.5 million. In the fiscal year 2004 President's budget, APHIS
proposes to increase the availability of doses to 20.75 million at a
cost of $560,000.
Once the North American FMD Vaccine Bank is supplied with the
serotype of the outbreak, and the vaccine is available, the North
American FMD Vaccine Bank will be able to supply approximately 300,000
vaccines to the affected areas within 3 days. If however, the North
American FMD Vaccine Bank does not have a stockpile of the needed
vaccine, it could take as long as a month to produce the needed
vaccines.
EXOTIC NEWCASTLE DISEASE
Question. It is my understanding that USDA developed a rapid test
for Exotic Newcastle Disease more than 2 years ago, but has failed to
speed the validation or deployment of this test in spite of
admonishments from Congress. The recent outbreak of this disease
indicates that USDA efforts at containment are badly inadequate.
Is not Exotic Newcastle Disease a virus that has been identified as
a potential biological weapon agent?
Answer. I disagree that the USDA efforts at containment are badly
inadequate. While the exotic Newcastle disease virus has been
identified as a potential biological weapon agent, there is no evidence
that this incident is the result of an intentional introduction.
Question. Why has USDA not validated and made available this test?
Answer. The United States Department of Agriculture, along with the
California diagnostic laboratory system, has validated the rapid test
for exotic Newcastle disease. Samples were used from the recent
outbreak in California to validate the test. Presently, both the State
of California and USDA's National Veterinary Services Laboratories are
using the rapid test to sample commercial and backyard flocks. USDA
officials have also offered the test to neighboring State diagnostic
laboratories and to laboratories participating in the National Animal
Health Laboratory Network. Training has been completed and once the
laboratories pass a proficiency test, they will begin using the rapid
test in national surveillance.
Question. To what extent does USDA believe the outbreak of Exotic
Newcastle Disease is intentional or does USDA believe, as has been
reported, that it was introduced by the illegal transportation of
fighting birds? If the latter is the case, what is USDA doing to step
up enforcement of bird fighting laws to prevent similar introductions
in the future?
Answer. While USDA's investigation into the exotic Newcastle
disease outbreak in Southern California has not provided a source of
infection, the virus strain is genetically similar to a strain
confirmed in Mexico in 2000. USDA does not believe the virus was
introduced intentionally. There is no conclusive evidence to support
the claims in the press that the disease was introduced by the illegal
transportation of fighting birds. However, the movement of poultry
species such as fighting birds does contribute to the spread of
disease. USDA commonly intercepts illegally transported pet birds from
Mexico and previous exotic Newcastle disease outbreaks have been
attributed to birds from Mexico. In February 2003, USDA conducted a 30-
day operation on the Mexican Border in Southern California to intercept
birds and other prohibited items. During the operation, program
officials intercepted three shipments of smuggled birds and two
shipments of fighting cock spurs, resulting in the confiscation of six
birds. All seized birds tested negative for END. Regulations in the new
Farm Bill and legislation pending in California should help support
improved enforcement of laws prohibiting the movement of fighting
birds.
SECURITY ANALYSIS SYSTEM/UNITED STATES AGRICULTURE SYSTEM
Question. You are requesting additional funding for the SAS/USA
system. The Agency received $1.7 million from Homeland Security Funds
last fiscal year. With the large balance left in that fund, why is a
separate line-item request needed?
Answer. ERS plans to obligate all of this $1.7 million before the
end of fiscal year 2003. Currently, ERS is focusing on integrating many
new databases to strengthen the fundamentals of the SAS/USA system to
have information readily available for analysis for a variety of
agriculture-related emergency situations. ERS has made substantial
progress in gathering and incorporating data in the areas of
transportation, agriculture production, and the locations of food
processing facilities. Within the next 6 months, ERS will also be
developing a very complex food contamination scenario that uses data to
describe the flow of food material from production through processing
and distribution channels to consumers. This scenario will concentrate
on ground meat, ready-to-eat food, poultry, milk, and eggs.
For fiscal year 2004, ERS will use the $1 million in additional
requested funding to finalize the food contamination scenario and
construct a foot-and-mouth scenario, as well as to incorporate a more
finely-defined spatial dimension (at the county level instead of the
current State level) and economic dimension (about 500 business sectors
instead of the current 132) into the system. ERS also plans to develop
a more sophisticated economic model that includes feedback to project
consumer reactions.
The Homeland Security funds have all been allocated to high
priority efforts, and all such funds are expected to be obligated the
end of fiscal year 2003.
COMPETITIVE SOURCING
Question. I am concerned that Administration directives on the
subject of USDA Competitive Sourcing will result in substantial harm to
employee morale and serious erosion of long-held public/private
partnerships in the area of conservation and other mission areas
important to Rural America.
Please provide a listing of all USDA activities that are being
considered for competitive sourcing and the timetables for actions on
this subject with a brief description of their current workload,
responsibility, grade, ethnicity, gender and include persons with
disabilities.
Answer. Currently USDA is considering approximately 6,600 positions
for study under Competitive Sourcing guidelines during fiscal year
2003. These positions include functions such as Human Resources,
Internet Technology, Debt Collection, Loan Operations, Program
Reporting, Maintenance, Clerical, Geological analysis, Cartography,
Soil conservation, Civil Engineering and Laboratory Technicians. About
two thirds of the individuals filling these positions have been
identified as male and about a third female, with an ethnicity of 8
percent African-American, 2.6 percent Hispanic, 1 percent Asian, 1
percent American Indian and less than 1 percent identified as disabled.
The grades of these individuals range from GS-3 to GS-14. I will
provide the listing you requested for the record.
[The information follows.]
----------------------------------------------------------------------------------------------------------------
Expected
Agency Responsible Type of Work Load Study Start Completion
Date Date
----------------------------------------------------------------------------------------------------------------
FSA............................................ Human Resources................... 6/1/2002 9/30/2003
Information Technology............ 6/1/2002 9/30/2003
Debt Collections.................. 6/1/2002 9/30/2003
Loan Operations................... 6/1/2002 9/30/2003
Program Reporting................. 6/1/2002 9/30/2003
FAS............................................ Data Collection................... 10/1/2002 9/30/2003
RMA............................................ Administrative Support............ 8/1/2003 9/30/2003
FS............................................. Information Technology 2/3/2003 2/15/2004
Infrastructure.
Maintenance....................... 2003 9/30/2003
(various
start
dates)
Job Corp Center................... 4/3/2003 9/30/2003
Information Technology Help Desk.. 10/15/2002 12/2/2003
Content Analysis.................. TBD TBD
NRCS........................................... Administrative Support............ 12/1/2002 9/30/2003
Geological Analysis............... 1/1/2003 9/30/2003
Supply Warehouse and Distribution. 12/1/2002 9/30/2003
Cartography....................... 1/1/2003 9/1/2004
Soil Conservation Operations...... 12/1/2002 9/30/2003
Soil Conservation Evaluation...... 12/1/2002 9/30/2003
Civil Engineering and Analysis.... 12/18/2002 4/1/2004
RD............................................. Centralized Service Center........ 10/8/2002 9/18/2003
Operations and Service 10/8/2002 9/18/2003
(Accounting).
Human Resources (Training Support) 10/8/2002 9/18/2003
Program Support................... 10/8/2002 9/18/2003
FNS............................................ Administrative Support............ 9/30/2002 9/30/2003
AMS............................................ Cotton Grading.................... 8/1/2003 8/30/2003
APHIS.......................................... Laboratory Technicians............ 2/1/2003 9/30/2003
Administrative Support............ 1/1/2002 6/1/2002
Aircraft Pilot.................... 2/1/2003 9/30/2003
Tree Climbers..................... 2/1/2003 9/30/2003
Clerical Support.................. 2/1/2002 9/30/2002
Information Technology............ 9/1/2002 9/30/2003
Laboratory Technicians............ 2/1/2003 9/30/2003
Maintenance....................... 2/1/2003 9/30/2003
Medfly Production Workers......... 2/1/2003 9/30/2003
Training.......................... 9/1/2002 TBD
REE............................................ Facilities Operations & 5/1/2003 12/1/2004
Maintenance Farm Services.
Facilities Operations & 5/1/2003 12/1/2004
Maintenance Research Farming
Service.
NFC............................................ E-Payroll operations.............. 10/1/2002 1/1/2003
Information Graphics.............. 7/1/2003 9/30/2003
Printing and Reproduction......... 7/1/2003 9/30/2003
Records Management................ 7/1/2003 9/30/2003
Microfilming...................... 7/1/2003 9/30/2003
Nursing........................... 7/1/2003 9/30/2003
Internal Audit.................... 7/1/2004 9/30/2003
Claims Processing................. 7/1/2003 9/30/2003
Telephone Management.............. 7/1/2003 9/30/2003
Cyber Security.................... 7/1/2003 9/30/2003
----------------------------------------------------------------------------------------------------------------
Question. Please explain how you intend to consider the
``competitive'' value of the historical experience and cooperation with
the private sector that Federal agencies currently posses?
Answer. USDA contracts extensively with the private sector. As
contracts expire, USDA will continue to compete the work according to
the Federal Acquisition Regulation to ensure full and open competition
through the use of competitive procedures.
Question. Please explain how the Administration intends to ensure
that any private entity that succeeds in a competitive bid over a
current USDA agency will maintain, at least, current services over a
prolonged period of time?
Answer. The Federal Acquisition Regulations that the Department and
other Federal agencies follow provide a number of mechanisms to ensure
that private entities provide services under contract to the
government. During the evaluation of the contract bid proposals, the
past performance of the vendor is considered when judging the ability
of a private entity to perform at the required level. In addition, the
contracting officer makes a determination to ensure that a private
entity is making a responsible offer; this assessment includes
possessing such items as: adequate resources, necessary organization
and experience, accounting and operational controls, and a satisfactory
performance record. Once a contract is awarded, the Department provides
technical direction and guidance to the contractor to ensure
satisfactory performance and timely delivery.
Question. For what period of time will private entities be expected
to maintain a current level of services in order to be ``competitive''
in this process?
Answer. Typically, a contract will include a base year and four
option years. Options will be exercised based on contract performance.
Question. Will there be liquidated damages assessed against any
private entity that defaults in their contractual responsibilities over
a period of time? If not, what means will be used to ensure long-term
viability of Federal programs once they are no longer under the control
of Federal employees?
Answer. The Federal Acquisition Regulation (FAR) provides for
several remedies, depending upon the circumstances, should a contractor
default in their contractual responsibilities. One such remedy is to
terminate the contract. There are also various steps the government
takes to notify contractors of unsatisfactory performance and to permit
them to correct the situation, prior to engaging in the termination
process. Should the contactor be terminated for default, the government
may hold it liable for any additional costs resulting from
reprocurement. Generally, sound contract administration practices
should result in satisfactory performance by most contractors. Use of
positive and negative financial incentives, in conjunction with the use
of a performance-based work statement, will also assist in ensuring
quality contractor performance.
Question. The Centralized Servicing Center's bankruptcy division is
an example of potential out-sourcing. If the government wins this
competition, as I understand, a contract will have to estimate the
number of bankruptcies that would be completed for a year. As the year
proceeds, if the number is less, the Agency will have to modify the
contract down. If the numbers come in higher as the year proceeds, the
Agency will have to modify once again and provide additional resources
including FTEs. In addition, if by chance there is a surge in
foreclosures, the Agency would be prevented from transferring some of
this work from the bankruptcy division to the foreclosure division to
temporarily handle the backlog. With the uncertainties in the economy
and an ever changing housing market, does this make sense to reach
efficiencies and provide good service to the customers? Why was the CSC
even considered?
Answer. Estimated workload requirements are included as part of the
Performance Work Statement (PWS) in the solicitation. These estimates
take into account workload variations. Additionally, the solicitation
states, ``The actual specific workload that the Provider will
experience during the performance period is subject to annual review
and may vary from the estimated workloads shown in the PWS by a much as
10 percent.'' Both government and potential industry offerors are aware
that their staffing approach must be flexible enough to accommodate the
fluctuations in workload.
Upon completion of the study, the Centralized Service Center (CSC)
will continue to be flexible in meeting the needs of their customers.
Further, we believe that the organization will actually have improved
control and management capability through its performance measures and
quality assurance procedures.
Since the CSC performs mortgage loan servicing functions that are
similar to loan servicing functions performed in the private mortgage
industry, this similarity makes the Center a good candidate.
Question. I also understand the correspondence unit in the national
office for Rural Development will be contracted out, even though the
overall competitive sourcing evaluations are not complete. A large
percentage of these letters are from Congress. The Federal managers of
the contract will have to ensure the complex policy, program and
political issues are dealt with appropriately. How will an outside
source with no historical knowledge of the internal workings of the
Department, relationships with the programs and Congress provide
savings and not simply add another layer of oversight?
Answer. The Rural Development Correspondence Unit does its work by
obtaining input on policy, program and political matters from Rural
Development policy officials and staff. The unit itself does not have
the expertise to address such matters. Its functions are primarily
administrative, such as keeping track of correspondence, using
previously approved responses for handling routine correspondence and
drafting appropriate responses based on the input it receives from
other sources including National, State and local office staff. Such
functions do not require a great deal of historical knowledge. Rather,
they require only basic skills in communications and organization,
which are readily available in the private sector work force.
Question. It is my understanding that the direct conversion
provisions of the A-76 are directed to functions with 10 or fewer
employees. These groups are not afforded the ability to compete. What
is the percentage of minorities and persons with disabilities that
could be impacted by this allowance?
Answer. For Rural Development, the number of FTEs impacted is 18,
12 of these individuals have been placed in other positions in the
agency. Fifty percent (9) were minorities, and three of them were
placed within the agency. Five have disabilities and three of them were
placed within the agency.
Question. Since Thursday, January 23, 2003, 13 employees in the
Rural Development Washington, D.C. office were given ``Certificates of
Expected Separation'' under the Direct Conversion of the A-76. What is
the Civil Rights Impact analysis of those employees, and have any Civil
Rights Impact Analysis been conducted on any other potential A-76 RIF
candidate?
Answer. I understand that Rural Development has performed a Civil
Rights Impact Analysis on all potential impacted employees in the
mission area. This analysis indicated that competitive sourcing in the
Washington DC area will impact less than 2 percent of Rural
Development's employees.
Question. I understand the same contractor, operating out of the
same Headquarters Office in Virginia, is performing both the
Performance Work Statement (PWS) and the Most Efficient Organization
(MEO) on this A-76 study. Do you have concerns that this could result
in a conflict of interest, and if so, can it be defended?
Answer. In accordance with OMB Circular A-76 and applicable Federal
Acquisition Regulations, firewalls are required within the competitive
sourcing process to ensure the government maintains the integrity of
the process by preventing the occurrence of actual or perceived
conflicts of interest. Rural Development has established written
firewall procedures based on the most current OMB guidance, and
requires compliance with that guidance by its contractors.
The Agriculture Appropriations Report, S. Rept. 107-41, stated as
follows: ``The Committee expects that none of the funds provided for
Rural Development, Salaries and Expenses should be used to enter into
or renew a contract for any activity that is best suited as an inherent
function of government, without prior approval from the Committees on
Appropriations of the House and Senate. Such activities many include,
but are not limited to, any functions that affects eligibility
determination, disbursement, collection or accounting for Government
Subsidies provided under any of the direct or guaranteed loan programs
of the Rural Development mission area or the Farm Service Agency.
Further, the Secretary shall provide a report to the Committees on
Appropriations of the House and Senate by March 1, 2002, and all plans
by the Department to enter into contracts to carry out any of the
previously stated activities.''
Clearly it is the intent of Congress that any function that affects
eligibility determination, disbursement, collection or accounting for
government subsidies provided under any of the direct or guaranteed
loan programs of the Rural Development mission area is inherently
governmental and should not be subjected to either competition or
direct diversion to the private sector.
Pursuant to the above, was a report provided to the Committees of
the House and Senate on plans to enter into contracts to carry out any
of these activities. The answer on March 6, 2002, from Deputy Under
Secretary Neruda stated: ``Rural Development contracting officers have
not entered into any contract for inherently governmental services and
do not plan to do so.''
Question. Don't some, if not all, of the services, contained in the
aforementioned fiscal year 2003 Competitive Sourcing plan for Rural
Development affect eligibility determination, disbursement, collection
of accounting for Government subsidies provided under any of the direct
or guaranteed loan programs of the Rural Development mission area?
Answer. Rural Development's competitive sourcing plan does not
include any of the aforementioned functions.
Question. It is my understanding that in its fiscal year 2000 Fair
Act Inventory, Rural Development listed some 929 FTEs as commercial,
with the remaining approximate 6,000 FTEs in Rural Development
considered being inherently governmental. Of the 929 FTEs listed as
commercial in fiscal year 2000, approximated 139 were coded ``Reason A
specifically exempted by the agency from OMB Circular A-76 cost
comparisons as core functions,'' and 788 were coded ``Reason B subject
to cost comparison or direct conversion requirements.'' Then in its
fiscal year 2001 FAIR Act Inventory Rural Development listed a total of
only 183 FTEs as commercial activities on its FAIR Act inventory of its
approximately 7,000 employees which seems more in line with the intent
of Congress as expressed in the fiscal year 2002 Agriculture
Appropriations report language. Of these approximately 58 were listed
with Reason Code A, and 125 with Reason Code B. The fiscal year 2002
FAIR Act Inventory was posted on the OCFO website on or about February
11, 2003. It now lists ALL of Rural Development activities and
employees as commercial. Can you explain the fluctuations in what is
being considered as inherently governmental vs. what is being
considered as commercial activities?
Answer. The FAIR Act inventory requirements have changed over time.
The fiscal year 2000 FAIR Act inventory required only ``Commercial''
functions. Rural Development identified only Headquarters functions in
that inventory; Field Offices were not reported and no inherently
governmental functions were identified. OMB did not approve Rural
Development's fiscal year 2001 FAIR Act Inventory. Rural Development's
fiscal year 2002 FAIR Act inventory reflects 20 percent of its total
FTEs (7,020) as commercial.
Question. Have you considered the cost of Federal oversight as a
factor in the cost of outsourcing?
Answer. Yes, the cost of oversight is routinely included in the
study process.
UNAUTHORIZED USER FEES
Question. The President's fiscal year 2004 budget request includes
assumed revenues of $159 million from unauthorized user fees among the
following programs: $8 million in connection with the Animal and Plant
Health Inspection Service, $29 million in connection with the Grain
Inspection Packers and Stockyards Administration, and $122 million in
connection with the Food Safety Inspection Service. The jurisdiction
for authorizing such fees does not lie with this Committee.
Notwithstanding the fact that the Budget Appendix for the
President's fiscal year 2003 Budget submission indicates appropriation
levels based on current law, Table S-8 on page 318 of the President's
Budget indicates the total discretionary spending amount for this
subcommittee is $16.9 billion, which does include assumptions that the
total $159 million in assumed revenues from these fees will be
available. It is from this table that the subcommittee's allocation
will be based.
Section 723 of Division A of Public Law 108-7 requires information
in regard to reductions in the President's budget that must occur in
the event such user fees are not timely authorized. Please provide that
information.
Answer. If the user fee proposals were not enacted, appropriations
would need to be provided to adequately support FSIS programs. We
respectfully defer to the appropriations and authorizing committees to
determine the outcome of these proposals.
Question. Have the Congressional authorizing committees received
your proposed legislation in regard to these fees, and if not, when
will they receive it?
Answer. The Department has not submitted the proposed legislation
to Congress. We expect to forward a package by the end of June.
Question. Since the President assumes the $159 million in revenues
from these fees will be available, would you similarly have no
objections if we also assume that the authorizing committees will
provide you the authority to collect these fees? Therefore, do you have
no objection if we, consistent with the President's S-8 Table,
appropriate what the President wants us to appropriate as suggested by
Table S-8, and provide you with the ability, subject to authorization,
to collect these fees? Do you have any objection to working with the
authorizing committees in this fashion?
Answer. We will be glad to work with both the appropriations and
authorizing committees to give the Department the ability to collect
and retain the user fees.
EEOC REVIEW
Question. The March 10th article in the Washington Post on USDA
Civil Rights refers to an EEOC review that was very critical of the
Department's entire civil rights process.
When will this division come into compliance with time frames,
tracking, proper oversight, etc.?
Answer. Vernon Parker, USDA's first Assistant Secretary for Civil
Rights, was sworn in on April 1, 2003, and is exploring aggressive
actions to improve civil rights at USDA.
Parker is developing a plan with a number of initiatives that will
dovetail with the United States Equal Employment Opportunity
Commission's (EEOC's) recommendations. The initiatives will address
timeliness, data tracking and oversight responsibilities. USDA plans to
fully comply with all the recommendations in EEOC's report and has
begun implementing and tracking the actions required to comply with the
recommendations.
FAIR HOUSING
Question. In 2001 and 2002, the Rural Housing Service conducted
Fair Housing testing on management companies, banks, and USDA
employees. I understand that some results have indicated violation in
the tested areas.
When will the results of this data be made available to Congress
and have you taken any steps against violators including USDA
employees?
Answer. All of the Rural Development testing projects are scheduled
for completion, with the Contractor's final reports issued, by
September 2003. Once the final reports are issued, corrective action
plans are developed and our summaries analysis completed I will be in a
position to provide you with a final report. We anticipate this being
completed by November 2003.
Question. In light of the President's initiative on increasing
minority housing, do you think this activity should continue, and if
so, will you provide funding within the Rural Development S&E budget?
Answer. Yes, testing should continue as part of the President's
initiative. We feel this is a tool to evaluate Rural Development's
program administration and better direct appropriate funding to various
programs. Funding for this activity is included within Rural
Development's S&E account for 2003 and the 2004 Budget.
Question. What are your plans for complying with the President's
Housing Initiative including Fair Housing?
Answer. Based upon the 2000 Census, Rural America is comprised of
13 percent minorities; however, over 20 percent of USDA's homeownership
programs benefit rural minority families. While USDA has an excellent
track record at assisting minority families, we feel we can do more. At
the White House Conference on Increasing Minority Homeownership on
October 15, 2002, both USDA Secretary Ann Veneman and Housing and Urban
Development (HUD) Secretary Mel Martinez announced their individual
plans to increase minority homeownership. USDA's Five Star Commitment
includes (1) lowering fees to reduce barriers to minority
homeownership; (2) doubling the number of self-help housing
participants by 2010; (3) increasing participation by minority lenders
through outreach; (4) promoting credit counseling and homeownership
education; and (5) monitoring lending activities to ensure a 10 percent
increase.
Benchmarks and performance goals have been issued to each State,
and each State has developed their own plans to meet the Department's
Minority Homeownership goals by the decade. In addition, USDA agreed to
submit reports to the White House on the progress made by HUD, VA and
USDA in meeting the President's initiative.
Question. I understand that the Department of Justice's Office of
Legal Counsel has indicated the HUD Fair Housing Division can't
prosecute USDA employees that violate the Fair Housing Act. What steps
are you taking to ensure USDA employees comply with the Fair Housing
Act and what steps will you take or have taken against violators?
Answer. Rural Development has in place appropriate regulations that
can be used when Rural Development employees violate civil rights laws
especially the Fair Housing Act. Rural Development Instruction 1901-E,
the Table of Disciplinary Penalties and employee evaluations are the
tools Rural Development will use to ensure accountability to violations
of civil rights laws.
The Rural Development Civil Rights Staff (CRS), in conjunction with
Program Area Divisions, conduct annual field reviews, Management
Control Reviews, State Internal Reviews, as well as Civil Rights
Compliance Reviews. These different types of reviews are all part of
regulations and the CRS is working toward providing training to all
Rural Development employees in the area of civil rights and program
reviews. Rural Development's Civil Rights Instruction require that one
third of its portfolio is to be reviewed by trained civil rights
compliance persons each year. Additionally, Rural Development has
collateral and full time State Civil Right Coordinator/Managers in each
State office.
Question. In the last administration, HUD and USDA entered into a
memorandum of understanding on Fair Housing. Is this still in place and
has it been altered?
Answer. Yes, the Memorandum of Understanding is still in place and
it has not been altered.
WORKING CAPTIAL FUND
Question. The fiscal year 2003 enacted bill provided $12,000,000
for acquisition of remote mirroring backup technology and requires a
feasibility study to be submitted to both the House and Senate
Appropriation Committees.
Can you give us an estimate of when you would complete this study?
Answer. The study should be completed by August 2003.
Question. Will it include various locations, including existing
USDA Federal facilities sites?
Answer. The National Finance Center is in the process of gathering
information required for a feasibility study. The study will look at
appropriate locations. However, until the study is completed, we will
not know whether a solution will involve one or more locations, or the
use of existing Federal facilities sites.
Question. Do you anticipate competition for one finance center for
the entire Federal Government in the future?
Answer. The Office of Management and Budget (OMB) and the Office of
Personnel Management (OPM) may look at this issue in the future.
Earlier this year, OPM conducted an internal competition to consolidate
22 Federal payroll providers and recommended that two payroll
partnerships be formed. USDA's National Finance Center and the
Department of Interior will form one partnership and the Department of
Defense will partner with the General Services Administration. OMB and
OPM expect this consolidation to save the Federal Government an
estimated $1.2 billion over the next decade.
OUTREACH TO SOCIALLY DISADVANTAGED FARMERS
Question. What is the status of the funding for the 2501 program
with funds made available in 2002 and 2003 combined?
Answer. A request for applications was released November 6, 2002 to
begin the solicitation process. The deadline for proposals to be
submitted was January 31, 2003. We received 85 proposals with the
following types of organizations represented in the applications: 25
percent from 1890 institutions; 35 percent from community based
organizations; 15 percent from 1994 institutions and tribal
organizations; 25 percent from other higher education institutions.
Applications came from the following regions: Western region 35
percent; Southern 38 percent; Northeast 9 percent; North Central 18
percent and 4 percent were multi-state applications. The peer review
panel has been convened and awards have been recommended. We anticipate
that the grants will be announced in early summer once the award
process is completed.
Question. Will you establish performance measures in this program?
Answer. Yes. The following two performance measures are under
development:
--Level of Participation.--There will be an increase in participation
in USDA farm assistance programs among socially disadvantaged
farmers and ranchers.
--Minority Participation.--There will be an increase in the number of
minorities involved in CSREES-funded education programs
(African Americans, Native Americans, Alaskan Natives,
Hispanics, Asians, and Pacific Islanders).
CHRONIC WASTING DISEASE/ASSISTANCE TO WISCONSIN
Question. Last year, the sudden presence of chronic wasting disease
in Wisconsin deer populations caused serious concern among the state's
livestock and natural resource sectors. I want to thank you for the
assistance you provided to Wisconsin. As is the case with many State
governments, budget shortfalls in Wisconsin have made it very difficult
for the State to direct the resources needed to contain and eradicate
this disease. Last year, we appropriated $14.9 million to combat
chronic wasting disease of which Wisconsin received only $800,000--far
below the State's needs. I understand other States have similar
shortfalls.
Can you explain how the $14.9 million was allocated and what
additional resources you plan to make available to Wisconsin in fiscal
year 2003?
Answer. Slightly more than half (about $7.6 million) of the
available fiscal year 2003 appropriations was directed to deal with CWD
in wild herds, of which $4 million was for cooperative agreements with
States. To deal with the disease in wild herds, APHIS worked with the
International Association of Fish and Wildlife Agencies in determining
the formulas for distributing these funds. Level-1 States, including
Wisconsin, are eligible to receive $93,750 for surveillance activities
and $125,000 for management activities. Final funding amounts are based
on the State's risk level and the needs outlined in the surveillance
and management plan accompanying each State's application for funding.
In addition to the $4 million reserved for State management and
surveillance assistance, APHIS also provides support for the diagnostic
testing of samples collected during the 2002-2003 hunting season.
Funding for diagnostic testing was based on the initial number of
samples projected in a given State's approved surveillance plan. APHIS
estimates that the allocation for the testing of Wisconsin samples will
be $232,000 given greater-than-expected testing efficiencies; this
amount will cover the 41,000 samples collected in the State during the
2002-2003 hunting season. Payments will be directed to the certified
laboratories that are conducting the tests. APHIS has already provided
the State laboratory of Wisconsin with $100,000 for the reagents used
to conduct the diagnostic testing.
We estimate that APHIS' total funding to Wisconsin in fiscal year
2003 to address CWD in free-ranging cervids will reach approximately
$550,750. We will make a final allocation of funds after all
surveillance and management plans submitted by State wildlife agencies
have been reviewed. Should funds remain after we meet all approved
requests, we will consider additional allocations. Such allocations
would focus on level-1 States like Wisconsin. Also we will consider
emergency developments such as CWD detection in wild cervids that
occurred in Wisconsin last year.
A sizable portion of the resources devoted to the captive cervid
program will support the program in Wisconsin. APHIS will be covering
testing, indemnity, and disposal costs associated with the depopulation
of CWD-positive and CWD-exposed captive cervid herds. In addition,
APHIS hired a veterinary medical officer (VMO) in September 2002 who is
stationed in Madison, Wisconsin. The Wisconsin VMO is responsible for
coordinating indemnity and disposal activities in the region.
Question. I and other members of the Wisconsin Congressional
delegation recently sent you a letter on ways you can release more
funds to Wisconsin. Please respond on that issue.
Answer. APHIS appreciates the support we have received from the
Wisconsin Congressional delegation in our efforts to monitor and
control the spread of CWD in captive and wild cervid herds. Before
finalizing the fiscal year 2003 CWD allocation, we are waiting to
receive about 20 more State applications for wildlife surveillance and
management funds, for which we have set aside $4 million. After we have
received and reviewed all applications and have allocated funds based
on these submissions, we will work with the International Association
of Fish and Wildlife Agencies to redistribute any remaining funds to
high-risk States. We recognize the need for funding in Wisconsin, and
we will take these needs into account when redistributing any
unallocated funds.
Question. The State of Wisconsin has requested $5.5 million in
Federal funds for CWD activities in fiscal year 2004. Will the
President's budget request provide Wisconsin with the necessary
resources to meet this need?
Answer. During fiscal year 2004, we anticipate distributing CWD
funds to States based on their level of risk, as we are doing in fiscal
year 2003. Wisconsin is among those States that rank in the highest
risk category.
During fiscal year 2003, we project that we will provide
approximately $550,750 to Wisconsin for CWD management, surveillance,
and testing of wild cervids. We may also be providing additional
resources to the State if unallocated funds remain from the $4 million
we set aside for wildlife surveillance and management. In addition,
APHIS will be covering testing, indemnity, and disposal costs
associated with the depopulation of CWD-positive and CWD-exposed
captive cervid herds in the State. We have also stationed a permanent
CWD VMO in Madison, Wisconsin, to carry out program activities.
Given that Congress provided a level of funding in fiscal year 2003
that was nearly equal to the amount asked for in the President's fiscal
year 2004 budget request, a significant increase in any one State's
level of funding in fiscal year 2004 would require other States to
accept significant decreases. Barring any unforeseen emergencies, we
anticipate CWD funding levels in fiscal year 2004 will correspond
closely to the amounts we are providing to the States during fiscal
year 2003.
ANIMAL CARE
Question. Please provide information regarding the number of
investigation and enforcement actions undertaken in fiscal year 2002,
and estimated for fiscal years 2003 and 2004, in regard to the Animal
Welfare Act.
Answer. APHIS conducted 12,174 AWA inspections and 143 formal
investigations of potential AWA violations in fiscal year 2002. The
investigations resulted in 137 official warnings, 97 stipulated
agreements, 85 formal decisions by administrative law judges, $586,577
in civil penalties, and 22 license suspensions and revocations. As of
May 2003, the number of inspections for fiscal year 2003 has increased
by 16 percent over the fiscal year 2002 inspection level. Based on this
increase, we estimate that we will conduct 14,121 inspections in fiscal
year 2003. With level funding, the number would remain roughly the same
in fiscal year 2004.
Question. Please describe how USDA has used the increases for
Animal Welfare Act-related activities in fiscal year 2002, and
estimated for fiscal year 2003, above the President's requested levels.
Answer. In fiscal year 2002, APHIS hired 17 new inspectors,
increasing the AWA inspection force to 99, and increased the number of
inspections by 2 percent over fiscal year 2001. We also increased
outreach efforts by conducting canine care workshops for licensed dog
dealers in seven locations. In fiscal year 2003, we are increasing the
inspection force to 100. With the newly-trained inspectors that were
hired in fiscal year 2002, we are increasing inspections by 16 percent
this fiscal year. To increase the effectiveness of the inspection and
enforcement process, we have upgraded our database and the equipment
used by inspectors. We are also continuing to conduct canine care
seminars for dog dealers and have created a seminar on caring for
large, exotic and wild cats. Additionally, program officials have
participated in training sessions for Institutional Animal Care and Use
Committees at registered research facilities and conducted a seminar in
conjunction with the Animal Welfare Information Center on searching for
alternatives to animal testing for researchers. We are working to
formalize these types of outreach efforts.
Question. To what extent have the additional funds for Animal
Welfare investigations increased the demand for additional resources
for enforcement activities?
Answer. The inspectors hired in fiscal year 2002 are now fully
trained and inspections are up 16 percent for fiscal year 2003. We
estimate that the number of formal investigations and enforcement
actions required will increase as well. As of May 2003, we have already
conducted 132 formal investigations into potential Animal Welfare
violations compared to the 143 conducted during all of fiscal year
2002.
Question. Please explain actions taken by USDA to enforce
violations of bird and animal fighting statutes. Do you support
directing enforcement of these statutes through the Office of Inspector
General or through the enforcement programs of APHIS?
Answer. We believe that animal fighting statutes must be enforced
primarily through the Office of Inspector General (OIG), USDA's law
enforcement arm, with the assistance of APHIS investigators. Most
animal fighting ventures are accompanied by other illegal activity,
such as sales of illegal drugs and firearms. Investigations into these
types of violations are inherently dangerous and require the expertise
of trained and equipped law enforcement personnel and the participation
of State and local law enforcement agencies. OIG frequently cooperates
with these agencies and can more effectively and safely lead such
investigations.
Since January 2003, OIG has assisted in three Federal prosecutions
for the smuggling of fighting cocks and two investigations of domestic
fighting cock operations. Because the three prosecutions involved
smuggling, the U.S. attorney was able to charge the defendants with
felonies. In the two domestic fighting cock investigations, over 1,500
fighting cocks were seized. Additionally, APHIS is reviewing
epidemiological evidence to determine whether the exotic Newcastle
disease outbreak in California and other nearby States resulted from
the movement of fighting birds.
MOLTING RESEARCH
Question. It has been reported that the egg production industry has
invested in research to maintain levels of production without the
practice of ``molting'' their flocks. Do you have any information
regarding research in this area, is USDA engaged in any such research,
and is there any reason there should not be a prohibition to this
practice?
Answer. The egg production industry is funding research directed at
assessing non-feed versus feed withdrawal methods to induce molting,
which contrasts greatly from maintaining production without the
practice of molting. The United Egg Producers is funding research at
three different universities: the University of Illinois, the
University of Nebraska, and North Carolina State University. The U.S.
Poultry and Egg Association's website (www.poultryegg.org) reveals
funding for three proposals for this year, two at North Carolina State
University and one at Virginia Polytechnic Institute and State
University. Additionally, ARS is conducting both physiological and
behavioral research in the area of alternatives to induce molting
through feed withdrawal. The Department is currently in the process of
responding to a Congressional directive, Senate Report 107-41, which
discusses current practices and molting alternatives as well as the use
and consequences of molting as a management tool.
Question. While there has been significant publicity to problems
regarding humane handling of livestock during slaughter operations,
there is a growing concern among the American people in regard to the
treatment of livestock during the production phase. Since the Animal
Welfare Act does not apply to poultry or livestock, would you support a
study to provide recommendations on humane treatment of farm animals?
Answer. Since USDA has no authority to regulate humane handling of
poultry or livestock, such a report would have to address authorities
to implement any recommendations.
WILDLIFE SERVICES
Question. Please describe progress in adapting additional non-
lethal methods of animal control through the Wildlife Services
programs.
Answer. APHIS Wildlife Services has made progress in the following
areas:
Having developed an effective non-lethal Radio-Activated Guard
(RAG), APHIS is working on reducing the relatively high costs of the
device.
Substantial efforts have been made towards the development and
evaluation of an effective non-lethal Movement-Activated Guard (MAG)
system to protect livestock from various large predators, including
wolves, black bears, and eagles. MAG systems are more flexible in their
application than RAG systems although they have a smaller, effective
range. The cost of these systems is likely to be less than the cost of
RAG units, making them more practical for routine livestock protection.
NWRC scientists are now in the process of testing a new breakaway
snare design with great promise as an effective remote collaring system
for both coyotes and wolves.
Substantial efforts continue to develop new and effective capture
technologies, including establishment of a temporary duty assignment
for APHIS wildlife specialists to work with National Wildlife Research
Center (NWRC) scientists to test and to improve cable restraint devices
that could serve as practical alternatives to foothold traps under some
circumstances. Additionally, in cooperation with APHIS operational
personnel in Arizona and New Mexico, the U.S. Fish and Wildlife
Service, Defenders of Wildlife, and the Arizona and New Mexico wildlife
agencies, NWRC is planning to investigate sustainable livestock grazing
regimes that could minimize predation opportunities by Mexican wolves.
As part of these studies and investigations elsewhere, NWRC scientists
are developing alert systems to warn ranchers when predators are in the
vicinity of livestock.
APHIS has established cooperative agreements with two universities
and a private research firm to foster collaborative research on
reproductive inhibitions, economics of non-lethal management
strategies, and the development of baiting systems to deliver wildlife
pharmaceuticals.
APHIS has applied commercially available repellents and fencing to
protect forest resources from beaver damage.
APHIS has documented the effectiveness of vulture effigies and low-
powered lasers as dispersal methods at vulture roosting sites.
Question. Please provide information in regard to losses to
production agriculture and other costs (such as costs related to
traffic accidents, costs to communities, etc.) from wildlife whose
control is under the jurisdiction of Wildlife Services.
Answer. According to Resolving Human-Wildlife Conflicts by Michael
Conover, 2001, wildlife causes an estimated $23.3 billion in damages to
the United States annually. Damage to agricultural producers is
approximately $4.5 billion annually; more than half of all farmers and
ranchers experience some kind of wildlife damage each year. APHIS'
efforts to protect agricultural resources include managing wildlife
predation to livestock and wildlife damage to a variety of crops (e.g.,
rice, sunflowers). In addition, APHIS conducts beaver management
activities to reduce loss to the timber industry, which is
approximately $3.4 billion annually.
APHIS works to reduce deer populations in heavily populated areas
in order to increase public safety. Damage from deer-automobile
collisions is approximately $1.6 billion annually and results in
approximately 29,000 human injuries each year. Damage from bird-
aircraft collisions is about $300 million annually, while also posing a
serious safety hazard to flight crews and passengers.
Other wildlife damage includes damage to metropolitan households
(approximately $8.3 billion annually) and damage to rural households
(approximately $4.2 billion). APHIS provides technical assistance and
frequently loans equipment to resolve wildlife damage to residential
property.
The power interruptions caused by Brown Tree Snakes (BTS) on Guam
cause a multitude of problems that have been valued at over $1 million,
ranging from food spoilage to computer failures. BTS frequently invade
poultry houses, homes, and yards to consume domestic poultry, eggs, pet
birds, and small mammals associated with residential areas. APHIS has a
BTS control program in Guam and conducts activities to prevent the
introduction of BTS into Hawaii through aircraft and cargo transport.
Question. Please provide information in regard to control of wolves
in the Upper Midwest.
Answer. As the Eastern timber wolf population continues to increase
in Minnesota, Michigan, and Wisconsin, so have the requests for
assistance with wolf predation. The U.S. Fish and Wildlife Service
(FWS) estimates the number of wolves to be over 2,600 in Minnesota, 325
in Michigan, and 360 in Wisconsin. In Minnesota alone, APHIS responded
to 218 requests for assistance with wolf predation on livestock and
other domestic animals during fiscal year 2002. APHIS also hired a wolf
damage management specialist to assist with management activities
related to the increasing wolf population within the State of Michigan.
There has been an increase in the wolf population in Wisconsin at a
rate of approximately 20 percent per year, and the public is
increasingly intolerant of wolf conflicts.
In fiscal year 2002, we continued to coordinate wolf depredation
control activities with the Wisconsin Department of Natural Resources
(WDNR) and the FWS. APHIS received 80 wolf depredation complaints in
fiscal year 2002 and verified 20 of these conflicts as either probable
or confirmed wolf depredation. The WDNR requested APHIS conduct control
operations, which resulted in APHIS capturing and relocating 18 wolves
to resolve livestock depredations. With the additional funding Congress
provided in fiscal year 2003, we are in the process of hiring wildlife
specialists and procuring necessary equipment and supplies to enhance
response to wolf depredation in the Upper Midwest.
COMPREHENSIVE FARMERS' MARKET PROGRAM
Question. In the fiscal year 2003 conference report, language was
included that encouraged research on creating a broad Farmers' Market
Program, that would take into account all of the activities currently
provided in the Senior and WIC Farmers' Market Nutrition Programs, as
well as the recently authorized Farmers' Market Promotion Program. A
report was requested by March 1, 2003. What is the status of this
report? Please summarize its contents.
Answer. On May 15, 2003, a letter reporting on this subject was
sent to the House and Senate Appropriations Committees. The letter
recommends that responsibilities for administration of the affected
programs remain unchanged at this time. This recommendation is based on
the relationship of the farmers' market programs in terms of target
populations served, administration of the programs at the State level,
current infrastructure at the Food and Nutrition Service and
Agriculture Marketing Service in terms of Federal oversight and
monitoring, and the lack of appropriated funding available for the
Farmers' Market Promotion Program. A copy of the letter is attached for
the record.
[The information follows:]
U.S Department of Agriculture,
Office of the Secretary,
Washington, DC, May 15, 2003.
Hon. Ted Stevens,
Chairman, Committee on Appropriations, U.S. Senate, Washington, DC.
Dear Mr. Chairman: Public Law 108-7, enacted February 20, 2003,
directs the Under Secretary for Marketing and Regulatory Programs to
work with the Under Secretary for Food, Nutrition, and Consumer
Services to study the potential for a broad Farmers' Market Program
within the Agricultural Marketing Service (AMS). Such a program would
provide funding for the WIC Farmers' Market Nutrition Program (FMNP),
the Senior Farmers' Market Nutrition Program (SFMNP), and the recently
authorized Farmers' Market Promotion Program (FMPP). Public Law 108-7
requires that a report on this subject be provided to the House and
Senate Committees on Appropriations by March 1, 2003.
As a result of our consultation, we are pleased to report our
recommendations. As you are aware, both the FMNP and SFMNP are intended
to enhance the health of their target populations by providing coupons
directly to recipients that can be exchanged at farmers' markets,
roadsides stands, and in the SFMNP community supported agriculture
programs for the purchase of fresh fruits and vegetables. In many
cases, the same office that operates the Special Supplemental Nutrition
Program for Women, Infants and Children (WIC) administers the FMNP and
SFMNP. Only State-level governmental agencies and Federally recognized
Indian tribal organizations can receive grant funds to administer the
FMNP or SFMNP.
The Food and Nutrition Service (FNS) has successfully administered
the FMNP and SFMNP since their inception. FNS' infrastructure includes
seven regional offices that effectively provide oversight, technical
assistance and monitoring of the programs. The FNS cost estimate
associated with the administration of the FMNP and the SFMNP is
$554,600 per fiscal year.
AMS facilitates cooperation and collaboration among agencies and
organizations that promotes direct marketing and help agricultural
producers benefit from the growing consumer interest in direct
marketing, including promoting the development and operation of
farmer's markets. As such, staff from AMS works closely with FNS staff
to provide technical guidance and expertise on market developments
aspects of the FMNP and SFMNP. Over the years, AMS has significantly
increased its farmers direct marketing activities. Evidence of our
success is the phenomenal growth in the number of farmer's markets
nationwide.
The Farmers' Market Promotion Program is intended to support the
development of farmers' markets and direct marketing opportunities for
agricultural producers by providing funds directly to agricultural
cooperatives; local governments; nonprofit corporations; public benefit
corporations; economic development corporations; regional farmers'
market authorities; or other entities as the Secretary may designate.
Currently, no funding has been appropriated for this program.
Given the relationship of the farmer's market programs in terms of
target populations served, administration at the State level, current
infrastructure at FNS and AMS in terms of Federal oversight and
monitoring, and no appropriated funding for the FMPP, we recommend that
responsibilities for administration of the affected programs remain
unchanged at this time.
Sincerely,
William Hawks,
Under Secretary, Marketing and Regulatory Programs.
Eric M. Bost,
Under Secretary, Food, Nutrition and Consumer Services.
FOODS DONATED TO FOOD BANKS
Question. Please describe any authorities USDA has to assist public
or private organizations with activities to collect donated crops or
food from farms, restaurants and other entities and deliver this food
to local food banks.
Answer. Under the Emergency Food Assistance Act, State and local
agencies can use Emergency Food Assistance Program (TEFAP)
administrative funds to pay costs associated with the transportation,
processing, and packaging of foods obtained through gleaning and food
recovery initiatives. Such activities complement our efforts to engage
community-based organizations, including faith-based organizations, in
providing nutrition assistance to those in need. In corresponding with
State and local agencies, we continue to emphasize the excellent
opportunity to increase the volume of fresh produce available to TEFAP
recipients by using TEFAP administrative funds to support gleaning
initiatives. The recovery and distribution of foods from restaurants
and other congregate meal service sites are governed by State and local
Health Department regulations, and require an intensively organized
local effort. While USDA does not play a significant role in these
initiatives, we continue to remind State and local agencies that TEFAP
administrative funds can be used to support them.
AGRICULTURAL MARKETING SERVICE
Question. There have been several recent reports of children
becoming ill after eating school lunches. As the agency who purchases
commodities for the school lunch program, please explain how you ensure
that all commodities you purchase are safe for consumption, and what
authorities you have to notify school districts if a problem is
discovered. What information is AMS required to provide school
districts regarding the commodities they are receiving? Is AMS
considering any additional means to ensure that contaminated foods are
not delivered to school districts, and if so, what is being considered?
Further, what are the responsibilities of the individual school
districts in relation to AMS? If a problem is discovered at the local
level, are school districts required to notify AMS or another USDA
agency?
Answer. The Agricultural Marketing Service (AMS) purchases
commodities based on strict specifications that assure high standards
of quality as well as safety. AMS purchase specifications rely on FSIS
and FDA food safety safeguards, explicitly require monitoring beyond
FSIS or FDA requirements of those safeguards, and require additional
testing to meet food safety standards as deemed appropriate.
Because USDA donated products are produced under contract and
certified by AMS employees as meeting these product specifications, AMS
attempts to ensure that only products that meet the required processing
sanitation or safety requirements are delivered to schools.
Further, when a plant that sells products to AMS becomes associated
with a food safety issue, such as a recall of products in commercial
trade, FSIS communicates such information about these problems to both
AMS and FNS. If the products produced under contract to AMS are
suspected to also be associated with the food safety problem, AMS
provides the product destinations to FNS for them to notify the State
Distributing Agencies so that suspected products are removed from the
system.
However, as noted in a number of independent reports, many of the
food safety issues that occur in the school lunch program associated
with USDA donated products are ultimately found to have resulted from
improper food handling within the school itself through cross-
contamination or improper preparation and are not due to
unwholesomeness of the USDA donated product as it was delivered to the
school.
AMS provides item descriptions to FNS, which in turn provides the
information to recipients. AMS also puts all of the specifications for
the commodities it purchases on its website.
All of the involved agencies within USDA--AMS, FNS, FSIS, and FSA--
are working to improve information systems used to assure that
recipients as well as State Distributing Agencies are always
immediately notified of suspected food safety issues involving foods
purchased for the school lunch program.
AMS is an integral part of the Department's Commodity Hold and
Recall Process which requires schools to report potential problems to
FNS. By being a part of this process, AMS learns of problems associated
with the products it procures so that corrective action can be taken in
a timely manner.
If schools suspect a food safety issue, they are to immediately
contact their local or State health department and FNS through its
commodity hotline.
AMS IT CONSOLIDATION
Question. What is the total funding ``saved'' through IT
consolidation? How was this number formulated?
Answer. The Department's total funding ``saved'' through IT
consolidation is $16 million. These savings will be realized across the
Department, through consolidated hardware and software procurements, as
well as the reengineering of paper-based processes, such as data
collection.
NON-FAT DRY MILK DONATION PILOT
Question. Please provide an update on the pilot project between
USDA and the Milwaukee Hunger Task Force regarding the donation of non-
fat dry milk.
Answer. We have worked with the Wisconsin Department of Health and
Family Services, the Hunger Task Force of Milwaukee, and Alto Dairy to
develop agreements under which non-fat dry milk will be made available
for processing into mozzarella cheese for distribution through the
Emergency Food Assistance Program. For purposes of this pilot, the
agreements reflect a substantial reduction in reporting and
recordkeeping requirements traditionally imposed under processing
agreements. We anticipate receiving information necessary for USDA to
approve the agreement between the Hunger Task Force of Milwaukee and
Alto Dairy in the very near future. Once the agreement is approved,
USDA will arrange to have the non-fat dry milk shipped directly to Alto
Dairy.
AGRICULTURAL MARKETING SERVICE
Question. What is the most updated estimate on the level of funds
AMS plans on spending in fiscal year 2004 on surplus commodities that
will be donated to food pantries, including the type and amount of
commodities?
Answer. Consistent with statutory requirements, fiscal year 2004
surplus removal levels will depend on a number of factors for each
possible commodity, including market demand, inventory levels, and
production yields. The Food and Nutrition Service will consider program
needs across the various Federal food and nutrition programs in
determining the appropriate outlets for each commodity purchased.
Beyond the commodities otherwise purchased through appropriations
specific to food pantries and other programs, recent history would
suggest a significant level of commodity donations for food pantries in
fiscal year 2004.
COUNTRY OF ORIGIN LABELING--RECORDKEEPING COSTS
Question. Please provide an updated cost estimate on record-keeping
costs associated with implementation of the voluntary Country of Origin
Labeling measures.
Answer. Thus far, no retailer has chosen to implement the voluntary
country of origin labeling guidelines, so there is no basis for
updating the cost estimate for recordkeeping costs.
SECTION 32
Question. During fiscal year 2003, Section 32 funds were released
for a livestock compensation program in a manner not suggested in the
submission of the President's 2003 budget request or accompanying
budget materials. This Committee was not provided prior notice of this
action and, in fact, learned of it as it was announced publicly through
a USDA broadcast.
Can you assure this Committee prior notification of any such future
actions in regard to Section 32 funds or other program authorities?
Answer. We will keep the Committee informed of future major uses of
Section 32 funds not included in the annual budget submission or that
otherwise fall outside the normal use of these funds.
Question. Please provide information for estimates of fiscal year
2003 and 2004 Section 32 purchases of specialty crops as a means to
comply with Farm Bill requirements.
Answer. For fiscal year 2003 through May 22, 2003, $135.9 million
has been authorized for Section 32 purchases of fruits and vegetables.
Actual, total Section 32 purchases for fruits and vegetables through
May 22, 2003 are $69.2 million. We do not anticipate a problem in
meeting the Farm Bill requirement for fruit and vegetable purchases in
either fiscal year 2003 or 2004.
Question. Please provide current estimates for all Section 32
activities for fiscal years 2003 and 2004.
Answer. The Department expects to spend a total of $1,432.4 million
of Section 32 funds in fiscal year 2003. This includes $897.0 million
provided for drought relief through the Livestock Compensation Program
and $25.6 million for AMS administrative expenses. The balance will
primarily be available for commodity purchases. For fiscal year 2004,
AMS anticipates expenditures of $821.6 million for commodity purchases.
GRAIN INSPECTION, PACKERS AND STOCKYARDS PROGRAM STUDIES
Question. Can you estimate the time frame for the $4.5 million
packer concentration study?
Answer. GIPSA is committed to completing the study as quickly as
possible consistent with the need to produce technically sound
findings. This is a complex, data-intensive project. It is difficult to
anticipate time requirements accurately before plans for the scope of
the study have been finalized and without knowing what specific
methodology and data needs will be proposed by potential contractors.
Major milestones include receiving public comments on plans for the
study; finalizing the plans; establishing a 5- to 7-member academic
peer review team; soliciting offers and awarding contracts;
consolidating data needs of the contractors and developing data
collection plans; obtaining Office of Management and Budget clearances
for data collection; collecting and analyzing data and preparing
contractors' draft reports; reviewing contractors draft reports;
finalizing contractors' reports; and preparing GIPSA's summary reports.
Question. Is a $500,000 study needed to review the Packers and
Stockyards Act? Couldn't this be accomplished by the Department's staff
without the additional cost?
Answer. The Packers and Stockyards Act of 1921 has not undergone
any significant review since its enactment, despite the substantial and
controversial structural changes experienced by the regulated
industries. The request for an additional $500,000 to review the
Packers and Stockyards Act primarily addresses the need for additional
staff with expertise not currently residing within the Agency for a
comprehensive review of the P&S Act. Use of existing staff to handle
issues associated with the review of the P&S Act and regulations would
also divert resources away from ongoing monitoring and compliance
programs.
WAREHOUSE LICENSING
Question. Section 770 of Division A of Public Law 108-7 (the
Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act, 2003) established certain
limitations in regard to the licensing of grain warehouses. Please
provide information in regard to this section and the current status
protections for farmers in regard to licensed warehouses.
Answer. On August 5, 2002, the Department of Agriculture (USDA)
published its final rule implementing the U.S. Warehouse Act of 2000
which clarified, for the first time, that Federal warehouse operators
cannot be required by State government to be dually licensed or comply
with State warehousing, grain dealer laws or regulations. The final
rule asserted, publicly, USDA's long-held view that it has exclusive
jurisdiction to regulate the merchandising and other activities of
Federally licensed warehouses. The final rule reflected existing case
law dating back more than 60 years and made transparent what USDA has
conveyed when asked.
State Departments of Agriculture with grain merchandising licensing
programs disagreed with USDA's position. Several States issued strongly
worded statements in response to USDA's position, noting the impact it
could have on the continued willingness of Federally licensed
warehouses to comply with State grain dealer laws or to submit elevator
proceeds to State grain indemnity funds.
The issue has caused both USDA and State governments to examine
levels of protection currently provided to producers under warehouse
programs. USDA cooperated with the National Association of State
Departments of Agriculture, as well as farm and industry
representatives, to explore ways to improve warehouse regulations in
order to protect producers and depositors.
As a result of its meetings with stakeholder groups, USDA announced
changes on February 5, 2003, to the Federal license requirements for
grain warehouse operators. These changes would improve depositor
protection requirements already in place for storage obligations and
expand coverage to producer contractual obligations.
USDA is changing the requirements for Federally licensed warehouse
operators to improve producer protection already in place for producers
who own and store grain with such warehouse operators and will extend
protection to producers who only sell grain to such an operator. USDA
is making the following changes to existing requirements for Federal
licenses:
--Increase the basic net worth requirements a warehouse operator must
have to qualify for a license;
--Increase the level of auditing required of the warehouse operator's
financial statements by a third-party auditing firm; and
--Provide additional coverage for producers who only sell grain to a
Federally licensed warehouse.
The increased producer protection will be funded through
liquidation proceeds, a $5 million assessment on the Federal licensee
community, and a $10 million umbrella insurance policy.
USDA planned to have its grain warehousing plan in place for the
start of the 2003 marketing year that begins May 1, 2003. The plan
included an opportunity for Federally licensed warehouse operators to
review the new program requirements before executing the new grain
licensing agreements. The new grain licensing agreements were scheduled
to be available by March 1, 2003.
This implementation plan changed based on the language in Section
770 of Division A of Public Law 108-7. This section requires a 180 day
moratorium during which no funds could be used to: (1) amend licensing
agreements for grain (excluding rice) under the United States Warehouse
Act; or (2) to issue Federal licenses to grain warehouse operators
(excluding rice) that are not currently Federally licensed; or (3) to
implement any changes that were not in effect on January 1, 2003.
All actions with respect to implementation of these changes
initially ceased during this 180-day period. On March 27, 2003, at the
urging of the stakeholders, USDA re-initiated its efforts to develop
and implement the grain licensing changes. USDA is working to implement
the announced changes at the end of the moratorium.
A stakeholder group composed of representatives from producer and
industry groups, and State Departments of Agriculture have met twice to
develop their own plan for improving producer protection in Federally
licensed grain warehouses. Joe Pearson from the Indiana Department of
Agriculture and Randy Gordon with the National Grain and Feed
Association serve as co-chairs for the warehouse task force.
USDA has provided requested background information and made
available staff to answer questions at both meetings. The warehouse
task force has requested information on the costs associated with
USDA's program. USDA has provided all information that has been
developed; however, some cost information has not been provided either
because it is unknown at this time or will require resources to
develop. The cost of the insurance policy is still unknown though USDA
is working quickly to obtain a contract for the insurance policy.
FSIS SYSTEMS REVIEW
Question. The Secretary was directed in the 2002 Farm Bill to
review State meat and poultry inspection systems and report the
findings to Congress in FSIS's annual report to Congress, including
guidance on possible changes if the statutory prohibition on interstate
shipment of State-inspected product is removed.
Please provide an update on the status of this report, including
when it, and FSIS's annual report, will be available.
Answer. At the 2002 National Advisory Committee on Meat and Poultry
Inspection (NACMPI) meeting, discussions were held in response to the
Farm Bill report language concerning interstate shipment. Committee
members recommended that FSIS assess all completed State comprehensive
reviews back to 2000, and complete reviews of the remaining States by
March 2003, before starting the more comprehensive reviews called for
in the Farm Bill report language. FSIS has completed all the audits
through March 2003, as recommended by NACMPI and is now beginning the
more comprehensive review of State MPI programs. Preliminary results of
the intensified comprehensive reviews should be available in late fall
2003.
Question. Further, no specific funding for this report is requested
in the fiscal year 2003 President's budget. How is this survey being
funded, and how much will it cost?
Answer. Existing resources within FSIS have been utilized to
prepare for the more comprehensive reviews of State inspection
programs. Under the current FSIS plan for these reviews, the more
intensive portion of the reviews will not occur until next year.
Available FSIS resources would in large part dictate the number of
States that could be reviewed next year.
FSIS USER FEES
Question. The President's budget request for FSIS for fiscal year
2004 is $797,140,000 in total. However, this number includes $122
million that is to be collected in proposed user fees paid for by
industry for the cost of mandatory, Federal inspections services beyond
8 hours per day. Therefore, the true President's budget request for
appropriated funds is $675,149,000. This is a decrease of $79,672,000
from last year's appropriated level, unless the proposed user fees are
authorized and collected.
Do you agree with this summary?
Answer. Yes, however, under current law, the budget requests
$797,149,000 million, which is the level of funding necessary to ensure
that America has the safest food supply in the world.
Question. If the appropriations committee provides FSIS with the
President's request for appropriated funds, $675 million, and the user
fees are not authorized, please describe in detail the effect this will
have on the FSIS budget and activities. Specifically, how will this cut
in funding be absorbed by FSIS, and how will it affect the number of
inspectors and inspections performed?
Answer. FSIS will not be able to conduct inspection operations
throughout the year, which would result in a disruption to industry
operations.
Question. Did USDA consult with industry or food-safety consumer
groups when preparing this user-fee proposal?
Answer. USDA did not consult with industry or food safety consumer
groups when preparing the user fee proposal.
Question. Did USDA consult with Congress before preparing this
user-fee proposal to ensure that there would be adequate support to get
it enacted?
Answer. USDA did not consult with Congress before preparing the
user fee proposal.
STATE MEAT AND POULTRY INSPECTION PROGRAMS
Question. In fiscal year 2003, both Maine and Virginia terminated
their State food inspection programs. Therefore, FSIS has assumed these
costs in its fiscal year 2004 budget request. In the current fiscal
environment, it is not unlikely that in the future, more States may
consider terminating their State food inspection programs and leaving
the responsibility with FSIS.
Does USDA believe this is a viable possibility, and has this
possibility been budgeted for in the Administration's fiscal year 2004
request?
Answer. FSIS is in constant contact with States to determine what
actions they will take with respect to their inspection programs. If
FSIS is aware of any plans by a State to either terminate or initiate
its program, FSIS will take it into account when preparing its budget.
Question. If this has not been budgeted for, how has FSIS planned
for these potential situations?
Answer. It is difficult to plan because many States are on a
different legislative and budget calendar than the Federal Government.
FSIS will address any potential funding problems related to the change
in status of State inspection programs as they arise.
TECHNOLOGY AND TRAINING
Question. The overall FSIS budget includes a total decrease of $1.5
million for ``savings associated with centralization and improvement of
information technology.'' How specifically was this number, and amount
of savings, determined?
Answer. The estimate of Department-wide savings resulting from
consolidating enterprise architecture and infrastructure procurement is
$16 million. FSIS' share of this is $1,356,000. The savings to the
agency will be realized through consolidated hardware and software
procurements, as well as the reengineering of paper-based processes,
such as data collection.
Question. I was pleased to see an increase of more than $5 million
to improve the scientific and surveillance skills of the workforce,
which appears to be essentially for increased training. While FSIS has
long declared that their employees need additional training, will this
training eventually qualify these employees for higher grade levels and
promotions? What type of payroll and benefit increases does FSIS
anticipate as a result of this training?
Answer. FSIS has recently created a Consumer Safety Officer (CSO)
position that requires greater scientific training and experience, as
well as a higher grade level. Employees qualifying for these positions
would receive increased compensation. Other employees that receive
training to conduct their duties as assigned will not automatically be
qualified for a higher grade level or promotion. Employees that move
into higher graded positions would receive increased compensation.
EXPANDED FOOD SAFETY AUTHORITIES
Question. I am pleased to hear that USDA is now reconsidering its
position on the need for additional food safety authorities. When the
Secretary spoke to the Food Safety Summit and Expo on March 19th, she
stated that USDA was considering asking Congress for additional
authorities, including, and I quote ``mandatory notification to USDA
when a Federally inspected establishment has reason to believe that
meat or poultry has been adulterated or misbranded; authority to impose
civil penalties after notice in writing and continued lack of
compliance; and cease and desist orders and potential suspensions at
earlier phases and on an expedited basis arising from HACCP
violations.''
What were the reasons that USDA decided to seek additional
regulatory authorities, and what is the status of these requests?
Answer. We are always assessing our authorities to determine if
they need to be strengthened. I have asked for a complete review of our
authorities to determine if they allow us to do our job and I am
awaiting assessments on what options USDA should consider pursuing in
the future.
Question. If additional authority is requested and granted, will
you have additional costs that were not included in the fiscal year
2004 budget? If so, how much do you anticipate additional authorities
will cost?
Answer. We are still evaluating our legislative authorities. Until
that evaluation is completed, we will not know what the potential
budget impact of those authorities will be.
Question. Are there any other additional authorities that the
Department is considering, such as mandatory recall authority?
Answer. At this time, we have not determined if we require any
additional authorities.
Question. If, in fact, you believe that your enforcement
authorities are relatively sufficient, then why are you continuing to
be sued by meat companies when your agencies try to enforce regulations
that the courts do not necessarily hold to have a legal basis, as
reported just yesterday in the Omaha World Herald? I realize you can't
discuss pending litigation, but this incident does seem to be more
evidence that sufficient authorities are lacking.
Answer. The Federal Meat Inspection Act and the Poultry Products
Inspection Act provide the authority needed to close plants that fail
to comply with FSIS regulatory requirements. Under these existing laws,
FSIS maintains the authority to initiate a withholding, suspension, or
withdrawal action based on sanitation or HACCP violations, including:
failure to collect and analyze samples for the presence of generic E.
coli; failure to develop or implement sanitation standard operating
procedures; or failure to develop or implement a required HACCP plan.
FSIS may also initiate a withholding, suspension, or withdrawal action
for other violations, such as inhumane slaughter or unsanitary
conditions. Even though FSIS cannot act solely on an establishment's
failure of the Salmonella performance standard, an establishment's
failure to meet Salmonella performance standards will trigger an
immediate review of the establishment's entire food safety system.
Establishments that do not meet food safety requirements are subject to
enforcement actions.
Question. I have received a request to include language that would
make bison an amenable species for purposes of the Meat Inspection Act.
Please provide a cost estimate for FSIS if this language is included in
the fiscal year 2004 bill.
Answer. It would cost approximately $1 million to start up a
mandatory bison inspection program.
HUMANE METHODS OF SLAUGHTER ACT
Question. The Committee, in fiscal year 2003, provided FSIS with $5
million to be used to hire no fewer than 50 FTEs for enforcement of the
Humane Methods of Slaughter Act. The Secretary stated at her May 8th
hearing before the Committee that none of the FTEs had been hired, but
that FSIS was working on the position descriptions.
How many total people does FSIS plan to hire during fiscal year
2003 and fiscal year 2004 with these funds? How many people will be
hired in fiscal year 2003, and how many will be hired (not carried over
from fiscal year 2003) in fiscal year 2004?
Answer. FSIS continues to increase agency efforts to ensure that
all field personnel understand their authorities and rigorously enforce
the Humane Methods of Slaughter Act. FSIS has recently hired 215 new
line inspectors trained in humane handling methods and at this time,
the systemwide FSIS effort devoted to humane handling and slaughter
inspection is equal to 63 FTEs. In fiscal year 2002, the comparable
level of effort equaled 25 FTEs carrying out humane handling and
slaughter inspection, so the agency has added 38 FTEs in fiscal year
2003. The agency expects that this number will continue to rise through
fiscal year 2004 to meet and even exceed the requirement outlined in
the fiscal year 2003 Omnibus Appropriations bill.
Question. Has FSIS been working with the GAO on the HMSA report
required in the fiscal year 2003 Conference report? If so, how?
Answer. FSIS has met with General Accounting Office (GAO) auditors
regarding the GAO report. FSIS has provided GAO a variety of humane
handling related materials. Several FSIS representatives have met with
GAO auditors to discuss humane handling issues. Additional meetings are
being planned.
IMPORTED FOOD
Question. In the fiscal year 2003 bill, the Committee included
report language emphasizing the importance of USDA enhancing its
inspections of overseas plants, making sure any plant that fails to
meet U.S. standards is audited frequently, and not allowed to ship its
product into this country until it meets our standards. So, I am
pleased to see an increase of $1.7 million to increase the number of
trips overseas by FSIS inspectors in order to ensure that foreign
plants shipping product to the United States meet the U.S. standard for
safety. The budget states that this funding will increase the number of
countries being evaluated from 33 to 40.
What, exactly, will this $1.7 million increase buy, and how will it
improve our food safety system? Will additional inspectors be provided
to countries that have historically struggled to meet our safety
standards?
Answer. Funds are included in this request to hire seven additional
auditors to conduct reviews of foreign country inspection systems.
These new auditors will enhance FSIS' review of foreign meat and
poultry inspection systems and exporting plants to assure they operate
at standards equivalent to the U.S. system. The additional auditors
will ensure that each country approved to export meat and poultry
products to the United States will be audited at least annually, and
more frequently, if needed.
FSIS currently allocates more resources to those countries that
have historically struggled to meet our safety standards and will
continue to do so.
Question. How many countries import meat into the United States?
Are there any countries that USDA inspectors do not physically visit
and evaluate, and if not, why?
Answer. At this time 33 countries have been approved to export meat
and poultry products to the United States.
All countries exporting meat and poultry products to the United
States are audited through a physical visit at least once a year.
Question. The language in the Senate report last year was due to a
concern about the safety of meat imported into this country. Although I
received several assurances from FSIS officials that this was not a
safety issue, and the USDA system was not flawed, there was a USDA
internal inspector general report released in February which stated
that from 1999 to 2001, USDA allowed more than 800,000 pounds of meat
from foreign plants that might have been prohibited, and 66,000 of that
was from processors that were not approved to ship product to the
United States. Generally, the report concluded that USDA has not been
sufficiently guarding the food supply from potentially unsafe imported
meat. This report was released after the President's budget request was
formulated. Please explain the discrepancy between the assurance I
received about the safety of imported meat, and the information
included in the USDA Inspector General's report. Further, what steps is
USDA taking to address the findings in this report? Will the increase
requested in the budget take care of the safety issues outlined, or is
further funding necessary?
Answer. The Office of the Inspector General (OIG) questioned the
entry of about 800,000 pounds of meat from foreign plants, including
66,000 pounds of meat from plants not eligible to export to the United
States. The discrepancy resulted from a disagreement between FSIS and
the OIG over how countries provided annual certifications of eligible
establishments to FSIS. FSIS is confident that establishments are
properly certified, and has made procedural changes to address the
concerns of the OIG. FSIS pointed out that, at the time this product
was presented for reinspection by FSIS, each shipment was accompanied
by a certificate issued by the inspection service of the foreign
country attesting that it was produced according to U.S. standards and
in a plant eligible to export to the United States.
The Automated Import Information System (AIIS) has been re-
programmed and updated to address all concerns raised by the OIG
regarding the entry of shipments. The changes will be made with
existing and requested resources.
FARM ASSISTANCE PROGRAMS
Question. The salaries and expense request eliminates 2,807 non-
Federal staff years, 2,657 temporary positions, and 150 permanent
positions. At the same time, the Agency received $70 million in
supplemental funding in the fiscal year 2003 appropriations bill,
Division N of Public Law 108-7.
How will the supplemental funds be allocated?
Answer. The $70 million will support approximately an additional
1,200 temporary staff years for county field offices during fiscal year
2003 and fiscal year 2004. In addition, funding will be used for IT/ADP
software development and support, and increased operating costs such as
postage, supplies, and materials. Even though the fiscal year 2004
Budget reflects a precipitous drop of 2,692 non-Federal temporary and
other staff years from the fiscal year 2003 level, FSA is working to
even out fiscal year 2003 to fiscal year 2004 temporary staffing
levels. We are able to do this by spreading the use of the $70 million
additional funding over a 2-year period.
Question. Will any be used for IT purposes and how much?
Answer. Yes, approximately $14 million of the funds provided for
Farm Bill implementation will be used for IT/ADP software development
and support.
Question. With the continued demand from new Farm Bill programs,
many still to be implemented, is there a need for additional permanent
Federal full-time staff?
Answer. No, at the present time, FSA does not feel there is a
critical need for additional permanent Federal full-time staff. The
initial impacts of Farm-Bill-related implementation workload increases
are similar to those of a disaster in that they are temporary and do
not easily lend themselves to support of permanent staff. Through the
dedication of our employees we have been able to sign up over 90
percent of the landowners that have made base and yield selections.
Some offices were stretched more than others, and we did our best to
provide additional temporary staffing resources to fill the gaps.
Temporary staffing is being used to assist with administrative
activities, allowing time for permanent staff with the needed technical
knowledge to conduct signup activities.
FSA does not yet know the full impact of permanent, ongoing
maintenance of new Farm Bill programs. However, every effort will be
made to continue the high standard of service provided to our customers
while analyzing these impacts.
Question. In the inventory property area, what is the racial and
ethnic breakdown, including women, of purchasers who have acquired
property through FSA lending programs in the latest data available?
Please include the average loan and size of farm.
Answer. FSA does not track the gender of purchasers when an
inventory property is sold. FSA lending programs do not finance
acquisition of inventory property except for beginning farmers. Rather,
the property is sold at auction to the highest bidder.
The following table displays fiscal year 2002 inventory property
purchasers by race, average size of farm and total acreage:
INVENTORY PROPERTY PURCHASERS, FISCAL YEAR 2002
----------------------------------------------------------------------------------------------------------------
Average Size
Race/Ethnicity Number of of Farm Total Acreage
Purchasers (Acres)
----------------------------------------------------------------------------------------------------------------
Asian/Pacific Islander.......................................... 1 10 10
Black........................................................... 6 84 505
Hispanic........................................................ 4 31 123
Native American................................................. 2 281 561
White........................................................... 174 148 25,679
Tax-Exempt \1\.................................................. 4 267 1,066
-----------------------------------------------
Total..................................................... 191 146 27,944
----------------------------------------------------------------------------------------------------------------
\1\ This category reflects corporations that have status as a race or ethnic group. Purchases made by these
entities are not tracked by any other group designation.
Question. In the Beginning Farmer Program, what is the racial and
ethnic breakdown, including women, of purchasers who have acquired a
farm or ranch? Please include the average loan and size of farm. The
2002 Farm Bill enacted a similar provision on data analysis but which
applied to Farm Loans rather than housing loans. Will this report be
submitted to the Committee?
Answer. There were 402 Beginning Farmer Farm Ownership Loans made
to females during fiscal year 2002. Because women are also counted in
the racial and ethnic categories, the number of women per racial
category was not separately identified during 2002. FSA does not track
the average size of farm by racial category for beginning farmers. This
information is only captured for inventory property.
[The information follows:]
----------------------------------------------------------------------------------------------------------------
Direct FO Average Loan Guaranteed FO Average Loan
----------------------------------------------------------------------------------------------------------------
White........................................... 1,000 $118,947 731 $252,300
Black........................................... 15 106,060 4 253,850
Asian........................................... 10 140,450 61 457,374
American Indian................................. 53 122,623 32 271,047
Hispanic........................................ 19 102,726 11 214,313
Other--Not coded................................ 0 0 1 200,000
---------------------------------------------------------------
Total Participants........................ 1,097 118,864 840 267,354
----------------------------------------------------------------------------------------------------------------
We assume the 2002 Farm Bill provision you are referring to is
Section 10708, ``Transparency and Accountability for Socially
Disadvantaged Farmers and Ranchers; Public Disclosure Requirements for
County Committee Elections.'' That provision is much broader than just
the farm loan programs. That provision requires an annual report on the
participation rate of ``socially disadvantaged farmers and ranchers
according to race, ethnicity, and gender'' for ``each program of the
Department of Agriculture established for farmers and ranchers,'' and;
the composition of county, area or local committees established under
the Soil Conservation and Domestic Allotment Act. In addition, Section
10708 requires a report to Congress after the completion of each Census
of Agriculture on the rate of change in participation by socially
disadvantaged groups since the previous census. We would be happy to
provide both the annual reports and the post-census report to Congress
when they become available.
RISK MANAGEMENT
Question. The President's budget proposes reducing the
administrative expense reimbursement rate from 24.5 to 20 percent,
which is expected to produce a savings of $67.8 million. Given the
drought and other natural disasters that have occurred in the farming
sector over the past several years, in developing this proposal, have
you worked with the individual crop insurance companies to ensure that
this limitation will in no way impair those companies' abilities to
continue providing coverage to our Nation's farmers? If so, what were
their comments? If not, please explain why.
Answer. On an ongoing basis, RMA works closely with the companies
to address a wide range of issues. It is clear that a reduction of the
A&O reimbursement rate is a cause of significant concern to them. It
should be noted that the general rate of 24 percent is not the actual
rate paid to companies. Because the rate is based upon the type of
policy purchased, the companies receive an average closer to 21
percent.
A reduction in the reimbursement rate will increase the financial
pressure upon the companies to adjust their operating approach. Each
company will strive for increased efficiencies without sacrificing
service. This of course is a healthy exercise. However, if the company
is not successful in driving down cost and generating sufficient
returns to satisfy shareholders, consolidations or departures will be
the result.
INFORMATION TECHNOLOGY INVESTMENTS
Question. The President's budget proposes a $5.5 million increase
for a new, updated information technology system. What are the specific
spending plans for this funding? Will all of the $5.5 million be spent
in fiscal year 2004? If not, how and when will each portion of the
funding be spent?
Answer. The spending plan for the funding is as follows:
------------------------------------------------------------------------
Dollars in
Information Technology Investments thousands
------------------------------------------------------------------------
Financial Management System............................. $512
Corporate Insurance Information System.................. 2,713
Compliance Support & Pattern Recognition System......... 725
Standard Reinsurance Agreement Analysis................. 1,550
---------------
Total............................................. 5,500
------------------------------------------------------------------------
These funds are scheduled to be used within the fiscal year. The
funds will be scheduled within the 5-year plan, which is currently
being developed, and will be completed and implemented prior to the
beginning of fiscal year 2004.
CROP AND LIVESTOCK INSURANCE
Question. Recently, I have heard from farmers in Wisconsin
regarding crop and livestock insurance. Specifically, they are in favor
of both, but believe that crop insurance while beneficial, can be
complicated and difficult for small farmers to understand and feel
comfortable participating in, and are concerned that any livestock
insurance program may have the same problems. How does RMA attempt to
reach out to small or part-time farmers to educate them on crop
insurance? Are there any products currently produced by RMA to educate
farmers about crop insurance that are easily accessible and easy to
understand? If not, how much additional funding would RMA need in order
to produce and distribute this information?
Answer. RMA operates two major education programs, as mandated and
funded under the Federal Crop Insurance Act (FCIA sections 522(d)(3)(F)
and 524(a)(2)). These two programs are (1) partnerships for risk
management education, with priority for producers of certain crops; and
(2) crop insurance education and information in States that have been
historically underserved by crop insurance. In addition, the
Cooperative State Research, Education, and Extension Service operates a
national program of grants for risk management education through four
regional centers based at Land Grant universities in accordance with
FCIA, section 524(a)(3).
RMA operates its educational programs to reach small farmers and
ranchers through local education partners. Funding to conduct these
local programs is awarded competitively through cooperative agreements
to educational partners that have substantial influence with local
farmers and farm groups. RMA's educational partners include State
departments of agriculture, universities, grower groups, and other
public and private organizations.
RMA recognizes the ongoing need for clear, understandable, and
timely information about crop insurance so that farmers can make an
informed decision. To accomplish this, RMA's regional offices work
closely with local education partners to tailor educational curricula
and training materials to the commodities and growing practices unique
to each area. Informational materials are also available on RMA's web
site (www.rma.usda.gov) and on the RMA-sponsored Ag Risk Education
Library web site (www.agrisk.umn.edu). RMA works with its educational
partners to ensure that, as far as possible, farmers are informed about
local educational opportunities.
Much is being done to reach the legislatively-mandated underserved
groups and regions with crop insurance education. Given the
acceleration in crop insurance development and expansion, however,
RMA's educational resources are continuously challenged to keep pace.
The increased use of information technology holds out the best promise
of meeting this challenge. Additional funding of $3 million per year
would allow RMA to substantially enhance its set of internet
information and distance learning tools, especially those dealing with
newer products such as livestock. With such tools, RMA could reach a
much larger number of small farmers than it can with current resources.
USDA DROUGHT OUTLOOK
Question. What does USDA forecast for drought outlook this coming
year, and if natural disaster-related crop and livestock losses reach
or exceed the levels of the last 2 years, will you recommend to the
President to work with the Congress to enact disaster assistance?
Answer. We are monitoring drought conditions carefully, however, it
is too early to make any reliable predictions on the outlook for the
coming year. According to the U.S. Drought Monitor, conditions have
generally been improving throughout the U.S. since early March.
However, severe drought persists in the West particularly from the 4-
Corners Region north to Southern Idaho. Current projections are that
this area will remain under drought conditions for at least the near
future. While we do not anticipate drought related losses to reach the
levels seen in 2002, we would expect to work with Congress should the
need arise.
DAIRY PRICE SUPPORT PROGRAM
Question. The Dairy Price Support system requires that USDA
purchase certain dairy products when the class III price falls below
$9.90 per hundredweight. Since January 2003 the class III price has
remained below that support level--in fact we reached a low of $9.11
per hundredweight for March. It has been suggested that USDA
specifications for the purchase of these products created additional
costs, and results in prices to producers falling below the safety-net
established by Congress.
Since January of 2000, the weekly average block cheddar cheese
price on the Chicago Mercantile Exchange has been below the $1.1314 per
pound CCC purchase price about one-fourth of the time. At one point,
during the week ending February 28, 2002, the price averaged as low as
12.3 cents below the CCC purchase price. In other words, sellers on the
CME are choosing to sell product at levels far below the standing offer
of the CCC. The effect of this is to undermine the integrity of the
price support program, causing prices to producers to fall far below
the $9.90 per hundredweight support price established by Congress. In
fact, during the period of January 2000 through April of 2003, the
Class III price; was below support for 14 of 39 months.
In order to make the price support program function more
effectively, and to more closely meet the intent of Congress with
regard to a price support level of $9.90 per hundredweight, some in the
industry have suggested that the CCC should be an active trader of
dairy products on the Chicago Mercantile Exchange. Instead of acting as
a passive purchaser of surplus products whenever manufacturers choose
to sell, it is argued that CCC should step in and purchase product,
particularly cheese, whenever it is offered on the CME at prices that
match or fall below the established CCC purchase price.
How do you plan to strengthen the price support program to prevent
the market price from falling below the support level?
Answer. The Farm Security and Rural Investment Act of 2002 states
that the Milk Price Support Program (MPSP) purchase prices shall be
sufficient to enable plants of average efficiency to pay producers, on
average, a price not less than $9.90 per hundredweight (cwt) for milk
containing 3.67-percent butterfat. The Class III price calculated by
the Agricultural Marketing Service (AMS) is a minimum price for milk
containing 3.5-percent butterfat. Actual prices producers received are
typically greater than the minimum, and prices for 3.67-percent milk
are about $0.20 per cwt higher when butter is near its support price of
$1.05.
CCC has historically interpreted ``on average'' to mean an annual
average over all cheese and butter/nonfat dry milk (NDM) plants (Class
III and Class IV milk). Weighted average prices, based on utilization,
of milk used for cheese making (Class III) and milk used for butter/NDM
making (Class IV) have exceeded $10.00 per cwt for the past 3 years.
Annual average manufacturing milk prices in the National Agricultural
Statistics Service (NASS) reports and the manufactured milk value
calculated for the Dairy Interagency Commodity Estimates Committee have
also exceeded $10.00 per cwt.
AMS began publishing a minimum monthly price for Class III milk and
a separate minimum monthly price for Class IV milk in January 2000 with
implementation of Federal Milk Market Order reform. CCC is considering
whether in light of these published prices it should revise its
interpretation of ``on average.''
Payment of an allowance to cover additional costs incurred to sell
cheese to CCC is being considered. This payment would be designed to
lessen the difference between Class III and Class IV prices when dairy
product prices are near CCC purchase prices for cheese, butter and NDM.
Question. Are you aware of the effect USDA specifications have on
the final level of support received by dairy farmers, and will you
consider either changing the specifications or being a more active
purchaser of products, such as on the Chicago Mercantile Exchange, in
order to make certain dairy farmers receive a price support level as
directed in the Farm Bill?
Answer. We are aware of USDA specification impacts on support
received by dairy farmers. Revisions to USDA specifications are in
draft form and are currently being reviewed. However, CCC storage of
product requires more expensive packaging. Also, resale or donation of
product from CCC inventory requires grading that is not typically
required for cheese going for immediate processing uses in the
commercial market.
Question. Does the CCC have the authority to be an active trader of
dairy products on the CME, or would separate legislation from Congress
be required to enable such action?
Answer. CCC has been an active trader on futures exchanges (Chicago
Board of Trade) and CCC has the authority to be an active dairy
products trader on the CME spot cash market.
Question. If the CCC does have this authority, please comment on
why it has not been used, in light of how often cheese prices have
fallen below support over the last several years?
Answer. In discussions with CME officials it was found that even
though CME product specifications match USDA's specifications, they are
not enforced for CME commercial trades. If CCC offered to buy product
on CME, CCC would not necessarily receive product meeting CCC
specifications. CME is uncomfortable with CCC's proposal to actively
sell inventory on the CME when market prices are above purchase prices
because this would tend to narrow the CME trading range and allow CCC
to break market rallies. CCC could purchase cheese on the CME at its
purchase price provided CCC specifications were fulfilled, but total
acquisition costs would be higher. CME brokerage fees, immediate
payment and $25 per trade transaction fees would add expenses to CCC
purchases. Also, CCC requires grading paid for by the seller while CME
does not require grading unless requested by the buyer, and if
requested, grading costs must be paid by the buyer.
Question. Will you provide me an analysis of the relationship
between an increase in the purchase CCC price of dairy products and
dairy income received by farmers?
Answer. A one cent increase in the CCC purchase price for cheese
should raise Class III milk price about 10 cents per cwt when purchases
are being made and cause a slight decrease in Class IV price. Class III
(milk used for cheese making) used 44 percent of total milk marketings
in 2002 so the price impact would affect at least 44 percent of milk
production. If Class III is the price mover, Class I price would also
increase, affecting another 37 percent of milk production. Impact on
the all milk price will vary from 4 cents to 8 cents per cwt depending
on the month. When purchases are taking place throughout the year and
Class III is seldom the Class I price mover, a 5 cent per cwt average
milk price increase for the year would yield an $85 million (half of 1
percent) dairy farm income increase (an average of about $925 per
farm). In years with few cheese purchases and Class III prices never
being the mover, the impact would be less than 1 cent per cwt average
increase, yielding a $12 million total income increase ($130 per farm).
Question. To what extent will use surplus stocks of non-fat dry
milk for food aid, drought relief, or other purposes?
Answer. Disposition of CCC NDM inventory for fiscal year 2003 has
been about 400 million pounds through April 30. Export donations have
been about 100 million pounds and drought relief about 250 million
pounds. Domestic donations and sales have each been about 25 million
pounds. Additional export donations of 100 to 200 million pounds are
expected. Additional drought aid is beginning to be distributed and use
may reach 200 to 400 million pounds by the end of the fiscal year.
CONSERVATION
Question. What input did USDA have in the Justice Department
determination that conservation technical assistance for Farm Bill
conservation programs would be subject to the section 11 cap, making
necessary the President's request to provide such assistance through
discretionary spending?
Answer. The Justice Department determination that conservation
technical assistance for Farm Bill conservation programs would be
subject to the section 11 cap reflects its own independent evaluation
of the law, legislative history, and relevant precedents. USDA supplied
the Justice Department with relevant legal materials, as requested.
CONSERVATION SECURITY PROGRAM
Question. Do you intend to implement the Conservation Security
Program in a manner similar to an entitlement until enrollments reach
the current statutory spending cap? If not, how would such alteration
be consistent with the Farm Bill?
Answer. USDA estimates that there is a potential applicant pool of
over two million farms and ranches covering some 900 million
potentially eligible acres. A primary implementation concern that was
raised in our published Advanced Notice of Proposed Rulemaking (ANPR)
is the scope of the CSP program. In order for this program to
accomplish the Administration's goal of maximizing the conservation and
improvement of natural resources, it will be necessary to focus CSP
assistance on farms and ranches that maintain the highest level of
natural resource protection.
STATUS OF CONSERVATION PROJECTS
Question. Please provide the status of conservation projects listed
in the Conservation Operations and Watershed Flood Prevention
Operations accounts of the Senate, House, and Conference Report
Statement of Managers to accompany the fiscal year 2003 appropriations
bill.
Answer. All of the fiscal year 2003 conservation projects listed in
the Conservation Operations account of the Senate, House, and
Conference Report Statement of Managers have been funded and
allocations made to the States within the last few months. State
Conservationists are in the process of implementing the projects and
accomplishments will be available at the end of the fiscal year.
Appropriated funds for Watershed Flood Prevention Operations were
not sufficient to cover the estimated installation cost of all projects
listed in the appropriation language. As a result, each 2003 project
allocation was reduced by approximately 20 percent. The following table
summarizes the fund allocations that were made during mid April:
WATERSHED PROTECTION AND FLOOD PREVENTION
------------------------------------------------------------------------
State Project Status of Funds
------------------------------------------------------------------------
Alabama......................... Upper Cahaba...... No funds
allocated, not an
authorized
Watershed
Protection and
Flood Prevention
project
Alabama......................... Pine Barren WS $1,184,000
Ext.. allocated to
project
Arkansas........................ Little Red River.. $545,000 allocated
to project
Arkansas........................ Poinsett.......... $744,000 allocated
to project
Arkansas........................ Big Slough........ $125,000 allocated
to project
California...................... Beardsley......... $5,646,000
allocated to
project
Florida......................... WF-Four Pilot $1,452,000
Projects in North allocated to
FL. project
Florida......................... Big Cypress....... $186,000 allocated
for FL project
planning,
including Big
Cyprus
Illinois........................ DuPage County..... $25,000 allocated
to project
Kansas.......................... Whitewater East... $1,429,000
allocated to
project
Kansas.......................... Whitewater West... $971,000 allocated
to project
Louisiana....................... Bayou Bourbeux.... $7,815,000
allocated to
project
Missouri........................ Big Creek & $1,341,000
Hurricane Creek. allocated to
project
Missouri........................ E. Fork of Grand.. $477,000 allocated
to project
Missouri........................ E. Locust Cr...... $477,000 allocated
to project
New York........................ Cayuga Lake....... Not an authorized
Watershed
Protection and
Flood Prevention
Project. Other
programs are
being utilized.
North Carolina.................. Swan Quarter...... $2,851,000
allocated to
project
North Dakota.................... Devil's Lake Basin Not an authorized
Watershed
Protection and
Flood Prevention
Project
Oklahoma........................ Sugar Creek....... $3,512,000
allocated to
project
Pennsylvania.................... Mill Creek........ $507,000 allocated
to project
Pennsylvania.................... Little Toby....... $347,000 allocated
to project
South Carolina.................. Flood mitigation Not an authorized
Projects. Watershed
Protection and
Flood Prevention
Project
South Dakota.................... Little Minnesota $67,000 allocated
River/Big Stone to project
Lake.
Texas........................... Elm Cr. Site #34.. $1,615,000
allocated to
project
Texas........................... Big Sandy Cr...... $1,277,000
allocated to
project
Texas........................... Lake Waco $437,000 allocated
Watershed. to project
Virginia........................ Southwest VA Not an authorized
Waterways in Watershed
Clinch Powell. Protection and
Flood Prevention
Project. $105,400
allocated through
the Emergency
Watershed
Program.
Virginia........................ Holston, Pound, & Not an authorized
Bluestone R.. Watershed
Protection and
Flood Prevention
Project. $105,000
allocated through
the Emergency
Watershed
Program.
Virginia........................ Marrowbone Cr..... $18,000 Watershed
Rehabilitation
Planning
provided, in
addition to
fiscal year 2002
fund carryover.
West Virginia................... Upper Tygart $12,131,000
Valley WTSH. allocated to the
project
West Virginia................... Little Whitestick $3,570,000
Cranberry. allocated to the
project
West Virginia................... Potomac Headwaters $460,000 allocated
Land Treatment. to the project
------------------------------------------------------------------------
WATERSHED REHABILITATION PROGRAM
Question. Please provide information in regard to expenditures in
fiscal years 2003 and 2004 under the Watershed Rehabilitation Program.
What criteria is USDA using to determine which rehabilitation projects
to fund? At the rate of funding for this program as requested by the
President, how many years will it take before those structures in
danger of failure will be rehabilitated? Is it likely that some
structures will fail before such time, and to what degree is this
likely?
Answer. The following is a summary of the allocations made for
fiscal year 2003. (To date, the fiscal year 2004 appropriations and
subsequent allocations have not been made):
------------------------------------------------------------------------
STATE TOTAL
------------------------------------------------------------------------
Alabama................................................. $30,000
Alaska.................................................. 0
Arizona................................................. 320,000
Arkansas................................................ 1,055,000
California.............................................. 10,000
Colorado................................................ 0
Connecticut............................................. 0
Delaware................................................ 0
Florida................................................. 0
Georgia................................................. 5,125,000
Hawaii.................................................. 0
Idaho................................................... 0
Illinois................................................ 40,000
Indiana................................................. 125,000
Iowa.................................................... 1,126,000
Kansas.................................................. 845,000
Kentucky................................................ 165,000
Louisiana............................................... 44,000
Maine................................................... 0
Maryland................................................ 0
Massachusetts........................................... 125,000
Michigan................................................ 19,000
Minnesota............................................... 0
Mississippi............................................. 530,000
Missouri................................................ 660,000
Montana................................................. 160,000
Nebraska................................................ 1,466,000
Nevada.................................................. 0
New Hampshire........................................... 0
New Jersey.............................................. 50,000
New Mexico.............................................. 740,000
New York................................................ 275,000
North Carolina.......................................... 54,000
North Dakota............................................ 470,000
Ohio.................................................... 300,000
Oklahoma................................................ 6,451,000
Oregon.................................................. 0
Pennsylvania............................................ 230,000
Rhode Island............................................ 0
South Carolina.......................................... 40,000
South Dakota............................................ 15,000
Tennessee............................................... 975,000
Texas................................................... 5,304,000
Utah.................................................... 150,000
Vermont................................................. 73,000
Virginia................................................ 328,000
Washington.............................................. 0
West Virginia........................................... 220,000
Wisconsin............................................... 150,000
Wyoming................................................. 36,000
Puerto Rico............................................. 25,000
---------------
Total............................................. 27,731,000
------------------------------------------------------------------------
The Watershed Rehabilitation amendment to Public Law 566 requires
that a priority ranking system be prepared. A standardized priority
ranking procedure was developed and is contained in NRCS policy. The
priority ranking process computes a ``risk index'' for each dam which
includes the following components:
--Potential for failure of the dam--based on existing conditions and
design features of the dam.
--Consequences of failure of the dam--based on number of lives and
property at risk if the dam should fail.
--Input from the State Dam Safety Agency.
Priority was placed on dams with:
--The highest risk to loss of life and where the dams were in the
poorest condition.
--Legal obligations through Federal contracts or projects agreements
where local contracts will encumber funds.
--Commitments for planning and application were made (i.e. completion
of plans, designs, and construction contracts).
At $10 million per year, an estimated 10 projects annually will be
rehabilitated. We do not have estimates of the number of dams that are
currently in danger of failure to respond to your request for
information on the possibility of future failures under current and
proposed program funding levels. We expect to have 250 risk assessments
completed by September 30, 2003 which will shed some light on this
question.
RD FIELD STRUCTURE CONSISTENCY PLAN
Question. I understand that the Under Secretary (Rural Development)
will issue a Consistency Plan for the field structure of RD. I also
understand that in the previous reorganization, States were allowed
flexibility to set up the structures to meet specific State needs. This
new plan, as I understand, will close most two-person offices and allow
States to develop a 2 or 3 tier system. States would also be limited to
the number of program chiefs. I assume this will require a shifting of
employees, functions and grade level changes.
How will these changes impact delivery and costs to the Agency?
Answer. The purpose of the Consistency Planning effort is to
improve the field structure across the country to better serve the
public, ensure that a basic level of service is available in all
offices, and to improve the delivery of services to customers. It
provides two possible field structures, which are very compatible to
each other on a national level, but allow for differences among the
States in geography, population density, program demand, and staffing
levels. Having a basic requirement nationally that there be at least 3
people in each office improves the chances that someone will always be
there to help customers in need of assistance rather than having to
close an office when employees are sick, on leave, or working away from
the office in order to make or service loans or provide technical
assistance. There will be some initial costs of relocating a few
employees and renting new space. There may be some savings in the long-
term of reduced rent due to the consolidation of a few offices.
Question. How will the savings or increase in cost be reflected in
your 2005 or 2006 budget?
Answer. These costs will be paid from, and any savings as a result
of improved efficiency, will accrue to the Salaries and Expenses
account.
RD COUNTY FIELD OFFICE CLOSURES
Question. What is the status of the 2003 requests by OMB to close
200 county base field offices?
Answer. The Secretary's Task Force, in the very near future, will
be transmitting to the State Leadership of the Farm Service Agency, the
Natural Resources Conservation Service, and Rural Development
instructions for evaluating offices for consolidation. The Task Force
anticipates the evaluation will be completed this summer.
Question. Is the criteria used for the Secretary's office closing,
to comply with the OMB request, and RD's plan similar, please explain?
Answer. The criteria are similar in that both efforts seek to
ensure customers are served effectively and efficiently. Rural
Development's consistency planning effort focuses on how the agency can
most effectively deliver its services with the resources available.
While the consistency plans are being reviewed, Rural Development is
also working closely with the Secretary's staff identifying inefficient
offices. The Rural Development State Directors will receive and utilize
the same evaluation criteria and instructions as the NRCS State
Conservationist, and the FSA State Executive Director and any
inconsistency between the Rural Development consistency plan and the
Secretary's evaluations will be reconciled following the completion of
the evaluations. Any Rural Development offices identified as
inefficient will be addressed in the implementation phase of each
State's consistency plan.
Question. Is there different criteria used in the two plans?
Answer. The criteria for the two initiatives are tailored to meet
the specific purposes of each initiative. However, the two effects are
being closely coordinated. Rural Development offices meeting the
evaluation criteria being used by the Secretary's Task Force will be
reviewed by the Rural Development State Director during their
consistency evaluation and appropriate action taken, based on the
overall needs and resources of the State.
Question. Are both groups using underserved minority populations,
substandard housing, rent overburden, and unemployment as factors for
office locations?
Answer. Rural Development did not provide specific criteria for the
States to use in determining the location of its offices during the
consistency planning process and each Rural Development State Director
is determining, with the assistance of their staff, where the offices
should be located utilizing such factors as geography, roads, location
of trade centers, existing office locations, and impact on employees.
The Secretary's Task Force has included diversity of the customer base
as a criterion that is being used in the evaluation of offices,
including those of Rural Development.
Question. Is the National Office reviewing factors of historic need
prior to final approval of State plans, including the factors used to
allocate resources to the States in the 1940-L regulation?
Answer. The National Office review of each State's implementation
plan does not include an assessment of the proposed office locations.
Each State Director established a working group of employees to assist
them in the development of their plan. The location of proposed offices
is part of that effort. The employees in the State are far more
knowledgeable of the State and its needs than is the staff of the
National Office and it would be presumptuous, in most cases, of the
National Office staff to question the recommendations of the State
employees as to the location of their worksites.
THE OFFICE OF COMMUNITY DEVELOPMENT
Question. The Office of Community Development will be redirected
from assisting EZ/EC and other communities to create and monitor
performance measures, training field staff and strategic planning (18
people). Do you need this entire staff devoted for these purposes?
Answer. The Office of Community Development (OCD) will continue to
provide national-level oversight of the Empowerment Zone/Enterprise
Community (EZ/EC) program, along with the Champion Communities and the
Rural Economic Area Partnership (REAP) Zones. These programs were
designed so that direct assistance to the supported communities would
be conducted by the Rural Development State and area office staff. As
part of a comprehensive plan to strengthen the field structure and give
State offices more responsibility for the outcome of programs in their
jurisdictions, OCD will provide State offices and staff additional
training on the implementation of the EZ/EC programs. In addition to
these responsibilities, OCD will be coordinating the effort within
Rural Development to formulate sound strategic plans, develop
appropriate goals to implement them, and devise sound performance
measurements to determine the effectiveness of Rural Development's
programs. It will also continue to develop and provide Rural
Development National and State office staff with web-based measurement,
mapping and reporting tools, along with other database management
systems, to achieve Rural Development's mission. Given this workload,
the staff of 18 FTEs is fully employed meeting these responsibilities.
ROUND 2 AND 3 EZ/EC COMMUNITIES
Question. Proper oversight and technical assistance were issues
when Round I of the EZ/EC communities were funded and there are still
many outstanding issues for these communities. What will happen to the
Round 2 and in the future round 3 EZ/EC communities with the proper
oversight and assistance to ensure these funds are adequately
administered?
Answer. Clearly, the Round I program constituted a learning
experience for both the urban and rural EZ/EC programs. There are still
outstanding issues with the oversight and assistance for the EZ/EC
program and they are constantly being addressed. Our Benchmark
Management System actively shows communities in all three Rounds are
making progress in the implementation of their strategic plans, for
example achieving an average leveraging ratio of over 16:1 with the
Federal funds provided them.
RURAL HOUSING SERVICE/MULTI-FAMILY HOUSING
Question. In recent years, RHS has offered little in the way of
incentives for section 515 owners to maintain long-term use. This lack
of action and funding has prompted both the courts and--the Congress to
consider the provisions of the law that regulates section 515 and
provides incentives. All section 515 tenants are low-income--with
average incomes of approximately $8,000 and two-thirds are elderly or
disabled households.
What is RHS doing to resolve this issue, so that owners are
compensated consistent with the law and tenants are not displaced?
Answer. The 2004 Budget includes funding for equity loans to
encourage owners to remain in the program. Additionally, RHS will
implement administrative changes to include: (1) encouraging and
expanding the use of third-party funds by establishing industry
relationships and continuing to subordinate our debt to secure
preservation funding; (2) re-directing existing Section 515 funds and
Section 521 rental assistance to resolve preservation cases; (3)
expanding the eligibility of non-profits and streamlining the transfer
of ownership process; (4) exploring contracting for processing; and (5)
concentrating MFH program and borrower training on preservation issues.
Question. If Congress, or the courts, lifted the restrictions in
the 87 Housing Act, what is the Agency's estimate of the number of
units that would be lost and the number of households that are likely
to be displaced?
Answer. Our estimates are consistent with those reflected in last
May's GAO report that stated 3,872 projects representing approximately
100,000 units/households could be eligible to prepay in the next
several years if restrictions on prepayment are lifted.
MULTI-FAMILY HOUSING PORTFOLIO NEEDS ASSESSMENT
Question. What is the status of the Committee's recommendation to
provide the Department $1,000,000 to conduct a capital needs assessment
as outlined in the GAO report, GAO-02-397?
Answer. The Committee's recommendation was included in the Senate
Appropriation Report, however, it did not reach the Conference Report;
and it was not funded by a separate line item in the USDA fiscal year
2003 budget. The Agency, however, has accepted the Committee's
recommendation to conduct a capital needs assessment of the Multi-
Family Housing Portfolio as outlined in the GAO report, GAO-02-397 and
has begun the study. To date, the structure of the Request for Proposal
(RFP) has been decided. A Multi-Family Advisory Board has been formed,
which consists of National Office staff, State Directors, and Program
Directors who will execute and closely monitor the progress of the
study. Portions of the study will be contracted out. Affordable housing
industry stakeholders have been identified to consult with the Multi-
Family Advisory Board during the study. Our target date for completion
of the study is early in 2004.
COMPREHENSIVE PROPERTY ASSESSMENT
Question. I see that the 515 program has no new construction funds
for 2004. What are the specific rehabilitation and preservation needs
for the entire portfolio and will you contract out for this purpose?
Answer. The Rural Housing Service has initiated an effort to
determine the condition of the portfolio from several perspectives. The
Comprehensive Property Assessment (CPA) has several objectives, all of
which are designed to provide an all-encompassing evaluation of the
State of the portfolio. These objectives include: (1) assessment of
property's physical condition; (2) assessment of property's financial
condition; (3) assessment of property's position in the real estate
rental market; (4) determination of continuing need for this rental
housing; (5) assessment of needed capital improvements and cost; (6)
assessment of future capital reserves needs; (7) analysis of prepayment
potential; and (8) analysis of prepayment incentive costs to retain
properties/use restrictions.
These objectives will be met using a combination of in-house
expertise and private contracts.
HUD OMHAR STRATEGIC PLAN
Question. The HUD OMHAR Strategic Plan indicates HUD will provide
assistance to the Department of Agriculture with restructuring the
Section 515 Program. What assistance are they providing and are there
any plans to allow HUD to perform preservation or other activities for
RHS? Is this delaying your Rural Housing Study?
Answer. The HUD OMHAR Strategic Plan referenced is a draft plan
that indicates that OMHAR would have the capacity to assist RHS as
OMHAR's activities sunset in 2004. At this point, there have been no
discussions with HUD as to how OMHAR could assist. However, we plan to
meet with HUD to see if OMHAR's underwriting capabilities can be used
to assist in meeting the preservation needs of RHS.
SECTION 515 HOUSING PROGRAM
Question. The Committee provided additional funding above the
President's request for new construction and rental assistance for the
515 programs. How much funding will be allocated to new construction
and please include the associated rental assistance cost and units?
Answer. Of the amount Congress appropriated for fiscal year 2003
for Section 515, the agency allocated a total of $29,252,541 for new
construction. As of June 6, 2003, we have funded 41 new construction
properties containing 984 units for a total funding of $23,616,151.
Rental Assistance was provided to 545 of those units totaling
$5,990,998 or 55 percent.
MULTI-FAMILY HOUSING STUDY
Question. The RFP for the $2,000,000 study on multi-family housing
has never been issued. This is the second year you have not requested
new construction funds while awaiting for this study to be completed.
What have you learned and when will you be in a position to request new
construction funds or legislation to change or replace the 515
programs?
Answer. The study is underway and the RFP is to be issued for
portions of the study that will be contracted out in fiscal year 2003.
We expect the study to be concluded in the first quarter of fiscal year
2004.
In recent years, RHS has offered little in the way of incentives
for Section 515 owners to maintain long-term use. This lack of action
and funding has prompted both the courts and--the Congress to consider
the provisions of the law that regulates section 515 and provides
incentives. All section 515 tenants are low-income--with average
incomes of approximately $8,000 and two-thirds are elderly or disabled
households.
Question. What is RHS doing to resolve this issue, so that owners
are compensated consistent with the law and tenants are not displaced?
Answer. The 2004 Budget includes funding for equity loans to
encourage owners to remain in the program. Additionally, RHS will
implement administrative changes to include: (1) encouraging and
expanding the use of third-party funds by establishing industry
relationships and continuing to subordinate our debt to secure
preservation funding; (2) re-directing existing Section 515 funds and
Section 521 rental assistance to resolve preservation cases; (3)
expanding the eligibility of non-profits and streamlining the transfer
of ownership process; (4) exploring contracting for processing; and (5)
concentrating MFH program and borrower training on preservation issues.
Question. If Congress, or the courts, lifted the restrictions in
the 87 Housing Act, what is the Agency's estimate of the number of
units that would be lost and the number of households that are likely
to be displaced?
Answer. Our estimates are consistent with those reflected in last
May's GAO report that stated 3,872 projects representing approximately
100,000 units/households could be eligible to prepay in the next
several years if restrictions on prepayment are lifted.
RURAL HOUSING SERVICE/RENTAL ASSISTANCE
Question. The Section 521 Rental Assistance Program is the largest
line item in the entire Rural Development request. On December 18,
2002, I requested the GAO to look into processes of the 521 Rental
Assistance Program including the administration of this program and
models used to anticipate recurring and future needs to formulate your
appropriation request. It is my understanding that the Agency is moving
to automate this process for the first time. Preliminary discussions
with GAO indicate this program appears to have large levels of
unliquidated balances for many reasons. The previous model was flawed
in estimating recurring and future costs as reflected in the
Department's appropriation requests.
The Secretary's testimony before this Committee on May 8, 2003,
insisted that outsourcing is needed specifically for advanced
technological needs.
Wouldn't it be prudent to contract with an outside source to help
the Agency construct an accurate and efficient program to track and
estimate the needs for this program?
Answer. The Agency has developed a working group consisting of
staff from the Department's IT Systems Services Division, the Financial
Management Division, national office and field staff, and private
contractors from Unisys, IBM and Rose International. This team is
developing a model based on relevant information elements using several
software applications that will provide a mechanism for providing
improved information for making budgetary decisions.
Question. This has obviously been a problem for many years. Are you
using outside expertise to create or test a new model?
Answer. Early in the rental assistance program, which started in
1978, there was a tendency to overestimate rental assistance needs,
mostly due to newness of the program and a lack of history on
assistance usage. Our recent analysis of the accuracy of rental
assistance projections in the last 6 to 7 years has revealed that the
current estimating methods used have been more accurate than in the
past. We have acquired a team of professionals from inside and outside
of government to create the Rental Assistance Forecasting tool.
Question. Are you using the same staff to provide input that
created the previous model?
Answer. Predicting the use of rental assistance has taken many
forms over the last 25 years and various methods and staff persons were
used to determine obligation amounts. We believe the recent methods of
projecting rental assistance usage contain valid parameters for
determining future needs, and it is critical to the development of the
forecasting tool to include persons most familiar with that process.
These staff members provide valuable input, historical knowledge and a
keen understanding of the variables associated with designing such an
estimating tool. A combination of experience and skill to assist in
this effort is required.
Question. Have you considered modifying existing systems, such as
DLOS, which USDA has spent millions of dollars to modify for RHS needs.
Answer. The Dedicated Loan Origination and Servicing System (DLOS)
is underpinned by a commercial-off-the-shelf package that currently
does not support the business processes applicable to the making and
servicing of Multi-Family Housing loans and the management of projects
and rental assistance. It was determined more cost effective and
efficient to pursue those systems already in place that support the
Multi-Family Housing loan program. These already contain much of the
data and have automated processes already in place that would support
the development and the integration of the new Rental Assistance
Forecasting software. This will reduce the cost of design, development,
and deployment as well as more effectively support existing business
processes supported by these systems.
RURAL HOUSING SERVICE/HOME OWNERSHIP COUNSELING
Question. The Section 525 technical assistance program for
homeownership counseling with a historical level of approximately $1
million has been eliminated with a justification that other sources,
including HUD, will provide this service. The President's Budget also
eliminates the Office of Rural Housing at HUD to provide technical
assistance and build capacity. HUD has been inadequate with the FHA
programs in penetrating rural America. In addition, the President and
the Secretaries of USDA and HUD have announced changes to increase
minority participation in Homeownership. One change required this
Committee to transfer $11,000,000 in the 502 guaranteed program to make
up for a shortfall during conference.
Do you have a commitment from HUD or others that would ensure our
rural areas are not left behind?
Answer. We work with many agencies, including HUD, State housing
finance agencies, local housing authorities and local non-profit
housing groups to ensure that rural areas receive a fair share of
housing assistance, including homeownership counseling. Homeownership
counseling is also provided by our Section 523 Grantees to those
families who participate in the Mutual Self-Help Housing Program. A
Memorandum of Understanding is being developed between the Rural
Housing Service (RHS) and the Federal Deposit Insurance Corporation
(FDIC) to make available training for potential rural homeowners using
the Money Smart financial literacy program. Our field staffs have
received training and are already using this program as another tool in
providing homeownership counseling.
Question. Does this Administration believe homeownership counseling
is an intricate part of the success of homeownership and wouldn't this
small investment add value; especially when you are reaching out to
historically undeserved minority communities and individuals?
Answer. We believe homeownership counseling is a critical factor in
becoming a successful homeowner. However, funding for homebuyer
education programs is available through numerous other Federal, State,
and local government and non-governmental sources. For example, in
2002, HUD awarded more than $18 million for its Housing Counseling
Programs in urban and rural areas across the country.
RURAL HOUSING SERVICE/SELF-HELP HOUSING
Question. In fiscal year 2003, the Rural Housing Service had a
large percentage of carryover-appropriated funds for the Self Help
Housing Grant fund.
What is the actual need to meet obligations in 2004?
Answer. We anticipate the actual need in fiscal year 2004 to be
$34,000,000. About $24,000,000 of this amount would be used to refund
75 existing grantees. The rest would be awarded to new grantees brought
to meet contract needs.
RURAL HOUSING SERVICE/FARM LABOR HOUSING
Question. In the Secretary's testimony for the May 8, 2003
Appropriation hearing, she indicated that the rental assistance request
is enough for all renewals including supporting new construction of $59
million for farm labor housing projects. In a recent briefing with the
Committee staff, the Department indicated that only 170 units of rental
assistance would be used for farm labor. Additionally, these projects
require a large percentage (around 80 percent) of rental assistance for
each facility, which averages around 40 units.
How will you utilize $59 million to construct farm labor housing
with only enough rental assistance for 4 or 5 projects?
Answer. We have projected to fund 984 farm labor housing (FLH) new
construction units from the $59,167,000 appropriations. Of that number
we will provide Rental Assistance for 859 units or 87.3 percent of FLH
new construction units, which will allow us to continue to operate a
viable FLH program. The percentage in prior years was 85 percent in
2002 and 79.5 percent in 2003.
Question. This is a program has low-rehab needs. What will you do
with the balance for the loan and grant programs in farm labor?
Answer. For fiscal year 2004, we anticipate to use all of the $59
million in loan and grant funds in FLH. The funds will be made
available for new construction of off-farm housing and rehabilitation
of properties in the portfolio. The balance of the funds will be used
for on-farm new construction and Technical Assistance grants.
Question. Will you make adjustments to this request?
Answer. We do not plan to make adjustments to this request.
BENEFICIARIES REPORT
Question. In 2001 the Department sent to the Congress a report,
Rural Housing Service Program Beneficiaries, which analyzed
demographically who was getting Rural Housing Service funds.
When will the Department provide another such report; a report that
is required annually by the Fair Housing Act?
Answer. This report will be completed within this fiscal year and
will cover the period from the last report.
Question. How many units of housing will the Rural Housing Service
finance with the budget authority requested in the fiscal year 2004
budget? How does this relate to the need?
Answer. For the Single Family Housing Direct loan and grant
programs, RHS will finance the construction or purchase of
approximately 17,900 homes with Section 502 Direct Loan funds, 17,000
with Section 502 Guaranteed funds and make more affordable over 2,500
units of refinanced housing, and the repair/rehabilitation of
approximately 12,000 homes with the Section 504 Loan and Grant funds.
The demand for these programs remains very strong.
For the Multi-Family Housing programs, the fiscal year 2004
President's Budget column reflects what will be financed with the
budget authority provided.
[The information follows:]
------------------------------------------------------------------------
Fiscal year 2004
PROGRAM (MULTI-FAMILY HOUSING) Presidents Budget
------------------------------------------------------------------------
Total Number of units funded for new construction 3,143
(fiscal year).......................................
Sec. 515............................................. 0
Sec. 514/516......................................... 741
Sec. 514/516 Natural Disaster........................ 0
Sec. 538............................................. 2,402
Total Number of units funded for rehabilitation 9,243
(fiscal year).......................................
Sec. 515............................................. 5,888
Sec. 514/516......................................... 978
Sec. 533............................................. 2,377
------------------
Total.......................................... 24,772
------------------------------------------------------------------------
These figures, which are consistent with prior years, indicate that
the Rural Housing Service is making a significant contribution toward
meeting the housing needs of Rural America.
I believe these analyses, judging from the one submitted for the
Rural Housing Service in 2001, Rural Housing Service Program
Beneficiaries, are tools for the Congress, the Department, and the
agencies in Rural Development and the Farm Services Agency to monitor
civil rights, as well as, programmatic performance. This type of report
can tell you who received the funds, what county they are in, what
their racial and ethnic background is, and who was successful in
obtaining USDA funds. The report also compares the beneficiaries to
those eligible for the program, so you can see if you are reaching all
eligible populations around the country.
Question. I know we have had a difficult time getting data and
analysis from the Department on these programs, wouldn't you agree that
this type of analysis would help you respond to us in the Congress as
well as to self-monitor your own programs?
Answer. Yes, this type of analysis would help respond to Congress
and Rural Development is working to improve data collection.
Rural Development has evaluated all of its program data and
reformatted the data to better address the requirement of FHA and other
Civil Rights Laws. Additional racial and ethnic data collection has
been adopted to the new categories as required by the Office of
Management and Budget.
Question. Does the Department have the personnel to perform such
analysis?
Answer. Rural Development's report was prepared by a private
contractor. Similar reports for other USDA program areas would likely
also have to be done by contractor.
I know the Assistant Secretary for Civil Rights' was just
established and may have difficulty providing studies such as the one
submitted in 2001, so I don't believe we can look there for action. I
know the report, Rural Housing Service Program Beneficiaries, was
produced by a private group under contract from Rural Development.
Question. Are you prepared, as Rural Development did, to seek non-
Federal entities to perform the analysis and write these reports
required by law?
Answer. We believe such reports can be effectively done in-house or
by private contractors. It is important that they meet the specific
needs for ethnic data for specific program areas.
ASSET SALES
Question. What programs do you consider for the asset sale and how
will you assure that agencies don't repeat 1987 loan asset sales
conducted by the former Farmers Home Administration when they sold only
seasoned loans for approximately 55 cents on the dollar?
Answer. All farm loan programs, both performing and non-performing
loans, will potentially be considered for the loan asset sale. However,
FSA will participate with RD in a study to determine whether or not
there is any market for the loans and whether or not there would be any
net savings to the Government after factoring in the cost of the sale.
If it is determined that there will be no net savings, it is not likely
that the farm loans will be considered for an asset sale.
As noted above, FSA will conduct a study to determine whether or
not there will be a net savings to the government before farm loans are
considered for an asset sale.
Question. Will these assets also be heavily discounted and if so
isn't this the same as reducing a portion of the debt to the borrowers
and allowing them to refinance with the private sector?
Answer. If it is determined that the farm loans will not yield any
net savings to the Government, it is not likely that they will be
considered for an asset sale.
RURAL BUSINESS SERVICE
Question. The Rural Business Investment Program (RBIP, Sec. 6029)
is currently required to use another Federal agency to carryout the
program. Is this arrangement adequate, or should the Department have
the authority to contract with non-Federal groups or deliver this
program in-house?
Answer. Rural Development and SBA have jointly identified certain
impediments with the current legislation. While we are continuing to
work toward resolving these impediments, we may find it necessary to
propose some legislative changes.
Question. How does the agency protect a property acquired by a
Rural Enterprise grant from allowing the recipient to take an equity
loan on a facility or selling the equipment? Is any instrument filed by
the Government at the courthouse to protect the Government's interest?
Answer. Rural Business Enterprise Grants are governed by Section
3019.37 of 7 C.F.R., which provides that Federal agencies may require
recipients of grants to record liens or other appropriate notices of
record to indicate that personal or real property has been acquired or
improved with Federal funds, and that use and disposition conditions
apply to the property. These requirements are spelled out in the Grant
Agreement and/or Letter of Conditions that is signed by the Agency and
Grantee.
Question. A recent news report referred to a Business and Industry
loan provided to a company that was found to have violated other
Federal requirements and was forced to pay penalties to the Federal
Government. The report indicated that proceeds from the B&I loan went
to pay these fines. Is this allowed under the current regulations and,
if so, is this good policy? Can you please explain in detail how this
loan was approved?
Answer. We are not familiar with the news report to which you
refer. Not knowing the specifics of the project, it is hard to provide
more than a general answer. Program regulations do not specifically
prohibit the payment of fines, but prudent lending decisions would
dictate the proper action. Most guaranteed loans are approved at the
State Office level. It would be up to the approval official to evaluate
each individual application on its own merits, assess the causes of any
fines or penalties, and evaluate any adverse affect on repayment
ability. We do not know the amount or purpose of the fines. It is
possible that a business owner purchased property with existing
environmental problems of which he was unaware. It is possible that the
lender and borrower did not make the Agency aware of the fines, nor
that B&I funds were used to pay the fines.
RURAL ECONOMIC DEVELOPMENT LOAN AND GRANT PROGRAM
Question. The Farm Security and Rural Investment Act of 2002 (Farm
Bill), which was signed into law by President Bush last May, included a
new provision providing for private sector funding for the Rural
Economic Development Loan and Grant (REDLEG) program. The REDLEG
program provides zero-interest loans and grants for projects such as
business expansion and start-up, community facilities, schools and
hospitals, emergency vehicles, and other essential community
infrastructure projects in rural America. In Wisconsin alone, this
program has provided 59 grants/loans totaling nearly $13 million while
leveraging an additional $59 million and creating over 1,800 jobs. This
new source of private funding for REDLEG is provided through fees
assessed on qualified private lenders receiving a guarantee under
Section 313 A of the Farm Bill. The authorizing language is very
straightforward on this matter and incorporates specific and strong
protections to the government to ensure the safety and soundness of the
program. In fact, the Farm Bill Conference Report notes that this new
provision ``effectively places the lender between the RUS and the
borrower minimizing the risks to the government.'' It is clearly stated
in the Farm Bill that the Secretary has 180 days from the date of
enactment to issue regulations and 240 days to implement the program.
Both deadlines has come and gone and not even draft regulations have
been issued. I am concerned that by the time regulations are issued
with the appropriate following public comment period and then final
program implementation, USDA may well be into the next fiscal year and
lose the $1 billion guarantee program level Congress appropriated for
this fiscal year.
What steps are you taking to expedite this process and will you
have something published this fiscal year?
Answer. The Rural Utilities Service is in the process of addressing
the issues that came about through the normal review process within the
Administration. The regulation should be published in the near future.
Question. Does this Committee need to do anything else to assist
the Department in this effort?
Answer. No, the Committee does not need to do anything else.
COMMUNITY FACILITIES
Question. The Rural Community Development Initiative (RCDI) imposes
a one-to-one match requirement. Is this a problem serving low-income
communities that lack capacity compared to, for example, national
organizations?
Answer. The point system used for ranking RCDI applications gives
priority to small, low-income rural communities. We have no way of
determining if some organizations are discouraged from applying by the
requirement for matching funds. However, there have been more loan
applications than could be funded in recent years.
Question. What lead to the change to allow the Federal match and
are we funding other USDA entities like Extension Service and is this
good policy?
Answer. The matching funds requirement is mandated by Congress. The
Extension Service and other USDA agencies are not eligible to receive
RCDI funding.
Community Facilities (CF) Direct Loan--The CF direct program has
never had a negative subsidy. This program has had a generally flat
program level of $250,000,000 for years. Additionally, the Agency
adjusts the interest rates to the customers on a quarterly basis on the
11th bond buyer's index. On the 3 week at the end of the quarter, the
Agency averages the bond buyer's index for the previous three months
and sets a new interest rate for the next quarter.
Question. The current rates to the borrowers are as follow:
Poverty, 4.5 percent; Intermediary, 4.78 percent; Market, 5 percent.
Without any budget authority, is the Agency exposed as we move through
the appropriation process with higher anticipated interest rates?
Wouldn't a slight rise in the interest rates have a tremendous impact
on this program and the end customers? What are the factors that lead
to a negative subsidy rate for the first time?
Answer. All direct loan programs are exposed to risk related to a
rise in interest rates as we go through the appropriation process. That
is a part of credit reform budgeting for direct loans. Subsidy costs
tend to increase when interest rates go up and to decrease when
interest rates go down. Other factors that determine the subsidy rate
include disbursement rates, average loan terms, percentage of program
level obligated at each interest rate, grace period for principal,
repayment schedule, and recovery of payments that are behind schedule.
The primary factor that has changed creating the negative subsidy
factor is the overall cost of money to the Federal Government.
RURAL UTILITIES SERVICE/WATER AND WASTEWATER PROGRAM
Question. The 2002 Farm Bill provided mandatory funds to meet the
requirements of a portion of the backlog for water and wastewater
applications. The fiscal year 2002 request dramatically reduces the
portion of grant funds available for this program. I understand that
you have applications in a pre-application stage, applications that
have been approved for funding and are expected to be funded with
available dollars, and applications which have been approved for
funding but for which resources are not available.
What level of applications which had been approved for funding were
still unfunded after the Farm Bill mandatory funds were made available?
Answer. At the end of fiscal 2002 there were 762 complete loan
applications on hand totaling $1,363,369,609 and 561 complete grant
applications on hand totaling $706,527,731.
Question. How many applications were funded with the Farm Bill
mandatory funds and how many additional applications approved for
funding were unfunded?
Answer. A total of 393 projects were funded with the Farm Bill
mandatory funds and a total of 786 additional applications were
unfunded at the end of fiscal year 2002.
Question. As of May 1, 2003, how may applications are approved and
waiting for funding but are not expected to be funded in fiscal year
2003, and what is the cost of funding these applications?
Answer. It is estimated that approximately 500 complete
applications will not be funded in fiscal year 2003. It is estimated
that the cost of funding these applications is approximately $1.0
billion.
Question. As of May 1, 2003, how many applications have been
submitted that are in the pre-application stage, and what is the
expected cost of funding these applications if they are all approved.
Answer. There are a total of 820 incomplete applications on hand.
The total cost of funding these incomplete applications is estimated to
be $1.5 billion.
Question. Of the applications approved for funding, what is the
total of grant necessary to fund these applications?
Answer. The total amount of grant needed to fund the complete
applications on hand is estimated to be $763,852,491.
Question. How many applications will not be funded in fiscal year
2004 due to the Administration's reduction in grant funds since those
applications need a higher rate of grant funds to cash flow, and from
what States are those applications generated?
Answer. Nationally, the applications remaining in the backlog
indicate an increasing demand for loan funds, which could mean that
there would be no change in the number of applications funded and
unfunded. It is anticipated that fiscal year 2004 will be no different
than any other fiscal year in that a number of applications will be
unfunded in each State.
Question. Will the Administration's proposal to reduce grant levels
mean that it is intended to pass on a higher portion of the project
cost to lower income Americans or does it mean that it is intended that
this program shall be more targeted to more affluent communities?
Answer. It is believed that neither one of these is the case. The
program remains committed to directing loan and grant funds to the
smallest communities with the lowest incomes, while providing financial
assistance that results in reasonable costs for rural residents, rural
businesses, and other rural users. The substantial reduction in
interest rates that has occurred over the past 10 years has made
projects funded through loans more affordable.
Question. Will the customer historic rates for water and sewer
increase for the States as a result of debt serving a larger portion of
the projects with loans funds instead of a higher grant infusion and
have you conducted any analysis on the impact to low and very low-
income communities?
Answer. It is believed that the customer's historic rates for water
and sewer will not increase at this time. Matching loan and grant funds
to meet the needs of local communities is always challenging. A
project's financial feasibility is determined based on its ability to
repay a loan and at the same time maintain reasonable user rates. With
the additional funding from the Farm Bill, we were able to fund a
significant number of applications that needed grant funds to develop a
feasible project. The loan-grant mix on the 393 Farm Bill projects was
50/50. Fortunately, we were able to reach many projects that needed
significant grant support. This resulted in a reduction in the backlog
particularly in projects with a heavy grant demand. Nationally, the
applications remaining in the backlog indicate an increasing demand for
loan funds.
A formal analysis has not been conducted on the impact to low and
very low-income communities.
PUBLIC TELEVISION
Question. Public television stations are facing a Federal mandate
to convert all of their analog transmission equipment to digital. The
deadline for public television stations to make this conversion
recently passed on May 1, 2003. 195 stations have filed with the FCC
for extensions of the deadline. Of the stations that cited financial
hardship as reason for a waiver, 70 percent of them serve predominantly
rural areas.
Last year, members of this committee recognized that public
stations serving rural areas would experience financial hardship as one
of the obstacles to meeting the Federally mandated deadline. To assist
these stations, the committee included $15 million in the Distance
Learning and Telemedicine program specifically to address these needs.
Committee staffs have recently met with both budget officers and
attorneys in your department about funding for this purpose. Further, I
understand that your agency has neglected to develop a plan for
awarding these funds. It is my understanding that the reason for the
delay in awarding these funds is because your department does not feel
that there is significant congressional direction to implement this
program for public television. I have read both the Senate report
language as well as the Omnibus report language and I think that
Congress was explicit in their intent to award these funds. I might add
that we put those funds in there for this specific purpose--to provide
funding for rural public televisions stations.
Please explain why you are choosing to ignore a directive from this
committee?
Answer. Rural Development is aggressively seeking the
implementation of a Notice of Funds Availability (NOFA) that would make
this funding available this summer. The NOFA will outline funding
parameters and set forth eligibility requirements to allow for the most
equitable distribution of this grant funding.
WIC CONTINGENCY FUND USE IN 2003
Question. Does USDA currently anticipate the need to use any of the
contingency funds provided in fiscal year 2003 in order to maintain
full WIC participation in fiscal year 2003.
Answer. Based on our current assessment of State agency funding
requirements, we do not anticipate using contingency funds in fiscal
year 2003 in order to maintain WIC participation. Any projected
shortfalls by individual States will be managed through conventional
reallocations.
2003 WIC FARMERS' MARKET GRANTS
Question. Please provide an update on funds provided in fiscal year
2003 for the WIC Farmers' Market Program, including the amount of funds
obligated to date, and information regarding the specific grants.
Further, please include the total number and total amount of requests
received for the WIC Farmers' Market Program.
Answer. A total of 44 State agencies requested and received to
date, $23,619,504 in funds as reflected in the attached chart. We have
advised State agencies of the opportunity to request additional
funding, given that $1,380,496 remains available from the $25 million
appropriated for the program. Some State agencies have expressed an
interest in receiving additional funds. Therefore, we are collecting
this information and expect to allocate additional funds by July 2003.
The grant allocations through May 22, 2003 are provided for the record.
[The information follows:]
WIC FARMERS' MARKET NUTRITION PROGRAM
------------------------------------------------------------------------
Fiscal Year
State Agency 2003 Program
Grant \1\
------------------------------------------------------------------------
ALABAMA................................................. $239,850
ALASKA.................................................. 290,029
ARIZONA................................................. 303,333
ARKANSAS................................................ 245,000
CALIFORNIA.............................................. 3,097,875
CHICKASAW, OK........................................... 40,000
CONNECTICUT............................................. 409,879
D.C..................................................... 339,276
5 SANDOVAL.............................................. 6,337
FLORIDA................................................. 366,543
GEORGIA................................................. 309,243
GUAM.................................................... 123,457
ILLINOIS................................................ 322,166
INDIANA................................................. 284,696
IOWA.................................................... 641,320
KENTUCKY................................................ 230,000
MAINE................................................... 85,000
MARYLAND................................................ 624,843
MASSACHUSETTS........................................... 607,229
MICHIGAN................................................ 515,490
MINNESOTA............................................... 396,667
MISSISSIPPI............................................. 86,766
MISSOURI................................................ 257,137
MS. CHOCTAWS............................................ 14,500
MONTANA................................................. 70,000
NEW HAMPSHIRE........................................... 129,047
NEW JERSEY.............................................. 1,118,411
NEW MEXICO.............................................. 392,891
NEW YORK................................................ 4,083,332
NORTH CAROLINA.......................................... 365,470
OHIO.................................................... 329,446
OREGON.................................................. 363,067
OSAGE TRIBAL COUNCIL.................................... 31,325
PENNSYLVANIA............................................ 2,312,386
PUEBLO OF SAN FELIPE.................................... 8,666
PUERTO RICO............................................. 1,301,308
RHODE ISLAND............................................ 198,313
SOUTH CAROLINA.......................................... 132,530
TENNESSEE............................................... 96,000
TEXAS................................................... 1,650,000
VERMONT................................................. 75,676
WASHINGTON.............................................. 308,000
WEST VIRGINIA........................................... 70,000
WISCONSIN............................................... 747,000
---------------
TOTAL............................................. 23,619,504
===============
Fiscal year 2003 Available Funds........................ 25,000,000
===============
Total Funds Allocated................................... 23,619,504
===============
Remaining Available Funds............................... 1,380,496
------------------------------------------------------------------------
\1\ Funds Allocated Thru May 22, 2003.
WIC VENDOR PRACTICES EVALUATION
Question. Please provide an update on the evaluation of WIC vendor
practices, for which $2 million was provided in fiscal year 2003. When
will the evaluation be complete, and does USDA anticipate any changes
in WIC guidelines as a result of this evaluation?
Answer. We anticipate that an evaluation contractor will be
selected and a contract awarded by September 30, 2003. Data collection
will occur in 2004 with a final report expected in 2005. This will be
the first study of WIC vendor management practices since the WIC Food
Delivery Systems final rule, which was published on December 29, 2000.
WIC State agencies were required to implement the rule by October 1,
2002. We expect that an examination of the efficacy of existing State
high-risk vendor identification systems will result in additional
guidance to help States to target more effectively their limited
investigative resources toward vendors that are most likely to
overcharge on food instruments or commit other serious violations.
ROUNDING-UP FOR WIC FORMULA
Question. The Senate included report language last year regarding
the amount of infant formula issued to WIC participants each month and
the variety of infant formula can sizes. Has FNS taken any action in
regard to this report language? Please provide an update.
Answer. The Department has a proposed rule in the initial stages of
clearance that would, as drafted, allow WIC State agencies to round up
to the next whole can size of WIC formula (infant formula, exempt
infant formula, or WIC-eligible medical food) so that participants can
receive the full amount of formula authorized in WIC regulations. We
intend to publish the proposed rule by September 2003.
WIC MANDATORY FUNDING
Question. Has USDA taken any position on any proposals to modify
the WIC program from a discretionary program to a mandatory program
during the reauthorization of the Child Nutrition Act, or at any other
time? If so, what is the position of USDA?
Answer. As stated in Food and Agriculture Policy: Taking Stock for
the New Century of particular urgency is ensuring dependable funding
for WIC. There may be advantages, programmatically as well as from a
budget formulation perspective, in redefining WIC as a mandatory
spending program. There has been no formal proposal and the
Administration has taken no formal position on any proposals to modify
the WIC program from a discretionary program to a mandatory program. In
the current budget environment, the Administration is likely to be wary
of putting more spending on the mandatory side of the budget.
WIC STUDIES AND EVALUATIONS
Question. The President's budget requests an increase of $5 million
for studies and evaluations. Please provide more detailed information
on the type of studies planned with this increased funding, and the
information that will be obtained through these studies.
Answer. This increase will be used for a comprehensive study to
evaluate the effectiveness of the WIC program.
While studies by FNS and other entities have long shown that WIC is
cost-effective in improving health and nutritional outcomes for
specific populations, a comprehensive evaluation has not been recently
completed. The program faces a range of emerging issues and challenges,
including changes in the demographics of WIC recipients, the need for
better coordination with other programs, staff development and
retention, and the use of new technologies to improve customer service
and maintain program integrity. Detailed research plans are under
development within USDA. We will be happy to share this with the
Committee once they are finalized.
WIC MANAGEMENT INFORMATION SYSTEM REQUEST
Question. The President's budget requests an increase of $30
million for State Management Information Systems, to replace old and
antiquated WIC systems. What are the specific spending plans for this
funding? Will all of the $30 million be spent in fiscal year 2004? If
not, how and when will each portion of the funding be spent? Is this
$30 million increase a one-time request for fiscal year 2004, or do you
anticipate requesting another increase in fiscal year 2005 and beyond?
Answer. We intend to fully obligate the funds in fiscal year 2004
for planning activities and system design and development work. Funding
decisions will be made in accordance with a Capital Planning and
Investment Plan we are preparing in conjunction with OMB. Funds
obligated in fiscal year 2004 will ultimately be contingent upon State
agency progress in forming consortiums, determining State agency needs,
and actual award of procurement contracts as specified in our Plan.
The requested $30 million is part of a multi-year plan for WIC
system development that should be completed no later than fiscal year
2008.
BREASTFEEDING PEER COUNSELING REQUEST
Question. How will the $20 million increase for breastfeeding peer
counseling, in the President's budget, be distributed? Will there be
any evaluation of this effort to increase the number of women who
choose to breastfeed?
Answer. These funds would be awarded on a competitive grant basis
to the WIC State agencies. Restricting the use of these funds to
breastfeeding peer counselor programs would ensure that peer counselors
are available at a majority of the WIC agencies nationwide. The
selection criteria for awarding grant funds to the WIC State agencies
is still under consideration. However, we expect the components of a
successful peer counselor program to provide education and support to
WIC clients through: (1) repetitive contacts throughout the prenatal
period in the WIC clinic; (2) postpartum hospital visits; (3) home
visits, (4) follow-up phone calls; (5) addressing barriers and
encouraging family support; and (6) culturally sensitive breastfeeding
management and education within the context of limited financial and
social resources.
Prior to developing our budget request, we examined the research on
use of breastfeeding peer counselors. The research indicated that use
of breastfeeding peer counselors has proven to be an effective method
of increasing breastfeeding duration rates among the WIC target
population. To ensure that WIC breastfeeding peer counseling is
effectively implemented, we plan to monitor and evaluate the
effectiveness of breastfeeding peer counseling on WIC breastfeeding
initiation and duration rates, but no formal evaluation is planned.
WIC FOOD PACKAGE REVISION STATUS
Question. I recently received a letter from Secretary Veneman,
dated March 11, stating that the updated WIC food package is expected
to be published in early summer. Please provide a specific date by
which this is expected to occur.
Answer. The letter you refer to, dated March 11, 2002, outlined the
Department's plans to publish a proposed rule to amend the WIC food
packages by early summer 2002. Since that time, in light of emerging
nutrition-related health issues and the new research-based Dietary
Reference Intakes, the Department instead plans to publish an Advanced
Notice of Proposed Rulemaking (ANPRM) on the WIC food packages in late
summer 2003. Also, a Statement of Work has recently been submitted to
the Institute of Medicine's (IOM) Food and Nutrition Board requesting
that it undertake a review of the research on nutrients lacking in the
WIC population's diet and the WIC food packages. We are asking the IOM
to make recommendations for possible changes to the WIC food packages,
based on the best available science. They will also consider
recommendations from the National WIC Association and comments received
in response to the ANPRM. IOM recommendations and the Department's
proposed decisions on how to implement them will be submitted for
public review and comment through a Notice of Proposed Rulemaking. We
have developed an accelerated timeline to ensure publication of a final
rule before the close of fiscal year 2005.
WIC OBESITY PREVENTION EFFORTS
Question. The President's budget requests an increase of $5 million
for obesity prevention projects to be carried out in WIC clinics,
including evaluations of those projects. Does USDA intend to try and
replicate successful projects throughout the country when reasonable?
Further, does USDA anticipate additional funding needs for obesity
prevention within the WIC program in the near future?
Answer. FNS plans to use these funds to implement and rigorously
evaluate a series of interventions in multiple WIC clinics to prevent
childhood obesity. FNS will encourage States and local WIC agencies to
implement any cost-effective approaches identified through the
evaluation.
FNS will use the results of the evaluation to determine the need
for additional funding. If cost effective approaches to preventing
childhood obesity are identified, FNS may request additional funding to
assist State and local WIC agencies in implementing these approaches.
FREE AND REDUCED PRICE LUNCH CERTIFICATION
Question. The President's budget includes an increase of $6 million
for activities to explore policy changes to help ensure that all
children receiving free and reduced price meals are eligible for them.
According to the budget, some of the ways in which USDA seeks to
improve the accuracy of eligibility decisions include mandating the use
of Food Stamp and TANF records to directly certify eligibility of
children already participating, or to use a ``combination of third-
party wage data'' and other expanded requirements for up-front
documentation for children not currently receiving free or reduced
price school lunches.
Does USDA believe that these increased certification requirements
will not only identify ineligible children who are currently receiving
benefits, but also children who are currently receiving reduced price
lunches but are in fact eligible for free lunches?
Answer. Yes. We expect that using Food Stamp records to directly
certify children for free meals, and other program improvements, will
help to identify more children who are eligible for free breakfast and
lunch, but currently pay for school meals at reduced or full price, and
certify them for free meals.
We also intend to address this issue through our $6 million budget
request to explore methods to enhance the targeting accuracy of the
free and reduced price eligibility determination system.
USDA has identified two fundamental problems in the current system.
First, there is a substantial number of children approved for free and
reduced price meal benefits on the basis of an application that are not
income-eligible for the benefit level they are receiving. These
children are over-certified. FNS believes that the vast majority of
over-certified children are approved on the basis of an application
provided to their school district, while there are very few over-
certified children approved on the basis of direct certification.
Second, there are a significant number of income-eligible children
that are not approved for the level of benefits associated with their
income-level. For example, some households eligible for free or reduced
price meal benefits are not approved for either level of benefits. When
these children receive an NSLP lunch, they must pay full price.
Likewise, there are some households eligible for free meal benefits but
who are approved for reduced price meal benefits. Funds requested are
designed to consider methods to address both fundamental problems.
SCHOOL LUNCH CERTIFICATION ACCURACY
Question. Please explain the proposals listed in the budget a
little more fully, specifically the ``combination of third-party wage
data and other expanded requirements.'' If USDA has updated their
proposals, please explain the most current ones.
Answer. Through the President's Budget request and the
reauthorization of the Child Nutrition Programs, USDA will seek to
improve the accuracy of program eligibility determinations, while
ensuring access to program benefits for all eligible children, and
reinvesting program savings to support program outcomes. Our current
recommendations to improve integrity include:
--Requiring direct certification for free meals through the Food
Stamp Program, to increase access among low-income families,
reduce the application burden for their families and schools,
and improve certification accuracy.
--Enhancing verification of paper-based applications by drawing
verification samples early in the school year, expanding the
verification sample; and including an error-prone and random
sample.
--Minimizing barriers for eligible children who wish to remain in the
program by requiring a robust, consistent effort in every
school to follow-up with those who do not respond to
verification requests.
--Initiating a series of comprehensive demonstration projects to test
alternative mechanisms for certifying and verifying applicant
information, including use of wage data matching that
identifies eligible and ineligible households.
--Planning for a nationally representative study of overcertification
errors and the number of dollars lost to program error.
IMPROVING CERTIFICATION ACCURACY
Question. How does USDA intend to make sure that increased
certification requirements do not drive away any child who is eligible
for a free or reduced-price school lunch, regardless of whether or not
they are currently participating?
Answer. The Administration is committed to maintaining and
improving access to low-income children who rely on free or reduced-
price school meals. We have had a continuing dialogue with the
Congress, the school food service community, and program advocates, and
have been working to develop and test policy changes that improve
accuracy but do not deter eligible children from participation in the
program and do not impose undue burdens on local program
administrators. Recommendations we support include:
--Requiring direct certification for free meals through the Food
Stamp Program. As provided for in the Child Nutrition
reauthorization, this would increase access among low-income
children and reduce the application burden for their families.
Current evidence suggests that while direct certification is
much more accurate than the standard application process it is
not yet widely used.
--Requiring school districts to follow up and make contact with
households that do not respond to verification requests, in
writing and by telephone.
--Streamlining the process for those who must still submit paper
applications by requiring a single application for each
household.
--Providing for year-long certifications in both paper-based
applications and direct certifications, eliminating the need to
report income changes during the year.
USE OF SAVINGS FROM CERTIFICATION ACCURACY
Question. Secretary Veneman's testimony stated that the
Administration would fully reinvest any savings that result from
improved payment accuracy to strengthen the programs. How specifically
will those savings be reinvested?
Answer. The Administration's decision to fully reinvest any savings
back into the programs is an essential aspect of our commitment to
improving program integrity and program access.
A majority of the savings will be reinvested to promote access to
the programs for all those eligible for them. Some specific proposals
in this area include increasing the regular free and reduced-price
school breakfast rates to the severe need rate, to encourage additional
schools to deliver the School Breakfast Program, and to exclude
military housing allowances from income, expanding eligibility and
improving access for families serving in America's armed forces.
Savings will also be used to encourage children to make positive
choices about what they eat, how much they eat, and how active they
are. This could include proposals such as providing expanded funding to
support the delivery of nutrition education messages and materials in
schools and conducting a large-scale demonstration project and
evaluation to test the impact of a healthy school nutrition environment
on student's nutrition and well-being in schools across the Nation.
IRRADIATED MEAT IN SCHOOL LUNCHES
Question. Please provide an update on any plans by USDA to
introduce irradiated meat into the school lunch program.
Answer. Product specifications will be released May 29, 2003 and
schools will have the option to order irradiated beef beginning January
2004. This allows ample time for schools to educate parents and the
community so that informed decisions can be made. Should schools decide
to order product, this also allows schools ample time to notify
parents. In addition, irradiated beef manufacturers will have the
opportunity to study and implement the specifications prior to orders
from schools in January. The decision to order and serve irradiated
ground beef will be left to each school food authority.
Farm Bill conference report language indicates that USDA should
consider ``the acceptability by recipients of products purchased'' by
USDA for commodity distribution. Therefore, before irradiated ground
beef products are made available for order by schools, USDA will make
every effort to encourage schools to educate food service personnel,
parents, and the community concerning irradiated ground beef products.
Shortly after the release of specifications, FNS will provide all
school districts with an informational package to help them to decide
whether to order irradiated beef products beginning January 2004. The
package will be mailed in June 2003 and will include a letter from
Under Secretary Bost strongly encouraging schools to notify parents,
students, and the community if they are planning to order irradiated
beef. In addition, the package will include a brochure with answers to
commonly asked questions about irradiation. This letter will also
include Web site addresses for the brochure as well as the site for the
U.S. Food and Drug Administration (FDA) irradiation consumer
information. The letter will give information regarding the community
educational materials currently under development by the State of
Minnesota that will be available to schools in the fall of 2003.
FRUIT AND VEGETABLE PILOT
Question. The pilot programs that have provided free fruits and
vegetables to students have been deemed extremely successful, and the
USDA has stated that it would like to expand these pilot programs. Has
USDA taken any specific steps to try and expand these programs in the
most cost-effective manner?
Answer. Public Law 108-30, enacted May 29, 2003, extends the
ability of schools participating in the Fruit and Vegetable Pilot
Program, which was authorized in the Farm Bill, to use any remaining
funds to continue the pilot in the 2003-2004 school year. Schools were
unable to expend the funds completely this past school year because the
grants were not made until the middle of October and schools then
needed time to implement the pilot. We will continue to work closely
with participating schools, providing support and technical assistance,
through next school year. We stand ready to provide technical
assistance to Congress, upon request, on this issue. An evaluation of
the pilots, submitted by USDA to Congress in May 2002, demonstrated
great popularity among participating schools; however, empirical
evidence was not available to allow us to evaluate the impact of the
pilots on dietary or health outcomes.
SCHOOL MEALS AND CHILDHOOD OBESITY
Question. There have been many reports of the drastic increase in
childhood obesity, and questions have been raised about the role of
school meals in this trend. What actions are USDA taking to ensure that
meals provided to children during school hours are nutritious and do
not contribute to childhood obesity?
Answer. Currently, the Richard B. Russell National School Lunch Act
requires schools to offer program meals that meet USDA's nutritional
standards. In a recent report, the General Accounting Office (GAO),
citing USDA studies, found that schools have made measurable progress
nationwide, in meeting USDA nutrition requirements and other
guidelines. GAO noted that additional improvement is needed not only in
meeting the nutrition requirements, but also in encouraging students to
eat more healthfully.
FNS is currently working on updating guidance and providing
training to assist States in providing schools with the technical
assistance needed to bring all meals up to the nutrition requirements
identified in program regulations. The more difficult problem is
teaching children to eat more healthfully. Most schools secure
additional revenues by offering children ``other foods'' a la carte
during times of meal service, in school stores, in vending machines,
and in other venues that compete with the school meals in the
cafeteria. There are no nutritional standards for these ``other
foods'', except that when sold in the cafeteria during meal service
periods they cannot be ``foods of minimal nutritional value.''
GAO noted that FNS has several major school nutrition initiatives--
Team Nutrition, Changing the Scene, and Eat Smart.Play
Hard.TM--that play an important role in encouraging schools
to serve nutritious foods and encouraging children to eat well. FNS is
also working with the Centers for Disease Control, the Department of
Health and Human Services, and the Department of Education to support
the Administration's HealthierUS initiative. However, not all schools
participate in these initiatives.
FOOD PROGRAM PARTICIPATION IN WISCONSIN
Question. There were recently two articles in the Milwaukee Journal
Sentinel regarding Wisconsin's difficulty in getting Federal food aid
to hungry people within the State. While some of these problems are due
to complicated Federal regulations, other difficulties are due to the
complex State applications people are required to fill out, and a lack
of outreach to eligible participants. Do you currently have, or are you
pursuing through Child Nutrition reauthorization, any programs that
will provide outreach and assistance to States such as Wisconsin to
help them increase the numbers of people they are serving?
Answer. While we are aware of problems in certain areas of the
State, it is important to note that Wisconsin's Food Stamp Program
(FSP) participation has substantially increased in recent years. For
instance, between February 2001 and 2003, Food Stamp participation
increased by 39 percent in Wisconsin, compared to 22 percent
nationally. Furthermore, the FSP has several outreach activities
underway to help States like Wisconsin increase the number of eligible
people that they are serving. One is a web-based pre-screening tool
that will be launched this Summer to allow interested persons to learn
quickly if they might be eligible for FSP benefits and the approximate
benefit amount they might receive. Another is a bilingual toll-free
number allowing callers to receive educational materials about the FSP
and how to apply.
Regarding the Child Nutrition Programs, the Administration believes
that ensuring access to program benefits for all eligible children
should be one of the guiding principles of the Child Nutrition
reauthorization. To advance this principle, we would support using
savings from an improved eligibility certification process for the
National School Lunch Program for proposals such as:
--Streamlining the school meal programs by fostering common program
rules and policies, supporting program operators in improving
access to the programs.
--Increasing the regular free and reduced-price breakfast rates to
the severe need rate for all schools participating in the
School Breakfast Program, to encourage more schools to
participate in the program.
--Mandating direct certification for free meals through the FSP,
which would add low-income children to the program while
reducing the application burden on their families.
--Expanding the 14 State Summer Food Service Program Pilots
(``Lugar'' pilots) to all States, thus eliminating cost
accounting for reimbursement in the Summer Food Service Program
(SFSP).
--Expanding permanent authority for proprietary child care centers
with 25 percent of their enrollment at free and reduced-price
to all States who participate in the Child and Adult Care Food
Program. Currently, only 3 States have this authority.
WISCONSIN SCHOOL BREAKFAST PROGRAM PARTICIPATION
Question. Wisconsin ranks last in getting school breakfast to needy
children. Morning meals were served in only 44 percent of Wisconsin
schools that also serve lunch, compared with 78 percent nationally. It
seems to me that we should be able to turn this situation around. As I
understand, with the combination of start-up grants we have provided in
the last three Appropriations bills--and that we hope to make a
national program by next year--and State and Federal subsidies, a
Wisconsin school district can run a breakfast program at minimal to no
cost to the district. Given the great benefits to the students of a
school breakfast program, I have to believe that many Wisconsin school
districts aren't offering breakfast because they simply do not
understand how easy it would be to set up and run the program.
Can USDA commit to me that they will work with my office to develop
a plan to ``sell'' the school breakfast program to Wisconsin school
systems?
Answer. We share your concern regarding the low participation rate
of Wisconsin schools in the School Breakfast Program (SBP). In fiscal
year 2003, the Food and Nutrition Service (FNS) has made promotion of
this program a national priority. In reviewing the level of school
participation in Wisconsin, we find the number of schools participating
in the SBP has increased from 858 (fiscal year 2000) to 1,127 (fiscal
year 2003), a 31 percent increase. Prior to the grant activity (fiscal
year 2000), only 35 percent of the schools with the National School
Lunch Program also participated in the breakfast program; this has
grown to 45 percent in fiscal year 2003. This growth is encouraging and
likely represents the Wisconsin Department of Public Instruction's
(DPI) efforts to ``sell'' the program.
In addition to schools not understanding how easy it would be to
set up and run the SBP, a number of other factors that are not within
the control of the State agency or school food service may affect a
school's decision to participate in the SBP; e.g., logistics resulting
from bussing or scheduling. As a result, it is not clear what level of
participation we can hope to expect from Wisconsin schools.
In addition to the School Breakfast Start-up grants which may be
used for administrative costs related to program outreach and
expansion, DPI receives State Administrative Expense Funds to
administer the Child Nutrition Programs. These funds may also be used
to promote the breakfast program to schools. USDA will continue to work
closely with Wisconsin, as we do with all State agencies, to provide
technical assistance. We will also continue to work with our partners
in the advocacy community, the Food Research and Action Center and the
American School Food Service Association, to generate interest in the
program across the country.
WISCONSIN SCHOOL BREAKFAST PROGRAM EXPANSION
Question. Will such a commitment include people and time dedicated
to helping these districts understand and design new school breakfast
programs?
Answer. The Department of Public Instruction (DPI) is the State
agency charged with administering the breakfast program in Wisconsin.
In addition to the School Breakfast Start-up grants to be used for
administrative costs related to program outreach and expansion, DPI
receives State Administrative Expense Funds to administer and promote
the Child Nutrition Programs, including the School Breakfast Program.
USDA will continue to work closely with Wisconsin, as we do with
all State agencies, to provide technical assistance, as needed. We will
also continue to work with our partners in the advocacy community, the
Food Research and Action Center and the American School Food Service
Association, to generate interest in the program nationwide.
FOOD STAMP REINVESTMENT
Question. Several States, including my State of Wisconsin, have
paid several million dollars in penalties in recent years due to
misadministration of the Food Stamp Program within the State. However,
USDA does allow these States to ``reinvest'' those funds in order to
try and improve their programs. How are these funds ``reinvested''? Are
there specific guidelines? Does USDA provide any assistance to States
as they are attempting to improve their program?
Answer. USDA's Food and Nutrition Service (FNS) encourages States
to settle liabilities incurred due to misadministration of the Food
Stamp Program by reinvesting in mutually agreed-upon error reduction
activities and management improvements to improve payment accuracy. In
recognition that no single approach or set of initiatives work for all
areas, reinvestment strategies vary from State to State and reflect
each State's unique problems and circumstances. In the past States have
reinvested funds in activities such as enhanced training of eligibility
workers, computer cross matching to check client data, on-line policy
manuals, client education on reporting responsibilities, intensive case
reviews, and centralized change reporting functions.
While there is a broad spectrum of potential strategies for
reinvestment, there are specific criteria that must be met in
determining whether or not a specific activity is allowable. These
include a determination that the activity is directly related to error
reduction in the State's ongoing Food Stamp Program and has specific
objectives regarding the amount of error reduction and type of errors
that will be reduced. The activity must also be in addition to the
minimum program administration required by law for State agency
administration and represent a new or increased expenditure that is
entirely funded by State money, without any matching Federal funds
until the entire reinvestment amount is expended.
FNS works with States to develop allowable reinvestment strategies
and routinely assists them as they attempt to improve their programs.
As part of this effort, FNS allocates State Exchange funds to support
travel to conferences, workshops, and other meetings between States to
facilitate the sharing of effective and efficient program management
techniques. FNS Regional Offices also work with States to analyze error
data and provide technical assistance in support of corrective action
and payment accuracy efforts. These efforts are supplemented by
national efforts to monitor and evaluate payment accuracy progress,
analyze error rate data and exchange information on payment accuracy
best practices and program improvement strategies.
BISON MEAT PURCHASES
Question. The Committee provided $3 million in fiscal year 2003 for
the purchase of bison meat for the food stamp program. How much of that
funding has been expended? Does the Department anticipate spending the
full amount? If additional funding were provided, would USDA encounter
any difficulty in expending the funds?
Answer. To date, the Department has spent $789,689 of the $3
million provided to purchase bison meat for the Food Distribution
Program on Indian Reservations in fiscal year 2003. The Department
anticipates fully expending the remaining funds. Should the same amount
or a lesser amount be appropriated under the same terms for this
purpose for fiscal year 2004, we believe that it could be fully
utilized.
FOOD STAMP PRIVATIZATION WAIVERS
Question. Are there currently any pending or requested waivers of
section 11(e)(6)(B) of the Food Stamp Act? Please provide an update of
the waiver granted in fiscal year 2002. Is it still in effect, and what
have the results been.
Answer. There are no pending waivers of the merit personnel
provisions under section 11(e)(6)(B).
In December 2002, the State of Florida requested a modification of
its approved fiscal year 2002 food stamp privatization waiver. The
expanded request would include all food stamp households in the six
demonstration sites, increasing the number of food stamp households
participating in the demonstration from approximately 3 percent to
approximately 22 percent of the State's food stamp caseload. The Food
and Nutrition Service (FNS) denied this expansion request. However,
because the State indicated its intention to request the same waiver
for the Medicaid caseload, FNS advised the State in April 2003 that we
would reconsider the merits of the expanded waiver when the Center for
Medicaid and Medicare Services (CMS) at the Department of Health and
Human Services reviews the Medicaid waiver. We believe this will ensure
the greatest program consistency among the Federal programs. As of this
date, the State of Florida has not submitted its waiver request to CMS.
In the meantime, we continue to work with the State in its development
of a Request for Proposals for the independent evaluator of the
demonstration as originally approved.
COMMODITY SUPPLEMENTAL FOOD PROGRAM FUNDING REQUEST
Question. The President's budget requests $94.991 million for the
Commodity Supplemental Food Program. This is the same level as
requested last year. However, the Congress provided $114.5 million for
CSFP in fiscal year 2003, so the net result is a requested decrease of
nearly $19 million for this important program for senior citizens and
others.
In Dane County, in my State of Wisconsin, food pantry participation
has increased 14 percent in the previous year. At the same time,
donations are down, so pantries are trying to feed more people with
less food. Similar statistics are seen throughout the State, and with
the current unemployment rate, relief doesn't seem to be coming any
time soon.
With all this information in mind, why wasn't an increase in
funding requested for CSFP over the fiscal year 2003 President's
request level?
Answer. The President's Budget request for fiscal year 2004 was
submitted before the fiscal year 2003 appropriation was enacted on
February 20, 2003 and was identical to the fiscal year 2003 request.
The fiscal year 2003 appropriation of approximately $114 million
significantly exceeded the President's request for $94,991,000.
FUNDING AND CSFP PARTICIPANTS
Question. How many participants does the Administration believe
will have to be turned away from this program, if the President's
budget request is agreed to by Congress?
Answer. We do not believe that any participants will be turned away
from the Commodity Supplemental Food Program (CSFP). Because fiscal
year 2003 appropriations increased so significantly over the previous
year, and because they were enacted so late in the fiscal year, we
anticipate that States will not be able to fill a significant portion
of their allocated caseload. Therefore, we anticipate carryover into
fiscal year 2004 of about $12 million. Based on the fiscal year 2004
budget request, the anticipated availability of bonus commodities for
the CSFP, projected participation levels at the close of the current
fiscal year, and unspent funds carried over from fiscal year 2003, we
anticipate being able to support a caseload of 530,000. A monthly
average participation of 482,000 is projected. It is important to point
out that the Food Stamp Program is America's first line of defense
against hunger and poor diet quality for people of all ages, and CSFP
participants are typically eligible for food stamps.
COORDINATION OF CSFP FUNDING
Question. Was the CSFP request taken into consideration when
formulating the budget for other Federal feeding programs such as WIC
and the Elderly Feeding Programs?
Answer. The Commodity Supplemental Food Program (CSFP) funding
request for fiscal year 2004 was developed independently from the
requests for other nutrition assistance programs such as WIC or the
Elderly Feeding Program. The other programs cited do not have a direct
connection to the level of activity or resource needs of CSFP. The WIC
component of CSFP is a small and declining portion of the program and
is not significantly influenced by the activity in the WIC Program. The
Elderly Feeding Program, now known as the Nutrition Services Incentive
Program (NSIP), is no longer a part of the USDA budget request. The
program was transferred to the Department of Health and Human Services
in fiscal year 2003.
Question. What suggestions and resources does USDA have for people
who are turned away from CSFP?
Answer. The Department does not anticipate that eligible applicants
will be turned away in fiscal year 2004. It should be noted that the
CSFP is not a nationwide program. Currently, it operates in 32 States,
on 2 Indian reservations and the District of Columbia. Also, only in a
few States is the program administered Statewide. Individuals in need
of nutrition assistance that do not have access to CSFP can apply to
participate in the Food Stamp Program, which is the Nation's primary
nutrition assistance program. In addition, individuals may also be
eligible for The Emergency Food Assistance Program, the Women, Infants
and Children Program and /or the Nutrition Services Incentive Program
which are all administered nationwide.
THE EMERGENCY FOOD ASSISTANCE PROGRAM ADMINISTRATIVE FUNDING
Question. Congress provided the Secretary with the authority to
transfer up to $10 million from TEFAP commodity purchases to
administration, if the Secretary deemed it necessary. Have any funds
been transferred to date? If so, how much, and if not, does USDA
anticipate transferring funding for this purpose?
Answer. On March 27, 2003, State agencies administering the
Emergency Food Assistance Program (TEFAP) were notified of their fair
shares of the $10 million being made available from TEFAP commodity
purchases for program administration. The funds were released to the
States in early April.
TEFAP ADMINISTRATIVE FUNDING USE FOR FOOD
Question. Currently, within the TEFAP Program, does USDA have the
authority to allow a State to use any of its storage and distribution
funds to purchase additional commodities, if feasible for that State?
If not, what additional authorities, if any, are needed, and would USDA
support such a proposal?
Answer. No. The Emergency Food Assistance Act currently prohibits
State and local agencies from using TEFAP administrative funds to make
direct purchases of additional commodities. However, in recent years,
excluding fiscal year 2003, States were granted authority under
Appropriations Acts to convert any portion of their TEFAP
administrative funds to food funds for use by the Department to
purchase additional commodities on behalf of the States for
distribution through TEFAP. To ensure that States are granted this
authority on a permanent basis, an amendment to the Emergency Food
Assistance Act would be necessary. Since States are in the best
position to target available resources to ensure that the nutritional
needs of households are met, the Department would support such an
amendment.
The Department would not, however, support an amendment to permit
States to make direct purchases of additional commodities since, in
most instances; States cannot purchase commodities as economically as
the Department. Although State and local agencies cannot directly buy
food with TEFAP administrative funds, they can use these funds to pay
costs associated with the transportation, storage, packaging, and
distribution of non-USDA commodities. The Department encourages using
TEFAP funds to support gleaning and food recovery initiatives, and the
distribution of commodities donated by other sources, because this
practice can substantially increase the amount of commodities available
for distribution through TEFAP.
SENIORS FARMERS' MARKET NUTRITION PROGRAM
Question. What was the total number of requests received by USDA
for the Seniors Farmers' Market Nutrition Program for fiscal year 2003?
Answer. A total of 48 grant applications were received by USDA's
Food and Nutrition Service to operate the Seniors Farmers' Market
Nutrition Program (SFMNP) for fiscal year 2003. All 36 SFMNP grantees
from fiscal year 2002 requested funding to continue their programs. In
addition, 12 new State agencies submitted applications to operate the
program.
FUNDING FOR SENIORS FARMERS' MARKET
Question. What was the total funding level requested for fiscal
year 2003 by the States, and how many and what level of grants were
funded?
Answer. The total funding level requested for the Seniors Farmers'
Market Nutrition Program (SFMNP) grants for fiscal year 2003 was just
under $30 million. The total amount of grants awarded was $16.8
million. The attached chart reflects the individual grant amounts for
the 40 State or tribal agencies that received SFMNP grant awards for
the fiscal year 2003 market season. The SFMNP grant allocations for
fiscal year 2003 are provided for the record.
[The information follows:]
------------------------------------------------------------------------
GRANT AWARD
SFMNP STATE AGENCIES FISCAL YEAR
2003
------------------------------------------------------------------------
Alabama................................................. $757,760
Alaska.................................................. 52,221
Arkansas................................................ 96,335
California.............................................. 791,800
Chickasaw............................................... 144,845
Connecticut............................................. 91,148
District of Columbia.................................... 143,080
Florida................................................. 96,604
Grand Traverse.......................................... 96,440
Hawaii.................................................. 575,246
Illinois................................................ 814,352
Indiana................................................. 42,297
Iowa.................................................... 467,997
Kansas \1\.............................................. 182,439
Kentucky \1\............................................ 750,000
Louisiana............................................... 284,644
Maine................................................... 893,220
Maryland................................................ 135,000
Massachusetts........................................... 56,900
Minnesota............................................... 77,280
Missouri................................................ 238,888
Montana................................................. 43,313
Nebraska................................................ 205,885
Nevada \1\.............................................. 200,010
New Hampshire........................................... 86,000
New Jersey.............................................. 560,734
New York................................................ 1,457,900
North Carolina.......................................... 54,000
Ohio.................................................... 1,309,052
Oregon.................................................. 882,249
Osage Tribal............................................ 22,720
Pennsylvania............................................ 1,500,000
Puerto Rico \1\......................................... 1,000,000
South Carolina.......................................... 570,925
Tennessee............................................... 472,980
Vermont................................................. 64,660
Virginia................................................ 493,707
Washington.............................................. 123,720
West Virginia........................................... 737,973
Wisconsin............................................... 299,579
---------------
Total............................................. 16,783,903
------------------------------------------------------------------------
\1\ Indicates New State Agencies for fiscal year 2003.
NUTRITION SERVICES INCENTIVE PROGRAM TRANSFER TO DHHS
Question. Please provide an update or summary on the transfer of
the Nutrition Services Incentive Program from USDA to DHHS.
Answer. Before the passage of the fiscal year 2003 Appropriations
Act, USDA was still operating the Nutrition Services Incentive Program
(NSIP). For the fiscal period prior to the passage of the fiscal year
2003 Appropriations Act, the States obligated a total of $58,114,849.
USDA is closing out all financial operations for the current fiscal
year for funds provided to the program during the Continuing
Resolutions. The Administration on Aging within the Department of
Health and Human Services has taken the lead in developing two
memoranda of agreement with input from the USDA's Food and Nutrition
Service. The first memorandum established roles and procedures for
program operations during this transitional year and the second
addresses fiscal year 2004 and beyond.
NUTRITION SERVICES INCENTIVE PROGRAM TRANSFER
Question. Was service to any participants interrupted at all during
the NSIP transfer?
Answer. Service to participants has not been interrupted during the
NSIP transfer. States continue to order and receive commodities for the
current program year. Cash has also been provided to States in a timely
manner.
NUTRITION SERVICES INCENTIVE PROGRAM FUND ALLOCATION
Question. Were all aspects of NSIP maintained that were
specifically mentioned by the Congress? These include ensuring that
NSIP funds are allocated on the basis of the number of meals served in
a State in the previous year, excluding NSIP from being subject to
transfer of administrative or match requirements, and ensuring that
States continue to have the option to receive benefits in the form of
cash or commodities.
Answer. While the program operated under Continuing Resolutions at
USDA, all aspects of the program remained unchanged. All States were
provided the opportunity to receive benefits in the form of cash and/or
commodities, and all NSIP funds were allocated on the basis of the
number of meals served in the previous year. The Department of Health
and Human Services, Administration on Aging, has maintained program
administration and operation as specified by Congress including the
exclusion of NSIP from being subject to transfer of administrative or
match requirements.
CHILD NUTRITION PROGRAMS INTEGRITY REQUEST
Question. The President's budget requests a $6 million increase
under the Child Nutrition Programs account for ``enhanced program
integrity in the Child Nutrition Programs.'' An increase of $1 million
is also requested for ``enhanced program integrity in the Child
Nutrition Programs'' under the Nutrition Programs Administration
account. What specific activities will be carried out with these two
requests and will there be any overlap? Why were these funds requested
in two different accounts to apparently carry out the same activities?
Answer. The requests are in separate accounts to support different
kinds of activities--analytical program assessment versus State agency
oversight--each of which is intended to contribute to enhanced Child
Nutrition Program integrity.
The $6 million request under the Child Nutrition Programs account
will allow FNS to expand its assessment of free and reduced price meal
certification procedures in the National School Lunch and School
Breakfast Programs. The agency has been testing a number of potential
policy and program changes to improve certification accuracy. The
requested funding will build on these efforts, and provide important
data needed to inform policy decisions in this area. Specific projects
will be selected based on the outcome of work already underway; high
priorities include a study of the feasibility, cost, and operational
implications of data matching as an additional source of eligibility
information, and collecting information that will improve the accuracy
of our estimates of the level of error in the program. This activity
will help us to comply with the Improper Payments Information Act.
The $1 million increase in the Nutrition Programs Administration
account will fund 13 additional staff years to support increased
oversight of State agencies and their efforts at improving local level
eligibility determinations for the National School Lunch Program.
FNS STUDIES AND EVALUATIONS
Question. Congress provided an increase of $3.195 million in fiscal
year 2003 to the Food and Nutrition Service for studies and
evaluations, and requested a comprehensive list of planned studies,
including the intent and funding level of each study, and the time
frame during which each study will be carried out. Please provide the
most up-to-date information on all planned studies to be carried out
with this increase.
Answer. The Food and Nutrition Service provided the requested list
of planned studies to the Committee on April 24. I will provide a copy
for the record.
[The information follows:]
NUTRITION ASSISTANCE STUDY AND EVALUATION PLAN FOOD AND NUTRITION
SERVICE FISCAL YEAR 2003
America's nutrition assistance programs form a nationwide nutrition
safety net to help low-income families and individuals improve their
nutritional levels. Together, these programs touch the lives of one in
five Americans over the course of a year and, with an expected
investment of nearly $42 billion in fiscal year 2003, account for
almost 40 percent of USDA's annual budget. Operational assessments that
respond directly to the needs of program policy makers and managers are
essential to ensure that these programs achieve their mission
effectively.
As indicated in House Rpt. 108-010, the Consolidated Appropriations
Resolution, 2003, provided the Food and Nutrition Service (FNS) a
$3,195,000 increase (for a total of $6,195,000) in the Food Program
Administration account for studies and evaluations of the nutrition
assistance programs. The conferees directed the Department to report to
the Committees on Appropriations on the studies and evaluations to be
carried out, including a comprehensive list of planned studies, the
intent and funding level of each study, and the time frame during which
each study will be carried out. The study and evaluation agenda
described here responds to this directive.
The conference agreement also provided $2,000,000 in the account
for the Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC) for an evaluation of WIC vendor practices. Finally, not
less than $7,500,000 of the Food Program Administration account is
available to improve integrity in the Food Stamp and Child Nutrition
programs, a portion of which is used to provide support for related
studies. This report consolidates the Agency's spending plans for funds
provided from all of these sources.
The study and evaluation agenda described here addresses four key
program priorities:
--Improve access to Federal nutrition assistance programs, to ensure
that all those eligible for these programs are able to
participate. USDA is targeting special efforts in three
underutilized programs--Food Stamps, School Breakfast, and
Summer Food Service.
--Improve program integrity, to strengthen their operations and
maximize their ability to serve eligible children and low-
income people while safeguarding the taxpayer's investment in
nutrition assistance.
--Build a HealthierUS by better integrating nutrition education into
the nutrition assistance programs and promoting healthier
lifestyles among those eligible for nutrition assistance.
--Address the emerging epidemic of obesity, especially among
America's youth, by improving the programs' ability to promote
healthy eating and physical activity.
Improve Program Access
Measuring Program Access, Trends, and Impacts.--This project
supports several key analytic tools (including microsimulation) to
address program participation trends and impacts. It provides annual
estimates of the percentage of eligible individuals who receive food
stamps, for the Nation as a whole and for individual States, providing
a key measure of the program's effectiveness in reaching its target
population. The project also generates annual reports on the
characteristics of food stamp participants. In addition, the project
provides the primary mechanism through which FNS estimates the caseload
and budgetary impact of actual and proposed policy changes. The project
is structured to support these activities through fiscal year 2008.
Evaluation of Grants to Improve Food Stamp Participation.--FNS
awarded 19 grants to State and local organizations in 2002 to explore
innovative approaches to improve food stamp access and increase program
participation. Grantees are responsible for evaluating the impact of
their approach. This project will provide technical assistance to help
ensure that their evaluations meet national technical standards and
will synthesize findings across all grants to help inform policy makers
about the effectiveness of different approaches. The final report is
anticipated in 2005.
National Work Support Center Demonstration.--The rate of receipt of
the full package of financial work supports available to low-wage
workers is quite low even though it can fundamentally change the return
on low-wage work, raising a family well above the poverty level. This
project will support a multi-year demonstration to put in place new
systems and procedures that make it easier for low-wage workers to
access the full range of financial work supports--including food
stamps. Funds would be provided to the U.S. Department of Labor, which
would serve as the lead Federal agency in a consortium of public and
private funders. Initial funding will support the development and
implementation of an integrated work support demonstration in selected
sites in 2003 and 2004.
Feeding Practices of Low-Income Households When School is Out.--
Federal summer feeding programs reach only one in five of the 15
million children who receive free or reduced price school lunches on a
typical day during the regular school year. This qualitative study will
examine the family dynamics and food security of low-income households
with school-aged children during the summer months in an effort to gain
a better understanding why low-income families are not participating in
the Summer Food Service Program. The final report is expected in 2005.
Improve Program Integrity
NSLP Payment Error Rate Methodology Study.--There is growing
recognition that inaccurate certification of eligibility for school
meals is a significant problem. The precise size of the problem,
however, remains difficult to quantify. This project would explore
survey methods for accurate classification of households eligible for
free and reduced price meals and examine the cost and burden
implications of various methods to estimate the payment error rate in
the National School Lunch Program. The final report is anticipated in
2004.
Evaluation of NSLP Application and Verification Pilot Projects.--
This evaluation is examining the effect of new school meal application
and verification processes on the accuracy of free and reduced price
meal eligibility determinations, the difficulty that eligible
households have in obtaining benefits for their children, and the
additional workload imposed on school food service staff. Fiscal year
2003 funds will be used to fund remaining tasks of a contract awarded
in fiscal year 2002. The final report is expected in 2003.
Case Study of Metropolitan Area Verification Outcomes.--The current
pilot tests of alternative free and reduced price eligibility
determination systems for school meals does not include any of the
largest metropolitan school districts. This study will help fill this
gap by collecting application verification results from a number of
large metropolitan areas and conducting household interviews with a
sample of those who fail to respond to a request for documentation to
assess their eligibility for free and reduced price meals. The results
will be used to inform discussions related to school meal certification
and verification. The final report is expected in 2003.
Feasibility of Data Matching.--This project would assess current
State infrastructure and capability to conduct data matching as an
additional source of eligibility information in the school meals
certification process. An initial census of all States would be
followed by feasibility testing in selected States. Fiscal year 2003
funds would be used to fund the initial census and to design the
feasibility test. The results will be used to improve the process for
determination and verification of student eligibility for school meals.
The final report is anticipated in 2005.
WIC Vendor Practices.--This Congressionally-mandated study will
examine the extent to which vendors comply with program rules and
ensure that proper foods are purchased from retail stores. This would
be the first study of WIC vendor management practices since the new
vendor management regulations were issued. It will also build on State
high-risk vendor identification systems to identify and evaluate the
efficacy of high-risk indicators that would allow States to target
their limited investigation resources toward vendors that are most
likely to be overcharging on food instruments. The final report is
anticipated in 2005.
Build a Healthier US
Assessment of Nutrition Education in the Food Stamp Program.--A key
mission area initiative is to improve the nutrition status and behavior
of those served by USDA's food assistance programs through integrated
cross-program nutrition education. Nutrition education funded through
the Food Stamp Program can be a powerful tool to promote healthy food
choices among low-income families and individuals. This project will
help realize this potential by collecting systematic information needed
for effective policy oversight and planning. This information will
include measures of the extent of integration of community efforts to
promote healthy food choices and physical activity; the content,
structure and funding of nutrition education and promotion activities;
and consistency with FNS policy objectives. The project will also
develop a model assessment tool that can be used to assess the quality
of food stamp nutrition education in a community. Project results are
anticipated to be available in 2005.
Feasibility of Monitoring Impact of Competitive Food Policy.--
Although there has been an increased emphasis on nutritional
improvement in school meals, the increased prevalence of childhood
obesity underscores the need to consider further efforts to promote
healthy eating throughout the school environment. Schools typically
sell foods and beverages that compete with the Federally supported
school meals, both in cafeterias and through vending machines, school
stores and other venues. This feasibility study will explore data
availability and reliability, and analytic methods to monitor the
impact of changes in competitive food policies on the nutritional
profile of foods available in the school environment. The final report
is anticipated in 2003.
Integrated Study of School Meal Programs.--The school meals
programs have changed considerably since the last national studies of
student diets and meal costs were completed in the 1990's. As part of
the Agency's periodic assessment of the nutritional effects of school
meals, this integrated study would update information on five domains
of great interest to policy makers: (1) characteristics of the school
environment and school food service operations; (2) nutritional quality
of meals offered and served in the school meal programs; (3) costs and
revenues of providing school meals; (4) student participation,
participant characteristics, satisfaction, and related attitudes toward
the school lunch and breakfast program; and (5) student dietary intakes
and the contribution of school meals to these dietary intakes. Fiscal
year 2003 funds would be used to develop the sampling frame and recruit
school districts to participate in this large national study. The final
report is expected in 2006.
Food and Nutrition Information Center.--These funds will support
the Food and Nutrition Information Center (FNIC) within the National
Agriculture Library to systematically store and disseminate information
on USDA's food assistance programs, nutrition education, and related
nutrition topics.
Address Obesity
Overweight and Obesity Initiative Pilot Project.--As part of
mission area's Breaking the Barriers initiative, the Center for
Nutrition Policy and Promotion has launched a pilot project to help
consumers aim for and maintain a healthy weight. The pilot will develop
and test appropriate messages and delivery mechanisms targeted to 20 to
40 year old women, especially those with low income. These funds will
support creative development and consumer research of material
prototypes, a small-scale implementation in selected cities to evaluate
effectiveness and measure consumer awareness, and development and
testing of enhanced graphics and educational information for the
Interactive Healthy Eating Index. The final report is expected in 2005.
Poverty, Food Assistance, and Obesity.--Recent observers, noting
the prevalence of obesity among low-income recipients of food
assistance, have speculated that there is a relationship between
program participation and obesity. The research evidence on this
question is sparse, scattered, and inconsistent. This project will
assemble an expert panel of leading researchers to conduct a critical
review, evaluation, and synthesis of the scientific literature and
suggest avenues for additional work to determine how food assistance
programs can best address overweight and obesity among participants.
The final report is expected in 2004.
FNS & ERS STUDIES AND EVALUATIONS
Question. I understand that the fiscal year 2004 budget was
formulated and sent to Congress prior to the passage of the fiscal year
2003 appropriations bill. In light of this, is it USDA's opinion that
the studies and evaluations funding, which was transferred from the
Economic Research Service to the Food and Nutrition Service in fiscal
year 2003, should remain in FNS in fiscal year 2004 or should be
transferred back to ERS?
Answer. Objective studies and evaluations are a critical need for
effective program management of the Nation's nutrition assistance
programs. To keep the budget request to a minimum required difficult
decisions about funding levels for studies and evaluations, and which
organization should have primary responsibility. Funding should be
provided as requested, although it would seem appropriate to anticipate
continuation of a certain level of flexibility, as plans solidify
around program needs.
UPDATING THE DIETARY GUIDELINES FOR AMERICANS
Question. The President's budget requested an increase of $150,000
for development for the Year 2005 Dietary Guidelines for Americans, in
conjunction with DHHS. Will there be additional increases requested for
these efforts in the future? Please provide a breakout of the total
cost, including funding provided by USDA and funding provided by DHHS.
Answer. Although USDA and HHS jointly manage the effort to develop
and publish the Dietary Guidelines for Americans, each is responsible
for funding different aspects of the process. The responsibility to
charter and fund the operation of the Dietary Guidelines Advisory
Committee rotates between the two departments--HHS bears that
responsibility for the 2005 Committee. The HHS costs for Committee
operations have been estimated to be $116,300. The $150,000 requested
by CNPP for fiscal year 2004 is for development and testing the sixth
edition of the consumer bulletin Nutrition and Your Health: Dietary
Guidelines for Americans.
After release of the new Guidelines, development and dissemination
of a variety of actionable materials for targeted consumer audiences
will allow the messages to reach and influence consumer behaviors.
UPDATING THE FOOD GUIDE PYRAMID
Question. There has been an increased focus on decreasing obesity
and improving eating habits in America recently, and much publicity has
been given to a Harvard study published in the American Journal of
Clinical Nutrition in December 2003 that suggests the USDA Food Guide
Pyramid is outdated and actually contributes to obesity. The
President's budget request includes a $670,000 increase to promote the
``Reassessed and Updated Food Guide Pyramid''. What is the status of
updating the Food Guide Pyramid? Will there be an update on the
nutritional recommendations included in the Food Guide Pyramid, or will
this be a newer packaging and presentation of the same material? Has or
will the December 2003 study be taken into consideration? When does
USDA plan on having the update complete, and do you anticipate another
requested budget increase?
Answer. The Food Guide Pyramid reassessment and updating process
includes three phases. The first phase consists of gathering
information through technical research, stakeholder input, and consumer
research. The second phase involves updating of the Pyramid food
patterns and the third involves developing new or revised graphic and
educational materials for consumers.
Phase two technical analysis is currently underway to revise
Pyramid food patterns so that they meet current nutritional standards
and reflect changes in food choices among Americans. Pyramid food
patterns consist of the types and amounts of foods to eat and are
specific to consumers' gender and life stage. Any changes in the food
patterns will be examined in consultation with Department of Health and
Human Service staff and potentially with other experts in the field.
Proposed modifications will also be made available for stakeholder and
public comment through the Federal Register before they are finalized.
New or revised consumer materials will be developed and tested in
the third phase of the revision process. The major goal of this phase
is to create a graphical representation and materials that communicate
the Pyramid's advice in ways that consumers can understand and act on
it. All proposed changes to the Pyramid's graphic presentation will be
tested with consumers and available for stakeholder and public comment
through the Federal Register before they are finalized.
As described above, there will be an update of the nutritional
recommendations included in the Food Guide Pyramid as well as the
packaging and presentation. The nutritional goals for the Pyramid are
set according to current nutritional standards, including the Dietary
Reference Intakes from the National Academy of Sciences, Institute of
Medicine, and the Dietary Guidelines for Americans. The committees that
establish these standards conduct extensive reviews and evaluations of
all the current scientific literature. The determinations that they
make are based on the preponderance of these research findings. Within
the context of these standards, we are taking into consideration the
findings from the Harvard study, along with the findings from numerous
other studies
TIMING OF DIETARY GUIDELINES AND FOOD GUIDE PYRAMID
Question. Upon looking at the budget, it appears as though the
updated Food Guide Pyramid will be completed and used in the
development of the Year 2005 Dietary Guidelines for Americans. Please
provide a timeline of how and when these two items will be developed
and updated--how will the updated dietary guidelines be reflected in
the Food Guide Pyramid if the Food Guide Pyramid is completed first, or
will these two updates occur concurrently?
Answer. The development processes for the Food Guide Pyramid and
the Dietary Guidelines for Americans are concurrent and coordinated.
USDA plans to present Pyramid-related technical and consumer research
to the Dietary Guidelines Advisory Committee. Coordination of these two
activities allows for significant changes in the Guidelines to be
reflected in the Pyramid. HHS and USDA expect to release the new
Dietary Guidelines in January 2005. Release of an updated Food Guide
Pyramid with a core set of actionable, consumer-friendly materials will
follow shortly after that in early 2005. The projected timelines for
development of the sixth edition of the Dietary Guidelines for
Americans and the updated Food Guide Pyramid follow.
[The information follows:]
------------------------------------------------------------------------
Dietary Guidelines
for Americans Food Guide Pyramid
------------------------------------------------------------------------
Fall 2002....................... USDA and DHHS CNPP conducts
Memorandum of technical
Understanding research to
provides the develop proposed
framework to revisions to Food
jointly prepare Guide Pyramid
and publish the food patterns.
2005 Dietary
Guidelines for
Americans.
Spring 2003..................... The Dietary
Guidelines
Advisory
Committee (DGAC)
is chartered.
Federal Register
notice solicits
public
nominations for
the DGAC.
Summer 2003..................... USDA and DHHS Proposed Food
appoint a Dietary Guide Pyramid
Guidelines food patterns are
Advisory published in the
Committee (DGAC) Federal Register
composed of for peer review
nationally and public
recognized health comment.
and nutrition
experts. Federal
Register notice
announces the
DGAC members and
their first
meeting date. The
notice also
solicits written
and oral comments
from the public.
Fall 2003....................... DGAC holds its Revised Food Guide
first public Pyramid food
meeting in patterns are
Washington, DC. finalized and
cleared.
Preliminary
graphic
presentation is
conceptualized
and designed.
Winter 2003-Summer 2004......... DGAC holds its Preliminary
second, third and graphic
fourth public presentation is
meetings, which consumer tested.
include oral Proposed Food
public testimony Guide Pyramid
and presentations graphic
from invited presentation is
experts on published in the
Dietary Federal Register
Guidelines for public
related topics, comment.
including
presentations by
CNPP on the Food
Guide Pyramid
revision.
Fall 2004....................... The DGAC report is The Food Guide
issued to the Pyramid is
USDA and HHS finalized.
Secretaries. The
departments
develop and
produce the
bulletin,
Nutrition and
Your Health:
Dietary
Guidelines for
Americans.
January 2005.................... The sixth edition Revised Food Guide
of Nutrition and Pyramid is
Your Health: cleared.
Dietary
Guidelines for
Americans is
released.
February 2005................... .................. Revised Food Guide
Pyramid is
released.
------------------------------------------------------------------------
INTERACTIVE HEALTHY EATING INDEX
Question. An increase of $400,000 is requested to update the
Interactive Healthy Eating Index. How long has this website been in
existence, and approximately how many hits does it receive daily? Are
further increases anticipated, as the update is scheduled for fiscal
year 2004 and fiscal year 2005?
Answer. In April 1998, the Interactive Healthy Eating Index (IHEI)
was added to the Web site of the Center for Nutrition Policy and
Promotion. In fiscal year 2002, on an average day, consumers hold more
than 2,500 sessions of the IHEI, spending about 25 to 35 minutes on
average assessing their dietary status and receiving targeted nutrition
education messages. (The average number of hits per day is around
200,000, but this is not as informative as the average number of
sessions). Besides continual updates to the IHEI foods database, the
Center will need to incorporate any revisions in targets for the new
Dietary Guidelines and the Food Guide Pyramid. An interactive menu
planning module will be an enhancement that will allow consumers to
plan for healthful diets based on their food preferences and dietary
guidance. The Center also intends to develop and promote IHEI-related
applications--a single-user CD-ROM and a Personal Digital Assistant
(PDA) IHEI application--that will provide greater access to the IHEI.
OBESITY PREVENTION AND NUTRITION PROMOTION
Question. Please provide additional information regarding what the
$600,000 increase to expand an obesity prevention program, and the $2.5
million increase for nutrition education and promotion, will be spent
on. Will all of this money be spent in fiscal year 2004?
Answer. The $600,000 increase to expand an obesity prevention
program will be spent in fiscal year 2004 on consumer research and
message development to refine and reshape consumer messages for
additional audiences. In fiscal year 2003, the Center for Nutrition
Policy and Promotion (CNPP) began development of a campaign to build
awareness of USDA's anti-obesity message and promote behavior change.
In this first phase, credible consumer messages were developed and
pilot tested with 20 to 40 year old women, especially low-income women,
to help motivate them to aim for a healthy weight. The fiscal year 2004
funds will be spent on research to test the applicability of these
messages to men and women over 40, and to reshape the messages and
modify the delivery channels as needed to better target these
audiences. Widespread implementation of the consumer-tested campaign
elements is planned for fiscal year 2005, using appropriate messages
and delivery channels for each audience.
The $2.5 million increase for nutrition education and promotion
will be spent in fiscal year 2004 on:
Enhanced Media Support for the Eat Smart.Play Hard.TM
Campaign (40 percent). This includes expanding the Web site with
interactive games and projects for children and information for
teachers and caregivers, producing nutrition education materials for
teachers, and producing messages and other products that can be shown
on in-school educational networks and closed circuit channels in WIC
clinics, community centers and Food Stamp offices.
Revising, reprinting and distributing existing Eat Smart.Play
Hard.TM Materials (25 percent). This includes providing
materials to WIC and the household-based commodity programs and
translating and making materials more culturally appropriate (for
Native Americans and Hispanics).
Establishing and evaluating cross-program nutrition education
interventions (35 percent). This includes working with specific States
to plan and implement targeted nutrition education interventions by
providing materials, training and evaluation support to teams
representing all the FNS programs. Subjects would include promoting the
5-A-Day messages, breastfeeding, implementing comprehensive Team
Nutrition, and overweight and obesity issues especially in children.
PUBLIC LAW 480 TITLE II
Question. During fiscal year 2003, we appropriated more than $1.7
billion for international food assistance through the Public Law 480
Title II program. Those resources were in addition to other commodities
released this year from the Bill Emerson Humanitarian Trust, and were
vital to meet needs in places like Sub-Saharan Africa from which
resources were being diverted to meet anticipated demand in connection
with our military campaign in Iraq. However, the President's 2004
budget for Public Law 480 Title II is less than $1.2 billion.
Can you explain why the President has recommended a decrease by
more than $500 million when the crisis in Africa remains at
unprecedented levels?
Answer. Title II has been provided an unprecedented funding level
for fiscal year 2003 in response to the scale and magnitude of
emergency requirements around the globe, and for increased program
costs due to higher U.S. commodity prices and fuel costs for shipping
in the run up to the war with Iraq. Our assumption is that fiscal year
2003 is an unusual year, and fiscal year 2004 will see a return to a
more traditional situation, including more typical commodity and fuel
costs. Accordingly, the President's budget proposes to continue funding
for Public Law 480 Title II in fiscal year 2004 at the same level
requested for fiscal year 2003.
Question. Have the President's or your views changed since the
United Nation's World Food Program informed the Administration just the
other week that their appeal for assistance in Iraq for $1.3 billion
will be $868 million below what they actually need?
Answer. Under the original appeal of $1.3 billion, the World Food
Program planned on distribution of full rations for 3 months, assuming
the public distribution system (PDS) would be fully functioning in
July. As time has progressed, we have come to realize that the PDS
system will take longer than expected to become fully functional and
will require the support of WFP for a longer period of time. The WFP
now plans to expand its Emergency Operations, which are still under
revision, to include full rations until the end of October at an
estimated total value of $1.85 billion.
Question. What assumptions were used for commodity prices in the
fiscal year 2004 budget request for Public Law 480 Title II? How do
they compare to more recent estimates of commodity prices for fiscal
year 2004?
Answer. The commodity price projections used in the fiscal year
2004 budget request were based on the USDA baseline estimates of
November 2002. The baseline incorporates provisions of the Farm
Security and Rural Investment Act of 2002 and assumes that current farm
legislation remains in effect through the projections period. Projected
prices for corn, wheat, and soybeans reflect, in part, movements in
stocks-to-use ratios. The baseline assumes that prices decline over the
next several years as production recovers from the reduced levels of
the 2002 crops. Prices for corn, wheat, and soybeans rise during the
later years of the baseline period as growth in demand outpaces gains
in production.
When the November forecasts were made, there was only limited
information about Northern Hemisphere winter wheat plantings for 2003/
2004 and, of course, no information about Southern Hemisphere crops for
the next year. By the May revision, however, Northern Hemisphere winter
and spring crop conditions and plantings were better known. In
addition, by this time in the crop year, there are at least some
indications of Southern Hemisphere winter grain plantings.
For wheat, the November 2002 baseline price for Marketing Year
2003/2004 was $3.25 per bushel and this was revised to $3.35 (midpoint
of range) in the May 12, 2003, World Agricultural Supply and Demand
Estimates (WASDE). For rice, the November 2002 baseline price for
Marketing Year 2003/2004 was $3.77 per hundredweight and this was
revised to $5.25 (midpoint of range) in the May 12 WASDE. For corn, the
November 2002 baseline price for Marketing Year 2003/2004 was $2.20 per
bushel and this was revised to $2.10 (midpoint of range) in the May 12
WASDE. For soybeans, the November 2002 baseline price for Marketing
Year 2003/2004 was $189 per metric ton and this was revised to $182
(midpoint of range) in the May 12 WASDE. For soybean oil, the November
2002 baseline price for Marketing Year 2003/2004 was $525 per metric
ton and this was revised to $430 (midpoint of range) in the May 12
WASDE.
Question. What estimates were used for emergency needs (commodity
and dollar levels for each country) in the 2004 request for Title II?
Are these levels still relevant? Will funding be needed for food aid
for Iraq?
Answer. As outlined in USAID's Congressional Budget Justification,
the estimated emergency allocation in the aggregate for fiscal year
2004 for Title II is approximately $522 million, not including the
unallocated reserve of $241 million. It is expected that over 1 million
metric tons of commodities for emergency food needs can be procured
with this funding level. Allocation decisions between emergency and
non-emergency programs must take into account many factors, including
congressional mandates related to Title II as well as global food aid
needs. No decisions regarding specific dollar and tonnage allocations
by country for fiscal year 2004 have been made at this time. As we draw
nearer to the fiscal year, funds will be allocated to countries or
regions based upon the latest information on hand. This is true for all
countries, including Iraq, where the projected funding allocation for
fiscal year 2004 is largely dependent on what food commodities are
sourced through the Oil for Food program contracts. The U.S. Government
will provide funding to fill shortfalls as needed.
Question. Does the 2004 request for Title II assume that you will
comply with the requirement in the 2002 Farm Bill that 1.875 MMT be
made available for non-emergency purposes, and what steps have been
taken to seek proposals for fiscal year 2004 developmental programs in
order to reach the 1.875 MMT level?
Answer. The fiscal year 2004 budget request assumes that the Title
II program will comply with the minimum tonnage level established for
non-emergency programs. We understand the Office of Food for Peace at
USAID continues to work with the U.S. PVO community to increase the
number of effective development activities, as well as to program
commodities for other non-emergency activities.
Question. Is OMB or USAID placing arbitrary limits on the use of
monetization for Title II programs, rather than allowing PVOs to
identify and justify in their proposals the appropriate levels to meet
program objectives in particular countries?
Answer. No arbitrary limits have been placed by OMB or USAID on the
use of monetization of Title II commodities. However, as part of the
President's Management Agenda and related review of Title II programs,
a decision has been made jointly by OMB and USAID to reduce the level
of monetization over the next several years. A Monetization
Rationalization Plan has been developed by USAID to guide this process.
The plan is now under discussion with private voluntary organizations.
Question. How has the Administration met the requirement in the
fiscal year 2003 Supplemental Appropriations Act that to the greatest
extent possible USAID shall restore funding for the Title II non-
emergency programs that were cut? What tonnage level do you estimate
will be provided for non-emergency Title II programs in fiscal year
2003?
Answer. Except for India, funding has been restored to the maximum
extent possible to all non-emergency programs that were cut to meet the
food emergencies in Africa. In the case of India, the Government's
position on commodities potentially containing genetically modified
organisms prohibit us from shipping commodities to that country at this
time. USAID anticipates that $106 million will be restored to the PVO
development portfolio in fiscal year 2003, bringing the funding level
to $416 million for PVO development activities.
Including PVO development activities and other Title II non-
emergency activities, it is estimated that approximately 1.3-1.9
million metric tons grain equivalent of food will be programmed under
Title II non-emergency programs in fiscal year 2003.
Question. What level (tonnage and dollar amounts) of food
assistance is being provided for the following emergencies: a) Southern
Africa, b) Ethiopia, and c) Eritrea and from what funding sources? What
were the estimated food needs (tonnage and dollar amounts) in each of
these cases in fiscal year 2003?
Answer. The information is submitted for the record.
[The information follows:]
Southern Africa.--The U.S. Government has provided 566,000 metric
tons of food aid to Southern Africa over the past year, using both
fiscal year 2002 and fiscal year 2003 funding availabilities. The
estimated value of those contributions is $320 million. In addition,
USAID will be shipping an additional estimated 150,000 metric tons of
commodities in fiscal year 2003. Funding has come from three sources:
Public Law 480 Title II, Section 416(b) programming, and the Bill
Emerson Humanitarian Trust.
The estimated humanitarian cereal needs for the six affected
countries in southern Africa between July 1, 2002, and March 31, 2003,
was 1.2 million metric tons. With the addition of the other required
components of the food basket, such as beans and oil, the total reached
approximately 1.5 million metric tons. On average, the provision of
this amount of food aid would cost $825 million.
Ethiopia.--In fiscal year 2003, 737,020 metric tons valued at $340
million have been provided from both the Bill Emerson Humanitarian
Trust ($77 million) and Public Law 480 Title II ($263 million). The
estimated food needs for Ethiopia are 1.52 million metric tons for 12.6
million beneficiaries. Based on U.S. pricing factors, this quantity on
average would cost $836 million.
Eritrea.--In fiscal year 2003, 118,900 metric tons valued at $52
million have been provided from Public Law 480 Title II. The estimated
food needs for Eritrea are 290,000 metric tons for 1.4 million
beneficiaries. Based on U.S. pricing factors, this quantity on average
would cost $160 million.
Question. The Administration did not request food aid funding for
Iraq, other than restoring $200 million to foreign aid accounts for
funds that were provided to the U.N. World Food Program for the
purchase of food aid from other countries. What level (tonnage and
dollar amount) of food aid will be provided to Iraq from the United
States, not foreign purchases, in fiscal year 2003 and from what
funding sources?
Answer. USAID will provide a total of 164,000 metric tons of Title
II valued at $150 million and 81,500 metric tons from the Bill Emerson
Humanitarian Trust valued at $46 million. The total planned U.S.
contribution is 245,500 metric tons valued at $196 million. This does
not include the $200 million in cash provided to WFP.
Question. What is the estimated need for Iraq food assistance for
the remainder of the fiscal year? If this is not being supplied
directly through U.S. food aid programs, then how is it being supplied?
Do you agree with the World Food Program estimates in regard to Iraq,
and if not, please explain.
Answer. Fortunately, the WFP has been able to re-negotiate over 1.2
million metric tons of food contracts. According to the latest reports
from WFP, 1.2 million metric tons of Oil for Food contracts coupled
with additional donor contributions, including those from the U.S.
Government, mean that the food pipeline is fully sourced.
The total needs for the Iraqi population are being met in part
through U.S. food contributions, other donor contributions, and a $200
million cash contribution provided by the U.S. The cash allowed WFP to
procure 330,000 metric tons of commodities in the Gulf region. This was
done to provide commodities urgently needed in Iraq in May, when U.S.
food aid could not have arrived in time.
We agree with WFP estimates in regard to Iraq. The total food needs
per month under the Public Distribution System are a little under
500,000 metric tons. This level multiplied by 5 months is about 2.4
million metric tons.
BILL EMERSON HUMANITARIAN TRUST
Question. The fiscal year 2003 supplemental provides $69 million
for the purchase of commodities to replenish the Emerson Trust.
Language is also included that prohibits the monetization of any
additional release of Emerson Trust commodities during the remainder of
this fiscal year.
Do you support having the authority to hold cash for replenishment
of the Emerson Trust rather than being required to actually purchase
commodities to be held in storage for future use?
Answer. Yes, we support maximum flexibility in administering the
Bill Emerson Humanitarian Trust.
Question. What effect on U.S. commodity markets has the
monetization of Emerson Trust commodities had during the past 2 years?
Answer. About 19 million bushels of wheat were monetized during the
2002/2003 marketing year. A review of wheat prices shows that wheat
markets began an upswing in June and peaked in early September. Markets
began a downward swing about mid-September and leveled off around mid-
October. There was slight market increase in late October through early
November. Markets then began a downward trend in mid-November that
continued through the end of the marketing year.
Although wheat prices varied, there is no evidence to link the sale
of wheat by CCC as the reason for any price decline. Price decreases
point more directly to declines in the U.S. market share of world wheat
trade, which resulted from lower priced wheat being offered by other
countries, including a number of non-traditional exporters. U.S. wheat
exports during 2002/2003 were at the lowest level in many years.
It is also important to note that during the June to December 2002
period, CCC purchased more wheat in the marketplace--approximately 59
million bushels--than it sold--approximately 26.7 million bushels. When
all these factors are taken into account, the sale of wheat from the
Emerson Trust appears to have had a negligible impact on the domestic
U.S. wheat market.
Question. How is the $69 million appropriated in the fiscal year
2003 Supplemental Appropriations Bill being used?
Answer. At the moment, the $69 million is being held by the
Commodity Credit Corporation. No final decision has been made on how
the $69 million will be used, but clearly its use will depend on future
needs.
Question. Why did USDA decide not to seek funds to replenish
commodities for the Trust?
Answer. Funds were not sought by the Administration to replenish
the Trust at this time due to other more pressing budget needs.
Question. Have Public Law 480 funds been used at any time to repay
the Trust for commodities withdrawn for urgent needs under section
302(c)(1) of the Bill Emerson Humanitarian Trust Act? If so, have any
of these funds been retained for the purchase of commodities to
replenish the Trust, as permitted under section 302(b)(2)(B)?
Answer. CCC has been reimbursed three times for wheat released from
the reserve in response to urgent humanitarian needs and programmed
through Public Law 480 Title II. The reimbursements were based on the
export market price of the wheat in accord with section 302(f)(2) of
the authorizing statute. CCC was reimbursed $45 million in fiscal year
1987, $6.9 million in fiscal year 1991, and $28 million in fiscal year
1995. These funds were not used for the purchase of commodities to
replenish the Trust. The reason for that is because the authority
provided in section 302(b)(2)(B) was not added to the statute until
enactment of the Bill Emerson Humanitarian Trust Act of 1998, which was
after all three reimbursements had occurred.
MILK PROTEIN CONCENTRATE
Question. Although USDA has no direct jurisdiction of the
regulation of MPCs, the importation of these products has raised
substantial concerns among dairy farmers.
Will USDA work with the USTR to ensure that any future agricultural
trade negotiations will include the issue of MPC imports as a priority?
Answer. In trade negotiations we pay close attention to the needs
of import-sensitive U.S. producers. Throughout the negotiations, USTR
and USDA work together closely to assess a particular product's import
sensitivity, based on advice from the ITC on probable economic effects.
USTR and USDA also consult closely with private sector advisors and
Congress throughout the negotiations. Negotiators use a variety of
tools to protect U.S. import-sensitive sectors, including extended
periods for tariff reductions and import safeguards.
Question. In the meantime, does USDA have any recommendations on
how the harm to domestic dairy markets from MPC imports can be
overcome?
Answer. MPC impacts on dairy markets would be to lower nonfat dry
milk (NDM) prices. However, during MPC import growth domestic NDM
prices have typically been near support and CCC has purchased
significant quantities of NDM. The impact of MPC imports has been to
support new product formulations and to some extent increase CCC NDM
purchases. Direct impacts on farm prices are believed to be very small
because of the milk price support program (MPSP).
A subsidy program to encourage the production of MPC domestically
is being considered. Diversion of milk protein to domestic MPC
production and away from NDM production might decrease CCC purchases
and save total government expenditures.
A tariff rate quota would probably lead to a WTO challenge and
possible demands from the EU for compensation of up to $600 million.
INTERNATIONAL DEVELOPMENT POLICY
Question. There is evidence of growing sentiments around the world
critical of the United States intentions and practices, on a global
scale.
Do you agree or disagree that international developmental programs,
such as those associated with Public Law 480 non-emergency programs,
have great potential to overcome growing world hostilities toward
American interests, help prevent the growth of terrorist organizations
in those parts of the world, and provide significant long-term benefits
for those countries and the United States?
Answer. We agree that Public Law 480 non-emergency programs, such
as Public Law 480 Title I and Public Law 480 Title II development and
food for work programs, have a significant role in supporting the
economic development of low-income countries and in this way are
beneficial in reducing the potential for terrorist activity. For the
United States, reducing the number of chronically poor, undernourished
and underweight people throughout the world is both a humanitarian
concern and a strategic goal. Food aid resources are given to help
those in need in an effort to deal with hunger and to eliminate the
food insecurity that fuels political instability and the potential for
terrorism. Global Food for Education programs and food for work
activities also contribute to the prevention of conditions that foster
terrorism and create new generations of better educated citizens.
However, it is important to note that there is a mosaic of issues that
stimulates terrorists that is much broader than food and economic
development alone.
Question. If you agree, what will you do to help promote these
programs and seek greater levels of resources?
Answer. Our first step in promoting the non-emergency programs will
be to continue to work with the recipients of our programs to develop
effective programs that are supported by the recipient governments. We
also will continue to ensure that program oversight is effective so
that program objectives are met. These measures will go a long way
toward effective and efficient use of program resources.
Question. Should these types of programs take on a greater role in
the context of national security in view of current world conditions?
Answer. The United States Government carries out a wide range of
programs designed to assist in the growth and development of developing
countries. These programs range from security, economic development,
humanitarian food assistance, and health and safety programs.
Maintaining a balance in the level of support for these programs is
important, and that's what the Administration is attempting to do.
Question. One of the areas of U.S. involvement in reconstruction
efforts in Iraq is agriculture. Please describe U.S. activities in this
effort, including the amount of funds and number of personnel assigned
to this task.
Answer. USDA has had one person on the ground in Baghdad since
April 24th. He has been totally involved in getting the Ministry of
Agriculture up and running and in selecting a management team which
will begin to make decisions on the priorities of the agriculture
sector. Once this team is in full play, USDA will be sending Daniel
Amstutz, Senior Advisor for Agriculture, to Baghdad. He will be
responsible for policy development in agriculture and as agriculture
relates to the other sectors of the Iraqi economy.
USAID has begun the lengthy process of obtaining a project
agreement for the reconstruction of agriculture in Iraq. The proposed
project will contain four components: (1) increased agriculture
production, (2) enterprise development, (3) access to rural credit, and
(4) resource management--water, irrigation, etc. The timetable for this
project will include full and open competition (45 days), a bidders'
conference, a period in which to receive proposals, evaluation,
selection, negotiations, and awards. Funding for this project is to
come from the funds already designated for Iraq reconstruction.
Question. There has been significant criticism of U.S. farm
policies (and those of other countries) that certain program
characteristics, such as commodity price support programs, are very
harmful to the developing economies of many poor nations. How does USDA
respond to these criticisms?
Answer. All domestic support programs are not alike. The United
States has tabled an ambitious proposal to the WTO agriculture
negotiations designed to substantially reduce trade-distorting domestic
support and open world agricultural markets to fair competition.
Governments can and will continue to support their agricultural
producers; however, our focus remains on trade-distorting domestic
support.
The Uruguay Round only started the job of tackling trade-distorting
domestic subsidies. As a result, the EU's current limit for amber box
support is around $67 billion annually, Japan's limit is around $33
billion, and the U.S. limit is $19.1 billion. In addition, the EU and
Japan use blue box subsidies (trade-distorting support linked to
production limiting policies). All other countries have much lower
levels of amber and blue subsidies, if any.
The U.S. agriculture proposal in the Doha negotiations seeks to
build on the first step of the Uruguay Round by pressing for much more
substantial reductions to achieve a more level playing field for all
countries, including developing ones. In particular, the U.S. proposal
calls for a cut of over $100 billion in trade-distorting support
globally, undertaken in a manner that harmonizes levels across
countries, with the eventual goal of eliminating such subsidies
altogether. The United States proposes maintaining current rules on
non-trade distorting support (green box)--spending in areas such as
conservation, research, food stamps, and the environment--as long as
such spending is de-linked from production incentives.
BIOTECH TRADE
Question. An Iowa State University study concluded that the U.S.
wheat industry could lose 30-50 percent of its business with foreign
markets for spring wheat if Monsanto releases a new genetically
modified variety of that commodity.
Do you agree with this assessment?
Answer. Dr. Robert Wisner of the Iowa State University concluded in
a recent study that U.S. exports of hard red spring (HRS) wheat could
fall by 33-52 percent if Monsanto's herbicide-tolerant, genetically
modified (GM) wheat were introduced in the United States. We believe
that this finding can only be regarded as a worst-case scenario. Dr.
Wisner makes a strong assumption about the ready availability of non-GM
wheat in competing countries. Further, his analysis does not consider
the probable diversion of U.S. exports to markets that will accept GM
wheat.
A preliminary ERS study suggests there is considerable scope for
diversion of GM wheat away from sensitive export markets. In the U.S.
domestic market, we estimate that the non-GM segment accounts for only
5-10 percent of demand. Thus, our large domestic market would provide
an important outlet for GM wheat production, even if most export
customers refused to accept it. Of course, the feasibility of diversion
(without loss of export sales) also depends on extent of adoption by
spring wheat growers. The ERS analysis, assuming 50 percent adoption of
the GM variety, shows relatively modest impacts on average farm-level
prices. However, buyers of non-GM spring wheat (primarily foreign)
would incur additional costs.
Question. Do you think that the growing trend toward genetically
modified agricultural products can continue without a further erosion
of our foreign markets? If so, how?
Answer. Up to now, trade impacts from the rapid adoption of biotech
crops since 1996 have been limited. Demand for non-biotech corn and
soybeans has reflected biotech food labeling regulations in some parts
of the world, such as the EU and Japan, and changing consumer
preferences toward non-biotech foods. Over the last few years, the EU's
de facto moratorium on approving new biotech varieties did adversely
impact the United States. However, a concerted effort is being made by
the government, the U.S. grain industry, and biotech companies to
address issues that led to these incidents, paving the way for the
further adoption of biotech crops.
Question. What plans does USDA have to counter the threats by
foreign nations in regard to genetically modified products?
Answer. The Administration announced on May 13, 2003, that the
United States, Argentina, and Canada are requesting World Trade
Organization (WTO) consultations with the EU over its moratorium on
approving new biotech varieties. The complaint intends to ensure that
crops grown by U.S. farmers will not be rejected simply because they
were produced using biotechnology.
In the United States, we have managed to keep biotech discussions
within the realm of science; and, indeed, scientific assessments are
the cornerstones of our regulatory system. USDA/APHIS, FDA, and EPA
have managed to maintain consumers' faith in their abilities to discern
which products are safe to consume, and which products are unsafe.
We continue to believe that keeping the discussions on scientific
ground offers the most promise to counter threats to biotech products,
but we need to reinforce those efforts. For this reason, the 2004
budget requests $6.6 million to establish a new fund within the Office
of the Secretary to support cross-cutting trade-related and
biotechnology issues. These funds will be available to support the work
of FAS, APHIS, and other USDA agencies as they address the growing
array of regulatory and market access issues related to biotechnology.
______
Questions Submitted by Senator Tom Harkin
CONSERVATION TECHNICAL ASSISTANCE
Question. The most recent allocations for conservation programs
were for far less than was generally expected after passage of the farm
bill because of the Administration's decision to prohibit technical
assistance to be paid from each program's funds as provided in the farm
bill. I believe we need to find a solution that does not continue to
require a net reduction in overall conservation funding, because that
is the effect under both the omnibus appropriations bill and the
Administration's budget.
Will you work with the Committee to find a way to fix the technical
assistance funding problem that does not involve cutting funding for
conservation from expected farm bill levels?
Answer. We share your concern about providing adequate funding for
the technical assistance necessary to support the conservation programs
of the 2002 Farm Bill. We believe that the President's budget proposal
for a dedicated technical assistance account for Farm Bill
implementation would be the best approach to fixing this problem. This
approach maximizes the amount of financial assistance dollars while
providing the technical assistance funding needed to deliver the
programs. Having one central account also increases accountability and
improves transparency of the Department's costs of delivering these
conservation programs.
At the same time, both NRCS and the Farm Service Agency have been
making concerted efforts to improve and streamline their operations in
the field which has helped to significantly reduce NRCS technical
assistance costs for the Environmental Quality Incentives Program.
Recently proposed rule changes for the Conservation Reserve Program
will help streamline and improve the sign-up process and will lead to
additional savings. This summer, we will also be conducting a thorough
sweep of all Farm Bill conservation program accounts and will convert
any unused technical assistance funding back into program dollars.
Finally, NRCS will be fully implementing the new Technical
Assistance Provider (TAP) system authorized in the Farm Bill. This will
ensure that there is a viable cadre of technically qualified non-
Federal partners that are certified by NRCS to provide the technical
assistance needed to plan and oversee the installation of conservation
practices.
While we believe that these steps will greatly help achieve the
conservation envisioned by the Farm Bill, we also look forward to
working with the Committee to look for ways to better address this
issue and to make further improvements.
NATIONAL ORGANIC STANDARDS BOARD
Question. I am concerned about ongoing threats to the integrity of
the Organic Foods Protection Act of 1990 (OFPA). OFPA requires a very
strong public-private partnership in setting, enforcing and maintaining
strong standards for organically certified foods. Specifically, OFPA
established the National Organic Standards Board (NOSB) as a body of
private-sector experts to help USDA set and oversee the implementation
of the national organic standards, and required the establishment of a
peer review panel to ensure public oversight of USDA's accreditation
program. As envisioned by OFPA, the NOSB's recommendations would have
significant weight and authority. Yet, in recent years, many of its
recommendations have been ignored or simply not implemented by USDA. In
addition, the peer review panel has yet to be established, even though
organic certifiers have been accredited.
Please detail your plan for giving proper weight to recommendations
of the NOSB and for constituting and supporting the required peer
review panel.
Answer. AMS is in the process of establishing a peer review panel,
with the American National Standards Institute (ANSI), a well
recognized accrediting body that represents the United States in
international standards setting organizations. A technical expert from
the organic community will assist ANSI in their review of AMS'
accreditation program under the National Organic Program (NOP). This
technical expert will be selected from nominations made by the organic
industry. AMS also is developing ``Good Guidance Practices,'' a
document that outlines in detail how the agency will process and handle
recommendations from the NOSB. In addition, AMS has provided the NOSB
with clear guidance on how to present their recommendations to the
agency in a manner that will expedite action on those recommendations.
Question. In addition, would you please provide for the record a
list of the recommendations that the NOSB has made, since the
publication of the final rule on organic standards, and the actions
that USDA has taken in response to those recommendations. If no action
has been taken in response, please explain why.
Answer. Since the final rule was published in December, 2000, the
NOSB has held six public meetings; all of their recommendations are
posted on the NOP web site for viewing by the public. All
recommendations concerning materials to be added or prohibited on the
National List have been accepted by AMS and are being published in the
Federal Register for notice and comment. All other recommendations made
by the NOSB will be reprocessed through the guidance material that the
agency has given to the NOSB, so that all Board recommendations are
treated equally and to ensure that those recommendations that are
feasible will withstand scrutiny from a legal and regulatory review.
REIMBURSEMENT RATE FOR CROP INSURANCE COMPANIES
Question. The crop insurance industry is in shaky financial shape
in the wake of the drought and other disasters that affected the 2002/
2003 crops, as illustrated by the failure of American Acceptance, the
largest company at the time. The President's budget proposes to cap the
amount of delivery expense reimbursement the crop insurance companies
may receive at 20 percent of the premium. Such a cut from the current
24.5 percent would cut companies' revenue for delivery expenses by 20
percent.
What analysis has been done to assess the effect such a reduction
would have on the financial condition of remaining companies,
particularly in high-loss years such as 2002? What are the results of
this analysis?
Answer. The 24.5 percent reimbursement rate is the statutory
maximum rate. However, several crop insurance products currently have a
maximum statutory reimbursement rate less than that. In fact, for the
2002 crop year the average reimbursement rate across all product lines
was about 21 percent. We are projecting a reduction in reimbursements
of about 10 percent. To put this in perspective, reimbursements have
risen about 53 percent in the past 5 years with no increase in the
number of policies sold.
RMA conducts an annual analysis of each company's plan of operation
for the upcoming crop year, in addition, the Agency has recently
instituted a comprehensive review of each company's financial
condition. As part of this review, the Agency is evaluating financial
data that has never been previously requested by RMA. While the results
are preliminary, it is evident that the analysis will significantly
improve the Agency's ability to identify companies who are in a
particularly vulnerable financial position.
A reduction in the reimbursement rate will increase the financial
pressure on companies to adjust their operating approach. Each company
will strive for increased efficiencies without sacrificing service.
This of course is a healthy exercise. However, if the company is not
successful in driving down cost and generating sufficient returns to
satisfy shareholders, consolidation or departures will be the result.
PACKERS AND STOCKYARDS
Question. In a letter to me from Under Secretary Hawks dated
February 24, 2003, the Administration stated its opposition to the
proposed ban on mandatory arbitration in livestock and poultry
contracts, its opposition to efforts to reorganize USDA to improve
enforcement of the Packers and Stockyards Act, and other competition
and trade practice statutes. The letter argued that USDA already has
the authority and enforcement regime to deal with matters like unfair
contract terms. Yet a number of private suits, as well as numerous
press accounts and studies, have highlighted the real problems that
exist in USDA's enforcement of the Packers and Stockyards Act.
Your testimony indicates that the USDA budget seeks an additional
$500,000 to ``enhance compliance with the Packers and Stockyards Act
and to fund a review of the Act'' (page 13). We have increased Grain
Inspection Packers and Stockyards Administration (GIPSA) funding for
years, with absolutely no improved results, and some would argue even
more lax enforcement. Without substantial changes in the law and in
USDA's enforcement organization, why should we think that simply
increasing funding will address GIPSA's serious enforcement
shortcomings?
Answer. Industry has become more complex, vertically integrated,
and is making increasing use of technology, which complicates
enforcement activities. The P&S Act has not undergone any significant
review in many years. A review of the P&S Act and regulations is
warranted to determine the best way for GIPSA to remain effective in
the 21st century. The request for an additional $500,000 to ``enhance
compliance with the Packers and Stockyards Act and to fund a review of
the Act'' would provide 6 additional staff years, expenses, and
consultations necessary for a comprehensive review of the P&S Act.
FSIS MEAT RECALLS
Question. USDA has been criticized during recalls for its policy of
telling State public health officials where recalled meat was
distributed in their States only if those States promise not to tell
their citizens where recalled product is being sold. It seems to me
that the purpose of a recall is to get tainted product out of
consumers' homes.
Can you explain the reasoning behind USDA's policy of essentially
withholding from consumers information about where recalled product was
sold? Is there any barrier, legal or otherwise, to the Department's
release of this information to any State public-health department that
may need it to respond to a recall?
Answer. The goal of a recall is to protect public health by
removing potentially contaminated product as quickly as possible. In a
recall situation, FSIS needs to be able to act quickly to ensure public
health by protecting consumers from potentially contaminated product.
The cooperative arrangement with establishments ensures that FSIS can
move as quickly as needed to remove potentially contaminated product
from the marketplace. It also allows industry to move as rapidly as
possible. The current cooperative arrangement allows FSIS to act
quickly to protect public health and is preferable to a slow,
cumbersome legal process.
There are no barriers to the Department's release of distribution
information to the States.
FOOD AID PROGRAMS
Question. Has USDA considered adding Iraq to the list of countries
receiving donations under the McGovern-Dole International Food for
Education and Child Nutrition program?
Answer. USDA will consider all proposals during the application
period, which we expect to begin in June. Proposals for Iraq would be
considered, although Iraq will soon return to the status of middle-
income country. Due to the limited budget for the McGovern-Dole
International Food for Education and Child Nutrition program, most
programming resources are expected to go to low-income countries. A
major consideration in programming will be the cooperating sponsors'
ability to carry out effective programs immediately. It is not clear if
this criterion could be met for Iraq because the economic and political
systems are in transition.
Question. If not, do you think it would help facilitate Iraqi
reconstruction if we encourage such school nutrition programs there?
Answer. The education system in Iraq is already restarting and
rebuilding. Over the next few months, what is needed to restore and
improve the education system will be assessed by the new Iraqi
government as well as the international donor community. Use of
programs like McGovern-Dole should not be ruled out but, as Iraq
emerges as a middle-income country, it would not be a primary target
for U.S. Government food aid programs.
VALUE-ADDED GRANTS
Question. The Farm Bill provided $40 million a year in mandatory
funding for Value-Added Product Market Development grants. These grants
have been a critical element in assisting rural value-added business
development. Without the help of these value-added grants, many
projects such as farmer owned ethanol plants and meat processing plants
simply would not materialize. The Administration's budget proposes
changing this program to discretionary funding and reducing the funding
to $2 million a year--only 5 percent of its fiscal year 2003 level--
thus essentially eliminating this program.
What is the Administration's commitment to producer owned business
and cooperative development in light of this budget proposal?
Answer. USDA spends approximately $10 million a year on the
Cooperative Service programs. Rural Development has over 75 years of
experience in working with producer owned cooperative businesses. This
includes assisting producers in organizing cooperatives; providing
technical assistance, such as strategic planning, to existing
cooperatives; conducting research on problems and issues facing
cooperatives; and providing education services to cooperative boards,
management, and members. The Administration is committed to the
continuation of helping producers, their farm and ranch businesses, and
their cooperatives.
RURAL BUSINESS INVESTMENT PROGRAM
Question. I am disappointed that the Department has moved slowly on
implementing the Rural Business Investment Program, which was
authorized and provided mandatory funding in the Farm Bill. As you
know, venture capital is a crucial need in rural America. This program,
carefully worked out in a bipartisan manner, should really help.
It has very broad support, including from the major farm groups,
cooperative groups, bankers of all sizes, and many of the entities of
the Farm Credit System.
I had hoped by now to see this program in full operation, creating
jobs.
Exactly what is the status of the Department's actions to get the
Rural Business Investment Program up and running?
Answer. Since the Farm Bill was signed, USDA has worked jointly and
diligently with the Small Business Administration (SBA) to develop an
RBIP implementation and management plan that is based on the Program
model, as envisioned and expressed by Congress in the statute. USDA and
SBA have identified some impediments to the development of the
implementation plan, such as how administrative responsibilities for
the program would be shared between USDA and SBA within the context of
the statute. We are continuing to work with SBA to reach agreement on
such issues.
Question. When will the Department have this program in operation?
Answer. The timeline will be developed once an agreement with SBA
is reached and specific roles and responsibilities are developed.
Question. Is there anything that we can be doing to help expedite
the Department's implementation of the Rural Business Investment
Program?
Answer. At this time, we know of nothing that the Committee needs
to do to implement this program.
RURAL UTILITIES
Question. The farm bill provided $360 million to assist in funding
some of the backlog of water and wastewater programs at the Rural
Utilities Service. Your budget proposes increasing the loan program,
but reduces the grants by almost 50 percent, or $250 million. Small
communities will once again be placed on a long waiting list because
grant funds will not be available. It is not the purpose of this
program primarily to fund only communities that qualify for loan
programs, but also to ensure that the poorest and smallest of
communities needing clean drinking water or a wastewater system will
not be left behind.
What is the national backlog in applications needing grant
assistance? What is your plan for addressing the needs of small
communities with very limited incomes, which need safe, reliable
drinking water if this proposed shift in the program is implemented?
Answer. There are currently 443 incomplete applications and 662
complete applications on hand for water and waste grants for a total of
1,105. The total amount requested by these applications is $433,762,484
for incomplete applications and $763,852,491 for complete applications
for a total of $1,197,614,975.
With the additional funding from the Farm Bill, we were able to
fund a significant number of applicants that needed grant funds to
develop a feasible project. The applications remaining in the backlog
indicate an increasing demand for loan funds. The current very low
interest rate environment reduces the need for higher grant amounts,
which will allow us to adequately meet the need for assistance. A
project's financial feasibility is determined based on its ability to
repay a loan and at the same time maintain reasonable user rates. A
proposed system's budget is based on income projections solely from
sales of services the system is providing. Since the Rural Utilities
Service has the authority to switch funds between loan and grant, the
levels established at the beginning of the year can be adjusted as
needed based on projects funded during the year.
CREDIT
Question. On the matter of farm credit, your written testimony
(page 10) indicates that the amount of direct loans that FSA will make
available to farmers will decrease because the subsidy costs have
somehow increased. Yet in other parts of your testimony, you note that
the subsidy rate for other loan programs has actually fallen because of
decreased interest rates.
Please explain why the subsidy rate for FSA direct loans has
increased in this time of lower interest rates and relatively low
default rates.
Answer. The cost of subsidizing direct loans has increased due
largely to projections of increased loan defaults. As the modeling of
the projected costs of subsidizing loans is refined, default
projections have increased. Defaults are a major component of the
subsidy rate that determines the amount of budget authority that is
required to support the requested loan levels. Direct loans are more
expensive to operate than guaranteed loans due to the fact that
borrowers of direct loans are generally not able to obtain credit from
commercial lenders due to their credit risk.
AGRICULTURAL BIOTECHNOLOGY
Question. As a supporter of agricultural biotechnology, I believe
products derived from this new technology hold tremendous promise for
consumers and our Nation's agricultural industries. For that very
reason, any shortcomings in our regulatory regime must be addressed to
ensure that the development of agricultural biotechnology continues in
a thoughtful and secure manner that provides our Nation's consumers and
our trading partners with assurance that these products are safe. The
National Research Council has released two important reports on
agricultural biotechnology over the last few years. In last year's farm
bill, Congress required your Department to issue a report to the House
and Senate Agriculture Committees by next week outlining how USDA plans
to implement the recommendations made by the Council.
Please provide an update on the status of this report.
Answer. While we have drafted a response to most of the
recommendations from the National Academies of Science, National
Research Council, there are a number of issues that we are currently
working on with our partners at FDA and EPA that will affect many of
our responses. As a result, our report missed the deadline of May 12.
We feel it is important to work through the issues with our partners so
that we can offer a more concrete overall Answer. Our report, when
complete, will give a better sense of the direction we are taking in
USDA and across government to address the recommendations in the
reports.
FSIS--INSPECTIONS
Question. In May 2000, a Federal judge in Texas ruled that the Food
Safety and Inspection Service (FSIS) could not use Salmonella test
results to determine the sanitary conditions in a beef grinding plant.
More recently a Federal court in Nebraska prevented FSIS from closing a
meat plant repeatedly found to have sanitation violations. Rather than
pursuing the Nebraska case, FSIS signed a consent agreement with the
company which ceded the agency's authority.
In light of these court decisions, can you specify USDA's exact
legal authority to close meat plants that repeatedly fail to comply
with USDA's food-safety standards?
Answer. The Federal Meat Inspection Act and the Poultry Products
Inspection Act provide the authority needed to close plants that fail
to comply with regulatory requirements. USDA has the authority to
initiate a withholding, suspension, or withdrawal action based on
sanitation or HACCP violations, including: failure to collect and
analyze samples for the presence of generic E. coli; failure to develop
or implement sanitation standard operating procedures (SSOP); or
failure to develop or implement a required HACCP plan. USDA may also
initiate a withholding, suspension, or withdrawal action for other
violations, such as inhumane slaughter or unsanitary conditions.
Question. Your statements last month seemed to indicate that you
thought USDA could benefit from enhanced enforcement powers. What is
USDA's opinion concerning the need for additional authorities, or
clarifications of existing authorities?
Answer. We are always assessing our authorities to determine if
they need to be strengthened. I have asked for a complete review of our
authorities to determine if they allow us to do our job and am awaiting
assessments on what options USDA should consider pursuing in the
future.
RENEWABLE ENERGY AND ENERGY EFFICIENCY
Question. Please provide for the record the explanation you
promised regarding proposed funding for the energy and energy
efficiency program (section 9006) and the CCC Bioenergy program. As
clarified in the hearing, these programs already have mandatory funding
for fiscal year 2004 as provided in the farm bill. The Administration's
budget proposes to change the 9006 program to a discretionary program
and reduce funding from $23 million to $3 million in fiscal year 2004.
The proposed cut of $50 million to the bioenergy program is similarly
troubling since this program has been a key Federal program to help
increase ethanol and biodiesel production. How do you reconcile your
stated support for the farm bill renewable energy and energy efficiency
programs and the Administration's budget proposal?
Answer. This is a very tight budget and embodies numerous difficult
resource allocation decisions. The Administration's energy policy
strongly supports development and expansion of renewable and bio-based
energy sources. Rural Development is in the process of implementing
Section 9006 of the Farm Bill to promote renewable energy and energy
efficiency projects. The $23 million in mandatory funding will be made
available as grants under this program. Rural Development has also
supported renewable energy under its Business and Industry (B&I)
guaranteed loan program, and the Value Added Producer Grant program.
Through fiscal year 2003, projects totaling over $70 million will have
been funded under these programs. For fiscal year 2004, the Department
is continuing to seek funding for the Section 9006 program, but at the
reduced level of $3 million, and as discretionary rather than mandatory
money. During this tight budget environment, it is appropriate to pause
and review the success and effectiveness of the significant funding
that has already been provided. Furthermore, Rural Development will
continue to support renewable and bio-based energy projects through the
B&I program, and also the Value Added Producer Grant program.
ANIMAL FIGHTING
Question. I and many of my colleagues in the Senate and House are
concerned about reports of illegal animal fighting. As you know,
Congress strengthened this animal fighting law last year, as a
component of the farm bill. In addition, we called on you to report
back to the Committee on March 1, 2003 regarding plans for effective
enforcement of the animal fighting law.
What can you tell us now about how the Department intends to carry
out these responsibilities? When will we see the report?
Answer. The report will be sent to Congress on May 9, 2003. APHIS
and the USDA's Office of the Inspector General (OIG) work together with
State and local authorities to investigate and enforce Federal and
State laws regarding animal fighting. USDA has made some progress with
both APHIS and OIG taking steps to improve the effectiveness of the
USDA enforcement effort. APHIS refers information it receives on animal
fighting activities to OIG. OIG initiates investigations based upon the
potential for criminal prosecution and as resources permit. In those
instances where OIG does not initiate an investigation, it refers those
complaints to State or local enforcement agencies as appropriate.
Despite these efforts, however, significant improvements cannot be
achieved without increased involvement by other Federal and State law
enforcement agencies specifically dedicated to investigating and
prosecuting violators of the prohibition against animal fighting
ventures. APHIS must rely on law enforcement agencies to conduct
investigations into animal fighting ventures because they are often
accompanied by other illegal activities and are inherently dangerous.
APHIS and OIG will continue to work together to seek better ways of
furthering the goal of reducing and eliminating illegal animal fighting
ventures.
OUTSOURCING IN NRCS
Question. The farm bill does not authorize or justify downsizing of
NRCS staff or outsourcing of their work. Instead, it provides for the
use of outside personnel to supplement existing NRCS staff. I am
concerned that the Administration has undertaken a process to downsize
the agency by outsourcing and reducing the number of field offices.
Please provide for the record all analyses you have done of the
expected workload involved in fully implementing the farm bill
conservation programs and carrying out NRCS' responsibilities for
assisting on-farm non-farm bill conservation. How will this workload be
met by: NRCS staff; and outside personnel, and what are the planned
numbers for each?
Answer. I will provide this information for the record.
[The information follows:]
NRCS has developed a workload model to estimate the technical
assistance costs to deliver each of the Farm Bill programs at the
authorized level. The model uses information from the agency's
Integrated Accountability System (IAS) including workload analysis,
timekeeping, and financial systems data. The model is used to project
future technical assistance requirements for Farm Bill programs based
on actual data collected at the field level. This model assumes that
the program will continue to be delivered in the way they are today.
However, we anticipate finding opportunities to work smarter and more
efficiently and effectively deliver technical assistance. Technical
assistance is reflected as staff year needs, regardless of who does the
work.
Farm Bill programs included in these technical assistance
projections include:
--Agricultural Management Assistance Program (AMA)
--Conservation Reserve Program (CRP)
--Conservation Security Program (CSP)
--Environmental Quality Incentive Program (EQIP)
--Ground and Surface Water Conservation Program (GSWC)
--Klamath Basin
--Farm and Ranchland Protection Program (FRPP)
--Grassland Reserve Program (GRP)
--Wildlife Habitat Incentives Program (WHIP)
--Wetland Reserve Program (WRP)
Funding levels for Farm Bill Programs are based upon the
Congressional Budget Office score of the Farm Bill. Funding levels can
be adjusted to evaluate technical assistance requirements based upon
different funding levels.
Farm Bill Technical Assistance Requirements currently projected
based upon the model are displayed in the following graph:
The projections also include technical assistance requirements for
USDA to continue to service ongoing Commodity Credit Corporation (CCC)
contracts from prior years for the conservation programs authorized in
the 1996 Farm Bill.
A key component of the NRCS workload projection model for Farm Bill
Programs is the National Conservation Partnership Field Workload
Analysis (WLA 2001), which provides a descriptive baseline of the
workload requirements by discipline for Federal, State and district
employees at the field level. WLA 2001 describes the time required by
discipline for what employees do at the field level as described in 28
Core Work Products (CWPs). It captures the core field activities and
the time to accomplish them for the NRCS field staff and the
Conservation Partners field staff. WLA 2001 is used to estimate the
staff years required to complete fiscal year projected workload and
total resource conservation needs.
Within each Core Work Product, several tasks are identified and
time associated with each task to accomplish the activity. Similar CWPs
have the same tasks. For example, the natural resource CWPs all have
the same tasks. Two hundred and eighteen Time Teams, consisting of NRCS
and partner specialists (subject matter experts), provided estimates of
the time required from various disciplines to perform the tasks
necessary to accomplish each Core Work Product. Time teams were
determined based on the area having similar resource concerns,
geophysical characteristics, production characteristics, and cultural
differences, time requirements for conservation activities.
Integrated with information from other components of the Integrated
Accountability System, such as the Performance and Results Measurement
System (PRMS) and the Total Costs and Accounting System (TCAS), the
National Conservation Partnership Field Workload Analysis (WLA 2001)
and the NRCS workload projection model for Farm Bill Programs are the
analysis tools utilized to provide information necessary for management
activities such as workforce planning, and performance planning.
The workload on non-farm bill programs consists of conservation
planning assistance including lands, which are ultimately enrolled in
Farm Bill programs and conservation practice installation accomplished
on a voluntary basis without USDA incentives or cost sharing. The
workload also includes development and maintenance of conservation
technology such as the Field Office Technical Guide, soil surveys,
water supply forecasts, conservation plant materials, etc, utilized by
local, State and Federal agencies as well as individual land owners and
operators, to guide resource management decisions and programs. In
2002, CTA resulted in 33 million tons of sediment reduction,
conservation systems being applied on 8.8 million acres of grazing
lands, and 2,172 Comprehensive Nutrient Management Plans being
installed.
NRCS has allocated $20 million in fiscal year 2003 or approximately
209 staff years for Technical Service Providers (TSPs) to assist in
implementing Farm Bill programs this fiscal year. We anticipate the
portion of technical assistance provided by TSPs of the total workload
will grow in future years.
MAINTAINING ASSISTANCE TO PRODUCERS
Question. How will you ensure that reducing NRCS staff will not
harm producers' access to this important assistance?
Answer. USDA will continue to utilize the best available
information to evaluate the conservation workload and determine the
most cost-effective means of providing the highest quality technical
assistance available for producers including the use of NRCS staff and
technical service providers. Given the farm bill workload, no net staff
reductions are anticipated.
To ensure high quality technical assistance is provided by
technical service providers as well as NRCS staff implementation of
several initiatives were undertaken during the first year of the new
Farm Bill. A technical service provider online self-certification
process (TECHREG) was made available from the NRCS website for
organizations and individuals who wish to provide technical assistance
to USDA customers. Several hundred technical service providers have
registered and self certified and the list is growing each day. TECHREG
also provides access to USDA customers to identify sources of technical
assistance available other than NRCS staff and their areas of
expertise. NRCS quality assurance policies were revised and updated to
provide a standard level of quality review for all technical assistance
provided to USDA customers including technical service providers. On
line access was developed and implemented to provide USDA customers and
others electronic access to the latest in standards, specifications and
other technical information available from their local Field Office
Technical Guide.
By automating and streamlining administrative processes NRCS has
made available staff resources for providing technical assistance under
all programs, also reducing the technical assistance costs for the farm
bill programs allowing more dollars to be available for cost-share
assistance.
______
Questions Submitted by Senator Byron L. Dorgan
LEGUME CROPS GENOMICS INITIATIVE
Question. The U.S. Legume Crops Genomics Initiative brings together
growers and scientists to guide the development of priority research
areas that will provide economic benefits and enhance sustainable
agronomic practices of American agriculture. The initiative is designed
to develop tools and research to alter compositional traits to further
legume crops competitiveness and growers' profitability; maximize
tolerance to biotic and abiotic stresses; and minimize use of inputs.
Each of the 48 contiguous States produces legumes, from major row crops
to alfalfa for hay and grazing. Agronomic improvements to legumes using
modern genomics tools will provide an economic boost to agriculture in
all areas of the United States. In 2000, the U.S. total estimated
farmgate value was $22 billion. An added value derives from the legume
symbiosis with soil bacteria that fixes nearly 17 million metric tons
of atmospheric nitrogen each year, worth about $8 billion.
Given the need and benefits of the initiative, can you detail
USDA's plans for including legume crops genomics funding in the
Administration's budget?
Answer. Expansion and strengthening of legume genomics and genetics
programs will play a crucial role in ensuring food for future
generations. The fiscal year 2004 USDA/ARS request for sequencing and
bioinformatics related to plants is $5.1 million of which $1.2 million
is proposed for legume genomics.
USDA/CSREES supports plant/crop genomics (including legumes)
through its competitive grants program, the National Research
Initiative (NRI). The fiscal year 2004 request for the NRI is $200
million with $9 million requested for plant genomics (including
legumes).
WORLD TRADE ORGANIZATION
Question. On March 17, the USTR official in charge of agricultural
trade with China stated that the United States would be well justified
in filing a WTO case against China, for failing to live up to its
commitments on wheat trade. The official said that the evidence of
unfair trade by the Chinese was undeniable, and that the Chinese
themselves privately acknowledge that they are cheating on agricultural
trade. He said that the interagency Trade Policy Review Group has given
USTR the green light to move forward with a WTO case against China. But
the official said that the Administration was reluctant to do so,
because the Chinese might be offended. He said the Administration was
worried that a WTO case would be seen as an ``in-your-face'' thing to
do to China, so soon after China joined the WTO.
Is the Foreign Agricultural Service of USDA a part of the Trade
Policy Review Group?
Answer. USDA is part of the interagency Trade Policy Review Group
(TPRG), which also includes USTR, State, Commerce, Treasury, NSC, and
several other agencies. USDA's representative at these meetings can
vary depending on the topic, but generally includes high-level
representation from either the Office of the Secretary, the Office of
the Under Secretary for Farm and Foreign Agricultural Services, or the
Foreign Agricultural Service.
Question. Didn't FAS sign off on a WTO case against China on wheat
trade?
Answer. In the TPRG meeting that you refer to, USDA expressed
support, absent a timely resolution of outstanding concerns, for
pursuing a WTO case against China over its overall administration of
its TRQ system. The TPRG deferred a decision to initiate a WTO case,
pending the outcome of further discussions with the Chinese to resolve
the issue. Ambassador Zoellick and Ambassador Johnson raised our
concerns at the highest levels during their subsequent visit to Beijing
in February. A follow-up meeting, which has been delayed by the SARS
situation, is expected to occur in the very near future. Absent a
satisfactory outcome, it is expected the TPRG would reconvene to
revisit the issue of initiating a WTO case. Wheat is one of nine
agricultural commodities covered by China's TRQ system, and USDA
believes that improvements in China's TRQ system would lead to greater
market access for U.S. wheat and other commodities.
Question. Do you believe that filing a WTO case is an ``in-your-
face'' thing to do, when there is undeniable evidence of a trade
violation, as the USTR official stated?
Answer. USDA views very seriously China's failure to fully meet its
WTO commitments. Our preference would be to resolve the issue
bilaterally, as the WTO option, while certainly a viable one, could
prove time consuming and could ultimately produce mixed results. At the
same time, we recognize the bilateral process should not be open ended
and that China should take immediate steps to bring its practices into
compliance with the WTO. Toward that end, we are actively engaged with
other U.S. agencies in preparation for upcoming negotiations with the
Chinese to resolve this issue.
RURAL DEVELOPMENT FARM BILL SPENDING CUTS
Question. The Administration's proposal to prohibit all fiscal year
2004 mandatory funding for all Rural Development programs authorized in
the Farm Bill and instead fund a few at much lower levels than
authorized (such as renewable energy programs and enhancement of access
to broadband services) is going to put tremendous pressure on this
Subcommittee to fund these items with a very limited discretionary
allocation.
Do you consider these issues when you claim that there are no cuts
in the Farm Bill spending?
Answer. USDA considered both the mandatory and discretionary
funding in developing its 2004 budget. The proposals to not spend
mandatory funding that was authorized in the Farm Bill provided offsets
for a portion of the discretionary funding that is being requested in
the budget. Without these offsets, it would be even more difficult to
stay within the discretionary spending targets.
PUBLIC LAW 480 PROGRAM FUNDING
Question. The Administration's request would provide $1.185 billion
for Public Law 480, which provides grants to private voluntary
organizations (PVOs), and the World Food Program (WFP), to alleviate
hunger. Last year, Congress provided $1.44 billion in appropriations,
$300 million in supplemental appropriations (for a total of $1.74
billion).
Why does the Administration believe that the appropriations needed
will be $555 million less in fiscal year 2004 than in fiscal year 2003?
Answer. Fiscal year 2003 is unusual in that unfavorable climatic
conditions in the United States last summer resulted in dramatically
higher commodity prices at the same time that we are experiencing
several large scale emergencies overseas. The scale of the emergencies
and the fact that they overlapped is almost unprecedented. Congress
responded to the situation by increasing the level of appropriations
for Public Law 480 Title II for fiscal year 2003.
Although we do not see an end to emergencies in fiscal year 2004,
the budget assumption in this regard is that fiscal year 2003 is an
unusual year in terms of the magnitude of emergency requirements, e.g.,
droughts in the Horn and Southern Africa and conflict in Iraq, and that
the funding level required to respond to emergencies in fiscal year
2004 will not be as high.
SALES OF LOAN ASSETS
Question. I see that your budget includes a new provision that
would provide an estimated savings of $5 million from the sales of loan
assets. I have to admit that this provision makes me very nervous given
the experience that North Dakotans have had with the Small Business
Administration's asset sale program and the sale of their disaster
loans to private companies.
A GAO report released last January confirmed the complaints that I
heard and found very serious problems in SBA's asset sales program.
This report found that SBA lacks a comprehensive system to document and
track all borrower inquiries and complaints after loans are sold, that
SBA incorrectly calculated the losses on its loan sales and lacks
reliable financial statements. It recommended that before OMB continues
to encourage loan sales at USDA and other agencies, it make sure that
agencies have the capability to properly carry out and account for
these activities.
Does USDA have these mechanisms in place? Is USDA familiar with the
concerns raised by GAO, and if so, what does it plan to do to address
borrower inquiries and complaints after FSA and Rural Development loans
are sold?
Answer. USDA does have mechanisms in place to correctly account for
its loan programs and to handle constituent inquiries of any kind. USDA
has reviewed the GAO report on the SBA loan sales program and is
currently working with OMB to make certain that the problems
experienced by SBA are not repeated at USDA. In the event of a sale of
loan assets, all borrower rights would still be protected, as they were
during previous sales.
______
Questions Submitted by Senator Dianne Feinstein
MEXICAN FRUIT FLY ASSISTANCE
Question. Secretary Veneman, I am concerned that the Mexican fruit
fly outbreak this year is already worse--much worse than the previous
Fallbrook outbreak. In 2000 I helped provide assistance to San Diego
farmers hurt by the fruit fly outbreak, yet few growers who applied for
payments received assistance from USDA.
Secretary Veneman, if 1,470 growers suffered approximately $3.5
million in total losses, why did your department only provide
assistance to 60 growers for a total of $644,225?
Answer. We provided assistance to all producers that applied for
the program. Some producers may have elected not to participate because
of issues relating to gross revenue eligibility requirements.
MEXICAN FRUIT FLY OUTBREAK
Question. Fighting this infestation will be costly and I believe
this widespread invasion of foreign species requires a strong Federal
response from Congress. What more can USDA do to provide assistance to
the avocado and citrus growers hurt by the current Mexican Fruit Fly
outbreak?
Answer. USDA is mounting an aggressive response to the outbreaks.
Since the initial detection of Mexican Fruit Fly (MXFF) in November
2002, APHIS and the California Department of Food and Agriculture have
worked diligently to prevent and alleviate damage from this harmful
pest as part of a cooperative eradication effort. We have increased
trapping densities, continuously release millions of sterile MXFF's per
square mile for at least two generations, and applied ground bait
pesticide sprays and aerial treatments. We are also developing
regulatory treatments especially for specialty fruits and organically
grown commodities. Our program protocols specify pre-harvest and post-
harvest treatments to allow the continued movement of commodities such
as avocados and citrus in commerce.
Question. Would you support direct financial assistance to help the
growers in San Diego County?
Answer. I would be happy to work with you to discuss the funding
for the program.
Question. To ensure high value specialty crop growers are able to
receive the help they deserve, I believe compensation payment must be
based on the value of the crop, not the acreage. Would you support
adding specific language to an appropriations bill to specify this so
that growers of high value crops like avocados and citrus receive
adequate payments?
Answer. I would be happy to work with you to discuss the funding
for the program.
REALLOCATING UNUSED SUGAR EXPORT QUOTAS TO OTHER COUNTRIES
Question. Secretary Veneman, I was able to include an amendment to
the Farm Bill to allow you the authority to ensure that the amount of
sugar allowed to come into the United States actually makes it to the
market.
At the end of section 1403 of the Farm Bill, I included a provision
that allows you, working with the United States Trade Representative,
to reallocate any unfilled portion of a sugar exporting country's quota
when that country does not fill its quota.
On March 25th, I wrote you a letter urging you to make this
reallocation because there are 50,000-60,000 tons of sugar that could
be exported to the United States right now from other nations that have
already met their cap. Will USDA and USTR be making this reallocation
this year to help refineries like C&H Sugar--the only sugar refinery on
the West Coast--obtain more raw sugar to be refined?
Answer. According to current estimates, the shortfall of the raw
cane sugar tariff rate quota for fiscal year 2003 is expected to be
30,000 tons. The Harmonized Tariff Schedule of the United States and
the Farm Bill authorize the United States Trade Representative to
allocate the quota and reallocate it, if necessary. USDA's authority is
limited to establishment of the quota and consulting with the U.S.
Trade Representative. Concerning this year, the U.S. Trade
Representative has not informed us of his intentions regarding a
shortfall reallocation.
______
Questions Submitted by Senator Richard J. Durbin
PATHOGEN TESTING AND ENFORCEMENT
Question. Madame Secretary, in a speech you gave in March you said
``we are working under a Meat Inspection Act that pre-dates the Model
T,'' and I couldn't agree with you more. It is obvious that changes are
needed to ensure that dirty meat processing plants can be shut down
based on the results of microbiological testing, and Senator Harkin,
myself and others have sought to clarify the USDA's authority through
the Pathogen Reduction and Enforcement Act, or Kevin's Law, as it also
is known. I also want to ensure that you have enough resources to
implement a vigorous microbiological testing program.
You have asked for a $6 million increase to strengthen FSIS'
microbiological testing program for Salmonella, E.Coli and Listeria.
How frequently will the USDA be testing products for Salmonella, E.Coli
and Listeria with the $6 million requested, and is that enough to make
the new E.Coli and Listeria testing directives meaningful?
Answer. The proposed increase of just over $6 million is to
strengthen USDA's microbiological testing program. Of the approximately
$6 million requested, $4.5 million would be used to provide additional
microbiologists, chemists, laboratory technicians, and other personnel
to increase the agency's ability to identify adulterants in meat,
poultry, and egg products. This funding will help the agency develop
analytical methods to test food products for chemical, biological, and
radiological contamination. This initiative will also increase sampling
of ready-to-eat (RTE) products for the presence of bacteria such as
Listeria monocytogenes and Salmonella. FSIS will increase sampling of
these products from 10,000 to 15,000 annually and will add the
capability to conduct 5,000 Listeria monocytogenes environmental
samples annually. The agency also plans to increase sampling of raw
ground beef and raw ground beef ingredients for E. coli O157:H7 from
7,000 to 15,000 samples annually.
The budget request also includes a new $1.7 million initiative to
establish nationwide microbiological baseline studies to provide the
long-term data necessary to assess the ongoing risks presented by the
products FSIS regulates. The use of nationwide microbiological baseline
studies will improve data quality and help us further incorporate risk
management into all regulatory and policy actions. Furthermore, these
increases will significantly increase FSIS' ability to identify food
safety risks associated with these pathogens.
Question. How much more testing could USDA perform if it were given
$10 million for the testing program?
Answer. It costs the agency approximately $130 per test. However,
the budget fully funds the laboratory needs for 2004.
MANDATORY NOTICE AND RECALL
Question. Madame Secretary, you also suggested earlier this year
that you would be willing to support mandatory notification to USDA
when a Federally inspected establishment has reason to believe it has
adulterated or misbranded meat or poultry. You also called for civil
penalties for continual lack of compliance, and expedited cease-and-
desist orders and suspensions for those companies that violate their
Hazard Analysis and Critical Control Points plan.
I support you in seeking these authorities, but I'm curious to know
why you did not seek mandatory recall authority of an adulterated
product, considering mandatory notice of adulteration, and recall
authority, traditionally go hand in glove? Why would you want mandatory
notice of a food safety problem, but not want the authority to act on
it?
Answer. FSIS has the means to quickly remove potentially
adulterated product from commerce in order to protect the public
health. Any new authority would need to be implemented with an eye
towards enhancing public health. Providing FSIS with mandatory recall
authority would not increase the safety of our food supply nor enhance
our Nation's public health.
Advance notice of food safety problems would enable FSIS to more
quickly identify and act to initiate a recall or other action to
protect public health from a potential food safety hazard. This would
provide an additional tool to increase response time to a food safety
hazard with a recall or other action. A company's decision to comply
with a voluntary recall request from FSIS is compelled by FSIS
enforcement powers such as detention and seizure authority. In addition
to detention and seizure authority, the agency can also shut a plant
down by withholding official inspection.
LISTERIA STANDARDS
Question. Last summer a multi-state Listeriosis outbreak linked to
deli products sickened at least 53 consumers, killing eight people and
causing three miscarriages or stillbirths. More than 2 years have
passed since the USDA published a proposal to require ready-to-eat meat
and poultry processing plants to test for Listeria. A recent USDA risk
assessment showed that requiring even more frequent Listeria testing
than was proposed in 2001 would ``lead to a proportionally lower risk
of listeriosis.'' Thus, the new risk assessment provides the scientific
basis for the USDA to issue a stronger Listeria rule.
When do you anticipate issuing the final regulations for Listeria
testing and when would those regulations go into effect?
Answer. We plan on issuing an interim final rule on June 4, 2003
with an effective date of 120 days after publication in the Federal
Register.
Question. Wouldn't more testing save more lives by helping plants
to more rapidly identify when they are not adequately controlling
Listeria? Shouldn't USDA be seeking a testing scheme that is more
protective of public health?
Answer. Through use of the Listeria risk assessment, FSIS
discovered that a combination of testing, sanitation and interventions
yielded greater benefits than any one strategy alone. The risk
assessment also demonstrated that the use of intervention steps, such
as post-packaging pasteurization or the introduction of growth
inhibitors, showed dramatic public health benefits.
FSIS has worked diligently to gather the extensive scientific data
necessary to develop a predictive risk assessment model. By allowing
FSIS to evaluate factors that potentially contribute to the overall
risk to public health, this risk assessment has given FSIS scientific
confidence that new policies will be effective.
SAFETY OF FOODS PURCHASED BY SCHOOLS
Question. About 17 percent of the food served in schools is donated
by the Federal Government and undergoes stringent USDA food-safety
standards, including increased inspections and tougher pathogen
standards. The USDA also has extensive safety information available to
it on the companies it purchases food from to help it make informed
decisions. Yet, the remaining 83 percent of food consumed at schools is
purchased locally and is not subjected to these tougher standards.
Local school officials also do not have access to the safety
information that their Federal counterparts have when making their
purchasing decisions.
In 2002, the General Accounting Office recommended USDA provide
local school authorities with information and guidance on incorporating
these more stringent safety provisions in their procurement contracts.
The GAO also urged USDA to consider giving schools access to records
from USDA's and FDA's inspections of prospective school food suppliers.
Have you followed up on these GAO recommendations? If so, to what
extent have these recommendations been implemented?
Answer. As we understand it, the General Accounting Office (GAO)
made these suggestions in testimony given in April 2002 on ``Continued
Vigilance Needed to Ensure Safety of School Meals.'' Since that time,
GAO has done extensive work in this subject area. They recently
concluded an audit entitled, ``GAO Audit of School Meal Programs:
Opportunities Exist to Improve Nationwide Data on Frequency and Causes
of Foodborne Illness and to Enhance School Food Safety Efforts
(Assignment No. 360246).'' GAO held exit conferences with the Food
Safety and Inspection Service (FSIS), the Agricultural Marketing
Service (AMS), and the Food and Nutrition Service (FNS) on March 7 and
April 15, 2003. GAO released the audit on May 9, 2003, entitled
``School Meal Programs: Few Instances of Foodborne Outbreaks Reported,
but Opportunities Exist to Enhance Outbreak Data and Food Safety
Practices (GAO-03-530).''
GAO's recommendation that USDA provide local school authorities
with information and guidance on incorporating these more stringent
safety provisions in their procurement contracts is currently being
addressed. First Choice: A Purchasing System Manual for School Food
Service has been revised and published by the National School Food
Service Management Institute (NFSMI). NFSMI is currently working on a
food safety supplement to First Choice that provides information on how
to apply food safety to food purchasing including guidance on food
safety procurement language that schools could use in developing their
contracts. This supplement will be made available to every local school
as a technical resource in the fall of 2003. Development and
distribution of these NFSMI products are fully funded by USDA.
The suggestion to share inspection records was not raised in either
exit conference or in the statement of facts that GAO provided. We feel
that sharing inspection records with schools would not be an effective
or efficient means of helping them make purchases, as these records are
complex and voluminous. AMS conducts lengthy and rigorous screening of
potential vendors and considers many factors, including inspection
records, before admitting a vendor to the Approved Vendor List. That
list, which may be useful to schools, is available on the AMS website.
USDA COMMODITY STANDARDS FOR LOCAL SCHOOLS
Question. What would be the health benefits of incorporating USDA's
donated commodity standards into local schools' food-purchasing
contracts?
Answer. There would be little or no health benefits of
incorporating USDA's donated commodity standards into local school food
purchasing contracts, as the more stringent safety standards only apply
to USDA commodities of ground meats, turkey, some egg products, frozen
cooked diced chicken, and canned fruits and vegetables. Otherwise, all
foods supplied through the USDA commodity donation program have the
same safety standards as are required for commercially available foods.
Schools, for the most part, choose to use their entitlement money to
purchase those products that are more stringently regulated (ground
meats, turkey, some egg products, and frozen cooked diced chicken), and
purchase very little of those same foods from the commercial market.
Schools make direct purchases of foods such as fresh dairy products,
fresh bread and other baked goods, additional fresh, frozen, or canned
fruits and vegetables, and staples, such as salt, sugar, seasonings,
and spices, for which no more stringent specifications are available at
the Federal level.
SCHOOLS ACCESS TO SAFETY DATA
Question. Would school officials be able to make better purchasing
decisions if they had access to companies' safety data? What barriers
(legal or otherwise) are preventing USDA from implementing these
recommendations?
Answer. No, we believe giving schools access to companies' safety
data would prove to be overwhelming and not informative. If the
assumption is that these records would lead school officials directly
to a decision to purchase or not to purchase, there is no single set of
inspection records that could be used to arrive at that conclusion. As
noted above, heavily regulated foods supplied through the commodity
program are more stringently governed by food safety measures. Other
food items supplied by USDA or purchased commercially by schools meet
all of the current safety standards as are required for all
commercially available foods.
One barrier to providing inspection and safety records is that this
data is voluminous, complex, and requires specialized knowledge of the
subject in order to be properly interpreted. Another barrier is that
this information would need to be screened and, in some cases
``sanitized,'' to protect confidential and proprietary commercial
information, or other protected information, from release.
SAFE FOODS IN SCHOOLS
Question. What other methods could be employed to ensure that
schools are purchasing and preparing the safest foods possible for the
school lunch program?
Answer. We believe that training school food service staff is the
key to ensuring that schools are purchasing and preparing safe foods.
Administering State agencies provide training to school food service
personnel on an on-going basis. To support training in the areas of
safe food purchasing and food handling practices, FNS has worked
closely with the National Food Service Management Institute (NFSMI) to
provide guidance and seminars to complement State agency training
endeavors.
NFSMI is a key resource for food safety materials, education and
training for food service personnel in our nutrition programs.
Established by Congress in 1989, the Institute recently created a
network of Hazard Analysis and Critical Control Points (HACCP)
instructors to train school food service employees in HACCP principles,
and developed a manual and teleconferences to train food service
managers in responding to a food recall or emergency readiness crisis.
In addition, NFSMI has been active in developing procurement materials
including the manual, First Choice, A Purchasing Systems Manual for
School Food Service which was originally published in 1995. Since its
publication, over 2,000 school food service professionals have attended
seminars using the manual as a reference. This training effort
reinforces the concept that food procurement is integrally related to
food safety. Emphasis is placed on bid specifications, laboratory
testing of products, food recall procedures, and receiving and storage
of foods.
FNS's Team Nutrition developed a complementary manual, Serving It
Safe: A Manager's Tool Kit to assist food service managers to implement
a comprehensive sanitation and safety program in the cafeteria.
Emphasis is placed on identifying key phases and critical control
points in the food preparation process and identifying methods of
preventing problems during each phase of the process. FNS continues to
develop materials to educate food service personnel on food safety
issues and to emphasize the importance of the safety of the food in
school meals. We have distributed irradiation pamphlets; bio-security
guidelines for school food service; ``Fight BAC'' food safety posters
and pocket cards; ``Thermy'' pocket card, poster and magnet; and a
manager's checklist.
FNS is providing funding to the NFSMI for various food safety
projects including: creation of a Hand Washing Video and Poster, adding
hazard analysis and critical control points information to all USDA
recipes, and updating Serving it Safe--A Manager's Toolkit.
While we will continue to provide materials and guidance and to
work with States to educate school food service personnel on food
safety issues, we also believe that the reauthorization of the Child
Nutrition Programs offers an opportunity to reaffirm the importance of
food safety. We would support requiring all school food authorities to
employ approved HACCP procedures in the preparation and service of
meals, to ensure that every meal is prepared under the safest, most
wholesome conditions possible.
______
Questions Submitted by Senator Tim Johnson
COUNTRY OF ORIGIN LABELING--CONSUMER BENEFITS
Question. A study from the International Agricultural Trade and
Policy Center at the University of Florida was released yesterday
concerning the benefits and costs of mandatory COL. This is the only
comprehensive, independent study on COOL that covers the benefits of
labeling, and also provides a legal analysis to guide regulators at
USDA in the implementation of the rule. No other report exists other
than those paid for by lobbying groups and opponents of COL.
The report contains very encouraging news about consumer
willingness to pay for beef containing a U.S. label. It suggests the
benefits of COL for beef may total between $3 and $6 billion if you
extrapolate the consumer willingness to pay a 10 percent premium for
steaks, 10 percent premium for roasts, and a 24 percent premium for
hamburger. (We know from a recent Colorado State study consumers are
willing to pay those premiums for beef with a U.S. label.) Finally, the
University of Florida report suggests labeling won't cost $2 billion,
but rather between $70 and $200 million.
I encourage USDA to review this study and glean useful information
from it.
Has USDA ever studied the benefits of COL? If not, why?
Answer. USDA has conducted studies that examined the benefits of
Country of Origin Labeling (COOL). The Conference Report accompanying
the Agriculture, Rural Development, Food and Drug Administration, and
Related Agencies Appropriations Act, 1999 directed the Secretary of
Agriculture to conduct a study on the potential effects of mandatory
country of origin labeling of imported fresh muscle cuts of beef and
lamb until such products reach the ultimate consumer. As directed,
USDA's Food Safety and Inspection Service released a report entitled
``Mandatory Country of Origin Labeling of Imported Fresh Muscle Cuts of
Beef and Lamb'' in January 2000. The findings of the report relate to
benefits, costs, implications for international trade, and stakeholder
views.
To fulfill requirements of the Paperwork Reduction Act of 1995
(PRA), USDA estimated the annual reporting and recordingkeeping burden
associated with the voluntary COOL program published on October 11,
2002. The PRA requires the estimation of the amount of time and related
cost necessary for participants to comply with a program, but does not
require the determination of any benefits that may be attributed to a
program.
In the process of promulgating the regulations to implement
mandatory COOL, USDA will prepare a cost/benefit assessment. We have
received many comments on the initial reporting and recordkeeping
burden estimates, which combined with information gleaned from
available studies, the voluntary COOL program, and other public and
private data, will assist us in examining both the benefits and costs
of mandatory country of origin labeling.
Question. Do you agree that the consumer demand for knowing the
country of origin of the food they feed their children is very
substantial?
Answer. Many groups, including consumers and industry associations,
have expressed an intense interest in the value of country of origin
labeling.
Question. Do you agree that there may well be a significant
willingness on the part of consumers to pay for information about the
origin of the food they feed their families?
Answer. This will be one of the issues that will be examined when
the requisite cost/benefit analysis is conducted as part of the
mandatory rulemaking.
Question. Do you agree that more consumer information about their
food is better than less information?
Answer. In general, consumers benefit from having more information
on which to base their purchasing decisions. However, the costs of
providing the additional information must be considered as well as the
benefits.
A recent independent consumer survey conducted by economists at
Colorado State University indicated that of those surveyed, 75 percent
of consumers prefer mandatory COL for beef. Other findings included: 73
percent of consumers were willing to pay an 11-percent premium for
steak and a 24-percent premium for hamburger with a ``U.S.'' label and
21 percent of the consumers surveyed preferred COL for beef because
they want to support U.S. ranchers--they prefer to buy American meat
from American producers.
Question. Has USDA reviewed this consumer survey, will you consider
these consumer benefits as you write the final rule, and do you agree
with the results from the survey?
Answer. As part of the rulemaking process, USDA will prepare a
detailed cost/benefit analysis utilizing all of the pertinent
information available, including the Colorado State University survey.
However, the researchers who conducted this survey recently issued a
fact sheet about the appropriate use of the survey data and stated that
results of the study ``were not intended to and should not be used to
establish COOL policy or cost benefit analysis.''
COUNTRY OF ORIGIN LABELING--PACKER THREATS
Question. My constituents are very supportive of COL, but are very
concerned about the abusive letters sent by meat packers saying that
the packers intend to conduct random private audits of farmers and
ranchers for compliance. The law was carefully written to prohibit on-
farm, mandatory animal identification and it doesn't permit third-party
audits mandated by packers.
What provision of the COL law leads USDA or the packers to believe
mandatory third-party audits are permissible?
Answer. While Section 282(f)(1) of the law expressly prohibits USDA
from using a mandatory identification system to verify country of
origin, the law does not contain any language prohibiting the industry
from using whatever method industry participants deem appropriate,
including the use of third-party audits, to verify the country of
origin information they receive from their suppliers (i.e. producers).
Question. Why do you believe it is reasonable for a packer to
require a third-party audit of a farm when existing USDA programs to
track origin and other information (USDA grading system, Certified
Angus Beef program, school lunch program) do not allow for a similar
requirement?
Answer. The COOL law requires suppliers to provide country of
origin information to retailers. Retailers and their suppliers are
subject to fines of up to $10,000 per violation under the law.
Therefore, it is reasonable to expect that industry participants will
take the steps necessary to ensure themselves that they are in
compliance with the law. In order for retailers to make accurate origin
claims, suppliers must have proper documentation to verify ``born,
raised, slaughtered'' information. Such documentation can only be
provided by producers that have first-hand knowledge of where an animal
was born.
The USDA grading system, Certified Angus Beef program, and school
lunch program are command-and-control type systems that can only be
utilized in conjunction with a mandatory identification system. Because
USDA itself administers these systems, third-party audits by packers or
other entities would be redundant.
Question. Do you agree with me that the prohibition of a mandatory
animal identification system in the COL law means that USDA cannot mark
product to trace the farm of origin but can mark product, including
animals, to show the country of origin?
Answer. This provision states that USDA ``shall not use a mandatory
identification system to verify the country of origin of a covered
commodity.'' The provision is not limited to mandatory animal
identification systems and prohibits USDA from mandating any type of
identification system to verify the country of origin.
COUNTRY OF ORIGIN LABLEING--RECORDKEEPING/IMPLEMENTATION
Question. Livestock producers currently maintain birth, health,
sales, breeding, feed, beef quality, veterinary, and inventory records
on the cattle, sheep, and hogs they own. I intend for producers to be
able to self-certify this information which can be utilized to help
verify the origin of animals for COL.
Does USDA believe this type of information that a majority of
producers already maintain is sufficient to comply w/COL?
Answer. USDA believes that in general, these types of records are
useful in verifying the origin of animals for COOL. However,
maintaining documents and records such as those listed will not
necessarily ensure compliance. During a compliance audit conducted by
USDA, auditors will review and assess any and all documents and
information to the extent necessary to arrive at an accurate decision
on compliance.
Question. If not, what additional information do you believe you
will require?
Answer. Because of the diversity in industry operations, we cannot
predetermine precisely what documents will be necessary to verify
origin claims.
The COL law gave USDA discretion to create an audit verification
system (not a mandatory system!) to help verify the origin of
livestock. We included many existing industry practices and USDA
programs to model in order to achieve voluntary audits. Some of these
models include: the USDA grade stamp system--i.e. Choice, Select, etc,
Certified Angus Beef and other breed programs, Beef Quality Assurance,
Hazard Analysis Critical Control Points--HACCP, the national school
lunch program, the Market Access Program, and, the voluntary ``Born and
Raised in the USA'' label used by Carolyn Carey of California).
Question. To what extent is USDA using existing models to implement
COL?
Answer. While the law provides USDA with the authority to require
and enforce retail labeling, it does not provide USDA with the
authority to certify and control the movement of products from
production through retail sales. A necessary component of the models
referenced is a mandatory identification system, which USDA is
prohibited from requiring, to verify country of origin claims. Thus,
none of these models could be used to implement COOL.
Recently, I discovered that for one beef carcass, packers track up
to 2,500 different products--called stock keeping units. Packers
segregate beef products by owner, type, breed, grade, and special
company brands or labels they use to market the beef they sell. All of
this information is computerized and records are kept by the company.
Moreover, a sticker is placed on every beef carcass which includes
an identification number for the carcass and the packing plant number.
This data is read from each sticker/carcass and downloaded into the
company's computer system. Boxed beef items are shipped to their final
destination according to a complex computerized routing system. The
boxes of beef contain labels denoting a wide array of data, including:
cut of meat, breed of animal meat is derived from, final destination
(whether for export, a grocery store, or wholesaler), special company
labels, packing plant, quality grade of meat, and weight among other
information.
All of this data is stored on a bar code included on every label
placed on the boxed beef. It is my belief that while tracking animals,
carcasses, and meat for COL will include costs, it isn't impossible and
it can be done knowing they track so many other bits of information for
their business operations.
Question. If packers are tracking enough information to keep track
of 2,500 different products from one beef animal, how are we to believe
it's virtually impossible and exorbitantly costly for them to also
track the origin of the animals?
Answer. The level of complexity in the packing industry will be a
function of the variation of the number of different origins and the
number of products they process. In addition to maintaining an accurate
recordkeeping system, packers that handle products from more than one
country of origin will be required to have a segregation plan to
maintain the identity of the origin of the product. Facilities may need
modifications to permit product segregation, and there may be
additional costs associated with handling, employee training,
marketing, invoicing, shipping, etc. Products that may be of mixed
origin, such as ground beef, add additional complexity to process
needed to ensure credible country of origin labeling claims.
Question. Do you agree that the food industry currently tracks a
large amount of data (at least 2,500 products just for one beef animal)
about their product so that a whole new record keeping system is NOT
required, but merely an adjustment to current records?
Answer. USDA does not believe that records pertaining to the origin
of covered commodities as defined by the COOL law are already
maintained by affected entities. While it may be possible for these
entities to make modifications to their existing recordkeeping systems
in order to meet the requirements of COOL, it is an additional burden
that USDA must account for in the recordkeeping costs.
tracking imports only for verification of country of orgin labeling
Question. It has been pointed out to me that under Article 9 (IX)
of GATT 1994, live cattle entering the United States can be marked as
to their country of origin so long as the mark doesn't discriminate
against, materially reduce the value of, or unreasonably increase the
cost of the imported item. Indeed, last year the U.S. imported about
800,000 calves from Mexico, and most of these calves were branded with
an ``M'' to differentiate them from domestic cattle. This practice is
in compliance with Article 9 of GATT.
Several organizations have made a very compelling case to me that
one way to reduce the implementation and tracking costs associated with
COL is to have USDA require markings similar to the ``M'' applied to
imports of Mexican cattle on all imported livestock. The rationale is
that tracking these markings on imports will reduce overall costs for
implementation. I believe the costs associated with tracking only
imported animals for COL implementation--in accordance w/Article 9 of
GATT--is a common sense approach to pursue which is permissible under
the law and would reduce implementation costs because imported
livestock are already marked as such.
To what extent has USDA analyzed Article 9 of GATT to determine
how to implement COL?
Answer. In promulgating the regulations for the mandatory Country
of Origin Labeling program, USDA will analyze the pertinent statutes
that govern the marking of imported goods and will work with the Office
of the U.S. Trade Representative to ensure that the United States is in
compliance with all of the applicable trade laws.
Question. Does USDA have a position on using Article 9 of GATT as a
rationale to track only imported animals for COL implementation?
Answer. The COOL law applies to all covered commodities and
specifically identifies the criteria that products of U.S. origin must
meet. While Article 9 of GATT may permit the marking of imported
animals, the COOL law does not provide authority to control the
movement of domestic or imported products and prohibits the use of a
mandatory identification system, which would be required to track
imported product through the entire chain of commerce.
Question. Do you agree that virtually all imported covered
commodities are currently marked as to country of origin and that such
marks are specifically allowed by GATT and WTO rules?
Answer. While products imported in consumer-ready packages are
required to be labeled for origin, many imports undergo some type of
transformation that eliminates the current requirement for labeling of
origin. In addition, certain products such as livestock are currently
on the ``J-List'' and are exempt from marking requirements.
Question. In general terms, the United States only imports around 2
million head of live cattle but slaughters 28 million head. Obviously,
most of the cattle we slaughter are of U.S. origin. Doesn't it make
sense to USDA that tracking the 2 million imported cattle would be less
costly than keeping track of 28 million?
Answer. While tracking only imported cattle may be less costly than
tracking 28 million head, the law applies to all covered commodities
and specifically identifies the criteria that product of U.S. origin
must meet. The law does not provide authority to control the movement
of products and prohibits the use of a mandatory identification system,
which would be required to track product through the entire chain of
commerce. Because the law requires country of origin labeling by
retailers, compliance enforcement will begin at retail and will track
the country of origin claims back through the production and marketing
chain. Not all imported animals and covered commodities will be sold at
retail, so there is little justification for requiring marking and
tracking of all imported products.
COUNTRY OF ORIGIN LABELING--TRADE
Question. Nearly 30 major trading Nations in the world have
mandatory COL programs for food.
Has the United States ever filed a complaint in the WTO against any
of these foreign labeling requirements?
Answer. The U.S. filed a complaint against certain trade practices
followed by Korea, which included an import labeling component.
Question. Has USDA reviewed any of these foreign labeling
requirements so as to learn what pitfalls and/or success stories may be
available regarding COL implementation?
Answer. USDA has reviewed many existing labeling requirements,
including State labeling laws. However, all of these labeling programs
have different definitions and requirements that provide limited value
in terms of implementing the specificity of origin in the COOL law.
COUNTRY OF ORIGIN LABELING--COST
Question. Earlier this year USDA released a public cost estimate of
$2 billion for implementation of COL. I can think of no credible
organization that agrees with this exorbitant estimate.
Through a Freedom of Information Act request, it was discovered
that USDA only consulted with 3 organizations regarding the possible
cost of COL--and all 3 were among the most powerful opponents of COL.
The documents released to the Consumer Federation of America reveal
USDA consulted with the National Meat Association (packers), the
National Food Processors Association, and the National Pork Producers
Council before developing the $2 billion cost estimate.
Shortly thereafter, I wrote you a letter asking that you explain
the methods USDA used to determine the initial cost of COL and why you
apparently met only with opponents.
You recently responded to my letter, assured me USDA would
implement COL in a fair and balanced matter, and said USDA officials
met formally w/29 different organizations and State programs regarding
the cost estimate of COL, as opposed to just 3.
How many of the 29 groups supported COL and would you provide me
with a list of the 29 different organizations USDA met with to discuss
cost issues?
Answer. USDA was approached by numerous groups representing a
variety of industry segments and we tried to meet with as many groups
as possible. As the law had already been enacted, our discussions were
focused more on the overall implementation of Country of Origin
Labeling rather than the individual group's position on COOL. A copy of
all of the groups we have met with to date is attached.
[The information follows:]
------------------------------------------------------------------------
Event name Event dates
------------------------------------------------------------------------
Food Labeling Conference.................. January 15
R-Calf National Conv...................... January 23-25
NAMP Executive Cmte....................... January 27
NCBA/CBB Conv. & Trade Show............... January 29-February 1
Northern VA Angus Assn.................... February 1
Lancaster County Cattle Feeders Day....... February 4
National Grocers Assn./GRLC............... February 4
American Sheep Industry Assn. Annual Conv. February 6-8
Congressional Research Service............ February 14
California State Univ. @ Chico............ February 15
American Farm Bureau Federation........... February 16-20
United Fresh Fruit & Vegetable Assn....... February 21-24
Agricultural Women's Leadership Network February 24
Forum.
21st Century Pork Club.................... February 26-28
National Meat Assn. MEATXPO 2003.......... March 2-5
Kentucky Farm Bureau...................... March 3-6
Joplin Regional Stockyards/Mo. Cattlemen's March 11
Assn.
AMI/FMI/Topco Meat Conference............. March 9-11
South Dakota Briefing--Farm Bill/USDA March 11
Programs & Services.
International Boston Seafood Show......... March 11-13
National Lamb Feeders Assn................ March 13-15
House Ag Committee Briefing............... March 17
Virginia Farm Bureau...................... March 18
AAEA/FAMPS Food Labeling Conf............. March 20-21
Oklahoma Ag Leadership.................... March 20
Texas Southwest Cattle Raisers Assn....... March 23-26
Haverlah Ranch--Powderhorn Cowbelles...... March 25
Missouri Cattlemen's Association.......... March 25
International Meat Secretariat/OPIC March 30-April 1
Regional Meeting.
Missouri Stockgrowers Assn................ April 10-12
National Cattlemen's Beef Assn., Spring April 11
Conference.
NFI Spring Conference..................... April 11-16
NAFTA Workshop............................ April 23-26
Federal Food Regulatory Conf.............. April 28
American Farm Bureau Federation........... May 6
------------------------------------------------------------------------
2003 LIVESTOCK FEED PROGRAM
Question. On August 12, 2002, you announced $150 million in feed
assistance for producers in Colorado, Nebraska, South Dakota, and
Wyoming. This assistance was provided in the form of $23 feed credits
for producers to use at their local feed supply store. At the same
time, USDA was sending participating feed mills surplus nonfat dry milk
stocks to be used in manufacturing the feed. In a press release issued
by your office, it was stated that the four States chosen to
participate in the program was because they were the hardest hit by the
drought, with at least 75 percent of the pasture and forage crops rated
poor or very poor.
The data made available by NASS indicates pasture in South Dakota
was rated 59 percent poor or very poor the week of April 8, 2003, when
the new Livestock Feed Program was announced. Additionally, feed
supplies and stock water supplies jumped from an average of 4.5 percent
very short in 2002 to an average of 23.5 percent very short in 2003.
Yet it appears data of this sort was not taken into consideration in
determining how producers would be eligible for the new feed assistance
program.
If the entire State of South Dakota was eligible for the 2002
Cattle Feed Program and little if any precipitation has fallen since
then, how can you justify excluding over three-fourths of the State
from the 2003 feed assistance program?
Answer. In mid-April, when criteria for the 2003 Nonfat Dry Milk
Feed Program were established, the previous 6 months' moisture
accumulation data was used, specifically the U.S. Drought Monitor. In
order to best utilize the available surplus stocks of non-fat dry milk,
only the areas suffering the most according to the monitor were
determined eligible.
Question. Why did the Department choose a different drought data
source (Drought Monitor) for the 2003 program, which excludes over
three-fourths of the producers that had been eligible for the 2002
program?
Answer. This program was established early in the spring before
there was any new growth of pasture. The other program was established
in late summer after pasture losses were known. Therefore, the criteria
based on the U.S. Drought Monitor were utilized.
Question. How does the Department plan on providing assistance to
producers who have no feed source for 2003 but were excluded from this
recently announced program?
Answer. Under the Nonfat Dry Milk Feed Program, conditions are
monitored on a monthly basis, and the program will be available in
areas of persisting drought and inadequate grazing due to the drought.
PUBLIC TV QUESTION
Question. Secretary Veneman, as you may know, public television
stations are facing a Federal mandate to convert all of their analog
transmission equipment to digital. The deadline for public television
stations to make this conversion recently passed on May 1, 2003. 195
stations have filed with the FCC for extensions of the deadline. Of the
stations that cited financial hardship as reason for a waiver, 70
percent of them serve predominately rural areas.
Last year, members of this committee recognized that public
stations serving rural areas would experience financial hardship as one
of the obstacles to meeting the Federally mandated deadline. To assist
the stations, the committee included $15 million in the Distance
Learning and Telemedicine program specifically to address these needs.
It is my understanding that the committee staff has recently met
with both budget officers and attorneys in your department about fund
for this purpose. Further, I understand that you agency has neglected
to develop a plan for awarding these funds.
Can you explain the delay?
Madam Secretary, it is my understanding that the reason for the
delay in awarding these funds is because your department does not feel
that there is significant congressional direction to implement this
program for public television.
I have read both the Senate report language as well as the Omnibus
report language and I think that Congress was explicit in their intent
to award these funds.
I might add that we put those funds in there for this specific
purpose--to provide funding for rural public television stations.
Question. Secretary Venemen, can you explain why you are choosing
to ignore a directive from this committee?
Answer. The 2003 Agriculture Appropriations Act provides
$56,941,000 for the Distance Learning and Telemedicine Program. It
specifically enumerates that $10 million of these funds are to be used
for grants to support broadband transmission and local dial-up Internet
services for rural areas. It is, however, silent concerning translators
for digital conversions. There is language in the Senate Appropriations
Committee Report and a reference in the Statement of Managers that
accompanies the Conference Report that both sets out the $15 million
and refers to conversion to digital translators.
Rural Development is aggressively seeking the implementation of a
Notice of Funds Availability (NOFA) that would make this funding
available this summer. The NOFA will outline funding parameters and set
forth eligibility requirements to allow for the most equitable
distribution of this grant funding.
______
Questions Submitted by Senator Robert C. Byrd
ANIMAL WELFARE
Question. In the Fiscal Year 2003 Omnibus Appropriations bill, $5
million was secured for the hiring of at least 50 new Humane Slaughter
inspectors within the Food Safety Inspection Service (FSIS) at the
United States Department of Agriculture (USDA). Report language in this
bill instructed these new inspectors to work solely on the enforcement
of the Humane Slaughter Act. Prior to the $1.25 million allocation in
the fiscal year 2001 Supplemental Appropriation bill for the hiring of
17 District Veterinary Medical Specialists at FSIS to work solely on
the enforcement of the Humane Slaughter Act, there were no inspectors
employed exclusively for this purpose.
Due to the late date on which the Fiscal Year 2003 Omnibus
Appropriations bill was signed into law, language in the bill permitted
the funding for inspectors to be used into fiscal year 2004. However,
it has recently come to light that it is not the intention of the USDA
to hire at least 50 new Humane Slaughter Inspectors with the funding
that has been provided. Instead, it is believed that the USDA plans on
hiring only 15 inspectors in fiscal year 2003, then in fiscal year 2004
the USDA will retain these 15 inspectors while hiring an additional 20
inspectors. While the USDA may claim that this qualifies as the minimum
of 50 inspectors they are required to hire, this does not coincide with
the original intent of the law.
At this time, how many new Humane Slaughter Inspectors have been
hired to work solely on the enforcement of the Humane Slaughter Act,
funded through the $5 million provided for this purpose in the fiscal
year 2003 Omnibus Appropriations bill? How many new inspectors will be
hired by the end of fiscal year 2003?
Answer. FSIS continues to increase agency efforts to ensure that
all field personnel understand their authorities and rigorously enforce
the Humane Methods of Slaughter Act. FSIS has recently hired 215 new
line inspectors trained in humane handling methods and at this time,
the systemwide FSIS effort devoted to humane handling and slaughter
inspection is equal to 63 FTEs. In fiscal year 2002, the comparable
level of effort equaled 25 FTEs carrying out humane handling and
slaughter inspection, so the agency has added 38 FTEs in fiscal year
2003. The agency expects that this number will continue to rise through
fiscal year 2004 to meet and even exceed the requirement outlined in
the fiscal year 2003 Omnibus Appropriations bill.
Question. When will the USDA complete securing no less than the 50
new Humane Slaughter inspectors as required by the fiscal year 2003
appropriations bill and what is the schedule for hiring these new
inspectors?
Answer. The agency expects to meet the requirement in fiscal year
2004 and even exceed the requirement outlined in the fiscal year 2003
Omnibus Appropriations bill.
When determining the amount of funding necessary to employ 50 new
Humane Slaughter Inspectors at the Food Safety Inspection Service,
officials at the USDA requested the amount of $5 million, indicating
that it would be preferable to employ veterinarians in these positions,
thus affecting the amount of funding that was allocated for these
inspectors.
Question. Are all of the new Humane Slaughter Inspectors, and those
that have yet to be hired, veterinarians? If not, how many inspectors,
above the 50 required by the fiscal year 2003 Omnibus Appropriations
bill, are being hired?
Answer. In fiscal year 2003, FSIS has hired 215 new line inspectors
trained in humane handling methods and the systemwide FSIS effort
devoted to humane handling and slaughter inspection is equal to 63
FTEs. In fiscal year 2002, the comparable level of effort equaled 25
FTEs carrying out humane handling and slaughter inspection, so the
agency will have 38 FTEs in fiscal year 2003. The agency expects that
this number will continue to rise through fiscal year 2004 to meet and
even exceed the requirement outlined in the fiscal year 2003 Omnibus
Appropriations bill.
In addition to the 63 FTEs, FSIS veterinarians also conduct humane
handling verification activities. FSIS' Veterinary Medical Officers
(VMO) are assigned to all livestock slaughter facilities that also
provide inspection oversight for humane handling and slaughter. FSIS
employs 1,100 veterinarians, approximately 600 of which conduct on-
going humane oversight verification duties in livestock plants.
In order to ensure that adequate funding is available to maintain
no less than 50 Humane Slaughter Inspectors throughout fiscal year
2004, the future funding needs must be determined.
Question. Given that the $5 million provided in the fiscal year
2003 Omnibus Appropriations bill for no less than 50 new Humane
Slaughter Inspectors has been made available through fiscal year 2004,
will any additional funding be need to fulfill and maintain this
requirement in fiscal year 2004? If so, how much funding is needed?
Answer. FSIS has adequate resources to continue increasing agency
efforts to ensure that all field personnel understand their authorities
and vigorously enforce the Humane Methods of Slaughter Act.
COMPETITIVE SOURCING
Question. The Office of Management and Budget (OMB) scores agencies
on how well they comply with the President's Management Agenda.
Agencies are encouraged to submit management plans to the OMB which
incorporate the competitive sourcing quotas outlined in the President's
budget. I understand that agencies within the Department of Agriculture
are currently studying their workforces to find places where it would
be appropriate for private contractors to take over agency functions.
One example relates to potential outsourcing of technical
specialists (such as soil scientists and other conservation
specialists) of the Natural Resources Conservation Service. These are
the very people who are responsible for transferring public
conservation policy to private landholders through what has been one of
the most successful public-private partnerships in history.
Another example which many of my constituents are concerned about
is the privatization effort within the U.S. Forest Service, but I
believe this is an important issue for every agency in your Department.
Regardless of the agency or the activity, the uncertainty and the
employee level as to how agency outsourcing will evolve is having a
horrific effect on morale. Given the loss of experienced agency
personnel that will occur as a large number of employees reach
retirement, we should be thinking of ways to retain experienced
workers, not engage in practices which will erode their trust in
personnel management.
It is my understanding (from OMB) that these competitive sourcing
plans, once they are submitted to the OMB for approval, can be released
to the public at the discretion of the agency heads. If the Congress is
to appropriate substantial funding for private sector employment
opportunities, I expect that you will first provide Congress, and in
particular this Committee, with a copy of any management plan or
competitive sourcing proposal that the Department of Agriculture
submits to the OMB.
When do you expect to submit a management plan to the OMB, and how
soon can you make that plan available to this Committee?
Answer. I submitted a competitive sourcing plan to OMB in May 2002.
This plan represents USDA's initial starting point for competitive
sourcing. The Department expects to update this plan over the next
several months. I will submit a copy of our May 2002 plan for the
record.
[The information follows.]
Department of Agriculture,
Office of the Secretary,
Washington, D.C., May 14, 2002.
Hon. Mitchell E. Daniels, Jr.,
Director, Office of Management and Budget, Washington, D.C.
Dear Director Daniels: On January 4, we provided you with a summary
of the Department's plan to meet the Administration's competitive
sourcing goal by September 2003. Enclosed is a detailed plan of the
specific positions we intend to compete or convert as part of Phase I
of our plan.
In addition, we are also now focusing on USDA-wide functions,
including the structure and initiatives for county-based agencies. As
we finalize the tasks, we will incorporate additional changes, as
necessary, to our competitive.sourcing plans.
If you have any questions, please contact Edward R. McPherson,
Chief Financial Officer, at (202) 720-5539.
Sincerely,
Ann M. Veneman,
Secretary.
Question. Secretary Veneman, how do you intend to quantify the
collective experience and expertise of the public employees in your
Department when determining their ``competitiveness'' in this process?
Answer. We use the guidance and process in OMB's Circular A-76 when
quantifying the experience and expertise of government employees in the
competitive process. Circular A-76 requires that the government develop
a Most Efficient Organization (MEO) to compete against private sector
bidders. As part of that organization, the government develops a
staffing plan, to include position descriptions that specify the level
of expertise required to perform the work. If the government wins the
competition, the new organization will be staffed from the personnel
currently assigned within the organization.
Question. To the extent that the Administration intends to pursue a
policy of outsourcing, why is that policy not limited to new hires, as
current employees retire, so as to not erode the morale of current
employees?
Answer. The Administration is pursuing a policy of competitive
sourcing, not outsourcing. Where practicable, USDA has used and will
continue to use current vacancies to minimize the impact of competitive
sourcing on employees. However, limiting competitive sourcing only to
vacancies could severely impact efforts to build better organizations
across the department.
SUBCOMMITTEE RECESS
Senator Bennett. Thank you for your persistence.
Madam Secretary, we appreciate your appearance here. We
appreciate the work that you do, and that all of your team
does. I know this process sometimes gets untidy, and you will
get more questions in writing that will add to the untidiness.
But we are grateful to you and your staff for your ability to
straighten this all out, and in the end, give us a result and a
product that we can understand where you are.
The subcommittee is recessed.
[Whereupon, at 12:28 p.m., Thursday, May 8, the
subcommittee was recessed, to reconvene to subject to the call
of the Chair.]