[Senate Hearing 108-629]
[From the U.S. Government Publishing Office]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2005
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THURSDAY, MARCH 25, 2004
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 1:36 p.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Bond, Craig, Kohl, Harkin,
Dorgan, and Durbin.
DEPARTMENT OF AGRICULTURE
Office of the Secretary
STATEMENT OF ANN M. VENEMAN, SECRETARY
ACCOMPANIED BY:
KEITH COLLINS, CHIEF ECONOMIST
STEPHEN DEWHURST, BUDGET OFFICER
Senator Bennett. The Subcommittee will come to order, and
we welcome you all here to the first hearing of the Agriculture
Subcommittee of the Senate Appropriations Committee.
Last year was a very challenging year, because our
allocation was almost $1 billion less than the previous year in
fiscal 2003, but with some heavy lifting and a lot of help by
Senator Kohl, we managed to write a balanced bill that seemed
to solve the problems, and we congratulated ourselves and
thought that we had set the level that we might be asked to
hold this year.
However, the budget request for this year is over a half a
billion dollars less than last year. So maybe there is no
virtue, Senator Kohl, in having given at the office. They come
back to us again. But we do not have our formal allocation, but
at least from the budget request, it looks as if it is going to
be even more challenging this year than it was last, and I very
much appreciate the cooperation and continuing support that
Senator Kohl has given.
Before we begin, I would like to acknowledge the efforts of
Secretary Veneman with respect to recently announced 110 metric
tons of wheat destined for export to Iraq. This is a
significant contribution toward moving Iraq in the direction
which we want it to move, and we are grateful to the Secretary
for her efforts in bringing that to pass.
We have a host of issues that we are facing and expect to
talk about many of them this afternoon, and so, with a lot of
ground to cover, I would ask the witnesses if they would
summarize their statements. And we will be using the 5 minute
timer, both for opening statements and for questioning. We can
do additional rounds if Senators wish to do that, but given the
number of things we need to talk about, I would like to have
the discipline of the 5 minute timer.
And to try to set the example, I will now cease here and
recognize Senator Kohl.
Senator Kohl. I thank you, Mr. Chairman, Senator Bennett. I
want to congratulate you for the superb job you and your staff
have done in guiding this Subcommittee last year and for
crafting the fiscal year 2004 bill under trying circumstances.
Secretary Veneman, we want to welcome you and your
colleagues to appear before us once again this year. We just
passed through a most challenging year for USDA and all of us
involved in U.S. agriculture. The year ahead shows no signs of
relief. We will continue to focus on the needs of farmers and
ranchers, invasive pests and disease, demands for food
assistance, threats to public health and consumer confidence,
notably the December discovery of mad cow disease, and many
other challenges.
However, the President has submitted a budget proposal for
us for the second year in a row with major reductions,
reductions which are among the very largest of any Federal
department. Madam Secretary, we hope that you will be able to
explain to us today why the budget for the Department of
Agriculture continues on a severe downward slope. You are the
primary spokesperson in this country for rural America, and
your voice needs to be heard and heard loudly within the
highest levels of the administration.
As challenging as your tasks continue to be, Madam
Secretary, our job this coming year will be no less difficult.
Downward budget pressures on this Subcommittee will continue to
make our choices difficult and leave our opportunities
diminished.
So, Mr. Chairman, I look forward to continuing our strong
working relationship in order to meet the problems ahead of us.
Thank you very much.
Senator Bennett. Thank you, Senator. I appreciate that very
much.
Senator Craig.
Senator Craig. Mr. Chairman, thank you. I will be brief.
We are anxious to hear your testimony. As I have done
privately, let me publicly again congratulate you, Madam
Secretary, for your leadership in several areas, but most
important to my state and I expect to the State of Utah and to
Senator Kohl's state was I think the masterful way that USDA
and you handled the issue of mad cow.
I say so because it was a volatile issue. You stayed on top
of it. You were quick to demonstrate to the American consumer
the safety of the American meat supply while at the same time
moving judiciously and responsibly to get it under control. So
my congratulations to you on that.
I am, as most of us are, extremely frustrated by some
things going on in farm country today against production
agriculture; that is, outside their control. While we look at
the increase of $4 billion in mandatory spending in your budget
and about a $720 million decrease in discretionary outlays,
that is no small sum and a very real frustration as we try to
solve a couple of issues or work with Agriculture to do so.
Let me point out a couple of them. In the 2002 Farm Bill,
we worked hard to improve the energy title. We were not able to
do that. We will work again to be able to do that this year, to
extend larger loans, guarantees and grants to farmers and
ranchers and rural businesses purchasing renewable energy
systems, because energy has become a huge factor in production
agriculture at this moment, and it will be in the near future.
Yesterday, Madam Secretary, I was visiting with a banker
from Idaho who extends a lot of lines of credit to Idaho
agricultural producers. He said he had just called all of his
managers of the branches together on a conference call and
asked them to examine all of the lines of credit of his farmers
this year, and if those lines would handle at least a 20
percent increase based on one sole input factor: energy and the
cost of energy.
Energy as an input part of production agriculture this year
will go up between 25 and 30 percent at the farm gate. Nothing
will offset that. There is not a commodity out there that is
going to increase enough this year in any way to offset that.
And that is a direct response to the inability of this Congress
to produce a national energy policy and get us back into the
business of production.
Let me give you one other figure that has just come out. In
the 46 months since 2000 until today, increased natural gas
prices have taken $130 billion out of this economy: in
industrial consumers, $66 billion; residential consumers, $39
billion; commercial consumers, $25 billion. Shame on Congress.
Shame on those who stand in the way of energy production in
this country today.
And what does that do to the farmer? You and I both know.
The input cost of fertilizer this year, 100 percent up from a
year ago; 100 percent. Now, that will do one of two things.
First of all, the farmers I talk to are saying we are not
buying forward; we are buying it as delivered. We will use much
less fertilizer this year than we did last. Maybe in some
areas, that is okay. But it runs the risk of the overall
production in agriculture dropping this year as it relates to
the ability to produce at certain levels, and those margins of
production, in some instances, were the margin of
profitability, and now, you drive that cost of production up,
and so, you ultimately drive production down because of its
cost factors.
You have no control of the price of energy, nor does this
administration. But the Congress has fumbled and fumbled and
fumbled once again, and for 10 years, we have debated national
energy policy. We have done nothing since 1992 in any positive
way as it would relate to the increased production of energy.
How do we, then, for the American farmer, offset those
dramatic increases in production costs? That is a phenomenal
challenge for you and for this Congress in difficult budget
times. So shame on Congress for standing in the way of this
country beginning to produce once again for its consumer and
especially for American agriculture.
Thank you, Mr. Chairman.
prepared statements
Senator Bennett. Thank you very much, Senator Craig.
The Subcommittee has received statements from Senators Byrd
and Johnson which will be placed in the record.
[The statements follow:]
Prepared Statement of Senator Robert C. Byrd
Secretary Veneman, thank you for coming before this committee
today.
Over the past 3 years, I have made funding for the proper
enforcement of the Humane Methods of Slaughter Act one of my top
priorities. In the fiscal year 2001 supplemental appropriations bill, I
secured $1.25 million for the hiring of 17 District Veterinary Medical
Specialists at the Food Safety Inspection Service. Report language
accompanying that bill instructed these new inspectors to work solely
on the enforcement of the Humane Methods of Slaughter Act. Prior to my
securing this funding for DVMS personnel, there were no inspectors
employed by the USDA exclusively for this purpose.
During the consideration of the fiscal year 2003 omnibus
appropriations bill, the Senate included, at my request, $5 million for
the hiring of at least 50 full-time equivalent humane slaughter
inspectors also for the sole purpose of humane slaughter enforcement.
The fiscal year 2004 omnibus appropriations bill includes continued
funding for the 50 full-time equivalent humane slaughter inspectors and
the 17 District Veterinary Medical Specialists.
Last year, Secretary Veneman, when you testified before this
committee, I expressed my deep concern about the proper use of the $5
million for at least 50 full-time equivalent humane slaughter
inspectors by the U.S. Department of Agriculture. The purpose of this
funding is to ensure that the industry works to minimize pain and
suffering of defenseless animals. By adding 50 full-time equivalent
inspectors devoted exclusively to enforcing humane slaughter methods,
along with 17 District Veterinary Medical Specialists, the USDA will
finally have the resources to enforce a law that was enacted nearly 25
years ago.
Earlier this year I was pleased to learn that the 50 FTE inspectors
are now in place at the USDA. The Department is now heading down the
right path with regard to humane slaughter enforcement. But there is
still more that can and needs to be done to eliminate operations that
raise and slaughter livestock in unspeakable conditions--conditions
where the animals do not even have room to lie down and where animals
are not properly stunned before beginning the process of dismemberment.
Such facilities are operating illegally and it is the responsibility of
the USDA to identify these violations and stop the production line when
violations are observed. Today it is my hope that we will hear from
you, Madame Secretary, about the progress that has been made by the
USDA over the last year regarding humane slaughter enforcement with the
funding this committee provided, and how the USDA plans to continue to
improve its enforcement of the Humane Methods of Slaughter Act with
future funding.
______
Prepared Statement of Senator Tim Johnson
Mr. Chairman and Members of the Agriculture Appropriations
Subcommittee, I appreciate the opportunity to submit a statement at
today's hearing, and address important issues for our Nation's farmers
and ranchers. As the Senate considers the fiscal year 2005 Agriculture
Appropriations bill, I find several issues at the forefront for the
producers in my home state of South Dakota and across the Nation. I
would like to take this opportunity to address these important issues,
and question United States Department of Agriculture Secretary Ann
Veneman on the Department's action, or in some unfortunate
circumstances, inaction, on these concerns.
Country of origin labeling (COOL) remains an overwhelmingly popular
concept with American consumers and producers. Not only would this
provision facilitate consumer choice and confidence, it would also be
greatly beneficial for our Nation's producers and the agricultural
economy in general. The General Accounting Office (GAO) study that I
requested during the summer of 2002, along with my colleague Senator
Tom Daschle, confirms that COOL would be feasible to implement not only
from a budget perspective, but also by incorporating existing regional
and state programs for record-keeping and tracking purposes. GAO found
that ``USDA used higher estimates of the hourly cost of complying with
the recordkeeping requirements of the COOL law than it used in
developing similar estimates for other programs and it has no
documented evidence to justify these differences.''
The Administration's handling of the country of origin labeling
delay, in addition to their position on the country of origin labeling
debate, has consistently been problematic and difficult. While
opponents of COOL were successful in securing a 2-year delay on
implementation of labeling for meat and produce, many unanswered
questions still exist regarding what type of delay was enacted. While
the mandatory date of implementation was postponed for 2 years, I
believe the rulemaking process has remained unhindered by the delay
language included in the 2004 Omnibus Appropriations measure. I wrote
USDA on December 11, 2003, requesting clarification of the department's
interpretation of the language delaying the implementation of COOL. I
was greatly disappointed by the vague and ambiguous response in the
letter I received dated February 10, 2004.
To deny country of origin labeling to America's consumers and
producers is unacceptable; for USDA to remain evasive and unresponsive
in attending to this issue is inexcusable. I intend to seek
clarification of the rule pertaining to the delay. My first meat
labeling bill was introduced in the House of Representatives 12 years
ago, in 1992, and I will persist in working to speed up implementation
of this invaluable and effective law with my colleagues. A majority of
producer groups support implementation of COOL and consumers are
expecting swift implementation. Country of origin labeling should be
implemented for all products in a timely fashion, not only for the fish
producers whose special interests were represented during closed-door
consideration of the fiscal year 2004 Omnibus Appropriations bill.
Furthermore, I am very concerned that an adequate amount of funds
be available for small and medium-sized producers. Our family farmers
and ranchers in South Dakota and across the Nation deserve adequate
representation in the fiscal year 2005 Agriculture Appropriations bill.
I was pleased to see that Senator Charles Grassley's (R-Iowa)
amendment, which would alter payment limitations and cap excessive
compensation to large farms, was adopted on this year's budget
resolution. I support this amendment. This funding would instead be
channeled toward worthwhile and essential conservation and development
programs, which are beneficial to producers in South Dakota and across
the Nation.
With respect to the President Bush's budget recommendation, the
President has cut spending to seven of the fifteen Cabinet level
agencies, including an unacceptable 8.1 percent cut to agriculture and
an astounding 10 percent cut to rural development programs.
Conservation programs have experienced a 12 percent cut, and research
has been cut by 3 percent. Our rural communities are irreplaceable, and
regardless of budgetary constraints, we must place a high priority on
rural America. It is an essential component for a stable and productive
Nation.
Furthermore, we must ensure that a marketplace exists for the
quality products our Nation's farmers produce, and we must ensure that
consumer confidence in our food supply remains high. I sent a letter to
President Bush requesting that he make funding for meat and livestock
testing a priority in his fiscal year 2005 budget request. USDA's
budget includes $60 million in new spending for Bovine Spongiform
Encephalopathy (BSE) related programs, while allotting $17 million for
an additional 40,000 BSE tests a year. While I am pleased to see an
increase in funding for animal disease measures, there are several
problematic aspects of testing which must be resolved. Animals can only
be tested after slaughter, and it can take up to two weeks to receive
test results. USDA should be committed to the development of a rapid,
live test, which is an endeavor that we cannot afford to compromise.
Producers in my home state of South Dakota continue to suffer from
closed export markets, and USDA must do everything they can to ensure
the viability of our agriculture economy.
Additionally, the President's budget includes $33 million for the
development of a national animal identification program. I am concerned
that we have no information as to how this money will be spent, nor do
we have any knowledge of how this system will work. It is my
understanding that at the March 4, 2004, Senate Marketing, Inspection,
and Product Promotion Subcommittee oversight hearing on a national
animal identification plan, USDA's testimony left a lot to be desired.
The broad statement that was given provided little substantive
information on issues of cost and transparency. Cost estimates are all
over the board, and are often twice the amount allotted by the
President's budget. This lack of consistency is disturbing.
Implementing a national animal identification program is a
substantial endeavor with direct impacts on our Nation's farmers and
ranchers, and we must ensure that the process by which this system is
established is open and transparent. It is imperative that an animal
identification system is effective and feasible for all parties
involved. Questions regarding confidentiality and cost to the producer
are still answered. It is my hope that USDA will work jointly with the
affected parties to arrive at a sound system.
In conclusion, I am hopeful that USDA will respond appropriately to
the looming concerns for our Nations' farmers and ranchers. I will do
everything possible to ensure they get a fair deal and are well-
represented as Congress considers such important issues, which will
affect their bottom line and productivity.
Senator Bennett. Secretary Veneman, when I talked about
opening statements to 5 minutes, I did not mean you.
Secretary Veneman. Oh, good. I was panicking.
Senator Bennett. You were panicking; all right.
We will give you 6\1/2\ minutes.
No, we appreciate your being here, and we recognize that
while you will, I am sure, submit your written statement for
the record, we want to give you ample time for your verbal
statement, and we now turn to you and very much appreciate your
appearing here.
STATEMENT OF ANN M. VENEMAN
Secretary Veneman. Thank you very much, Mr. Chairman and
members of the Committee. It is a pleasure to be with you
today. I appreciate the opportunity to appear before you today.
Senator Bennett. I do not think your microphone is on.
There is a button to press.
Secretary Veneman. Okay.
Senator Bennett. That helps, yes.
Secretary Veneman. I want to thank the Subcommittee and
each of you for the support of the Department and for the
support of American agriculture, and we look forward to
continuing to work with all of you as we craft the 2005 budget.
As you indicated, we have a longer statement for the
record, and we would ask that it be included in the record. But
I wanted to provide a quick overview of what our budget does
provide. First, it is consistent with the policy book that we
put out at the beginning of this Administration, Food and
Agriculture Policy: Taking Stock for the 21st Century, and it
supports USDA's strategic plan, both of which are designed to
enhance economic opportunities for agricultural producers,
support increased economic opportunities and improve the
quality of life in rural America, protect America's food supply
and our agriculture system, improve nutrition and health; and
conserve and enhance our natural resources and environment.
As you know, we are in a time of fiscal constraint. The
President has proposed a responsible budget across the Federal
Government, which holds non-defense and non-homeland security
discretionary spending increases to no less than 1 percent. At
the same time, his budget funds key priorities such as
continuing the war on terror, protecting homeland security,
strengthening the economy and jobs and health care
affordability.
His budget puts our Nation on track to reduce the deficit
by one-half within 5 years. The budget for USDA faces those
same fiscal realities. Our proposals focus and maintain
resources to meet our strategic goals. The numbers and data we
present today build upon the Omnibus Appropriations Bill for
2004, and of course this means we do not have the confusion we
had last year when we were working on the 2004 budget without a
2003 budget, which made comparison very difficult.
The 2005 budget focuses on our key priorities, as I
indicated, including strengthening food safety and pest and
disease prevention and eradication, continuing the
administration of the 2002 Farm Bill, and that includes many
increases in conservation funding, providing an unprecedented
funding for a food and nutrition safety net, expanding
agricultural trade, investing in our rural sector, supporting
basic and applied sciences, and improving USDA's program
delivery and customer service.
The 2005 USDA budget calls for $82 billion in spending.
This is an increase of $4 billion or about 5 percent above the
2004 level. The Department's request for discretionary
appropriations for ongoing programs within the jurisdiction of
the Subcommittee is $16.2 billion. Due to some user fee
proposals and other adjustments reflected in the budget, the
net amount requested is $14.9 billion.
And now, I would like to review some of the details: first,
looking at the safeguarding of America's homeland and
protecting the food supply, the President's 2005 budget funds
an interagency initiative to improve the Federal Government's
capability to rapidly identify and characterize a bioterrorist
attack. This initiative will improve national surveillance
capabilities in human health, food, agriculture and
environmental monitoring.
In keeping with the President's commitment to homeland
security, the USDA budget for 2005 includes $381 million, to
support the Food and Agriculture Defense Initiative. These
funds would enhance monitoring and surveillance of pests and
diseases in plants and animals, support research on emerging
animal diseases, increase the availability of vaccines,
establish a system to track select disease agents of plants;
expand the Regional Diagnostic Network to all 50 States; and
the bulk of the funding goes to completing the National Centers
for Animal Health in Ames, Iowa, which is the single largest
item under this initiative at $178 million.
The research and diagnostic activities at the Ames complex
are a critical part of our Bovine Spongiform Encephalopathy
(BSE) response as well as our work on other animal diseases. In
light of the discovery of a BSE-positive cow, first in Canada
last May 20 and another on December 23 in Washington State, I
announced on December 30 a series of actions to strengthen
protection of the food supply, public health and animal health.
USDA's actions are based on our BSE response plan, which
has been in place since 1990, and it has continuously evolved,
based on current knowledge of the disease. We are committed to
ensuring that there is a strong BSE surveillance program in
place in this country, and in that regard, on March 15, I
announced the details of an expanded surveillance program which
reflects the recommendations of the international scientific
panel.
Our goal is to greatly expand the testing of high-risk
cattle as well as testing a sampling of the normal, older
cattle population. The budget also requests increases in
funding for other BSE-related activities in the amount of $60
million, which includes increases for advanced animal testing,
acceleration of the National Animal Identification System and
some funds for the Grain Inspection, Packers and Stockyards
Administration to enable rapid response teams to deal with BSE-
related complaints regarding contracts or lack of prompt
payment.
It would also include some funds for our Food Safety and
Inspection Service to conduct monitoring and surveillance of
compliance with regulations for specified risk materials and
advanced meat recovery.
As we have responded to the BSE situation, we have been
constantly guided by what has been in the best interests of
public health. We received a report from an international panel
of experts about how the BSE incident in Washington was handled
which indicated that the Department had done a comprehensive
and thorough epidemiological investigation, and the
investigation was concluded on February 9.
Protecting the food supply and public health is one of the
primary missions of USDA, and this focus is reflected in the
budgets of this Administration. The budget for 2005 seeks a
record level of support for USDA's Food Safety and Inspection
Service, or what we call FSIS, meat and poultry food safety
programs as well as increases to strengthen food and
agriculture protection systems. These areas of our budget have
been top priorities for the Administration since we came into
office.
This additional funding continues to build upon a solid
record of achievement to further strengthen our agricultural
protection systems to ensure the integrity of our food supply.
The FSIS funding request would increase to a program level of
$952 million, which would be an increase of $61 million over
the 2004 level. This represents an increase of $170 million or
22 percent in food safety programs since the Administration
took office in 2001.
The $952 million for FSIS comprises $828 million in
appropriated funds and the continuation of existing user fees
as well as $124 million in new user fees for inspection
services that are provided beyond one approved inspection
shift. The FSIS funding would support 7,690 meat and poultry
inspectors, and it would provide specialized training for the
inspection work force, increase microbiological testing and
sampling, strengthen foreign surveillance programs and increase
public education efforts.
USDA is working on the Nation's fastest growing public
health problem--obesity. As part of the President's Healthier
US Initiative, USDA is working with the Department of Health
and Human Services to promote good nutrition and physical
activity. The Department's 2005 budget includes just over $700
million for nutrition research, education and promotion
programs, including an increase of $33 million, most of which
is focused on obesity-related initiatives.
I also would like to point out that for the first time, the
subject of a healthier food supply and the topic of obesity
were major issues at this year's Agricultural Outlook Forum. As
I said in my Outlook speech, we need to make people more aware
of the dangers of being overweight and figure out ways to
reverse what is becoming an increasingly dangerous trend in
America's eating habits.
Next, the President's budget supports the continued
implementation of the 2002 Farm Bill. Our employees at USDA
have worked very, very hard to implement this Farm Bill, and
they have done so quickly and efficiently. We appreciate their
outstanding efforts, both from our staff here in Washington,
DC, as well as the staff all over the country in our county and
state offices.
Funds are provided in the budget to support continued
implementation of the Farm Bill, and we are in the process of
implementing the largest and most far-reaching Farm Bill
conservation title ever. It represents an unprecedented
investment in conservation that will have significant and long-
lasting environmental benefits. Total program-level funding for
Farm Bill conservation programs increases from about $2.2
billion in 2001 when this Administration took office to $3.9
billion in the 2005 budget proposal. This is an increase of
$385 million or almost 11 percent over the amount of 2004.
The expanded programs include $2 billion for the
Conservation Reserve Program, an increase of $76 million over
2004; $1 billion for the Environmental Quality Incentives
(EQIP) Program, which is an increase of $25 million over 2004;
$295 million for the Wetlands Reserve Program, to enroll an
additional 200,000 acres, which is an increase of $15 million;
$209 million for the new Conservation Security Program, which
is an increase of $168 million; and $125 million for the Farm
and Ranch Lands Protection Program, an increase of $13 million.
The 2005 budget also reflects the Bush Administration's
continued commitment to nutrition and fighting hunger by
including a record $50.1 billion for domestic food assistance
programs, which is a $2.9 billion increase over 2004. Our
continued support for these programs follows the course of
compassion that has been set by President Bush. The Food and
Nutrition Service's budget supports an estimated 24.9 million
Food Stamp participants, and that compares to 23.7 million in
2004; a record level of 7.86 million low-income nutritionally
at-risk Women, Infants and Children Program (WIC) participants,
which compares to 7.8 million in fiscal year 2004; and an
average of 29.2 million school lunch children each day in the
school lunch program, and that compares to 28.7 million in
fiscal year 2004.
Particularly with the WIC and School Lunch Programs, we are
reaching more Americans and helping to educate them about
healthy eating and the importance of balanced diets. These
efforts help support the President's Healthier US Initiative,
and many of these services are delivered in cooperation with
our partners under the President's Faith-Based and Community
Initiatives. The budget includes a $3 billion contingency
reserve for the Food Stamp Program and $125 million contingency
reserve for the WIC program to be available to cover
unanticipated increases in participation in these programs.
One of the most important ways to expand opportunities for
American agriculture is through trade, by maintaining and
opening markets for our products. We have seen this close tie
between agriculture and markets with the BSE situation. The
2005 budget continues a strong commitment to export promotion
and foreign market development efforts by proposing $6.6
billion for our international programs and activities.
Since this Administration took office, these programs have
experienced significant growth by increasing by more than $1.4
billion or 27 percent since 2001. Funding for USDA's market
development programs, including the Market Access Program and
Cooperator Program are maintained at the current year level of
$173 million. Funding is provided for a new initiative to
modernize FAS's IT systems and applications and improve
telecommunications systems in order to provide more effective
and efficient services to cooperators and the public and to
help bolster our trade policy and trade expansion efforts.
A program level of $4.5 billion is provided for the
Commodity Credit Corporation export credit guarantees
activities. Concerning global food aid, the efficiency and
productivity of American farmers has allowed the United States
to lead the world in this important area. More than $1.5
billion is requested for U.S. foreign food assistance
activities, including $75 million for the McGovern-Dole
International Food for Education and Child Nutrition Program, a
50 percent increase over 2004. So clearly, this budget
continues to provide strong support for development of markets
and assistance to those most in need around the world.
We have also worked hard in this budget to provide funding
for infrastructure and to enhance economic opportunities and
the quality of life in rural America. The Administration
proposes $11.6 billion for rural development programs, down
from the 2004 level, due in large part from lower projections
of the demand for loans, particularly electric and distance
learning loans.
Of the total amount, $3.8 billion is for direct and
guaranteed Section 502 single-family housing loans. These
programs are a crucial part of USDA's effort to support the
President's Minority Homeownership Initiative, which has the
goal of homeownership for an additional 5.5 million minority
families by the end of the decade. In addition, $1.4 billion is
requested for the Water and Waste Disposal Loan Program, which
will provide about 650,000 rural families with new or improved
water and waste disposal facilities.
The budget proposes $331 million for broadband loans and
loan guarantees in 2005, building upon the $2.2 billion in
funding that has been provided over the last several years.
Finally, the budget supports the Department's strategic plan
and our continued efforts to implement the President's
management agenda, which focuses on improving performance and
results in government. USDA is one of only eight out of a total
of 26 Federal agencies to be scored at green, or the highest
level, for our progress toward all five of the major areas in
the President's management agenda, and for the second year in a
row and only the second time ever, USDA again received a clean
audit of our financial statements.
As part of our implementation of the President's management
agenda, USDA is working on several initiatives to better
integrate computer systems and technology support functions. In
so doing, we are providing employees with the tools necessary
to quickly and efficiently deliver services and to benefit our
customers. The 2005 budget will allow us to build on our
program delivery progress and our management priorities by
providing resources needed to improve customer service through
continued modernization of technology.
This includes $137 million in 2005, an increase of $18
million, to upgrade technology in the county office service
centers in order to continue to improve administration of farm
programs and customer service. Electronic government is a major
focus for USDA in 2004. By increasing our customers' ability to
interact with us over the Internet, we can save them and USDA
time and money. As part of these efforts, we are nearing
completion of a new basic computing infrastructure for all of
our field agencies so that employees and customers will be able
to share data electronically.
The budget also proposes to strengthen the security of the
Department's facilities and information technology. The budget
increases funds to focus on strengthening civil rights and
equal treatment under our programs. We need to ensure there are
adequate resources to implement our civil rights initiatives.
The budget proposes $22 million for USDA's Office of Civil
Rights, an increase of $4 million over 2004. This includes an
increase of $2 million to process complaints in a more timely
manner and an increase of $1 million to improve our tracking
and analyses of civil rights complaints.
That completes my overview of some of the key points in
this budget. Again to summarize: the 2005 budget is a
responsible budget, and it funds key priorities and programs at
USDA by focusing on the Food and Agriculture Defense
Initiative, BSE-related activities, record level support for
farm conservation programs, food safety and nutrition programs.
PREPARED STATEMENT
With that, Mr. Chairman and members of the Committee, I
want to again thank you for the opportunity to be here today.
We look forward to working with the Committee, and we would be
pleased, along with our team, to answer the questions posed by
the Committee.
Thank you very much.
[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 today to discuss the 2005 budget for the Department
of Agriculture (USDA). I have with me today Chief Economist, Keith
Collins; and our Budget Officer, Steve Dewhurst.
I want to thank the Committee again this year for its support of
USDA 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, as well as the other Members
to make progress on these issues during the 2005 budget process and
ensure strong programs for our Nation's farm sector--but as well--the
many other USDA mission areas.
The 2005 budget calls for $82 billion in spending, an increase of
$4 billion, or about 5 percent, above the level for 2004. Discretionary
outlays are estimated at $20.8 billion, a decrease of $720 million,
over 3 percent below the 2004 level. The Department's request for
discretionary appropriations for 2005 before this Committee is $16.2
billion. Due to some user fee proposals and other adjustments reflected
in the budget the net amount requested is $14.9 billion.
The Department's budget for 2005 is consistent with this
Administration's policy book ``Food and Agricultural Policy for the
21st Century'' and it supports the USDA's Strategic Plan. Both are
designed to enhance economic opportunities for agricultural producers;
support increased economic opportunities and improved quality of life
in rural America; protect America's food supply and agriculture system;
improve nutrition and health; and conserve and enhance our natural
resources and environment.
As you know, we are in a time of fiscal constraint. The President
has proposed a responsible budget across the Federal Government which
holds non-defense and non-homeland security discretionary spending
increases to less than 1 percent. At the same time, the budget funds
key priorities, such as the continuing War on Terror, protecting
Homeland Security, strengthening the economy and jobs as well as health
care affordability. It puts the Nation on track to reduce the deficit
by one-half within 5 years.
The budget for USDA faces those same fiscal realities. Because the
budget is constrained, the Department's request is focused on key
priorities which include:
--Ensuring a safe and wholesome food supply and safeguarding
America's homeland.
--Continuing administration of the 2002 Farm Bill--the major
provisions of which we have implemented in the past year--and
includes providing historic increases for conservation funding.
--Providing record funding for a food and nutrition safety net.
--Expanding agricultural trade.
--Providing housing for rural citizens and investing in America's
rural sector.
--Providing continued support for basic and applied sciences in
agriculture.
--Improving USDA's program delivery and customer service.
With this as an overview, I would now like to focus on the specific
budget proposals for 2005.
FOOD AND AGRICULTURE DEFENSE
The infrastructure developed in response to September 11, 2001, has
enabled the Department to become a strong partner in the
Administration's biodefense initiative. The Department has worked
closely with other Government agencies participating in the Homeland
Security Council to prepare for any potential bioterrorist acts. The
2005 budget funds an interagency initiative to improve the Federal
Government's capability to rapidly identify and deal with such threats.
This initiative will improve national surveillance capabilities in
human health, food, agriculture, and environmental monitoring. It will
promote data sharing and joint analysis among these sectors at the
Federal, State, and local levels and also will establish a
comprehensive Federal-level multi-agency integration capability led by
the Department of Homeland Security (DHS) to rapidly compile these
streams of data and preliminary analyses and integrate and analyze
them.
The highlights of the $381 million USDA request to support the Food
and Agriculture Defense Initiative include:
Strengthening food defense by requesting increases totaling $38
million to:
--Establish a Food Emergency Response Network (FERN) with
participating laboratories, including implementation of the
Electronic Laboratory Exchange Network (eLEXNET) and an
electronic methods repository;
--Develop diagnostic methods to quickly identify pathogens and
contaminated foods;
--Improve surveillance and monitoring of pathogens and other hazards
in meat, poultry and eggs and establishing connectivity with
the integration and analysis function at DHS; and
--Upgrades laboratories, improve physical security; and enhance
biosecurity training and education.
Strengthening agriculture defense by requesting increases of:
--$178 million to complete the consolidated state-of-the-art
biosafety level-3 (BSL-3) animal research and diagnostic
laboratory at Ames, Iowa;
--$50 million for the Animal and Plant Health Inspection Service
(APHIS) to substantially enhance the monitoring and
surveillance of pests and diseases of plants and animals,
increase the availability of vaccines through the national
veterinary vaccine bank, increase State Cooperative Agreements
to better identify plant and animal health threats, provide
biosurveillance connectivity with the integration and analysis
function at DHS, and establish a system to track select disease
agents of plants.
--$27 million for the Cooperative State Research, Education, and
Extension Service (CSREES) to expand the Regional Diagnostic
Network, and to establish a Higher Education Agrosecurity
Program that will provide capacity building grants to
universities for interdisciplinary degree programs to prepare
food defense professionals.
--$9 million for the Agricultural Research Service (ARS) to establish
a National Plant Disease Recovery System that will quickly
coordinate with the seed industry to provide producers with
resistant stock before the next planting season, and to conduct
research on identifying, preventing and controlling exotic
plant diseases.
BSE RELATED ACTIVITIES
The Department has taken aggressive actions to deal with the recent
detection of a cow that tested positive for bovine spongiform
encephalopathy (BSE) in the State of Washington. The actions taken were
based on a BSE response plan which has been in place since 1990 and has
been continuously updated to reflect the latest available knowledge
about this disease. As late as August 2003, Harvard University
reaffirmed the findings of an initial 2001 study that the risk of BSE
spreading extensively within the United States is low because of the
firewalls already in place. In general, we have effectively responded
to this incident.
--Our tracing efforts were remarkably successful. After an
international panel of experts indicated that the Department
had done a comprehensive and thorough epidemiological
investigation, our investigation was concluded on February 9.
The panel also indicated that actions the Department announced
on December 30 and subsequent the Food and Drug Administration
announcements have further enhanced the protections for human
and animal health.
--We also traced the products from the slaughter of these animals and
determined that high-risk products such as brain and spinal
cord did not enter the food system. Nevertheless, all of the
beef that came out of that plant on the day in question was
recalled.
--Throughout the investigation, we regularly held briefings to inform
the public about the incident. In one week's time we announced
a series of actions to further enhance the Department's already
strong safeguards. These included, among other actions, an
immediate ban on nonambulatory or so-called downer animals from
the food system and further restrictions on specified risk
materials such as brain and spinal cord from entering the food
supply. Retailers and food service outlets are reporting
virtually no adverse effects on consumer demand as a result of
the BSE finding.
--The Department's Chief Information Officer is overseeing the design
of a National Animal Identification Program. Every effort is
being taken in the design of this system to ensure it is
technology neutral, cost effective, and does not place an undue
cost burden on the producer.
--We are also in the process of approving the use of BSE rapid test
kits to enhance our national surveillance efforts.
--We have continued to work with trading partners. Regaining export
markets is a top priority for the Administration, and the
international response must reflect what science tells us.
Unfortunately, most export markets for U.S. beef, including key
buyers--Japan, Mexico, Korea and others--immediately closed
their markets to U.S. beef, accounting for 10 percent of U.S.
beef production that now must be absorbed in the domestic
market. The loss of exports had an immediate impact on the
cattle market, resulting in an initial drop of 15 to 20 percent
in cattle prices on cash and futures markets while remaining
above year-ago levels. Despite this decline, USDA's current fed
cattle price forecast of $74 to $79 per hundredweight remains
above the previous 5-year average and would be the second
highest average price in the past 11 years.
--We are committed to ensuring that a robust BSE surveillance program
continues in this country. On March 15, we announced the
details of our expanded surveillance program which is based on
recommendations of an international scientific review panel.
The enhanced program has a goal to test as many cattle as
possible in the high-risk population, as well as to test a
sampling of the normal, aged cattle population. USDA has begun
to prepare for the increased testing, with the anticipation
that the program will be ready to be fully implemented on June
1, 2004. In the meantime, BSE testing will continue at the
current rate, which is based on a plan to test 40,000 animals
in 2004. Testing will be conducted through USDA's National
Veterinary Services Laboratory in Ames, Iowa, and a network of
laboratories around the country.
As part of the President's Budget for 2005, we are requesting $60
million, an increase of $47 million which will permit us to:
--Further accelerate the implementation of a verifiable National
Animal ID System;
--Increase the current BSE surveillance program;
--Conduct advanced research and development of BSE testing
technologies;
--Strengthen the monitoring and surveillance of compliance with the
regulations for specified risk materials and advanced meat
recovery; and
--Dispatch rapid response teams to markets experiencing BSE related
complaints regarding contracts or lack of prompt payment.
BETTER NUTRITION FOR A HEALTHY US
USDA is also working on the Nation's fastest growing public health
problem--obesity. The Department has a special responsibility to ensure
that participation in nutrition assistance programs such as the School
Lunch and Breakfast programs, the Special Supplemental Nutrition
Program for Women, Infants and Children (WIC) and Food Stamps,
contributes as much as it can to healthier diets and improved health
outcomes. USDA research is essential in understanding the role of the
diet in obesity and healthy weight management. USDA along with its
Federal partners at the Department of Health and Human Services (DHHS)
is responsible for developing the revised Dietary Guidelines for
Americans to be issued jointly by USDA and DHHS in January 2005. On a
parallel track, the Department is undertaking a complete reassessment
and update of the Food Guide Pyramid. These documents are the
cornerstone of Federal nutrition promotion efforts directed at all
Americans. With these efforts, USDA plays a key role in the President's
Healthier US initiative. And as part of this, USDA is working closely
with DHHS to promote good nutrition and adequate physical activity.
The Department's 2005 budget includes about $700 million for
nutrition research, education, and promotion programs, including an
increase of $33 million which is focused mainly on obesity-related
initiatives. Spending for nutrition education and promotion programs
accounts for the largest share of this spending, over $540 million or
almost 80 percent in 2005. These Federal funds are augmented by
significant spending by State and local partners who conduct a wide
range of nutrition education and promotion activities designed by local
officials to meet local needs.
Spending for basic research on nutritional requirements, monitoring
food consumption patterns, analyzing social and behavioral factors
affecting diets, and conducting demonstration projects accounts for the
rest of our spending. We are a partner with the National Center for
Health Statistics for the food consumption data that supports research
on diets conducted by the growing number of Federal and non-Federal
scientists looking at the causes and possible ways to curb the obesity
epidemic.
FARM AND FOREIGN AGRICULTURAL SERVICES
Currently, major sectors of the diverse farm economy are
experiencing favorable market conditions. Net cash farm income was at a
record level in 2003. The President's budget for 2005 supports
continued administration of the Farm Bill which has now been largely
implemented, although work is proceeding on the substantial expansion
of the conservation programs provided by the bill. In addition, the
budget supports a strong crop insurance program and an aggressive
international trade program that will be critical to the continued
improvement on farm economy in the next few years.
Farm Program Delivery
The Farm Service Agency (FSA) salaries and expenses are funded at
$1.3 billion in 2005, an increase of $50.9 million over 2004. This
would support staffing levels of about 6,000 Federal staff years and
nearly 10,300 county non-Federal staff years, including about 1,000
temporary staff years. Temporary staff will be reduced from the high
levels required in 2003 and 2004 because the heavy workload associated
with the initial implementation of the new farm programs has been
completed. However, we expect the ongoing workload for FSA to remain at
significant levels in 2005. Therefore, permanent county non-Federal
staff levels are maintained at current levels. In addition, the budget
provides for an additional 100 Federal staff years to improve service
provided to farm credit borrowers. The budget also requests continued
funding for FSA's information technology (IT) efforts related to the
Service Center Modernization Initiative.
International Trade
Trade is vitally important for American agriculture. The United
States is the world's largest agricultural exporter. The value of our
agricultural exports equals nearly one-fourth of farm cash receipts,
making the agricultural sector twice as dependent on trade as the
overall U.S. economy. With gains in productive capacity continuing to
outpace growth in demand here at home, the economic growth and future
prosperity of America's farmers and ranchers depend heavily upon our
continued success in reducing trade barriers and expanding overseas
markets. Accordingly, the expansion of international market
opportunities is one of the key objectives set forth in the
Department's strategic plan.
The 2005 budget proposals fully support the Administration's
commitment to export expansion and overseas market development by
providing a program level of over $6.6 billion for the Department's
international programs and activities. These programs have increased
significantly since this Administration took office and have increased
by more than $1.4 billion, or 27 percent, since 2001.
The Foreign Agricultural Service (FAS) is the lead agency for the
Department's international activities. Through its network of 80
overseas offices and its headquarters staff here in Washington, FAS
carries out a wide variety of activities that contribute to expanding
and preserving overseas markets. Our budget requests $148 million for
FAS activities in 2005. This is an increase above the 2004 level of
nearly $12 million and is designed to ensure the agency's continued
ability to conduct its activities effectively and provide important
services to U.S. agriculture. This funding would enable FAS to meet
higher overseas operating costs, improve telecommunications systems,
and implement a high priority initiative to modernize the agency's IT
systems and applications.
The Department's export promotion and market development programs,
which FAS administers, play a key role in our efforts to expand
international market opportunities. Commodity Credit Corporation (CCC)
export credit guarantees are the largest of these programs. As overseas
markets for U.S. agricultural products continue to improve, that
improvement will be reflected in export sales facilitated under the
guarantee programs. For 2005, the budget projects a program level of
$4.5 billion for the guarantee programs, an increase of just over $250
million above the current estimate for 2004.
The budget continues funding for the Department's market
development programs, including the Market Access Program and
Cooperator Program, at the current level of $173 million. It also
includes $53 million for the Dairy Export Incentive Program and $28
million for the Export Enhancement Program.
The efficiency and productivity of our producers allows the United
States to be a leader in global food aid efforts. For 2005, the budget
supports a program level of over $1.5 billion for U.S. foreign food
assistance activities. This includes $1.3 billion for the Public Law
480 Title I credit and Title II donation programs. For the McGovern-
Dole International Food for Education and Child Nutrition Program,
funding is increased to $75 million, a 50 percent increase over 2004.
The budget also includes an estimated program level of $149 million for
the CCC-funded Food for Progress program, which is expected to support
400,000 metric tons of assistance as required by the authorizing
statute.
Farm Credit
The budget supports a program level of about $3.8 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 about $300 million higher than last year.
Due to lower subsidy costs for the direct loan programs, the amount of
subsidy requested is less than for 2004. In addition, funding has been
realigned to better accommodate the actual demand in these programs.
The budget also includes a request of $25 million for the emergency
loan program. Also, any unused funding from prior year appropriations
will carry over for use in 2005.
Crop Insurance
The budget provides full funding for the crop insurance program.
The budget includes ``such sums as may be necessary'' for the mandatory
costs associated with program delivery and the payment of indemnities.
The current estimate of the mandatory costs is about $3.7 billion.
The budget includes a request of $92 million for the discretionary
costs of the Rural Management Agency (RMA), an increase of $21 million
above the level provided in 2004. The increased funding is urgently
needed for the modernization of the RMA IT infrastructure as well as to
provide for 30 additional staff years. The additional staffing will be
used, in part, to monitor companies and producers participating in the
crop insurance program, to detect and prevent fraud, waste, and abuse.
MARKETING AND REGULATORY PROGRAMS
Marketing and Regulatory Program agencies provide 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 is a
primary responsibility of APHIS. The 2005 budget requests an
appropriation of $828 million for salaries and expenses, an increase of
about $112 million (16 percent) above the 2004 estimate. The majority
of this increase is for the Food and Agriculture Defense Initiative and
for BSE related activities.
Increases are also requested for efforts to deal with low-
pathogenic avian influenza, emerging plant pests (especially citrus
canker and Emerald Ash Borer), Mediterranean fruit fly, tuberculosis,
scrapie and a $6.6 million increase is requested to enhance the
Department's ability to strengthen its regulatory system for the
testing of biotechnology based crops.
Marketing
For 2005, the Agricultural Marketing Service (AMS) budget proposes
a program level of $732 million, of which $87 million or 12 percent, is
funded by appropriations and the remainder through user fees and
Section 32. AMS, in cooperation with the Food and Nutrition Service and
FSA, purchases commodities to meet the needs of domestic feeding
programs and to help stabilize market conditions. The 2005 budget
includes an increase of $10 million in appropriated funds to begin the
critically needed replacement of our outdated IT systems used by three
USDA agencies to manage and coordinate commodity orders, purchases, and
delivery.
Another important proposal in the marketing and regulatory programs
area involves the Grain Inspection, Packers and Stockyards
Administration (GIPSA). For 2005, the budget proposes a program level
for salaries and expenses of about $44 million. Of this amount, $20
million is devoted to grain inspection activities for standardization,
compliance, and methods development and $24 million is for Packers and
Stockyards Programs. The 2005 budget includes $7.7 million in increases
to:
--Conduct market surveillance and ensure that marketing and
procurement contracts are honored in the aftermath of the BSE
finding.
--Significantly upgrade the agency's IT functions, including the
ability to securely accept, analyze, and disseminate
information relevant to the livestock and grain trades.
--Monitor the various technologies that livestock and meatpacking
industries use to evaluate carcasses to ensure fair and
consistent use of those technologies. Producer compensation is
increasingly dependent not simply on the weight of the animals
they bring to slaughter, but the characteristics of the
carcasses as well (e.g., fat content).
--Enable GIPSA to better address and resolve international grain
trade issues, thus precluding disruption of U.S. exports.
The GIPSA budget includes two user fee proposals which have been
submitted to the authorizing committees. New user fees would be charged
to recover the costs of developing, reviewing, and maintaining official
U.S. grain standards used by the grain industry. Those who receive,
ship, store, or process grain would be charged fees estimated to total
about $6 million to cover these costs. Also, the Packers and Stockyards
Programs would be funded by new license fees of about $23 million that
would be required of packers, live poultry dealers, poultry processors,
stockyard owners, market agencies, and dealers as defined under the
Packers and Stockyards Act.
FOOD SAFETY
USDA plays a critical role in safeguarding the food supply and
plays a pivotal role in protecting the Nation's food supply from
bioterrorist attack. This Administration believes that continued
investment in the food safety infrastructure is necessary to achieve
USDA's goal of enhancing the protection and safety of the Nation's
agriculture and food supply.
For 2005, the budget for the Food Safety and Inspection Service
(FSIS) provides a program level of $952 million, an increase of $61
million over 2004. The budget includes an increase for pay to support
7,690 meat and poultry inspectors, which are necessary to provide
uninterrupted inspection services to the industry.
The budget for FSIS requests $5.0 million to continue the work
funded in 2003 and 2004 to fully enforce the Humane Methods of
Slaughter Act. With this funding, the agency has allocated 63 staff-
years to ensuring the humane treatment of livestock in 900 federally
inspected establishments. With the increased emphasis on humane
handling verification, the agency was able to increase humane handling
inspection procedures from 86,810 performed in 2002 to 111,117
performed in 2003, a 28 percent increase. Although difficult to
estimate, FSIS reports that a resultant increase in the number of
enforcement actions and violations was the result of training and
correlation efforts of FSIS District personnel, Front Line Supervisors
and veterinarians to better understand the application of the Agency's
rules and enforcement process to inhumane handling situations. As
recommended by the General Accounting Office, FSIS will continue to
make improvements in the inspection process to ensure proper
enforcement of the law and accurate tracking of both verification
activities and enforcement actions.
The budget includes an increase of approximately $33.6 million to
support programmatic improvements aimed at achieving FSIS' strategic
objective to reduce the prevalence of foodborne hazards from farm to
table. The majority of this increase is for the Food and Agriculture
Defense Initiative and BSE related activities.
The budget provides an increase of $7.1 million for a broad-based
training initiative for meat and poultry inspection personnel. This is
more than a 50 percent increase in the FSIS training budget from 2004.
Under this initiative, all entry level inspectors will receive formal
classroom training for performing basic inspection duties within one
year of employment. Currently, only 20 percent of new employees receive
this type of training. In addition, current inspectors will receive
supplemental training to improve the enforcement of the Pathogen
Reduction/Hazard Analysis and Critical Control Point Systems regulation
and food safety sampling. The increased level of training will improve
the consistency and effectiveness of inspectors in the performance of
their duties and ensure a safer food supply.
The 2004 budget also reproposes legislation submitted to Congress
in August 2003 to collect an additional $124 million in user fees
annually by recovering 100 percent of the cost of providing inspection
services beyond an approved primary shift. Assessing user fees in this
manner promotes equity among producers that have enough production for
a full second shift paid for by the Government and other establishments
that may only have enough production for a partial shift which they
must currently pay for themselves. 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 $50.1 billion for USDA's domestic nutrition
assistance programs, an increase of $2.9 billion, and the highest level
ever requested. The budget will ensure access to nutrition assistance
for low-income families and individuals as they work toward economic
self-sufficiency. USDA is working hard to provide information to help
improve nutritional intakes, increase breastfeeding rates, and reduce
obesity and overweight among Americans. In addition to its work with
the President's Healthier US Initiative, USDA will work with nutrition
assistance program stakeholders to identify strategies to improve
health outcomes for eligibles.
The WIC program is expected to be reauthorized this year and is
budgeted at $4.8 billion. This is a record high funding request, which
will help record numbers of low-income, at-risk participants. The
request continues special increments to fast track State information
systems development, increase breastfeeding rates through the use of
peer counselors, and increase support of childhood obesity prevention
projects. Ensuring a WIC Program that yields healthy birth outcomes and
nutritional habits with the best possible outcomes is a top
Administration priority.
The Food Stamp Program, the cornerstone of America's effort to
ensure access to an adequate diet for low-income people, is funded at
$33.6 billion. The budget anticipates modest food cost inflation and
participation growth of about 1.2 million participants or a 5 percent
increase above 2004 estimates. The budget includes a $3 billion
contingency reserve, $1.4 billion for Nutrition Assistance for Puerto
Rico, $2.4 billion for the Federal share of State administrative
expenses, and about $300 million to support employment and training.
Significant progress has been made in reducing payment errors in the
program. In 2002, 91.74 percent of payments were made accurately, with
overpayment error at 6.16 percent of benefits. Changes in financial
incentives to States for good management as authorized by the 2002 Farm
Bill are on track for implementation in 2005. This is the time line
anticipated by the Farm Bill, and this will help improve program access
as well as program integrity.
Child Nutrition Programs are funded at $11.4 billion with increases
provided for food cost inflation, growth in the number of meals served
and program integrity. Also, the budget includes funding for several
key provisions that are expiring such as the exclusion of military
housing allowances for eligibility determination. The Administration
will continue work with Congress on a reauthorization bill this Spring
to ensure that all aspects of the program continue without
interruption, including those key provisions expiring at the end of
March.
The Administration is committed to ensuring that funds for school
meals are well targeted to those in need and that any savings achieved
in reauthorization will be reinvested in the program.
NATURAL RESOURCES AND ENVIRONMENT
The 2002 Farm Bill represents an unprecedented commitment to
conservation and its continued implementation is an ongoing challenge
as well as a high priority for the Department. To do this successfully,
the budget proposes not only to increase funding for Farm Bill programs
but also to continue support for the underlying conservation programs
that form the basis for the Department's ability to address the full
range of conservation issues at the national, State, local and farm
levels.
The 2005 budget request for the Natural Resources Conservation
Service (NRCS) includes $1.9 billion in mandatory CCC financial
assistance funding for Farm Bill conservation programs in addition to
$2.0 billion for the Conservation Reserve Program administered by FSA.
This represents an increase of more than $200 million over the 2004
level and includes $1 billion for the Environmental Quality Incentives
Program that will allow nearly 40,000 producers to participate in this
vital program. It also includes $295 million for the Wetlands Reserve
Program to enable the Department to enroll an additional 200,000 acres.
Another $209 million will support expansion of the new Conservation
Security Program that supports ongoing conservation stewardship and
rewards those producers who maintain and enhance the condition of their
natural resources. The remaining $351 million in CCC funding will
support the other Farm Bill programs including the Grassland Reserve
Program, the Wildlife Habitat Incentives Program and the Farm and Ranch
Lands Protection Program.
On the appropriated side, the 2005 budget proposes a total funding
level of $908 million which includes $604 million for conservation
technical assistance (CTA) that forms the base program that supports
the Department's conservation partnership with State and local
entities. The budget also proposes a separate account totaling $92
million to fund technical assistance activities in support of the
Wetlands Reserve and Conservation Reserve Programs. This would limit
the amount of funding that would have to be redirected from other Farm
Bill programs and maximize the financial assistance made available to
producers. Overall CTA funding will also enable the Department to
continue to address natural resource issues such as maintaining
agricultural productivity and improving water quality and grazing
lands.
In the watershed programs area, the budget proposes reductions in
funding for watershed implementation, planning and rehabilitation. This
will enable NRCS to redirect some resources to address the more
pressing Farm Bill implementation issues while still funding the most
critical watershed work. With emergency spending being so difficult to
predict, the budget proposes to not seek appropriated funding for
emergency work and instead to address disaster funding as emergencies
arise.
Finally, the Department's 2005 budget will maintain its support for
all 375 Resource Conservation and Development areas that are now
authorized. This important activity will continue to improve State and
local leadership capabilities in planning, developing and carrying out
resource conservation programs.
RURAL DEVELOPMENT
Rural America is home to over 60 million people, most of whom are
not farmers. It is a place of employment for workers in numerous
industries that contribute to the Nation's wealth. It is also very
diverse, including areas that are facing declining population and
employment opportunities as well as areas that are growing at a rapid
pace and becoming urbanized. Thus, the challenges differ from area to
area, and require planning and coordination, to ensure that State and
local priorities are served along with national goals. USDA embraces
this reality and is committed to supporting increased economic
opportunities and improved quality of life in rural America.
The Department's rural development programs are both traditional
and forward looking. Many of these programs were created to bring
electricity, telephone service and other amenities to the Nation's
farms and rural towns. These programs have made enormous contributions
to economic productivity and quality of life of rural America. In
addition, USDA has played a significant role in providing homeownership
opportunities and rental housing for rural residents, and support for
rural business and industry.
Modern technology has brought new challenges. Perhaps the most
striking example is in the area of telecommunications. Basic telephone
service is no longer adequate. High speed broadband communications,
including data as well as voice transmission, are needed to stay
abreast of the ever changing world of information for both business and
personal use. In addition, new approaches are needed to diversify rural
economies, for example, through value-added processing of agricultural
products.
The 2005 budget supports $11.6 billion in loans, grants and
technical assistance for rural development. This is a realistic level
of support in light of the need to balance budgetary constraint against
the demands for program assistance. While it is significantly below the
level available for 2004, more than half of the reduction is due to
lower projections of the demand for selected loans.
In particular, the 2005 budget reflects a reduction in electric
loans from almost $5 billion in 2004 to $2.6 billion in 2005. In recent
years, Congress appropriated much higher levels for such loans than the
Administration requested. The additional funding, including the amount
available for 2004, has helped meet the needs of rural electric
cooperatives for upgrading their systems. Although more remains to be
done, it is anticipated that the high levels of lending in recent years
will provide a cushion that will result in fewer applications for 2005.
Also in the electric area, the 2005 budget does not include a $1
billion add-on by Congress to the 2004 Appropriations Act for
guaranteeing electric and telephone notes of certain private lenders.
This program was authorized in the 2002 Farm Bill. USDA published a
proposed rule for implementing the program on December 30, 2003, with a
60-day comment period. Until the public comments are reviewed and a
final rule published, it is difficult to know the extent of demand for
the program and for that reason the program was not included in the
2005 budget.
The 2005 budget also does not include funding for distance learning
and telemedicine loans, which accounts for a $300 million reduction
from 2004, because there has been little demand in the past few years
for these loans. Further, there is a reduction in discretionary funding
for broadband loans from $598 million in 2004 to about $331 million in
2005 because there remains a substantial amount of unused mandatory
carry-over funding that was provided by the 2002 Farm Bill. Currently,
there is about $1.6 billion available for such loans and about $1.0
billion in applications, many of which will require additional work
before they are complete and can be considered for funding.
For single family housing loans, the 2005 budget includes $1.1
billion for direct loans and $2.5 billion in guaranteed loans for
purchases and $225 million in guaranteed loans for refinancing. While
there is a proposed reduction in direct loans, guaranteed loans are
maintained at the 2004 levels. Further, legislation is being proposed
to allow guaranteed loans to exceed 100 percent of appraised value by
the amount of the fee on such loans. This proposal will make the
program more accessible to families with limited resources for paying
closing costs and will contribute to the President's Initiative to
Increase Minority Homeownership. The combined level of almost $3.8
billion in direct and guaranteed loans is expected to provide up to
40,000 homeownership opportunities for rural residents. Continuation of
recent increases in housing costs will reduce the number of
homeownership opportunities that can be provided in 2005 compared to
prior years.
The total water and waste disposal loan and grant program for 2005
is $1.42 billion compared to $1.67 billion for 2004. Within this total,
loans are maintained at about $1.1 billion. It should be noted that the
subsidy rate for these loans has increased such that we are asking you
to increase the budget authority for loans from $34 million in 2004 to
$90 million in 2005 just to reach the $1.1 billion level. This increase
is due to a rise in the Government's cost of financing the loans.
Grants would be reduced from $563 million in 2004 to $346 million in
2005. With interest rates remaining low, more projects are viable at a
higher loan to grant ratio.
In addition, the 2005 budget for rural rental housing continues the
Administration's policy to focus on servicing the existing portfolio
which includes about 17,000 projects that provide housing for about
450,000 rural households. Many of these projects require repair and
rehabilitation, for which the 2005 budget includes $60 million in
direct loans. It also includes $100 million in guaranteed loans for new
rental projects. In addition, the 2005 budget includes $592 million for
rental assistance payments, up from $581 million available in 2004.
Most of this funding is for the renewal of expiring contracts,
consistent with the policy established by Congress in the 2004
Appropriations Act to renew contracts on a 4-year cycle. About a
quarter of a million rural households receive this assistance. We are
nearing completion of a comprehensive study of the existing portfolio
to help identify opportunities for revitalizing the management of these
projects.
The budget includes $300 million in direct loans and $210 million
in guaranteed loans for essential community facilities that meet a wide
range of public safety, health and other purposes. This reflects a
reduction in direct loans, from $500 million in 2004, but exceeds the
2003 level of $261 million. This pattern mirrors a change in subsidy
costs which went from 6 percent in 2003 to zero in 2004 and up to 4
percent for 2005, due largely to very small differences in interest
rates. For business and industry programs, the 2005 budget supports
$600 million in guaranteed loans, up from $552 million in 2004 and $34
million for the intermediary re-lending program, compared to $40
million for 2004. Together, these programs are expected to account for
most of an estimated 66,000 jobs that will be created or saved by a
combination of rural development programs that assist business and
industry. This estimate reflects direct employment. Many rural
development programs also impact on employment indirectly by creating a
demand for products and services.
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.
The 2005 budget for the four Research, Education and Economics
(REE) agencies is approximately $2.4 billion. The budget proposes
reductions in unrequested earmarks of about $335 million, and program
increases in high priority areas, such as food and agriculture
security, genomics, human nutrition and climate change, where national
needs and returns are the greatest.
One increase directly related to the Food and Agriculture Defense
Initiative is to fund the remaining $178 million required to complete
the modernization of the National Centers for Animal Health in Ames,
Iowa. These funds will allow the completion of the $460 million project
that will provide a world-class research and testing facility
commensurate with the magnitude and economic importance of the $100
billion U.S. livestock industry. Upon completion in October 2007, there
will be nearly one million gross square feet of new and renovated
laboratory and support space. Extensive site and infrastructure
upgrades and miscellaneous office, animal care, and support facilities
will also be integrated into the design.
The 2005 budget for 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 research on invasive species
and animal diseases, such as bovine spongiform encephalopathy and foot
and mouth disease; as well as research which will lead to improved
vaccines and therapeutics, rapid diagnostic tests, and genome data on
biosecurity threat agents. The budget includes an increase of $5
million for research in support of the President's Healthier US
Initiative. And, as part of this, USDA will work closely with the
Department of Health and Human Services to promote good nutrition. In
support of the Administration's Food and Agriculture Defense
Initiative, food safety research will see an increase of $14 million to
support the development of rapid diagnostic tests that will accurately
detect and identify pathogenic bacteria, viruses and chemicals of food
safety concern. Finally, the ARS budget will provide $5 million to
support the President's Climate Change Research Initiative. These funds
will be used to conduct interagency research that will build the
scientific foundation for forecasting responses of ecosystems to
environmental changes and for developing resources that can be used to
support decision making.
The 2005 budget for CSREES includes funds to continue the formula
programs at current levels. There are 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 the recruitment of minority graduate students. Additional increases
are proposed for the Expanded Food and Nutrition Education Program
which assists low income youth and low-income families with children in
acquiring the skills, attitudes, and changed behavior necessary to
formulate nutritionally sound diets.
The proposal for the National Research Initiative (NRI) in the 2005
budget is consistent with the greater overall constraints of the 2005
budget. The proposal includes $180 million as compared to $164 million
in 2004, for the NRI to finance work that will have a far reaching
impact on such issues as genomics, nutrition, and obesity.
The budget for the Economic Research Service (ERS) includes an
increase of $8.7 million to develop a consumer data information system,
to provide information to support decision making in the food, health,
and consumer arenas. There are three components: a food market
surveillance system that will provide information to identify and
explain consumer food consumption patterns; a rapid consumer response
module that will provide real-time information on consumer reactions to
unforeseen events such as the recent discovery of BSE; and a flexible
consumer behavior survey module that will assess the relationship
between individuals' knowledge and attitudes about dietary guidance and
food safety and their food choices, complementing the Centers for
Disease Control and Prevention and ARS data on health outcomes and food
consumption.
The budget for the National Agricultural Statistics Service (NASS)
includes an increase for two initiatives to improve its statistical
programs, and a decrease of $2.6 million for the Census of Agriculture,
reflecting the decrease in staffing and activity levels to be realized
in 2005 due to the cyclical nature of the 5-year census program.
To improve NASS' statistical accuracy, an increase of $7.4 million
is requested to continue the restoration and modernization of its 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 payment rates provided under the 2002 Farm
Bill.
The second initiative requires an increase of $2.5 million for
NASS' Locality-Based Agricultural County estimates program to continue
the improvements begun in 2003. These local estimates are one of the
most requested data sets, and are especially important to RMA for their
risk rating process, (affecting premium levels paid by producers), and
to FSA for calculating national loan deficiency payments.
CIVIL RIGHTS
This budget will allow the Assistant Secretary for Civil Rights to
continue making progress in addressing Equal Employment Opportunity
(EEO) and Program-related civil rights issues. The Assistant Secretary
for Civil Rights also has responsibility for outreach and conflict
prevention and resolution. The challenging task of implementing changes
within USDA's civil rights organization is now underway. A
comprehensive action plan has been developed to address structural,
operational, procedural accountability and systems challenges.
This budget is critical in ensuring adequate resources to implement
Civil Rights initiatives. Specifically, the budget will support a
reduction in the time it takes to process both EEO and Program-related
complaints. The Department continues to make progress toward meeting
regulatory timeframes for complaint processing. Tracking and analysis
of complaints will be improved and analytical information will be used
to identify further improvements and allocate resources. Additional
funds will be devoted to technical assistance, training, and outreach
activities.
This budget clearly reflects the high priority that the Department
places on providing equal opportunity, equal access and fair treatment
for all USDA customers and employees. .
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.
Due to the efforts of these offices, the Department has made
significant progress in improving management. For example, the
Department received its first-ever unqualified or ``clean'' opinion on
the 2002 financial statements and received a clean opinion again in
2003. To meet the mandate of the Government Paperwork Elimination Act,
USDA agencies are deploying new departmentwide electronic signature
technologies that allow customers to conduct business transactions over
the Internet, saving both customers and the Department time and money.
The 2005 budget builds upon that progress by continuing funding
levels for these offices and providing key funding increases in order
to:
--Continue efforts to modernize the Service Center agencies (FSA,
NRCS, and the Rural Development) IT activities to improve
efficiency and customer service. As part of this initiative,
efforts to expand the use of the Geographic Information Systems
continue and will lead to improved soil and land-use analyses.
A scheduled integration of the IT support functions of the
Service Center agencies into a single organization under the
Chief Information Officer will further improve these
activities.
--Strengthen the security of the Department's facilities and IT
systems through certifying and accrediting USDA systems,
improving a Departmentwide Information Survivability program,
implementing an automated risk management system, and
establishing a Cyber-Security Operations Center.
--Support the creation of remote backup capabilities to protect the
National Finance Center accounting, payroll and related
services data for USDA and other agencies from malicious
intrusions and natural catastrophes.
--Implement an electronic commodity market information system that
will consolidate all of the Department's commodity data,
analyses and forecasts into a single public website.
--Support the Administration's goal to increase procurement of
biobased products, with the purpose of creating new economic
opportunities in rural areas while reducing our dependence on
fossil energy-based products derived from foreign oil and
natural gas. The Office of the Chief Economist (OCE) will
implement and administer a government-wide biobased product
procurement program, mandated by the 2002 Farm Bill. OCE will
work with Departmental Administration to develop a model
biobased product procurement plan that can be adopted by
Federal agencies, and will support interagency biobased product
procurement efforts.
--Continue renovations of the South Building to ensure that employees
and customers have a safe and modern working environment.
That concludes my statement. I look forward to working with the
Committee on the 2005 budget so that we can better serve those who rely
on USDA programs and services.
NATIONAL ANIMAL IDENTIFICATION PROGRAM
Senator Bennett. Thank you very much, Madam Secretary. We
appreciate your statement, and we appreciate your being here.
I understand you are working to design a National Animal
Identification Program. Can you tell us how you envision such a
program being implemented? Any timing that you might have on
this? And do you expect it to be mandatory or voluntary? And do
you have statutory authority to implement this, or when you
have got the work done, are you going to come back to the
Congress and ask for additional authority? Could you explore
that whole area with us?
Secretary Veneman. I will, Mr. Chairman, and thank you for
that question.
As you know, on December 30, I announced aggressive actions
that we were taking in response to the BSE find on December 23.
One of the things I said we would do is accelerate a national
verifiable system of animal identification. A tremendous amount
of work had been done over the past 18 months involving an
effort by a number of agriculture producing groups, and
government employees to look at the kinds of standards that
should be applied in an animal identification system.
So we were fortunate that the work had already been done. I
then asked our Chief Information Officer to begin to look at
how do we put together the architecture for such a system. As
we continued into this process, we expanded our CIO's group to
include Keith Collins, our Chief Economist; and Nancy Bryson,
our General Counsel, because of the legal issues involved, and
they are now in the process of putting together an overall plan
with recommendations. I will have Keith comment on that.
With regard to the authorities, we have also been looking
at that issue, and as I have testified at other hearings, the
one issue that is of concern to many of the producers is making
sure that they can maintain confidentiality of the information
that will be put into this system. We have been working with a
number of the Committees to determine the kind of statutory
language we may need to ensure that information provided into
this system can be maintained as confidential information.
I would like Keith Collins to comment briefly on what the
USDA committee has been doing on this system.
Mr. Collins. I would be happy to do that, Madam Secretary.
A lot of work has been done, as the Secretary said,
particularly by a group called the USAIP, United States Animal
Identification Plan team, which represents some 100 people and
70 organizations. They have developed a tremendous amount of
infrastructure recommendations such as data standards for
identifying premises, for identifying animals, and for tracking
movements.
What we have envisioned is to be able to implement a
national plan, first on a voluntary basis because we have such
a complicated animal agricultural sector in the United States
with very little experience with individual animal
identification. A survey taken in 1997 indicated that about
half of all operations had no experience whatsoever with
individual animal identification.
When you consider that we have over 1 million cattle
operations alone, and we have some 3,000 meat packing and feed
lot operations in excess of that, we felt it was important to
start this program on a voluntary basis. We believe that for it
to work over time, all animals will have to be in the system,
so at some point, this could very well become a mandatory
program.
The first thing we want to do is to look at the USDA-funded
programs that have operated over the last couple of years and
select one of those systems to serve as the national animal
allocator for premise numbers and a national animal allocator
for individual animal numbers. Once we scale up one of the
existing systems to be able to operate in that capacity, then,
we plan to work with states, with tribes, and eventually with
third parties to, through cooperative agreements, and some
funding by USDA, enable them to interface with the national
premise allocator and with the animal number allocator.
Our first priority would be to issue premise numbers,
identify places where animals are located, develop a uniform
definition of a premise, sign up states, tribes and third
parties and issue premise numbers. As you know, in this budget,
there is a request for $33 million for 2005 to continue the
development of that process that I just described. That
initiative would grow in 2005.
Senator Bennett. Fine, thank you very much.
Senator Kohl.
HUNGER TASK FORCE PILOT PROGRAM
Senator Kohl. Madam Secretary, in March 2003, I was able to
assist a nonprofit in Milwaukee, the Hunger Task Force, in
receiving approval from the USDA to carry out an innovative
pilot program. They received nonfat dry milk from USDA and
worked with a local Wisconsin dairy to turn this into about
20,000 pounds of mozzarella cheese.
The cheese was distributed to needy families at food
pantries throughout the region, and it was very popular.
Ninety-three percent of the recipients surveyed said that they
would much rather receive cheese than nonfat dry milk. Because
it was such a popular program, the Hunger Task Force has asked
USDA to let them continue their program. They would propose to
use 516,000 pounds of nonfat dry milk every year, less than
one-half of 1 percent of the 960 million pounds USDA has in
storage.
As you know, we have been working on this together for a
year now, and we have talked about it, you and I and your
Department a great deal. It would be nice if we could reach a
conclusion. Is it possible that you have anything to say to us
on this issue?
Secretary Veneman. Well, Senator, as you and I discussed, I
indicated to you that after a review of this pilot program,
there are significant concerns that have been raised regarding
the operation of the program from the perspective of how it
interrelates with the dairy price support program, particularly
if the pilot goes beyond the limited application it now has.
Given the conversations that you and I had yesterday, we
will be agreeing to extend the pilot program for a year, under
the limited basis, to further evaluate the pilot. But again,
there are some significant concerns over the long term that are
being looked at both in terms of the price support program and
the overall impact on the dairy program.
Senator Kohl. Well, I consider that to be a very positive
development, and I want to thank you for your willingness to be
so cooperative and supportive. I know that the Hunger Task
Force, and more importantly, the people they serve, will be
very gratified by your response and will feel indebted to you
for this. Thank you so much.
WIC CONTINGENCY FUNDS
Madam Secretary, it is my understanding that states are
already starting to take action to conserve WIC dollars because
they are afraid they do not have enough money to finish out
this year. As you know, we have a $125 million contingency fund
to prevent things like this from happening, and states need to
be given as much advance notice as possible if additional money
will be made available. Do you anticipate using any of the
contingency fund this year, and if so, will an announcement be
made with regard to this?
Secretary Veneman. We are reviewing the possibility, for
the very reasons that you state, of tapping into that
contingency fund primarily because of increased prices for
formula. That has been the primary driver in the increased cost
of the WIC program. So we are looking very carefully at the
possibility of tapping into that contingency reserve. Of
course, that would have implications for the budget you are now
considering, because it is anticipated in the 2005 budget
proposal that the reserve would not have been tapped into and
would roll forward.
So all of that has to be considered, but given the
difficulty that many of the states are having, I think we will
be looking very carefully at tapping into some of that reserve
for 2004.
ANIMAL WELFARE ACT VIOLATIONS
Senator Kohl. All right. As you know, included in the
fiscal year 2004 bill is $800,000 to help address violations of
the Animal Welfare Act, including illegal animal fighting.
Along with other problems, bird fighting played a key role in
spreading Exotic Newcastle Disease in 2002 and 2003, which
ultimately cost taxpayers about $200 million to contain. I know
your department has tried to develop some cases against people
who have participated in this activity but has had a tough time
because the Federal law provides only misdemeanor penalties,
and the U.S. attorneys are reluctant to prosecute misdemeanor
cases.
Does the administration support legislation, S. 736, to
upgrade the penalties for Federal animal fighting violations
from a misdemeanor to a felony, and if not, do you have
suggestions on how to deal with this problem?
Secretary Veneman. Senator Kohl, I absolutely agree with
you that this is a serious issue. We encountered the outbreak
of Exotic Newcastle Disease, that was focused in the area of
Southern California. Not only did we begin to better understand
the problem of birds that were being transported for bird
fighting purposes but also I think all of our regulatory
agencies and the state agencies, including the state regulatory
agencies, were surprised to find out just how many--what we
call backyard birds--were in homes around Southern California,
in the L.A. area, which made the task of controlling Exotic
Newcastle Disease and looking for the problems much more
difficult.
We worked with our Inspector General and with our Animal
and Plant Health Inspection Service and with local law
enforcement to see how we could better control some of the
movement of these animals and birds. Of course, another problem
with the birds is the live bird markets. There has been a lot
of concern expressed about that, particularly with the
outbreaks of avian influenza here on the East Coast.
I am not familiar with the penalties legislation that you
have indicated. We would be happy to review it to determine
whether or not, with our authorities, it would provide the
kinds of assistance that would help us better control some of
this movement of birds that can cause these animal diseases. As
you know, these outbreaks have a tremendous impact on our
international trade when we get these diseases of poultry and
other animals. We have had several disruptions over the past 2
or 3 years, and we have been doing everything we can to address
these issues as completely and effectively as we can.
CENTRAL FILING SYSTEM PROGRAMS
Senator Kohl. All right. Mr. Chairman, I had just one other
question regarding current central filing system programs and
the need to eliminate any potential for identity theft, which
was brought to my attention by the Wisconsin Department of
Financial Institutions.
However, in the interest of preserving time, I will submit
that for the record and look for a response. Thank you, Mr.
Chairman.
Senator Bennett. Thank you. We can get to it in the next
round if you are so inclined.
Senator Craig.
Senator Craig. Thank you, Mr. Chairman.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Madam Secretary, the Chairman asked the first question that
I had planned to, and I appreciate your response to a national
ID system. Senator Hagel, myself, and a good number of others
are looking at different approaches. But we do appreciate your
sensitivity to it, the Department's. A lot of work--you are
right--has already been done. The vet sciences and all of that
type of thing; I am glad you are approaching it with caution in
the sense of timing and testing things.
We here in the Congress sometimes think we are pretty
smart, but we are not as smart as the cattlemen when it comes
to knowing how something will work on the ground that can
effectively develop a chain of identification, and I
appreciate, and I have had the concern of confidentiality
expressed to me by a variety of our cattlemen. At the same
time, they know, and they are ready to respond to a national ID
system as long as it is the right system and it works, and it
is something that is manageable and cost-effective.
We dare not, in a marginal industry at times, drive up the
costs simply because we are going to command and control a
system. It has to function.
NATIONAL RURAL DEVELOPMENT PARTNERSHIP
Through the decade of the nineties, Idaho was not unlike
other States. Many of our urban areas prospered, and many of
our rural areas floundered. And as a result of that executive
order by President Bush in 2002 to look at rural economic
development was the right thing to do. And we here on the Hill
responded; I responded with legislation to develop a National
Rural Development Partnership. It happened. And we have it
implemented, now, across America and beginning to work.
Unfortunately, although I have tried hard to secure stable
funding for this what I believe is a common sense vision of
bringing together varieties of resources and focusing them
effectively in a teaming approach as the kind that the
executive order and our President proposed, we are still
struggling to be able to effectively do that with natural
resources or with resources. I have discussed the issue with
former Rural Development Secretary Tom Dorr, and frankly, we
have not seen much change.
With resources as scarce as they are, what are your
thoughts in regard to the NRDP with its role in helping rural
communities and states better coordinate and understand the
resources that are available to them?
Secretary Veneman. As you indicate, our Rural Development
programs are an important part of the USDA portfolio, one that
many people often forget, and I think that one of the things
that former Under Secretary Dorr was able to do was to help
people to understand that we need to look at these programs as
the venture capital for rural America. And I think that concept
is very appropriate as we look at these kinds of programs.
One of the things that our Rural Development team has done
is they have begun to put together a new partnership of all of
the Rural Development agencies and programs, so that they are
working in much more of a coordinated effort with rural
communities. I think this partnership will be very positive as
we implement it and go forward with it because rural
communities are often going to one of our housing programs, for
one thing, and somewhere else for an economic development
grant.
If we can begin to integrate our efforts more with specific
communities, I think it will help to bring together a number of
the kinds of issues that you are talking about with the Rural
Development Partnerships where we are also trying to work with
the States and the local communities.
We have tried to be very forward looking in terms of our
Rural Development programs. Our housing initiatives,
especially, have been ones where we have really tried to target
towards homeownership. We have our business development loans
and our business loans and grants for rural businesses that can
help stimulate economic activity. We also have a range of
utility loans and water and sewer loans, which are very
popular, and all of these programs help rural America have the
kind of infrastructure they need to attract capital and attract
jobs that they need to thrive for the future.
So we certainly will continue to work with you on the
issues of rural development as we move forward.
Senator Craig. Well, thank you, Mr. Chairman.
Teaming in this issue is phenomenally important. The
coordination of bringing them all together, instead of
communities rushing one place and another to try to find
resources is clearly the right approach, and I do believe the
partnership is moving in that direction to do a comprehensive,
coordinated effort, and so, I encourage you to pursue that. We
will try to find the bucks to help you pursue it a little more
aggressively than your budget reflects, because many of our
rural communities are really struggling to come alive in a new
context that agriculture will just not provide them anymore.
Thank you.
Senator Bennett. Thank you.
Senator Durbin.
Senator Durbin. Thanks, Mr. Chairman.
Secretary Veneman, welcome, and I welcome all those who are
with you, especially your chief economist, Dr. Keith Collins,
and your budget officer, Stephen Dewhurst. They are gifted,
patient, long-suffering stalwarts of the U.S. Department of
Agriculture who have in their careers seen more of Congressmen
and Senators than any living American----
With the possible exception of the attending physician in
the Capitol.
And I am glad that they are with you today.
SINGLE FOOD SAFETY AGENCY
We spend a lot of time talking about food safety, and we
certainly have since we found that one sick cow. And I have
been pushing for a single food safety agency to combine the 12
different agencies of the Federal Government that have some
mandate when it comes to food safety and the 35 different laws
and the scores of committees. I have really been able to
convince every aspiring Secretary of Agriculture and every
retiring Secretary of Agriculture. I just had my problem with
current Secretaries of Agriculture who do not want to support
it.
So this is your chance to step out and to say it is time
for us to get together on a single, science-driven food safety
agency; that it is mindless to have the Food and Drug
Administration responsible for the feed given to cattle and the
USDA responsible for the cattle once fed, and it is time to put
it all under one roof. I give you that chance at this moment.
Secretary Veneman. Well, Senator, you and I have talked
about this issue on other occasions, and as you know, I think
it is very important for us to coordinate very carefully on
food safety issues. We have made a concerted effort in this
Administration to do just that, and in fact, we have been
working very, very closely with the Food and Drug
Administration throughout the issue of the BSE find.
The FDA has been involved in our briefings with the press
and they have been involved in our meetings in determining
where we go from here. Again, we have worked very, very closely
with them. There has been a lot of discussion about forming a
separate agency, taking, for example, the Food Safety and
Inspection Service out of USDA, and along with FDA, putting it
into a brand new agency.
There are pros and cons to that strategy, but I would say
to you that I think that the BSE situation has illustrated one
reason why it has been so important to have the Food Safety and
Inspection Service in the U.S. Department of Agriculture, and
that is the intersection with BSE between animal health and
human health and the safety of the food supply given an animal
health issue. As you know, these two agencies were under the
same Undersecretary or Assistant Secretary for a number of
years in USDA. They were split apart about 10 years ago but are
still under the same department in USDA.
We have found that these agencies have had to work
seamlessly throughout this BSE incident. I think that as hard
as we are working with FDA, it would not have been as easy to
begin the traceback, which we were doing through the Animal and
Plant Health Inspection Service, when we found the BSE cow and
then the trace forward to the product, which we were doing
through the Food Safety and Inspection Service.
All of these things have been very, very well coordinated
as a result of the fact that we have had the agencies together
in USDA.
Senator Durbin. Well, I will not dwell on the question,
because as I said, no current Secretary of Agriculture every
supports it.
Once you have retired, you will be in my corner.
But that will be many years from now.
BSE TESTING
Let me say, though, that the logic behind the creation of
the Department of Homeland Security is the same logic behind
bringing together food safety. I want to ask you specifically
about the announcement of the USDA about testing for BSE:
200,000 cattle from high risk, 20,000 from normally old cattle.
I have written to you three different letters, three different
subjects, I should say, on BSE, soybean rust and childhood
obesity, and I am hoping that your Department can get me a
response soon to all of those letters.
In the meantime, though, as I understand it, we do not know
the ambulatory status of the Washington State holstein cow that
tested positive. I understand an investigation by the OIG has
been opened. If it turns out that the only animal that has been
tested for BSE in the United States was clinically normal and
was found only through chance, then we must question the USDA's
BSE surveillance program that focuses only on suspect,
nonambulatory and dead cattle.
So I would like to ask you, how do you happen to believe
that it makes sense for us, since we have millions of cattle,
mostly aged dairy cows in the United States, that are older
than the FDA ruminant feed restrictions of August 1997 not to
be universally testing those older animals; instead, taking a
very small sample which may not even tell the story of what
happened in Washington State?
Secretary Veneman. Senator, as you know, we recently
announced our expanded surveillance plan on March 15. One of
the reasons that we wanted to wait to make an announcement and
to decide on our surveillance plan is that we wanted to wait
for the international review committee to return with their
analysis of how we conducted the BSE investigation and what
steps we should undertake in addition to what we have already
done to move forward.
We had already said we were going to increase our
surveillance, but we asked them for specific recommendations on
surveillance. What they recommended was an expanded
surveillance plan for a period of about a year to get a
baseline of what the extent of the BSE problem is in the United
States. As a result of that, we worked with our Animal and
Plant Health Inspection Service as well as our Chief
Economist's Office to get a statistically valid sampling
process established. Now, that is still targeting, as the
international organizations recommend, the highest-risk
animals: those with central nervous system disorder signs,
those that are dead, dying, or downers.
We know from the countries that have had a much greater
incidence of BSE than we obviously have had in North America,
that these are the cows that are most likely to have BSE. But
as you indicate, we included in our surveillance plan a random
sampling of older, healthy animals, and the importance of that
is to target the animals you are talking about, that is, those
animals that are older than the feed ban primarily. Not just to
say that if animals are over 30 months, we are going to
randomly sample them but to really target those animals that
are over the age of the feed ban. We think it is important to
get a random sampling of that group of animals.
I think you have probably seen a lot of the debate about
this particular instance in Moses Lake in Washington State.
There has been a great amount of debate about whether or not
this cow was indeed a downer. I have to say that as our OIG is
investigating it, the Government Reform Committee has been very
involved in looking into this.
Our veterinarian from FSIS clearly deemed this cow to be
nonambulatory, a downer, thereby putting it in the higher risk
category. But apparently, according to this process, this
company was bringing in animals that they called, ``back door
animals'' and many of those animals were tested under the BSE
testing protocol, but the company was not calling them downers
because they were saying that we do not kill any downers in our
plant, because they had customers who did not want downer cows.
Senator Durbin. It has been 4 months, and we still cannot
answer that basic question: what was the ambulatory status of
this diseased cow?
Secretary Veneman. Our veterinarian deemed it to be a
downer.
Senator Durbin. Nonambulatory.
Secretary Veneman. Right.
Senator Durbin. Mr. Chairman, I know my time has expired. I
have a series of questions on BSE, soybean rust, which was not
mentioned in the Secretary's remarks, but I have spoken to her
personally, and on the whole question of school lunch programs
dealing with childhood obesity, which I would like to submit to
her for response.
Thank you, Mr. Chairman.
Senator Bennett. Be happy to do that, and we do intend to
have another round if you----
Senator Durbin. Thank you.
Senator Bennett. If you have got an opportunity.
Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
Madam Secretary, thank you for being here and thanks to
your staff.
BSE AND CATTLE FROM CANADA
I want to just make a couple of comments and then follow
with a question, and the comments will not surprise you. One is
the issue of BSE or mad cow disease. You know I have written to
you, and I hope very much that we will not move quickly to open
the border to live cattle with Canada. We know there is
discussion going on, there is a process, but I feel very
strongly about that issue. I regret very much that a case of
mad cow disease was found in Canada; a case of BSE was found in
the United States, apparently with a cow that was imported from
Canada.
But first and foremost, our objective must be to protect
our beef industry, and I really hope you will move cautiously.
I do not think this is the time to open the market to the
import of live cattle from Canada. Second, I want to again say,
many of us, as you know, feel very strongly about country of
origin labeling. And we have had a long, tortured debate about
this legislation, and, you know, this has kicked around a long
while. We need to move on that and get that done.
AGRICULTURAL TRADE AND CAFTA
And third, I want to discuss something that you are not
directly involved in in terms of responsibility, but I know you
have an acquaintance of, and that is the agricultural trade
issue. I would just say for the interest of the administration,
the negotiation of CAFTA, the negotiation of US-Australia falls
far short, from my standpoint. I regrettably would oppose CAFTA
if it is brought to the floor, and with respect to Australia,
the promise by the trade ambassador to deal with the
elimination of state trading enterprises was not done with
Australia, and I regret that.
STANDARD REINSURANCE AGREEMENT
So those are just a couple of things, and I know that it is
not your primary responsibility to deal with ag trade. That is
a message, really, for the Trade Ambassador.
I would like to mention to you, the Risk Management Agency
of USDA is engaged in negotiations with the crop insurance
providers for a new product called SRA or Standard Reinsurance
Agreement, and I have been visited by farm organizations and
others about it. One major farm organization that came in to
talk to me about the first draft of the SRA, were very
concerned about it.
They said that draft was so onerous that a number of
private companies and reinsurers could abandon their
participation in the program, leaving farmers and ranchers with
less competitiveness than they have today. I do not admit to
being an expert in this area, but I will just ask you to take a
look at what is happening there, because having crop insurance
that works, that is good for producers, is very important to
us, and we do not want to leave farmers and ranchers without
the choices that they need and deserve.
IMPORTATION OF LIVE CATTLE FROM CANADA
We, I believe, are going to be meeting on another subject
dealing with the issue of broadband loans, which is a program,
I know, that you are beginning to initiate, and I am anxious to
get that done. We will talk about that at a later time. But I
did want to just mention those issues, and if you would give me
just an answer on the issue of the importation of live cattle
from Canada, given the BSE situation. Would you respond to
that?
Secretary Veneman. I would be happy to, Senator.
As you know, when Canada announced that it had a single
find of BSE on May 20, our standard protocol was to close the
border, which we did. We then looked from a risk-based
perspective, a scientific perspective, at reopening the border
for the lowest-risk product, which was deemed to be boneless
boxed beef from animals under 30 months, and we did that. The
effective time of that was about the end of August, the
beginning of September.
We then also published a proposed rule that would allow
live cattle to reenter the U.S. market that were under 30
months of age and that were going directly to slaughter. I know
that you said in your remarks that we need to protect our beef
industry. This would have not put these cattle into the general
population, but they would have had to be destined directly for
slaughter.
The comment period on that rule was to close on January 5.
This, as you know, was just after we discovered BSE in this
country. So on January 2, I announced that we would allow the
comment period to close, but that we would not take action on
the proposed rule until we had time to finish our
investigation, which we did in February. In March, we
reproposed the same, or a very similar rule, I should say, and
opened the comment period again for 30 days. The comment period
will close, I think, on April 7, and we will then evaluate the
comments that we have received.
But again, this border opening would be limited, and as I
have been around the country lately, I realize there is a lot
of confusion about what this importation rule would do. This
rule, as it is proposed, would limit importation to those
animals under 30 months destined for slaughter. My Canadian
counterpart indicates that we should move quickly to allow all
cattle to come into the United States, but the way we set this
up is in a two-stage process based upon the risk.
So I think that it is very important that we take actions
with regard to trade on sound science. We have also been
working with other countries. Obviously, we have lost most of
our beef trade because of the BSE find here. We have had some
success in partially reopening the Mexican market. We are
working hard with our markets in Asia and other places. But it
is very important that we set a good example in terms of basing
our decisions that pertain to border opening and other issues
on sound science, and that is what we have attempted to do
throughout this BSE situation.
Senator Dorgan. If I might just make a final comment, Mr.
Chairman, I understand that. I also believe that in Japan, they
have discovered animals with BSE, mad cow disease, under 30
months of age. I wish no ill for the Canadian producers. Our
heart breaks for them as well. But our first and foremost job
is to protect our country's industry. And with the release a
week or so ago of information about two Canadian feed plants,
you know, the question is what were British cows, cows that
were banned for importation into the United States since 1988,
doing in Canadian cattle feed in 1997, 9 years later?
All of those things just raise a lot of questions, and I
would just ask that we not rush to open that border to the
import of live cattle from Canada. I think it is very
important.
Madam Secretary, thanks for all of the work that you do. We
from time to time agree on things and disagree on things, but
your office is always responsive, and I appreciate that.
Secretary Veneman. Thank you.
Senator Bennett. Senator Bond.
Senator Bond. Thank you very much, Mr. Chairman.
EXPORTS TRANSPORTATION INFRASTRUCTURE
Madam Secretary, I do not know if you remember or if you
saw the December 1 last year Wall Street Journal. The headline
on the front page said railroad log jams threaten boom in the
farm belt, delays in grain shipments reduce potential profits,
may affect overall economy. Log jams worst since 1997. Corn and
soybean on the ground; rail prices doubled over the past 6
months, close quotes.
In general, in your view, how critical is it that we have
efficient shipment transportation options for our exporters,
and is an efficient waterways system essential if we are going
to export in an increasingly competitive international
marketplace?
Secretary Veneman. Well, Senator, I believe it is. As you
know, we are very dependent in our agriculture sector on the
export market. We produce much more than we consume, and so,
the global market is very important. We are projecting that our
agricultural exports for this year, 2004, will be at $59
billion. This is even with the difficulties we have had because
of our beef exports and our poultry exports with BSE and avian
influenza. That exports projection is nearing our record high
level of exports of $60 billion in 1996.
But one of the reasons we are able to be such an abundant
producer and be such an important exporter in the world market
is because we do have an infrastructure that allows us to move
that product. Whether it is on the railroads, and I would like
to point out that I did send a letter to all of the railroad
executives asking them to make sure that they were addressing
the issue of agricultural commodities when the transportation
infrastructure issue was going on, but we also depend, to a
great extent, on the waterways as well for the movement of
agricultural commodities.
Senator Bond. Thank you. And I think the best way to
assure--we need all forms of transportation, and the more
competition we have the more efficient and more economical
every one of them is going to be. You are probably aware the
Mississippi River has locks and dams built 70 years ago that
were designed to last 50 years. I have seen them leak and the
water flow through. They are a source of congestion. It is a
straitjacket on our shipping growth in a region where two-
thirds of our corn and almost half our beans for export must
travel.
I am working with Senators Harkin, Durbin, Grassley and
others, because it takes 870 trucks to carry the same amount of
corn as one single medium-size tow on the Mississippi. The
Corps of Engineers is now in the 12th year of their 6 year, $70
million study and in great need of some adult supervision and
guidance from USDA. AMS and Deputy Hawks have been working on
this to ensure that farmers are not left to the mercy of a
dilapidated water transport system and a railroad monopoly. I
appreciate your keeping an eye on this to ensure that we
maintain an efficient means of getting our farm products to
market.
TRANSPORTATION EFFICIENCY
Let me turn to Dr. Collins. How do you see the relationship
between transportation efficiency and the ability of farmers to
win markets at higher prices?
Mr. Collins. I think they are fundamentally related,
Senator Bond. A great example of that is simply what has
happened in the world soybean market over the last 10 years or
so. Everyone knows that Brazil has a very low cost of
production of soybeans. However, we have an advantage in
transportation infrastructure. And that has enabled us, despite
the large growth in soybean production in Latin America, to
continue to increase our exports and be competitive around the
world. So I think they are closely related.
CORN SHIPMENTS
Senator Bond. I just hope we maintain that edge.
Over the next 10 years, Dr. Collins, what would you
estimate the increase in corn shipped through the Gulf to be?
Mr. Collins. Senator, we have recently completed a 10-year
analysis that forecasts through the 2013 crop year. We do not
project specific exports through the Gulf. I know you have
asked me this question. Our exports of corn in total over the
next 10 years are projected to rise about 45 percent, and about
70 percent of all corn export increases would be expected to go
out through the Gulf. So we would say something in the range of
about 435 to 550 million bushels of corn, over and above where
we are now, would be going out through Gulf ports by the year
2013.
Senator Bond. I was interested that you do your baseline
projections for 10 years. The Corps has tried to figure out
what is going to happen 50 years from now. Why do you do it for
10, not 20, 30 or 50?
Mr. Collins. Doing it for 10 is heroic enough.
Senator Bond. You are joined in that by the National
Academy of Sciences, which said nobody can predict anything 50
years from now, and I very much appreciate your projections and
your interest.
Mr. Collins. I think that is right. There are just too many
risk factors for us to go much beyond a decade.
Senator Bond. Thank you.
Senator Bennett. Senator Harkin.
CONSERVATION SECURITY PROGRAM
Senator Harkin. Thank you very much, Mr. Chairman.
I apologize for being late, but I thank you for this
opportunity.
I welcome you again, Madam Secretary, and I want to cover a
couple of programs with you, the Conservation Security Program
and the bio-based proram which includes, the Federal
requirement to purchase bio-based products, both of which were
in the Farm Bill.
Secretary Veneman, as you know, the Conservation Security
Program is an important new program included in the 2002 Farm
Bill. It embodies all the important features included in your
own Food and Agricultural Policy report. The payments fall
under the WTO green box for trade purposes. It encourages not
only maintenance of conservation practices, but additional new
conservation, and it is a voluntary national program to
diminish the need for environmental regulations for farmers and
ranchers.
Despite the promise of CSP, despite the clear wording in
the law that we passed and the President signed, USDA has drug
its feet and has issued a proposed rule that provides such
limited payments and very difficult eligibility requirements
with multiple obstacles that almost no producers can get in,
and the few that can may find it financially impossible to
participate.
The program in your proposed rule bears little resemblance
to what was passed in the Farm Bill. Quite frankly, Madam
Secretary, you have made up the rules out of thin air. Now, not
only have members of Congress told you that; I have here a
recent letter that 56 members of the Senate signed. Last
summer, we sent you another bipartisan letter. This later one
was bipartisan, too with 56 members. I could have gotten more,
but I ran out of time.
But every Senator I have talked to has heard from their
farm groups, the major groups, the Farm Bureau, the Farmers
Union and also the other crops: the corn growers, soybean
producers, cotton, rice, everybody. And as I understand it, you
have gotten over 12,000 comments, sent to you expressing
similar sentiments and disappointment.
Now, after you published the proposed CSP rule, Congress
passed and the President signed into law the fiscal 2004
Consolidated Appropriation Act that restored the CSP funding to
what it was in the Farm Bill. Now, in your proposed rule, you
have said here, that Congress is currently considering
legislation that amends funding for the CSP. Pending the
enactment of the legislation, NRCS intends to publish a
supplement to this proposed rule. Well, we changed the law, but
there is no supplement to the proposed rule.
So now, USDA's rulemaking, simply, it seems to me, is going
on in some kind of a black box. We do not know what is going
on. For example, I was shocked to find out that despite the
fact that the comment period closed on March 2, the public and
the press still does not have access to the comments. My staff
that I deputized to do this have repeatedly requested and asked
for access to the comments, and we have been denied. The press
has been denied.
Madam Secretary, with all due respect, I have never in all
my 20 some years here encountered an agency denying access to
public comments in this way, never. And so, you know my
frustration. I am saying it this way because the farmers I have
talked to are extremely frustrated by this, so I am asking you
for the record whether you will commit to America's farmers and
ranchers, to our Nation's citizens, to your own words in your
farm policy report that you will revise the CSP rules and carry
out the program as written in the Farm Bill and which the
President signed.
Will you commit yourself to that?
Secretary Veneman. Senator, let me just say that this CSP
is part of the larger Farm Bill, as we have talked about. We
have had a tremendous amount of work to do with regard to this
Farm Bill, and as we have discussed on many occasions, the CSP
was not described in detail in the Farm Bill, and there were
many decisions left to be made. We have gone out and had a
number of public hearings, a number of processes to get public
input, and as you say, our proposed rule was then published.
The comment period has now closed, and as you have
rightfully indicated, there were over 12,000 comments. We are
now in the process of evaluating those comments to determine
what the final rule should look like. I certainly can commit to
you that we are going to review all of the comments that we
received. I frankly had been unaware of the fact that you had
not had access to the comments, and I commit to you that I will
look at that issue to determine whether or not we can get you
the comments that you are requesting. I was not aware that the
comments were not available.
Senator Harkin. I would also hope that you would let the
press have access--these are public comments.
Secretary Veneman. I understand.
Senator Harkin. There should be no secrecy. There are no
state secrets.
Secretary Veneman. I understand, Senator. I just was
unaware that there was a problem.
Senator Harkin. Well, it is a big problem.
Secretary Veneman. I will go back and try to determine what
is the issue there.
Senator Harkin. All right; I appreciate it.
Secretary Veneman. But I think as you indicate, this has
been a long process primarily because it is a new program, and
we want to do it right. I have not seen the comments. I do not
know what the various issues are, but I can tell you that
because the funding has been limited, we have had to make some
decisions about how we structure this CSP program. Are they the
right ones? I do not know. But this is what you have: a notice
of proposed rulemaking and we have comments for the proposal
and so, as we go forward, I cannot tell you what the final rule
is going to look like, but certainly, we will review the
comments and take into account as much as we possibly can in
developing a final rule.
Now, Dr. Collins has been part of our overall group that
has been responsible for implementing the Farm Bill, and he may
want to make a couple of other comments about how we have tried
to work to get to where we are on the CSP rule.
Senator Bennett. Let me warn you, Dr. Collins, the vote is
on, so that we need to be as brief as we can. We will not have
another round, after I have been promising it all afternoon,
because we have to go vote.
Mr. Collins. I did not know that.
Senator Bennett. But go ahead.
Mr. Collins. Mr. Chairman, I would only say very quickly
that there has been a different balance that the agency has had
to cast here. We have a statute with a legislative history of
it being capped. It is capped for fiscal year 2004. It also has
a limitation on technical assistance funds.
Senator Harkin. Is it capped beyond fiscal year 2004?
Mr. Collins. It is not capped beyond 2004.
Senator Harkin. Thank you. I want that for the record to be
clear. Fiscal year 2005 and beyond is not capped.
Mr. Collins. It is not. But we have had a legislative
history of caps in the out years, and the Administration has
proposed a cap in the out years, although statutorily, it is
not capped in the out years.
Senator Harkin. Thank you, the law we are following in the
law in effect now.
Mr. Collins. Correct. There is also a 15 percent limitation
on technical assistance, which also does serve as a constraint
in the Natural Resources Conservation Service's ability to deal
with the potential 1.8 million farms that would be eligible for
a wide-open environmental stewardship program. So I think there
were those kinds of constraints that the agency felt they
needed to deal with in developing this regulation.
Senator Harkin. Well, I know we have to go, Mr. Chairman,
but when were the rules supposed to come out under law? What
date? February of 2003. We are now more than a year past that.
I think we, all of us here and on the authorizing committee,
have been more than understanding of saying, okay, fine, things
take time.
But we are getting to the point now where farmers are just
saying you are scoffing at the law. The Department of
Agriculture is just scoffing at the law that we wrote and not
doing anything to implement this. The proposed rules bear no
resemblance to what is in the law. That is why you have got
over 12,000 comments. I have not read them. I take you at your
word you are going to try to let us have access to those. As I
have said, I have never had an agency ever say that we could
not look at public comments.
But all I know is that the agricultural producers and
groups have contacted me who have sent in comments. To a
person, I am sure that close to 100 percent were opposed to the
rules that you proposed, so I just am hoping that you do have a
revision of these rules. I would forego the supplement at this
point to the proposed rule. You do not need a supplement. That
will just delay the final rule some more. But if you get these
rules out and carefully follow the comments, then, perhaps we
can start signing people up soon.
And I am glad, Mr. Collins, you have pointed out that it
was capped this year; the law got changed. We got it put back
the way it was in the Farm Bill, and it will not, I can assure
you, change again until this Farm Bill is up again. And so you
should prepare for a program that reflects the law beyond this
year.
Thank you, Mr. Chairman.
Senator Bennett. Thank you.
Senator Harkin. I did not get to the bio-based products
program.
Senator Bennett. Well, you can submit those for the record.
Senator Harkin. I appreciate it. Thank you.
Senator Bennett. And she will be happy to respond in
writing.
SECTION 521 RENTAL ASSISTANCE
Madam Secretary, I have two quick items; also, you can
respond in writing for the record. GAO recently reviewed the
Rural Housing Service's Section 521 Rental Assistance Program,
and the information that I am seeking is very specific, so I
will provide a written request and would ask that you respond
in writing both to myself and to Senator Kohl by the 6th of
April if you possibly can.
CYBER SECURITY
And then, the second quick item, this is a hobby horse of
mine, but I cannot resist it: cyber security, IT weakness. GAO
did a study on the cyber security of the department and found,
quote, significant and pervasive, close quote, information
security weaknesses. And we will give you again some
information in writing, and the only comment I want to make
about this based on my experience with Y2K, when we had that
challenge governmentwide, the mantra I repeated over and over
again, to which the Clinton administration responded, was this
is not a CIO problem; this is a CEO problem.
When the Secretary or the administrator or whoever the CEO
of the agency was made it clear that this was her priority or
his priority, then it got done. If it got turned over to the
CIO and say, well, this is a technical thing, you fix it, then,
it did not get done, because nobody recognized how important it
was, and the GAO report indicates the many problems they found
are fixable, and I am sure that it can be fixable.
I simply wanted to call it to your attention as the CEO, to
ask you to give it the kind of leadership of which you are more
than capable and which I think the problem demands.
Secretary Veneman. Mr. Chairman, if I might make one
comment on that. I do take cyber security very seriously, as
does our CIO. We had money in the 2004 budget for cyber
security, and it was denied by the Congress. We have money
again in the 2005 budget request for cyber security, and we
hope that, given your strong interest in this, that we will be
able to maintain that money in the budget so that we can do the
things that we know we need to do.
Senator Bennett. Properly noted, and I will be a bulldog on
it this year.
Senator Harkin. Just 60 seconds, please.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bennett. All right. I will time you.
Senator Harkin. Secretary Veneman, the learing I did not
want to leave on that note. I told you I was going to be hard
on you on the CSP, and I am going to continue to be hard on
you. But I wanted to end it on a positive note. I want to thank
you, Madam Secretary, for what you have done for the Ames Lab
and for coming out for the dedication of it. You have been
great. You have put money into this critical project.
It is needed, Mr. Chairman, to make sure that we have the
best laboratory facilities in the world in answering animal
disease problems and especially with the issues about BSE. We
are moving ahead at Ames, and I just wanted to thank you, Mr.
Chairman, Senator Kohl and your staff, along with Secretary
Veneman, very much for all of your support and help with the
Ames lab.
Secretary Veneman. Thank you for being there with us.
[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
RD STATE OFFICES
Question. We understand that RD state offices have been told that
there will not be sufficient money to fund all rental assistance needs
this year--in particular, that some rehabilitation and repair loans may
be funded without rental assistance. We also understand that the state
offices have been told to reexamine their unused rental assistance and
to consider using unused rental assistance funds for rehabilitation and
repair loans. Your calculations for rental assistance needs seem
inconsistent.
Please explain your fiscal year 2004 calculations and provide us
with documented information that explains the discrepancy between your
original and current calculations. Also, please document what new
information, if any, has resulted in the change regarding your ability
to fund rehabilitation and repair loans.
Answer. The fiscal year 2004 calculation of $740,000,000 was
reduced by Congress to $730,000,000. Then 20 percent was taken off to
account for 4-year contracts instead of 5 years. There was a rescission
to bring the number to $580,550,000. Of the total, $10,000,000 was
allocated to new construction, farm labor and preservation, which left
$570,550,000 for renewals. At $14,000 per unit for 4 years, we
estimated 40,754 contracts could be renewed. This resulted in no rental
assistance for rehabilitation. We expect to use $55.8 million of the
$116 million available for the Sec. 515 loan program for repair
rehabilitation process.
RHS/GAO REPORT ON RENTAL ASSISTANCE
Question. The Rural Housing Service (RHS) has reported that in
implementing its new automated budget estimation process, 3 to 4 staff
will work together on generating the budget estimates and allocating
the resulting funds to rental assistance contracts.
In light of the concerns reported in the GAO report,
``Standardization for Budget Estimation Processes Needed for Rental
Assistance Program'' (GAO-04-424), over the lack of segregation of
duties at RHS, how will you document that these key duties have been
divided among 3 to 4 different people to reduce the risk of error or
fraud? Furthermore, will these 3 or 4 staff come from different offices
within Rural Development, e.g., budget, finance, and program offices,
or will they all be from the program office? If from the same office,
please comment on how you plan to maintain the segregation of duties.
Answer. The agency has not made a decision on how to address this
issue. Several options are being considered. One of the options would
include a national office staff person responsible for the day-to-day
administration of rental assistance and a supervisory-level person to
handle the policy issues. The allocation process would be developed in
the national office and then presented to a ``Rental Assistance
Advisory Committee'' made up of the national office staff who
administer the rental assistance program and a person from RD Budget
Staff, a person from the Finance Office, and the Deputy Administrator
for Multi-Family Housing. This committee would concur with the proposed
allocation method presented by the national office staff. The concurred
allocation method would be presented to the Administrator for approval.
Question. To what extent is the RHS national office monitoring the
activity of rental assistance transfers at the state and local levels?
For example, how many units and how much rental assistance funding was
transferred in fiscal year 2003? How does RHS ensure that units are
transferred according to the regulations, and that transferred units
are used in a timely manner?
Answer. The national office provides procedures and advice to the
field staff for the proper administration of rental assistance. We also
perform Management Control Reviews (MCR) of the program, which consist
of visits to four representative states to see if the program is being
correctly administered. The MCR results and recommendations are
provided to all states for educational and consistency purposes.
In fiscal year 2003 5,166 rental assistance units and $48,436,455
were transferred.
To address the issue of unused rental assistance, we are reviewing
and providing monthly reports to the field staff and the management
team to ensure this valuable resource is properly and promptly used.
Question. Last year this subcommittee was told that USDA had
acquired a team of professionals from inside and outside of government
to create a new rental assistance forecasting tool. Who were the
outside professionals that helped create the tool and what did they do?
Answer. The Agency 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
developed a model based on relevant informational elements using
several software applications. The Rental Assistance Forecasting Tool
was completed in November 2003, was reviewed by GAO in December 2003,
and has undergone several months of testing to ensure accuracy and
debugging. The Department expects to use the Forecasting Tool to
develop the fiscal year 2006 Rental Assistance Renewal budget estimate.
RURAL PROGRAMS
Question. There are currently different definitions of rural among
various rural development programs throughout USDA and the Federal
Government. A town needs to have a population under 2,500 to be
eligible for some USDA rural development programs and rural towns with
populations of 20,000 or 50,000 are eligible for other USDA rural
programs. Rural health programs in HHS use non-metropolitan criteria.
Also, some programs use county data, others use census tract
information, and still others use commuting area designations.
Should there be a more consistent definition with common criteria
for rural programs throughout USDA and the Federal Government?
Answer. Due to the diversity of rural communities across the
country and the wide variety of programs funded by the Federal
Government for rural residents, businesses, and communities, it is
difficult to develop one definition for ``rural'' that is appropriate
for all purposes. Past efforts have been found to be harmful to some
segment of the population or overly generous to another segment.
Nevertheless, we support simplification of the myriad of definitions
and criteria used to define and allocate resources to rural areas.
Question. I understand that RHS has started a capital needs
assessment and, as outlined in the GAO report (GAO-02-397), is
developing a protocol for evaluating the physical, financial, and
market needs of the section 515 multifamily portfolio. I also
understand that a private contractor is evaluating a 3 percent sample
of the portfolio to develop the protocol. Who selected the 3 percent
sample, and what methodology was used for the selection? In particular,
(1) did all properties have an equal chance of being selected, or (2)
were other factors, such as the age of or the percentage of rental
assistance in each property considered in the sampling process?
Answer. The Agency consulted with Department economists who, after
reviewing the data, provided us with the sample size that would result
in a 90 percent confidence level. The 333 Section 515 properties
selected were a mix of family and elderly complexes in operation for
more than 5 years, and categorized by property size (less than 12
units, 12-24 units, 25-50, 51-100 and 101 units or more). All of these
factors were used to sort the total database to develop a
representative sample. The percentage of rental assistance was not a
factor in selecting the sample.
RD INFORMATION TECHNOLOGY
Question. In July 1993 testimony, GAO stated ``USDA has
substantially increased its use of information technology. But most of
the information system expenditures to date have been for automating
the systems associated with providing program benefits. However, these
systems are not providing managers with the data they need to manage
and make decisions, nor is the information produced in a form that can
easily be shared with other agencies.''
How much have we progressed in the past 11 years? For example, how
many different information systems are used to manage the various
housing and community development programs in USDA's Rural Development
Mission Area?
Answer. Over the past 11 years, Rural Development has progressed
significantly beyond the automation capabilities supporting the mission
area at that time. Several new, modern state-of-the-art systems have
been constructed and deployed in support of Agency business needs. Some
key major accomplishments in this area include:
--The Agency purchased and deployed a new commercial-off-the-shelf
mortgage servicing system in support of the Single Family
Housing Direct Loan Program and in support of the Centralized
Servicing Center in St. Louis. Deployed in support of this
commercial system were several new technologies including
document management technologies including scanning and
imaging, workflow management, and content management; automated
mail handling; and automated call center technologies including
voice response and predictive dialing. These capabilities have
not only been extended to other business processes within Rural
Development but to other USDA agencies and the Department.
--A new guaranteed loan system supporting all Rural Development loan
programs (and Farm Services Agency guaranteed loans) has been
fully deployed and major new enhancements have already been
completed. This system now includes a funds reservation
application, an electronic data interchange capability with
participating lenders, and a web-enabled user interface.
Application and project tracking capabilities for Business &
Industry and Community Facility loans and grants have been
added to this system.
--A new system is in the process of being designed, developed, and
deployed to replace obsolete legacy systems dating back to the
Rural Electrification Agency. The initial capabilities of this
new system have been deployed and key financial and program
management capabilities are in development.
--In a joint effort with the Farm Services Agency, Rural Development
has purchased and deployed a new program funds control system
that is compliant with the Joint Financial Manager's Integrity
Act.
--A new Multi-Family Housing project management system has been
deployed and new enhancements are being added to meet emerging
needs identified to improve the overall management and
oversight of this program. This new web-enabled system
permitted the retirement of three, stove-pipe legacy systems.
While much progress has been made in RD's information technology
(IT) capabilities, the 2005 Budget requests an additional $14.1 million
to upgrade IT systems. Upgrades are needed to improve RD program
accountability and customer service, and to correct a material
deficiency in RD direct loan systems.
Question. How compatible are the systems?
Answer. Each system is designed to meet the unique needs of the
loan and grant programs they support. However, all new systems and
applications are built using ``re-useable components'' and technologies
that are relatively easy to extend to other systems and applications.
Integration of data is achieved through the construction of a data
warehouse that will eventually become the single source of all Rural
Development management data. Although much Agency data has been
extracted and moved into the data warehouse and made available to
Agency managers and staff, there is much more to accomplish. Also
included in the data warehouse is census data which allows program
managers to better monitor the effectiveness of their programs. Tabular
data has been geo-coded to permit the graphical display of data by
creating maps; maps showing eligibility areas for specific programs
have already been developed. Rural Development systems are being built
through a vision of a fully-open technology architecture and data
integration is being achieved by moving all data required to support
Agency loan and grant programs into a single data warehouse.
COORDINATION OF USDA RURAL PROGRAMS
Question. What efforts have you implemented to facilitate the
coordination of programs across USDA for the benefit of rural
communities?
Answer. Within USDA, we have developed guidelines regarding the
delivery of all Rural Development programs and required the state
offices to reorganize themselves to meet those guidelines in order to
bring consistency to how programs are delivered nationwide.
Question. What is the Department's rural policy?
Answer. The Department's rural policy recognizes the diversity of
rural America and that there is no single recipe for prosperity that
will be applicable nationwide. It further recognizes that agriculture
is no longer the anchor for most rural communities and the availability
of non-farm jobs and income are the drivers of rural economic activity.
The creation of an economic environment to save or create jobs in rural
areas is the challenge and doing so will require attracting private
investment; creating a rural population with the education and skills
needed by businesses; and the development of the technology,
infrastructure and community facilities needed to make rural
communities attractive to new businesses is critical if the communities
are to prosper. Finally, there is the recognition that we need to
enhance the market base for agricultural producers to find new markets
for their products, including the development of alternative fuels. A
more thorough discussion of the Department's rural policy is outlined
in the USDA publication ``Food and Agricultural Policy--Taking Stock
for the New Century'' which was published in September 2001.
Question. USDA Rural Development is mandated under the Farm Bill to
create the National Rural Development Coordinating Committee. What is
the status of that effort?
Answer. Rural Development is developing a course of action
regarding creating the National Rural Development Coordinating
Committee. The Farm Bill mandates certain representation on the
Coordinating Committee, but implementation of that mandate could be
pursued in a variety of ways. Rural Development may publish a notice in
the Federal Register requesting public comment and input on how to
accomplish that mandate.
Question. The Farm Bill also mandates that USDA present a report to
Congress on the National Rural Development Partnership. What is the
status of that report?
Answer. Section 6021(b)(3)(B) of the Farm Security and Rural
Investment Act states that the Governing Panel in conjunction with the
National Rural Development Coordinating Committee and state rural
development councils shall prepare and submit to Congress an annual
report on the activities of the Partnership. This annual report cannot
be submitted this year because neither the Governing Panel nor the
National Rural Development Coordinating Committee yet exists.
PILOT PROGRAM
Question. In September 2000, GAO noted that in some rural areas,
new agribusiness jobs are available in off-farm processing plants, such
as aquaculture and poultry processing operations. In response to the
GAO report, USDA noted that it had undertaken a pilot program in
California and was considering a potential demonstration program in the
future. What resulted from the pilot program and has USDA undertaken
any similar pilots?
Answer. In the fiscal year 2001 Agriculture Appropriations Bill,
Congress authorized the Rural Housing Service (RHS) to provide almost
$5 million in housing assistance (grants) for agriculture, aquaculture,
and seafood processing workers in the states of Mississippi and Alaska.
On February 12, 2001, RHS published a Request for Proposals in the
Federal Register and on September 14, 2001, six proposals were selected
for funding. The six selected proposals are in different stages of
development. Some have completed construction and are now providing
housing to processing workers. Other proposals have not completed
construction.
In the fiscal year 2004 Agriculture Appropriations Bill, Congress
authorized RHS to provide almost $5 million in housing assistance
(grants) for processing and/or fishery workers in the states of Alaska,
Mississippi, Utah and Wisconsin. On April 6, 2004, RHS published a
Request for Proposals in the Federal Register. The deadline to submit a
proposal is July 6, 2004.
NATIONAL BOARD ON RURAL AMERICA
Question. What is the status of the National Board on Rural America
created under the Farm Security and Rural Investment Act of 2002? Is
such a board needed to promote business and community development in
rural America?
Answer. The Board was to implement the Rural Strategic Investment
Program. Funding for the program was rescinded by Congress. Without
funding to cover their administrative expenses, the Board cannot
function and has, therefore, not been named.
The promotion of business and community development in rural areas
occurs in a variety of ways through outreach from government, non-
profit and profit organizations. The establishment of the National
Board on Rural America is not critical to this function.
MULTI FAMILY HOUSING
Question. How effective has the agency been in encouraging more
lenders to get involved with the Section 538 guaranteed multifamily
housing program? Is anything being contemplated through regulation, or
through a statutory change to allow the program to provide more
multifamily affordable housing for moderate-income families?
Answer. Lender participation in the program has been increasing
because the industry has created a secondary market for the program.
The Section 538 lender pool currently consists of 15 Approved Lenders,
which are lenders with closed Section 538 loans, and 16 Eligible
Lenders, which are lenders that are processing a Section 538 loan. The
eligible lenders will become approved once they close the 538 loan. In
addition, the publication of the program's final rule this summer will
allow Ginnie Mae lenders to participate in the program.
The purpose of the Section 538 Proposed Rule, which was published
for comment on June 10, 2003, was to make the program more industry
friendly to the secondary market. We expect the final rule to be
published this summer.
In addition to moderate-income families, the program also serves
very-low-income (with section 8 vouchers) and low-income families.
Eighty-five percent of the Section 538 housing portfolio has been
financed with Low-Income Housing Tax Credits (LIHTC) equities and,
therefore, must follow the LIHTC low-income occupancy restrictions.
RURAL BUSINESS AND COOPERATIVE SERVICE
Question. The Inspector General has reported that the Rural
Business Cooperative Service's business and industry loan program
continues to have problems in applying its own policies and procedures
for underwriting and managing the loans and performing adequate lender
oversight. What can be done to ensure that the loan approval process
and monitoring of the loans will reduce the number of defaults and
better protect the government's financial interests?
Answer. The Agency revamped its internal control review of the
State Offices. The review is called a Business Program Assessment
Review. We contracted with another Agency (experienced in completing
Safety and Soundness reviews) to improve upon the National Office
review. National Office reviewers have been trained and we are working
with the contractor agency in conducting these reviews.
As a result of these reviews, we are evaluating:
--the need for reducing/removing loan approval authorities delegated
to individual State Offices,
--the need for implementing changes to protect the portfolio,
--the need for training/closer monitoring of loan approval(s),
--changes to the regulations to improve portfolio development, and
--the need for lender training.
BUSINESS AND INDUSTRY PROGRAM
Question. Considering the problems with the business and industry
program and the complex nature of the deals, does your field staff have
the training and capacity to effectively negotiate with lenders and the
borrowers?
Answer. The level of expertise varies between states. Several
initiatives are underway to provide staff with tools and training that
will ensure more timely and consistent analysis in the processing of
applications/servicing actions.
The Agency has purchased and distributed Moody's financial analysis
software to field staff to improve and provide consistent credit
analysis of loans that are considered for funding.
We have had national meetings with the National Office and selected
State Office Program Directors/Loan Specialists and we have contracted
with other institutions, i.e. Farm Credit Association, to provide
specific training. With budget constraint, we have explored ways to
provide telephonic training, regional teleconferences, web cast,
Intranet and etc., to provide guidance to our field personnel.
The Agency has identified the need for a core curriculum of
training that will provide staff the training necessary for them to
perform their assigned duties. An accreditation plan that will identify
this core curriculum is under development. Current field staffs are
being surveyed to determine the basic core training needs.
Each delegation of authority to State Offices for loan processing
and servicing actions is based on experience as well as the performance
record of the personnel in the state. We will continue to make every
effort to ensure authorities are issued to employees with the necessary
skill set to protect the taxpayer's investment.
FARM CREDIT ADMINISTRATION REVIEW
Question. How effective has the Farm Credit Administration been in
identifying problems with nontraditional lenders using the B&I program?
What is the annual cost of this contract? Has the cost of the contract
been justified based on Farm Credit Administration reviews?
Answer. The Farm Credit Administration (FCA) has been quite
effective in its review of nontraditional lenders. The particular arm
of FCA with which the agency has contracted conducts safety and
soundness examinations not only of the banks within FCA but has also
contracted with the Small Business Administration (SBA) to perform the
same function for specific SBA lenders. FCA is a recognized expert in
lender examinations, internal controls, and program oversight. These
examinations provide the agency and the nontraditional lenders with
recommendations. We monitor the lenders to assure that recommendations
are implemented.
The cost for lender examinations by FCA in fiscal year 2004 is
$104,501.
We believe the involvement of FCA in the examination of lenders
participating in the B&I Guaranteed Loan Program has been cost
effective. Improvements in lender loan underwriting, risk
identification, and servicing as well as a better understanding of the
Agency's regulations are examples of the benefit of FCA's lender
reviews. FCA reviews have supported the Agency's actions to debar an
individual from participation in Government programs. The results of
FCA reviews have been instrumental in identifying weaknesses in lender
practices and have assisted the Agency in determining lender fraud,
misrepresentation or negligent servicing. This assistance helps save
millions of dollars for taxpayers.
CENTRALIZED SERVICING CENTER
Question. The Centralized Servicing Center in St. Louis reported a
32.5 percent reduction in the number of loans serviced from the year
the center opened in 1997 to 2003. Have any staff reductions occurred
as a result? Has the Centralized Servicing Center in St. Louis
attracted any additional work from other Federal agencies? If not, what
efforts are underway to attract any new business? Without new business,
at what point will the loan volume become too small to keep the
operation viable?
Answer. Thank you for recognizing the success of our Single Family
Housing program and Centralized Servicing Center. As you are aware,
customers are required to ``graduate'' to other credit when they no
longer require Federal assistance. We are pleased that over 30 percent
of our direct homeownership customers were able to graduate to the
private sector. In response to your specific questions, we offer the
following explanation:
In 1997, the Centralized Servicing Center (CSC) supplemented its
permanent workforce with 100 private-sector temporary staff and the
equivalent of 50 staff with overtime. The CSC no longer uses private-
sector temporaries and has reduced overtime usage by 50 percent. This
is equivalent to a reduction of 125 staff years or 20 percent, without
negatively impacting service to our customers.
The CSC has acquired additional work. It recently began the
centralization process for approving loss mitigation plans and
processing loss claims for National Lenders participating in our
guaranteed homeownership program. The guaranteed homeownership program
has the second largest dollar portfolio within Rural Development. By
providing a single point of contact at CSC, loan servicers are provided
greater consistency and efficiency in obtaining approval for loss
mitigation plans and processing of claims. The Agency also benefits
through better internal controls and improved monitoring of losses.
More than 40 percent of all loss mitigation activity for guaranteed
lenders will be handled at CSC by the end of May and more than 60
percent by year-end. This is an ongoing and growing initiative.
In addition, the graduation process for direct loan customers has
been centralized at CSC. This is the process used to identify, notify
and support customers who are eligible for private financing. An
average of 10 percent of our customers graduate annually. Naturally
this supports self-sufficiency, while reducing ongoing costs for the
government.
CSC is also working with Rural Development's Business and Industry
(B&I) program to service a portion of its receivables. CSC's Real
Estate Owned (REO) website has also been expanded to include B&I, as
well as Multi-Family Housing and guaranteed program properties. CSC is
also working with the Veterans Administration and the Department of
Housing and Urban Development to establish a common government website
for all government-owned housing.
CSC is currently using its imaging technology to archive historical
executive correspondence files on behalf of the USDA Office of the
Executive Secretariat. CSC is also participating in the project to
establish a web-based correspondence tracking system for Department-
wide use.
CSC is devoting approximately 75 staff years to these and other new
initiatives.
Since CSC's inception, the rate of delinquent loans has declined to
a new record of 12.93 percent as of March 30, 2004. This is a 37.5
percent reduction in delinquency since 1998. The delinquency rate net
of foreclosures is 9.24 percent which compares favorably to the latest
reported Federal Housing Administration (FHA) delinquency rate net of
foreclosures of 12.23 percent.
In summary, CSC staff years have declined by 20 percent, important
new work has been and continues to be assumed, while dramatic
improvements in program results are being attained. The combination of
reduction in FTE and new work acquired is equivalent to savings of 200
staff years or 32 percent.
With the existing portfolio, new loans being added every day, and
new business, CSC will continue to be an efficient and effective
operation and asset to USDA. CSC continues to look for other services
that can be provided to other USDA Agencies and throughout the
government.
merging of urban and rural housing and community development programs
Question. When the Congress decided to separate rural development
from urban development programs in the 1930s, the world was different.
Today we have superhighways, information highways, and the boundaries
of rural and urban areas are often unclear. Access to credit, a major
factor behind the creation of rural specific programs, is no longer a
major issue in rural areas. Today, affordability is the key problem in
rural as in urban areas.
Given the changes in rural demographics, the current budget
constraints, and your need to focus on food security and safety issues,
is it time to merge both urban and rural housing and community
development programs into one housing and community development agency?
Answer. Rural areas, like urban areas, are constantly changing, but
for many parts of the country, the rural areas continue to be far
different places than urban communities. We do not believe one housing
and community development agency for both rural and urban areas would
be helpful to rural families and communities. Most rural communities,
especially the smallest and the poorest, do not have the staff to
develop the loan and grant requests needed to effectively compete for
limited funding against larger, more urban communities. These requests
are often developed by the elected officials of small communities who
are totally inexperienced in such an effort. Providing this type of
assistance is a key function of USDA Rural Development field staff.
Access to credit, especially private credit, continues to be very
limited in the poorest communities. We have found there are pockets
throughout the country where private lenders are not interested in
making single family housing loans in rural areas. In some areas,
private lenders are not even available. Rural Development has several
pilots underway in rural areas that have no local banking facilities to
involve the state housing authorities. Rural Development staff works
with the family to prepare their application and then submits it to the
state housing authority for consideration as a guaranteed loan.
RENTAL ASSISTANCE PRESERVATION
Question. We understand you are committed to preserving rural
rental housing. We also understand that you cut half of the $5.9
million that this subcommittee set aside for rental assistance
preservation funding. How do you plan to address the waiting list for
rental assistance preservation?
Answer. We have successfully reduced this waiting list over the
last 12 months to the point where few borrowers are currently on the
list.
Question. We understand that as a result of legal action, 2
properties in Oregon have prepaid their Section 515 loans resulting in
44 households at risk of being displaced. I understand that RHS has the
authority to issue vouchers under section 542 of the Housing Act of
1949 to tenants in such a situation. Why has no funding ever been
requested for this voucher authority that could be used in this type of
emergency situation?
Answer. Until recently, the need for RHS rental assistance vouchers
was not recognized for the preservation program. Currently, the Agency
is conducting a comprehensive property assessment of its multi-family
housing portfolio. Upon completion of that study, the Agency expects to
consider many policy options, which may include the use of vouchers for
the situation you have described above.
USDA KEY INFORMATION SECURITY WEAKNESSES
Question. GAO reported that a key reason for USDA's weaknesses in
information security system controls was that it had not yet fully
developed and implemented a comprehensive security management program.
What steps are you taking to ensure that an effective information
security management program is implemented?
Answer. Beginning in 2000, using initial funds provided by the
Congress as well as existing resources, USDA embarked on a new approach
to securing its critical information assets. Since its formation, the
Department's Cyber Security Program has engaged in a number of
activities and projects designed to address USDA's most serious cyber
security deficiencies. I will provide some additional details for the
record.
[The information follows:]
Examples of progress made during the past year include:
--Initiation of a USDA Certification and Accreditation Program that
will position USDA mission critical systems to comply with
Federal system certification requirements. In fiscal year 2004,
USDA compiled a Departmental inventory of over 500 systems that
we are now using to track the certification and accreditation
(C&A) of these systems. OCIO has challenged USDA agencies to
schedule accreditation of each of these systems by the end of
the fiscal year 2004. To assist agencies with the certification
and accreditation process, OCIO has established a contract
vehicle through which agencies can acquire contract support.
--Development and establishment of a Risk Management Program that
incorporates the widespread use of security self-assessment
tools that address both overall security management and
specific technical platforms. OCIO has developed a
comprehensive USDA Risk Assessment Methodology that addresses
the full spectrum of risk management, including sensitivity,
assessment, remediation, and business case.
--With a contract vehicle established for conducting independent risk
assessments according to OCIO methodology, dozens of risk
assessments have been conducted on the Department's more
important systems. This activity has positioned agencies to
move forward with full certification and accreditation, a major
priority for fiscal year 2004.
--Release of guidance and tools to USDA agencies that provide the
ability to analyze existing information security controls and
technical environments.
--Establishment and management of an enterprise-wide Intrusion
Detection System and procedures for detecting and reporting
intrusion incidents. OCIO is requesting funds in fiscal year
2005 to further strengthen this system by establishing a
Departmental security operation center to continuously evaluate
and manage gathered security information.
--Development and issuance of new or revised policies and interim
guidance on specific security areas and provide precise
requirements. These include policies addressing: (1) mainframe
security, (2) incident reporting, (3) security plan guidance,
(4) security requirements for the use of private Internet
access providers, (5) user ID and password requirements, (6)
server and firewall security, use of network protocol
analyzers, and (7) physical security standards and use of
configuration management.
Guidance issued during fiscal year 2003 and 2004 includes
policies addressing: (1) Privacy Impact Assessments, (2)
Encryption of Sensitive But Unclassified (SBU) Information, (3)
Revised Capital Planning and Investment Control Requirements,
(4) Security Awareness and Training, (5) Contingency Planning,
( 6) Telework and Remote Access Security, (7) Trusted
Facilities Manual Requirements, (8) Security Features Users
Guide Requirements, (9) Portable Electronic Devices (PED) and
Wireless Technology Security, and (10) Life Cycle Approach to
Security Controls.
--For the broader USDA security community, and to meet the Federal
requirement for on-going training for security specialists,
OCIO is providing instruction in the areas of security
controls, forensics, intrusion detection, risk management,
vulnerability assessments, contingency planning and other
security-related issues.
More recent security training has been provided in the areas of
systems security scanning, patch management, Certification and
Accreditation, and Federal Information Security Management Act
(FISMA) requirements.
--Development of an enhanced security awareness program that includes
partnership with the Government-wide eLearning initiative. This
program provides Department-wide web-based training on security
issues to all USDA staff. As of September 30, 2003, over 39,000
employees (of 60,000 total), including the Secretary, have
logged on and completed this course. Other objectives of the
Department's Security Awareness and Training Program include:
defining a security and awareness scope, identifying executive
briefing package materials, surveying and assessing security
and awareness products, and identifying security and awareness
assessment methodologies.
In 2003, the Secretary declared September as USDA Cyber Security
Awareness Month. The Secretary recorded a video focusing on the
need for every employee to be aware of and comply with
Departmental security requirements.
--Oversight has been increased for both Capital Investment Planning
and technology deployment to ensure that security is considered
throughout the entire life-cycle of system development. Annual
reporting instructions are issued and requests for approval to
invest in technology are carefully scrutinized to ensure
security is adequately addressed.
--A rigorous reporting and monitoring process has been established to
oversee USDA's activities related to the Federal Information
Security Management Act (FISMA). In particular, OCIO manages
the Department's annual self-assessment process and oversight
of the action plans and schedules designed to address weakness
discovered.
--OCIO has negotiated and executed USDA-wide contracts for security
services and products. These contracts, managed by OCIO,
provide USDA agencies with access to quality security controls
and expertise in the areas of scanning devices, virus detection
and protection, software security patch management,
vulnerability assessments, and security planning.
--The Department has initiated an Information Survivability Program
through which Disaster Recovery and Business Resumption Plans
will be developed and tested. Software that supports the
development of these plans has been purchased for use by all
USDA agencies and offices. Contract support has been engaged to
support agency personnel in this endeavor.
While much remains to be done to improve USDA's information
security program, these steps and strategies provide evidence
that the Department is committed to eliminating its long-
standing security deficiencies.
HOLDING SENIOR MANAGMENT ACCOUNTABLE FOR INFORMATION SECURITY
Question. How does USDA hold senior management of the department
and its component agencies accountable for ensuring adequate
information security? For example, does it affect their performance
evaluations?
Answer. We have taken a number of steps, both directly and through
delegated authority to the CIO, to ensure program and IT executives and
managers understand and perform their information security
responsibilities. These include:
--Establishing an information security performance measure within the
performance plan of each under and assistant secretary, agency
head, and staff office director. Performance in this measure is
rated and considered in each executive's annual performance
review.
--Focusing senior management attention on certifying and accrediting
all USDA IT systems. The USDA CIO briefed the Subcabinet on
this critical effort, and agency management have been advised
that funding will not be approved for any new systems
development efforts until agencies identify the resources and
milestones to certify and accredit their systems.
--Evaluating and approving each investment in the USDA IT Portfolio
to ensure cyber security is addressed, staffed, budgeted, and
assessed for compliance with USDA Cyber Security Policies.
After approval by the Department's Executive Information
Technology Investment Review Board, the Deputy Secretary
recommends approval of the Major IT Investment Portfolio to the
Secretary.
--Ensuring decisions on all USDA IT acquisitions, above a $25,000
threshold, are approved by the Department CIO. OCIO reviews
each acquisition to ensure cyber security is addressed,
staffed, budgeted, and assessed for compliance with USDA Cyber
Security Policies.
--Establishing security responsibilities and authorities for Program
Officials, CIO's, security officers, IT technical specialists
and IT users through departmental guidance and policy.
ENSURING EFFECTIVENESS OF SECURITY MANAGEMENT
Question. How will the Department ensure that security management
positions have the authority and cooperation of agency management to
effective implement and manage security programs?
Answer. The Department has established controls and performance
measures to ensure the cooperation of agency management.
In addition, USDA's Office of the Chief Information Officer makes
great effort to ensure security managers are engaged in IT investment
decisions throughout the system life cycle. The Department's Capital
Planning and Investment Control process is designed to ensure security
issues are considered at every phase of investment. OCIO reviews each
acquisition to ensure cyber security is addressed, staffed, budgeted,
and assessed for compliance with USDA Cyber Security Policies.
OCIO reaches beyond USDA's security community to the Department's
most senior mangers to keep them abreast of topical and important
security issues. Our current effort to certify and accredit (C&A) all
USDA IT systems is a good example of this process. Discussions
regarding C&A are held regularly with the Department's most senior
management. Executive training and materials for the C&A process have
been developed and presented to agency heads and program
administrators.
Weekly status reports that score progress toward attaining
accreditation are prepared and shared with senior management to ensure
objectives are attained. In addition, OCIO's senior management counsels
individual agency managers on specific C&A strategy, procedures and
progress.
FILLING ACIO FOR CYBERSECURITY
Question. What actions are planned to fill the role of Associate
CIO for Cyber Security, given that the person that held this position
is recently retired?
Answer. The advertisement to recruit a new USDA Associate CIO for
Cyber Security will close in early May 2004. The Department will
carefully review all applications in its search to fill this critical
position.
BUDGET IMPACT OF INFORMATION SECURITY REQUIREMENTS
Question. Is there a budget impact to ensure that information
security requirement are met?
Answer. The Department's Capital Planning and Investment Control
process is designed to ensure security issues are considered at every
phase of investment. OCIO reviews each acquisition to ensure cyber
security is addressed, staffed, budgeted, and assessed for compliance
with USDA Cyber Security Policies.
USDA is currently operating under a moratorium that requires a
waiver for all IT acquisitions above $25,000. OCIO reviews each
acquisition waiver request to ensure cyber security is addressed,
staffed, budgeted, and assessed for compliance with USDA Cyber Security
Policies. Failure to adequately address security throughout the system
life cycle will result in delay or denial of funding approval.
Additionally, OCIO has advised agency management that funding for
any new system development efforts will not be approved until agency
management identifies the resources and milestones to certify and
accredit their systems.
COMPLETING RISK ASSESSMENTS
Question. Addressing risk is necessary to implementing appropriate
security controls. According to the USDA OIG, 8 of 10 agencies that it
reviewed during fiscal year 2003 had not completed risk assessments for
mission essential information technology resources. What actions is the
Department taking to ensure that risk assessments are completed?
Answer. USDA is addressing the issue of risk management on a number
of separate fronts. First, with agency and contractor assistance, USDA
has developed a comprehensive Risk Assessment Methodology to assist
USDA agencies in determining information sensitivity, identifying
threats and vulnerabilities, designing mitigation strategies, and
developing business cases for necessary security costs. Additionally,
risk assessment training and counseling has been provided to agency
security managers by both Cyber Security Program Staff and contracted
risk management specialists.
Second, to meet the requirements of the Federal Information
Security Management Act, agencies are charged with performing self-
assessments of their respective IT systems and security programs. To
address these requirements, USDA uses the National Institute of
Standards and Technology (NIST) Self-Assessment Guide. Weaknesses
discovered during these assessments form the basis for mitigation plans
that guide agency security activities throughout the year.
Third, an initiative that addresses risk management is OCIO's
aggressive strategy to certify and accredit all of its IT systems in
fiscal year 2004. A fundamental component of system certification is a
thorough risk assessment. Agencies will be using USDA and Federal risk
assessment guidance to ensure security controls are adequate prior to
submitting systems for accreditation.
Fourth, OCIO has established vehicles through which USDA agencies
and offices can obtain contract expertise to perform risk assessments.
Over the past 2 years, dozens of USDA IT systems have been
independently assessed for risks and vulnerabilities by highly
qualified and experienced security contractors, a reflection of the
high priority USDA management places on thorough security analysis.
PLANS TO FINALIZE SECURITY POLICIES AND PROCEDURES
Question. Although the department's Office of Cyber Security has
developed numerous policies and procedures that address information
security over the last couple of years, many remain in draft, or
interim guidance, some for over a year. What plans does the department
have for finalizing these policies and procedures?
Answer. Individual information security policies, particularly
those that prescribe technical controls must be vetted thoroughly to
resolve issues of incompatibility and unnecessary expense. Often this
vetting process requires additional analysis and compromise to achieve
maximum effectiveness and economy. Nevertheless, OCIO has been
successful in issuing a wide array of security guidance. New guidance
issued during fiscal year 2003 and 2004 include policies addressing:
(1) Privacy Impact Assessments, (2) Encryption of Sensitive But
Unclassified (SBU) Information, (3) Capital Planning and Investment
Control Requirements, (4) Security Awareness and Training, (5)
Contingency Planning, (6) Telework and Remote Access Security, (7)
Trusted Facilities Manual Requirements, (8) Security Features Users
Guide Requirements, (9) Portable Electronic Devices (PED) and Wireless
Technology Security, and (10) Life Cycle Approach to Security Controls.
It should be noted that even guidance issued as ``Interim''
provides the standard by which USDA agencies must operate. Interim
guidance is used as criteria for IT investment reviews, risk
assessments, FISMA self-assessments, and other compliance exercises.
EMPLOYEE SECURITY AWARENESS TRAINING
Question. How does the Department plan to ensure that all employees
receive security awareness training?
Answer. During the past year, OCIO has developed a more rigorous
security awareness program that includes partnership with the
Government-wide eLearning initiative. During fiscal year 2004, OCIO
purchased on on-line security awareness course through which all
Department end-users could meet their awareness training requirements.
By using this course, USDA was able to report over 60,000 USDA
employees had been trained. While this was only 53 percent of all
employees, we anticipate the percentage will increase for this year.
Performance related to this issue will be a consideration in each
executive's annual performance review.
Other objectives of the Department's Security Awareness and
Training Program include: defining a security and awareness scope,
identifying executive briefing package materials, surveying and
assessing security and awareness products, and identifying security and
awareness assessment methodologies--all designed to assist agencies in
their attempt to meet Federal security awareness requirements. For the
technical security community, on-going training is provided in the
areas of security controls, forensics, intrusion detection, risk
management, vulnerability assessments, contingency planning and other
security-related issues.
SYSTEMS TESTING AND EVALUATION
Question. The department has reported that just over a third of its
systems have undergone test and evaluation within the past year, and
only 16 percent of its systems had been certified and accredited. What
action has the department taken to ensure that testing and evaluating
controls becomes an ongoing element of agencies' overall information
security management programs?
Answer. The testing and evaluation of the security controls is a
critical component of the Department's current certification and
accreditation (C&A) initiative. The C&A process requires testing and
evaluation of all system controls to ensure they function as planned.
To ensure the independence of system testing, agencies must enlist the
services of a third party to undertake the testing who was not involved
in the design or development of the security controls.
In addition, in order to reduce or eliminate these risks, OCIO has
established guidance for conducting Security Vulnerability Scans (SVS)
of all USDA networks, systems and servers. These SVS scans are a vital
component of the overall security protection plan being deployed within
the department. OCIO guidance requires USDA organizations to accomplish
these SVSs on a monthly basis. In addition, to the vulnerability scans,
each agency/staff office is required to conduct and maintain
information technology (IT) inventories of networks, systems, servers,
software and Internet Protocol Addresses for all areas within their
responsibility.
To assist agencies with their scanning responsibilities, OCIO
provides scanning tools, training, and on-going support. OCIO also
conducts oversight reviews of agencies and staff offices to review
vulnerability reports and corrective actions taken to ensure that
networks, systems, and servers are protected in accordance with this
policy.
ENSURING SYSTEMS ARE CERTIFIED AND ACCREDITED
Question. What action has the department taken to ensure that
systems are certified and accredited?
Answer. OCIO has initiated an aggressive program to certify and
accredit (C&A) all of USDA's IT systems and position the Department to
comply with Federal system certification requirements. To prepare
agencies for C&A, OCIO developed a USDA Certification and Accreditation
Guide, document templates, and procedures for managing the broad set of
activities involved. Training sessions have been conducted to educate
all levels of managers and technicians involved in the C&A process.
In fiscal year 2004, USDA compiled a Departmental inventory of over
500 systems that we are now using to track the certification and
accreditation of these systems. In fiscal year 2004, USDA will spend in
excess of $25 million on systems certification and accreditation.
A fundamental step in accreditation is a thorough risk assessment,
conducted through self-assessments for low impact systems and through
independent assessments for all others. To achieve this independent
review, OCIO has developed contract vehicles by which agencies can
engage external expertise to assist them. USDA management and agency
technical staffs have become fully involved in the Certification and
Accreditation Program, scheduling activities and executing contracts
that will lead to accreditation of the systems for which they are
responsible.
OCIO's fiscal year 2005 budget request of $687,000 relative to
certification and accreditation does not reflect the cost of individual
agency C&A activities. Funding for these activities is expected to be
borne by agencies from funds provided for IT investments, and from
unobligated balances allocated for this purpose. OCIO's funding request
is directed toward corporate-level activities such as common toolsets,
oversight and counsel, and Independent Verifications and Validation
exercises.
OCIO recognizes this aggressive schedule places an enormous burden
on the Department's technical staffs, both from a personnel and budget
perspective. Nevertheless, OCIO is committed to moving the Department
to a more secure baseline from which new technologies and methodologies
can be employed safely and effectively, while at the same time meeting
Federal security mandates.
HOW USDA BUDGET CORRECTS SECURITY WEAKNESSES
Question. Given the pervasive extent of the Department's
information security weaknesses, how will the Department's request for
budgetary resources address the issues involved in correcting the
problems?
Answer. OCIO is working with the agencies to ensure funding for
security requirements are included in all budget requests for system
development and operation. In addition, OCIO's budget request for
fiscal year 2005 includes increases for the following security
initiatives:
--An increase of $687,000 is needed to manage the USDA Information
System Certification and Accreditation Program.--OCIO's highest
priority is to certify and accredit all USDA systems to ensure
they are properly secured from theft and destruction, in
compliance with Federal security laws and guidelines. Funding
provided to-date from the Department's fiscal year 2003
unobligated balances, as well as from the OCIO base is being
used to pay for the certification and accreditation (C&A) of
specific high-priority systems that are owned and operated by
USDA agencies and staff offices. These additional requested
funds will enable OCIO to manage this program in fiscal year
2005 at the needed level of detail and help ensure that USDA IT
systems are properly secured and in compliance with Federal
security guidelines.
The result of the OCIO C&A Program will be a large collection of
security documentation and artifacts (security plans, risk
assessments, contingency plans, etc), most of which will be
essential to future C&A activities. In addition to compliance
activities, training, evaluation, and Independent Verification
and Validation, OCIO will investigate the value of acquiring
enterprise C&A management tools that will allow USDA to re-use
C&A artifacts, thereby reducing future C&A costs. Because
Federal guidance requires certification of systems at least
every 3 years, savings obtained through re-use could be
substantial.
--An increase of $2,373,000 is needed to maintain an Information
Survivability program to minimize disruptions caused by
attempted intrusions and catastrophic interruptions.--OCIO's
Information Survivability Program addresses both prevention of
attack on USDA IT systems and recovery in the event of
disruption.
OCIO currently manages USDA's corporate Intrusion Detection
System (IDS). This system monitors traffic over the
Department's backbone network to detect incidents of possible
unauthorized access and policy/legal violations. The system is
instrumental in detecting viruses, worms, and other mechanisms
intended to disrupt IT systems. OCIO's IDS operates 24 hours
per day, 365 days per year.
OCIO's request for increased funding for Information
Survivability includes $1,000,000 for the expansion of the IDS
to lower level networks operating within the Department that
support mission-critical applications and communications. In
addition, the increased funding will allow USDA to improve and
expand its detection tools to expand the range of monitoring
and reduce detection time.
Recognizing that no prevention measures are perfect, OCIO's
Information Survivability Program also addressed the
disciplines of disaster recovery and business resumption.
Procedures and policies have been established to ensure that
USDA's business processes will continue to function and serve
its customers, regardless of the degree of damage sustained
from an attack. Features of the Information Survivability
program include: tools, policies and procedures designed to
understand the extent and source of an intrusion; protection,
and if needed, restoration, of sensitive data contained on
systems; protection of the systems, the networks, and their
ability to continue operating as intended; recover systems;
information collection to better understand what happened; and,
if necessary, legal investigations support.
OCIO has entered into a Department-wide contract that provides
software tools and training for agencies as they begin
developing contingency plans. However, the funding for this
effort was provided through the Department's Homeland Security
budget, which provides for no long-term support. As agencies
begin development of their recovery plans, counseling, support,
testing and training will become an on-going effort. In
addition, contractor support to perform Independent
Verification and Validation of contingency plans will be
needed.
OCIO currently devotes one FTE to manage its contingency planning
effort. Over the past year, two contract FTE's have also
provided support with funding provided through the Department's
Homeland Security budget. However, since Homeland Security
funds are no longer available for this contract support, OCIO
is requesting $1.373 Million to continue this critically
important effort.
--An increase of $937,000 is needed to obtain, implement, and manage
an automated Risk Management toolset.--Risk determination and
risk management are the foundation for all successful security
programs. The Department currently relies heavily on manual
tools and forms to conduct risk assessments that identify
security deficiencies in our system controls. This increase is
requested to fund the acquisition of automated software tools,
training, oversight, maintenance and support that provide
continuous updates to existing threats and provide users with
methods to determine information value, vulnerability
predictions, and mitigation strategies. USDA agency employees
will be the predominant users of the tools.
--An increase of $1,561,000 is needed to establish a Security
Operational Center.--While USDA's Intrusion Detection System
captures and handles an ever-growing stream of information on
cyber security related events, no single USDA organization is
trained and equipped to fully utilize the information captured
to determine the true nature and extent of risk to critical
USDA information systems. By providing the requested funding in
fiscal year 2005, Congress will enable OCIO to reduce the time
delay in detecting and responding to security events, improving
the efficiency and effectiveness of USDA's security controls.
ENSURING ADEQUATE FUNDING FOR FISMA REMEDIATION
Question. In preparing remediation plans as required by the Federal
Information Security Management Act--FISMA, what is your process to
ensure that adequate funds are identified to correct the Department's
information security weaknesses?
Answer. By ensuring responsible agency officials identify the funds
to certify and accredit USDA's systems, we are focusing agency
management on addressing a majority of the remediation actions
identified in their FISMA plan of actions and milestones or POA&Ms. In
a review of USDA Agency POA&Ms, approximately seventy percent of the
identified security vulnerabilities are being addressed by agency
system certification and accreditation efforts, which is being funded
through a combination of agency IT funding, the Department's fiscal
year 2003 unobligated balances, and from the OCIO base.
Additionally, OCIO is working with USDA agencies on all non C&A
related activities, such as providing security awareness training to
all employees and improving intrusion detection and response, on a
project-by-project basis. In the case of security awareness training,
OCIO has acquired an online training course, which will be available to
all agencies to use in security awareness training requirements.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
Question. On March 15, 2004, the Department of Agriculture
announced details for an expanded surveillance effort for BSE. The
release also stated that $70 million is being transferred from the
Commodity Credit Corporation (CCC) to test cattle in the high risk
population.
Can you take a moment to provide Committee Members with a detailed
explanation of how the Department intends to conduct this increased
surveillance program?
Answer. For more than a decade, USDA has taken aggressive measures
to prevent the introduction and potential spread of BSE. On March 15,
USDA announced a plan to significantly augment those efforts by
strengthening BSE surveillance in the high-risk cattle population and
establishing a small proportion of random surveillance in the aged
cattle population. We are taking these proactive steps to further
assure consumers, trading partners, and industry that the risk of BSE
in the United States is low. By expanding surveillance, we will have
even greater confidence in the health of the U.S. cattle population.
USDA's primary focus and the goal for this new program is to obtain
samples from as many of the targeted high-risk adult cattle population
as possible, plus obtain a small random sample of apparently normal,
aged animals. Under this surveillance plan, USDA will test as many of
the targeted high-risk cattle as possible for a 12- to 18-month period.
This effort will help better define whether BSE is present in the
United States and, if so, at what level. After that time period, USDA
will evaluate the results of the program and determine what future
actions may be appropriate.
We have already begun ramping up our surveillance system and expect
to be at full capacity by June 1. Whereas all BSE testing in the United
States has historically been performed at USDA's National Veterinary
Services Laboratories (NVSL), the new program incorporates a network of
State and university laboratories into the testing program. Their
geographic distribution will help ensure adequate turn-around time for
sample testing and reporting of results.
USDA will continue to build on previous cooperative efforts with
renderers and others to obtain samples from the targeted high-risk
populations. Samples will be collected by authorized State or Federal
animal or public health personnel, accredited veterinarians, or trained
State or USDA contractors. The random sampling of apparently normal,
aged animals will come from the 40 U.S. slaughter plants that currently
handle more than 86 percent of the aged cattle processed for human
consumption each year in the United States. The carcasses of these
animals will be held and not allowed to enter the human food chain
until negative results are received.
USDA anticipates using rapid test technology during the enhanced
surveillance program. However, any rapid test that identifies a non-
negative result will be subject to additional confirmatory testing by
NVSL. A BSE implementation team has been established and is working to
ensure the program meets its goals. The team is currently drafting more
specific guidelines that will be used during the course of the enhanced
surveillance program. These guidelines will address questions regarding
cost recovery and participation in the program.
USDA anticipates pursuing a variety of approaches with regard to
cost recovery, including contracts, cooperative agreements, direct
payments, and fee-basis agreements.
A more detailed version of the plan is available through the APHIS
Web site at http://www.aphis.usda.gov/lpa/issues/bse/BSE_Surveil-
Plan03-15-04.pdf.
TESTING OF ANIMALS PRIOR TO EXPORT
Question. The livestock industry and Department of Agriculture are
working toward reopening export markets in Japan, Mexico, and other
exporting countries. Establishing animal testing guidelines for export
markets continues to be a point of controversy that is preventing any
agreement to open markets. The controversy arises over testing each
animal and whether or not animals under the age of 30 months should be
tested.
Do you believe each animal, including those under 30 months of age
should be tested prior to export? Also, if an agreement requires
testing each animal, what is the expected cost of such a program?
Answer. We do not believe each animal, including those under 30
months of age, should be tested prior to export. Science does not
support the testing of every animal, regardless of age, for BSE.
Further testing apparently healthy animals is the most inefficient
method of finding disease if it were present.
The cost for each rapid test kit is about $25 per test. If we were
to test every animal that goes to slaughter each year (in excess of 35
million), the approximate cost for the test kits alone would be $875
million. However, there are other costs involved in testing the
animals. These costs include sample collection, shipping, handling,
processing, lab support, equipment, disposal, etc. Because of these
other costs, we have estimated that the total cost of testing would be
$175-$200 for each animal. Thus our total cost of testing every animal
would be between $6 billion and $7 billion.
LOW PATHOGENIC AVIAN INFLUENZA
Question. The Administration's fiscal year 2005 Budget request
includes an increase in funding of nearly $12 million to address Low
Pathogenic Avian Influenza (LPAI).
Can you update the Committee in regard to ongoing action related to
avian influenza and explain how the Department would utilize the
additional funding?
Answer. APHIS has been working to establish a national LPAI program
by incorporating this program into the National Poultry Improvement
Plan (NPIP); scheduled to be discussed and adopted at the NPIP meeting
in July 2004. The Uniform Methods and Rules (UM&R) for the live bird
marketing portion of the program has been drafted and is currently
being reviewed by a subcommittee of the U.S. Animal Health Association
in order to obtain their recommendations for program improvement.
APHIS would utilize the additional funding for cooperative
agreements with states that will support the LPAI prevention and
control program; indemnities; for additional field personnel,
equipment, and other resources necessary to assist states with long-
term prevention and control; educational materials and training for
recognition of avian influenza and for biosecurity practices to protect
against the disease; development and administration of vaccine to
support industry when infected with LPAI; and provide reagents and
other laboratory support to incorporate the commercial program through
the National Poultry Improvement Program (NPIP). This program is
currently testing poultry breeder flocks and will continue to expand
its activities until all segments of the commercial industry are
monitored and certified as avian influenza clean.
AVIAN INFLUENZA
Question. With the discovery of avian influenza (AI), a number of
countries have banned poultry imports from the United States.
Can you provide the Committee with an update on poultry export
markets and exactly what actions USDA is taking to reopen these
markets?
Answer. USDA responded quickly and effectively to control the
spread of AI in the AI-affected states. Throughout this process, USDA
officials were in constant contact with their foreign counterparts to
provide timely information about the outbreaks and quarantine control
measures. As a result of these efforts, USDA was able to free pipeline
shipments in Japan and Hong Kong valued at over $40 million, and head
off the actions of many trading partners to impose nationwide bans on
U.S. poultry meat. The good news is that countries representing 47
percent, or $941 million of our export markets, have banned products
only from affected areas and another 18 percent, or $337 million, did
not impose any ban. Therefore, taken together 65 percent of U.S.
poultry exports to the world have been unaffected by the AI situation.
On April 2, the USDA Chief Veterinary Officer (CVO) announced the
completion of the required surveillance and testing protocols per the
World Animal Health Organization (OIE) guidelines. An official request
from the CVO has been sent to major U.S. poultry export markets
requesting the removal of all import bans on U.S. poultry and poultry
product imports. The Department at all levels is diligently pursuing
with its trading partners the lifting of all AI trade restrictions on
products from the United States. By the summer of 2004 or earlier, the
remaining countries imposing nationwide bans on U.S. poultry meat are
expected to at least regionalize their import bans to those states
affected by Low Pathogenic Avian Influenza (LPAI) now that the United
States is free of High Pathogenic Avian Influenza (HPAI).
BEEF EXPORT MARKETS
Question. Livestock producers continue to be concerned with the
loss of export markets following the outbreak of BSE.
Will you take a moment to update the Committee in regard to the
efforts being made by the Department of Agriculture to open export
markets?
Answer. USDA continues to work closely with its foreign trading
partners to re-establish U.S. ruminant and ruminant product exports as
quickly as possible. We work with foreign officials at all levels to
reassure them of the safety of U.S. beef and beef products. USDA
officials encourage foreign governments to follow World Animal Health
Organization guidelines regarding BSE. The Animal and Plant Health
Inspection Service (APHIS) has been in constant contact with its
counterparts providing them with updates on the BSE investigation, as
well as new USDA regulatory policies imposed on BSE testing and
specified risk material (SRM) removal.
As a result of USDA's efforts, a number of countries have opened
their markets to selected U.S. beef, beef products, and ruminant by-
products exports. Mexico and Canada have agreed to accept U.S. boneless
beef from cattle less than 30 months of age. Although export
certification issues continue to impede U.S. beef exports to Canada,
USDA and Canadian officials are expected to resolve the problem very
soon. We expect Mexico to lift its ban on selected U.S. beef variety
meats and veal. Mexico had already lifted its ban on U.S. boneless beef
imports earlier and exempted low-risk ruminant product imports based on
OIE guidelines. Mexico and Canada are the second and fourth largest
U.S. beef export markets, respectively, valued at over $1.2 billion in
2003.
Japan and South Korea, the first and third largest U.S. beef export
markets, continue to ban U.S. beef imports. Senior USDA officials
communicate with their respective government officials and have
traveled there to discuss their concerns with USDA BSE controls and
testing procedures. USDA has extended an invitation to Korean officials
to visit Washington for further discussions. USDA is also planning
another high-level visit to Japan in late April to continue discussions
and resolve issues regarding BSE testing and SRM removal.
In addition, USDA continues to work with governments in secondary
markets to lift their bans to U.S. bovine products as a result of the
finding of a BSE case in Washington State. USDA has sent a letter to
selected secondary countries requesting they open their markets to no
risk and low-risk products. These export markets, while smaller in
total export value, provide significant opportunities to resume U.S.
exports in rendered products, animal genetics, dairy products and other
ruminant by-products.
Question. According to the livestock industry, economic losses to
export markets following the discovery of BSE are estimated to be over
$10 billion.
Has the Department conducted a thorough investigation of the
economic impact of the lost export markets?
Answer. The Office of the Chief Economist and the Foreign
Agricultural Service independently evaluated the situation and
concluded that there will be minimal effects on U.S. meat production
and domestic consumption. U.S. consumers continue strong demand for
beef and beef products, and coupled with tight U.S. beef supplies, beef
and cattle prices remain relatively high. The trade impact will be
significant. In 2003, the United States exported approximately $7.5
billion worth of ruminant and ruminant by-products. U.S. export value
of these products for January-February 2004 alone was down 53 percent,
or over $582 million compared to the 3-year average January-February
period for 2001-2003. The severity of the overall trade impact will
depend upon the number of countries that continue to impose import
bans, their importance to U.S. trade, and the length of time the bans
remain in place.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
Question. The Administration's Budget request for the Department of
Agriculture includes a total of $60 million for BSE related activities.
Can you provide the Committee with the most up to date information
in regard to ongoing activities related to BSE and then take a moment
to explain the increase that has been requested for fiscal year 2005?
Answer. On December 25, 2003, USDA received verification from the
Veterinary Laboratories Agency in Weybridge, England, of the finding of
BSE in an adult Holstein cow slaughtered in the State of Washington.
The epidemiological investigation and DNA test results confirm that the
infected cow was not indigenous to the United States, but rather born
and became infected in Alberta, Canada. Above and beyond OIE standards,
animals with known or potential risk for having been infected with the
BSE agent in Canada have been depopulated, as have all progeny from the
index cow in the United States. All carcasses were properly disposed of
in accordance with Federal, State, and local regulations. Between
January 1, 2004 and March 31, 2004, USDA tested approximately 5,500
cattle for BSE, and all results were negative.
The United States concluded active investigation and culling
activities on February 9, 2004, and has redirected resources toward
planning, implementing, and enforcing national policy measures to
promote BSE surveillance and protect human and animal health.
An international panel of scientific experts appointed by the
Secretary was complimentary of the scope, thoroughness, and
appropriateness of the epidemiological investigation and concluded that
the investigation conformed to international standards. The review team
members concurred that the investigation should be terminated and made
several key policy recommendations. USDA and the Department of Health
and Human Services have already taken significant actions to address
these recommendations, many of which build on mitigation measures that
were previously in place.
The response actions have focused on (1) preventing inclusion of
specified risk materials in human food and ruminant feed, (2) enhancing
targeted and passive BSE surveillance systems, (3) improving
traceability through a comprehensive national animal identification
system, and (4) reinforcing educational and outreach efforts.
On March 26, 2004, USDA's Animal and Plant Health Inspection
Service provided the results of its BSE investigation to foreign chief
veterinary officers. The information included in the letter
demonstrates that any remaining trade restrictions against U.S. beef
and beef products can be lifted without compromising safety.
On March 15, 2004, USDA announced an enhanced surveillance plan
with a goal of testing as many cattle in the targeted, high-risk
population as possible during a 12- to 18-month period. We plan to
evaluate future actions based on the result of this effort. USDA will
continue to focus on the cattle populations considered to be at highest
risk for the disease--adult cattle that exhibit some type of clinical
sign that could be considered consistent with BSE. This includes non-
ambulatory cattle, those exhibiting signs of central nervous system
disorders, and those that die on farms. We also plan on testing at
least 20,000 BSE slaughter samples from apparently healthy aged
animals.
More intensive surveillance will allow USDA to refine estimates of
the level of disease present in the U.S. cattle population and provide
consumers, trading partners, and industry better assurances about our
BSE status.
As an example, if a total of at least 268,444 samples is collected
from the targeted population, we believe this level of sampling would
allow USDA to detect BSE at a rate of 1 positive in 10 million adult
cattle (or 5 positives in the entire country) with a 99 percent
confidence level.
Historically, all BSE testing in the United States has been
performed exclusively at USDA's National Veterinary Services
Laboratories (NVSL) in Ames, Iowa. The new program incorporates a
network of State and Federal veterinary diagnostic laboratories into
the testing program. Their geographic distribution will help ensure
adequate turn-around time for sample testing and reporting of results.
Appropriate rapid screening tests will be used to test time-
critical samples. USDA recognizes the possibility of false positives;
any non-negative results on the rapid screening tests will be forwarded
to NVSL for additional confirmatory testing.
A BSE implementation team has been established and is working to
ensure the program meets its goals. The team is currently drafting more
specific guidelines that will be used during the course of the enhanced
surveillance program. These guidelines will address questions regarding
cost recovery and participation in the program.
The President's fiscal year 2005 Budget request includes $60
million for BSE related activities, an increase of $47 million over
fiscal year 2004. The increase will allow USDA to further its research
efforts, improve animal traceability, enhance surveillance, ensure
compliance with food safety regulations, and answer BSE-related
complaints at markets regarding contracts or prompt payment. The total
requested includes:
--$33 million to further accelerate the development of a national
animal identification system;
--$17 million for the Animal and Plant Health Inspection Service
(APHIS) to enhance BSE surveillance at rendering plants and on
farms;
--$5 million for the Agricultural Research Service (ARS) to conduct
advanced research and development of BSE testing technologies;
--$4 million for the Food Safety and Inspection Service (FSIS) to
conduct monitoring and surveillance of compliance with the
regulations for specified risk materials and advance meat
recovery; and
--$1 million for the Grain Inspection, Packers and Stockyards
Administration (GIPSA) to dispatch rapid response teams to
markets experiencing BSE related complaints regarding contracts
or lack of prompt payment.
Question. What actions have you taken to better coordinate the
Department of Agriculture's response to BSE?
Also, if this $60 million is provided, will one person coordinate
the various components?
Answer. USDA's response to the BSE detection has been overarching
and has included contributions from all affected agencies, particularly
the Animal and Plant Health Inspection Service (APHIS), the Food Safety
and Inspection Service (FSIS), and the Foreign Agricultural Service
(FAS). APHIS, FAS, and FSIS communicate regularly, and an FSIS liaison
has been assigned to APHIS. USDA also communicates and coordinates with
the Food and Drug Administration (FDA), and we requested FDA's input
when developing the enhanced BSE surveillance plan.
APHIS' Transmissible Spongiform Encephalopathy (TSE) Working Group
monitors and assesses all ongoing events and research findings
regarding TSEs, including BSE. Members are in regular contact with the
Agricultural Research Service, the research arm of USDA, to ensure
regulatory actions are in line with the most current science.
To ensure a consistent trade message between the United States and
our North American trading partners, USDA has been working with Mexico
and Canada to enhance ongoing efforts to increase harmonization and
equivalence of BSE regulations. In January 2004, each government agreed
to establish a sub-cabinet group to coordinate ongoing interagency
efforts toward resumption of exports based on a harmonized framework.
Currently, Dr. J.B. Penn, Under Secretary for Farm and Foreign
Agricultural Services, is leading USDA's efforts in this area. He is in
regular contact with other members of USDA's leadership council,
including the Under Secretary for Food Safety, the Under Secretary for
Marketing and Regulatory Programs, and the Under Secretary for
Research, Education, and Economics.
The sub-cabinet group is serving as a coordinating body for the
three countries, giving guidance to existing work groups, many of which
are already working on harmonization and other activities. A meeting
among the sub-cabinet members was held in mid-February, and a meeting
among the chief veterinary officers from all three countries took place
in mid-March 2004. The three parties are committed to working towards
the normalization of trade and the harmonization of regulations on a
North American basis. We plan to use the harmonized regulations to
present a unified front to the international community.
STANDARD REINSURANCE AGREEMENT
Question. The Risk Management Agency (RMA) is currently working to
renegotiate the Standard Reinsurance Agreement (SRA). This agreement
establishes the terms and conditions under which the Federal government
will provide subsidies and reinsurance on eligible crop insurance
contracts.
Can you provide the Committee with an update on the negotiation
process and have you set a deadline for completion?
Answer. The Department announced on December 31, 2003 that the
current standard reinsurance agreement would be renegotiated effective
for the 2005 crop year. The first proposed reinsurance agreement was
made publicly available at that time. Based on the advice of the
Department of Justice, RMA established a process by which we meet with
each company individually and renegotiate the agreement in detailed
negotiating sessions. Interested parties had until February 11, 2004 to
provide written comments about the proposed agreement. RMA reviewed
comments from insurance companies and interested parties to revise the
first draft. On Tuesday, March 30, RMA announced the release of the
second SRA proposal. RMA believes that the second draft demonstrates
responsiveness to concerns raised by companies and interested parties.
The proposed SRA will enhance the Federal crop insurance program by:
encouraging greater availability and access to crop insurance for our
nation's farmers; providing a safe and reliable delivery system; and
reducing fraud, waste, and abuse, while achieving a better balance of
risk sharing and cost efficiencies for taxpayers.
As part of the process, RMA will meet with the insurance providers
in individual negotiating sessions the last 2 weeks of April and will
receive public comments until April 29. At that point RMA will evaluate
the comments and negotiating session materials and develop another
draft for discussion with the companies. There are several remaining
issues of substance to resolve before a final draft may be completed.
While it is the agency's desire to resolve them and complete the
process before July 2004, given that this is a negotiation, RMA is not
able to determine how long it will take to resolve issues to all
parties' satisfaction. Prior SRA negotiations have taken well past July
to conclude, but have not affected the continuing delivery of the
program.
FRAUD AND ABUSE
Question. The Administration's Budget request for the Risk
Management Agency includes an increase of over $20 million to improve
information technology. Within the increase, the Budget requests
funding to monitor companies and improve current procedures to detect
fraud and abuse.
Can you explain how the department will monitor companies and
improve detection of fraud and abuse?
Answer. The current systems are based on technology that is more
than 20 years old. The information that is collected from the Insurance
Companies is distributed to a collection of 100+ databases. Any
subsequent updates or changes to this information received from the
Insurance Companies overlays the original information. This
architecture does not allow RMA to track changes in the submissions
from the external entities.
As the data requirements of the current data structures change from
year to year, new databases are created for each crop year. The prior
years' databases are problematic due to the intense effort needed to
convert the historical information to formats that are consistent with
the more recent years. This creates problems in data analyses when
trying to use data from multiple crop years.
The requested increase in funds is directed at the establishment of
a consistent enterprise architecture and enterprise data model. This
would replace the 100+ databases with a single enterprise data model
that would be consistent across the organization. This enterprise data
model would allow data mining operations to be conducted without first
converting the data to a consistent useable format.
By moving the data to a modern relational database system, RMA will
be able to track detailed changes that are made to the data that is
received from the Insurance Companies. This will allow RMA to monitor
the timing of the changes as they occur and identify those changes that
could potentially be related to fraud and abuse.
ASSISTANCE ON PUBLIC LANDS
Question. Currently, the Natural Resources Conservation Service is
prohibited from performing conservation work on public lands. This
limits participation to farms and ranches with private lands and puts
Utah, other public land states, and ranchers who graze on the public
lands at a disadvantage.
As a matter of policy, does the Department believe that the Natural
Resources Conservation Service should be able to provide technical and
financial assistance to ranchers to make improvements to their BLM and
Forest Service grazing allotments?
Answer. The Department believes that legislative intent limits the
conservation programs that the Natural Resources Conservation Service
(NRCS) administers to primarily providing financial and technical
assistance on private lands. However, NRCS does work with other
agencies, individuals, and groups using the Coordinated Resource
Management (CRM) approach to provide technical assistance on Bureau of
Land Management (BLM) and Forest Service lands. CRM is a voluntary,
locally-led planning process to address the natural resource issues
which involves all the stakeholders. The Federal and State agencies
work through a Memorandum of Understanding to support the use of the
CRM approach.
Financial assistance, for applicable NRCS programs, is available
for use on BLM and Forest Service grazing allotments when the land is
under private control for the contract period, included in the
participant's operating unit, and when the conservation practices will
benefit nearby or adjacent agricultural land owned by the participant.
Question. Public lands dominate many of Utah's counties and many
states in the West. In addition to their impact on agriculture, public
lands severely reduce the tax base in many communities, restrict and in
some cases discourage development, and affect the way-of-life in rural
public land counties.
Do you think farm programs, rural development programs, and
conservation programs offered by USDA, take into account regional
differences generally, and the impact of public lands specifically?
Answer. The Natural Resources Conservation Service (NRCS)
administers conservation programs. The agency allocates conservation
program funds to states based on National program priorities and the
scope of natural resource needs in the individual states. The process
used to allocate conservation program funds to states includes factors
that account for the fact that natural resource conditions are often
similar within the same physiographic region, but may have natural
resource differences with other regions. The Department believes that
legislative intent limits the conservation programs that NRCS
administers to primarily providing financial and technical assistance
on private lands. Resource concerns on Federal acreage would not
typically contribute to the scope of resource factors used to allocate
funds to states for a particular conservation program.
FSA Conservation Programs are adapted to local and regional
conditions. Seeding and planting requirements are tailored to the local
climatic and ecosystem for that region. FSA utilizes State Technical
Committees and County Committees in the development and implementation
of conservation policies.
Conservation programs, such as the Conservation Reserve Program
(CRP), help address the most critical resources on private land. Sound
resource planning on private land assists producers to better manage
their other resources including range resources on public land. In
addition, programs such CRP can have a significant positive impact on
hydrology and water resources in the West. Water yields off of CRP can
be of greater quantity and longer duration than water yields on
cropland.
USDA Rural Development allocation formulas generally take into
account: (1) rural population in comparison to national rural
population; and (2) rural population in poverty in comparison to
national rural population in poverty. While that does not make an
adjustment for a regional area that is impacted by a large amount of
public lands, it also does not punish an area. The lack of population
concentration could give a state like Utah and other western states an
advantage because of the rural nature of the areas. Grant programs like
the Distance Learning and Telemedicine, Community Connect and the Water
and Waste Disposal loan and grant program give those areas additional
points in the scoring process.
NATIONAL FINANCE CENTER/TSP COMPETITIVE BIDDING
Question. Madam Secretary, the National Finance Center did an
admirable job in late 1986 to get ready to assume responsibility for
the record keeping functions associated with the new Thrift Savings
Plan which started receiving participants investment selections in
April 1987. Many people didn't think it could be done but the NFC did
it.
It has recently been brought to my attention that the Federal
Retirement Thrift Investment Board has begun to explore the competitive
outsourcing of the services related to the TSP. Earlier this year, the
Board decided to solicit a Request for Proposals for both software
maintenance and mainframe installation and housing. I am told that
these actions were taken because the NFC was ``slow to assume control
for software maintenance and to install the TSP's new mainframe
computer.'' The Board has also stated that while they intend to leave
the remaining TSP record keeping functions at the NFC, they will
periodically conduct a cost/benefit analysis to make sure that TSP
participants get the best value for their money.
What percentage of the NFC operations has been associated with
management and operations of the Thrift Savings Plan?
Answer. Approximately 425 employees, 35 percent of the National
Finance Center's (NFC) total staff, supported the Thrift Savings Plan
(TSP) in fiscal year 2003.
Question. What is the impact of the decisions to outsource software
maintenance and the location of the mainframe?
Answer. Outsourcing software maintenance resulted in a reduction of
31 programmers and analysts. Moving the mainframe will reduce the data
center mainframe support staff by 7.
Other cutbacks in service recently directed by the Federal
Retirement Thrift Investment Board (FRTIB) will eliminate 20 additional
positions in NFC's Thrift Savings Plan Division in fiscal year 2004 and
120 additional call center employees by 2006. The administrative and
other general support staff for these employees will also be reduced.
NFC anticipates 65 administrative and general support staff positions
to also be reduced by 2006. Another 15 contract positions will also be
lost. In total, between 2004 and 2006, decisions by FRTIB to outsource
work historically performed at NFC will result in a loss of 243 Federal
and 15 contract positions in New Orleans.
Question. Will the NFC compete to retain these functions?
Answer. NFC was not given an opportunity to compete for the
software maintenance and mainframe operations work.
Question. What steps is the NFC taking now to make sure that they
are the best facility to continue the remaining vital record keeping
functions for this program?
Answer. NFC is attempting to redefine the FRTIB/NFC relationship
and develop principles of operation for TSP that help clarify roles,
responsibilities, and service level expectations for the future.
NFC has multiple initiatives underway to ensure that its facilities
are secure and that they meet or exceed customer expectations. The
United States Department of Agriculture (USDA) performed an extensive
security assessment in 2002 on the current facility. As a result of
that assessment, NFC has undertaken 31 multi-year facility improvement
initiatives, most of which are now completed. The facility improvements
include such things as increasing the number of guards; adding x-ray
machines, fencing, and bollards; and building guard stations.
NFC also received an appropriation to develop data mirroring
capability at NFC, which will address known network vulnerabilities,
high availability and immediate recovery time objectives, and the
enterprise-wide vulnerabilities to weather and other threats that
jeopardize NFC's service to its customers.
USDA'S CENTER FOR VETERINARY BIOLOGICS
Question. Madam Secretary, on February 10 of this year, UPI
published a story which stated that many Federal meat inspectors had
lost confidence in the testing conducted by the National Veterinary
Services Laboratories in Ames, Iowa. There were allegations of secrecy
and collusion with the beef industry, as well as inaccurate test
results. We are aware that the USDA Inspector General has been looking
into these allegations as part of their larger investigation into
issues surrounding the December discovery of a BSE-contaminated cow in
Washington State.
The fiscal year 2005 budget requests $178 million to expand this
facility. Obviously, with resources as tight as they are, it would be
imprudent for us to provide this level of funding to upgrade and expand
a facility if it provides unreliable testing.
What is the USDA reaction to this article?
Answer. USDA's Center for Veterinary Biologics, National Animal
Disease Center, and National Veterinary Services Laboratories (NVSL)
are all located in Ames, Iowa. The laboratories included in the Ames
complex, now identified as the National Centers for Animal Health, are
recognized nationally and internationally for their scientific
expertise and professional ability. They continue to receive
recognition from various science-based organizations, including the
United States Animal Health Association (USAHA) and the American
Association of Veterinary Laboratory Diagnosticians (AAVLD).
The President's fiscal year 2005 Budget request includes $178
million to modernize the Ames complex, a request that has received the
full support of organizations such as USAHA and AAVLD, as well as the
Animal Agriculture Coalition and the American Farm Bureau Federation.
With regard to the February 10, 2004, UPI article, USDA believes
the allegations made are inaccurate and that the article itself does
not represent a balanced profile of the work carried out by scientists
at NVSL. USDA is confident in the quality and competence of all
laboratory staffs in Ames, and we regret that the reporter did not
include the viewpoints of any staff members currently employed at NVSL,
which has been responsible for BSE testing at the national level.
NVSL has quality assurance standards in place, as well as standard
operating procedures to track samples that are sent in for testing. The
facility is recognized as the United States' national and international
reference diagnostic laboratory for animal diseases, as designated by
the World Organization for Animal Health (OIE) and the Food and
Agriculture Organization of the United Nations. NVSL staff members have
participated with full transparency in a review by the USDA Office of
the Inspector General, just as they operate with full transparency in
carrying out program operations.
USDA continues to stand behind the work of its laboratory staffs in
Ames, and we plan to move forward with an enhanced BSE surveillance
program that incorporates a network of approved State and Federal
veterinary diagnostic laboratories throughout the United States. NVSL
will provide leadership, confirmation testing, proficiency testing,
quality assurance inspections, and training throughout this program.
Question. When do you expect the IG to complete the investigation?
Answer. The Office of Inspector General's (OIG) investigators and
auditors are working collaboratively to determine the facts involving
BSE-related allegations that have been circulating in the public
domain, including those in the article you mention. OIG's investigative
work involves the condition of the BSE-infected cow before slaughter.
OIG auditors are separately conducting a broader review involving USDA
BSE Surveillance Programs. The audit is looking at the surveillance
program in use when the BSE-infected cow in the State of Washington was
identified. It is also looking into changes made to the surveillance
plan (New Surveillance Plan) after the BSE-infected cow was discovered.
This also includes looking at the role and responsibilities of the
National Veterinary Services Laboratory in Ames, Iowa. Within the next
few weeks, OIG will be in a better position to estimate a completion
date for reporting its findings from those reviews.
______
Questions Submitted by Senator Christopher S. Bond
RISK FACTORS
Question. Dr. Collins, in our questions regarding forecasting, you
mentioned that, ``There are just too many risk factors going on for us
to go much beyond a decade.''
Can you please identify some of the risk factors or uncertainties?
Answer. Long-term forecasting models are generally based on long-
term relationships among explanatory variables, such as income and
population, and variables to be projected or forecast, such as corn
demand and trade. These relationships are also based on a number of
other factors, ranging from infrastructure to government policy, which
are not usually explicit in models. Therefore, long-run projections can
go wrong when projections of explanatory variables are wrong or there
are changes in the underlying structures that invalidate the
relationships between explanatory variables and variables to be
projected. As examples, the longer the projection period, the larger
the error is likely to be in projecting income, population, exchange
rates, yield per acre and other such explanatory variables. These are
all risk factors. Similarly, changes in governments, government
policies, infrastructure such as available transportation routes and
modes, weather and climate, war and peace, availability and prices of
substitute or competing products, and availability and prices of
production inputs are all risk factors as well. The longer the forecast
period, the more likely these underlying factors will change and reduce
the accuracy of the projections. Statistical projection models estimate
the range (confidence interval) within which the projection is expected
to be. The further the projection is into the future, the larger is the
confidence interval.
Question. Dr. Collins, given all the risk factors that you identify
and changes that have transpired in the world in recent years, is it
necessarily so that to embrace a forecasting model looking ahead, that
same model would need to accurately predict recent experience when
applied to the same time period looking backward?
Answer. A long-term projection model is normally validated against
historical data. If the model cannot explain past trends, then there is
little reason to embrace it. However, a model may be useful for
projecting trends, or central tendencies, and still miss some year-to-
year variation due to transitory factors. If the model errors are for
the most recent years, the challenge is to know whether these misses
are due to transitory factors that will correct over time or whether
the underlying assumptions on which the model is based have changed.
______
Questions Submitted by Senator Ted Stevens
BUDGET CUTS
Question. Thank you Secretary Veneman for appearing before this
committee today. I understand that your department is operating under
challenging funding constraints, and you had to make some difficult
decisions in preparing your budget. However, I am extremely concerned
with the level of funding you chose to allocate to certain programs,
and how those choices will affect constituents in my state.
The Rural Utilities Program was established to provide rural
communities with assistance to support basic needs of its residents.
This includes many of the things that we take for granted such as
running water, electricity, and waste disposal. These basic amenities
are vital to the health of these rural communities and yet the USDA has
slashed the funding of this program.
In Alaska alone, funding was reduced for water and waste disposal
systems from $28 million in fiscal year 2004 to $11.8 million in fiscal
year 2005, a reduction of $16.2 million.
Funding was also eliminated to develop a regional system for
centralized billing, operation and management of water and sewer
utilities, which will streamline operations, reduce overhead, and
ensure efficient management.
And funding was eliminated for high cost energy grants--a reduction
of $28 million. Alaska's rural communities experience some of the
highest energy costs in the nation--paying up to 9 times higher than
the national average. Rural areas rely on expensive diesel fuel which
must either be barged or flown in.
These cuts will have devastating consequences on rural communities,
particularly in my state. Why are these cuts proposed?
Answer. The Department is aware that high energy costs in Alaska
and other states can be a barrier to the economies and quality of life
in rural communities. It also recognizes that there are a host of other
barriers that can have similar consequences. In a tight budget
situation, it is very difficult to make the necessary choices that will
provide effective results for the most people. Grants for rural
development purposes are particularly difficult to budget because they
have a dollar for dollar impact on the limited amount of budget
authority that we have available. Loans, on the other hand, require
budget authority for only the amount of subsidy costs. In most cases,
these costs are relatively low. A small amount of budget authority used
for loans can leverage a substantial amount of financing for the types
of projects that will be the most help for rural communities. This was
a significant factor in the decisions that were made in developing the
2005 budget.
DISTANCE LEARNING, TELEMEDICINE AND BROADBAND
Question. Additionally, USDA reduced funding for the Distance
Learning, Telemedicine and Broadband program by $14 million.
With respect to the telemedicine program, most of Alaska's rural
communities are not on a road system and so do not have access to
healthcare facilities. These communities rely on the telemedicine
program, which provides them access to doctors and healthcare
professionals.
The distance learning program is also important to Alaska's rural
communities because it provides residents with tools necessary for
education. These residents don't have access to the more populated
urban centers and rely on distance learning programs to meet their
educational needs.
Similarly, the broadband program connects schools, libraries,
homes, and health clinics to the information highway. Without funding
for this program, the residents have limited access to the outside
world. Why was funding cut for these programs?
Answer. The $14 million reduction was not a cut. Congress, in
fiscal year 2004 appropriations, added $14 million in funding under the
DLT program specifically for the purpose of providing grants to Public
Broadcast Stations serving rural areas with funding to meet the Federal
Communications Commission mandate to convert their analog broadcast
signals to digital. None of that funding was for DLT or broadband
grants. The $25 million request for DLT grant funding is within
historical funding level requests. With regard to broadband grants, the
deployment of broadband facilities in rural areas is very capital
intensive. Typically, limited grant authority provides a very small
number of communities nation-wide with the ability to deploy broadband
service on a limited scale within the community. There isn't enough
grant funding available to make a significant dent in achieving
universal broadband service deployment in rural areas. The best model
is one built on a company that has a strong business plan and that
seeks to take advantage of economies of scale in its business model.
The Broadband Loan program is designed to specifically meet this
challenge. With reasonably low subsidy rates and low loan interest
rates, the loan program will be the vehicle by which broadband
infrastructure is deployed on a wide scale basis in all of rural
America.
TRANSSHIPMENT OF BEEF FROM THE LOWER 48 TO ALASKA
Question. I am pleased that USDA has increased funding for APHIS
for animal diseases. I understand that you are currently negotiating
with the Canadian government regarding the reopening of our borders.
This is particularly important to my state, which relies on the Alaska-
Canada highway, or ALCAN to transport live cattle and beef products to
Alaska.
In the February BSE hearing which Senator Specter held, I raised
the issue of transshipment. The inability of transporting cattle and
beef products from the Lower 48 to Alaska is having a devastating
impact on ranchers, dairy farmers and truckers in Alaska.
At that time, I requested that the USDA take steps to address this
issue and to negotiate an agreement to permit the safe passage of
cattle and beef products through Canada.
Has the USDA taken any steps to address this situation? If so, what
is the status of your negotiations and how soon can we expect a
resolution on this issue?
Answer. We appreciate the position of Alaskan ranchers, dairy
farmers, and others who wish to transport U.S. cattle, beef, and beef
products through Canada to Alaska. USDA continues to work with Canadian
colleagues to reach an agreement on a regulatory protocol that would
allow the safe transiting of U.S. cattle and beef products through
Canada to and from Alaska. United States and Canadian officials have
had a series of discussions regarding this issue--the latest in early
March 2004--and we hope to resolve the matter in a timely fashion.
In a broader context, USDA continues to push for a more reasoned
international dialogue on the need for countries to devise more
flexible, commercially viable solutions to allow safe trade in low risk
products. We are working with the World Animal Health Organization to
both clarify the international guidelines for trade and ensure a
consistent application of these guidelines. In addition, USDA continues
to work with both of our tripartite partners, Canada and Mexico, to
harmonize North America's approach to handling trade in certain
commodities that present minimal BSE risk.
______
Questions Submitted by Senator Herb Kohl
HEALTH CARE COOPERATIVE PILOT
Question. Recent studies by the University of Wisconsin-Madison and
others demonstrate that farmers pay an average of three times as much
for their health care coverage as salaried employees and pay twice as
much as other self-employed individuals. These plans carry high
premiums and high deductibles and do not contain preventive health
care. Furthermore, 41 percent of our farm families cannot afford to
insure every member of their family and nearly half of those families
have no insurance at all.
One or more family members must often work off of the farm to
obtain less expensive group health insurance. This acts as a
significant labor barrier when the farm operation is determining
whether or not to modernize. The net result is a loss of farm
operations. We know this because farmers say that the lack of
affordable quality health care is a primary reason why they will no
longer farm.
Because of the lack of affordable health insurance, farm supply
cooperatives and other small businesses in rural areas are working to
help their farmer-members stay on the farm by creating a cooperative
healthcare purchasing alliance. This purchasing alliance is designed to
provide a group coverage alternative to individual coverage. The
healthcare co-op could serve as a model for other rural and urban
cooperatives to provide access to group coverage for individuals that
otherwise would not be able to access affordable health care.
Secretary Veneman, are you supportive of the creation of a pilot
health care cooperative purchasing alliance for farmers and small
businesses in rural communities?
Answer. We would certainly support every appropriate and realistic
effort to fill the serious gaps in health insurance coverage available
to farmers and other rural residents. Purchasing alliances,
cooperatives, and mutuals have a demonstrated track record of lowering
costs and responding to the special needs of their members. A properly
structured pilot healthcare cooperative purchasing alliance could be a
very useful tool for shaping effective and efficient solutions.
Question. A ``stop-loss'' fund will be needed to attract potential
insurers and healthcare providers and ``buy down'' the risk for farmers
and other individuals who are currently considered to be ``high risk''
because they have not been insured during the last 12 months or longer
or have only carried a catastrophe healthcare plan. Cooperative
councils in Wisconsin and Minnesota are working to create these
healthcare cooperatives. They report to me that insurers and
reinsurance carriers do not want to offer healthcare insurance to the
cooperative if they include ``high risk'' members without the assurance
of a stop-loss fund.
Overall, this demonstration project would potentially help
thousands of agricultural producers. This demonstration project would
provide affordable, quality group healthcare coverage as an alternative
to individual coverage for farmer members of rural, agriculturally-
based cooperatives. By doing so, this removes a primary barrier for
growing agriculture across the nation.
Will you support appropriations to help create a stop-loss fund to
move these healthcare cooperatives forward?
Answer. Our support would depend upon certain conditions. First,
our support would be limited to funding that is used in the start-up
process. We do not believe this should become a perpetual support
program that takes on the nature of an entitlement. Second, extensive
input and oversight in the use of the funds would be appropriate. This
is a new and untested effort whose success or failure may well be
determined by the quality of the decisions made by its management. If
we provide funding, we have an obligation to do what we can to make
sure the overall effort is well conceived, well organized, and well
managed. Third, we need the authority and resources to properly analyze
the effectiveness of the program. We need to make sure, for example,
that Government funding does not distort the real economic costs of the
system or give false impressions about the likely success of future,
self supporting systems. Any such appropriation should include funding
for adequate USDA staffing to assist and monitor this initiative.
COOPERATIVE SERVICES TECHNICAL ASSISTANCE
Question. The Committee is concerned that over the last several
years State Directors have not been held accountable to meet the
Department's Cooperative Services technical assistance goals as
outlined in the Rural Development Strategic Plan. This plan states that
in order to achieve rural development's goals, the Department
emphasizes the use of cooperatives to develop the institutional
framework to leverage rural America's assets.
Madam Secretary, will you hold your State Directors accountable to
meet the Department's goals as stated in the strategic plan to provide
technical assistance for cooperatives?
Answer. We will make ourselves accountable for the directions we
are laying out for ourselves in our strategic planning process.
Building accountability into the Rural Development system, at all
levels, is critical if our planning process is to be of any value. We
have developed and distributed an administrative notice directing our
State Rural Development Directors to provide regular and prescribed
reports on the cooperative development assistance activities being
undertaken by their staffs. This regular reporting system will provide
the basis for holding our State Directors accountable for cooperative
development work.
Question. Will you commit to requiring State Directors to dedicate
at least one full time employee per State for cooperative services
technical assistance?
Answer. We are taking steps to determine the appropriate resources
and staffing mix in providing Cooperative Services technical assistance
within each State. We are engaged in a set of reviews and analyses of
our Cooperative Services program that will enable us to develop sound
guidance and directions on how we can best deploy cooperative technical
assistance assets, particularly in light of our strategic goals and
objectives. A high level external program review team is initiating a
formal review of the Cooperative Services technical assistance
programs, resource mix and requirements, priority area of focus, and
fit within the Rural Development program portfolio. We have also
established a cooperative advisory committee composed of Rural
Development field and National Office staff to provide an internal
review and suggestions for strengthening the effectiveness of Rural
Development's field level delivery systems for Cooperative Services
programs and activities. We will use the products of these review
activities in conjunction with the Rural Development strategic plan to
better position ourselves to make specific commitments to alternative
resource deployment for providing Cooperative Services technical
assistance.
Question. Beyond ensuring a minimum of one FTE per state, staffing
resources should be reflective of the number of cooperatives in the
state and the number of small farm producers.
Are you supportive of working to ensure that state offices are held
accountable to have staffing that reflects the level of need for
cooperative services technical assistance in each State, based on the
number of coops in each state?
Answer. There are several factors we believe are necessary to
consider in deciding how to deploy resources to cooperative services
technical assistance programs. While the existing number of
cooperatives in a given State or region is certainly one criterion, we
would also want to take a broader needs and opportunities based
approach to designing program delivery. We want to make sure small and
underserved farmers have appropriate access to technical assistance;
and we want to make sure that new markets and industries growing out of
value added and energy products receive due attention.
______
Questions Submitted by Senator Tom Harkin
CONSERVATION PROGRAMS
Question. Madame Secretary, I noticed that you state in your
testimony that the Administration is increasing funding for
conservation for fiscal 2005. However, if you compare the President's
budget proposal to what Congressional Budget Office estimates should be
spent on 2002 farm bill conservation programs, the President's budget
represents a cut of over $400 million for fiscal 2005. This includes
the $92 million for technical assistance for the Conservation Reserve
Program and the Wetlands Reserve Program because the President's budget
does not propose new funding to fix the technical assistance problem
created by this Administration.
Would the President support providing new funding for conservation
technical assistance without an offset so the other conservation
programs, like the Environmental Quality Incentives Program, will no
longer need to lose funding to support other programs?
Answer. The President's fiscal year 2005 Budget proposes a brand
new Farm Bill Technical Assistance account to provide separate and
distinct technical assistance funding to support the Conservation
Reserve Program and the Wetlands Reserve Program. The President's
fiscal year 2005 Budget reflects the change in law that was initiated
by the Subcommittee to ensure programs that historically could fund
their own technical assistance, could continue to do so. We feel that
the Administration's approach is the best way to ensure that adequate
funding resources are available to implement all conservation programs.
Question. What are the underlying assumptions for the $249 million
estimate for the Conservation Security Program (CSP)? Does this $249
million estimate reflect the law as it is in effect following the
enactment of the 2004 Consolidated Appropriations Act?
Answer. We have been able to design the Conservation Security
Program (CSP) in a way that provides funding obligations similar to the
way that the Conservation Reserve Program obligations are structured.
We estimate that there is a potential applicant pool of 700,000
producers nationwide to sign-up for CSP. Given the $41 million
available for this fiscal year and undetermined amounts for fiscal year
2005 and beyond, USDA has had to design a program that is flexible
enough to be able to function at any funding level. To accomplish this
we have proposed making the program available in selected watersheds
and emphasizing enrollment categories.
The NRCS approach also deals with the constraint placed in statute
on technical assistance at 15 percent of expended CSP funding. If USDA
was to conduct a nationwide sign-up for CSP, technical assistance costs
would far exceed the $41 million made available in fiscal year 2004 for
the program just for the signup. The Administration's budget assumes
that all watersheds would be offered a CSP sign-up within an 8 year
rotation; about one-eighth of the total watersheds would be offered
sign-ups annually.
The 10 year spending cap is no longer in effect.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
Question. You suggested that the revised BSE surveillance plan will
require $70 million (that will be obtained from CCC) to test at least
201,000 cattle. The President's fiscal year 2005 budget proposed to
test 40,000 cattle at a cost of $17 million. APHIS now plans to
increase the number of animals tested by more than five-fold and that
the new surveillance plan will include incentives paid to farmers and
veterinarians to collect and submit samples to APHIS.
Is a four-fold increase in funding adequate to cover the costs of
this increased surveillance, testing and incentives?
Answer. In fiscal year 2003, APHIS tested approximately 20,000
samples for BSE, the majority of which were collected from animals at
slaughter facilities. When the fiscal year 2005 budget request was
submitted, the Secretary had announced that certain new regulations
were going into effect--such as the banning of non-ambulatory cattle
from slaughter facilities--but USDA had not yet received the
international review panel's recommendations with regard to an enhanced
surveillance program.
The fiscal year 2005 President's Budget request, therefore,
included enough funding for APHIS to double the number of samples
collected from 20,000 to 40,000 samples and to provide for certain
cost-recovery options. However, since the fiscal year 2005 budget was
submitted, USDA has revised its BSE surveillance program for fiscal
year 2004 and fiscal year 2005 to allow for more than 200,000 samples
to be collected and tested over a 12 to 18 month period. We will now be
utilizing a network of approved laboratories and will achieve certain
economies of scale with regard to other costs, such as shipping and
test kit costs. We anticipate that funding will be adequate to cover
the costs of the enhanced surveillance and testing program.
Question. The downed cattle population represents a large portion
of USDA's BSE proposed test population.
Since downed cattle have been removed from the human food supply,
and it will be more difficult to obtain access to these cattle for
testing, will the $70 million be adequate to pay for the additional
expected costs of incentives for downed animals that do not come to
slaughter plants?
Answer. A BSE implementation team has been established and is
working to ensure the enhanced surveillance program meets its goals.
The team is currently drafting more specific guidelines that will be
used during the course of the program. These guidelines will address
questions regarding cost recovery and participation in the program.
USDA anticipates pursuing a variety of approaches with regard to
cost recovery, including contracts, cooperative agreements, direct
payments, and fee-basis agreements. For example, costs for transporting
an animal or carcass to the collection site from a farm or slaughter
establishment may be reimbursed, or disposal expenses for ``suspect''
cattle that test non-negative or that cannot be rendered may also be
covered. Other expenses may also be addressed in the program.
We anticipate that the $70 million provided to APHIS through an
emergency transfer will be adequate to cover the cost of the enhanced
surveillance program during the course of the 12-18 month effort.
MEAT AND POULTRY SAFETY
Question. As you know, USDA still does not have a nationally
representative, statistically robust, baseline surveillance program for
pathogens on meat and poultry products. We still do not know the
prevalence of common foodborne pathogens, such as E. coli O157:H7 and
others that kill thousands of people in the United States each year.
While it is critical to implement a national surveillance program for
BSE, it is equally critical to know the prevalence of pathogens on meat
and poultry products.
Can you provide me with your plans for developing a national
baseline surveillance program for pathogens on meat and poultry
products?
Answer. FSIS is committed to developing baseline studies that will
help the agency and the industry to better understand what
interventions are working or how they could be improved. Currently,
FSIS is developing protocols to enable us to conduct continuous
baseline studies to determine the nationwide prevalence and levels of
various pathogenic microorganisms in raw meat and poultry.
To achieve the agency's goal of applying science to all policy
decisions, the fiscal year 2004 appropriations bill provided $1.65
million for an initiative to establish a continuous baseline program.
After the fiscal year 2004 appropriations bill was enacted, the agency
quickly developed a Request for Proposals. On February 12, 2004, the
agency posted the pre-solicitation notice, and then on February 29, and
March 2, 2004, the solicitation and accompanying materials were posted
on the web site, FedBizOpps.gov, which is the point-of-entry for
Federal government procurement over $25,000. The official solicitation
issue date was March 1, 2004, and all offers were due on April 1, 2004.
FSIS is currently evaluating offers and expects to award a contract in
June 2004.
Baseline studies will provide information on national trends and
are a tool to assess performance of initiatives designed to reduce the
prevalence of pathogens in meat and poultry products. These baseline
studies will also yield important information for conducting risk
assessments that can outline steps we can take to reduce foodborne
illness. These surveys will also be important in establishing the link
between foodborne disease and ecological niches, as well as levels and
incidence of pathogens in meat and poultry. The net result will be more
targeted interventions and the effective elimination of sources of
foodborne microorganisms.
Question. What would be the estimate of the cost of such a program?
Answer. FSIS estimates that each year, it can complete one baseline
and begin a second one using the $1.65 million appropriated in fiscal
year 2004. Since there are at least 15 different products for which
baselines could be considered (e.g. beef trimmings, beef carcasses,
ground beef, chicken carcasses, and ground chicken), FSIS could
complete a full cycle of baselines in about 10 years at a cost of
approximately $16.5 million. If baselines were repeated every 3 to 5
years, the yearly costs would be higher.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. The USDA budget proposes $33 million for the development
of a National Animal Identification system, even though most estimates
for implementation of the system are well above $100 million. I have
repeatedly stressed the need for this system to ensure animal health,
consumer confidence, export markets and public health. The proposed
budget amount falls far short of the full implementation costs and will
impede USDA's ability to implement a system that will meet these goals.
Given the limited funding, which parts of the system do you plan to
fund, and which parts of the system will you leave to states and the
private sector?
Answer. The President's Budget for fiscal year 2005 requests $33
million for animal identification. This funding would support the
national repositories for identification of premises, animals and non-
producer participants; cooperative agreements with states, tribes, and
third parties; communication and outreach efforts, and some staff to
support the effort. The cooperative agreements would be one-time
allocations for initial implementation and integration with the
national repositories. USDA would look to state or state consortiums
for additional contributions, depending on the integration needs. It is
also expected that producers and other market participants would share
in the system's cost.
There is an important role for private industry in the National
Animal Identification System. One of the key elements of the National
Animal ID program is to be technology neutral in the requirements of a
national system. This objective was to provide flexibility to producers
and to prevent the stagnation of innovation in technology. Private
industry will be critical in providing technology and service to
producers and markets. Grass-roots interface with producers, states and
other parties will be needed to support the successful implementation
of a national animal identification system.
Question. How did you arrive at this decision?
Answer. The recommendations reflect the complex structure of the
livestock industry and previous efforts to design and implement a NAIS.
The decision process was chaired by the Chief Information Officer with
assistance from USDA's BSE response coordinator, the Deputy Under
Secretary for Farm and Foreign Agricultural Services; USDA General
Counsel; and USDA Chief Economist. The group relied heavily on the
excellent information developed as part of the U.S. Animal
Identification Plan (USAIP) and on the expertise of the USAIP Steering
Committee; the Under Secretary for Marketing and Regulatory Programs;
and the Administrator and the staff of the Animal and Plant Health
Inspection Service. The group also met with a broad spectrum of
organizations and companies representing the meat supply system, from
production through retailing.
MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION PROGRAM
Question. I want to ask you about the McGovern-Dole International
Food for Education Program that we permanently established in the 2002
Farm Bill. We provided $100 million for fiscal 2003 for the program in
mandatory funds, but we were only able to provide $49.7 million for
fiscal 2004.
Please describe to me how the program has to be scaled back to fit
within the lower funding level for fiscal 2004, and how many fewer
children will be served compared to fiscal 2003?
Answer. The fiscal year 2003 program, which totaled $100 million,
supported a total of 130,000 tons of commodity donations for 21
programs with the total beneficiaries estimated at 2.2 million. It is
estimated that the fiscal year 2004 funding level of $49.7 million will
provide approximately 60,000 tons of commodities for 10-15 programs
with approximately 1.1 million beneficiaries.
Question. Also, please describe to what extent USDA has been able
to recruit participation in the program by other donor countries.
Answer. Under the pilot Global Food for Education Initiative and
the McGovern-Dole International Food for Education and Child Nutrition
program over $1 billion has been donated to school feeding programs
from other donors. These contributions have been primarily via the
World Food Program but also in coordination with private voluntary
organizations. In addition, the in-kind contributions in recipient
countries have been significant.
Question. In the last few months, we have seen significant
increases in key commodity prices in the United States. On a season-
average basis, 2003/04 prices for corn, wheat, rice, and soybeans have
increased between 2 and 10 percent just since December 2003, with cash
soybean prices now spiking near $10/bushel. While that is certainly a
beneficial development for American farmers who still have crops from
last fall in their storage bins, it will also increase the cost of
acquiring commodities for USDA and USAID food aid programs.
Given that the President's budget does not include an increase to
compensate for these higher prices, will it be necessary to curtail the
scope of these food aid programs? And, if so, to what extent?
Answer. Yes, it will be necessary to curtail the scope of these
food aid programs. USDA calculated the potential impact of price
increases of both commodities and freight on USDA food aid programs for
fiscal year 2004. I will provide a table which shows the expected
decrease in tonnages and people fed under the programs, based on four
different price scenarios.
[The information follows:]
POTENTIAL IMPACT OF PRICE INCREASES ON USDA FOOD AID PROGRAMS FOR FISCAL YEAR 2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tonnage Assuming Tonnage Assuming
Tonnage with a 10 percent a 20 percent
Commodity Value Freight Cap ($ prices from Tonnage with Dec/ price increase price increase
Program ($ Million) Million) President's Feb prices \1\ from 12/2003/02/ from 12/2003/02/
Budget Estimates (000 MT) 2004 prices (000 2004 prices (000
(000 MT) MT) MT)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Title I \2\........................... $117.70 ................. 740.0 616.4 560.6 512.8
Food for Education \3\................ 21.47 ................. 66.1 60.6 55.1 50.5
Food for Progress \4\................. ................. $40.00 257.6 225.1 204.6 187.5
-----------------------------------------------------------------------------------------------------------------
Total........................... 139.17 40.00 1,063.7 902.1 820.3 750.8
=================================================================================================================
Millions of People Fed................ ................. ................. 5.9 5.0 4.6 4.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Title I uses price estimates based on Feb. 2004 crop report. Food for Education uses average of actual purchase prices for Dec. 2003--Feb. 2004.
\2\ Includes Title I funded Food for Progress. Tonnages and values do not include the $21.9 million reserve.
\3\ McGovern Dole Food for Education and Child Nutrition Program.
\4\ CCC funded Food for Progress.
DESIGNATE BIOBASED PRODUCTS
Question. What are your plans to designate biobased products for
Federal agencies to purchase?
Answer. Under the Federal Biobased Products Preferred Procurement
Program, we currently are gathering test data on individual biobased
products in a number of separate items (generic groupings of products).
This data will be used to support the designation of one or more items
for preferred procurement in a draft rule we expect to begin preparing
soon. We will first publish a draft rule with a thirty day public
comment period, to be followed by a final rule. Once a final rule is
published designating this first group of items, we will begin a draft
designation rule for a second grouping of items. The process of
designating items by rule for preferred procurement will then continue
as quickly as manufacturers can be identified and test data developed.
We expect that the bulk of the items thus far identified by the CTC
study will be designated by rule over the next 3 or 4 years. We also
recognize that new items or generic groupings of biobased products will
emerge in the market place from time to time, as the industry grows. As
that occurs, we will gather the necessary information to designate
those new items as well.
Question. Can you provide me with a schedule of what products you
are planning to designate and when?
Answer. We expect to include one or more items-generic groupings of
products-in the first regulation to designate items. Among the items on
which we are currently gathering product and test data for individual
products are:
--hydraulic fluids for stationery equipment
--hydraulic fluids for mobile equipment
--formulated industrial cleaners
--all other formulated cleaners
--formulated solvents
We expect to be able to include one or more of these items in our
first draft rule to designate items for preferred procurement. We
expect to publish a draft rule, with a 30 day public comment period
this summer. We hope to have a final rule in place this fall.
Question. Also, can you update me briefly on the labeling program?
My understanding is that you have created a draft label. What else are
you doing to move this component of Section 9002 of the farm bill
forward?
Answer. We do have a draft label in review in USDA's Office of the
General Counsel. We currently are working through Federal contracting
procedures to obtain a contractor to provide support in writing draft
and final rules for the labeling program. We hope to have that draft
rule cleared for publishing in the Federal Register by the end of the
current calendar year. We expect to have a 30 or 60 day public comment
period on the draft rule, and will follow as quickly as possible with a
final rule before the middle of 2005.
RENEWABLE ENERGY SYSTEMS
Question. What does the Department plan to do to vigorously promote
and implement Section 9006 of the farm bill this spring and summer? The
Department used a Notice of Funds Availability to implement section
9006 of the farm bill in fiscal year 2003 and fiscal year 2004. I
understand that the Department intends to issue a rule for the fiscal
year 2005 program. Can the Department commit to issuing the final rule
by January 2005, in order to give potential applicants sufficient time
to review and apply for the program?
Answer. The Under Secretary for Rural Development designated Rural
Energy Coordinators from each USDA Rural Development State Office to
coordinate outreach, implementation and delivery of the program. An
Interagency Agreement between DOE's Office of Energy Efficiency and
National Renewable Energy Laboratory (NREL) and USDA Rural Development
has been executed. This agreement provides a vehicle for funding NREL
activities to assist USDA in writing the technical requirements of the
program, to develop tools to assist applicants and Rural Development
State offices in addressing the technical requirements, and to assist
in public outreach activities. Through this interagency agreement, a
strong partnership has been established with the National Renewable
Energy Laboratory (NREL) to establish a technical team of
internationally recognized experts in the fields of solar, wind,
biomass, geothermal, hydrogen, and energy efficiency technologies to
provide training, technical review of applications and comments on the
program. These experts are from the following Department of Energy
(DOE) Laboratories: National Renewable Energy Laboratory, Sandia
National Laboratory, and Oak Ridge National Laboratories. We have also
developed a close partnership with EPA's AgStar Program.
With the help of NREL, the State and Local Initiative Staff, we
have developed the following resources: Outreach materials for Rural
Development State Offices and technology interest groups to conduct
outreach workshops, informational meetings and agricultural conferences
were developed and a comprehensive one-stop web-site addressing the
opportunities for renewable energy development provided by Section
9006. The website consists of a series of web pages designed to
increase program awareness and aid prospective applicants in
determining basic eligibility requirements. This website will be
continually updated as new information and opportunities and case
studies come available. The website also provides useful guidance to
farmers and ranchers on how to go about developing these projects by
technology and scale.
Most recently, a national training web-cast for our USDA Rural
Development Rural Energy Coordinators for the fiscal year 2004 Program
delivery was held. The training conference was broadcasts from the NREL
headquarters in Golden, Colorado, on April 7, 2004. Training included
presentations from DOE, EPA, NREL, the Sandia National Laboratories,
Rural Utilities Service, and Rural Business-Cooperative Service.
USDA Rural Development has drafted a proposed rule that is in
clearance within the Department. We anticipate publishing the proposed
rule in the Federal Register within the next few months. A 60-day
public comment period is included in the proposed rule.
We hope to publish this final rule early in calendar year 2005.
RENEWABLE ENERGY
Question. Will the Department lower the minimum grant or loan size
to allow more farmers and rural small businesses to participate in the
section 9006 program, especially for energy efficiency projects? This
is something that I, and others, would support. What else is the
Department considering to encourage more applications for energy
efficiency projects?
Answer. In the fiscal year 2004 notice of funding availability, we
have lowered the minimum grant request threshold from $10,000 to
$2,500. We will consider similar changes to the minimum threshold in
the rule.
We are considering ways to streamline and reduce application
requirements for energy efficiency improvements for smaller project
requests. We are developing guidance to assist smaller project
applicants in preparation of applications.
Question. Will the Department streamline the application
requirements, especially for small farmers? Section 9006 funds should
go only to deserving applicants, but I strongly encourage you to open
up the program to a broader audience. One way of doing this would be to
ensure that the detail necessary for the feasibility study commensurate
with the size of the project. In other words, a smaller project ought
not to have to provide the same level of information and analysis as a
larger one.
Answer. The Department is proposing ways to streamline application
requirements in the proposed rule.
Question. Will the Department allow in-kind contributions to count
towards the funds leveraging requirement? If not, why not? This seems
like a potential change that could help spur additional participation
in the program and put it within the reach of many smaller producers,
who are clearly among the intended beneficiaries of the program.
Answer. The Department will address this issue in the proposed
rule.
Question. What is the Department planning to do to coordinate the
section 9006 program with state energy offices and the U.S. Department
of Energy?
Answer. USDA has entered into an Interagency Agreement with DOE and
the National Renewable Energy Laboratory (NREL). This agreement
provides a vehicle for funding NREL activities to assist USDA in
writing the technical requirements of the program, to develop tools to
assist applicants and Rural Development State offices in addressing the
technical requirements, and to assist in public outreach activities.
Through this interagency agreement, a strong partnership has been
established with the National Renewable Energy Laboratory (NREL) to
establish a technical team of internationally recognized experts in the
fields of solar, wind, biomass, geothermal, hydrogen, and energy
efficiency technologies to provide training, technical review of
applications and comments on the program. These experts are from the
following Department of Energy (DOE) Laboratories: National Renewable
Energy Laboratory, Sandia National Laboratory, and Oak Ridge National
Laboratories. We have also developed a close partnership with EPA's
AgStar Program.
With the help of NREL, the State and Local Initiative Staff, we
have developed the following resources: Outreach materials for Rural
Development State Offices and technology interest groups to conduct
outreach workshops, informational meetings and agricultural conferences
were developed and a comprehensive one-stop web-site addressing the
opportunities for renewable energy development provided by Section
9006. The website consists of a series of web pages designed to
increase program awareness and aid prospective applicants in
determining basic eligibility requirements. This website will be
continually updated as new information and opportunities and case
studies come available. The website also provides useful guidance to
farmers and ranchers on how to go about developing these projects by
technology and scale.
Most recently, a national training web-cast was held for our USDA
Rural Development Rural Energy Coordinators for the fiscal year 2004
Program delivery. The training conference was broadcast from the NREL
headquarters in Golden, Colorado, on April 7, 2004. Training included
presentations from DOE, EPA, NREL, the Sandia National Laboratories,
Rural Utilities Service, and Rural Business-Cooperative Service.
Our Rural Development State Offices are working with the State
Energy Offices and others in conducting outreach activities, workshops,
using materials we have discussed previously. The DOE, through NREL,
has assisted in developing the regulation and conducting technical
reviews of applications and in preparing outreach materials. Also,
these materials have been used by DOE to conduct workshops such as
those conducted by the wind working groups.
NATIONAL CENTER FOR ANIMAL HEALTH
Question. I am concerned about possible shrinkage in the
capabilities of the National Center for Animal Health that might be
necessary to avoid exceeding OMB's present budget limit of $459 million
on which the $178 million in the Administration request is premised.
What reductions in the capabilities of the facility have either been
decided on or are likely, and what are the costs of restoring those
capabilities over the past year and the past 2 years?
Answer. There is no shrinkage in the capabilities of the Centers
for Animal Health. The primary difference between the initial plan and
the current plan is how animal and laboratory support space will be
acquired--either by renovating existing space or constructing new
space. By consolidating ARS and APHIS functions into a single complex
the USDA will achieve efficiencies in both staffing and space needs
over the existing campus. New animal and laboratory space is configured
to accommodate both agencies and be shared by a number of programs to
improve usage efficiencies. The $461 million program provides for the
needs of the 280 NADC program staff and the 286 APHIS program staff
located in Ames.
The Department will meet the animal health program needs within the
$461 million estimated for this project. Because construction costs for
the Ag large animal facility and the initial laboratory segment were
higher than originally estimated in 1999 during the preliminary program
efforts, the size of the new low containment large animal facility has
been reduced; however, these programs will be accommodated within
existing low containment facilities. A number of the existing field
barns and miscellaneous support structures (feed storage, hay storage,
vehicle maintenance) will also remain in operation.
SOUND SCIENTIFIC INFORMATION FOR REGULATORY DECISIONMAKING
Question. There has recently been much discussion about ``sound
science.'' I am concerned that proposed changes to the review process
of scientific information used by agencies, including the USDA, would
create the perception that the acceptance of scientific findings are
subject to review by political and special interests. I am also
concerned that the proposed review process would also unnecessarily
slow down the implementation of regulations to protect human health.
Of particular concern are changes that would (1) move the
coordination of scientific review out of the agencies and into the
Office of Management and Budget, where the administration would have
greater political influence, and (2) specifically restrict the
participation of scientists receiving funding from agencies such as the
USDA in the review of scientific findings, but not similarly restrict
participation of scientists receiving funding from regulated
industries.
Can you please explain what steps you have taken to make certain
politics and special interests will not affect the quality of
scientific information used to make important regulatory decisions?
Answer. Following recommendations from a Report by the National
Research Council entitled ``Improving Research Through Peer Review,''
and language in The Agricultural Research Extension, and Education
Reform Act of 1998, USDA/ARS overhauled its prospective peer review
process. The Office of Scientific Quality Review (OSQR), which was
established in 1999, coordinates independent external peer panel
reviews of each of the research projects that make up the Agency's 22
National Programs at the beginning of their 5-year cycle. This
prospective review of the proposed project plans has contributed to a
strengthening of the ARS research program.
We are currently developing new procedures for a retrospective
evaluation of each of ARS' 22 National Programs at the end their 5-year
program cycle. While we are piloting several different approaches to
achieve this objective, all of our pilots involve an independent
external peer panel made up of scientists, customers, stakeholders, and
partners who will determine if the research is relevant, of high
quality, and that it produced research products that benefited American
agriculture. Additionally, results of ARS' research are peer reviewed
when they are submitted to scientific journals for publication.
The information provided to regulatory agencies to serve as the
basis for regulation is also submitted to scientific journals in the
form of scientific manuscripts. The editorial boards of the journals
subject these manuscripts to peer review, which usually occurs
anonymously. Researchers do not get their papers published unless the
papers pass the scientific scrutiny of the peer review process.
The Cooperative State Research, Education, and Extension Service
(CSREES) funds research relevant to the mission of USDA at
universities, Federal laboratories, private research institutions, and
other organizations. All research projects, including those funded by
base programs, undergo scientific peer review prior to initiation, as
required by law. Proposals are reviewed by peer panels that are
composed of expert scientists from universities, industry, government
and stakeholders as appropriate. Conflict of interest criteria are
applied to ensure that proposals from an institution are not reviewed
by a panel member from that institution and that there are no real or
perceived financial conflicts. The review criteria include scientific
merit and relevance to U.S. agriculture. Research results are peer
reviewed again when published in the scientific literature, as
described above. This peer review process ensures that the highest
quality scientific information is continually supplied to those who
would make regulatory decisions. However, CSREES does not control or
limit in any way publications or other communication of research
results from projects it funds. Finally, the relevance, quality, and
performance of research portfolios will be subjected to rigorous
assessment by experts on a 5-year basis.
Every regulation published by USDA must comply with applicable
Executive Orders, the Administrative Procedures Act, and other
applicable statutes. The procedures in place establish an open and
transparent process that requires regulatory agencies to clearly and
concisely outline the basis for regulatory decisions, including the
scientific information used to make those decisions. USDA follows
procedures common to all Federal regulatory agencies to ensure all
interested parties as well as the general public have an opportunity to
participate in the rulemaking process and comment on regulatory
decisions made by the agency.
______
Questions Submitted by Senator Byron L. Dorgan
EMPOWERMENT ZONES
Question. For the third year in a row, the Administration proposes
no funding to follow through on the commitment that USDA made to rural
empowerment zones even though this Subcommittee has thankfully rejected
this recommendation for 2 years in a row. I have one of those zones in
my state, the Griggs-Steele Empowerment Zone, focused on out
migration--a very serious problem in North Dakota.
Why has the Administration continued to oppose this funding even
after Congress restored it in the fiscal year 2003 and fiscal year 2004
bills?
Answer. The Administration has provided substantial earmarks and
technical assistance in support of the EZ/EC communities in the past. A
larger amount of resources can be made available by utilizing the
Budget Authority for loans rather than funding specialized grants.
Question. Can you please give me a substantive reason why this
funding has been eliminated again this year?
Answer. The President's fiscal year 2005 budget proposes $103.8
million of earmarked loan and grant funds for the EZ/EC communities.
Considering the tight nature of the fiscal year 2005 overall budget,
this amount of funding, plus technical assistance, is a substantial
investment on the part of the Federal Government in rural communities.
OBESITY PREVENTION INITIAIVE GRAND FORKS ARS
Question. I see that this year, you have announced Food-Based
Obesity Prevention as a top departmental priority. It is my
understanding that you also included an additional $5 million in ARS to
implement this priority.
Can you tell me where that ARS research will be conducted?
Answer. The new funds will be used to support research on obesity
prevention at the following proposed locations: Baton Rouge, LA;
Beltsville, MD; Boston, MA; Davis, CA; and Houston, TX.
Question. I would have expected that some of that research would
happen at the Grand Forks Human Nutrition Center, which is one of our
nation's most outstanding human nutrition research facilities. But when
I look at the budget for the Grand Forks ARS, I only see a reduction of
$515,317 which is the funding I've been able to add for the last
several years through this Subcommittee for the Center's Healthy Food
Initiative.
Why isn't ARS better utilizing this facility, particularly given
your emphasis on human nutrition and obesity?
Answer. The Grand Forks Human Nutrition Research Center has
developed a much deserved reputation as an outstanding Center for the
study of trace elements, which is the mission of the Center. That work
will continue to be supported. ARS is developing its strategic plan to
attack the problem of obesity using a focus on foods. The Grand Forks
Human Nutrition Research Center has been part of that process, and ARS
will develop a role for its research capacity to address obesity
issues.
Question. I am concerned about reports that the Grand Forks ARS has
lost 40 percent of its staff since 1985 and flat budgets will probably
force 8-10 layoffs a year.
Why hasn't ARS been supporting this top notch facility?
Answer. Funding at the Grand Forks Human Nutrition Research Center
has increased since 1985. The impact on the center is similar to the
impacts on all of the other human nutrition research centers, as well
as on all ARS units. The funding for the center, or any unit in ARS,
can be used as best determined by the Center Director, who can use
discretion in deciding to expand a program, purchase new equipment,
develop new facilities, or change the number of personnel. At each of
the human nutrition research centers, there has been significant
leveraging of resources with funding from industry and other Federal
agencies, and this has resulted in much stronger research programs.
In recent years there have been a number of outstanding scientists
hired at the center and, with the existing budget, ARS has been able to
maintain the high visibility and impact of the research that is
conducted at the center. There has not been a reduction in force in ARS
since 1985, and any reductions in the number of personnel that have
occurred throughout the agency are based on decisions to not fill
positions in favor of using the money for new programs, new equipment,
etc.
BSE SURVEILLANCE PROGRAM
Question. Madam Secretary, I noted in your testimony that USDA is
requesting $60 million, an increase of $47 million, which will permit
it to further accelerate the implementation of a verifiable National
Animal ID system, increase BSE surveillance, conduct technology of BSE
testing technologies and strengthen the monitoring and surveillance of
advanced meat recovery. I wanted to bring to your attention some
technology that has been developed at North Dakota State University
that I understand APHIS may be interested in pursuing.
NDSU and its private sector partners have the unique capability to
participate in this, and I'm curious what to know about the technology
that USDA plans on using?
Answer. USDA is interested in technologies that may meet the needs
of the BSE surveillance program and the implementation of a national
animal identification system.
On January 9, 2004, USDA announced that the Center for Veterinary
Biologics would begin accepting license applications for BSE tests. The
decision to formally accept license applications for BSE test kits and
rapid tests has better positioned USDA to quickly implement
modifications to our current BSE surveillance program.
Several test kits have been issued licenses or permits by APHIS,
and more may be approved in the future. Distribution and use of BSE
test kits in the United States shall be under the supervision or
control of the USDA's Animal and Plant Health Inspection Service.
Distribution in each state shall be limited to authorized recipients
designated by proper state officials, under such additional conditions
as the APHIS administrator may require. Regarding the national animal
identification system, USDA's goal is to create an effective, uniform,
consistent, and efficient system by:
--Allowing producers, to the extent possible, the flexibility to use
current systems or adopt new ones, but not burden them with
multiple identification numbers, systems, or requirements;
--Building on the data standards developed in the United States
Animal Identification Plan; and
--Remaining technology neutral in order to utilize all existing forms
of effective technologies and new forms of technology that may
be developed.
The specific technologies used to link a unique animal number to an
animal, record the movement in commerce, and report the movement to a
national database will be determined by industry. We welcome North
Dakota State University's participation in this developing program.
BROADBAND FUNDING
Question. It has been almost 2 years since the new broadband title
to the Rural Electrification Act (REA) was enacted. More than $2
billion in loan authority has been provided under this new program and
the Senate reinforced its bipartisan support for this initiative in a
series of amendments to the Agriculture Appropriations bill.
Unfortunately, less than $200 million in loans have been allocated so
far while more than a $1 billion in demand has been made known to the
agency.
Specifically, I would like to know: how many broadband loan
applications are pending; how many loans have been approved; how many
loan applications have been rejected; what states have projects
pending, rejected or approved; how long loan processing takes; how many
staff are allocated to the broadband program and how many staff are
allocated to the Telecommunications and Distance Learning and
Telemedicine programs; and how many rural broadband connections you
expect to make under the new program?
Answer. There are 40 loan applications pending totaling $438.8
million; 14 loans have been approved totaling $201.8 million; 20 loan
applications totaling $300.3 million have been returned as ineligible
and 17 loan applications totaling $195.3 million have been returned as
incomplete. It takes RUS approximately 60 days to process a loan
application provided the application is reasonably complete when it is
submitted. Initially, a team of 14 headquarters individuals have been
assigned to the broadband program. Under a recently approved
reorganization plan, approximately 25 individuals will be assigned to
it, pending filling vacancies which currently exist. The number of
headquarters employees assigned to the Telecommunications and DLT
program is approximately 40. Over 1 million potential connections to
broadband service have been made possible with the approval of the
first 14 loans. Future connections will vary depending on loan size,
service territory, and project costs. Our goal is the full utilization
of the funding available to hook up as many rural customers as
possible.
RURAL TELECOMMUNICATIONS
Question. I am also profoundly concerned about reports that suggest
that the agency avoid rather than manage risk. The risk I hope you
avoid is the risk of leaving rural Americans behind in the digital
economy. In creating and funding a new broadband title to the REA,
Congress sought to re-ignite the ``can-do'' spirit of the early days of
rural electrification and the rural telephone program. Historically,
the agency worked with applicants in a cooperative, not adversarial way
to find solutions.
Can I get assurances from you that you see our mission as using the
tools of this new loan program to spur rapid and meaningful deployment
of broadband services?
Answer. Yes. In concert with the President's recently announced
goal of universal broadband by 2007, USDA's Rural Development is ready
to meet this goal in rural America. The ``meaningful deployment of
broadband services'' can only be met by making quality loans. As stated
before, universal broadband deployment has been recognized as a
national policy goal. In light of this, we still face challenging
domestic spending decisions. In order to balance fiduciary
responsibility with mission delivery, USDA is focusing on ``quality
loans'' that produce exponential benefits through reduced subsidy rates
and greater lending levels and that strengthen not only rural
economies, but our national economy and its role in the global economic
system. A failed business plan translates not only into loss of
taxpayer investment, but deprives millions of citizens living in rural
communities of the technology needed to attract new businesses, create
jobs, and deliver quality education and health care services. I can
assure you that every effort is being made to expedite the deployment
of broadband service to rural America in a ``meaningful'' way.
NORTHERN GREAT PLAINS REGIONAL AUTHORITY
Question. Can you tell me how the Department is proceeding with the
establishment of the Northern Great Plains Regional Authority and which
agency within USDA will be charged with administering the Authority?
Also, when can we expect the fiscal year 2004 funding to be released?
The legislation also calls for the appointment of a Federal and a
tribal co-chair. Can you tell me what the process will be to make these
appointments and what the status of this process is?
Answer. Rural Development has been tasked with providing the report
requested in the fiscal year 2004 Appropriations Act and working with
the Governors of the five states to establish the Northern Great Plains
Regional Authority. A taskforce of State Directors has been established
to develop the report and coordinate the numerous activities required
to establish the Authority.
Funds will be available once the Authority is fully established.
The Authority cannot be established until the Federal and Tribal co-
chairs have been named and confirmed.
The statute requires those appointments to be made by the President
and confirmed by the Senate. It is our understanding that the White
House will follow the normal procedure for filling such positions.
STANDARD REINSURANCE AGREEMENT
Question. When can we expect a new SRA?
Answer. RMA anticipates establishing an agreement for the 2005
reinsurance year by the July 1, 2004 deadline.
Question. Why did RMA eliminate the developmental fund within the
crop insurance program?
Answer. The first draft of the SRA was designed to raise many ideas
and concepts to address long-standing program delivery issues. RMA has
listened carefully to all the responses from insurance providers,
interested parties via submitted written comments, and discussions with
trade associations. RMA believes the second draft addresses most of the
concerns raised in the first round of negotiations. There were strong
concerns about the suggested elimination of the developmental fund.
Therefore, in the second draft RMA restored the developmental fund and
reverted back to seven reinsurance funds.
UNDERWRITING GAINS TAX
Question. Why did RMA propose a 25 percent tax of underwriting
gains for the reinsurance companies involved in crop insurance?
Answer. The proposed SRA encourages companies to provide broader
service to farmers by RMA assuming a larger share of the non-profitable
business in high-risk areas. It also allows greater flexibility for
companies to share risk with FCIC in the pilot phase of new products,
encouraging companies to make new products available to producers.
The 25 percent global quota share arrangement permitted RMA to take
a greater share of the losses as well as gains to stabilize the program
and secure a better balance of risk sharing between the government and
the companies. This provision was intended to add capital support and
stability to the program to supplement private sector reinsurance that
often is less available for drought stricken, and therefore less
profitable areas of the country. The second draft retains this
provision but at a much reduced, 5 percent level.
MULTI-PERIL CROP INSURANCE
Question. RMA is proposing to penalize companies who deliver Multi-
Peril Crop Insurance above the cost of Federal reimbursement of
Administration and Operations. This proposal would have a
disproportionate affect on smaller companies and may force them out of
the program. Why would RMA want fewer companies in the crop insurance
program? What evidence do you have that the current rate of A&O
reimbursement is adequate?
Answer. RMA does not want to have fewer companies in the program,
but is also concerned about companies over spending and harming the
livelihood of the customers, agents and loss adjusters. In the second
draft, we have removed the penalty for companies that exceed their A&O
reimbursement allowance, but will continue to exert careful and active
oversight over company financial condition and operational
effectiveness. RMA will take appropriate regulatory action to safeguard
farmers and the delivery system against another company failure due to
financial excesses. The failure of American Growers cost taxpayers
approximately $40 million to date above and beyond indemnities paid for
farmer losses. The proposed SRA establishes additional reporting to RMA
of critical business information needed to anticipate company financial
weaknesses such as those that caused the failure of American Growers.
Expense reimbursement payments have grown over time in total and on
a per policy basis. For example, the number of policies serviced by
companies in 1998 and 2003 remained at 1.2 million, but RMA paid the
companies a total of $444 million in expense reimbursement in 1998 and
$734 million in 2003. On a per policy basis, expense reimbursements
increased from $358 per policy in 1998 to $592 per policy in 2003. This
is a 65 percent increase over 5 years--an average compound increase of
over 10 percent per year. For 2004, it is estimated that premium income
will be substantially higher reflecting generally higher commodity
prices and that the related total and per policy expense reimbursement
will rise dramatically without a significant increase in the cost of
selling or servicing the policies.
STANDARD REINSURANCE AGREEMENT
Question. Does RMA intend on providing the industry with a complete
proposal, including all necessary supporting manuals to review when the
second draft is released?
Answer. On Tuesday, March 30, RMA announced the release of the
second SRA proposal along with subsequent appendices (Appendix I:
Program Integrity Statement, Appendix II: Plan of Operations, and
Appendix IV: Quality Standards and Control). This additional
information will allow the companies to evaluate the agreement in a
more comprehensive way. A document detailing the required data
processing formats and instruction, Appendix 3 (formerly Manual 13),
will be published at the end of the process to reflect the new
agreement.
Question. Will the SRA contain terms to make it financially viable
for companies to operate in every state?
Answer. RMA has proposed changes allowing for future growth of the
delivery system, such as permitting greater flexibility for companies
to shift more risks to RMA on policies that are in high-risk areas as
well as the risk of new products in their pilot phase. Traditionally,
the Federal Government takes on the bulk of non-profitable business in
all areas and allows insurance companies to retain more of the
profitable business. In addition, the SRA proposes raising state
session limits in many states allowing for the viability of more
service in those areas.
Question. What happens if RMA doesn't have the SRA wrapped up by
May 1?
Answer. RMA fully anticipates having a signed agreement by the July
1, 2004 deadline. As with prior negotiations, if the new agreement is
not signed by that time, RMA will continue to provide the necessary
reinsurance support until the new agreement is signed. Once the new
agreement is signed, all policies issued for the 2005 reinsurance year
will be covered by the new agreement.
Question. Do you believe RMA will pursue the establishment of a
guarantee fund in the second draft of the SRA?
Answer. Yes, in the second draft, the purpose of the guarantee fund
was clarified and the fund was also renamed the Contingency Fund.
During the company discussions and with others, it became clear that
many misunderstood the purpose of the fund and even questioned the
authority to have such a fund.
The purpose of the fund is simply to use existing penalty and fee
provisions, due to company performance issues, to help pay for any
future company failures, such as the American Grower situation. The
estimated funds that would be put in this fund on an annual basis is
between $1-2 million. The Office of General Counsel firmly believes RMA
has the authority to make what is essentially a bookkeeping change for
this purpose. It should also be noted that this fund cannot be used by
the RMA as a resource to fund agency expenses.
Question. It is my understanding there were numerous provisions in
the first SRA proposal in which RMA was exerting more regulatory
authority. I believe RMA currently has very extensive regulatory
authority and I would urge the agency to use such authority in a
responsible manner. Additionally, I am concerned the crop insurance
program is currently a very complex highly regulated program. Has the
agency done any analysis regarding the costs these regulations place on
the delivery system and the savings, which could be generated by
removing some of these burdensome procedures?
Answer. Although RMA has not performed a formal analysis regarding
regulatory costs, RMA is striving to put into place regulatory
provisions that do not put an undue burden on the agency or the
companies. In addition, RMA has revised its Appendix IV (Quality
Control and Standards) to incorporate more efficient processes for
oversight activities, and to better utilize the existing resources of
the companies in such efforts. However, it is imperative that RMA apply
its learning gained from the demise of American Growers. RMA will
continue to work closely with the companies to responsibly fulfill its
vital role as a steward of the program.
In the proposed SRA, RMA is fairly and equitably exercising its
given authority and responsibility to oversee the financial and
operational safety, soundness and effectiveness of the Federal crop
insurance program to ensure program integrity and a reliable, effective
delivery system. This is good for farmers, companies, agents and all
others concerned and will not impose ``massive'' new burdens or costs.
The proposed SRA establishes additional reporting to RMA of
critical business information needed to anticipate company financial
weaknesses such as those that caused the failure of American Growers.
The companies are already preparing much of the requested information
for other purposes. This information includes financial statements,
statement of earnings and cash flow, commission and other expense
details, reinsurance agreements and management evaluations of major
financial and operating risks facing a company. Any well-run, fiscally
responsible company will already be developing and using this kind of
information and should be willing to provide it to its regulator.
In farmer listening sessions throughout the country, RMA has
received an overwhelming number of requests to ensure that agents and
loss adjusters are knowledgeable and well trained. The proposed SRA
requires insurance companies to verify that agents and loss adjusters
are trained in accordance with RMA standards and are delivering the
best and most complete and accurate information possible to farmers.
The proposed SRA also strengthens the companies' focus on training
agents and loss adjusters to better serve limited resource, minority
and women farmers.
Any concern over the cost associated with agent and loss adjuster
oversight and training fails to recognize the benefits and efficiencies
of well-trained agents and loss adjusters. Farmers benefit from making
informed sound risk management decisions, while agents, loss adjusters
and insurance companies benefit from increased customer satisfaction
and customer retention, and reduced exposure to fraud, waste and abuse,
and litigation risks and costs.
The proposed SRA provides for disclosure of information to allow
RMA to assess the financial strength and performance of insurers and
their service providers. RMA is asking that companies disclose more
leading indicators of their insurer and service provider operational
and financial soundness and risks. Many of these disclosures were
requested informally last year in the wake of the failure of American
Growers. Current insurance companies serving farmers should have this
information and be willing to share it with their regulators. Companies
conducting good business practices and assessing their risks should
incur no additional cost. Companies that are not already using this
information should begin to develop it to ensure their soundness and
safety.
AGRICULTURAL TRADE
Question. The United States Trade Representative (USTR) has
recently completed free trade agreements with Central America (CAFTA)
and Australia, with the benefits to American agriculture being
miniscule.
Can you identify any specific benefits to American agriculture that
these and future free trade agreements provide?
Answer. On March 22, 39 leading agriculture-related associations,
federations, councils, and institutes representing a broad spectrum of
American agriculture, sent a letter to President Bush expressing their
support for the CAFTA and Dominican Republic agreements. The signators
of the letter expressed the view that the agreements would lead to
``significant'' increases in exports of a wide range of agricultural
products.
American agriculture will benefit from the Australia FTA because
Australia will immediately eliminate all agricultural tariffs. In
particular this will benefit U.S. exports of: processed foods; oilseeds
and oilseed products; fresh and processed fruits and fruit juices;
vegetables and nuts; and distilled spirits. Also the FTA establishes an
SPS Committee that will enhance our efforts to resolve SPS barriers to
agricultural trade, in particular for pork, citrus, apples and stone
fruit.
Under the Caribbean Basin Initiative and the Andean Trade
Preferences Act, agricultural imports from nearly all of our FTA
partners already receive duty free treatment from the United States. By
negotiating Free Trade Agreements with these countries we will level
the playing field, affording our exporters similar duty free access to
those markets for their products.
Question. The USTR has recently announced intentions to negotiate
free trade agreements with Colombia and Thailand.
Will sugar be included in the negotiations and do you support the
inclusion of sugar in regional and bilateral free trade agreements?
Answer. To maximize the benefits for U.S. agriculture from these
negotiations, we seek increased market access for all of our export
commodities, including those that our negotiating partners want to
protect. We can only pursue this strategy effectively if we are willing
to negotiate increased foreign access to our own sensitive markets. We
will continue to take steps to ensure that the interests of U.S. sugar
producers are taken into account. For example, in the CAFTA, we
insisted that the out-of-quota duty for sugar not be eliminated or even
reduced. This provision for sugar was unique, but it was deemed
necessary to defend our domestic sugar program.
ASIAN SOYBEAN RUST
Question. I am very concerned about the risk of importing Asian
soybean rust into the United States. The movement into the United
States could devastate our soybean crop and impose a heavy economic
burden on American farmers and consumers. We cannot afford to take
unreasonable risks given the adverse impact soybean rust would have on
soybean production and growers in the United States. If a temporary ban
on the importation of beans from infected nations is the only answer
that government can come up with in the short term, I believe that it
is better than jeopardizing our entire soybean industry.
Will you halt soy imports until the Department can find a sway to
ensure that this devastating fungus doesn't infiltrate our domestic
soybean crops as a result of lax import standards?
Answer. We do not plan to halt soy imports. APHIS officials are
looking closely at our country's importation of soybean seed, meal, and
grain. Our analysis to date has shown that clean soybean seed and
soybean meal--which is a heat-treated, processed product--pose a
minimal, if any, risk of introducing this disease. Historically, there
has never been a documented instance of soybean rust spread through
trade. Rather, it is spread naturally through airborne spore dispersal.
We are currently conducting a risk assessment to study the viability of
the pathogen and verify that it does not survive in commercial grade
soybean products. The preliminary results of the assessment indicate a
very low risk, if any, of introducing this disease through imports.
INTEREST ASSISTANCE LOANS
Question. Money for interest assistance loans to farmers has been
used up for 2004. Many producers depend on interest assistance to
obtain the financing necessary to plant their crops. It is my
understanding that interest assistance was cut by 35 percent from 2003
to 2004.
What steps are being taken by USDA to meet the demands of the
program? Will USDA provide alternative funding for the program in 2004?
Answer. The fiscal year 2004 allocation of guaranteed operating
with interest assistance loan funds was $271.2 million. As of March 31,
2004 guaranteed operating with interest assistance loan obligations
totaled $244 million. In accordance with statutory requirements,
remaining funds are targeted for exclusive use by socially
disadvantaged farmers.
The direct operating loan program is one alternative that could
provide aid to family farmers unable to obtain guaranteed OL with
interest assistance loan funds. This program, with its availability of
a lower interest rate for terms of up to 7 years, provides family
farmers a means of financing their business operations at rates and
terms comparable to the guaranteed OL with interest assistance loan
program. As one would expect, demand for this program is also high.
However, with historically low interest rates available through
commercial lenders, many family farmers are able to utilize the
guaranteed operating unsubsidized loan program. Use of funds in this
program has increased by eleven percent compared to a year ago at this
time, but there are still sufficient funds available to meet additional
demand.
Because the subsidy rate for the interest assistance program is
significantly higher than for other farm loan programs, it is not cost
beneficial to transfer funds for interest assistance loans.
COUNTRY OF ORIGIN LABELING
Question. Madam Secretary, when the Omnibus Appropriation bill
became law, it delayed the implementation date of Country of Origin
Labeling from September of this year until September of 2006, except
for certain fish. The Omnibus bill did not, however, change the date at
which the actual regulations governing COOL need to be concluded, which
is also September of 2004. The Department has nearly 2 years to work on
the COOL regulation, so I am hopeful that USDA will, in fact, have
those regulations completed. As you know there are many of us in
Congress, in fact a bipartisan majority in the Senate, who want the
COOL regulations completed and the date changed back. In fact, the date
may be changed back to September of 2004, and I want to ensure that the
Department is ready in that event, as the law currently requires. I
read with interest some comments that the President made in Ohio
recently. The President said, and I quote: ``I want the world to `buy
America.' The best products on any shelf anywhere in the world say,
`Made in the USA.' '' His comments were followed by applause. I think
the President is right.
If he says that, why does the Bush Administration oppose the COOL
law that would ensure that consumers have the opportunity to buy
American?
Answer. In general, the Administration believes that providing more
information for consumers on which to base their purchasing decisions
is better than less information. However, if the costs of providing the
additional information exceed the benefits, then there is no economic
rationale for providing it. We are reviewing the comments received on
the proposed regulations and will finalize the regulations to implement
COOL as mandated by the 2002 Farm Bill and the Omnibus Bill.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
Question. Do you still intend to open the U.S. border to live
Canadian cattle, especially in light of the discovery that two Canadian
feed mills were the cause of the outbreak of mad cow disease?
Answer. Today, the Animal and Plant Health Inspection Service
(APHIS) closed the comment period on a proposed rule that would amend
the regulations regarding the importation of animals and animal
products to recognize, and add Canada to, a category of regions that
present a minimal risk of introducing BSE into the United States via
live ruminants and ruminant by-products. USDA will take into account
the comments received on the proposed rule as we review this matter.
RESIGNATION OF ADMINISTRATOR BOBBY ACORD
Question. On March 23, Bobby Acord, head of USDA's Animal and Plan
Health Inspection Service (APHIS), resigned effectively immediately.
Was his resignation the result of a disagreement over policy?
Answer. Bobby Acord resigned after almost 38 years of Federal
service due to a number of factors, including illness in his family and
his desire to spend more time in the places and with the people that he
cares about most. In a letter to all APHIS employees dated March 24,
2004, Mr. Acord stated, ``Those of you who know me well know that if
nothing else, I am a decisive person. And this weekend, I decided it is
simply time for me to pass the torch.''
During Mr. Acord's tenure as APHIS Administrator, he led the Agency
through the aftermath of the September 11, 2001, terrorist attacks, an
outbreak of exotic Newcastle disease and its eradication, and the
country's first detection of bovine spongiform encephalopathy. While
Mr. Acord was administrator, the employees of APHIS were also named
``2003 People of the Year'' by Progressive Farmer magazine.
Mr. Acord is succeeded by Dr. Ron DeHaven, who joined APHIS in 1979
and most recently served as the deputy administrator of APHIS for
Veterinary Services.
BSE POLICY
Question. We understand that there are a wide range of policy
proposals to address various BSE issues.
What are you doing to ensure that our decisions are science based
and don't rest upon short-term political or public relations benefits?
Answer. In addition to employing scientific and technical experts
with working knowledge of transmissible spongiform encephalopathies,
USDA has consulted with international experts through the Secretary's
Foreign Animal and Poultry Disease Advisory Committee and with
scientists at the Harvard Center for Risk Analysis to review the BSE
surveillance plan and response. USDA bases its policy decisions on
sound science and the advice we receive from such experts.
Question. Japanese officials say that despite USDA officials'
statements to the contrary, ``Ag Department officials from the United
States have not been in recent contact with their Japanese
counterparts. We're confused as to why some USDA officials have been
saying otherwise.''
Is the Japanese claim true and what is the status of the
negotiations regarding the reopening of the Japanese market to U.S.
beef imports?
Answer. The Department has been and remains in close contact with
Japanese government officials. Immediately following USDA's
announcement of the BSE case, senior USDA officials and Japanese
officials held talks in Tokyo, Japan, on December 29 and January 23. A
Japanese technical team visited USDA in Washington, D.C., and the BSE-
incident command center in Yakima, Washington, during January 9-15. On
March 23, the Agricultural Affairs Office, American Embassy in Tokyo,
reported meetings with the Japanese Ministry of Health and Welfare
(MHLW), Ministry of Agriculture, Fish and Food (MAFF), and the Food
Safety Commission (FSC).
There is still a significant difference in our official positions
regarding BSE testing and specified risk material removal. On March 29,
I sent a letter to Japanese Agriculture Minister Kamei proposing to
have a technical panel made up of experts from the World Animal Health
organization meet before April 26 to discuss a definition of BSE and
related testing methodologies as well as a common definition of
specified risk materials. On April 2, Japan rejected the proposal
reasoning that the United States first needed to reach a bilateral
scientific understanding on BSE. USDA is planning another high-level
visit to Japan to continue talks in late April. The United States
exported over $1.3 billion in beef to Japan in 2003, representing over
50 percent of Japan's total beef imports. The import ban has severely
impacted Japan's market supplies and beef prices. Given Japan's need
for beef imports and the importance of beef exports to Japan for the
U.S. beef and cattle industry, we are hopeful that a solution can be
found.
DURUM AND SPRING WHEAT YIELDS
Question. Recently, the Risk Management Agency mandated that durum
yields be split out from spring wheat yields. The method which RMA is
proposing to do this is causing durum growers to have disproportionate
yield reductions in their actual production histories. It is also
causing farmers to take an inordinate amount of time to retrace these
yields. One solution to this problem is to allow producers to replicate
yields.
What are USDA's plans to resolve this problem and will USDA allow
farmers to replicate yields?
Answer. The U.S. Durum Wheat Growers Association (USDGA) requested
Risk Management Agency (RMA) recognize spring and durum wheat as
separate crop types due to quality and price differences, thus allowing
each to be insured as a separate unit beginning with the 2004 crop
year. This was done via publication in the Federal Register at 7CFR
457.101 June 9, 2003.
Insured areas most affected are all North Dakota counties, 18
counties in Northern South Dakota, and 18 counties in Northeastern
Montana. Some insured's will have increased spring wheat yields and
some insured's will have increased durum wheat yields. The impact will
vary depending upon individual yield history.
On average 25-30 percent of all wheat in North Dakota is durum
wheat. RMA's experience for 1999-2003 shows durum loss ratios in North
Dakota under the APH yield based coverage are higher than that of
spring wheat, 2.69 verses 1.09 for spring wheat.
RMA explored viable options to alleviate some producers concerns
while still maintaining program integrity.
While producers have requested to be allowed to use replicated
yields in their history database, this will generally overstate
guarantees for durum wheat and will most likely generate significant
complaints from insured's negatively impacted by replication, and from
agents and insurance providers who have undergone considerable work to
implement the procedures for splitting out the yields by type, and
increase the risk of loss to companies and re-insurers providing
protection in these areas.
RMA is implementing a 10 percent yield limitation to provide relief
to those that may experience declining yields. Implementing yield
limitations is consistent with existing procedures for other situations
that protect insured's from declining yields, and provides immediate
protection while avoiding replicated yields that are too high that will
adversely affect actuarial soundness for several years to come.
WOOL FOR BERETS IN IRAQ
Question. Madam Secretary, it has come to my attention that the
Coalition Provisional Authority (CPA) in Iraq has let a contract for
berets for Iraqi security forces. While the CPA has indicated that the
contract is open to all bidders, the contract's parameters have put
American wool producers at a distinct disadvantage by specifying that
the berets be made of 100 percent Australian wool! Such preferential
treatment is not only unfair but is a serious concern that deserves
immediate attention. There are 64,170 U.S. wool producers, including
over a thousand in North Dakota, that produce some of the finest wool
in the world. Given a fair field on which to compete, I am certain they
will win such a contract.
Given the time-sensitive nature of this issue, I want to know if
you will work with others in the Administration to ensure that the CPA
is directed to re-let that contract to ensure that no country receives
preferential treatment?
Answer. Thank you for this question which has brought this issue to
our attention. We have been in contact with USDA personnel in Iraq and
were able to learn a great deal about this contract and procurement.
Unfortunately, the contract has been awarded and the tender
specifications did, in fact, specify Australian wool. This tendering
was not done by the CPA directly and did not involve U.S. government
funds.
As part of our reconstruction efforts in Iraq, we are trying to
bring greater transparency and predictability to the public tendering
process. This is of vital importance if we are to regain market share
for American agricultural products in this potentially significant
export market. Bringing about a market based, open and transparent
public tendering process is an uphill battle and this is a perfect
example. We will be working closely with CPA and Iraqi authorities to
ensure that oversights like this do not happen again.
______
Questions Submitted by Senator Dianne Feinstein
SPECIALTY CROPS
Question. The crop insurance program has expanded significantly
over the past 10 years providing farmers and ranchers with increased
financial security. Even in California it is now commonplace for
bankers to require crop insurance prior to approval of operating loans.
However, there are still many specialty crops that have no crop
insurance program available. Many of these crops are grown on
relatively few acres nationwide compared to the more traditional
commodity crops.
How does the USDA plan to expand the insurance programs to the
remaining specialty crops not currently covered?
Answer. Through the use of feasibility studies and pilot programs,
RMA plans to expand the insurance programs to cover additional
specialty crops. Risk Management Agency has made significant progress
in providing new crop insurance programs available to specialty crop
growers. For example, during 1998-2002: The number of insurable
specialty crops increased 29 percent The number of active policies
increased 28 percent The amount of coverage (liability) increased 98
percent
Since 2001, RMA has entered into over 90 contracts and partnerships
with the majority focusing on providing crop insurance or other non-
insurance risk management tools for producers of specialty crops.
Feasibility studies to determine whether crop insurance programs can be
developed have been completed for direct marketing of perishable crops,
fresh vegetables, Hawaii tropical fruits and trees, lawn seed, and
quarantine insurance. The fresh vegetables project is in the
development stage with crop year 2007 as the target year for
implementing a pilot program. Insurance programs for Hawaii tropical
fruits and trees and quarantine insurance are in the development stage
with crop year 2006 as the target year for implementing pilot programs.
The feasibility study for lawn seed is projected for completion in the
fourth quarter of fiscal year 2004. The feasibility study for direct
marketing of perishable crops is projected for completion in the first
quarter of fiscal year 2005.
Most specialty crops of significant size or value have either a
program already developed or are a future project on RMA's Prioritized
Research and Development Plan. The ten highest valued specialty crops
not insured are listed below with the current plan for addressing each:
[In dollar amount]
------------------------------------------------------------------------
Crop Insurance
Crop Status Value
------------------------------------------------------------------------
Bedding/Garden Plants............. Target 2007 crop $2,392,495
year.
Lettuce........................... Target 2007 crop 2,261,185
year.
Mushrooms......................... Industry not 911,509
interested.
Sod............................... Industry not 800,694
interested.
Cut Flowers & Cut Greens.......... No action based on 717,612
Feasibility Study.
Carrots........................... No action based on 551,433
Feasibility Study.
Broccoli.......................... Target 2007 crop 536,226
year.
Cut Christmas Trees............... Target 2005 crop 441,604
year.
Cantaloupes....................... Target 2007 crop 404,685
year.
Melons............................ Target 2007 crop 328,550
year.
------------------------------------------------------------------------
Note: Pilot program is scheduled for implementation in the target year.
In addition, RMA recently issued a statement of objectives request
for proposals for innovative and cost effective approaches to providing
crop insurance for crops with small value. The purpose is to develop a
program that responds to small value crop producers, provides a minimal
requirement transaction between a producer and insurance provider, and
identifies the vulnerabilities for waste, fraud and abuse. A contract
was awarded in March 2004 to begin research for possible development of
a new approach that provides crop insurance coverage for crops with
small value. One possible approach that may be proposed is some form of
whole farm program, perhaps similar to the existing Adjusted Gross
Revenue program, which is being piloted in a limited number of counties
in California.
REVENUE BASED PROGRAMS
Question. The crop insurance program has been piloting a number of
new programs which address not only production losses, but revenue
losses as well. However, most of these programs have been made
available to only the major commodities: corn, wheat, cotton, rice etc.
I understand that in certain states in the mid-west a corn grower has
up to 6 different options in insuring their crop.
When will these new revenue based programs be made available to
specialty crop growers?
Answer. RMA conducted a feasibility study for developing a revenue
model of insurance for certain specialty crops, which is currently in
the process of development for revenue based programs tailored to those
specialty crops. The new revenue based programs should be made
available to specialty crop producers for the following crops in the
proposed pilot program states for the crop year 2007, pending approval
by the FCIC Board of Directors. The list of crops and states include:
Apples, NY, PA, OR, VT, and WA; avocados, grapefruit, and oranges, FL;
dry beans (Baby Lima, Blackeye Peas, and Large Lima), CA: dry peas and
lentils, ID; maple syrup, ME, NH, NY, and VT; and revenue product
modification (corn), IA, IL, and IN.
ADJUSTED GROSS REVENUE PROGRAM
Question. There is currently a pilot crop insurance program
available in a very limited number of counties Nation wide called the
``Adjusted Gross Revenue'' (AGR) program. The program is available in 8
counties in California. However, I understand the Agency has put a hold
on further expansion of the program pending an evaluation.
When is the evaluation expected to take place and when is the
earliest that expansion of this program can be expected?
Answer. The Adjusted Gross Revenue (AGR) pilot program began in
1999 in five States (36 counties). In 2000, six more States and 52 new
counties were added. In 2001, RMA made a number of significant changes
to the program in order to increase the number of eligible producers,
coverage available, and producer acceptance. At the same time, AGR was
expanded into six additional States and 126 new counties to provide a
broader base upon which to test the pilot program.
The Agricultural Risk Protection Act (ARPA) required the expansion
of AGR into at least eight counties in California and into at least
eight additional counties in Pennsylvania. RMA worked with the
respective State Departments of Agriculture to select the expansion
counties, gathered the data necessary for expansion and the FCIC Board
of Directors approved expansion into eight counties in both states for
2003. Effective for 2003, AGR was available in 17 states and 214
counties.
RMA is currently in the process of contracting for an evaluation to
be conducted of the AGR pilot program. The evaluation will commence
during 2004 using 2001-2003 AGR experience data reflecting the program
changes and broad expansion made in 2001. Once the evaluation is
completed, the results will be made available to the Board of
Directors, who will determine any future direction and expansion of
this pilot program.
TECHNICAL ASSISTANCE FOR SPECIALTY CROPS PROGRAM
Question. The Technical Assistance for Specialty Crops (TASC)
program, authorized in the 2002 Farm Bill, was developed exclusively to
provide the specialty crop industry with financial assistance to help
overcome trade barriers such as sanitary, phytosanitary, and technical
barriers that prohibit or threaten exports. Funds are applied for by
industry and distributed upon approval by USDA. The need for the
program is great as noted by the overwhelming requests by industry for
assistance. During the past 2 years, since the program's inception,
USDA has received 111 proposals totaling $20 million in funding
requests--compared to actual funding of only $4 million. The $2 million
annually, while beneficial, is clearly insufficient.
What is USDA doing to expand this program and encourage growth of
specialty crop exports?
Answer. The Technical Assistance for Specialty Crops (TASC) program
was established in the Farm Security and Rural Investment Act of 2002.
As program managers, the Foreign Agricultural Service (FAS) is
responsible for ensuring all funds are used in the most effective way
to maximize benefits to U.S. specialty crops. To accomplish that
objective, FAS has taken several steps to maximize the use and
effectiveness of this program that include:
--outreach to the U.S. specialty product industries to maximize
awareness of the program;
--established regulations to ensure fair and equitable allocation of
the funds to worthy projects;
--program flexibility to address unexpected trade barriers, enabling
the availability of funds throughout the year; and
--selected projects that had the highest expected return in value to
expanding exports.
In addition, FAS continues to support the specialty crops through
ongoing activities such as market intelligence, trade policy, and
export market development. The Market Access Program (MAP) includes
over 30 nonprofit associations that represent specialty crops and
received $40 million of MAP funds in fiscal year 2003.
FRUIT AND VEGETABLE PILOT PROGRAM
Question. The 2002 Farm Bill authorized a $6 million Fruit and
Vegetable Pilot program in fiscal year 2003 to provide free fruit and
vegetable snacks to students in 25 schools each in Michigan, Ohio,
Indiana, Iowa, and seven schools in the Zuni Nation in New Mexico.
Results of the program have been positive. According to a report by the
USDA Economic Research Service, the pilot has shown consumption
increases in school children by at least one serving a day.
Various nutrition groups, the United Fresh Fruit and Vegetable
Association, and other anti-obesity advocates have been pushing for
expansion of this successful fresh fruit and vegetable pilot program
under the Child Nutrition Reauthorization Bill.
However, due to funding technicalities, the expansion of the pilot
has been removed from the House bill. The Child Nutrition
Reauthorization Bill is being written so it contains very little
opportunity for participants to access fresh fruit and vegetables, at a
time when childhood obesity is becoming an enormous issue.
What is the USDA doing to increase the consumption of fresh fruits
and vegetables in the school lunch, school breakfast, WIC and related
programs?
Answer. The Department shares your interest in the fruit and
vegetable initiative, and would support its expansion provided Congress
is able to fund it through savings or offsets that do not compromise
access to school meal benefits. USDA, as part of the Department's
Strategic Goal 4: ``Improve the Nation's Nutrition and Health,''
established a specific performance measure to improve the diets of
children and low-income people by at least five points as measured by
their Healthy Eating Index (HEI) scores; and to increase the score for
the broader U.S. population by at least two points. USDA is working
harder than ever with stakeholders to devise program initiatives to
achieve these changes. Since fruit consumption and vegetable
consumption are two of the ten elements of the HEI on which the most
progress can and should be made, I am particularly keen to see
innovations addressing these areas.
The Department believes that the Federal nutrition assistance
programs are an effective way to support and promote the consumption of
fruits and vegetables. For example, I know that children who
participate in the National School Lunch Program eat nearly twice as
many servings of vegetables at lunch as non-participants and School
Breakfast Program participants eat twice as many servings of fruit at
breakfast as non-participants. USDA nutrition assistance programs
provide over $8 billion in support for fruit and vegetable consumption
annually by supporting consumer purchases in the marketplace through
the Food Stamp Program; purchasing and distributing these foods
directly to schools, food banks, and other institutions; and through
nutrition education and promotion. I will provide some additional
information for the record.
[The information follows:]
To maximize the results of this investment in increasing
consumption for children and others, the Department is taking action to
motivate all consumers to eat more of these healthful foods. We are
expanding the Department of Defense fresh produce program to distribute
fresh fruits and vegetables to schools, enhancing the variety and
availability of fruits and vegetables in the school meals, as well as
expanding the Food Distribution Program on Indian Reservations fresh
produce initiative.
The Department has recently published Fruit and Vegetables Galore,
a guide developed as part of Team Nutrition that helps schools offer
and encourage consumption of a variety of fruits and vegetables. In
addition, the Department is expanding dissemination of the EAT SMART.
PLAY HARD.TM (ESPH) materials that promote vegetable and
fruit consumption. One theme of ESPH--Grab Quick and Easy Snacks--
promotes fruits and vegetables as snacks.
More broadly, we continue to pursue our partnership with the
National Cancer Institute (NCI) and the Centers for Disease Control and
Prevention (CDC) in the expanded national 5-A-Day for Better Health
program. The 5-A-Day campaign's goal is to increase consumption of
fruits and vegetables to 5 to 9 servings every day, and inform
consumers of the health benefits gained from eating fruits and
vegetables.
Regarding the WIC Program, the WIC food package currently plays a
key role in contributing to fruit and vegetable consumption by
providing 100 percent fruit and vegetable juices to program
participants. In addition, WIC nutrition education emphasizes the
relationship between nutrition and health, and fruits and vegetables
are promoted as part of a complete diet. Both the Dietary Guidelines
and the Food Guide Pyramid are foundation nutrition education materials
used by WIC to emphasize the importance of fruit and vegetable
consumption. Also, many WIC State agencies have adopted the National
Cancer Institute Campaign, Five A Day, to promote the intake of fruits
and vegetables. WIC's nutrition education approach is designed to teach
participants and caregivers about the important role nutrition plays in
health promotion and disease prevention as well as overcoming specific
risk conditions.
Finally, a contract was awarded in September 2003, to the Institute
of Medicine (IOM), through the Food and Nutrition Board to review the
WIC food packages in a 22-month study. This study will use current
scientific information to review the nutritional requirements and
assess the supplemental nutrition needs of the population served by
WIC. IOM is currently scheduled to provide the Department with a final
report in February 2005. Assuming the report is received on schedule,
USDA expects to publish a Notice of Proposed Rulemaking for public
comment in December 2005, and a final rule in December 2006.
The WIC Farmers' Market Nutrition Program (FMNP) provides WIC
participants with coupons that can be exchanged at authorized farmers'
markets for fresh fruits and vegetables. The FMNP is currently in
operation at 44 sites--36 States, the District of Columbia, Guam,
Puerto Rico and 5 Indian Tribal Organizations. During fiscal year 2002,
just over 2.1 million participants were served. The FMNP educates WIC
participants on selecting, storing, and preparing fresh fruits and
vegetables and how to make fruits and vegetables part of healthy meals.
TRAINING OF DHS EMPLOYEES
Question. As the Department of Homeland Security (DHS) was being
organized, a significant part of USDA's funding for import inspections
was placed within DHS. There remains significant concern that DHS will
not place a high enough priority on invasive pest and disease detection
at the border and that inspectors that are cross trained in other types
of import inspections will not be sufficiently vigilant to prevent
importation of pest on imported produce.
The agriculture industry, and in particular fresh fruit and
vegetable growers, have been very vocal that it is not acceptable for
Customs agents to be cross-trained to detect pests and diseases in
imported products. That capability is a specialized skill. Given the
enormous increases in fresh fruit and vegetable imports over the last 5
years, it is very unwise to reduce the Federal Government's capability
to detect invasive species.
Costs of eradication and elimination are higher than taking
preventive measures, if pests enter the United States the Federal
Government will need to pay for increased pest and disease eradication,
due to failures to interdict these threats at the border.
What is the U.S.D.A. doing to ensure that inspectors will have
sufficient training and experience to detect and prevent entry of new
pests on imported produce?
Answer. To facilitate the transfer of the agricultural inspection
force, USDA and the Department of Homeland Security (DHS) signed a
Memorandum of Agreement that specifies the functions and funding
transferred to DHS and establishes mechanisms between the two agencies
regarding the training of employees, use of employees, and other areas
described in the Homeland Security Act of 2002. The Agreement is meant
to emphasize the importance of continuing and enhancing the
agricultural import and entry inspection functions.
As specified in the Agreement, USDA continues to train DHS
inspectors who conduct agricultural inspections. DHS is maintaining an
inspection force of agricultural specialists, who must meet certain
educational requirements and go through a 2-month training course in
our import requirements and pest and disease identification, among
other things, at APHIS' Professional Development Center in Frederick,
Maryland. APHIS and DHS' Bureau of Customs and Border Protection (CBP)
are also implementing a joint quality assurance program to ensure that
the inspection process continues to function effectively. As part of
this effort, APHIS will provide on-the-job training for both
agricultural specialists and primary inspectors. APHIS also provides
basic training in the agricultural inspection process for general CBP
inspectors at CBP's training center in Atlanta.
SUDDEN OAK DEATH
Question. Sudden Oak Death (SOD) is a serious, often fatal disease
of California native oaks, and has been found in two nurseries
(Monrovia, Azusa and Specialty Plants, San Marcos) in Southern
California. The discovery of this disease in the nursery trade, in
warm, dry Southern California and many miles from the epicenter of the
disease in the Bay Area has caused five states to quarantine California
nursery products. Monrovia nursery is one of the largest nursery
producers in the United States and ships plants throughout the United
States and Canada as well as other foreign destinations. Current
economic losses to Monrovia at this juncture are estimated at $4.3
million. A general embargo on California nursery stock will cause the
state incalculable economic damage.
What is the USDA doing to assess the extent of the disease both
within California and within the United States and take action to
contain the spread and prevent new areas from being affected by the
disease?
Answer. To assess the extent of SOD, we are conducting
``tracebacks'' to determine the nursery or nurseries from which
infected plant material originated, and ``trace forwards'' to determine
where a particular nursery has sent infected plant material. Also, we
are conducting a national survey of nurseries and forests. These
activities will help us determine the extent of SOD migration within
California and to other States. In addition, we plan to impose a
Federal quarantine on the interstate movement of known and
``associated'' SOD hosts from all California nurseries. This quarantine
will be based on sound science and a measured risk response. Associated
hosts are plants which are not technically hosts, but are nevertheless
susceptible to SOD. This action would preclude States from imposing
their own quarantines, and would provide for the resumption of safe
trade in California nursery plants--albeit under strict conditions. As
a result, we would be able to prevent further SOD spread via shipments
from California nurseries, while still allowing the interstate movement
of healthy plants.
GLASSY-WINGED SHARPSHOOTER
Question. Other pests like the Vine Mealy bug and Glassy winged
sharpshooter are impacting crops in California and elsewhere. What is
U.S.D.A. doing to contain the spread of and eliminate these pests?
Answer. Since fiscal year 2000, we have led an extremely successful
cooperative Glassy winged sharpshooter (GWSS) research and control
program in California. This program includes nursery stock inspections,
a Statewide survey, and site-specific urban treatments. These
activities help us quickly detect, control, and mitigate the GWSS.
Also, we develop strategies to reduce the pest problem in agricultural
production areas. This approach supports Statewide activities to
promote trade, and remove the pest from State commerce routes. In areas
where 100 or more GWSS had been found in traps each week, the program
now finds approximately five. This success demonstrates the benefits
not only of rapid response to a pest introduction, but also of
cooperating with stakeholders, universities, extension services,
agricultural researchers, and growers.
In addition, we are continuing a successful pilot program
throughout Kern County and conducting a similar program in infested
areas of Riverside, Tulare, and Ventura Counties. In addition, we have
expanded area-wide control activities into crucial production areas in
Tulare County, Ventura County, and Coachella Valley in Riverside
County. Our prompt implementation of these area-wide strategies has
significantly reduced the incidence of GWSS in the new areas. This
year, we continue to (1) develop management strategies and conduct
area-wide treatments; (2) monitor the impact of GWSS control strategies
on the environment; (3) mitigate Pierce's Disease spread in vineyards;
(4) transfer control strategies to County Agriculture Departments; and
(5) conduct regulatory activities through increased nursery stock
inspections.
At this time, APHIS does not have a program to control the Vine
Mealybug. Since this non-native pest has no natural predators,
eradication is not likely. Currently, producers are working to contain
its spread using sanitation and chemical control.
However, APHIS and the CDFA are continuing the highly successful
California Mediterranean Fruit Fly (Medfly) Preventative Release
Program. Since fiscal year 1996, only four Medflies have been detected
in California. The most recent of these was a single adult found in
late fiscal year 2002. This detection demonstrated the program's
continued reduction of captured wild Medflies, while mitigating
pesticide concerns. In fiscal year 2003, the program detected Mexican
Fruit Flies (MFF) in San Diego County. This detection necessitated an
emergency funds transfer, but we eradicated this infestation last
September--less than a year after the pest was first detected in the
area.
ENVIRONMENTATL IMPACT OF ON-FARM BURIAL OF DOWNER/DEAD CATTLE
Question. The new regulations issued by USDA to address BSE will
help improve the safety of human food and animal feed and will help to
keep export markets open. Two of the recently announced changes in
regulations though may result in environmental issues for states with
large dairy and cow-calf industries.
Cattle carcasses buried on farm land can have adverse impact on
watersheds and pose other issues to the environment and ecosystems
should wildlife or other animals access the buried cattle.
Because of the potential for creation of an environmental hazard,
in Europe many countries have instituted regulations prohibiting the
on-farm burial of dead and downer cattle. The collection and disposal
of these animals is often subsidized by the government.
This issue has potential to have substantial environmental impact
for states with large dairy and cow-calf industries. There is potential
for substantial economic impact on farmers and others needing to
dispose of these animals.
Has there been an evaluation of these impacts? If so what are the
solutions and at what level of government do these solutions need to be
addressed? Is there a research need to identify effective disposal
options?
Answer. USDA has had an aggressive BSE surveillance plan in place
since the 1990's, and scientific experts--including those at Harvard
who conducted the risk assessment for BSE--agree that, even given the
find in Washington State, the disease would be circulating at extremely
low levels in the U.S. cattle population if at all. With such a low
prevalence rate, we do not anticipate large numbers of affected animal
carcasses needing disposal during the next 12 to 18 months. Our
recently announced enhanced surveillance plan should instead allow us
to further assure consumers, trading partners, and industry that the
risk of BSE in the United States is very low.
With regard to concerns about cattle carcass disposal options,
burying animals on the farm is not the only option for producers whose
animals are non-ambulatory disabled. Other alternatives for disposal
continue to be available to producers. These include rendering
facilities, salvage slaughter facilities (i.e., not slaughtered for
human consumption), and other animal disposal industries.
USDA welcomes additional research into carcass disposal options and
will continue to make decisions based on the most current science
available.
Question. Finally, is there a need to subsidize the collection and
proper disposal of dead and downer animals, first to ensure inclusion
in surveillance programs for disease, second to offset increases in
costs associated with disposal of these animals and finally to ensure
they do not create a hazard for other transmissible diseases? What is
U.S.D.A. doing to assess and control this situation from becoming a
potential hazard?
Answer. Scientific experts from Harvard conducted risk assessment
for BSE and concluded that, even given the find in Washington State,
the disease would be circulating at extremely low levels in the U.S.
cattle population if at all. With such a low prevalence rate, we do not
anticipate large numbers of affected animal carcasses needing disposal
during the next 12 to 18 months. Our recently announced enhanced
surveillance plan allows us to further assure consumers, trading
partners, and industry that the risk of BSE in the United States is
very low.
There are a number of options available to producers to dispose of
animals that are non-ambulatory disabled. Options for disposal include
burying animals on the farm, use of rendering facilities, salvage
slaughter facilities (i.e., not slaughtered for human consumption), and
other animal disposal industries.
USDA has included cost recovery options in the budget for its
enhanced BSE surveillance program. Payment for certain services will
help cover additional expenses incurred by producers and the industries
participating in the surveillance program and encourage participation.
For example, costs for transporting an animal or carcass to the
collection site from a farm or slaughter establishment may be
reimbursed, or disposal expenses for ``suspect'' cattle that test non-
negative or that cannot be rendered may also be covered. Other expenses
may also be addressed in the program.
Question. The collection of these animals is important for tracking
and surveillance for Mad Cow. Collection and inclusion of these animals
in tracking and surveillance sampling is important.
Has consideration been given as to how to achieve inclusion of dead
on the farm and downer cattle in the monitoring program?
Answer. Throughout the history of our surveillance program, USDA
has worked to obtain samples from the targeted animal population,
wherever these samples may be located. In order to obtain the samples,
USDA-APHIS has worked with facilities other than federally inspected
slaughter establishments as part of BSE surveillance efforts. These
facilities included renderers, salvage slaughter facilities (i.e., not
slaughtered for human consumption), and other animal disposal
industries.
Under our new surveillance program, we will build on these efforts
to ensure that we maintain access to our targeted surveillance
population. We will also be reinforcing our educational and outreach
efforts to producers, so they will know who to contact about testing
dead or downer animals on the farm.
USDA-APHIS-Veterinary Services' officials across the country will
work closely with their State counterparts to build on existing
relationships at these locations so that we can obtain the necessary
samples.
Payment for services will help cover additional costs incurred by
producers and the industries participating in our surveillance program.
For example, costs for transporting an animal or carcass to the
collection site from a farm or slaughter establishment may be
reimbursed, or disposal expenses for ``suspect'' cattle that test non-
negative or that cannot be rendered may also be covered.
NATIONAL ANIMAL IDENTIFICATION DATABASE
Question. The USDA announced the immediate implementation of a
National Animal Identification program. The pilot for this system has
been underway with USDA for more than a year and a half to ensure
uniformity, consistency and efficiency across this national system.
Will this be a mandatory or voluntary system? If it is not
mandatory could it satisfy requirements for international trade in beef
and cattle?
Answer. At the present time, participation with a national animal
identification program would be on a voluntary basis while the USDA
moves forward with the beginning stages of implementation. As the USDA
learns more during the implementation of the system, USDA would likely
move into rule-making.
Implementing a national identification system that records animal
movements will enable APHIS officials to complete the tracing of
animals potentially exposed to a disease as timely as possible.
Demonstrating our ability to contain and control the disease will
provide the scientific data to document appropriate trade status
issues. The animal tracking system will play a critical role in
maintaining and/or restoring our export markets for U.S. livestock and
animal products during and after an animal disease outbreak.
Question. What considerations for maintaining the privacy of this
information in a national animal identification database are being
made?
Answer. The USDA recognizes that producers are concerned about the
confidentiality of the national system. USDA is not seeking marketing
or production information, but only information that would help us
track animals for disease purposes. We are examining all applicable
laws and regulations, as well as the potential need for additional
legislative authority, in our efforts to address this issue.
Question. In 2002 many states, including California, suffered
outbreaks of low-pathogenic avian influenza. USDA indemnified poultry
producers in each of the affected states, except for California. In
Virginia, West Virginia and North Carolina, USDA provided over $50
million for indemnification. Despite inclusion of Report language
directing USDA to indemnify California, Nicolas Turkey Breeders in
Sonoma, California remains the only poultry operator omitted from this
program.
I would like to know what steps are you taking to rectify this
situation?
Answer. In 2002, when positive cases of Low Pathogen Avian
Influenza had been found in New York; New Jersey, Texas, Maine,
Michigan, and California; State authorities had taken the
responsibility of controlling and eliminating the disease with no
assistance provided from Federal authorities. In the case of Virginia,
West Virginia, and North Carolina, LPAI was spreading at a rate that
State officials could not control. At the request of the State of
Virginia the USDA stepped in to provide assistance with depopulation,
indemnities, cleaning and disinfection of premises; disposal of
carcasses; epidemiology support; data management; and information
dissemination. The California outbreak was relatively isolated and the
State officials were able to control further spread. As a result, USDA
does not intend to indemnify Nicolas Turkey Breeders for their turkey
breeder flock.
______
Questions Submitted by Senator Richard J. Durbin
SINGLE FOOD SAFETY AGENCY
Question. Currently, Federal oversight for food safety is
fragmented with at least 12 different Federal agencies and 35 different
laws governing food safety. There are also dozens of House and Senate
subcommittees with food safety oversight. With overlapping
jurisdictions and scattered responsibilities, Federal agencies often
lack accountability on food safety-related issues and resources are not
properly allocated to ensure the public health is protected. Our
Federal food safety statutes also need to be modernized to more
effectively ensure that food safety hazards are minimized.
President Bush and Secretary Ridge have both publicly discussed the
concept of combining Federal food safety responsibilities into a single
agency. In the past, USDA has stated its opposition for such a move.
Assuming USDA's position has not changed, what do you see as the
disadvantages of combining the Federal food safety agencies into a
single agency? Are there any advantages?
Answer. Over the years, there has been much discussion about
consolidating all food safety, inspection, and labeling functions into
one agency in an effort to increase the effectiveness of the food
safety system. In 2002, the White House established a Policy
Coordinating Committee (PCC), led by the Domestic Policy Council and
the National Economic Council, to look into the single food agency
issue. The PCC concluded that the goals of the Administration are
better advanced through enhanced interagency coordination rather than
through an effort to create a single food agency.
USDA routinely communicates and coordinates with other government
entities to ensure a safe and secure food supply. With authority over
meat, poultry, and egg products, USDA's FSIS plays an integral role in
ensuring the safety of America's food supply. As a partner in the U.S.
food safety effort, FSIS strives to maintain a strong working
relationship with its sister public health agencies. Cooperation,
communication, and coordination are absolutely essential to effectively
address public health issues.
The present statutory framework recognizes distinctions associated
with the relative risks and hazards of foods and the food safety and
food security issues that bear on public health. USDA's mission is to
provide leadership on food, agriculture, and natural resources based on
sound public policy, the best available science, and efficient
management. Within USDA, the nearly 10,000 employees of the FSIS
dedicate their careers and lives to protecting public health. USDA
inspectors are in plants every day enforcing our nation's food safety
laws. The statutes that are administered are clear and demand
unwavering attention to ensuring that consumers continue to enjoy the
safest and most abundant food supply in the world. It is this focused
attention to food safety, food security, and public health that is best
supported by the current organizational placement of the USDA food
safety mission.
FSIS bases its policy decision on science, so the single food
agency discussion boils down to one
Question. will there be a measurable benefit to public health? In
other words, would such an effort save lives and reduce foodborne
illness rates? As with any new food safety and security effort, we must
make sure that we maintain and continue improving on any progress that
has been made to improve public health. It is important to make sure
that any disruption to the current food safety system effectively
improves food safety and public health. USDA looks forward to working
with Congress to examine these issues and to continue to keep the
nation's food supply safe and secure and strengthen public health.
Question. We have recently witnessed the consolidation and creation
of the Department of Homeland Security. Do you believe the creation of
DHS could serve as a model for the creation of a single food safety
agency?
Answer. The outcome of the policy discussion concerning a single
food safety agency may be addressed in answering one key
Question. Will there be a measurable benefit to public health? We
must assure that any disruption to the current food safety system
effectively improves food safety and public health. Additionally, the
costs associated with any major overhaul to the U.S. food safety system
must be considered. It is important to determine what the financial and
human costs associated with a single food safety agency might be and to
determine if this cost will best leverage funding for food safety.
Question. Secretary Veneman, I believe you have been noted as
saying that the statutes governing meat inspection ``pre-date the Model
T'' and have implied that these statutes need to be modernized. I agree
with you. Please identify what efforts you have made in the past year
to accomplish this goal.
Answer. During the past year, we have taken a hard look at our
statutory authorities, and have held meetings with consumer and
industry groups to ensure that we received the input of a variety of
sources. Our efforts culminated in the development of ``Enhancing
Public Health: Strategies for the Future,'' the Food Safety and
Inspection Service's (FSIS') 2003 Vision Paper, which was published in
July 2003. In outlining the Department's food safety vision, steps have
been identified that must be taken before consideration of changes to
our statutory authorities.
SOYBEAN RUST
Question. I am very concerned about the risk of importing Asian
soybean rust into the continental United States. This could be a
potentially devastating situation to our soybean crop and impose heavy
economic burden on American farmers and consumers. I noticed this
particular disease was not mentioned in your statement regarding APHIS'
plan to deal with intentional and unintentional disease.
I understand various pathways of entry for rust spores have been
suggested which range from natural wind current to human or maritime
transport. I am particularly concerned about the movement of soybeans
and soybean meal through import channels. Soybean and soybean material
produced in soybean rust-infected areas have the potential to carry
viable spores when they are transported. I understand the potential
viability of soybean rust spores can be eliminated if the soybean
material is processed, heat-treated and handled properly.
I, along with a number of my colleagues, wrote your office (a month
ago) stating our concern on allowing imports from diseased areas until
APHIS completes its risk assessment and has a plan in place to ensure
we do no inadvertently import this devastating fungus. I would
appreciate a response to these concerns. In addition, I would like to
hear what the agency is doing to prevent the importation of soybean
rust.
Answer. Our response to your concerns about this disease was sent
on March 25, 2004. As we indicated in the letter, APHIS officials are
looking closely at our country's importation of soybean seed, meal, and
grain. Our analysis to date has shown that clean soybean seed and
soybean meal--which is a heat-treated, processed product--pose only
minimal, if any, risk of introducing this disease.
APHIS officials conducted site visits to soybean grain elevators in
New Orleans on January 7, 2004, and to grain elevators and processing
facilities in Brazil from February 10-12, 2004, to examine how the
storage, loading, and shipping of export-quality soybeans are handled
in the two countries. APHIS officials have determined that soybean leaf
debris associated with the ``foreign material'' found in soybean grain
shipments could present a potential pathway for the introduction of
soybean rust. However, foreign material in soybean grain shipments
typically amounts to less than 2 percent of the shipment. Moreover, as
it is normal commercial practice to harvest soybeans after the plants
have been defoliated, leaf debris should compose only a very minute
part, if any, of the foreign material. Therefore, the foreign material
found in soybean grain is an unlikely pathway for the introduction of
soybean rust.
APHIS has developed a strategic plan to minimize the impact of the
introduction and establishment of soybean rust in the United States.
The strategic plan describes our four-pronged approach to the disease,
focusing on protection, detection, response, and recovery. We developed
the plan in cooperation with our State cooperators, other USDA
agencies, and industry representatives.
Our protection efforts focus on preventing the human-assisted entry
of soybean rust through the collection of off-shore pest information, a
pathway pest risk assessment currently underway, and commodity entry
standards. In this regard, Customs and Border Protection officials are
inspecting imported shipments of soybeans to make sure that they meet
our entry standards and notifying APHIS of these incoming shipments.
We are currently conducting the risk assessment to evaluate the
levels of risk involved with soybean imports and to develop mitigation
measures to reduce any such risks. We have completed the first step in
this process, a review of available scientific evidence on the risk of
soybean rust's entry, and posted the document on APHIS' Web site. The
collection of off-shore information from trading partners and APHIS
personnel overseas is helping us to understand possible reservoirs and
routes for infection and will enhance our detection, response, and
recovery efforts.
Our goal for the detection, response, and recovery aspects of the
strategic plan is to ensure that a wide variety of stakeholders,
including growers, crop consultants, State officials, extension agents,
and many others can recognize the disease and know how to report
possible introductions. We are monitoring sentinel soybean fields in
eastern seaboard and southeastern States, the areas where we believe
the disease would most likely enter the country, for the presence of
soybean rust and have also begun training stakeholders in detection,
identification, and disease management. We are also supporting the
development of forecasting methods that would help predict where the
disease would spread once it arrived in the United States.
APHIS has established a Soybean Rust Detection Assessment Team, a
rapid response team composed of scientific experts and State and
regulatory officials. Team members met in January 2004 to plan specific
emergency actions that would be immediately activated in response to a
detection of soybean rust. Most recently, USDA officials participated
in a soybean rust conference that was cooperatively organized by USDA,
five pesticide companies, and the American Soybean Association. The
primary goal of the conference was to disseminate to soybean farmers
the knowledge, information, and techniques they will need to manage
this pathogen when it reaches in the continental United States.
CHILDHOOD OBESITY
Question. To address this issue, many schools have explored
creative approaches to promote healthy eating, and some of those
approaches have been successful.
These include efforts to: integrate nutrition education into the
school curriculum; experiment with food packaging; and expose students
to different fruits and vegetables.
Efforts in some states are promising, and a number of schools have
reported increased vegetable consumption and student acceptance of
other healthier food choices.
Unfortunately, such efforts remain limited and are often
compromised by budget pressures. Recognizing this, on February 5, 2004,
I sent a letter to your office, expressing my desire to work with you
and your department to establish demonstration projects in several
Illinois school districts to identify effective strategies to increase
student acceptance of healthy foods.
My staff has been in contact with your office in efforts to obtain
a response to this letter. I would like to know if it is going to be
possible to establish these demonstration projects. What new programs
does the USDA plan to initiate to combat this growing threat of
childhood obesity?
Answer. I asked Undersecretary Bost to respond to your letter,
which I understand he did on March 15. USDA's Team Nutrition
administers a competitive grant program that assist States on
initiatives that promote the nutritional health of the Nation's
children. Team Nutrition has worked with the State of Illinois in the
administration of the seven grants awarded to the State over the past 9
years totaling $1.2 million. The Department is preparing to review new
proposals for the fiscal year 2004 Team Nutrition grant program. These
proposals could include mini-grants for funding school districts
interested in developing innovative programs to promote healthy eating
choices.
In addition, the Food and Nutrition Service has joined the working
group you have launched to deal with childhood obesity; I understand
they will begin to meet in the very near future to discuss the group's
goals and potential opportunities to address this important issue.
USDA did receive funds in fiscal year 2004 to pursue a number of
initiatives, and has proposed additional ones for fiscal year 2005 to
address obesity and promote healthy weight. With this additional
funding, the Department is developing new interventions in WIC to
promote healthy eating for infants and children--efforts that will help
our youngest participants develop healthy habits for the long term.
USDA received $14.9 million in its fiscal year 2004 appropriation to
enhance WIC breastfeeding promotion through peer counseling. The use of
peer counselors has proven effective in increasing initiation and
duration of breastfeeding--the feeding practice best suited to giving
most babies a healthy start. USDA also received $4 million in fiscal
year 2004 to initiate WIC Childhood Obesity Prevention Projects, which
build on the success of the Fit WIC to work in partnership with States
on innovative strategies to use WIC to prevent and reduce childhood
obesity. Ongoing funding for these initiatives is critical to ensuring
continuous improvement; and a $5 million increase has been requested
for each initiative in fiscal year 2005. In fiscal year 2004, $2
million in WIC Special Project grant funding is being used to promote
consumption of fruits and vegetables.
In addition, $2.5 million was requested in fiscal year 2005 to
expand the Eat Smart. Play Hard.? campaign and establish a cross-
program nutrition framework to help ensure a comprehensive, integrated
approach to nutrition education in all nutrition assistance programs.
The Department has efforts underway in other programs as well.
USDA, as part of the Department's Strategic Goal 4: ``Improve the
Nation's Nutrition and Health,'' established a specific performance
measure to reduce overweight and obesity among Americans. As a partner
with the U.S. Department of Health and Human Services and other public
and private sector stakeholders, USDA will take actions to encourage a
reduction in overweight and obesity such that adult obesity will be not
greater than 20 percent by 2010 (it is currently 30 percent), and child
and adolescent overweight will be no greater than 8 percent (when last
measured 15 percent of the Nation's children ages 6 to 19 years of age
were overweight). The efforts underway in all the Federal nutrition
assistance programs promote proper nutrition and healthy weight.
However, to help ensure progress on this performance measure, the
Department is reshaping nutrition education in the Food Stamp Program
to target activities that promote healthy weight; exploring new ways to
support healthy weight through the WIC Program; and promoting increased
fruit and vegetable intake through partnership with other Federal
agencies and the National 5-A-Day Program.
BOVINE SPONGIFORM ENCEPHALOPATHY (BSE)
Question. We still don't have a firm grasp of the prevalence of BSE
in the nation's cattle herd. The USDA announcement on March 15th
proposed an expansion of BSE testing to include over 200,000 cattle
from the ``high risk'' group and 20,000 from clinically normal older
cattle.
Sampling approximately half of the high-risk group of cattle
provides meaningful statistics on the prevalence of BSE in the sub-
population of cattle. However, 20,000 samples from an estimated
population of 1 million older, clinically normal cows is not enough to
validate disease prevalence for a population of that size.
There are millions of cattle, mostly aged dairy cows, that are
older than the FDA ruminant feed restrictions of August 1997. Many of
these cows received potentially contaminated meat and bone meal, much
of it imported from the EU, well into 1998. It is this sub-population
of cattle that must be tested for BSE as they are processed into the
human food supply.
However, questions remain as to how the USDA can gain access to
enough samples to meet the proposed number of cattle tested for BSE.
I have sent you two letters which have yet to be addressed. I would
appreciate a response to these letters and specifically these
questions:
You stated you did not know the ambulatory status of the Washington
state Holstein cow that tested positive for BSE. I understand an
investigation by the OIG has been opened. If it turns out the only
animal that has tested positive for BSE in the United States was
clinically normal and was found only through chance, then we must
question the USDA's BSE surveillance program that focuses only on
suspects, non-ambulatory and dead cattle.
Answer. Prior to the passage of FDA ruminant feed restrictions in
1997; USDA prohibited the import of ruminant-origin meat and bone meal
from countries known to be affected by BSE beginning in 1989, and in
1997 we prohibited the importation of ruminant-origin meat and bone
meal from all of Europe. This was done to minimize the likelihood of
aged dairy cattle in the United States being exposed to potentially
contaminated meat and bone meal. Even more importantly, the United
States has traditionally been a net exporter of rendered protein
products. Our records simply do not show that there were significant
imports of meat and bone meal from Europe for incorporation into
livestock feed even when our regulations permitted such products to be
imported.
In addition, USDA has maintained an aggressive surveillance program
since 1990. This surveillance has been targeted at the population where
we are most likely to find the disease if it is present--adult animals
that have some type of clinical signs that could be consistent with
BSE. The index cow in Washington State fit in our targeted population,
as she was not clinically normal. According to Agency records, when the
index cow arrived at the plant, a Food Safety Inspection Service
veterinarian conducted a clinical assessment and classified her as non-
ambulatory disabled. The Department stands behind that assessment.
USDA continues to target its BSE surveillance efforts on cattle
populations at the highest risk of having BSE. Specifically,
surveillance has been targeted at cattle exhibiting signs of neurologic
disease; condemned at slaughter for neurologic reasons; testing
negative for rabies and submitted to public health laboratories and
teaching hospitals; and appearing non-ambulatory (including those
exhibiting general weakness severe enough to make it difficult but not
impossible to stand), also known as ``downer cattle.'' We also target
cattle that die on the farm for unexplained reasons.
USDA's testing regime for BSE will follow our prescribed plan
regardless of whether the afflicted animal in Washington State was a
downer cow. There is a very important distinction to be made between
``ambulatory'' cattle and ``apparently healthy'' cattle. An animal may
be ambulatory but have other signs of disease that make it an
appropriate animal to test. In addition, non-ambulatory cattle may be
completely and entirely unable to walk, or intermittently so. It is not
uncommon for a downer cow to be ``down'' then ``up'' several times over
the course of the journey from farm to slaughter. Weak animals--either
with a specific weakness, such as in their hind legs, or a general
weakness--may be considered non-ambulatory for surveillance purposes
because they cannot stand or walk completely normally. All evidence to
date indicates that the animal in Washington State was selected
appropriately for our targeted surveillance.
As we recently announced, we plan to test as many cattle in the
targeted high-risk population as possible in a 12-month to 18-month
period and then evaluate future actions based on the results of this
effort. The plan also incorporates a small random sampling of
apparently normal aged animals at slaughter.
The international standard setting organization--the World
Organization for Animal Health--recognizes that focusing all BSE
surveillance efforts on testing apparently healthy animals is the most
inefficient and ineffective method of actually finding disease.
In addition, no matter what the prevalence of the disease in the
United States, there is a series of firewalls in place that
dramatically reduce any possible risk to consumers. These safeguards
include the ban on all parts of animals from high-risk populations from
the food supply, along with potentially infective tissues--specified
risk materials--from all cattle over 30 months of age.
Question. If states are not allowed to do their own testing, then
how does the USDA plan a ``robust'' expansion of its BSE testing from
20,000 in 2003 to over 200,000 during the next 12-18 months?
Answer. Throughout the history of our surveillance program, USDA
has worked to obtain samples from the targeted animal population,
wherever these samples may be located. In order to obtain the samples,
USDA-APHIS has worked with facilities other than federally inspected
slaughter establishments as part of BSE surveillance efforts. These
facilities included renderers, salvage slaughter facilities (i.e., not
slaughtered for human consumption), and other animal disposal
industries.
Under our new surveillance program, we will build on these efforts
to ensure that we maintain access to our targeted surveillance
population. We will also be reinforcing our educational and outreach
efforts to producers, so they will know who to contact about testing
dead or downer animals on the farm.
USDA-APHIS-Veterinary Services' officials across the country will
work closely with their State counterparts to build on existing
relationships at these locations so that we can obtain the necessary
samples. Payment for services will help cover additional costs incurred
by producers and the industries participating in our surveillance
program. Historically, all BSE testing in the United States has been
performed exclusively at the National Veterinary Services Laboratories
(NVSL) in Ames, Iowa. Under the new surveillance program, USDA plans to
use a network of State and Federal veterinary diagnostic laboratories
to conduct BSE surveillance tests. Confirmatory BSE testing will still
be conducted at NVSL.
Question. If state veterinary diagnostic laboratories or private
companies meet or exceed the USDA standards for BSE test quality
control and sample chain of custody, then why should states and private
companies not be allowed to test animals for BSE within their states?
Answer. USDA's targeted surveillance program is designed to
identify the presence of BSE in the U.S. cattle population if it
exists. Under our current surveillance plan, using APHIS' National
Veterinary Services Laboratories and participating Animal Health
Network laboratories, we can assure trading partners of the program's
scientific legitimacy. We may not be able to make the same case to the
international community if industry dictates the parameters of the
testing program. Further, the use of a rapid test would imply a
consumer safety aspect that is not scientifically warranted. Also,
because USDA will be restricting BSE testing to public laboratories, we
can ensure that our testing remains transparent but does not cause
undue public concern if a rapid test produces a false positive
reaction.
Question. Given the limited access to suspect and non-ambulatory
cattle, how many cows have been tested for BSE since January 1st of
2004?
Answer. Between January 1, 2004 and March 31, 2004, approximately
5,500 cattle were tested for BSE. USDA anticipates the number of cattle
tested per month to increase substantially once the enhanced
surveillance plan is fully implemented on June 1, 2004.
Question. Since there are no incentives for producers to submit
non-ambulatory or sick animals for BSE testing, how can the USDA expect
to test over 200,000 of these ``high risk'' animals during the next 12
to 18 months?
Answer. Throughout the history of our surveillance program, USDA
has worked to obtain samples from the targeted animal population,
wherever these samples may be located. In order to obtain the samples,
USDA-APHIS has worked with facilities other than federally inspected
slaughter establishments as part of BSE surveillance efforts. These
facilities included renderers, salvage slaughter facilities (i.e., not
slaughtered for human consumption), and other animal disposal
industries.
Under our new surveillance program, we will build on these efforts
to ensure that we maintain access to our targeted surveillance
population. We will also be reinforcing our educational and outreach
efforts to producers, so they will know who to contact about testing
dead or downer animals on the farm.
USDA-APHIS-Veterinary Services' officials across the country will
work closely with their State counterparts to build on existing
relationships at these locations so that we can obtain the necessary
samples.
Payment for services will help cover additional costs incurred by
producers and the industries participating in our surveillance program.
For example, costs for transporting an animal or carcass to the
collection site from a farm or slaughter establishment may be
reimbursed, or disposal expenses for ``suspect'' cattle that test non-
negative or that cannot be rendered may also be covered. Other expenses
may also be addressed in the program.
Question. How will the $70 million earmarked for expanded BSE
surveillance be distributed among costs for tests, laboratory
expansion, certification and manpower needs, sample collection and
shipping, education, communications and incentives for collection of
samples?
Answer. We estimate that the full cost of the enhanced surveillance
program will be approximately $76.4 million. However, USDA was able to
offset some of these costs by directing funds from previous Commodity
Credit Corporation transfers towards this 12- to 18-month effort.
Of the total need identified, USDA anticipates spending the funds
as follows:
[In thousands of dollars]
------------------------------------------------------------------------
Program Component Cost
------------------------------------------------------------------------
Personnel and Benefits (Includes investigators, 9,078
laboratory inspectors and manager, pathologists,
program analysts, sample collectors in the field, staff
veterinarians, etc.)...................................
Travel (includes trips for meetings, training sessions, 1,445
outreach)..............................................
Transportation (Includes shipment of samples for testing 19,013
and the transportation of animals, animal parts,
carcasses, etc. for sampling and/or disposal)..........
Rent, Communication, Utilities (Includes offsite 400
collection/storage facilities).........................
Other Services (Includes agreements with contract labs, 36,994
laboratory training set-up, costs associated with
carcass/offal storage until test results confirmed,
disposal of non-negative and certain other carcasses,
database costs, printing, and indirect costs, etc.)....
Supplies and Materials (Includes shipping supplies-- 4,400
cooler box, centrifuge tubes, etc.; test kits).........
Equipment (Includes robotics and other equipment for 5,059
cooperating labs, additional equipment for NVSL and
Center for Vet Biologics)..............................
---------------
Total............................................. 76,389
------------------------------------------------------------------------
______
Questions Submitted by Senator Tim Johnson
COUNTRY OF ORIGIN LABELING
Question. I have the February 10th response from Bill Hawks, Under
Secretary for Marketing and Regulatory Programs, to my December 2003
letter. I ask you, Secretary Veneman, for a more substantial response
to my initial question. How are you interpreting the 2-year delay on
COOL, and will the delay apply to the rulemaking process?
Answer. The Omnibus Bill delayed the implementation of mandatory
COOL for all covered commodities except wild and farm-raised fish and
shellfish until September 30, 2006. Accordingly, USDA is precluded by
law from immediately implementing a mandatory COOL program for all
commodities. Currently, we are reviewing the comments received on the
proposed regulations and will continue to implement COOL as mandated by
the 2002 Farm Bill and the Omnibus Bill.
Question. Secretary Veneman, with respect to the feasibility of
country of origin labeling, have you and your department reviewed the
GAO report that Senator Daschle and I requested?
Answer. Yes, my staff and I have reviewed the report.
Question. Has the United States Department of Agriculture reviewed
the multiple assertions on the part of GAO that deem country of origin
labeling to be entirely feasible and much more cost effective than your
department originally contended?
Answer. Yes, we have reviewed the GAO assertions. The GAO report
recognizes that the existing Federal, State, and foreign country
programs that were suggested for use as models in implementing
mandatory COOL will not be particularly useful for meat, fish, and
shellfish due to the law's unique definitions of a U.S. product. The
preliminary recordkeeping burden estimate that AMS published in
conjunction with the voluntary country of origin program, which served
as the basis for GAO's report, was $1.9 billion. While the report
questions the assumptions used by AMS in formulating this estimate, it
also recognizes that this estimate did not include the costs of
segregating and storing foods and for labeling products.
DEVELOPING THE ANIMAL IDENTIFICATION PROGRAM
Question. How do you intend to develop the animal identification
program, and what parties will you include in the process? Will
producers and scientists be adequately represented and consulted?
Answer. Implementation of a national animal identification system
will begin through cooperative agreements to assist state and other
entities to develop the capacity to interface with the national
repositories. Federal funds would not be earmarked for hardware such as
identification tags or electronic readers. Cooperators would decide to
develop the interface and solicit producer and non-producer
participation into the system. USDA expects that the funding level
would start at the highest levels in Phases I and II as cooperators and
species are added but then decline into a steady state maintenance
level over time. USDA does not envision the Federal funding being used
for hardware purchases in the long term, except for maintenance and
additional development of the national allocators and repositories.
USDA also expects that competition among vendors for adoption of their
technologies by producers would result in private technology vendors
also making investments in the system infrastructure to position their
technologies.
A major factor contributing to the success of this program will be
state participation and communication with and educating producers and
other stakeholders as to the operation of the program and their
responsibilities. Some states have started activities that mirror, to
various degrees, the identification of premises and animals. Many of
these activities are supported by USDA funds. Cooperative agreements
would support the interface of these systems with the National Animal
Identification System. Some agreements with early cooperators would be
established early in Phase I. USDA recommends that additional
agreements with a broad range of cooperators be established later in
Phase I and into Phase II.
The decision process for these recommendations included a group
effort of USDA's BSE response coordinator, the Deputy Under Secretary
for Farm and Foreign Agricultural Services; USDA General Counsel; and
USDA Chief Economist assisting the Chief Information Officer in
developing a plan and strategy to implement a National Animal
Identification System. The group relied heavily on the excellent
information developed as part of the U.S. Animal Identification Plan
(USAIP), and on the expertise of the USAIP Steering Committee; the
Under Secretary for Marketing and Regulatory Programs; and the
Administrator and staff of the Animal and Plant Health Inspection
Service. The group also met with a broad spectrum of organizations and
companies representing the meat supply system, from production through
retailing. The recommendations of the group reflect the complex
structure of the livestock industry and previous efforts to design and
implement NAIS.
BSE TESTING
Question. Secretary Veneman, a rapid, live test will be
instrumental in reestablishing our trading opportunities in key
markets. How much money would the department need to develop this test,
and have you in fact initiated the process?
Answer. The Agricultural Research Service is conducting research to
develop live animal tests for transmissible spongiform
encephalopathies. ARS has successfully developed such a test for
scrapie in sheep and has contributed to such a test for CWD in farmed
deer using non-brain tissues accessible in live animals. Unlike the
sheep third eyelid and the deer tonsil tests, cow material does not
contain prions at concentrations that can be detected with current
technologies. Using current funding, ARS is enhancing the sensitivity
of current tests to look for prions in blood where they may be present
at very low levels. ARS is also developing novel proteomic approaches
to prion detection. This research will be enhanced by an additional $1
million included in the President's fiscal year 2005 budget which will
support the studies to determine the genetic susceptibility of cattle
to BSE. Such information will be helpful in identifying what peripheral
tissues might be used to detect prions and/or what alternative genetic
markers might be indicative of a cow being infected with BSE-causing
prions.
ENERGY BALANCE OF ETHANOL
Question. Dr. Collins, the United States Department of Agriculture
has conducted extensive analysis on estimating the net energy balance
of corn ethanol. Technological advances in ethanol conversion and
increased efficiency in farm production have produced demonstrated
improvements and a positive net energy balance.
At a time of increasing prices for some inputs and the continued
expansion of ethanol plants and capacity throughout the country, could
you please summarize the USDA's latest conclusions as to the positive
net energy balance of ethanol?
Answer. Although it takes energy to produce ethanol, repeated USDA
research shows a positive net energy balance of corn ethanol. the
energy in ethanol exceeds the amount of energy used to produce it, and
this energy balance has improved over time.
Technological innovations in corn production and ethanol conversion
are important factors in this improvement. Corn yields have improved,
and ethanol plants are rapidly adopting innovations which substantially
reduce the energy required to convert corn into ethanol. Our most
recent estimate of the energy ratio is 1.67, up from 1.22 in 1995. This
indicates that the energy content of ethanol is 67 percent greater than
the energy used to grow, harvest, and transport corn, and to produce
and distribute the ethanol. USDA will be presenting our most recent
study at the Corn Utilization Conference, June 7-9, 2004 in
Indianapolis, Indiana.
Question. Dr. Collins, the Reformulated Gasoline Program (RFG) is a
key contributor toward mitigating ozone problems in some of America's
largest metropolitan areas. The principal oxygenate used in the RFG
Program, MTBE, is linked to underground water contamination and several
states have taken action to phase-out and then ban the use of MTBE as
an oxygenate.
Dr. Collins, as the Congress works to pass a renewable fuel
standard, can you please summarize for the Committee the latest
benefits of using ethanol as an oxygenate under the existing RFG
Program?
Answer. Ethanol contains 35 percent oxygen, and adding oxygen to
fuel results in more complete fuel combustion, thus reducing harmful
tailpipe emissions. Ethanol also displaces the use of toxic gasoline
components such as benzene, a carcinogen. Ethanol is non-toxic, water
soluble, and quickly biodegradable.
According to the National Research Council, blending ethanol in
gasoline reduces carbon monoxide tailpipe emissions. Additionally, RFG,
including ethanol-blended fuels, reduce tailpipe emissions of volatile
organic compounds, which readily form ozone in the atmosphere. Thus,
the use of ethanol can play an important role in smog reduction.
Importantly, where smog is of most concern, gasoline blended with
ethanol must meet the same evaporative emission standard as gasoline
without ethanol. This ensures that these ethanol blends provide further
emissions reductions that limit ozone formation.
Ethanol is produced from grains and other biomass in much the same
way as beverage alcohol. MTBE, on the other hand, is a toxic additive
produced from natural gas and methanol. Exposure to ethanol vapors
coming from ethanol-blended gasoline is very unlikely to have any
adverse health consequences. Because ethanol is naturally present in
blood and the body rapidly eliminates ethanol, exposure to ethanol
vapors is unlikely to be a health hazard.
standard reinsurance agreement
Question. With respect to the Standard Reinsurance Agreement, my
office has heard substantial complaints regarding the Risk Management
Agency's proposed draft.
Where are you in the process of reviewing these complaints, and how
do you propose to change the SRA to ensure it is friendlier to
producers and agents alike?
Answer. RMA reviewed comments from insurance companies and
interested parties to revise the first draft. On Tuesday, March 30, RMA
announced the release of the second SRA proposal. RMA believes that the
second draft demonstrates responsiveness to concerns raised by
companies and interested parties in the first round of negotiations.
______
Questions Submitted by Senator Mary L. Landrieu
NATIONAL FINANCE CENTER--E-PAYROLL INITIATIVE
Question. What, if any, action do you plan to take with respect to
this proposal?
Answer. USDA has worked with the Office of Personnel Management
(OPM) to review and respond to the State of Louisiana's ``e-Government/
e-Payroll Project Initiative.'' OPM's e-Government Initiatives Office
took the lead in working with the Payroll Advisory Council, the Office
of Management and Budget (OMB), the various Federal councils, and
others involved in the e-Payroll initiative to respond to the proposal.
On April 19, 2004, OPM wrote the Honorable Don J. Hutchinson, Secretary
of Louisiana's Department of Economic Development, to share with him
the results of this review. A copy of this memorandum is attached.
[The information follows:]
Office of Personnel Management,
Washington, DC, April 19, 2004.
Hon. Don I. Hutchinson,
Secretary, Department of Economic Development, Baton Rouge, LA.
Dear Secretary Hutchinson: Thank you again for the opportunity to
review your ``e-Government/e-Payroll Project Initiative'' proposal. As
a part of the evaluation process, you permitted our Payroll Advisory
Council (PAC) the opportunity to review the proposal and provide
comments. In February 2004, members of the PAC (that includes
representatives from the Office Personnel Management, the Office of
Management and Budget, 6-Payroll Providers, and Federal Councils)
reviewed the proposal, and I would like to share the results with you.
In general, the PAC determined that the proposal was very well
thought out and contains valuable ideas. However, it does not appear to
meet the needs of the Federal Government at this time and is not in
alignment with the strategic goals of the e-Payroll initiative. For
example, while it discusses including the Department of Agriculture's
National Finance Center (NFC) in some loosely defined development
activities, it merely mentions NFC's partnership with the Department of
Interior, National Business Center (NBC). Additionally, the proposal is
unclear in regard to considerations for the employees at the NBC and
NFC who will be affected by the proposal. The proposal also indicates
that the State of Louisiana and private concerns will provide $200
million for the advancement of the facility. Not stated in the proposal
is what, if any, obligations the Federal Government would have to
reimburse that amount. It is also not evident how the proposed
corporation will interact with OPM, other authority agencies; or
customers. An established process for collaboration with Federal
authority agencies and customers is extremely critical since competing
needs could place significant demands on the provider. The PAC was also
extremely concerned with how the proposed corporation would address key
national security concerns, especially those of the Intelligence
community. Additionally, the PAC was also unclear as to how the
proposal complied with the principles of fair and open competition,
considering that thee-Payroll Providers operate out of several
different States.
The proposal indicates that software development is one of the
first priorities of the corporation. The PAC construed this to mean
that the State does not have a viable product readily available to the
Federal Government. Today, the e-Payroll Providers have independent
systems; replacement of these four systems is targeted for fiscal year
2007. To achieve replacement in fiscal year 2007, e-Payroll and the
Providers are exploring options today by conducting a feasibility study
to assess commercial off-the-shelf (COTS) and Government off-the-shelf
(GOTs) products. Upon completion of this study, it is planned to test
these applications under a structured demonstration lab. Should the
State of Louisiana have a product available in the next several months,
it could be considered for inclusion in the demonstration lab.
Again, thank you for the opportunity to review the proposal. I
would welcome any information that you might provide regarding the
availability of software the State of Louisiana might have for
inclusion in the upcoming demonstration lab.
Sincerely,
Norman Enger,
Director, e-Government Initiatives Office.
Question. Since the activities of the NFC are outside the normal
scope of business of the U.S. Department of Agriculture, in the event
the Department cannot support this cost-effective approach to meeting
the PMA, are you considering the possibility of the transition of the
NFC to a structure or ``ownership'' that will facilitate this proposal?
Answer. As part of the e-Payroll initiative, USDA/NFC in
conjunction with the Department of the Interior's National Business
Center (NBC), its e-Payroll business partner, submitted to OPM in
August 2004, a proposal to combine the Government-wide, cross-servicing
business lines of NFC and NBC into an organization characterized as:
--Commercial-like, Federal corporate entity
--Providing a wide range of services targeted at supporting the
President's e-Government Agenda
--Operational flexibilities defined; i.e., human resource and finance
This proposal is under review by OPM and OMB.
Question. What specific actions can you take from here to make sure
the Louisiana proposal receives the full attention of the Department of
Agriculture?
Answer. OPM's e-Government Initiatives Office has taken the lead in
working with the Payroll Advisory Council, the Office of Management and
Budget (OMB), the various Federal councils, and others involved in the
e-Payroll initiative to respond to the proposal.
Question. If Congress were to direct you, or suggest that you, your
Department and the Department of Interior have authority to move out on
a proposal like Louisiana's, would you support such legislative
authority?
Answer. We would work with OPM and OMB in support of any direction
provided and work with them to implement this direction in line with
the goals and objectives of the President's Management Agenda to
further delivery of cost-effective services to Federal employees and
agencies.
Question. Is specific legislation necessary before you, your
Department and the Department of the Interior proceed with some type of
public/private partnership initiative like that proposed by the State
of Louisiana?
Answer. We believe that specific legislation would be necessary to
charter and authorize the new entity as well as provide the necessary
structure, human resource, and financial flexibilities necessary for
the organization to be successful. OPM has identified the need for
legislation as a primary critical path item if the merged proposal
proceeds.
NATIONAL FINANCE CENTER--THRIFT SAVINGS PLAN
Question. Ms. Secretary, as you are aware, the Federal Retirement
Thrift Investment Board (FRTIB) Chairman, Andrew Saul, in his February
20, 2004 letter to you, said the Board is ``giving notice of
termination of software maintenance services and mainframe operations
by NFC'' for the Thrift Savings Plan. It is estimated that this action
could result in the loss of as many as 35 to 40, if not more, of the
highest paying jobs at NFC, and may lead to a subsequent decision by
the ``Thrift'' Board to terminate the NFC's ``case management' of the
TSP which involves another 400 jobs at the NFC. It is my understanding
that according to some preliminary information received thus far from
the ``Thrift'' Board and the NFC, the actions by the ``Thrift'' Board
may not be warranted or justified at this point.
Has your office considered what, if anything, can be done to
reverse this action by the Federal Retirement Thrift Investment Board?
Answer. The decision to purchase service from NFC is under FRTIB's
control. USDA believes strongly that continued use of NFC is still a
cost-effective, sound business decision. We have taken steps to improve
communication between USDA/NFC and FRTIB in an effort to rebuild the
strategic partnership and retain the business. However, we do not know
all of the factors influencing the Board's decision, and therefore do
not know if our actions will influence the outcome.
Question. What have your offices, specifically in DC, done in reply
to the February 20th letter?
Answer. Tom Dorr, Senior Advisor to the Secretary, was appointed to
represent USDA and to meet personally with senior FRTIB officials and
to help clarify and resolve the issues. Mr. Dorr, as well as other
executives of OCFO, has been in continuing contact with FRTIB and NFC
since his assignment.
Question. I am concerned that changing the operations of critical
elements of the Thrift Savings Plan operations and functions from the
National Finance Center to ``possible entities'' in Washington, D.C.
may cause even more customer problems and be less cost effective.
Please provide for the record any and all cost comparison studies
or analyses the Department of Agriculture, the Thrift Board, or any
other entities have done regarding ``outsourcing,'' moving,'' or
``changing'' any and all TSP activities versus maintaining them at the
National Finance Center.
Answer. FRTIB has had several studies conducted over the years.
Hewitt Associates prepared an analysis, Defined Contribution
Outsourcing Feasibility Study, for FRTIB in November 1992. Continued
service from NFC was the top ranked alternative under consideration.
The Hewitt Associates experts concluded that keeping the TSP
recordkeeping function at NFC with the existing software and management
structure best met FRTIB's and TSP participant needs at that time.
Logicon 4GT prepared a system review and recommendation report for
FRTIB in 1995. NFC's services were again rated favorably. According to
the consultants in 1995, the benefits that TSP participants received
relative to the costs paid at NFC were excellent. TSP participants were
paying less than one-half of the private sector cost. The industry
standard for comparing mutual/retirement fund administrative expense
ratios between competitors is percent of assets--typically referred to
as basis points. (One percent equals 100 basis points.) At the time of
the Logicon review, NFC's basis points were 7.7 of the 12 total TSP
basis points.
NFC's TSP costs are still low when compared to comparable efforts
in industry. In his opening statement at the March 1, 2004, Senate
Committee on Governmental Affairs, Senator Fitzgerald referenced the
recent expense ratio of TSP and comparable private sector funds. In
2003, the expense ratio of the average TSP fund was 11 basis points.
Per Lipper Services, comparable index funds in the private sector have
an average expense ratio of 63 basis points. Between 1994 and 2003 when
TSP's basis points dropped from 12 to 11, NFC's share of the basis
points decreased from 7.7 to only 4.4, a decrease of 43 percent.
Without the increased cost efficiencies of NFC, total TSP
administrative costs would have been significantly higher than 11
points in 2003.
On March 4, 2004, FRTIB issued a multi-year contract to a private
vendor for a parallel call center. This will result in the eventual
movement of 50 percent of the call center workload from NFC in New
Orleans to the vendor located in the Washington, D.C., metropolitan
area. NFC paired with its e-Payroll partner, Department of the
Interior's National Business Center in Denver, to compete but lost the
bid.
Question. Also, please provide for the record, or to the
Subcommittee staff and our offices all relevant correspondences,
notices, and memos between the Federal Retirement Thrift Investment
Board and any offices in USDA (in Washington or at the National Finance
Center) from January 1999 to today, relating to TSP management and
operations with respect to this issue.
Answer. The information has been provided to the Subcommittee
staff.
NATIONAL FINANCE CENTER--DATA MIRRORING
Question. The fiscal year 2005 USDA budget request provides
$12,850,000 in additional funding for the ``acquisition of disaster
recovery and continuity of operations technology of the National
Finance Center's data.'' This additional funding may be necessary to
complete the effort begun in fiscal year 2003 to fund a back-up, or
data mirroring, center for the NFC. In fiscal year 2003, $12 million
was appropriated for this center, subject to reporting requirements by
Congress.
As it appears that the Budget justification for fiscal year 2005
submitted to the Subcommittee by the Department only provides a four-
sentence explanation with no budget table breakout, please provide for
the record details and a specific breakout of what the $12.85 million
request in fiscal year 2005 includes.
Please provide for the record what has been obligated and or spent
to date from the funds appropriated in fiscal year 2003 and for what
purposes. In addition, please provide any relevant details.
Answer. NFC delivers critical service to the entire Federal
community. Its highest impact business lines are Thrift Savings Plan
recordkeeping for 3.1 million participants and payroll/personnel
support to 122 Federal agencies. Disruption in either of these services
due to a disaster would have wide, significant repercussions across the
nation. NFC has undertaken a multi-year initiative with appropriated
funds to address short-term vulnerabilities and as well as to begin
longer-term actions required to implement a more secure remote
alternate data center at another location.
The initial $12 million was to be used on immediate improvements to
NFC's security and recovery infrastructure and to begin the actions
required to establish the remote computing facilities. The immediate
improvements were estimated at $3.6 million--$0.8 million for
implementation of enhancements to network security and technical
solutions to known network vulnerabilities and $2.8 million for interim
implementation of high availability mirroring through expansion of the
current commercial recovery center contract. The remaining $8.4 million
was to begin implementation of the alternate computing facility.
Details on the projects follow.
--Implementation of enhancements to network security and technical
solutions to known network vulnerabilities: Estimated $800,000
--Access control--no expenditure of appropriation required; will be
achieved through the upgrade of the operating system on May
29, 2004
--Logging and monitoring--$26,977 expended for Blue Lance logging
and monitoring software; installed and fully operational;
$52,000 anticipated for intrusion detection enhancements
and installation/configuration of Tripwire (in the
procurement process)
--Vulnerability management--$284,000 anticipated for vulnerability
scanning and management software (in the procurement
process)
--Remote access--$157,689 expended, $157,787 obligated for Citrix
hardware and software
--Encryption--$26,468 expended for Cisco encryption equipment;
installation in progress
--Authentication--$95,000 anticipated; smart cards, technical
support, and server to support two-factor authentication
(estimated $75,000; in the procurement process); Sygate
Security Portal for remote connection policy enforcement
(estimated $20,000; in the procurement process)
--Implementation of mirroring to provide high availability and
recovery of payroll/personnel data in NFC's reporting center
within 24 hours of a declared disaster: Estimated $2.8 million
--Mirroring solution for payroll/personnel data in NFC's reporting
center--NFC has received the proposals from vendors and is
now in the process of evaluating them.
--Network equipment upgrade at the recovery backup site to support
mirroring solution--$60,000 anticipated; in the procurement
process
NFC initially estimated a one-time investment of approximately
$34.1 million to establish a Federally controlled alternate site within
350 miles of New Orleans that included collocation of business
resumption capability. Final plans depended upon on the availability of
facilities for lease or sublease in the targeted area that have already
been outfitted for data center operations and the availability of
funding. If NFC were able to secure space on an existing Federal
facility that already meets Department of Homeland Security physical
security standards, it could reduce costs below those shown in the
original estimates. NFC is currently pursuing site location and
business continuity options that would enable establishment of an
alternate computing facilities environment that manages the risks
associated with discontinued service. Final cost estimates are pending
receipt of the responses from the Federal community. However, the
remaining $8.4 million of the fiscal year 2003 appropriation and the
$12.85 million proposed for fiscal year 2005 are expected to fund much
of this critical investment.
This one-time capital investment will address the following
critical objectives:
--Undertake actions to reduce enterprise risk and support data
mirroring capability. NFC is currently awaiting responses from
prospective Federal sources to its statement of requirements
seeking excess computing facility space.
--Buy and install hardware and software needed to support the effort,
set up a new tape library system, and design and implement
point-in-time remote backup capability.
--Evaluate emerging backup and recovery options and their associated
costs.
The details of the initial $34.1 million capital investment
estimates are below. These were included in our September 2003 report
to Congress. We will update this budget once we receive feedback from
the prospective Federal site sources.
ONE-TIME CAPITAL INVESTMENT REQUIREMENT/SERVICEBASE COST
------------------------------------------------------------------------
Requirement/Service Base Cost
------------------------------------------------------------------------
Alternate Data Center:
Mainframe hardware/software......................... $2,650,000
Distributed servers hardware/software............... 2,775,000
Storage............................................. 10,550,000
Tape................................................ 3,450,000
Firewalls/Virtual Private Network................... 675,000
Telecommunications/LAN equipment.................... 2,000,000
Build-out cost/furniture for 16,000 sq. ft. data 6,444,000
center space (including 11 employee workstations)..
Design/engineering/project management contractual 2,854,000
services...........................................
---------------
Subtotal.......................................... 31,398,000
===============
Collocation of Business Resumption Capability:
Build-out cost for 52,000 sq. ft. office space...... 1,352,000
Furniture/workstations for 300 employees............ 1,200,000
Design/engineering/project management contractual 135,000
services...........................................
---------------
Subtotal.......................................... 2,687,000
===============
Total............................................. 34,085,000
------------------------------------------------------------------------
Question. As of today, what specific sites are under consideration
for this data mirroring center?
Answer. We are preparing for solicitation from Federal sources. No
specific sites are under consideration at this time.
Question. The fiscal year 2003 Continuing Appropriations Conference
Report section of the Agriculture Appropriations Bill, 108-10, Pages
551-552, included report language directing the Secretary of
Agriculture ``to submit a feasibility study to the Committee on
Appropriations on the need for remote mirroring backup technology of
the National Finance Center's data. This study should include a
breakdown of the costs and time frame associated with acquiring such
technology, and should designate an appropriate physical location for
the site. . . .''
This ``feasibility study'' did not make any specific
recommendations but it did provide a timeline for specific site
determination that included a ``competitive site selection for a
secondary backup data center'' starting in fiscal year 2004. Has this
process begun?
Answer. Site specifications are complete. The next step is
solicitation from Federal agencies, which will occur shortly.
Question. What is the current timeline and plan for this site
selection process?
Answer. We anticipate sending the solicitation package to three
Federal agencies and getting responses by the end of June 2004.
Question. The ``feasibility'' report essentially claims as the key
reason for site selection and criteria for that selection the
elimination of the ``NFC's extreme vulnerability to the hurricanes
common to the Gulf Coast.'' In fact, the report continually sites this
reason as a critical factor.
Please provide for the record the number of times the NFC has been
completely shut down because of hurricane events over the last 20
years. Also, provide for the record the number of times, over the same
time period that the Department of the Interior's National Business
Center, General Service Administrations comparable data center and the
Department of Defense pay and personnel functions have been shut down
for weather related reasons as well as any other factors. This should
also include the Office of Personnel Management operations in
Washington, D.C.
Answer. Over the past 20 years, NFC was shut down on two occasions
due to weather for a total down time of approximately 15 hours. On a
third occasion, operations were limited due to weather conditions
associated with a hurricane. Each of these occurrences took place since
1998. Regarding other agencies and Departments of interest to the
Committee, we learned that the Department of the Interior's National
Business Center reports no complete building shutdowns. We have been
unable to obtain up-to-date information from the other agencies
identified.
______
Questions Submitted by Senator Robert C. Byrd
HUMANE SLAUGHTER OPERATIONS
Question. In fiscal year 2003, $5 million was provided to the Food
Safety and Inspection Service to increase, by 50 full time equivalents,
resources dedicated to enforcement of the Humane Methods of Slaughter
Act (HMSA). The President's request for fiscal year 2005 includes $5
million to continue this purpose.
Please describe how the $5 million appropriated in fiscal year 2003
was allocated, and how the $5 million proposed for fiscal year 2005
will be allocated.
Answer. The fiscal year 2003 Appropriations conference agreement
provided $5 million over 2 years for at least 50 FTE's to enforce the
HMSA. In 2003, FSIS directed the District Veterinary Medical
Specialists (DVMSs) to evaluate the time spent conducting humane
handling verifications. The DVMSs determined that FSIS inspectors and
veterinarians would spend an estimated 130,000 hours conducting ante-
mortem and humane handling inspections, which translates to more than
50 FTEs. Based on the survey data, USDA believes that the requirements
are being met as evidenced by the increased hours of humane slaughter
activities. At the time the funding was provided, FSIS was developing
Humane Activities Tracking (HAT) system to allow the agency to more
accurately capture the time spent on humane handling and slaughter
enforcement activities by FSIS inspection personnel.
In fiscal year 2005, the Administration has requested $5 million
for FSIS to continue the work funded only for fiscal years 2003 and
2004. This includes staffing and benefit costs directly associated with
humane handling and slaughter enforcement activities.
Question. Please explain why you believe the manner you have taken
to meet the additional 50 full time equivalent requirement will provide
more effective HMSA enforcement than by using the appropriation to hire
50 individual inspectors dedicated solely to HMSA enforcement.
Answer. USDA considers humane handling and slaughter a top
priority, and FSIS veterinarians and inspectors are required to enforce
humane handling and slaughter regulations at all of the more than 900
federally inspected establishments. FSIS continues to improve training
and education efforts to ensure that all field personnel understand
their authority, obligation and accountability to rigorously enforce
the Humane Methods of Slaughter Act (HMSA). The fiscal year 2003
Appropriations conference agreement provided $5 million over 2 years
for at least 50 full time equivalents (FTEs) to enforce the HMSA. FSIS
secured at least 50 FTEs dedicated to HMSA enforcement during Calendar
Year 2003. Based on the DVMS survey data, USDA believes that the HMSA
requirements are being met as evidenced by the increased hours of
humane slaughter activities across all federally inspected
establishments. Because of the importance of this top priority to the
entire field workforce, in fiscal year 2005, the Administration has
requested $5 million for FSIS to continue the work funded in fiscal
year 2003 and 2004.
Question. Critics of current HMSA enforcement suggest that unless
FSIS personnel are always present at animal handling and slaughter
sites, there is no way to know if HMSA violations occur. Further, it
has been suggested that plant employees use communication methods to
warn handling and slaughter employees when FSIS personnel are
approaching their work stations and, only then, is stricter compliance
with HSMA requirements pursued by plant employees.
Would you please respond to these criticisms?
Answer. Humane handling activities and food safety systems are both
under on-going regulatory activities as part of FSIS inspection
personnel's everyday responsibilities. FSIS employees use a variety of
methods to determine compliance with the HMSA and do not rely upon a
single mode of evaluation. Some of these methods include standing in
establishments where they cannot be observed, listening to unusual
livestock vocalizations, viewing any changes in carcasses (e.g.,
bruising), communicating with plant employees to ask how they handle
certain situations, and conducting off hours inspections (e.g.,
observing humane handling during off-loading at a plant that receives
animals during the evening hours. The Veterinary Medical Officer (VMO)
is authorized administrative overtime to come back for unscheduled
observation during the evening).
The DVMSs routinely work with the VMOs on the importance of
utilizing different approaches to verifying humane handling
requirements. DVMSs work with FSIS inspection personnel to emphasize
the importance of, and methods of, observing humane handling in
locations where inspection personnel are not readily identified. If
there is not a location to verify animal handling without being
observed, the VMO is instructed to stand in a location to listen for
vocalization by the livestock, or excessive yelling by plant employees.
Both are indicators that plant employees may be using excessive force
to move the animals.
Question. How many plants under the jurisdiction of HMSA have the
capability to allow FSIS personnel to observe undetected plant animal
handling slaughter operations?
Answer. Most of the approximately 300 largest livestock operations
have safe areas with minimal visibility where FSIS personnel can and do
observe plant animal handling and slaughter operations without being
observed by plant employees. In addition, DVMSs and VMOs are authorized
to conduct off hours inspections to observe humane handling during off-
loading at a plant that receives animals during the evening hours.
However, continuous visibility is the most effective method to observe
HMSA compliance in small and very small operations. VMOs are trained to
listen for changes in an animal's behavior and to look for indicators
while observing carcasses. The need to be able to make this type of an
assessment is part of the information provided by the DVMSs and is
included in the new employee training for newly hired veterinarians.
Question. What is USDA doing to increase this capability?
Answer. FSIS inspection personnel have a continuous, on-going,
daily presence in all livestock slaughter operations. The fact that
FSIS personnel are constantly present and observing animal handling and
slaughter procedures for compliance with the HMSA keeps the industry
aware of the regulatory presence. DVMSs work with FSIS inspection
personnel to emphasize the importance of, and methods of, observing
humane handling in locations where inspection personnel are not readily
identified. It is also addressed in the new training developed for
newly hired veterinarians, and is addressed by the mentors provided to
assist newly hired FSIS veterinarians. In addition, DVMSs and VMOs are
authorized to conduct off hours inspections to observe humane handling
during off-loading at a plant that receives animals during the evening
hours.
Question. Would USDA support a requirement to require such a
capability?
Answer. USDA has a continuous regulatory presence through its FSIS
inspection personnel in all livestock slaughter operations under
official inspection. FSIS conducts humane handling and slaughter
verification using a complete array of inspection procedures and
professional judgment to verify compliance with the HMSA. Requiring
FSIS personnel to observe undetected plant animal handling slaughter
operations would likely be a burden on small and very small plants.
Question. Would USDA support a requirement for, as an option, the
installation of a closed-circuit television monitor to allow FSIS
personnel to make these observations from a remote location? If not,
why?
Answer. As the law requires, FSIS inspection personnel, including
veterinarians, are in all federally inspected slaughter plants every
day and every minute that they are in operation. An establishment may
not slaughter without the presence of inspection personnel. Inspection
personnel conduct humane slaughter verification procedures at these
establishments on a daily basis. These procedures include observation
of the establishment's stunning methods.
Cost must also be considered as the installation of a closed-
circuit television monitor could place a burden on small and very small
plants. If USDA were to bear the cost for such a system, substantial
funding would be needed. In addition, maintenance costs would likely be
problematic due to the potential difficulty in maintaining such a
system in a high humidity environment.
USDA does not believe that the addition of cameras would improve
the observation capability of trained inspectors. FSIS veterinarians
are technically trained to observe subtle signs indicative of humane
handling and slaughter methods, which may not be identifiable under
video surveillance. For example, ensuring animals are either dead or at
the level of surgical anesthesia is critical when evaluating stunning
effectiveness. This requires hands-on evaluation of the animal. If
these very subtle signs are missed, animals can return to consciousness
within a few seconds. The presence of FSIS inspectors in a plant is
much more integral to enforcing the HMSA. All in-plant FSIS personnel
are expected to enforce this Act and are held accountable for taking
corrective and/or enforcement actions if it is violated.
Question. Please provide information regarding the fiscal year 2005
cost of integrating the Humane Animal Tracking System within the FAIM
architecture.
Answer. FSIS upgraded its electronic Animal Disposition Reporting
System (eADRS) with the incorporation of HAT in February 2004. HAT will
allow the agency to more accurately capture the time spent on humane
handling and slaughter enforcement activities by FSIS inspection
personnel. Fiscal year 2005 costs will be covered within base funding.
Question. Please provide information regarding the number of FSIS
personnel, in fiscal year 2003, who may have received agency
reprimands, or similar actions, for taking any HMSA regulatory action
against a plant operation which was later found to be inappropriate or
unnecessary.
Answer. All in-plant FSIS personnel are expected to enforce the
HMSA and are held accountable for taking corrective and/or enforcement
actions if it is violated. In fiscal year 2003, FSIS employees did not
take any HMSA regulatory actions that were later found to be
inappropriate or unnecessary. In fact, certificates of recognition have
been provided to FSIS personnel for acting responsibly in certain HMSA
enforcement situations.
Question. Conversely, please provide information regarding
recommendations by FSIS personnel to take an HMSA regulatory action
against a plant operation which was subsequently rejected by an FSIS
supervisor.
Answer. USDA is not aware of any recommendations by FSIS personnel
to take an HMSA regulatory action against a plant operation which was
subsequently rejected by an FSIS supervisor. Because FSIS trains all
in-plant Veterinary Medical Officers (VMOs) and slaughter line
inspectors about humane handling responsibilities, the agency is
confident in their ability to properly enforce the HMSA.
Question. On pages 29 and 30 of GAO report 04-247, dated January
30, 2004, on the subject of the Humane Methods of Slaughter Act, six
specific recommendations are listed for you to further strengthen HMSA
regulatory actions.
Please describe steps you have taken to carry out each of these
recommendations.
Answer. USDA places a very high priority on ensuring that animals
produced for food are treated in a humane manner and has taken swift
action in instances where establishments have been found in violation
of the Humane Methods of Slaughter Act (HMSA). FSIS has already
incorporated many of the recommendations made by GAO that will improve
the quality and consistency of our enforcement efforts. Below is FSIS'
action plan in regards to the recommendations.
GAO Recommendation
To provide more quantifiable and informative data on violations of
the HMSA, GAO recommends that the Secretary of Agriculture direct FSIS
to supplement the narrative found in noncompliance reports with more
specific codes that classify the types and causes of humane handling
and slaughter violations.
USDA Response
Noncompliance reports are stored electronically in the Performance
Based Inspection System (PBIS). FSIS will determine whether it is
feasible and appropriate to modify the PBIS to incorporate additional
humane handling violation codes. The current database format contains
detailed narratives from FSIS Noncompliance Records (NRs). These
narratives contain a wealth of information beyond what is provided in a
simple classification code and provide the basis for a thorough
analysis.
In addition, DVMSs are now using procedures and tracking tools to
continually monitor regional trends and anomalies in establishment
compliance. These procedures and tracking tools are currently separate
from PBIS. All noncompliance reports are now being sent to the District
Office where they are reviewed and analyzed by the DVMS.
GAO Recommendation
To ensure that district officials use uniform and consistent
criteria when taking enforcement actions, GAO recommends that the
Secretary of Agriculture direct FSIS to establish additional clear,
specific, and consistent criteria for District Offices to use when
considering whether to take enforcement actions because of repetitive
violations.
USDA Response
FSIS is developing guidance for inspection personnel which will (1)
provide clear, specific, and consistent criteria for the District
Offices when taking enforcement actions because of repetitive
violations, (2) require the clear documentation of the basis for the
decision regarding enforcement actions of repetitive HMSA violations
and (3) provide criteria for determining when inspection personnel
would issue an NR and when immediate suspension is warranted. FSIS
expects to issue a Notice to inspection personnel this summer.
In addition, FSIS Directive 5000.1, ``Enforcement of Regulatory
Requirements in Establishments Subject to HACCP Systems Regulations''
issued on May 21, 2003, and the Food Safety Regulatory Essentials
courses provide guidance and direction to inspection personnel to
ensure consistent use of enforcement actions. These materials emphasize
a thought process rather than fixed criteria for initiating enforcement
action. They pose a series of questions for inspection personnel to
consider when determining whether a second violation is an isolated
incident or a trend of noncompliance is developing.
GAO Recommendation
To ensure that district officials use uniform and consistent
criteria when taking enforcement actions, GAO recommends that the
Secretary of Agriculture direct FSIS to require that District Offices
and inspectors clearly document the basis for their decisions regarding
enforcement actions that are based on repetitive violations.
USDA Response
FSIS is developing guidance for inspection personnel which will (1)
provide clear, specific, and consistent criteria for the District
Offices when taking enforcement actions because of repetitive HMSA
violations, (2) require the clear documentation of the basis for the
decision regarding enforcement actions of repetitive violations and (3)
criteria for determining when inspection personnel would issue an NR
and when immediate suspension is warranted. FSIS expects to issue a
Notice to inspection personnel this summer.
FSIS is using the Administrative Enforcement Report (AER) process
to ensure that the proper case support files and documents are in place
when an enforcement action is taken. A key component of this case file
is documentation generated by the FSIS in-plant employees. Properly
documented NRs and memos of pertinent plant meetings, conversations,
and other documentation are vital, and are important parts of the AER
reporting process.
GAO Recommendation
To ensure that FSIS can make well-informed estimates about the
resources it needs to enforce the HMSA, GAO recommends that the
Secretary of Agriculture direct FSIS to develop a mechanism for
identifying the level of effort that inspectors currently devote to
monitoring humane handling and slaughter activities.
USDA Response
FSIS has developed a new computer database, Humane Activities
Tracking, to provide detailed and current data related to time spent on
specific humane handling and slaughter verification activities by
inspectors. HAT is one component of the Agency's updated electronic
Animal Disposition Reporting System (eADRS) and e-gov initiative. eADRS
will replace the current use of FSIS paper forms to report information
about animals presented for slaughter. FSIS will utilize information
and data from the new tool to determine the adequacy of its resources
for enforcing humane handling and slaughter requirements at the
individual plants.
GAO Recommendation
To ensure that FSIS can make well-informed estimates about the
resources it needs to enforce the HMSA, GAO recommends that the
Secretary of Agriculture direct FSIS to develop criteria for
determining the level of inspection resources that are appropriate on
the basis of plant size, configuration, or history of compliance.
USDA Response
FSIS will use HAT and eADRS to document the number of animals
slaughtered each day and the amount of time spent monitoring various
aspects of humane handling and slaughter requirements. Information
maintained in the eADRS will be regularly examined by FSIS managers to
assist in inspection resource planning.
GAO Recommendation
To ensure that FSIS can make well-informed estimates about the
resources it needs to enforce the HMSA, GAO recommends that the
Secretary of Agriculture direct FSIS to periodically assess whether
that level is sufficient to effectively enforce the Act.
USDA Response
FSIS will use eADRS and HAT to document the number of animals
slaughtered each day and the amount of time spent monitoring various
aspects of humane handling and slaughter requirements. Information
maintained in the eADRS and HAT will be regularly examined by FSIS
managers to assist in inspection resource planning, and to determine if
staffing levels are adequate. Additionally, FSIS will periodically
assess whether the staffing level is sufficient to effectively enforce
the Act.
Question. With funds provided by this Committee in fiscal year
2001, USDA established 17 District Veterinary Medical Specialist (DVMS)
positions dedicated solely to HMSA activities.
Please describe the activities of these DVMS personnel in fiscal
year 2003, how they intend to carry out their responsibilities in
fiscal year 2004, and how they will carry out their responsibilities in
fiscal year 2005, and in particular, describe, if any, activities that
are not related to HMSA enforcement including the percentage of time
spent on non-HMSA enforcement. Specifically, what percentage of their
time is spent in plants subject to HMSA jurisdiction?
Answer. USDA considers humane handling and slaughter a high
priority and is committed to ensuring compliance with the HMSA. In
fiscal year 2003, each DVMS attended training and then conducted
assessments of each livestock facility within their district. The DVMSs
provided leadership for humane handling and slaughter activities by
conducting on-site training for field personnel during their visits.
They disseminated new information to field personnel and coordinated
humane handling and slaughter non-compliance actions for their
District.
The DVMSs also participated in monthly conference calls and in
working groups to assist the agency in humane handling strategies. The
DVMSs have developed the Humane Interactive Knowledge Exchange (HIKE)
tool, which provides humane handling and slaughter scenarios to help
improve the uniform understanding of humane enforcement throughout the
field. The DVMSs participated in the development of the Humane
Activities Tracking system and have developed tools to analyze humane
handling data within their District to ensure that Frontline
Supervisors are informed of any data trends. The DVMSs developed and
utilized established protocols for following up on humane handling
violations. The efforts and recommendations made by the DVMSs have
improved the consistency of humane handling enforcement among all
Districts.
In fiscal year 2004, DVMSs continue strengthening the humane
handling and slaughter enforcement and education of FSIS inspection
personnel. Thus far, in fiscal year 2004, each DVMS continues to
conduct on-site training with field personnel and coordinate humane
handling and slaughter non-compliance actions for their District. The
DVMSs are utilizing HAT to document and capture the time spent by
veterinarians and other FSIS inspection personnel conducting humane
handling and slaughter activities. The DVMSs have provided expert
advice for the development of new Directives and Notices used to inform
inspection personnel of the requirements, verification activities, and
enforcement actions for ensuring that the handling and slaughter of
livestock is humane. The DVMSs have also surveyed field employees on
their knowledge of and training needs for humane handling and slaughter
verification, so that the agency can determine what additional needs it
may have in these areas. The DVMSs continue developing the HIKE
scenarios to help improve the uniform understanding of humane
enforcement throughout the field. The DVMSs also distributed up-to-date
information to industry and FSIS personnel about new FSIS policies and
provided FSIS field employees with information on industry's Humane
Good Management Practices and auditing systems so that they may
encourage industry to not only follow FSIS regulations, but to also
adopt a systems approach to continually improve livestock handling
practices. In fiscal year 2004, the DVMSs also began a strategic
planning process to continually improve their service to the field.
The DVMSs will continue to build on the activities carried out in
2004, expand their ability to analyze trends, improve the tracking of
the time spent by FSIS personnel on humane handling and slaughter
activities, and continually improve the effectiveness of FSIS' humane
handling and slaughter verification activities. All DVMSs focus on
humane handling and slaughter verification and will continue to do so.
During 2004, DVMSs spent approximately 75 percent of their time
conducting in-plant assessments at plants subject to HMSA jurisdiction.
Question. To what extent do DVMS personnel visit locations in
Districts other than their own?
Answer. DVMS personnel visit other Districts on an as needed basis.
Each FSIS District Manager evaluates the needs of the District in order
to effectively utilize DVMSs and ensure that needs are fully met. DVMSs
have also crossed District lines when the Agency must follow-up on
specific concerns that have been brought to the Agency's attention.
Question. Will USDA support assigning additional FSIS personnel to
assist DVMS's in order to increase the frequency of plant visits?
Answer. Currently, the DVMSs enable the Agency to fully ensure
enforcement of the HMSA. However, as the need arises, FSIS will adjust
accordingly. For example, to ensure adequate humane handling
verification in Puerto Rico, FSIS trained a veterinarian in the DVMS
methodology to assist in this remote location.
PASTURE-RAISED BEEF PROJECT
Question. The February 2004, edition of Agriculture Research
Solving--Problems for the Growing World, published by the Agricultural
Research Service, contained a story entitled Grass Fed Cattle Follow
the Appalachian Trail. It is a story about a project that I have been
proud to secure funds for over the course of the past few years. It is
doing important research regarding pasture-raised beef.
Now that Mad Cow Disease has reared its ugly head here in the
United States, the markets for pasture-raised beef, naturally grown
without hormones or antibiotics, will continue to grow. That is causing
hope for Appalachia's family farmers who are participating in this
program. The goal of the project is to reduce foreign imports of beef
by increasing the supply of healthy, grass-raised beef from Appalachia.
This sounds like a wise use of the taxpayers dollars that will directly
benefit the family farmers of West Virginia.
With the Department highlighting the benefits of this project, can
you then explain to me why this Administration, and the President, sent
up a budget in February, the very month of the publication of this
magazine, that would cut this program by 81 percent, from $1,625,024 to
$301,312?
Answer. We fully recognize the accomplishments of this project and
its potential benefits to the family farmers of West Virginia. This
project is part of the $169.4 million in unrequested projects
appropriated to ARS between fiscal years 2001 through 2004. These
unrequested projects were proposed for termination in the fiscal year
2005 President's budget to redirect these resources towards the need to
implement higher National priority initiatives, such as obesity
research, food safety, emerging animal and plant diseases, controlling
invasive species in plants and animals, and other research initiatives
critical to advancing this Nation's food and agriculture economy.
Setting priorities requires that these kinds of choices be made.
FUNDING FOR FOOD SAFETY/ANIMAL HEALTH INSPECTIONS AND RESEARCH
Question. In the fiscal year 2002 Supplemental Appropriations Bill,
the Congress provided the President with resources to increase
surveillance, inspections, and research to reduce the likelihood that
diseases, such as Mad Cow Disease, would threaten American consumers.
That bill included $5 million for animal health research, $13 million
for food safety inspections (notably for imported products), and $39
million for enhanced animal health inspection and surveillance
programs. In several instances, these funds were specifically directed
for Mad Cow Disease-related activities.
However, when given the opportunity to make those funds available,
the President refused to designate those needs as an emergency. As a
result, you were deprived of significant resources to fight problems
like Mad Cow Disease. I don't mean to imply that the use of those funds
in fiscal year 2002 would have prevented the recent incident in
Washington State, but it would have contributed toward greater
surveillance and a better understanding of how to identify and control
problems like Mad Cow disease.
On January 6, 2004, I wrote President Bush a letter of admonishment
pointing out that he let slip through his fingers resources which could
have assisted him, and you, and the American people, be better prepared
to meet the challenges that the introduction of a disease, such as Mad
Cow Disease, would pose to this country.
However, I note that the President's fiscal year 2005 budget
request includes increases for what he is calling a Food and
Agriculture Defense Initiative to carry out some of these same
activities that he rejected 3 years earlier. It appears that the
President is more properly trying to play catch up in areas that
Congress tried to initiate before the public's attention was more
brought to focus on these problems and the President began to feel the
political heat. Even if the full Food and Agriculture Defense
Initiative is funded in the fiscal year 2005 appropriations bill, those
resources still will not be available until next fiscal year. Instead
of immediate action, the President is proposing additional delay.
Secretary Veneman, when the President was faced with the choice of
using or rejecting those supplemental funds in 2002, did you make the
case to President Bush that those resources should be utilized? If you
didn't think those funds were needed in 2002, why do you think they are
needed in 2005?
Answer. Each year, the Department submits a budget request based on
program area needs at the time, and the Administration developed a
funding request that it thought was appropriate in view of fiscal
realities. The additional funds Congress added above the request were
deemed not necessary given the timeframe related to the supplemental.
FSIS, in conjunction with other Federal agencies, has conducted
vulnerability assessments along the farm-to-table continuum for
domestic and imported products in order to protect against intentional
or unintentional contamination of the food supply. Based, in part, on
the vulnerability assessments, USDA, the Department of Health and Human
Services and the Department of Homeland Security are working together
to create a comprehensive food and agricultural policy, known as the
food and agriculture defense initiative. The Department's fiscal year
2005 budget request includes funding to support FSIS' components of the
food and agriculture defense initiative--biosurveillance, the Food
Emergency Response Network, data systems to support the Food Emergency
Response Network, enhancing FSIS laboratory capabilities, and follow-up
biosecurity training for front-line staff.
______
Questions Submitted by Senator Daniel K. Inouye
BROWN TREE SNAKE
Question. We understand that USDA-APHIS participated in a cross-cut
budget process for invasive species funding with other departments and
agencies and that brown tree snake was selected to be one of the ten
issues to be focused on for enhanced effort.
What level of new funding has been provided in the fiscal year 2005
budget request to address the urgent needs of Wildlife Services
Operations and Wildlife Services Methods Development efforts dealing
with the brown tree snake on Guam and in the U.S.-affiliated Pacific?
Answer. In the fiscal year 2005 budget request, APHIS had to
address areas that posed the highest levels of risk and potential
losses to American agriculture, such as enhancing efforts to prevent
the introduction of foreign animal diseases and foreign plant pests
from entering the United States; we could not address all identified
needs and as such the fiscal year 2005 budget request does not include
additional funding to address brown tree snakes on Guam.
PRECLEARANCE INSPECTIONS IN HAWAII
Question. While fiscal year 2005 budget request seems to include
funding for direct and interline preclearance inspections in Hawaii,
the specifics are not clear.
Please provide details on the funds requested for fiscal year 2005
for direct and interline preclearance inspections in Hawaii, and
provide a comparison for funds appropriated for fiscal year 2004.
Answer. APHIS conducts pre-departure, agricultural inspections of
passengers and cargo traveling from Hawaii and Puerto Rico to the
mainland United States. To assist Hawaii, we also conduct inspections
of passengers traveling from outlying Hawaiian Islands to the mainland.
Prior to fiscal year 2003, Hawaii funded this service through a
reimbursable agreement for $3 million. In fiscal year 2003, Congress
provided $2 million for the interline inspection program, and Hawaii
paid the remaining $1 million. Congress provided additional funding for
the interline program in fiscal year 2004, bringing the total available
for the program to $2.771 million. APHIS is not requesting funds for
Hawaii interline inspections in fiscal year 2005 and will rely on a
reimbursable agreement with Hawaii to conduct the program.
COQUI FROG
Question. The coqui frog is an alien invasive pest with no natural
enemies in Hawaii and is now established in many areas throughout the
State of Hawaii. Their presence and population levels are disruptive to
the export of potted flowers and foliage and to the peace and quite of
many communities in the State.
Has APHIS made any estimates of the funds needed to control the
coqui frog in Hawaii? Has APHIS included any funds in its fiscal year
2005 budget request to control coqui frog populations in Hawaii?
Answer. APHIS Wildlife Services (WS) estimates it would take $1.85
million annually to enhance management and methods development efforts
for the control of Caribbean tree frogs in Hawaii. In the fiscal year
2005 budget request, APHIS had to address areas that posed the highest
levels of risk and potential losses to American agriculture, such as
enhancing efforts to prevent the introduction of foreign animal
diseases and foreign plant pests from entering the United States; we
could not address all identified needs and as such the fiscal year 2005
budget request does not include additional funding to control coqui
frogs in Hawaii.
SUBCOMMITTEE RECESS
Senator Bennett. On that happy note, the subcommittee is
recessed.
[Whereupon, at 3:01 p.m., Thursday, March 25, the
subcommittee was recessed, to reconvene to subject to the call
of the Chair.]