[Senate Hearing 108-109]
[From the U.S. Government Publishing Office]
S. Hrg. 108-109
TO REVIEW THE IMPLEMENTATION OF THE 2002 FARM BILL
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HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
MAY 14, 2003
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
Available via the World Wide Web: http://www.agriculture.senate.gov
______
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
THAD COCHRAN, Mississippi, Chairman
RICHARD G. LUGAR, Indiana TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky PATRICK J. LEAHY, Vermont
PAT ROBERTS, Kansas KENT CONRAD, North Dakota
PETER G. FITZGERALD, Illinois THOMAS A. DASCHLE, South Dakota
SAXBY CHAMBLISS, Georgia MAX BAUCUS, Montana
NORM COLEMAN, Minnesota BLANCHE L. LINCOLN, Arkansas
MICHEAL D. CRAPO, Idaho ZELL MILLER, Georgia
JAMES M. TALENT, Missouri DEBBIE A. STABENOW, Michigan
ELIZABETH DOLE, North Carolina E. BENJAMIN NELSON, Nebraska
CHARLES E. GRASSLEY, Iowa MARK DAYTON, Minnesota
Hunt Shipman, Majority Staff Director
David L. Johnson, Majority Chief Counsel
Lance Kotschwar, Majority General Counsel
Robert E. Sturm, Chief Clerk
Mark Halverson, Minority Staff Director
(ii)
C O N T E N T S
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Page
Hearing(s):
To Review the Implementation of the 2002 Farm Bill............... 01
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Thursday, July 26, 2003
STATEMENTS PRESENTED BY SENATORS
Cochran, Hon. Thad, a U.S. Senator from Mississippi, Chairman,
Committee on Agriculture, Nutrition, and Forestry.............. 01
Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member,
Committee on Agriculture, Nutrition, and Forestry.............. 05
Coleman, Hon. Norm, a U.S. Senator from Minnesota................ 02
Conrad, Hon. Kent, a U.S. Senator from North Dakota.............. 03
Crapo, Hon. Mike, a U.S. Senator from Idaho...................... 04
Lugar, Hon. Richard G., a U.S. Senator from Indiana.............. 27
Nelson, Hon. Ben, a U.S. Senator from Nebraska................... 21
Stabenow, Hon. Debbie, a U.S. Senator from Michigan.............. 24
Talent, Hon. James, a U.S. Senator from Missouri................. 23
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WITNESSES
Veneman, Hon. Ann M., Secretary of Agriculture, U.S. Department
of
Agriculture, Washington, DC, accompanied by J.B. Penn, Under
Secretary, Farm and Foreign Agricultural Services; Bruce
Knight, Chief, Natural
Resources Conservation Service; and Keith Collins, Chief
Economist, U.S. Department of Agriculture, Washington, DC...... 07
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APPENDIX
Prepared Statements:
Leahy, Hon. Patrick.......................................... 99
Letters to Hon. Debbie Stabenow.............................. 66
Stabenow, Hon. Debbie........................................ 93
Veneman, Hon. Ann M.......................................... 42
Document(s) Submitted for the Record:
Baucus, Hon. Max............................................. 102
Questions and Answers:
Cochran, Hon. Thad........................................... 109
Harkin, Hon. Tom............................................. 172
Baucus, Hon. Max............................................. 196
Chambliss, Hon. Saxby........................................ 106
Conrad, Hon. Kent............................................ 161
Crapo, Hon. Mike............................................. 111
Daschle, Hon. Thomas......................................... 162
Grassley, Hon. Charles....................................... 202
Leahy, Hon. Patrick.......................................... 120
Miller, Hon. Zell............................................ 198
Roberts, Hon. Pat............................................ 153
Talent, Hon. James........................................... 168
HEARING TO REVIEW THE IMPLEMENTATION OF THE 2002 FARM BILL
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WEDNESDAY, MAY 14, 2003
U.S. Senate,
Committee on the Agriculture, Nutrition and Forestry,
Washington, DC
The committee met, pursuant to notice, at 2:10 p.m., in
room SR-328A, Russell Senate Office Building, Hon. Thad
Cochran, [Chairman of the Committee], presiding.
Present or submitting a statement: Senators Cochran, Lugar,
Coleman, Crapo, Talent, Harkin, Leahy, Conrad, Daschle,
Stabenow, Nelson, and Dayton.
STATEMENT OF HON. THAD COCHRAN, A U.S. SENATOR FROM
MISSISSIPPI, CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND
FORESTRY
The Chairman. The hearing of the Agriculture Committee will
please come to order. We have a vote in progress over on the
floor of the Senate and some of our Senate members are there on
the floor for that purpose, but we will begin and give senators
an opportunity to make opening statements and then proceed to
hear from the Secretary.
We are very pleased that the Secretary is here with others
from the department to discuss the implementation of the Farm
bill that was passed last year. Ann Veneman has been doing an
excellent job, in my opinion, as Secretary of Agriculture and
so has the team she has assembled at the Department of
Agriculture to assist her. Dr. J.B. Penn, Under Secretary for
Farm and Foreign Agricultural Services is here with her today,
Mr. Bruce Knight, chief of the Natural Resources Conservation
Service, and Dr. Keith Collins, who is the chief economist for
the department. We welcome all of you.
We know this is a very challenging opportunity to implement
some new programs to help landowners and those involved in
production agriculture in our country. There are some new
complications because of options that are given to farmers to
help decide how their benefits will be made available. The Farm
Service Agency county offices have had their workloads
increased enormously. Then we had the passage of disaster
assistance legislation and the sign-up for the Conservation
Reserve Program for them to deal with, as well.
We appreciate the work that all of you have been doing to
ensure that the benefits and opportunities of the Farm bill are
made available to those entitled to those benefits. There is an
80 percent increase in authorization for conservation spending,
for example, and the majority of those program funds are on
working lands. This increase in funding possibilities comes
with the increased need for technical assistance, which I know
the Natural Resources Conservation Service is working to make
available.
I was encouraged recently when I saw that Dr. Collins had
indicated some good news in the economic outlook for
agriculture in our country, suggesting that we would see an
increase of about 11 percent in net cash income for farmers
this year as compared to last year and that exports were likely
to increase by 7 percent to a level of $57 billion, which is
the highest level of farm exports since 1997. We hope that the
work that the department can do in implementing the Farm bill
will help assure that those expectations turn into realities.
With that note, I am happy to yield to my friend Senator
Coleman for any opening statement that he would like to make.
STATEMENT OF HON. NORM COLEMAN, A U.S. SENATOR FROM MINNESOTA
Senator Coleman. Thank you. Thank you, Mr. Chairman. I want
to thank you for holding this important hearing on the
implementation of the Farm Security and Rural Investment Act of
2002 and I also want to join in thanking Secretary Veneman and
Dr. Penn and Mr. Knight and Dr. Collins for appearing before us
today.
Since I was not here to vote for the 2002 Farm bill, I have
the luxury of prefacing my remarks by saying that I fully
support the provisions of the Farm bill that Minnesota farmers
like and, of course, I adamantly oppose the provisions they do
not.
In any case, America's farmers have had some challenging
times in recent years--the lowest real net cash income since
the Great Depression, record low prices, record high cost of
production, foreign tariffs and subsidies five and six times
than our own, and the sheer strength of the U.S. dollar vis-a-
vis our foreign customers and competitors. I believe a strong
safety net for our farmers is needed and I believe the 2002
Farm bill provides some certainty for Minnesota farm families
in uncertain times.
I commend President Bush for fully funding the Farm bill in
his budget and I was pleased to join Senator Lincoln in
successfully working to ensure that the budget resolution we
recently passed did the same.
I understand from USDA, as the chairman has noted, that
things may be looking up a little this year in terms of some
commodity prices, and that is encouraging. There are some
things that Congress can and should do, however, to help move
things along for our farm families in rural America. Passing an
energy bill with a strong renewable fuel standard and providing
tax relief for our farm families would raise commodity prices
while lowering their costs, and I am happy to be a part of both
these efforts.
President Bush's decision to file a case with the WTO
against the EU yesterday for its illegal ban on biotech
agriculture is very important to my farm families and I
appreciate the President's strong leadership on this issue. I
encourage the administration to take the same strong stand with
regard to the recent back-pedaling by Mexican on its
commitments under NAFTA.
All that aside, we are here to discuss the Farm bill's
implementation 1 year and 1 day after its enactment and on the
whole, I believe the administration has done a good job and
deserves high marks for undertaking an awful lot of work
without much time to get it done, particularly with the added
workload from the disaster assistance package.
I want to especially thank John Munson, Minnesota's state
SFA director, the state SFA committee and all the Minnesota SFA
team, both in St. Paul and in the field for their hard work,
dedication, and effort in serving Minnesota farm families. Of
course there are a few things here and there that might be
tweaked to better serve the farmer and I will not be bashful
talking with the department about how to fix those things.
Again on the whole, Mr. Chairman, Madam Secretary, you and
your team have done a commendable job. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Conrad is recognized for any opening statement that
you would care to make.
STATEMENT OF HON. KENT CONRAD, A U.S. SENATOR FROM NORTH DAKOTA
Senator Conrad. Thank you, Mr. Chairman. First of all,
thank you for holding this hearing, another one on the
implementation of the Farm bill.
Welcome, Madam Secretary and other representatives--Mr.
Collins, Mr. Penn, Mr. Knight.
Last fall's hearing on farm bill implementation focussed on
a number of unresolved issues. Since that hearing I am glad we
have finally been able to resolve the issue of loan rates for
minor oilseeds and pulse crops but it is unfortunate we had to
bring bipartisan pressure on the department to equalize loan
rates for minor oilseeds and it is very disappointing that we
had to actually push through legislation, again on a bipartisan
basis, to force the department to follow the original intent of
Congress in carrying out the new loan program for pulse crops.
As I said, I am pleased we have finally put those two issues
behind us.
However, in my view there remains a major piece of
unfinished business with regard to implementing the Farm bill
as Congress intended and that has to do with the interest rate
for sugar loans. As we know, the 1996 Farm bill imposed a 1
percent interest rate surcharge on price support loans issued
for sugar and other commodities. However, in the 2002 Farm bill
Congress very specifically repealed the interest rate surcharge
as it applied to sugar. I know because I wrote the new
provision. The actual language of the new law very specifically
exempted sugar from the interest rate surcharge and the
conference report. Statement of managers declared that the new
law ``makes Section 163 of the FAIR Act inapplicable to
sugar.''
Even USDA agrees on that fundamental point. In its final
rule governing operation of the sugar program, as published in
the Federal Register on August 26 of last year, USDA said the
following. ``The 2002 Act eliminates the requirement that CCC
add 1 percentage point to the interest rates as calculated by
the procedure in place in 1996 but does not establish a sugar
loan interest rate. CCC has decided to use the rates required
for other commodity loans.'' In other words, the department
admits that Congress repealed the surcharge but the department
does not seem to care. USDA is going to hit farmers with this
surcharge anyway. That, to me, is a gratuitous penalty and it
is gratuitous in terms of its disregard for the clear intent of
Congress.
This provision, like others that we had to reverse, was
paid for in the Farm bill. In the case of the interest rate on
sugar loans, repeal of the sugar surcharge costs $5 million
over 10 years. That was scored against the bill and we met that
cost. As we saw with minor oilseeds and pulse crops, the
department is attempting to undermine the law by administrative
fiat.
When we get to the point of asking questions, Mr. Chairman,
I am going to ask the Secretary about this matter. I advised
her in our call the other day that we would have a chance to
visit about this. I am hopeful that this can get resolved.
With that, I thank very much the chairman for again calling
this hearing and for this time.
The Chairman. Thank you, Senator.
Senator Crapo, you are recognized for any opening statement
that you would like to make.
STATEMENT OF HON. MIKE CRAPO, A U.S. SENATOR FROM IDAHO
Senator Crapo. Thank you very much, Mr. Chairman. I will be
brief. I, too, appreciate you holding this hearing. As
yesterday marked the 1-year anniversary of the signing of the
2002 Farm bill, I appreciate Secretary Veneman being here with
us today to discuss the implementation of this very important
law.
Secretary Veneman, I want to commend you and the many USDA
employees who have worked diligently to implement the new law.
Idaho farmers and ranchers have been well served by the many
local USDA employees who continue to work very hard on their
behalf. Additionally, I appreciate the department's efforts to
work with growers and commodity groups throughout the
implementation process to get their input on various aspects of
the programs. Cooperation and communication with the
agriculture industry and the department will better ensure that
the law is responsive to the needs of our nation's farmers and
I recognize your effort to ensure that the farmers and ranchers
have a voice in that process.
While throughout the process certain concerns remain to be
addressed, some of which I will raise during questioning today,
overall I have been very impressed with your dedication in
getting this immense law implemented in a timely manner. I do
want to interject right here that I share the concerns that
Senator Conrad has just raised with regard to the sugar loan
program and hope that we can get that issue resolved. You and I
have discussed that before.
Further, while the Farm bill makes great strides to ensure
the longevity of American agriculture, our high quality, world
renowned agriculture products continue to face trade barriers
that stifle the ability of farmers to remain competitive. I
appreciate the administration's efforts to work to expand
foreign market opportunities and I encourage the department to
continue to work to ensure that American agriculture interests
are at the forefront of these trade negotiations. We have to
make sure that new trade agreements bolster and do not hinder
the ability of farmers and ranchers to compete in domestic and
foreign markets.
Again I want to thank you for your hard work in
implementing the law. There will be issues that we will need to
continue to work on, but I believe that you have done a
yeoman's effort and that your progress is to be commended. I
look forward to working with you in the future as we ensure
that the farm programs are best crafted to meet the needs of
our nation's farmers and ranchers. Thank you.
The Chairman. Thank you, Senator Crapo.
I am pleased that the senator from Iowa, Senator Harkin,
who is the ranking Democratic on the committee, is here. We had
a vote on the floor of the Senate and it delayed some of us
from getting here but Senator, I would be happy to recognize
you for any opening statement you would care to make at this
time.
STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, RANKING
MEMBER, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
Senator Harkin. Thank you very much, Mr. Chairman, and I
apologize for being a little late. I thank you for having this
hearing to talk about the implementation of the Farm bill.
Madam Secretary, good afternoon. I am pleased that you
could be here with your staff.
A year ago yesterday, I am sure it has been noted,
President Bush signed the bipartisan 2002 Farm bill into law
after he made a very strong statement of support at the White
House. He underscored the law's importance to farmers, the
rural economy, and specifically he cited the landmark
conservation provisions of the Farm bill. The 2002 Farm bill,
as passed, represented a great boost for producers, the
environment and rural America.
As we have seen, those parts of the Farm bill that were
implemented early and well have proven a success. We are also
seeing positive results from the new policies and increased
funding for conservation, rural development, renewable energy,
nutrition, trade and research. Despite some fits and starts, it
now appears that over 94 percent of eligible farmers have made
their base and yield elections, as anticipated in the Farm
bill. Madam Secretary, I commend you and the personnel at the
department and all your field offices for your hard work in
implementing these titles of the Farm bill.
Despite these successes, too many of the more innovative
initiatives in the Farm bill remain on the shelf as a result of
inaction, delays, and misapplication of the law. Too often the
administration seems to create a Herculean task where, in fact,
a clear path lies to the intended result in the legislation,
and these have had really negative effects on producers in
rural America. These conservation, rural development and energy
programs, implemented as directed in the Farm bill, hold great
promise for us.
Unfortunately, funding for Farm bill conservation programs
turned out to be far less than anyone anticipated after the
singing of the Farm bill. The promise of the conservation title
has been limited by an inexplicable reading of the Farm bill's
funding for conservation technical assistance. As a result,
almost $160 million less will go to conservation in this fiscal
year than the Farm bill provided and there will be similar
shortfalls in future years if this reading is not reversed.
Further, implementation of probably the most greatly
anticipated and innovative program, the Conservation Security
Program, is also behind schedule, but we discussed that in a
previous meeting.
As for rural development, virtually nothing has been done
to carry out the Rural Business Investment Program, which was
designed specifically to bring critically needed equity capital
to rural communities, and I would like to have you address that
in the question-and-answer period.
For the first time the Farm bill included an energy title,
for the first time ever, but USDA is still far from finalizing
guidelines for Federal agencies to purchase bio-based products,
which is one of the key provisions in the title. In fact, there
is a demonstration going on down on the Mall right now with
soy-based diesel. You probably saw it; it is down by your place
down there, all the cars and stuff with soy diesel.
Since the Farm bill was signed we have a budget that would
undo much of the promise that the Farm bill held, and the
budget proposes to drastically reduce or even eliminate funding
for several rural development energy and conservation programs
that were fully funded in the Farm bill.
Again we all have a common goal and that is the successful
implementation of the Farm bill. As you said when the bill was
signed, you and your staff are ``strongly committed to ensuring
timely and efficient implementation during the coming months.''
Again I do not want to discount the work that you have put into
it so far. I know there have been new things in the Farm bill;
I know it has taken time; I understand that. I just hope that
we can work together to close some of the gaps that still exist
that are out there in rural development, in the Rural Equity
Fund, and working with the administration, getting some
suggestions for you on how we get over that hurdle on the
technical assistance problem that we have.
Thank you very much for being here. Thank you very much,
Mr. Chairman, for having the hearing.
The Chairman. Thank you, Senator.
Madam Secretary, we appreciate again your being here. We
have a copy of the statement that you have prepared and we will
have that printed in the record in full and invite you to make
any comments that you think would be helpful to the committee's
understanding of the work the department is doing to implement
the new Farm bill. You may proceed.
STATEMENT OF HON. ANN M. VENEMAN, SECRETARY OF
AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, DC,
ACCOMPANIED BY J.B. PENN, UNDER SECRETARY, FARM AND
FOREIGN AGRICULTURAL SERVICES;
BRUCE KNIGHT, CHIEF, NATURAL RESOURCES CONSERVATION
SERVICE; AND
KEITH COLLINS, CHIEF ECONOMIST, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, DC
Secretary Veneman. Well, thank you very much, Mr. Chairman
and Senator Harkin and the other distinguished members of the
committee. We appreciate the opportunity to be here today to
discuss the implementation of the Farm Security and Rural
Investment Act of 2002. As has been noted several times
already, it was just 1 year ago yesterday that that bill was
signed into law by the president.
As you indicated, Mr. Chairman, I do have a formal
statement and we do appreciate the fact that you have agreed to
make it part of the record. I would like to summarize my
statement and then we will be happy to take your questions.
I am pleased that we have with us today many people who
have worked on the implementation of the Farm bill but here at
the table with me is the Under Secretary for Farm and Foreign
Agricultural Services, Dr. J.D. Penn, our chief economist,
Keith Collins, and our chief of the NRCS, Bruce Knight. They
have all been very involved in the implementation process.
What I would like to do is first make some general remarks
about the challenges the department has met in implementing
this farm bill and then discuss some of the accomplishments of
the past year and conclude with some comments on the status of
the implementation of the Agricultural Assistance Act of 2003.
Our No. 1 goal over the past year has been to implement the
Farm bill provisions as quickly and efficiently as possible. I
am very pleased and I am proud of the progress that the
department has made to meet this goal. A major challenge was
the late passage of this new complex bill and the fact that
many of the provisions were applicable in the same year that
the bill passed. Fortunately, the department was actively
engaged in preparing for a new bill before it was passed, so as
soon as it was enacted we moved quickly to go into high gear to
implement it.
We established an internal working structure by putting
together a board of directors that was made up of the
subcabinet and then a working group that was co-chaired by
Keith Collins, Scott Steele of our Budget Office and Hunt
Shipman, who now works for the chairman. They did a terrific
job of coordinating the resources of the department and to
coordinate the department-wide implementation of the nearly 500
separate actions that we identified to implement the bill's
provisions.
Also, as has been noted, our staff throughout the country
has been working tirelessly and aggressively to implement the
new provisions and get the benefits flowing to producers and
other program participants. I know you would want to join me in
expressing our great appreciation to all the hard-working USDA
employees, as you have, all over the country who have put so
much time into implementing this bill. It is important that we
do especially recognize our county-based employees who have
been on the front line of sign-up and program delivery.
Literally thousands of USDA employees have played a part in
these efforts and I am incredibly proud of everybody on our
team.
We also want to thank the Congress for providing the
funding to implement the Farm bill. We're making good use of
the funds to hire temporary staff and make technological
improvements to help facilitate the sign-ups going on for all
the Farm bill programs, as well as for the newly authorized
disaster assistance programs.
We have made extensive efforts to keep the Congress, the
general public and stakeholders informed at every step of the
way. Based on congressional and stakeholder input we have
received over the past year, we were able to fine-tune and make
some adjustments where needed to meet constituent needs and the
intent of Congress.
Throughout the implementation effort USDA has focussed on
customer service and a commitment to ensuring that all
customers are treated equally and fairly. We held numerous farm
bill sessions across the country and in Puerto Rico to reach
out to a full spectrum of USDA customers. To date, over $8
billion in new commodity program payments have been issued to
agricultural producers during the first year of the Farm bill.
Due in part to these payments, net farm income prospects will
improve in 2003.
The Farm bill, along with the new Agricultural Assistance
Act of 2003 and other on-going USDA programs, is providing
immediate relief for producers dealing with financial stress
and these efforts will continue. Also, the administration is
strongly urging the Congress to enact an economic stimulus
package to get the economy moving faster. This undoubtedly will
also have a pay-off in farm country.
We would now like to focus in more detail on some of the
key accomplishments of the various titles of the bill. First,
Title I. All of the key commodity program provisions have been
implemented efficiently and in a timely manner. These include
direct and countercyclical payments, marketing assistance
loans, crop bases and yield election, Milk Income Loss
Compensation or what we refer to as the MILC program, dairy
price support program, and the apple market loss assistance. A
sugar marketing allotment program was established and all
changes to the sugar loan program have been implemented for
fiscal year 2003.
A new peanut program was implemented with direct and
countercyclical payments, marketing assistance loans, and a
buy-out program for current peanut quota owners. New marketing
assistance loans were provided for peas, lentils, chickpeas,
honey, wool and mohair. As prescribed by the Farm bill
legislation, the Payment Limitation Commission has been
established. It has been meeting regularly and is working on
its report to Congress. It is chaired by our chief economist,
who is here with us today, Keith Collins.
Turning to conservation, we are very pleased with the
important changes in conservation policy made in Title II. The
regulatory effort needed to implement these programs is an
enormous undertaking. I am happy to report that rulemakings
have been completed to continue conservation programs
reauthorized in the Farm bill, such as the Wetlands Reserve
Program, the Wildlife Habitat Incentives Program, the Farm and
Ranchland Protection Program, and the Agricultural Management
Assistance Program. We have also finalized the rule for the
Conservation Reserve Program and began general sign-up for that
program on May 5.
Our primary focus recently has been ensuring that the
fiscal year 2003 funding authorized by the Farm bill is
allocated to these programs. We recently announced that funding
allocations totaling more than $1.8 billion in financial and
technical assistance have been made available to farmers and
ranchers for both farm bill and non-farm bill programs. This
includes the state allocations for EQIP totaling $562 million.
The final EQIP rule will be published very soon, which will
give agricultural producers the opportunity to enroll in what
has become one of the department's largest and most important
conservation programs. Applications will be evaluated with
priority given to those that are most cost effective and
address national, state and local priorities.
We also announced the release of $53 million through the
ground and surface water conservation provision under the
Environmental Quality Incentives Program to provide cost-share
and incentive payments to producers in 17 states that have been
severely impacted by the drought.
Further, we will soon initiate the first sign-up for the
Grasslands Reserve Program and have issued a notice of funding
availability to get a limited program up and running for 2003.
We will then go through the formal rulemaking process in
developing the 2004 program.
We are also making steady progress on developing the
proposed rule for the Conservation Security Program. The
department was given very broad discretion to establish the
program requirements. Given that, we thought it was necessary
to seek broad public comment on the design of the program
before we issued a proposed rule. We are now reviewing some
4,500 comments as we work on this rule.
Good progress is also being made in implementing the third
party technical service provider provision that will help us
deliver the technical assistance needed to support the
implementation of the conservation programs. So far, more than
400 technical service providers have been registered through an
on-line technical service provider registry.
We are also making excellent progress on the other titles
of the Farm bill. While they may not receive as much attention
as the commodity and conservation titles, they are no less
important. With respect to the trade title, we are providing
additional funds for market development activities, including
the Market Access Program and the Foreign Market Development
Cooperator Program. We are implementing the Technical
Assistance for Specialty Crops Program and we are launching the
McGovern-Dole International Food for Education and Child
Nutrition Program, which builds on the Global Food for
Education Initiative that USDA implemented during 2001 and
2002. We expect the new program to be fully implemented before
the end of the fiscal year.
In the rural development area we have awarded hundreds of
millions of dollars in rural development assistance, including
value-added grants and water and waste disposal funds, and we
have finalized regulations and are soliciting applications for
an anticipated $1.4 billion in rural broadband loans and loan
guarantees.
Concerning the nutrition title, we are providing greater
access to and simplification of the Food Stamp Program. We have
allocated funds authorized for the WIC and Seniors Farmers
Market Programs in 2002 and 2003. We have implemented the pilot
program to increase fruit and vegetable consumption in schools.
These pilots were very well received by schools and by students
and we are looking at ways of expanding this program in the
future.
In the research area we have implemented the Senior
Scientific Research Service, which allows the department to
attract and retain the highest caliber scientists.
For energy we have implemented the Renewal Energy Systems
and Energy Efficiency Improvement Program and announced the
availability of $23 million in grants. We have implemented the
Biomass Research and Development Program and have announced the
availability of $21 million in grants. We have implemented the
key provisions to the Bioenergy Program which provides up to
$115 million in funding for fiscal year 2003.
Also, as authorized by the Farm bill, we have established
the Office of the Assistant Secretary for Civil Rights. Vernon
Parker has been confirmed by the Senate and we appreciate the
hearing that he had in this committee. He is providing terrific
leadership on civil rights issues in the department and I can
tell you that he is already working very hard to put together a
long-term plan to address these issues.
Finally, I want to give you a brief update on the $3.1
billion in disaster assistance that was included in the fiscal
year 2003 omnibus budget package that was signed by the
President on February 27. The same day the President signed the
legislation I established a disaster assistance working group
within USDA to begin work on the disaster assistance programs.
Their charge is very clear--to make implementation of disaster
assistance a farmer-friendly process and to make sure the
program benefits reach producers as quickly as possible.
The 2000 disaster program took five and a half months. This
bill is much more complicated and we will do it in four and a
half months, again showing the persistence, efficiency and
dedication of our work force in getting this job done.
I am pleased to announce that sign-up for the tobacco crop
losses began on March 17. Sign-up for the additional benefits
associated with the Livestock Compensation Program began April
1. The Cottonseed Payment Program sign-up began on May 2. Sign-
up for the Crop Disaster Program will begin on June 6.
USDA has launched a disaster assistance implementation
website that contains basic program information, such as
announcements on program sign-up and various questions and
answers, as well as comments and suggestions to encourage
interested parties to provide input to USDA on how best to move
implementation forward in a timely and expeditious manner.
Mr. Chairman, that concludes my overview of where we
currently stand on implementing the Farm bill. The team at USDA
has worked very hard to implement the new Farm bill efficiently
and responsibly to best help our farm and food sector receive
its intended programs and benefits. We are committed to
continuing to do the best job we can to deliver the programs.
We are also committed to continuing to work with all of the
Members of Congress and other stakeholders to ensure that the
legislation is implemented fairly and properly.
Thank you again for having us here this afternoon. We would
now be very happy to respond to your questions. Thank you, Mr.
Chairman and members of the committee.
The Chairman. Thank you, Madam Secretary, for your
excellent statement.
The Farm bill that we passed last year provided
opportunities for those who wanted to participate in the
programs to update their base acreage and yields for the
purpose of determining the amount of farm program payments they
would receive for the 2002 and later crop years. That deadline
for sign-up expired on April 1.
Looking back at the process, do you feel that you can say
that this was a fair process in terms of the familiarity that
Farm Service Agency employees provided to farmers so that they
could understand their options? To what extent did farmers take
advantage of this option, if you know?
Secretary Veneman. Well, Mr. Chairman, we do think we got
large amounts of information out so that people could make
informed choices about updating bases and yields. I believe
about two-thirds of the farmers updated--well, over 50 percent
updated their bases and yields, about 33 percent stayed with
their current bases and yields, and there are a very few that
are still in the process.
We tried to make sure that our Farm Service Agency
employees in the field had excellent training to be able to
help farmers and ranchers. We provided as much information as
we possibly could through web-based methods, questions and
answers on the website. We had multiple farm broadcast
briefings where we were able to get information out through Dr.
Collins and Dr. Penn and other people who were involved in day-
to-day implementation with the Farm bill. We had some web-based
calculators that were available for farmers and ranchers to
help them determine what was in their best interest with regard
to the updates of bases and yields.
I was out this week in Missouri and I was talking with our
state FSA director out there and he said, ``You know, the
people out here are really pleased in the county offices that
they were able to do this. A year or so ago they just did not
think they could get the job done and everybody is pretty proud
of the fact that they were able to get it done and do it in a
very timely manner.''
That is a real indication that the tools that were put
together worked. We got the farmers signed up for the programs
within the time limits allotted. The payments, we have already
made over $8 billion in financial assistance in the hands of
the farmers.
The Chairman. Thank you. I am also at this point going to
ask you or Dr. Collins to comment on the economic outlook for
farmers. I mentioned in my opening statement the 11 percent
increase in net cash income that is expected for agriculture
this year as compared to last year and the improvement in
export volume by 7 percent up to an expected total for this
year of $57 billion, which is the best performance in
agriculture exporting since 1997. Are those numbers still
looking good, Dr. Collins?
Mr. Collins. Yes, Mr. Chairman, they are. You summarized
them pretty well. The only thing I would add to that is we are
seeing a better improvement in the marketplace this year. Part
of it is driven by last year's bad weather, which has boosted
prices across the board. Part of it is driven by cutbacks in
production by livestock producers who are raising livestock
prices substantially. We are talking about an increase in cash
receipts this year from the sale of farm products in the
neighborhood of $8 billion, so that is showing that the market
economy is, in fact, starting to improve.
Farmland values went up 4 percent last year. We think they
will go up slower this year, a percent and a half, although I
just met today with a bunch of bankers who told me that is
wrong, that it is going to go up more than 1.5 percent this
year. Almost nothing seems to suppress the rise in farmland
values every year.
Also interestingly, despite the drop in farm income last
year, we really have not seen a sizable increase in
nonperforming loans by producers. By almost every lender
category, nonperforming loans is fairly small. Take the Farm
Credit System, for example. Their nonperforming loans in their
loan portfolio are running about 1.3 percent or so.
Yes, there has been financial stress. It has been spotty.
It has been driven by bad weather, drought. It has been
commodity-specific in a couple of cases, like milk, but overall
the farm economy still seems to be hanging on fairly well.
The Chairman. Thank you very much.
I am going to yield now to my friend from Iowa, the
distinguished senator and ranking Democrat on the committee,
and I am going to ask all senators if we can limit our time to
5 minutes for this opening round of questions. Then we can come
back around for additional rounds of questions if senators
would like to ask additional questions.
Senator Harkin.
Senator Harkin. Thank you very much, Mr. Chairman.
Madam Secretary, I do not plan to ask any questions on the
CSP today. We covered that pretty well the other day. I would
like to reiterate the widespread support for the Conservation
Security Program from both environmental, sustainable
agriculture and commodity groups.
Mr. Chairman, I would just like to submit for the record
two letters, one from conservation groups to Senators Bennett
and Kohl, and one to you from major commodity groups expressing
their support for CSP. Did I get a copy of that letter, too? I
just wanted to submit those.
Senator Harkin. Madam Secretary, I thank you for your hard
work in implementing the 2002 Farm bill, including the first-
ever energy title, and trying to move these forward. I am
concerned about one provision of great importance that really
lags, and that is section 9002. That is the Federal procurement
of bio-based products.
As we all remember, in the Farm bill we put a provision in
the Farm bill that basically mandates that all Federal
departments are to give a preference to purchasing bio-based
products as long as they are equivalent in price, availability,
and performance, if I am not mistaken. I may be off a little
bit there, but something like that. This section gives your
agency the primary role in ensuring that the Federal Government
purchases bio-based products made from domestic renewable
agriculture or forestry materials.
Although the statutory deadline for publishing the final
guidelines has passed, USDA has not even published a draft set
of guidelines for agencies to follow in procuring bio-based
products. Would you please give us an update on your progress
in drafting and issuing product guidelines, as well as the
status of the bio-based labeling initiative? When would this
critical initiative be in place?
Secretary Veneman. Well, thank you very much for your
question, Senator Harkin. This is a program that we have been
working very hard to implement. However, the draft regulations
have taken longer than anticipated for several reasons, not the
least of which is the very complicated nature of this bill
including some of the things you talked about--comparability of
price, availability, and so forth. How do you measure, for
example, the content of bio-based within a product?
There are a number of questions that have to be addressed
in these regulations and our people have been working very hard
to try to do that, working with the lawyers to make the proper
interpretations of what the law requires. As they got into this
process of implementing this provision a number of questions
were raised that had to be answered and worked out through the
process. That is why it has been taking considerably more time.
I might ask Keith Collins to comment for a moment on this,
as he has been involved directly in some of the meetings.
Mr. Collins. Senator Harkin, you said earlier that some of
these provisions we are not implementing with all due speed
because we were making a Herculean task out of something that
ought to be simple. We plead guilty to that in this case. We
started out with just the opposite in mind, that we saw a
Herculean statute that we wanted to implement in a simple way,
so we drilled a couple of dry wells. We have drafted several
sets of guidelines to make this program simple, fast,
transparent, easy to implement, low cost to the private sector,
low cost to us because there is no appropriation for us to
implement it.
That was our strategy. That is what the industry wanted.
That is what everybody wanted. Unfortunately, that is not the
way it is working out and the Secretary hit on what are the key
reasons as to why. Right out of the box we ran into some very
difficult problems of trying to define what are the appropriate
renewable materials that are eligible to be in a bioproduct.
Simple task, but try to answer that question for trees, for
example.
Then we had the problem of well, the Secretary has to
recommend minimum bio-based content. How do you measure the
bio-based content in a bio-product? There really is no way to
do it, so we suggested self-certification on the part of
manufacturers and vendors. Our Office of General Counsel does
not particularly like that approach.
Those are the small problems. The big problem is the one
that you mentioned. The statute says to designate an item, the
Secretary must consider economic and technical feasibility,
including life cycle costs. We do not know of any other program
that has to consider life cycle costs. Not even the Recycle
Material Program considers life cycle costs.
Then, on top of that, if the Secretary designates an item,
the statute says----
Senator Harkin. There is a reason that was put in there, by
the way. I remember that provision very well and there is a
reason. Maybe other agencies and departments do not have to
consider that. It is one of the reasons we waste a lot of money
in the government.
Mr. Collins. Oh, I agree with you.
Senator Harkin. Because we know something is cheap now but
we keep buying it over and over. If we bought something more
expensive it might last 10 years and it would be cheaper for
the people of the United States. That is why we put that in
there.
Mr. Collins. Let me say I agree with that completely and
when you consider life cycle costs, that is going to be the
best way that bioproducts can compete with non-bio-based
products.
Senator Harkin. That is true.
Mr. Collins. I agree with that. My only problem is how do
you measure it and how long does it take to measure it and who
measures it and who validates it?
In addition to that, the Secretary is required to provide
information on the availability, the relative price, the
functional performance, the public health effects and the
environmental effects of each of the items she designates.
Now these are unique responsibilities put upon the
Department of Agriculture. Can they be done? Yes, they can be
done. Are we going to do them? Yes, we are going to do them.
Could they be done in the few months that the bill allowed us
to do it? That is too Herculean a task.
We are going to get there and we will be happy to meet with
you, with the industry, with anybody, but it is not an easy
thing to do.
Senator Harkin. I appreciate that and you have had a lot of
other things you have had to do, too, and your answer makes
common sense. I just say that if there are things that need to
be changed legislatively or if we need to make a modification,
I would hope that you would get those to us forthwith.
Mr. Collins. It is important for us to get at least a draft
out that the legal experts agree with and do that as soon as
possible, so then people can see this path that we are on and
if they think that we are making it unduly complicated, then
they can respond either legislatively or through the comment
period and that will help us a lot. We do have to get this
first step behind us.
Senator Harkin. Thank you.
I do have questions on my second round, but thank you, Mr.
Chairman.
The Chairman. Thank you very much, Senator.
Senator Coleman, we are going to try to stay within a 5-
minute rule for this first round of questioning so that
everybody will have an opportunity to ask questions. Senator
Coleman.
Senator Coleman. Thank you very much, Mr. Chairman. Before
I ask my question I would like to note that I share the
concerns raised by Senator Conrad in his opening statement
about the sugar interest rate issue and I have introduced a
sense-of-the-Senate resolution on this, so we share the
concerns and I am very hopeful that we can work with the USDA
to resolve this issue. It is a very important issue to many of
us here.
Let me turn my focus to the issues of the Milk Price
Support Program and the concern that it has not been providing
the safety net it was intended to provide, which is namely a
price floor of $9.90 per hundredweight. Between January 2000
and April 2003, the class 3 price, which accounts for 85
percent of my farmers' production, actually fell below the
$9.90 price floor mandated by Congress in 14 out of 38 months.
With milk prices where they are today and Minnesota dairy
farmers are struggling to survive, we need to work on this
issue.
There were two specific proposals that I just wanted to
address before you and get a response. One proposal is for the
USDA to use its authority to increase the purchase price for
cheese, butter and powder to reflect the true cost of selling
surplus product to the Community Credit Corporation. Another
proposal is to have the CCC actively trade on the Chicago
Mercantile Exchange whenever the price falls to or below the
price support level instead of purchasing in its current, more
passive manner.
I am told you have authority to pursue either of these
approaches. Would you comment on their merits and explain
whether you intend to take such action or any other action to
prevent milk prices from dropping below the statutory floor?
Secretary Veneman. I am going to ask Dr. Collins to comment
on that. He has also been involved in the implementation of the
dairy provisions.
Senator Coleman. Thank you, Madam Secretary.
Mr. Collins. Senator, I guess the first comment I would
make relates to the premise that you started with in the
question, and that is that the price of milk has not been
supported at $9.90 because the class 3 price has been below
$9.90. In fact, the class 3 price has been; so has the class 4
price.
What the statute requires us to do is to set purchase
prices for butter, cheese, and nonfat dry milk so that a plant
of average efficiency can pay, on average, at least $9.90 for
milk. The best price series we have for what farmers are
receiving for the price of their milk is not the class 3
minimum price under Federal orders or the class 4 price. It is
the average price received by farmers for manufacturing-grade
milk as reported by the National Agricultural Statistics
Service. The most current price for the month of April is $9.90
a hundredweight exactly.
You can make a case that we are doing what the law says.
Does that mean the price of milk will be under $9.90 in some
areas at some times? Yes, that is going to happen.
Despite the fact that I just defended our program and the
performance of it, to go to your options, we are, in fact,
looking at this question of whether it costs more to deliver
products to the CCC rather than, say, to a processor,
particularly, for example, with cheese, which is the one you
are most interested in where the class 3 price has been so low.
We are, in fact, reviewing that whole delivery process now,
all the steps that a processor has to take and the requirements
that are imposed on a processor, and trying to look at the
costs of that to see if that, in fact, is the reason why when
we buy cheese it is causing the return to the processor to be
low enough to cause them to bid below $9.90 for milk. We are
looking at that. We have that under consideration and it has
not moved through the system yet.
Regarding the second proposal you raised about USDA buying
product off the Chicago Mercantile Exchange, that is one I
cannot say that I have analyzed. Occasionally you do see the
price on the Mercantile Exchange go below $9.90. I am not sure
why that happens. One reason I would suggest is that when we
buy cheese we require the seller to have the cheese graded and
pay the cost of grading. Delivery of cheese on the Merc does
not require the cheese be graded, so that is one reason why it
can sell at less than what it sells to us, I suppose.
There may be specification differences, as well. It is
something we could look at, although I am a little reluctant to
think of USDA as a buyer on an organized exchange where we are
paying brokerage fees and things like that. What we have now is
a price support program where we have an open door to buy
product at the purchase prices that we state and that that is
probably the most effective way and direct way we can
effectuate that program, but it is something we can look at if
you would like.
Senator Coleman. The follow-up, and underlying both these
proposals is the question of the difference between the cost of
selling cheese on the commercial market and then selling cheese
under the CCC purchasing program and I know some of our dairy
farmers have talked about modernizing specifications so that
they are more parallel to the commercial standards.
I guess the followup question on both of these is as you
are looking into this do you have a sense of timing? Do you
have a sense of when we can get more definitive resolution on
these issues?
Mr. Collins. Dr. Penn and I have talked about meeting on
this for the last week or so and we are going to do this pretty
soon.
Senator Coleman. I would appreciate that.
Mr. Collins. We will make a decision one way or the other
pretty soon.
Senator Coleman. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Conrad.
Senator Conrad. I notice that the Democratic leader has
arrived, Mr. Chairman, and I would certainly defer to him,
given the demands on his schedule.
Senator Daschle. Thank you very much, Senator Conrad.
The Chairman. Senator Daschle.
Senator Daschle. Mr. Chairman, thank you very much.
Secretary welcome and thank you. I will be very brief. I
have three questions if I can. The first has to do with
disaster assistance. You have had to cope with a number of
different situations around the country and we in South Dakota
have had a great deal of uncertainty with regard to disaster
assistance. Last year we had both the Milk Assistance Program
and the Livestock Assistance Program and both were provided to
those who were eligible for drought assistance and it was very
helpful.
This year, as you may know, the milk assistance is now
being deducted from the livestock assistance, so you are not
eligible for both outright, as you were last year. That has
posed obviously some problems, given the very limited nature of
this form of assistance. I am wondering if you could give us
some indication as to why that is.
Also obviously there is a question of certainty and for a
lot of these producers that is a very important matter, having
the certainty of knowing just what eligibility would be. Could
you address that, please?
Secretary Veneman. Well, Senator, we have been working very
hard to implement the disaster legislation that was recently
passed by the Congress. My understanding is that the statute as
it was passed requires the deduction of the milk assistance
from the livestock assistance, that the statute, the way it was
constructed, required us to do it that way. I am going to have
Dr. Penn explain it in a little more detail.
Mr. Penn. It is my understanding that the statute clearly
said that producers could benefit from one or the other of the
programs but not both, so we operated the Livestock
Compensation Program first and that caused us to have to
postpone the Livestock Assistance Program until that program
was concluded so that we could deduct from the Livestock
Assistance Program any benefits that had been received under
the earlier program.
Senator Daschle. Mr. Penn and Madam Secretary, at least my
staff have quite a different interpretation. We will have to
sit down and try to work through this. We understand it may be
budget-driven but let us see if we cannot resolve that.
I do not want to dominate the time. I have two other
questions. One has to do with the country of origin labeling.
Obviously there is a great deal of concern about what onerous
implications there may be in regulation, either from the
department or from packers with regard to compliance. Are you
able to give us some assurance that there will not be the kind
of onerous, burdensome regulatory framework for producers that
will render the country of origin labeling issue relatively
useless for our producers?
As I travel South Dakota and the country, that is the
concern I hear most, is obviously given your position, they are
concerned that that may be the case. We appreciate your
willingness to work with us in spite of the fact that you
opposed it but can you give us some assurance that that will
not be the case?
Secretary Veneman. Yes, Senator. It is important to point
out with regard to the country of origin labeling that we have
consistently said that while we opposed country of origin
labeling as the Farm bill was going through we had a specific
statement in our administration position on that but
nevertheless, it was passed by the Congress. We have worked to
implement the provisions of the country of origin labeling.
That required us initially to implement a voluntary program
which we put in place to be followed by a mandatory program.
There has been a tremendous amount of controversy about
these provisions. As you point out, much of it is not about
what the department's regulations would require but what the
various steps in the food chain further up are going to require
from the producers to assure that the country of origin can be
verifiable. Because of the disparity of opinion and the
strength of the opinion, we decided to have a series of
listening sessions throughout the country to get input from
various interested parties. We are in the process of doing that
right now.
We have to do an economic analysis on this as we go forward
because it is a significant rule. We will be looking for the
least cost alternative in terms of implementation of a new
regulation.
We are going to work with the interested parties including
the Congress, but we do have some restrictions with the way the
law was written in terms of how we can implement this
provision.
Senator Daschle. Obviously it would be extremely troubling
and disappointing if we went through all of this and found a
regulation that was so onerous for producers that it was
rendered virtually useless. Can we assume you will be finished
by September 9, as the law requires?
Secretary Veneman. We are on track to complete the
regulations.
Senator Daschle. Finally, let me just ask you about CRP.
Obviously we had some software glitches and because of that,
sign-up was delayed until it was the week before May 1. There
are a lot of producers interested in sign-up on CRP. Is there
any possibility we might be able to postpone the deadline to
accommodate the fact that there were the glitches and the fact
that we are right in the middle of planting season?
Secretary Veneman. We did begin sign-up on May 5 and it is
going through the month of May. One of the difficulties,
frankly, with CRP sign-up was that we had the Farm bill sign-up
through the end of April, we have the disaster assistance sign-
up starting June 6, so the CRP sign-up was, in terms of time,
strategically placed so that our Farm Service Agency employees
would be able to accommodate the farmers coming in and signing
up, so that they would not get backed up.
We were trying to make sure that we could actually conclude
the sign-up for all of these programs, so the timing was set so
that we could adjust the workload for our Farm Service Agency
employees because we were implementing the Farm bill, we did
have the CRP sign-up, and then we did have the disaster
assistance to implement, as well.
Senator Daschle. I want to again thank my colleague Senator
Conrad, and Mr. Chairman, thank you very much.
The Chairman. Thank you, Senator.
Senator Daschle. Thank you, Madam Secretary.
Secretary Veneman. Thank you.
The Chairman. I am going to go to this side of the aisle
now. Senator Crapo.
Senator Crapo. Thank you very much, Mr. Chairman.
Madam Secretary, in the interest of time I will just say I
have been making a list here of issues being raised by other
members of the committee and on a number of them I just want to
say I agree; for example, concerns that have been raised on the
sugar interest rate loan, which I assume Senator Conrad may go
into further during his questioning, concerns about the
technical assistance funding, on the conservation programs, the
country of origin labeling issues and the dairy program
concerns raised by Senator Coleman, and others, and again the
minority leader's concern about country of origin labeling.
Each of those is also a concern of mine and I just wanted
to be sure that I made that point to you. With the time I have
I am going to go into some other questions.
The first one is that I have a strong interest in
Continuous CRP and CREP programs. The conservation for working
lands was a large theme in the Farm bill's conservation title.
Continuous CRP and CREP provide the type of targeted
enrollments that address the needs of working lands and
frankly, do a lot to enhance our natural environment. Do you
know how many acres will be held back for these programs?
Mr. Penn. I do not have the number right on the top of my
head but we have made allowance for that.
Mr. Knight. Two million.
Mr. Penn. Two million acres.
Senator Crapo. Two million?
Secretary Veneman. Two million acres.
Mr. Penn. We have made an allowance.
Senator Crapo. Do you feel that that is going to be
adequate to meet the needs of the purposes of this part of the
conservation programs?
Mr. Penn. I believe so.
Senator Crapo. The interim rule on CRP indicates that while
the FSA state committees, in consultation with FSA state
technical committees, have been granted the authority to
determine the beginning of primary nesting and brooding seasons
during which managed haying and grazing can occur, that the
ending dates are still those that are set nationally by the FSA
and the Fish and Wildlife Service in the 1990's. Initially it
was my understanding and frankly the understanding of the
grazers in Idaho that both the beginning and the ending dates
would be allowed to be set locally, which makes much more
sense. Frankly, the state technical committees do have the more
precise understanding of just how all of the grazing conditions
come together to justify the timing of both going on and
leaving the ground.
The question I have is frankly, there is a little bit of
surprise that it is now understood that the termination dates
are still going to be the nationally set dates that were set
back in the 1990's. Are there any efforts under way to review
the national ending dates and return to the policy that at
least I thought we had been discussing earlier?
Secretary Veneman. I have not heard of your concern. I am
not sure that any of us have. We will be certainly happy to
look into the issue you are raising and to work with you and
your staff in trying to look at the various concerns that you
are asking about.
Senator Crapo. Thank you. I apologize for not giving you a
heads-up on that. This is just something that came up after we
talked the other day and I did want to raise that issue.
Mr. Chairman, I have a number of other questions here and
because of time, I will not be able to ask them and may not be
able to be here at the committee when we have another round.
Are we going to be able to submit questions?
The Chairman. Yes, Senator, we would be glad to have you
submit your questions and ask the Secretary to respond within a
reasonable time for the record.
Senator Crapo. With that understanding, Mr. Chairman, I
will forego the rest of these questions because some of them
are quite lengthy. I appreciate the chair and the Secretary's
accommodation.
The Chairman. Thank you, Senator.
Senator Conrad.
Senator Conrad. Thank you, Mr. Chairman. Thank you very
much. I want to thank my colleague Senator Crapo and thank my
colleague Senator Coleman for wading in on this sugar surcharge
issue.
Madam Secretary, would you acknowledge that Congress did
repeal the surcharge, the interest rate surcharge on sugar?
Secretary Veneman. Senator, my understanding is that the
Congress repealed the requirement for the interest rate
surcharge. However, in so doing--and we talked about this just
yesterday and I told you I would talk to our lawyers and try to
understand it better. My understanding from our lawyers is that
in repealing the requirement for it, it left it as a
discretionary matter for the department to decide.
In addition to what the language said, this surcharge was
initially put on, it is my understanding, during the 1996 Farm
bill as a way to establish some additional funding for the farm
programs. In the scoring of this particular provision it was
scored at zero in the Farm bill, which because it was, in the
opinion of our lawyers, then a discretionary matter with no
scoring, in the discretion of the department they decided to
leave the surcharge in place because their opinion is that we
did have the discretion to do that.
Senator Conrad. You know, I hope you get some new lawyers.
This is what the department itself said. ``The 2002 act
eliminates the requirement that CCC add 1 percentage point to
the interest rate as calculated by the procedure in place in
1996 but does not establish a sugar loan interest rate.''
Now why ever would we have repealed it if we did not intend
for that to actually be implemented? You know, as the author of
this provision, I can confirm that we got scored for it. In the
internal scoring this cost us $5 million over the 10 years, and
that had to be accommodated as we put together the entire
package.
We got charged for it and what I find disturbing is this
kind of trend. We had this on the loan rate for minor oilseeds.
Congressional intent was clear, you all did not follow it, we
had to go through a harangue to get it fixed. We had the same
thing on the pulse crops. On the pulse crops we actually had to
go back on a bipartisan basis and legislate because you all
were not implementing the clear intent of Congress.
Now this is the third case where we think it is abundantly
clear and the department has acknowledged itself that we
repealed the surcharge and yet you turn around and reimpose it.
I just think you are hurting yourself in terms of your
relations here. You are hurting yourself in terms of the
constituency out there who had a clear understanding that we
had repealed that surcharge, and yet USDA reimposes it.
I would just ask you to go back and give this another look.
It is not a big deal but it is a fly in the ointment and it is
easily resolved. It is not a costly measure but it does rankle
and I would hope that you would do that. I would ask that you
get back to us in some reasonable amount of time, if you could
reconsult not only the lawyers but maybe some outside counsel.
Let me say, because you and I have had many back-and-forths
on some of these issues, I do appreciate the work of the
department in getting the sign-up completed. This was an
enormous task and people worked very hard in the department,
out in your field offices, and they are to be commended and you
are to be commended. We appreciate the work that was done to
get that complete or virtually complete. I know it is never
complete but enormous progress has been made. I would just hope
that there would be a review of this issue and see if we cannot
resolve that, as well. Then we would have really cleared the
decks.
One other thing I wanted to mention to you is this trade
fight. You mentioned to me the other day that you and the trade
Ambassador had announced a case with our European competitors.
Thank you for doing that. Our friends in Europe are fighting
tooth and nail to preserve the enormous benefits that they have
and they are trying to preserve a playing field that is tilted
heavily to their advantage.
In many talks with the Europeans they have made clear to me
that their long-term game plan is to continue to insist on
equal percentage reductions in these unequal levels of support.
We cannot let them succeed in that game plan. The French, the
Germans and other Europeans are incredibly determined to
maintain these unfair advantages. We cannot permit that and it
is very important that we fight back. I thank you.
The Chairman. Thank you, Senator.
Senator Nelson.
STATEMENT OF HON. BEN NELSON, A U.S. SENATOR FROM NEBRASKA
Senator Nelson. Thank you, Mr. Chairman and thank you,
Madam Secretary. I appreciate the courtesy call the other day
to give me an opportunity to think about what I might ask.
I would concur with what my colleague from North Dakota
just said in terms of trade. Everywhere I go I encounter this
one way or the other from businesses that produce products in
Nebraska, agriculture products, manufacture products. We
encounter difficulties in trade. It is not as though Nebraska
is not trading. Nebraska, I have to point out, it happened
during my watch and I do not take full credit for it but during
the 8 years I was Governor we nearly tripled our international
exports and at that point in time, we were helping reduce the
imbalance of trade because we were exporting more than we were
importing. The imports and the exports do not balance today and
part of the reason they do not balance is because of unfair
trade practices that we encounter in other parts of the world.
I spoke to one of the ministers, Ivanoff in July about the
chicken wars; that is the way I described it. He was not very
pleased with the fact that I brought it up and had a different
point of view about what Russia was doing with respect to
poultry but the bottom line is that they are imposing
restrictions and it is making it very difficult.
The biogenetic issue. If we do not solve that
internationally and support biogenetics here in the United
States, the next thing you know, there will be local folks
starting to put in opposition programs to that effort. As a
matter of fact, I hear one of the fast food chains now is
saying that they are not going to buy any kind of biogenetic
food for sale.
The whole area needs to be dealt with, particularly as it
relates to food, from my perspective. I appreciate very much
joining together with Ambassador Zoellick to bring this action.
I wonder if we might consider and the department would consider
certainly as it relates to agriculture products the suggestion
of a process to deal with these trade issues in a prompt
manner. We will all be a lot older when the WTO issue is
resolved. I do not think that will be soon. I remember with the
Canadian free wheat issue, filed a Section 20. I do not know if
that has ever been resolved, but by the time it was resolved,
many of the Nebraska wheat farmers were already tremendously
disadvantaged and never really got an opportunity to recover
from it fully.
Is it possible to create a provision that we could support
that would permit for the timely consideration and
determination of trade disputes almost on the spot? Put them
into two different levels, one that has to go through the WTO
the way that we may be doing it there, but go back to other
trade treaties or other future trade treaties that permits the
equivalent of an umpire on the scene who rules immediately. I
can tell you right now if those unfair trade practices can be
stopped in a brief period of time you will see fewer of them,
but everybody knows that you will have exhausted your remedies
by the time you get to the end of it, whether it is the
Canadian molasses debacle or whatever it is.
I just wonder. I would like to get your thoughts on what we
might be able to do together to be able to have quick
resolution, a quick resolution provision that we can go back
and try to sell to these trade agreements.
Secretary Veneman. Well, Senator, I appreciate your
comments and your concerns about trade because it is an issue
we worked very hard on. Senator Conrad has left but I
appreciate the support from both of you and so many other
Members of Congress for the action that was taken yesterday in
beginning the process against the European Union for their
actions to not approve any more biotech varieties.
It is obviously something we lost patience on. We had been
trying for almost 5 years to work with the European Union on
this.
Senator Nelson. Excuse me. Which is my point. If you cannot
get a quick resolution you can be dragged on and on and on and
on.
Secretary Veneman. I understand. Obviously we are taking
action. One of the reasons that we have filed this action with
the EU is also because we do not want to see the rest of the
world go down this track of causing disruptions to our trade
because of unjustified and unscientific regulations. It is very
important.
On the issue, for example, of poultry with Russia, we just
recently had the Russian agriculture minster in. We have made
excellent progress on that issue in terms of the sanitary
issues and the inspection issues but again we could not take
Russia to the WTO on this issue because they are not a member.
We now have issues with regard to our poultry and meat with
Russia because they are imposing quotas. We continue to work
with them on that issue but Russia remains our largest export
market for poultry and that is our largest export to Russia of
any product, not just agriculture products. We have worked very
hard on that.
I sense the frustration and understand because we have the
same frustration. We call them market maintenance issues. It is
areas where we have had access to markets, we have been
exporting product, and we now see restrictions. We spend a lot
of time maintaining the markets that we have, in addition to
trying to open up new ones through the WTO negotiations, new
free trade negotiations.
I appreciate your concept of putting together a process.
However, we have dispute settlement processes through the
NAFTA. That is part of the consultation process that the WTO
and the NAFTA provisions provide.
Senator Nelson. Excuse me. It does not seem to be timely.
That is my point. Our frustration would be reduced dramatically
if when one of these issues is raised you could have a quicker
resolution.
Now in an athletic event if you had to go as long to get
something resolved, you would never finish a game, but there
are dispute resolutions on the spot. A foul is called.
Sometimes there is a replay in some athletic events. If there
was a way to do something like that where you would agree maybe
to make it a two- or three-tiered process, I can assure you
that if it could get resolved quickly there would not be the
kind of what I consider dislocations that we have right now
with the European Union and with others, and with NAFTA.
The Chairman. The time of the senator has expired. The game
is over.
Senator Talent.
STATEMENT OF HON. JAMES TALENT, A U.S. SENATOR FORM MISSOURI
Senator Talent. Thank you, Mr. Chairman. I am a little
reluctant now because I was just going to open up by echoing
what Senator Nelson said; I could not agree more.
Let me congratulate you on filing the suit. As you can
tell, all of us are so frustrated with them and their refusal
to take biotech food. It is as thinly disguised a protectionist
maneuver as I have ever seen. When they went so far then as to
actually try to convince the European countries that have
famine not to take the food so that people starve, that is just
the last straw. The message is we are ready to support you in
any way we possibly can to go after them and it just comes down
to that.
I also want to thank you for your efforts in the sign-up
and that is so important in Missouri because we are just so
diverse. We have midwestern farms in the north part of the
state in terms of commodities and then really southern-type
commodities in the southern part of the state. I like to say in
Missouri we have a lot of some things and a little bit of
everything and that is true in counties. We just had some
counties who have really struggled but I want to say our
Missouri FSA people have done a great job and I wanted to say
that and congratulate you.
Then there is an issue I want to raise and it is a
Missouri-specific issue, so I am not going to put you on the
spot and ask you for an answer now, but I do want to submit it
for the record and emphasize to you how important it is to us,
not just to Missouri but everywhere because it has to do with
rural development loan processing.
You are probably aware we do all of that really for the
country in two centers in Kansas City and St. Louis and
typically there have been proposals to privatize that function
and that is stirring again, because of the President's
initiative, which I support, to look for ways to privatize
functions. I want you to consider as you consider this whether
this is not an inherently government function because of the
difference between governmental attitudes and standards
regarding loans and private standards.
Also, it is always my big fear with this that if it is done
right, fine, but we can end up with a situation where we
privatize this, we lose the pool of labor that has done it and
has the expertise and then we find out that it is not working
and we cannot put it back together and we have a real problem.
I am going to submit to you some questions for the record, with
the chairman's permission, just to find out what your plans are
and how we can work with you to make certain that if anything
does go forward it goes forward in a way that is good for
agriculture and good for the taxpayer, as well. I thank you for
being here, Madam Secretary.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Stabenow.
STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR FROM MICHIGAN
Senator Stabenow. Thank you, Mr. Chairman.
Welcome, Madam Secretary and to all of you. I mentioned to
you when we had a chance to talk on the phone that I had asked
all of those who had testified at two field hearings in
Michigan in 2001 prior to the Farm bill's completion to respond
to how things are going and I do have a number of issues and
would like to respond in writing so that you can have a chance
to give me some feedback in writing, as well.
First of all, the overall feeling is that there has been a
great positive reaction to the technology that the department
uses, to the website, to the efforts to get information out in
a timely manner. There are universal compliments coming as a
result of that. Also, the nutrition title, a great deal of
positive feedback on that, as well.
There is also positive feedback regarding the FSA
employees. We have understaffed offices and people working
overtime, as well as the regular department employees, but
still concern about the initial sign-ups for a lot of the
program crops being complicated and cumbersome in spite of
that, but realizing people are working hard in that process.
Our Michigan dairy producers have raised some of the
concerns that have been raised before by Senator Coleman and
also the executive director of Monitor Sugar Beet Growers
Association, while indicating that the overall sugar program is
going well, he did have concerns that were raised, similar to
what Senator Conrad raised, as well, very concerned, assuming
that this was not discretionary to eliminate the surcharge but
that, in fact, it would be eliminated. We have heard that, as
well, across Michigan, and I share that concern, as well.
The major two areas though where we heard a lot of comments
related to the Commodity Purchase Program, which I have spoken
to you about, and also the question of conservation. We heard
from many different people a concern about the slow advancement
of conservation programs--from the Michigan pork producers, the
Michigan corn growers, the Farm Bureau, Farmers Union, Michigan
milk producers, all raising concerns about the technical
aspects of EQIP but in the broader sense concerned about the
security program, the Conservation Security Program. In fact, I
heard comments like producers are skeptical about the
government's commitment to the Conservation Security Program.
I wondered first, my two questions, if you would respond to
what is a message that they are feeling that there is not a
commitment to fully implement the CSP, and I also have letters
from a number of groups that were sent to you just, I believe,
yesterday indicating a real concern about not delaying or
reducing the funding, not delaying the implementation of CSP. I
wonder if you might tell us what is happening there.
[The letters can be found in the appendix on page 66.]
[The prepared statement of Senator Stabenow can be found in
the appendix on page 93.]
Secretary Veneman. I would be happy, too, and Senator
Harkin and I discussed this issue quite extensively last week
at the Appropriations hearing.
First of all, let me just say that we have an absolute
commitment to implement these programs. It is important to
point out there has been a lot of recognition among us, as well
as the members that are here today, that our folks have done
Herculean tasks to get as far as we have in the Farm bill. We
had to set some priorities and we had to start with the
commodity title of this farm bill and get the sign-up done but
we are in the process of making very good progress on the
conservation title.
We should have the final EQIP rule out I would say at the
latest by the end of next week. The final rule is prepared. It
is a matter of getting it in the Federal Register. That is good
news. Same with the grasslands and the farm and ranchland
protection. Those are three that are just in the final stages
of being published as the final regulations and that shows some
good progress in terms of these programs.
As Senator Harkin and I discussed the other day, the
Conservation Security Program has been an enormously difficult
one to implement because there was so much discretion left in
the regulatory process that we have been trying to work out the
best way to implement this. We went out with an advanced notice
of proposed rulemaking and we got 4,500 comments. That is
extraordinary. It is one of the highest we have ever gotten on
any kind of request for public comment.
We are in the process of putting together a proposed rule
now. We will review all of these comments and try to
incorporate them into this process and we certainly want to do
this right. That is the most important thing. It is a brand new
program. We feel strongly about doing the right thing and that
is why we have taken the time to get this kind of public input
through public meetings, and so forth.
Let me just say on the Commodity Purchase Program--you
expressed to me the other day, interest and thanks for the
apple purchases. You also expressed interest in the asparagus
purchase. I wanted to tell you that we have purchased asparagus
this year, $6.3 million worth, so I just thought you would like
to know that.
Senator Stabenow. That is great and that would lead to my
one other question, and I appreciate that, that you are doing
that. When we look at specialty crops, fruits and vegetables,
they are not covered by much in the Farm bill and the Commodity
Purchase Program was something that we fought very hard to get
in, the additional $200 million, not $200 million in total
being spent every year but the additional $200 million, plus I
might say the Conservation Security Program, which covers
farmers on working lands and would cover specialty crops
because they have not been covered in other areas. These are
very important things for our fruit and vegetable growers.
While we appreciate the recent purchases, overall I am very
concerned that we have seen purchases go down. We are seeing
that despite the fact that the Farm bill says at least $200
million per year and in the actual report language it says,
``The managers intend that the funds made available under this
section are to be used for additional purchases of fruits and
vegetables over and above the purchases made under current law
and that might otherwise be made without this authority,'' in
fact, that is not happening.
When we look at it, the 2002 USDA purchase was $189 million
in fruits and vegetables through section 32 and it devoted, of
course, $50 million to the DOD Project Fresh Program, which I
support, which is very positive. When you added those numbers
together, which barely met the goals of the Farm bill, but then
went on to look at section 32 fruits and vegetables purchases
in 2002 independent of the DOD $50 million, were far below the
purchases from 2001 and from 2000. The total section 32 bonus
and entitlement spending in 2001 was $263 million and $232
million in the year 2000 and, in fact, again we are seeing
these, in fact, go down.
The purpose of the bonus program is to look at where the
surpluses are. It is an effort to not only provide fruits and
vegetables but to support those crops where they need the
assistance in terms of surpluses.
I am very concerned that we are not seeing the intent of
this completed. There is a great deal of support and enthusiasm
and, in fact, tremendous need in this area and this is the one
area in the Farm bill, outside of the CSP, where we are really
talking about helping specialty crops. I am very disappointed
that this has not yet been fully implemented and I would like
to know what your plan is to do that.
Secretary Veneman. Well, let me first say that as of April
of this year for the 2003 year, we have purchased--well,
approved or pending approval of $135.9 million, which is well
ahead of this time last year at $44.9 million. That is the
significant difference from last year. Another $50 million has
been approved for the DOD Fresh Program and we have an
additional $251 million still available.
We probably are much more on target than your numbers may
have indicated and we are very aggressive in this program in
terms of what we have available for spending in 2003 and the
pace at which we are spending it.
Senator Stabenow. You anticipate $251 million additional?
Secretary Veneman. Is available for 2003.
Senator Stabenow. You intend to----
Secretary Veneman. Well, as you say, we have to have the
surplus determinations and the demand for the purchase, and so
forth, but that what remains available.
Senator Stabenow. Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Lugar.
STATEMNET OF HON. RICHARD LUGAR, A U.S. SENATOR FROM INDIANA
Senator Lugar. Thank you, Mr. Chairman.
Madam Secretary, I join all those in complimenting the
department and your leadership in the sign-up situation. Our
situation in the Lugar farm business is anecdotal. We have 15
family members who are stockholders of a subchapter 5
corporation, not an unusual thing with two generations of
people and passing along the farm.
What we have found are some unusual requirements; for
instance, a power of attorney from each of the 15 people
required so the farm manager can be designated to participate
in various aspects of the program. Not an unusual requirement,
I suppose, but as I take a look at all the farmers in Indiana,
people have not been involved really in getting powers of
attorney and going through these affidavits in this fashion,
but they are doing so. It simply is another layer of difficulty
for people there.
Likewise, an affirmation on the part of all 15 of us that
we do not have incomes of $2.5 million over a 3-year period of
time. I was startled that this was a requirement of the Farm
bill but nevertheless, we are all swearing that we have not had
that kind of income in the last 3 years or historically ever,
collectively.
I mention this because here around the committee we bear
responsibility for passing the bill that you have to implement
and there is a staggering amount of this type of thing but
eventually it will be worked through and we compliment those in
the field who have that responsibility finally.
What I want to know is at the end of the day as you are
working through the conservation, the EQIP situation--I know
Senator Harkin has already had these queries today and before,
and others--what kind of back-up in terms of demand do you
perceive? In other words, most people have not had at it yet in
terms of getting into new conservation efforts or EQIP and I am
wondering how many times the funds are spoken for. Do you have
any idea of the backlog, the line there that after the rule
happens and the window is open, what can you anticipate?
Secretary Veneman. Senator, I appreciate your questions.
Let me just say on some of the difficulties of implementation
and sign-up of this farm bill. I know there was a tremendous
amount of frustration on a number of issues, not the least of
which was power of attorney because when I traveled around the
country and I heard that. The fact of the matter is the power
of attorney had not been updated since the 1980's.
We were strongly advised that we needed, given the
tremendous changes in this farm bill, to have powers of
attorney updated because the landowners needed to have the
opportunity to make decisions based upon what the new Farm bill
did, and that is why the new power of attorney was required.
My previous response to Senator Stabenow talked about how
we are about to put out final regs on some of these
conservation programs. Those are ready to be published in the
Federal Register now and we continue to work on the CSP, but I
am going to have our chief of the NRCS, Bruce Knight, address
the backlog issue that you raised.
Mr. Knight. Senator, specifically on EQIP, our latest
estimates have about a $1.4 billion backlog for a program that
we are announcing today will be a little over $600 million in
available funding.
Senator Lugar. About two and a half years at least as you
look at it, at the same level of funding.
Mr. Knight. Yes, that is correct. We will, however, no
decisions will be made. Each of these applications will be
ranked independently based on the environmental needs of that
particular application and its success, so the wait list does
not change the rank on how these determinations are made.
Similar backlogs exist on the Farm and Ranchland Protection
Program, the WHIP program. Nearly every one of these
conservation programs have a backlog capacity behind them.
Senator Lugar. You have a point scale depending upon the
environmental circumstances, so you have a backlog but the
candidates are rated according to the criteria that is in the
legislation?
Mr. Knight. That is correct. Those ranking processes look a
little bit different from state to state. For this year, in the
spirit of openness, we are going to be publishing the ranking
processes for each of the states on the web so that every
farmer and rancher who is actually applying for EQIP can look
at the ranking and know precisely how best to fill out that
application in order to be able to score as best as they can in
the ranking process.
Senator Lugar. Very good. How about the conservation
backlog? Do you have any feeling on those programs?
Mr. Knight. We do not have as much of a backlog in the Farm
and Ranchland Protection Program. We are just about a week from
closing the notice for applications. We expect tens of millions
of dollars in backlogs on that one from the preliminary things,
and the applications will be closing very quickly. We will have
the same situation in the Wetlands Reserve Program, as well.
Senator Lugar. Thank you very much, Mr. Chairman.
The Chairman. Thank you, Senator Lugar.
Senator Dayton.
Senator Dayton. Thank you, Mr. Chairman.
I will join with the others, Madam Secretary, in thanking
you for your actions on the trade issues.
Regarding EQIP, $600 million if I understood correctly, Mr.
Knight, is that the amount for the entire fiscal year and you
have $1.4 billion in backlog applications already? That means
somebody making a current application would be considered in
three fiscal years from now?
Mr. Knight. Each one will be considered in this particular
year and ranked accordingly.
Senator Dayton. Those in the backlog, as well as the
current applications?
Mr. Knight. Those in the backlog, as well as the current
applicants.
Senator Dayton. That is the full amount of funding
appropriated for this purpose on a pro rata basis, authorized
for this purpose?
Mr. Knight. The allocations were recently sent out to the
states. Because of some of the technical assistance issues that
were discussed there was a need to hold some of that back in
order to be able to provide for the technical assistance for
all the conservation programs.
Senator Dayton. How much are you holding back?
Mr. Knight. The amounts that are going out in total in
technical assistance for EQIP is $145 million in technical
assistance for that program.
Senator Dayton. That is 20 percent of the amount for the
fiscal years, $143 million? That is just under 20 percent. That
is the amount that is necessary to be held back?
Mr. Knight. The technical assistance for EQIP will run a
little bit higher than 20 percent. It will be around 23
percent.
Senator Dayton. Is that typical?
Mr. Knight. That has historically run a little higher than
that and we are driving that down very rapidly, sir.
Senator Dayton. If that is the amount, given the demand, if
you are going to set aside 20 percent of it for technical
assistance, that is an awful lot of money taken out of the
program for advice. How much advice can people need? $4 for
every dollar of technical assistance?
Mr. Knight. The technical assistance involves a fairly
lengthy list of work. It is the planning associated behind all
of those contracts. Then on an individual contract it is the
work associated with lay-out, design, all of those types of
things.
We are working as rapidly as we can to be able to bring
those costs down. The advancement of today's technology and
utilization of computers have helped a great deal in that. That
is one of the reasons why we have been able to make any
advancements----
Senator Dayton. Is what you are calling technical
assistance, is this administrative? This $143 million, to whom
does that go? USDA?
Mr. Knight. That is what is used under the direction in the
statute for the technical assistance either for the assistance
costs for running the agency in the implementation of these or
to be able to utilize private consultants as deliverers of that
technical assistance.
Senator Dayton. You are taking 20 percent off the top of
the program for your administrative costs and then the other 80
percent goes to the program, to the farmers, and you are going
to try to bring that down? When are you going to bring that
down to something that is reasonable? That is an awfully high
percentage to take away from the program.
Mr. Knight. We are working as rapidly as we can and----
Senator Dayton. Define to me as rapidly as you can. Is that
something we should hold our breath about or are we talking
about 10 years from now?
Mr. Knight. We are moving very rapidly on that.
Senator Dayton. What is very rapidly?
Mr. Knight. Last year the technical assistance costs for
the EQIP program hovered between 25 and 26 percent. This year
we have that down to 23 percent and we will keep on driving
those things down.
Senator Dayton. Good. Thank you.
One point I will just make, let me go on to the country of
origin labeling, Madam Secretary. I am concerned and I want to
echo Senator Daschle's comments and concerns. I hear from my
producers that they are talking about--they think they are
going to have to have an affidavit verified by three onsite
inspectors and signed by the U.S. Attorney General that they
are in this category or another, and the like.
Also, as Senator Daschle said, some of these packers and
the like are making this sound as draconian as possible and
they are even trying to actually use, under the pretext of the
program and whatever regulations you issue, to make it that way
so that they can essentially punish farmers and probably punish
some of us who supported it or whatever else.
I just ask that you be explicit in your regulations as you
formulate them what you are going to require and not, and that
you not compromise the intent of it in any way but allow for
some assumptions of good faith because if these kinds of
documentation and verification in triplicate and the like that
sometimes is foisted not by you but just by government in
general, it is going to be crushingly unbearable for a lot of
our producers.
Secretary Veneman. Well, Senator, I really appreciate your
concerns on this. The issues you are raising are exactly the
kinds of issues that have come up in the process of trying to
write the regulations for the mandatory program. That is why we
decided to go out and get as much public comment as we possibly
can.
Senator Dayton. I commend you for doing so.
Secretary Veneman. The statute is written in a way that
puts the burden of proof onto the retailers and the packers, so
it is the retailers and the packers that are now talking about
what kinds of records they are going to require in order to
meet that burden of proof. That is inherent in the statute. It
is one of the issues that we need to discuss within the context
of the statute. As I understand the law, it would not allow
USDA to go in and verify the producers. That is a process that
we would be verifying through the retailers and the packers
according to the statute.
Senator Dayton. Well, if they are going to interpret that
as requiring the kind of proof that I indicated, they are going
to--maybe they are out to destroy the program. If they are
allowed to accept somebody's assertion even in writing that
their product meets whatever those specifications, then if
somebody is going to lie on that, that is another matter.
Quickly because I am probably short of time here, we are
taking up an energy bill right now and we are trying to get the
rest of the country to understand what the potential is for
ethanol and biofuels. I have a Ford Explorer now with an engine
right out of the factory that can use E85, 85 percent ethanol.
The president talked about hydrogen fuel and I respect that
as a possibility for the future but we have something right
before us now. It seems to me we have a chance to raise market
prices so we can reduce the subsidies and increase the prices
in the marketplace for these products.
I guess I am asking is USDA taking a position on promoting
these uses or what is your view on them?
Secretary Veneman. Well, absolutely USDA has been very
supportive of renewable fuels and the administration has been
very supportive of renewable fuels.
The President put together an energy task force very, very
early in his term. One of the things that was explicitly talked
about was the opportunities for renewal energy and the need to
produce more sources of energy here at home. The President has
been very supportive of ethanol. He did not grant the requested
waiver for California, which was certainly giving the ethanol
industry many more opportunities.
In addition, the administration does support the renewal
fuel standard that was proposed in the Senate energy bill. We
have been very explicit about the administration's support for
that provision.
I might add that we continue to see increases in ethanol
production. We expect to see about 10 percent of our corn
produced this year going into ethanol production, which is very
significant. We are very supportive of renewal energy and
industrial opportunities for our farmers to get new ways to get
access to the marketplace.
Let me just say in response to your question about country
of origin, we do have on the USDA Agriculture Marketing Service
website some examples of some kinds of things that AMS has put
together in terms of some of the documentation that can be
considered for proving country of origin. I would invite people
who have concerns to look the what has been listed there as
some possible suggestions and certainly still open to public
comment.
Senator Dayton. Thank you, Madam Secretary.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Leahy.
Senator Leahy. Thank you, Mr. Chairman. I thank you and
Senator Harkin for having this hearing.
Secretary Veneman, I am glad to see you here. It has been
sometime to be able to meet to discuss the Farm bill, so it is
good to have you back and I know you tried reaching me. I tried
reaching you back. I was down at Senator Long's funeral
yesterday.
It is not a very good year in Vermont for our Vermont dairy
farmers. The price is something like $1.11 on milk. We had some
relief by the MILC program, the Milk Income Loss Compensation
Program so I would be interested in knowing what you are going
to do on that.
I am, as I notified you before, disappointed that the
department has failed to implement the regional equity
provisions of the Farm bill. That is one that provides a
minimum level of conservation funding for every state.
I will put my full statement in the record if I might, Mr.
Chairman, but I would like to ask these questions.
Now that the department is fully implemented the MILC
program do you believe this program is a critical component of
our response to crises in the dairy markets? What is your plan
for improving the price of milk? I say that because the price
of milk is now at a 25-year low.
Secretary Veneman. Senator, we have, I believe, implemented
the milk provisions as was designed by the Congress in the Farm
bill. Dr. Collins addressed some of the dairy income issues
earlier but I would ask him now to just repeat some of the
economic conditions with regard to dairy and some of the things
that we are looking at in the department.
Mr. Collins. Senator Leahy, I agree with you that we looked
at the April price of milk and indeed it is at a 25-year low
for milk, so for right now we would certainly say that the Milk
Income Loss Contract Program has been an incredibly important
source of income for producers. The milk payment rate right now
is running about $1.80 a hundredweight if you are eligible to
get the full payment. That certainly helps restore some of the
purchasing power for dairy producers.
Regarding what we are doing to help the price of milk, it
is simply trying to use to the best advantage the portfolio of
tools we have available to us, which would include, of course,
the MILC program, and we would expect that to continue for its
life and that will provide a lot of income support to
producers. We also have the on-going Milk Marketing Order
Program, which helps about 70 percent of the nation's milk. We
have the Dairy Export Incentive Program and we have used that
to the fullest available for cheese and nonfat dry milk and for
the first time since 1999 we have initiated it for butter this
year.
As I mentioned to an earlier question, we are also looking
right now at our purchase prices for dairy products. We, of
course, have established those prices but we are looking at
those to ensure that we are taking account of perhaps any
unique costs that manufacturers encounter when they have to
produce a product to meet our specifications to make sure we
are paying them enough to cover those perhaps additional things
that they may have to do.
We are trying to use all those tools to the best available
advantage and the way Congress intended them.
Senator Leahy. Well, doctor, I will look at the earlier
testimony on this, too.
If I might, Mr. Chairman, I may have a couple of questions
for the record on this issue.
The Chairman. I would be happy for you to submit those,
Senator, and we will ask the Secretary to respond in a
reasonable time.
Senator Leahy. Thank you. I also note the Farm bill, when
we wrote that, and this was a matter of some discussion both
with the administration and among members, we put a strong
regional equity provision for conservation funding in it. That
was something worked out over a long-time negotiation. As part
of that negotiation it was Senator Harkin and Senator Cochran,
Senator Lugar and others. Under that, Vermont should have--and
I realize it is almost unique for a parochial issue to be
raised at a meeting of the Senate Agriculture Committee, but we
should have received $12 million in conservation funding. We
received only $8.6 million.
Now I say this notwithstanding that is an increase of
$100,000 over last year, but we increased nationally hundreds
of millions of dollars in this program. We have been able to
fund only 20 percent of our conservation applications, most
notably EQIP in the past years, due to insufficient funds. The
EPA regulations on large farms are coming. States like Vermont
that have stepped up the provisions need it.
Why can't we implement the regional equity provisions? We
have all the applications and everything else. Can you use
nonallocated conservation funds and immediately implement the
regional equity language?
Mr. Knight. One of the biggest challenges we face with
putting more of this information up on the web and being more
open on this is you are able to see exactly how the money has
gone in your particular state and I knew full well you would be
asking this question today, sir.
The regional equity provision, as it was written in law,
quite specifically asks us to look to ensure that we are
implementing all these provisions in an equitable manner
throughout the aspects of the bill and stated further that it
had to apply to the provisions prior to April 1, and we are in
the very difficult situation of this year, which will be very
unusual, in that having had the late appropriations process,
compounded by the late allocations process, we are very late in
the year for being able to make those out, to be able to get at
that program to be able to do as you had designed with the $12
million.
The program allocations are all constructed and designed by
formula that attempt to be able to gather the resource needs
for each of the programs. We have a different allocation
formula that is used to design EQIP. That one, as a matter of
fact, takes 29 different factors and it combines everything
from acreage to----
Senator Leahy. Before you get too far out there, the
provision, as I understood it, required each state to receive
at least $12 million in conservation funds by April 1. Now what
is so difficult to understand that? I realize you may have
applications and everything else, but why does not each state
just get their $12 million to begin with? That money is there.
Mr. Knight. The provision actually, sir, states that before
April 1 of each fiscal year the Secretary shall give priority
for funding on the conservation provisions of subtitle D--it
goes on with those things--for approved applications if not
received for the fiscal year in aggregate amount of at least
$12 million for these conservation programs.
There have been lawyers on each side of the issues who have
advised whether it does, in fact, require that a minimum of $12
million be spent on each of these states and this gets to some
of the provisions we have had before--the debate of the
differing legal interpretations.
Senator Leahy. The interpretation seems to be that if you
are in the so-called farm belt, you are going to get the money;
if you are in the Northeast, you do not get the money. The flip
side is if you are in the Northeast you pay the taxes to fund
the programs.
I am not trying to set up regional battles. I have
supported those programs in the Midwest. It seems to me that
any time we have something that seems to affect us, the
Northeast, we are going to be asked for the tax dollars to pay
for it but we do not get it.
I am looking at the AMA funds, the Agriculture Management
Assistance Programs. We all worked together to put that in
because current crop insurance policies do not cover crops
grown in the Northeast, could use these risk management funds,
but now you have taken the AMA money for a new crop insurance
subsidy. That is not going to benefit producers. We do not grow
crops that you insure.
We get a number of reasons. Penn here says that the
regional equity language, he cited that as justification for
redirecting it, the AMA funds. Now you do not implement it. We
had 24 of the 30 senators who would be affected by it ask you
to reinstate the old program. Are you going to reinstate the
previous innovative program? You invested the money in
traditional risk management programs.
Again it is a case like you guys in the Northeast pay the
bills but no matter how you write the Farm bill, no matter how
many things you put in there to get a response into your part
of the country, forget about it. I can't quite say it like my
New York senators might say ``forget about it,'' but that is
basically what happens. We get the bill, we send the check and
wait for delivery.
What are we going to do here? How many times do we have to
rewrite the law?
Secretary Veneman. Senator, I appreciate the concerns
that----
Senator Leahy. You know, I am a strong supporter of yours,
Madam Secretary. I do not know what is happening here.
Secretary Veneman. As I said, I appreciate your concerns
and as Bruce Knight said, there have been some differing legal
interpretations and I would be happy to have appropriate staff
come and work with your staff to determine if we can work out
some of these issues that are raising today, to determine how
we can best address them.
Senator Leahy. I wish you would because it not just a
parochial thing to Vermont, although we are really getting
shafted by it. Again it is a Northeast issue, and I am not
trying to pit one region against the other. My record is such
for 30 years that I have strongly supported other parts of the
country, but this was specifically to balance some of the
equities and I do not think we are getting it.
With that, Mr. Chairman, I know you are pressed for time,
too, and I will submit my other questions if I might for the
record and I will take the Secretary up on her offer to have
her folks meet with mine.
Secretary Veneman. We will do that.
Senator Leahy. I do appreciate your trying to reach me and
am sorry we missed.
The Chairman. Thank you, Senator.
[The prepared statement of Senator Leahy can be found in
the appendix on page 99.]
Madam Secretary, the record is clear that you have led a
gallant effort at the Department of Agriculture to
expeditiously and with a degree of sensitivity that is very
important implement this new writing of a farm bill and this
hearing, as you observed in your statement, comes on the first
year anniversary of the passage of that bill, the signing of
the bill by the president, as a matter of fact.
You had to hire temporary employees, over 2,000, to help
staff the Farm Service Agency offices and undergo training to
be sure they understood what their duties would be and how to
carry those duties out in a responsible and sensitive way. It
has been a massive undertaking and you have risen to the
occasion and demonstrated a great deal of competence and good
judgment in the process.
I do not have any other questions. You have answered all
the questions that have been put to you in a responsible way
and the team you have with you--Dr. Penn, Mr. Knight, Dr.
Collins--have done a commendable job, as well.
Senator Harkin.
Senator Harkin. Thank you, Mr. Chairman. I have some other
questions which I will submit in writing. It has to do again
with the Venture Capital Fund and why we cannot move in a more
timely manner on that.
The CRP was covered in terms of a possible--I appreciate
your getting back to me on that--a possible extension of time
on that. We have covered the other things here.
There is one issue, Madam Secretary, that I want to bring
up because I have been asked about it and it is important that
we air it a little bit publicly here. That has to do with the
reports that are coming out that the press somehow is being
locked out of doing their job at the Department of Agriculture.
President Lincoln called the Department of Agriculture the
people's department and there a story that appeared in
Feedstuffs and then there is another story that appeared in
Congress Daily and there is another story that appeared in
Agriculture about this and it has to do with obviously your
press secretary, Alisa Harrison, advising three reporters, this
one included--this is Sally Shift; I have not talked to her,
Feedstuffs Washington editor--that the days of staking out
closed press meetings in USDA buildings were over. She says in
her report, ``It went like this. The three of us were in the
lobby of USDA's Whitten Building on a stake-out of a closed
door session''--I have a little problem with this I will tell
you about--``a closed door session between high-ranking USDA,
White House and U.S. Trade Representative officials and
agriculture lobbyists on the thorny agricultural trade issues
with Mexico. Stake-outs are reporters' traditional way to seek
hallway interviews,'' as well we know up here, ``as
participants emerge from government meetings.'' She went on to
say that Harrison charged that our building passes only allowed
us access to our offices.
Now the report said here that she was standing out there
and Harrison, ``Just as reporters finished talking with the
lobbyist''--oh, I know. The lobbyists came out, evidently, of
the meeting. Lobbyists were meeting with your people. It is
reported that Under Secretaries J.B. Penn and Bill Hawks and
Chief U.S. Trade Representative Allen Johnson had no problem
answering her questions but just as reporters finished talking
with the lobbyists Veneman and her press secretary Alisa
Harrison talked in the front door of the building. The
reporters said Harrison walked over to them and told them they
must never stake out a meeting at USDA again. The reporters
said Harrison threatened that if they do, she would revoke
their building passes or call their editors.
I am wondering what is the policy at the Department of
Agriculture in terms of letting reporters stand outside of
doors and go ahead and question people when they come out?
Secretary Veneman. Well, Senator, let me first say that we
try very hard to have a very open and accessible relationship
with the press. We have done numerous press briefings. We try
to be available to the press. We answer their questions when
they call. We have a very unique situation in USDA in that we
have a radio studio and a TV studio. We try to do as much as we
can so that people can all listen in.
Yesterday when we did the announcement on the EU biotech
case we had that webstreamed on our web so that anybody
anywhere that had access to the web could actually watch the
entire press conference. Just first of all, I want to make it
clear that we try to have a very open press relationship.
The difficulty, as I understand it, that our press people
have been trying to deal with is we are one of the few
departments of government that has press actually in our
building. Defense and State and the White House have press in
the building. They are all relegated to certain areas. They do
not have free access to the White House or to the State
Department or the Defense Department in those cases. The
concern is that we need some reasonable guidelines for the
press access. They are invited to every public event. I
certainly talk to them and others do in any public event
setting. The issue is really private meetings.
In the meeting you talk about it was with people interested
in trade issues with Mexico. I would not necessarily have
termed them all lobbyists, although I am sure some of them are
registered. My understanding of that meeting was it was a
briefing with the private sector with interests in some of the
trade disputes we have with Mexico to get a direct briefing
from Dr. Penn and Mr. Hawks and Ambassador Johnson following
the meeting that they had in Mexico. We often brief private
sector interested parties. We think that is an important thing
to do.
We also brief the press often and they certainly had access
to our people to talk about the trip after Mexico, to talk
about the issues that were discussed.
Senator Harkin. Is this a departure? Is this a departure
from past practice?
Secretary Veneman. I have to tell you in all honesty until
I read about this in the press, I did not know it had happened.
My understanding of it is that it is an attempt to simply
restate what the policy of the department has been, and that is
we provide access at public meetings, we provide access that we
think is responsible.
Senator Harkin. I understand that but this has to be
cleared up for your benefit and for ours, too.
Secretary Veneman. I agree, Senator. I agree.
Senator Harkin. Up here, because there is a concern here
and we have to clear up one thing that was said in this story.
I do not know. It said here that since you had just come in the
door with Miss Harrison and she left from you to go to meet
with these people, there is some thought that--oh, yes. ``The
fact that Harrison was observed entering the lobby with
Agriculture Secretary Ann Veneman moments before she confronted
us only added to suspicions that her instructions came from the
top.''
Did you instruct Miss Harrison to go over and tell the
reporters that they could not stake out any longer?
Secretary Veneman. No, I did not. I did not even know she
was going to talk to them. We walked in talking about something
else.
Senator Harkin. She did this on her own volition?
Secretary Veneman. She did.
Senator Harkin. Well, Madam Secretary, you really ought to
review this. I have been around the department now for 28
years, I guess, in and out, and I aware that reporters have
been down there in the past, that they have access, which I
have always thought was a very good thing.
Again I am told that it is a departure from past practice
on the access of these reporters with desks at USDA to the
hallways, et cetera, that this is a departure. Again I would
like to know why at this point in time are we making a
departure from practices that have been going on for as long as
I have been here and maybe longer? Why is there that departure?
What happened?
Secretary Veneman. Well, Senator, my understanding is that
our press shop had tried to make reasonable guidelines, which
generally are followed by representatives of the press. As I
said, we have press people in the department, we have very good
relationships with them and normally we do not have issues that
arise coming out of these kinds of meetings.
I have asked for a full review of this situation. I have
asked for our folks to meet with the various members of the
press to talk about exactly what the ground rules are.
Obviously we need some ground rules in terms of the press
accessibility since they do have access to the building and it
is a unique situation in government. Most of the members of the
press would agree that we need to have a common understanding
of what the ground rules are, and that is what I have asked my
people to do following this incident.
Senator Harkin. Well, I hope you will keep us apprised of
that. I have no problem. Obviously we have meetings up here,
too, that are not open to the press. The press accepts that. As
soon as you walk out the door, there they are and we have that
all the time up here--in the hallways out here, the hallways in
the Capitol building. We may have a meeting, a closed door
meeting to discuss things for whatever reason now and then but
as soon as we walk out into the hallway the reporters are there
to ask us questions.
I believe it is a legitimate function of theirs to be
there, to get immediate responses from people that were in the
meeting, to ask them questions. Obviously if I come out of a
meeting and the press asks me a question I can demur; I can say
I do not want to answer that, but then they get a report that I
refuse to answer it, too. The public has a right to know these
things and the press, no matter how much we praise them or
despise them, they are our link to the public and we have to
make sure that they have that kind of accessibility.
I hope you do review this because I have been asked about
this a couple or three times and the more I looked into it, the
more I thought we had to air it here and get it out and
hopefully you will review that and get back to us with what
your policy would be down there.
Secretary Veneman. Well, Senator, I absolutely agree with
you about the important role of the press. One of the things
that we try to do at the department, and as we discuss the Farm
bill here today we could not have gotten the information out to
the recipients of the programs without the farm broadcasters
and the ag meeting writing the stories about the message that
we were all trying to give about the dates for sign-up, what
you need to do, where to get information, how to get on the
website.
I absolutely agree with you that our relationship and our
dependence on particularly the ag media is very important.
Senator Harkin. I appreciate that. I can only speak for
myself, I would not propose to speak for any other senator, but
look, we all have experience with stake-outs. The press is
there and you come out of a meeting and we all have experience
with that. Maybe it does make us uncomfortable once in a while
but maybe that is the press's job, to make us uncomfortable
once in a while, too. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Madam Secretary, thank you again for your cooperation with
our committee and the attendance at this hearing. I commend you
and your staff for the excellent job you have done.
[The prepared statement by Secretary Veneman can be found
in the appendix on page 42.]
The Chairman. There is no further business to come before
the hearing. The hearing is adjourned.
[Whereupon, at 4:22 p.m., the committee was adjourned.]
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A P P E N D I X
May 14, 2003
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DOCUMENTS SUBMITTED FOR THE RECORD
May 14, 2003
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QUESTIONS AND ANSWERS
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