[Senate Hearing 109-642]
[From the U.S. Government Publishing Office]
S. Hrg. 109-642
REGIONAL FARM BILL FIELD HEARING: REDMOND, OREGON
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
AUGUST 15, 2006
__________
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,
SAXBY CHAMBLISS, Georgia, Chairman
RICHARD G. LUGAR, Indiana TOM HARKIN, Iowa
THAD COCHRAN, Mississippi PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky KENT CONRAD, North Dakota
PAT ROBERTS, Kansas MAX BAUCUS, Montana
JAMES M. TALENT, Missouri BLANCHE L. LINCOLN, Arkansas
CRAIG THOMAS, Wyoming DEBBIE A. STABENOW, Michigan
RICK SANTORUM, Pennsylvania E. BENJAMIN NELSON, Nebraska
NORM COLEMAN, Minnesota MARK DAYTON, Minnesota
MICHEAL D. CRAPO, Idaho KEN SALAZAR, Colorado
CHARLES E. GRASSLEY, Iowa
Martha Scott Poindexter, Majority Staff Director
David L. Johnson, Majority Chief Counsel
Vernie Hubert, Majority Deputy Chief 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).
Regional Farm Bill Field Hearing: Redmond, Oregon................ 1
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Tuesday, August 15, 2006
STATEMENTS PRESENTED BY SENATORS
Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman,
Committee on Agriculture, Nutrition, and Forestry.............. 1
Smith, Gordon, a U.S. Senator from Oregon........................ 2
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WITNESSES
Panel I
Bushue, Barry, Oregon Farm Bureau Federation, Salem, Oregon...... 5
Livingston, Sharon, Oregon Cattlemen's Association, Salem, Oregon 10
Reese, Sherman, National Association of Wheat Growers, Pendleton,
Oregon......................................................... 7
Souza, Ray, Mel-Delin Dairy, Turlock, California................. 8
Panel II
Brentano, Pete, Oregon Nurserymen Association, Wilsonville,
Oregon......................................................... 22
Gallo, Ernest, Wine Institute and California Association of Wine
Grape Growers, Modesto, California............................. 23
Koompin, Klaren, Potato Growers of Idaho, American Falls, Idaho.. 20
Lorensen, Ted, Oregon Department of Forestry, Salem, Oregon...... 18
Panel III
Bernau, Jim, Willamette Valley Vineyards, Turner, Oregon......... 32
Euwer, Jennifer, Pear Bureau Northwest and Northwest Horticulture
Association, Hood River, Oregon................................ 34
Krahmer, Doug, Oregon Blueberry Commission, St. Paul, Oregon..... 35
Wettstein, Mark, Nyssa-Nampa Beet Growers Association, Ontario,
Oregon......................................................... 37
APPENDIX
Prepared Statements.
Wyden, Hon. Ron.............................................. 48
Bushue, Barry................................................ 51
Bernau, Jim.................................................. 56
Brentano, Pete............................................... 59
Euwer, Jennifer.............................................. 65
Gallo, Ernest................................................ 70
Koompin, Klaren.............................................. 79
Krahmer, Doug................................................ 83
Livingston, Sharon........................................... 92
Lorensen, Ted................................................ 98
Reese, Sherman............................................... 114
Souza, Ray................................................... 117
Wettstein, Mark.............................................. 123
Document(s) Submitted for the Record.
Connecticut Association for Human Services, Hartford, CT..... 146
Mallorie's Dairy, Inc........................................ 149
Oregon Cattlemen's Association............................... 152
Oregon Dietetic Association.................................. 155
Oregon Women for Agriculture................................. 158
The Linn Soil and Water Conservation District................ 161
Tipping Tree Country Eggs.................................... 163
Washington State Potato Commission........................... 166
Statement from Larry Bishop a farmer from Oregon............. 169
Statement from Nels Iverson a farmer from Oregon............. 172
REGIONAL FARM BILL FIELD HEARING: REDMOND, OREGON
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AUGUST 15, 2006
U.S. Senate,
Committee on Agriculture, Nutrition and Forestry,
Redmond, OR
The committee met, pursuant to notice, at 9 AM at the
Deschutes Fair and Expo Center, Hon. Saxby Chambliss, chairman
of the committee, presiding.
Present. Senators Chambliss and Smith.
OPENING STATEMENT OF HON. SAXBY CHAMBLISS, A U.S.
SENATOR FROM GEORGIA, CHAIRMAN, COMMITTEE ON
AGRICULTURE, NUTRITION, AND FORESTRY
The Chairman. The hearing of the Senate Committee on
Agriculture, Nutrition and Forestry will come to order.
Let me welcome all of you here today, particularly to our
witnesses who are going to be testifying and providing us
information. We do especially welcome you, and I can't tell you
how pleased I am to be in Oregon. I have been out here a couple
of times, visiting my good friend Senator Smith. But this has
given me an opportunity to come out a day or so early and do a
little agricultural experiment on some green grass and whatnot
that we've seen around Oregon for the last couple of days. And
what a beautiful part of the world.
This is our fifth Farm Bill hearing. We've had hearings in
Georgia, Missouri, Pennsylvania and Iowa, and we will hold two
more hearings this week in Nebraska and Montana, followed by a
final field hearing in Texas on September the 8th.
With the 2002 Farm Bill expiring next year, the committee
will be heavily involved in drafting a new law that will
reflect the needs of farmers across the country.
We have a number of factors that will influence the next
Farm Bill, and one of those is the input we are receiving from
our witnesses in these regional field hearings.
Agriculture in the United States is very diverse. Different
areas of the country view our farm programs in their own
distinct way. Today we hope to gain a better understanding of
the unique nature of the agriculture industry in the western
part of the United States.
The witnesses on the three panels today will provide us
with a unique perspective and appropriately reflects the
diversity of the crops raised in this region.
We have appreciated the information received and the
testimony delivered in our hearings so far and look forward to
hearing from our witnesses today. The statements we hear today
will play an integral role in helping the committee construct
farm policy for the future. It will assist us in providing a
safety net that works for farmers and ranchers while taking
into account the likely impact of the budget deficit and
international trade negotiations.
For those of you who are not witnesses but are interested
in submitting comments to the committee related to the Farm
Bill, the committee's website has guidelines for providing
written statements for the record and a web form for informal
comments. Comments received will also be considered during the
reauthorization process.
I appreciate Senator Gordon Smith hosting us here today and
the hard work of his D.C. and his Oregon State staff. Matt
Hill, Jason Billencort, and Susan Fitch have been particularly
helpful to my staff over the last several weeks in putting this
hearing together.
I understand that Jason could not be with us here today,
and on behalf of the Senate Agriculture Committee, we send our
condolences to him and has family during this very difficult
time.
I commend all of you for your hard work on behalf of all
Americans and I look forward to hearing your testimony.
And now before I turn it over to Senator Gordon Smith, let
me just say that the greatest thing about serving in public
office is having the opportunity to be associated with people
that you grow to have such admiration for and respect for. And
Senator Smith and I have become very fast friends during my
short time in the U.S. Senate. We sort of knew each other
during my House days, but we immediately became very close
personal friends.
His wife Sharon is such a delightful lady. And he married
way over his head. He freely admits that. That's one good thing
about him.
But Gordon Smith is just one of those class individuals
that makes serving in the U.S. Senate a pleasure for somebody
like me. And I can't over-emphasize to you folks in Oregon what
an important role he plays in the U.S. Senate. He's not a
member of the Ag Committee, but he regularly gives me advice
about what we need to be doing in agriculture. And I respect
him for it, because I know his background in agriculture. And
it's just a real pleasure to have the privilege to serve with
him.
Ron Wyden and I serve on the Intelligence Committee
together, and Ron is a terrific individual. And I've grown to
have great respect for him. And I'm sorry Ron couldn't be with
us today, but I know he has some staff representing him here
today. So, with that, I want to turn to Senator Smith for any
comments that he wishes to make in the form of opening
statement, and to recognize anybody here today.
STATEMENT OF HON. GORDON SMITH, A U.S. SENATOR FROM OREGON
Senator Smith. Thank you very much, Mr. Chairman. We are
honored to have you in the state of Oregon.
As I have done my research, I believe this is the first
time in the history of our state that the Senate Agriculture
Committee has come here to have a hearing on a Farm Bill. And
so we are all a little part of history today. But Senator
Chambliss and I share several things in common. And first among
them is a warm friendship. Second is that he married over
himself as well. Juliane is his better, as Sharon is mine. And
we are very thankful that you are here, and I am anxious for
you to get a better sense of the unique agricultural community
we have here in the state of Oregon.
Oregon's agricultural story is one that began over 200
years ago. You might think, well, no, that's Lewis & Clark,
they didn't do much ag here. Actually, it began with a British
ship in 1796 that came up the Columbia River. It was a ship
owned by the Hudson Bay Company. And they began farming at Fort
Vancouver, which was at the time part of the Oregon territory.
They planted wheat, potatoes, and I was relieved to see peas.
Soon after Oregon officially became part of the United
States territory, and lured by lush, fertile valleys, throngs
of wagon trains rolled from the East into the setting sun here
in Oregon. Plows dug into the rich fertile soil of the
Willamette Valley where glacial floods deposited blankets of
nutrients thousands of years prior.
By 1850 all of the best agricultural lands that they were
obvious were claimed, but this did not stop the Oregon Trail
from bringing thousands more, who spread throughout the state,
looking for water and pasture. The same determination that
brought them across the great plains and over the Rockies gave
them the drive to make farming and ranching a common practice,
even in tough territory.
That spirit is why agriculture remains a leading Oregon
industry here in Oregon, and why it's so fitting to have one of
these hearings here in this great state. Our state's
agriculture is second only to California in crop diversity.
Over 250 different crops are grown in Oregon. Oregon
agriculture output reached a record $4.1 billion in 2004. One
in 12 Oregonians is employed in agriculture.
Oregon is also vital to the success of agriculture across
the Northwest and Midwest because its geographic advantages are
so apparent. The Columbia River is the United States' largest
wheat export system, with 40 percent of all wheat exports
shipped through Oregon's ports. This reminds us of the
importance of trade to Oregon agriculture. No one wants the
United States to be a net food importing country. It is a
national security as well as an agricultural security issue.
Already we are rapidly seeing our import numbers approaching
our export numbers, and this is of real concern to me. The U.S.
agricultural trade surplus continues to fall. Between 2004 and
2005 it fell by nearly $4 billion.
Farming is not unlike logging or fishing. If government
regulation and unfair competition make life difficult, we will
lose the next generation of farmers. Oregon farmers can compete
any against any country's farmers, but not against other
governments or the cheap labor, high tariffs and minimal
regulations of some countries.
Since most of Oregon agriculture is not subsidized, we must
be more creative about competing in the world. And that's the
importance of marketing, conservation and research. We must
continue to strengthen these programs to remain competitive in
the world.
I also want to make mention of the nutrition title of the
Farm Bill. Oregon has suffered very high rates, amazingly, in
the category of hunger. This was a statistic by the U.S.
Department of Agriculture which really surprised many of us in
Oregon, when we live in a land of such abundance, both quality
and quantity. And for that reason, I formed the Senate hunger
caucus, and was joined by many colleagues, to try to help find
better ways to get our good food to people in need.
So, I want to thank Chairman Chambliss for his work in
preserving funding for food stamps. We sometimes don't
understand or remember how critical the Food Stamp Program is
to so many Oregon commodities, and certainly how important it
is to the poor. So I look forward to working with the Chairman
and the entire Senate to promote additional programs that help
the less fortunate, as well as the farmer.
We have assembled here a diverse representation of the
Pacific Northwest agriculture, and we welcome very much your
thoughts, your contribution today, and the Senate will be the
better for it. More importantly, the 2007 Farm Bill will be
better still because of the input that you make here today. We
will remember your testimony. We will try and reflect it into
our policy. And ultimately make--do our part in government to
help you be competitive. I have always taken enormous pride not
just in the diversity of our agriculture but frankly in its
abundance and its quality.
I have been to many agricultural shows. I have seen
Northwest products cut against those of other regions,
excepting Georgia, and we always come out on top. Senator
Chambliss is an unabashed fan of Oregon Penoir, and I don't
drink a drop, but he more than makes up for everything I don't
drink. So, he knows something of the quality of Oregon
agriculture.
Senator, thank you for your coming this long way over the
Oregon Trail a lot faster than they used to come here, but
thank you for including Oregon in the Agriculture Committee's
consideration.
Senator Chambliss and I office next to each other in the
Russell Building. And when he was elected to the U.S. Senate,
the quality of our effort and our work went up measurably. That
will be evident to you when you hear his words and see his
wisdom today. So we are thankful that you are here and thank
you all for participating.
The Chairman. Senator Smith, thank you very much for those
generous words and, again, for being here today. You're right,
I have a great affinity, as I mentioned to Jim a little
earlier, for Oregon Pinot Noir, and I try to do my best to keep
the economy of the agriculture community in Oregon moving
ahead. And I appreciate, I'm not sure who's responsible for
that table back there, but I've already told my staff that I
want one of each when we leave here to take on the plane with
us. We've already got some wheat and a great cookie there. I'm
enjoying Sharon's jerky up here. So, we're going to eat during
the whole hearing. We're not going to let you all interrupt our
appetite.
One thing you don't find back there that we grow a lot of,
and we always have at our ag hearings, are good Georgia
peanuts. So I want to make sure that all of these peanuts get
eaten while we are here, so you all feel free to come up here
and we will be happy to share these with you. Our first panel
today consists of, Barry, I hope to get this right, Bushue from
Salem, Oregon, representing the Oregon Farm Bureau Federation;
Sherman Reese of Pendleton, Oregon, representing the National
Association of Wheat Growers; Ray Souza of Turlock, California,
representing the Mel-Delin Dairy, and Sharon Livingston of
Salem, Oregon, representing Oregon's Cattlemen--the Oregon
Cattlemen's Association.
Again, welcome to each of you. Thank you for coming and
sharing some thoughts with us today. We look forward to your
comments.
I would ask that you keep your opening statements brief.
We'll be happy to submit your full written statement for the
record. And, Barry, we are going to start with you, and we will
go right down this way. Again, thanks for being here and for
your comments.
STATEMENT OF BARRY BUSHUE, OREGON FARM BUREAU FEDERATION,
SALEM, OREGON
Mr. Bushue. Mr. Chairman and Senator Smith, I wanted to
thank you for the opportunity to testify here today, especially
here in Oregon.
My name is Barry Bushue and I am honored to serve as
President of the Oregon Farm Bureau Federation. We have the
largest agricultural organization in the state. And our
interests are wide and diverse.
In light of the suspension of the World Trade Organization
talks, Oregon Farm Bureau supports an extension of the
framework of the current Farm Bill. Despite an ambitious offer
by the United States to reduce spending on trade distorting
domestic supports, no progress was made to increase market
access for American food and fiber products.
Extending this current farm program with some changes to
take into account recent trade rulings and new opportunities,
will help ensure U.S. farmers have the support they need to
survive in today's contentious global trading environment. This
is not the time to reinvent the wheel. Mr. Mendelson, chief
negotiator for the European Union, was quoted as demanding that
the President veto any Farm Bill that resembles 2002.
I hope we do not allow the European Union to dictate
America's agricultural policy.
The Chairman. We won't.
Mr. Bushue. The conservation programs, Title 2, within the
current Farm Bill are extremely important for Oregon producers.
The Conservation Security Program rewards producers who are
meeting the highest standards of conservation and environmental
management by providing payments for a wide range of structural
and land management practices. Additionally, CRP, EQIP, and
WHIP are all examples of how government and private landowners
can work together.
The Market Access Program encourages the development,
maintenance and expansion of commercial export markets for
agricultural commodities. All regions of the country benefit
from this program's employment and economic effects from
expanded agricultural export markets.
Energy issues are very important in the next Farm Bill.
Farmers are facing increased expenses due to energy prices.
This is not only felt from energy our farms directly consume,
but in price increases on production inputs. Oregon agriculture
sees an exciting opportunity in the development of renewable
energy resources. However, we need a continued investment in
technology development along with grants and loans programs
promoting farmer investments.
The fruit and vegetable industry is very important to
Oregon's economy. It is a very fragile industry that has not
traditionally been part of the Farm Bill structure. The
planting prohibition on base acres has been the only benefit.
That appears to be in jeopardy, and I encourage you to address
this issue and make these growers whole.
Crop insurance is an important safety net but the program
needs an overhaul in order to better address the diversity of
crops and plant varieties in a diverse state like Oregon. In
addition, disaster payments need to be funded outside of the
Farm Bill.
This is an exciting time for United States agriculture. So
much of what happens in Congress has a direct impact on the
industry. As farmers and ranchers continue to utilize cutting
edge technology, yields will increase while maintaining our
international reputation of providing Americans with the lowest
cost of food in the world.
Finally, I would like to take a moment to thank the Chair
and Senator Smith for their leadership in providing agriculture
with a Guest Worker Program as part of a Comprehensive
Immigration Reform Bill.
It is with sincere gratitude that I thank you not only for
the opportunity to share with you the many challenges facing
agriculture today but also for the great work you folks do day
in and day out in our behalf.
[The prepared statement of Mr. Bushue can be found in the
appendix on page 51.]
The Chairman. Barry, thank you. Mr. Reese.
STATEMENT OF SHERMAN REESE, NATIONAL ASSOCIATION OF WHEAT
GROWERS, PENDLETON, OREGON
Mr. Reese. Mr. Chairman and Senator Smith. My name is
Sherman Reese. I am a wheat farmer from Echo, Oregon. I am
currently serving as the past-President of the National
Association of Wheat Growers.
I thank you for this opportunity to discuss our members'
concerns about the current Farm Bill and our thoughts on the
1907 Farm Bill. Effective farm legislation is essential not
only for wheat growers but also for rural economies and
American consumers. Farm programs are designed to cushion the
boom and bust cycles that are inherent to agricultural
production, and to ensure consistently safe, affordable and
abundant food supply for the American people.
The 2002 Farm Bill has strong points and the wheat growers
that I represent here today believe that the next Farm Bill
should build on these strengths. But while wheat growers
generally support current policy, much of the, quote, safety
net provided by the 2002 Bill has not been effective for wheat
farmers. Since 2002 wheat growers have received little or no
benefit from two key components of the current Bill, the
Counter Cyclical Program and the Loan Deficiency Payment
Program, for two main reasons.
First, severe weather conditions for several consecutive
years in many wheat states have led to significantly lower
yields or total failure. The loan program and the LDP are
useless when you have no crop.
Second, the target price in the Counter Cyclical Program
for wheat was set considerably lower than the market and
conditions indicated, and severe weather conditions in some
areas have created a short crop, which has led to higher prices
in other areas.
As a result, there's been very little support in the form
of counter cyclical payments. As you can see by the chart in my
testimony, the support level for wheat as compared to other
commodities for the 2002 to 2005 estimated crop years even as a
percentage of production costs is relatively low. We are not in
any way suggesting that other crops receive too much support.
Far from it. They face the same problems our growers face and
rely heavily on this safety net.
We are simply stating that wheat producers need a viable
safety net also. There is no doubt that America's farmers would
rather depend on the markets than the government for their
livelihoods, but the current economic and trade environments do
not offer a level playing field in the global market place.
Many of our trading partners support their farmers at much
higher rate than the U.S.
At the same time we face continually increasing production
and transportation costs. Fuel and fertilizer prices are up an
estimated 24 to 27 percent for wheat growers just from last
year, it is estimated in a recent FABRI report. And the current
disaster situation, including droughts, floods and fires has
been especially troubling for our members.
In my own farm my costs for anhydrous has gone from 28
cents to 48 cents. Also our members would like to see the
conservation programs continue as presently authorized with
full funding, would like to explore opportunities to streamline
the program sign-up to be less consuming and more producer
friendly. We believe in the pursuit of renewable energy from
agricultural resources support additional incentives.
In closing I must state that we are firmly committed to
developing an effective 2007 Farm Bill and welcome the
opportunity to work with you to do so.
Thank you for this opportunity. Thank you for coming to
Oregon, Mr. Chairman, Senator Smith, thank you for the
opportunity to testify. I will be happy to answer any
questions.
[The prepared statement of Mr. Reese can be found in the
appendix on page 114.]
The Chairman. Mr. Souza.
STATEMENT OF RAY SOUZA, MEL-DELIN DAIRY,
TURLOCK, CALIFORNIA
Mr. Souza. Good morning, Chairman Chambliss and Senator
Smith. Thank you for holding this western field hearing and
allowing me the opportunity to testify on behalf of Western
United Dairymen, which is California's largest trade producers,
producer trade association.
I'd like to begin by telling you that my name is Ray Souza.
I own Mel-Delin Dairy in California and have a milking herd of
about 1200 total head of dairy animals.
First of all, let me begin by telling you that there are
many good things in our current Farm Bill. The Dairy Providers
Support Program came into play early in the life of the Farm
Bill and was not used at all during the middle of the 5-year
period of the Bill.
But unfortunately it has been reactivated during the past
few months. But our producer members overwhelming support
continuing the use of the Dairy Support Program.
But there are four major points I'd like to remind you
about in that Price Support Program. First of all, it has cost
far less than the projected number at the original time the
Bill was passed.
Second, at the current level of 9.90 support for the
program does not simulate any new production, for 9.90 is far
below the actual cost of production. And in 2002 and early
2003, a period of the lowest prices in a generation, it did
help keep the bottom from completely falling off, although I
will tell you that implementation of the program could have
clearly been improved, since the price got as low as $8.47 in
California, while Californians intended that the program not
allow prices to fall before the 9.90 support.
The fourth point I would like to make is that this is a one
farm safety program written that allows the Treasury to recoup
its costs. The government either sells the surplus dairy
products back to the commercial market when prices rise or use
them for nutritional assistance programs, both domestically and
abroad.
So, not only are farmers supported when the prices are
headed down, but consumers also benefit when the prices are
headed back up as the stored product comes back into the
commercial market, helping stabilize the price.
Given the fact that a new WTO agreement seems very
unlikely, there is no reason that the Dairy Price Support
Program should not be continued.
Given the history of the expenditures of the Farm Bill, the
fact that the cost is recovered, and what appear to be far
higher input costs for dairy farmers in the perceivable future,
the score of this program in the next Farm Bill should be
significantly lower if the cost level of 9.90 remains the same.
The 2002 Farm Bill also includes authorization and funding
for the Dairy Export Incentive Program for DEIP. DEIP is our
counter to the European Union's aggressive support subsidies
that are often responsible for keeping world dairy products
prices artificially low.
It is fully WTO legal, authorized and funded by Congress
and signed into law by the President of the United States.
Mr. Chairman, during that period of the extremely low
prices in 2002 and 3 the Department only released DEIP bonuses
for a small amount of butter.
So far in 2006, again with very low prices and much
economic pain for dairy farmers, there is nothing on DEIP.
Something this committee could do tomorrow to help farmers
in the rural communities nationwide is to ask the Secretary of
Agriculture to authorize some DEIP bonuses as our hopes for a
successful outcome in the Doha Round, have all been evaporated
and this would be an appropriate time to pursue our export
goals aggressively, using all available legal tools. DEIP is
one of those tools.
I'd also like to just briefly touch on the conservation
title. The conservation title includes a very important program
for western dairymen.
The EQIP program has worked very well within California,
and dairymen in my state have been very involved in the EQIP
program. We have a very good relationship with NRCS chief Bruce
Knight in Washington, D.C., and state conservationist Lincoln
Burton. Mr. Burton was especially helpful in developing ways to
move funds from counties where EWIP was under-subscribed to
counties where the program was over-subscribed. This resulted
in the additional completion of 21 critically important
projects without requiring any additional funding for EQIP.
This exemplifies the importance of local control to the
success and efficiency of the program.
Mr. Chairman, in the interests of time I will conclude my
testimony, but I have provided additional comments in the
testimony provided to you and the committee. Thank you again
for holding this hearing and allowing me to testify. I will be
happy to answer any questions you or other members of the
committee may have about these issues.
[The prepared statement of Mr. Souza can be found in the
appendix on page 117.]
The Chairman. Thank you very much.
Ms. Livingston.
STATEMENT OF SHARON LIVINGSTON, OREGON
CATTLEMEN'S ASSOCIATION, SALEM, OREGON
Ms. Livingston. Chairman Chambliss, Senator Smith. Thank
you for allowing me to be here and speak for the Oregon cattle
industries' perspective on the upcoming 2007 Farm Bill.
I am Sharon Livingston. I live in Long Creek, Oregon. I am
current President of the Oregon Cattlemen's Association.
And my grandmother came to Long Creek, across the Oregon
Trail, with two very, very small children, and she settled in
Long Creek, and I'm proud to still be there.
The American public wants quality food and open spaces.
Livestock producers provide quality food and open spaces.
With regulations imposed by the Endangered Species Act,
Clean Water Act, Clean Air Act and others, it is becoming
increasingly difficult for producers to comply and still stay
in business.
Most areas, many areas are being turned to development, and
good ag production land is lost. Livestock producers provide
watershed, wildlife protection and habitat for numerous
species.
In turn, ranchers need to be rewarded for their
environmental improvements and contributions. Programs such as
EQIP and WHIP are most utilized by ranchers. We must have
strategically located offices and qualified, credible personnel
to aid in applying for and implementing these programs.
Ongoing research into environmental issues and best grazing
management practices is essential. We rely a great deal on
Oregon State University for much of this research, and dollars
need to be made available for continuing programs.
Our association and industry just voted a 50 cent increase
in our beef check-off, and ten cents of each goes to research
for grazing and ten cents for animal science. We feel we're
stepping up to the plate.
I can't say enough about alternative fuel sources and the
need to relieve livestock producers from the dependence upon
foreign fuel. All you had to do was see the news this morning.
Diesel's not available. I buy my hay, and it has to be
trucked in a minimum of 112 miles.
The Market Access Program, I echo what Mr. Bushue said. We
need to develop our markets and regain for Oregon the export
market that we had to Japan.
Country of origin labeling could go hand in hand with
national animal I.D. They are not the same thing, however. I
think it's time that our people know where their beef is bred,
fed and processed.
Thank you for the opportunity to be here. I will answer any
questions. The livestock industry is important to Oregon, and I
appreciate your support in Congress.
[The prepared statement of Ms. Livingston can be found in
the appendix on page 92.]
The Chairman. Thank you. I thank all of you very much for
that very informative testimony.
Let me start, Mr. Bushue, Mr. Reese, with a set of
questions that we've asked in each hearing, and we will
continue to ask as we go through this. And these are on some
very basic issues of the current Farm Bill, and will help us
prepare for, or how we need to address these issues in the next
Farm Bill.
First of all, how would you prioritize Farm Bill programs
generally and the commodity title specifically and how would
you rank the relative importance of the Direct Payment Program,
the Marketing Loan Program, and the Counter Cyclical Payment
Program. Mr. Bushue?
Mr. Bushue. That's a tough question to ask the President of
a general farm organization, so I will pass that one off by
basically saying, for as diverse of agriculture as Oregon has,
it is difficult for us to prioritize. They all play a very
significant role in various types of products and commodities
that we raise here. So, we wouldn't prioritize. We'd merely
fund them at a higher level.
The Chairman. OK. Mr. Reese?
Mr. Reese. Well, I'll go out on a limb. The wheat farmers,
as my testimony indicated, feel that the last few portions of
the LDP Marketing Loan Program and counter cyclical have not
been helpful.
We would prioritize the direct payment as being the most
important, in terms of cash-flow and in terms of making your
banker comfortable with an operating loan, the last two are
maybes and the first one is for sure.
So, for us the direct payment is most important, followed
by the marketing loan, LDP program, and then last, counter
cyclical.
The Chairman. OK. We can expect an effort to further reduce
payments limits in the next Farm Bill. The payment limits need
to be modified in the next Farm Bill, and why?
Mr. Bushue. I think from the Farm Bureau's perspective, the
Farm Bureau has always supported the current Farm Bill and
there have been payment limitations in place I believe since
the 1970's.
We would not effectively ask for any change in that or
reduction certainly.
The Chairman. Mr. Reese?
Mr. Reese. We feel the same way. Obviously, farms have
gotten bigger, and those payment limits need to be commensurate
with increased farm size.
If we are going to look at increasing the direct payment,
that portion of the commodity title is going to have to be
increased as well, something up from the current 40,000 per
unit.
As far as the overall size, we would probably support, we
do support keeping it where it is, the current limit, overall
limit.
The Chairman. OK. The Doha Round of negotiations seeks to
provide additional market access for U.S. agriculture goods in
exchange for cuts in domestic farm payments.
Is this a reasonable exchange for farmers?
Mr. Bushue. Well, it would be nice if the Doha Round had
been completed, but certainly Americans produce a lot more than
they are able to consume, and sometimes up to 30 percent of our
agricultural products need to be exported, so trade is
absolutely critical to the future of agriculture, not only in
Oregon but in the United States.
And I think if we could have gotten by with reducing
domestic supports, mostly agricultural industry supported that,
but only in a tradeoff for increased market access. And since
that didn't happen, I think it's going to make your job as a
Chairman of the Agriculture Committee considerably harder, but
we'll support you where we can.
Mr. Reese. As far as wheat's concerned, I think we're in a
more critical situation than probably almost any crop.
In Oregon, as most of the people in the audience know, 85
percent of our wheat is exported. The figure drops to about 50
percent nationwide. So we are heavily dependent upon exports to
keep wheat viable.
At the same time a lot of our members across the Nation and
in Oregon are hanging on by the finger tips, and these direct
support payments that we are getting are in some cases the only
profit margin the farmer has left.
So, to trade that away for a hope in increased market
access is a gamble we're willing to make, but only if we can
find a way to make it a quid pro quo. We haven't found that yet
obviously.
The Chairman. Some organizations have explored the
possibility of a revenue based approach for the commodity
title.
What are your thoughts on a revenue based approach as a
safety--revenue based approach to a safety net as a replacement
for the current commodity programs?
Mr. Bushue. It is my understanding the corn industry is
looking into this very strongly, but I think at this stage,
going back to my comment about reinventing the wheel, I think
it is an awfully large fundamental shift in the way in which
Farm Bill programs are funded, and I don't know that we would
support that wholly at this stage. Maybe for 2007 or later on,
after we have extended this Farm Bill.
But I think at this stage we had probably better stay where
we are, because I'd be concerned about what revenue base would
affect on the conservation programs, crop insurance and maybe
even Title 1. So I think at this stage the Oregon Farm Bureau's
preference would be to say no to that one.
The Chairman. OK. Mr. Reese?
Mr. Reese. Well, Mr. Chairman, we've been looking at that
concept internally within NAWG, and can't find yet a way to
make it work across the board.
The most we've been able to see is 70 percent support.
We're wondering what happens with the other 30 percent. Do
you fill that with crop insurance? Do you fill that with
another direct payment?
We farm in such a low margin level to begin with, that to
have only 70 percent direct support for us probably would not
work.
The Chairman. OK. Last, should an increase in conservation
or energy programs come at the expense of commodity programs?
Mr. Bushue. You know, that's another difficult one. We
think that energy in the state of Oregon, and of course
nationwide, is a huge issue and a huge cost to agriculture.
But to take money from commodity payments to fund
conservation seems like robbing Peter to pay Paul.
I guess like most farmers, we want as much as we can get in
terms of trying to make sure we have a safety net, because food
security is clearly a national security issue. I'm not
convinced that the tradeoffs would be worth it in terms of the
agricultural industry as a whole. So, I would say no.
Mr. Reese. Perhaps over time that concept would work. Right
now I don't believe it would.
And one of the main reasons is, if you look at conservation
and also energy crops, not every farm is blessed with the
opportunity to participate in conservation programs. They're
very unequally spread.
And so from that standpoint, I think there's an inequality
there that has to be addressed before that kind of fund
transferable is even considered.
Other than that, I think we still need to keep with the
current commodity situation as it already is with the funding.
The Chairman. Mr. Souza, the 2002 Farm Bill, as you know,
included the Milk Income Loss Contract program to assist dairy
producers when prices were low. This has been a somewhat
controversial program.
But should Congress extend this program, or are there other
remedies low commodity prices that you would recommend?
Mr. Souza. The MILC program is not something that's worked
very well for the western dairy producers.
We feel that continuation of the program, you should do a
couple things.
One would be, it has to become more equitable. It's very--
discriminates toward western producers, family farmers in the
West. As you know, it basically sets a cap of about 200 cows--
or 150 cows. And on the West Coast, out here, Oregon included,
our numbers are much bigger.
So we are not covered, as some of the smaller herds are. So
we think any continuation of the MILC program or likewise
program, should be less discriminatory, it should embrace all
dairy producers, not just a select few.
The Chairman. OK. Currently only dairy producer
cooperatives have the ability to forward contract with their
members.
Does forward contracting provide producers with an
additional risk management tool to manage price and income
volatility in the marketplace, and should this option remain
available only to dairy producer cooperatives, or should
processors and noncooperative dairy producers also be able to
utilize this risk management tool?
Mr. Souza. Well, just a couple of things. One is that
forward contracting really does not work very well with the
concept of pooling.
It does affect those people that prefer to stay, to take
the pool price for their milk.
Second, it was part of the 2002 Farm Bill as a pilot
project. It was not driven by producers. It was primarily
pushed by the processors. It has not been popular with
producers. We had a very low participation in the pilot
project.
And the analysis shows that those producers that did
participate in forward contracting actually fared less than
those that did not, fared better than those that did.
I don't believe that it has a real value for long-term
stability for producers. It may have that for the processors.
Mr. Chairman. Ms. Livingston, what effect would bans on
packer ownership and forward contracting of cattle and
mandatory country of origin label have on livestock producers
in this part of the country?
Ms. Livingston. There is no definitive answer. I spent some
time the last week speaking with major cow/calf and feedlot
people, and we know that in order to get our product to the
final market, we must have packers. When packers don't have a
supply, then they shut down. We lost a facility in the Pacific
Northwest that was a major part of our marketing of cull cows.
You know what those are. They are a major part of our income.
Now when I sell a cull cow, or anyone in Eastern Oregon, I
believe they go to Fresno, California, for slaughter.
We must have our packing houses. I prefer to work through
collaboration, consultation, and cooperation, rather than
litigation and legislation.
I think we have legislation on the books. Let's enforce it.
We don't need anymore laws.
Now, it's a Catch-22, and here I sit telling you this. But
it's a serious issue. There will always be ways for packers to
own cattle. We're not going to stop that. And I don't believe
in whipping them to death, because we do need them.
The Chairman. OK. Talk for a minute about mandatory price
reporting. We have been trying to get this reorganized in
Congress now for a couple of years. The House passed a 5-year
reauthorization. We passed a 1-year. And we've been unable to
agree with the House on a compromise on that issue.
Mandatory price reporting is operating on a voluntary basis
now. How is that working and what are your thoughts on whether
or not we should reauthorize the legislation, requiring
mandatory price reporting.
Ms. Livingston. The people that I spoke with said they
thought it was working. It's like anything that's voluntary.
But when you force people, it seems there are always ways
to avoid this.
So, at this point I can't give you a definitive answer on
that, and I apologize. But it's a very complicated, complex
issue. And we'll just have to live with it. And we don't have
the voice that some of the people in the Midwest do. And that's
where much of this takes place.
The Chairman. From an Oregon Cattlemen's Association
standpoint, what's your most pressing environmental issue and
what's your most important conservation program?
Ms. Livingston. Anything to do with the Endangered Species
Act is pressing. We can use the EQIP. I personally have used
EQIP. We can use WHIP.
Anything that rewards our people for their good
conservation practices is important.
The Chairman. OK. Senator Smith?
Senator Smith. Thank you, Mr. Chairman. I think as I am
understanding these mikes, you've got to be close to them or
you'll be cutoff.
I know this hearing is on the Farm Bill. But two of the
committees, or at least one of the committees I serve on, the
Finance Committee, deals with an issue that I believe has a
great impact on the future of farming and ranching in this
state. And that is the issue of the estate tax.
So I wonder, Barry, if you, speaking for farmers generally,
can you give us some idea what will be the impact to future
farmers and ranchers if we don't come up with some compromise
that the President can sign?
This is an issue that's often described as something done
for the rich. Are your members all rich, Barry?
Mr. Bushue. We only wish we were, sir.
The death tax, as we prefer to call it, has been a critical
issue for agriculture, not only in Oregon but nationwide, and
we were very frustrated and frankly very upset that we weren't
able to get some kind of rationale, common sense solution to
the problem through the Senate.
Of course, full repeal is where we would like to be.
But frankly, we were looking for a solution, and solution
appeared to be in the Thomas Bill.
It was somewhat frustrating, I guess, just being blunt as I
usually am, that there was a number of other issues thrown in
there for reasons of trying to gain votes.
The minimum wage issue was put in there. I understand that
had some obvious problems.
But getting right to the nuts and bolts of it, in order to
pass on a family farm, and there's folk in this room right here
that are trying to do that today, they're not wealthy people,
they're not big farmers, they're family farmers that have
invested their lives and their lifestyles in agricultural
operations, and they are trying to pass it on to their
children.
To be faced with huge tax liabilities in the event of their
unfortunate death, to pass it on to their children makes it
almost impossible to pass some of these operations on and keep
them in family farming.
And when you look at agriculture as a whole nationwide,
virtually all farms are family farms. I think the exact figure
is 95 and a half percent or something like that, are family
farming operations.
Oregon has made a huge investment in its land use policies
to try and maintain an agricultural land base. Nationally there
is a need for an agricultural infrastructure to maintain
agriculture without an opportunity to pass those family
operations on and face these families with tax debts that the
only way they can pay them is to sell land and their other
assets, which land is their main one, seems somewhat short-
sighted and very narrow minded, frankly.
And I know where your support has been, and I'm sure
Senator Chambliss shares that.
And so, any voice you can use to rectify this situation is
going to be not only welcome but absolutely critical to the
survival of agriculture and the small farms that make up the
bulk of agriculture in the United States.
Senator Smith. One of the most contentious issues that I
have ever dealt with and have done so for the last 10 years in
the U.S. Senate is the issue of immigration.
I have, as people in this community know, I have been a
sponsor of a Guest Worker Program from the first year I was in
the Senate.
And yet we seem to be at logger heads as a nation.
But I wonder if Barry or any of you can speak to the issue,
what it would mean to Oregon agriculture if we just passed the
House Bill, which is a fence, security only, and fining
employers.
What would it mean to horticulturalists, nurserymen,
wineries, farms in general?
Mr. Bushue. Well, with the help of Senators such as
yourselves, we have long tried as an agricultural organization,
both statewide and nationally, to make sure we had a legalized
work force.
This isn't something new to agriculture, and it frustrates
us I guess that the American public seems to have taken this up
as an issue as something that's new. It's not new to us. It
certainly isn't new to you, sir, by the fact that you've been
so involved in this over the last 10 to 12 years.
An enforcement only bill such as passed by the House would
put us in the position of being law breakers and put us in the
position of having to create a work force from nothing.
We currently have a work force, some of which is legal. All
of mine are, of course. But it does, it puts us in a bad
position of trying to find a work force which cannot be filled
from outside the place we have them now.
If you look at the employment rate, the unemployment rate
in the United States is rated somewhere around 4 percent. Many
economists will tell you that that is full employment.
If you were to deport 11 to 15 million people tomorrow,
there aren't enough American citizens left to fill that void
that are employable. Let alone the rhetoric that we hear about
people lining up to take these jobs, if only we paid enough.
There isn't enough profit in agriculture to pay 20 and $30 an
hour for labor.
Senator Smith. Barry, on that point, I want to emphasize
something. I often hear on talk radio in Oregon it said that
all you have to do is pay them $50 an hour and you'll get
Americans to do this work.
But assume, if you did that, say you were a pear grower in
Medford or in Hood River, and you paid $50 an hour for your
labor, doesn't that just mean you wouldn't grow pears and
produce these commodities in Hood River or Medford?
Mr. Bushue. It just means I wouldn't produce them at all.
Senator Smith. It would go to another country.
Mr. Bushue. Absolutely.
Senator Smith. OK.
Mr. Bushue. And I think if I could just take liberty here,
I seldom listen to talk radio because you get exactly what you
pay for.
Senator Smith. Well, you know, I don't in any way want to
discount the security concerns our country has, and the
legitimate demand the American people make that we secure our
border. I think that those things are essential, and have so
voted.
But I think to stop there without a Guest Worker Program
would be economically and humanitarilly damaging to this
country, and this state in particular, in ways that are not
comprehended by all.
And I just simply hope that the American people will
understand that we can't stop there. And I'm not talking about
a path to citizenship. I'm talking about a Guest Worker
Program, at a minimum, beyond the House Bill, must be
ultimately enacted, or it will be damaging to people on both
sides of the issue.
Thank you, Mr. Chairman.
The Chairman. Well, thank you, and, you know, you raise one
of the most significant issues that we have faced in this
country, and certainly your tenure in the U.S. Senate and my
tenure in the U.S. House and in the Senate. The immigration
issue is the most volatile, most explosive, most politically
charged issue that I've ever seen.
And I have been a strong advocate of reforming the current
H2A Program for agriculture, because it is too expensive and
too cumbersome.
And we've got to have a temporary worker program of some
sort that will allow everybody at this table and every farmer
and rancher across America the opportunity to have a pool of
workers who are here legally from which to choose. And we're
going to continue to work on this very sensitive issue.
Also a couple of you have mentioned Doha, and let me just
say that Gordon's exactly right, we're going to write the Farm
Bill. We're not about to let Europeans dictate to us or
participate in the writing of that Farm Bill.
As I have so often said around the country, I'm a lot more
concerned about farmers in Paris, Texas, than I am farmers in
Paris, France.
And I'm still very hopeful that we can reach some sort of
agreement within Doha, because, again, each of you express how
valuable it is to export your products, which we know are the
finest agricultural products grown anywhere in the world.
But unless we achieve the market access and unless the
Europeans quit being protectionists, as frankly my friend Mr.
Mendelson, who likes to criticize us, but the truth of the
matter is, they have been extremely protectionists of their
farmers. And we'll never have an agreement unless they decide
to get reasonable and give us true market access.
Senator Smith. Mr. Chairman, isn't it true that U.S. levels
of agricultural subsidies are about a third what European
subsidies are?
The Chairman. That is exactly right. They just provide them
in a different way. Ours are more market oriented, which is why
we think the 2002 Farm Bill policy has worked very well.
We've got some shortfalls, as our wheat growers across the
country have reminded us everywhere we have been.
Mr. Reese. And will continue to do so.
The Chairman. We will continue to look at that particular
policy as we go forward with the next Farm Bill.
So, again, thank all of you for being here. We appreciate
it very much.
And we will now ask that our second panel to come forward.
Mr. Ken Lorensen, Salem, Oregon, representing the Oregon
Department of Forestry; Mr. Klaren Koompin, I hope I've got
that right.
Mr. Koompin. You did well, sir.
The Chairman. From American Falls, Idaho, representing the
Potato Growers of Idaho; Mr. Pete Brentano of Wilsonville,
Oregon, representing the Oregon Nurserymen Association; Mr.
Ernest Gallo, Modesto, California, representing the Wine
Institute and California Association of Wine Grape Growers.
So, gentlemen, thank you very much for being here. We will
follow the same format of taking opening statements from you,
and again I would remind you that we will accept your full
written statement for the record.
Mr. Lorensen, we will start with you.
STATEMENT OF TED LORENSEN, OREGON DEPARTMENT
OF FORESTRY, SALEM, OREGON
Mr. Lorensen. Chairman Chambliss, Senator Smith, thank you
very much for being here today and inviting me to testify.
I notice from the introduction that the focus has been on
agriculture and its importance to Oregon.
I just want to talk a little bit about forestry and its
importance to Oregon and the West as well.
And before I get to that, I want to mention that I think
that in the context of the Farm Bill, there's some perspective
at least in the West Coast that forestry is often the poor
cousin to agriculture in that context. But at least in the West
Coast and in Oregon I think there needs to be a very strong
marriage between forestry and agriculture. Many of our
producers do both types of activities. And having both means
success is important to their overall health.
Within Oregon 57 percent of Oregon's forest land is owned
by the Federal ownership. Both the Forest Service and Bureau of
Land Management. But 85 percent of Oregon's timber harvest
comes from private lands. Oregon's the nation's largest
producer of lumber. And we have been in that capacity for a
long time.
In the context of the Nation and forestry security, for a
long time imports have been a big portion of how we've met our
wood products demands. Now 30 percent of the nation's demand
for wood products, is met by foreign imports, mainly from
Canada and increasingly from other nations, including nations
such as South American countries and New Zealand.
It's very true that family forest lands are extremely
important and vulnerable part of the land base, that's been
assisted by Farm Bills in the past.
Nationally 40 percent of the nation's forest lands are
family owned forests. In Oregon that's only 20 percent. But yet
85 percent of the wood products provided by Oregon's landowners
come from private lands. Increasingly the family forest lands
are critically important to that 85 percent of the harvest.
In some Eastern Oregon counties, particularly like Baker
County, Malheur County, family forest landowners now make up
the largest share of the timber harvest, even though they are
only 20 percent of the ownership.
And, again, Eastern Oregon's fairly unique in the sense of
Oregon forestry, but I think that it is important to think
about the difference as you look at Oregon's forests from the
dry east side to the wetter west side.
So, forests are very important to Oregon from an economic
standpoint. They provide 85,000-plus jobs that are direct and
over 190,000 indirect and direct jobs, because of a higher
multiplier effect that occurs with the higher paying forestry
type jobs.
In terms of economic output, Oregon's forest sectors
provide $22 billion of output, 11 percent of the total value of
goods and services produced in Oregon.
Again, that's disproportionate because of the higher labor,
higher prices for labor paid for those sector jobs.
In the last several years we have done some fair amount of
work looking at what the contribution to Oregon's forests can
add to Oregon's economy.
And I've provided a fair amount of information on some
studies done by the Oregon Forest Resource Institute that
really concluded that without major change in Federal timber
harvest, the statewide Oregon harvest can be increased by 25
percent, or an additional 20,000 forest sector jobs.
The Farm Bill can contribute greatly to that kind of
success, if it was written well. And in our opinion the Farm
Bill needs to think about a broader policy perspective that we
call sustainable forest management, that tries to integrate in
a cohesive way environmental, economic and social values that
come from our forest lands.
Such a policy, to be undertaken, would include a number of
concepts.
I want to express the importance of a sustainable forestry
management policy across all ownerships, including Federal,
state, and other public, industrial and family forest lands. It
would encourage and promote a dialog around establishing such a
national policy. It would encourage new and innovative policies
and create new nonregulatory programs. It would clarify and
enhance the rolls of Federal, state and local governments,
respectful of the delegation of powers, promote regional
collaboration and joint planning and program delivery.
It would respect the critical role of private forest
ownership in our country while striving to conserve in a fair
and equitable manner the public benefits they provide.
And very importantly, it would recognize the Federal lands
must better contribute to the goals of sustainable forests in a
coordinated manner across landscapes, that in some parts of the
country these lands have a pervasive influence on
sustainability of all forest lands.
I do know that you flew yesterday, looked at some of the
fires, and again in the context of fire protection in Oregon,
if the Federal lands cannot provide good fire protection,
private lands will be at such risk, they will disinvest in
those lands and convert them to other uses. And we're seeing
that happen across portions of Eastern Oregon and Southern
Oregon.
Sustainable forestry policy needs to promote new and
creative delivery systems. Need to encourage reason in the
forest tax policy. Again, the death tax was talked about
earlier, but I think that's equally important for forestry. And
it does need to recognize the local influences that impact U.S.
forests and how we need to be able to compete fairly and
equitably.
I do want to make the point in that context, that the
National Association of State Foresters and Society of American
Foresters are both working on these ideas and invite you to
join them to further develop them as you develop the Farm Bill.
Forestry needs to continue to be a part of the Farm Bill,
and I know you're probably going to ask the question, how do
you prioritize things.
But the bottom line, the Farm Bill needs to place a higher
priority on forest lands than currently exists and needs to
encourage better participation by forest landowners.
I do want to make one point with regard to the Western
States, particularly the coastal states, is that most of our
states have regulatory forest practices acts.
And as a principle that could be looked at, I think it's
important to think about in the Farm Bill, is to try and reward
those states that are doing the most.
And I think in the past there's been a little bit of
inequity in how some of the Farm Bill programs have treated
forestry and often rewarded those that have done the least.
As a simple example, in Oregon we require that landowners
reforest after timber harvest. As a result of the requirement
to plant, that makes those sorts of activities ineligible for
Federal cost share programs. And we do provide cost share,
Federal cost share dollars to land owners that plant at higher
levels than what the regulation requires.
But again those kind of concepts, as you get into wildlife
issues, Federal ESA issues, those sorts of things, as a
principle make a lot of sense to us.
It's very true that the Farm Bill has been very successful
and education's very important to that part, and we hope to
continue that as well. Thank you.
[The prepared statement of Mr. Lorensen can be found in the
appendix on page 98.]
Mr. Chairman. Thank you very much.
Mr. Koompin.
STATEMENT OF KLAREN KOOMPIN, POTATO GROWERS OF IDAHO, AMERICAN
FALLS, IDAHO
Mr. Koompin. You did very well. Chairman Chambliss, I'm
going to attempt to poke five pounds of wisdom this three pound
bag we've go, and I can see it's pretty difficult, but I'm
going to take off here.
You did a great job with my name. I'm from American Falls,
Idaho. We're representing not only PGI but also the National
Potato Council.
I've served as President of the PGI as well as Executive
Director of the United States Potato Board, as well as 9 years
on county committee, FSA committee of Prior County. You can
tell our name went from, start out of school, caboose, we hit
Ellis Island, we went from Greek to Dutch just by the stroke of
a pen.
So that's going to bring me into one of my first critical
issues that probably transcends above all titles in the Farm
Bill, and that is the labor shortage, immigrant shortage of
farm workers here in the United States.
As potato growers, we are very dearly affected by this. We
applaud the vision of the Senate in passing a somewhat ag jobs
bill by Senator Craig that we supported very well, and after
listening to Senator Crapo's statement in Moscow, I believe he
softened his stance a little bit also, and is leaning that
direction, so you might want to ask him if that's still true.
It will become very critical, and we need to solve it. We
also need to give those people a pathway to citizenship.
With respect to any other titles of the Farm Bill, we have
to always keep cognizant that we do not put one farmer at an
advantage over another one. And specifically talking about the
CSP program.
Any time you have the ability to pertain $40,000 more per
year than your next door watershed neighbor, so to speak, and
you're going to do that for it looks like now maybe forever,
because there will be watersheds that will never be eligible
for the CSP, that's a distinct economic disadvantage that the
government has set up for one farmer versus another.
And anything in the Farm Bill that puts an advantage of one
area over another must never happen.
The same with the RMA. There are provisions in that, as far
as the AGR, it has been studied now for 5 years, and it either
needs to be implemented across the country, as the CSP must be,
or eliminated. It cannot be targeted to one area versus the
other, and have that opportunity for one farmer and not the
other.
Getting to the Farm Bill titles. I think the first one the
potato growers are most concerned with are obviously the
planting flexibility.
We all know that was specifically mentioned in the
Brazilian case, and we all know that it didn't--you know, it
was not illegal. It was only said that this is obviously an
amber box payment, not a green box payment.
We cannot allow specialty crops, particularly potatoes, to
be raised on base acre government subsidized soybean/corn
acres. And we do not want any payments from the government,
potatoes growers never have, and will not.
But we feel very strongly that we do not want to subsidize
potato crops on those soybean or corn acres also. And in fact
that's exactly what it is. And you've got my written testimony.
Mentioned the only other one is transportation. It is
absolutely critical. All 50 states trade with each other. We
trade with the world. We need two tracks. We need an evening of
the wage law between Washington, Oregon, New York, Florida. I
believe a repeal of the 1975 law that fixed the weight limits
would automatically terminate that, or allow a heavier load.
Right now we're working with an 80,000 limit. We should be
able to go to 102. We have states that go from 80 to 146. You
might be interested to know that the highest weight law in the
states is 146. That's New York. The 80,000 ones are pretty much
stretched through the Midwest. All trucks have to go through
the Midwest from coast to coast. So, they are limited to
80,000. That in itself would probably show, what, 15, 20, 30
percent savings in transportation costs. So that is something
that has to be done. Thank you.
[The prepared statement of Mr. Koompin can be found in the
appendix on page 79.]
The Chairman. Thank you very much.
Mr. Brentano.
STATEMENT OF PETE BRENTANO, OREGON NURSERYMEN ASSOCIATION,
WILSONVILLE, OREGON
Mr. Brentano. Chairman Chambliss and Senator Smith, my name
is Pete Brentano of Brentano's Tree Farm, and thank you for the
opportunity to testify here today.
I am co-owner of our family farm in Oregon's Willamette
Valley where we grow shade and ornamental trees as well as a
variety of other specialty crops.
And I have the pleasure this year to serve as the President
of the 1500 member Oregon Association of Nurseries which
represents Oregon's nursery and greenhouse industry, which is
the state's largest sector of agriculture with annual sales in
excess of $840 million.
Today I want to focus most of my talk on plant pest and
disease issues.
Plant pest and diseases threaten West Coast nursery growers
with serious economic harm due to crop loss, closed markets, or
burdensome regulatory restrictions.
In this respect we differ little from growers of Florida
citrus or soybean farmers. What's popularly known in the press
as sudden oak death threatens to result in very restrictive and
expensive regulations for West Coast nursery growers.
A more effective approach to nursery regulation and
inspection is needed. And one that relies on nurseries to
develop and implement a system to prevent the introduction
pests and diseases onto the nursery.
We believe the next Farm Bill must provide for a multi-
pronged effort as follows. Authorize and direct research on
systems of nursery production and measure their efficacy in
preventing the introduction and spread of plant pest and
disease problems; develop and pilot test systems of production
for various types of nurseries in different geographic regions
of the United States; establish definite time tables for the
dissemination and adoption of the new systems of production;
and establish definite time tables for the implementation of
regulatory programs, based on these new systems of production.
We at the OAN believe tremendous opportunity exists to
improve and enhance nursery regulation and inspection, and the
Farm Bill should establish clear and overarching goals to guide
development of new regulatory policy, based on a comprehensive
program of research, demonstration and extension.
And I've included with my testimony a brief discussion
paper describing that position.
Quickly I want to call your attention to several other
issues that merit our attention. Water quantity and
availability. Based on a Federal and state partnership study
the availability of water for western agriculture and develop
an inventory of potential new water stored sites, soil
conservation and habitat restoration, support research and
incentives to assist nurseries with soil erosion, water
conservation and efficiency, create a specialty crop title in
the Farm Bill.
We want to see emphasis and organization of farm policy for
the benefit of specialty crop agriculture. We don't want
subsidies but we have very focused issues and concerns. Support
the industry's growing partnership with USDA rural development
in our joint effort toward energy efficiency.
And even though it's not a part of the Farm Bill,
agriculture needs a comprehensive immigration reform bill that
embraces a Guest Worker Program because frankly without labor,
the nursery industry would not survive.
Thank you for listening to my testimony today.
[The prepared statement of Mr. Brentano can be found in the
appendix on page 59.]
The Chairman. Thank you. Mr. Gallo.
STATEMENT OF ERNEST GALLO, WINE INSTITUTE AND
CALIFORNIA ASSOCIATION OF WINE AND GRAPE GROWERS,
MODESTO, CALIFORNIA.
Mr. Gallo. Chairman Chambliss and Senator Smith, thank you
for the opportunity to appear before you today and present to
you some key facts of the wine and wine grape industry.
I'm proud to represent both the Wine Institute,
California's public policy advocacy association, of over 900
wineries and associated businesses, and the California
Association of Wine Grape Growers, also known as CAWG, which is
the California advocacy group for our wine grape growers.
I am a third generation to be involved with the family
winery, the E&J Gallo Winery of Modesto, California.
The California vintners face increasingly competitive
environments. I'd like to share with you some of the key trends
in our industry and propose solutions that rely upon the
cooperation of the industry, state and Federal Governments.
In the context of the Farm Bill, I believe laying out this
information will help to convince you as policymakers that our
industry is dynamic and could be a great fuel for the United
States 21st Century agricultural economy, if given the proper
support for research and development.
Imports as of 2005 data represent more than 27 percent of
the wine consumed in the U.S. today. Since 1984 the value of
imported wines has grown from 954 million to 3.8 billion in
2000. This dramatic rise represents a structural shift from old
world European wines to new world wines, particularly
Australia.
Australia surpassed France 2 years ago and is poised to
overtake Italy as the No. 1 importer into the United States.
Australia's success reflects skilled marketing in a focused
export driven campaign strongly supported by government and
well organized industry.
A partnership between the industry and the government has
also created one of the best research programs for viticultural
knowledge in the world. Their research program is seen as a key
driver for improving quality and marketability of their wine
into the export market.
California's home, and so is Oregon, to the most productive
agriculture in the world. It is also the most urbanized and
fastest growing state. These are pressures that our growers
face on a day-to-day basis, and the pressures are increasing
all the time.
The Farm Bill debate is a perfect forum for this discussion
to really come to fruition.
To that end, several of us in the grape industry have
developed an industry paper that I have submitted to the
committee into the record with my full written testimony, which
outlines more fully for you what we would like to see in the
next Farm Bill to ensure the grape industry's place as the
sixth largest crop in America and the largest specialty crop.
And this is by date value, not the added value that comes
with the industry which is three times as much.
Thank you for the opportunity to comment, and I'm delighted
to answer any questions you may have. Thank you.
[The prepared statement of Mr. Gallo can be found in the
appendix on page 70.]
The Chairman. Thank you very much, Mr. Gallo. And as I
mentioned to you before the hearing, are the namesake of a very
famous family that we're all familiar with in the winemaking
industry. And we're very pleased that you're here. I don't
limit myself to Oregon Pinot Noir, I want to assure you of
that.
Mr. Lorensen, you mention this fire we saw yesterday. I
picked up the paper this morning, and, gee whiz, boy, when I
look at something like that, what a gosh awful sight. Senator
Smith and I got to see it up close and personal yesterday. And
a couple of comments about it.
Senator Smith has a bill, and we also passed a bill, the
Healthy Forest Act, a couple years ago, that we've had some
problems in the implementation of. But those types of measures,
particularly the bill that Congressman Walden and Senator Smith
have been working on, appear to be the types of measures that
will not only help you here but even in our part of the world,
where we have significantly less percentage of our land in the
hands of the government. Most of it private lands, where we can
do a lot of management practices.
Let me just ask you about the types of practices you use to
limit the possibility of disasters like this fire that's
ongoing right now at Lake George and your comments relative to
the legislation that we have passed, and has it been a help to
you, or are there other things that we need to do in that
respect?
Mr. Lorensen. Chairman Chambliss and Senator Smith, good
question, and I know you both worked on this issue in terms of
Senator Smith's Healthy Forest Restoration Act. It has been
very helpful. There has been a lot of thinning work, forest
health work has improved the stand conditions so they will be
survivable in the context of a fire.
There's been a lot of work around communities, developing
community welfare protection plans and implementing projects
around those.
But at the pace we're going, we're basically not catching
up to the problem. And I know that Healthy Forest Restoration
Act programs are being reviewed in terms of how we can improve
the efficiency on those.
In Oregon we have had very little success in using the
stewardship agreements to do work on Federal lands that would
protect the adjacent private lands.
There's lot of things we are trying to implement, but it's
been a struggle. And I guess one general comment, to the extent
that those programs can be delivered through Farm Bill like
programs rather than through a Federal agency where you might
then have ESA consultation, those sorts of things, that would
be an efficiency.
Senator Smith. Mr. Lorensen, to follow up on Senator
Chambliss' question, we saw land burning yesterday that was
primarily Federal, but there was clearly some private land
being burned.
From what you observed over the years, after this fire is
extinguished, what will be the treatment on one versus the
other?
Mr. Lorensen. There will often be very different levels of
treatment. Typically, on the Federal lands, time will become a
huge factor and process will most often result in their
inability to salvage timber, if that's an allowed----
Mr. Smith. But will you see timber salvaged on private
land?
Mr. Lorensen. On private lands, you will see salvage almost
begin immediately.
And in fact, to use an example, on state owned lands, where
we had fire, we had a timber sale up within 3 weeks after a
fire. So, a huge difference.
Federal lands, it might be 3 years, and then the value
becomes a huge issue on whether there's a competitive
opportunity----
Senator Smith. And how about replanting of new seedlings?
Mr. Lorensen. Same sort of thing. With private lands, if
they do salvage, which almost always will occur, they will have
to plant, by law, in Oregon. We can provide some----
Senator Smith. They have to replant, whether you cut it or
whether you salvage it?
Mr. Lorensen. If they salvage it, they have to cut. If they
don't do any salvage work, they wouldn't have to reforest. But
again I've never seen any private landowner not reforest.
Senator Smith. And how much sooner do they have a new
forest versus----
Mr. Lorensen. Typically the seedlings will be free to grow
in three to 5 years, which means they will be up above the
brush and moving toward a timber crop.
The Chairman. Let me ask you about your soft wood forests
in this part of the country. We have seen--My home state
happens to be, as you well know, a large timber producing
district, large timber producing part of the world, primarily
soft wood timber.
We have seen the export of the pulp wood timber industry
outside of the United States over the last several years, it is
virtually non-existent now.
But I was at Georgia Tech last week and had a chance to
visit with a number of professors there and researchers who are
very, very close, and I mean very close, within a matter of
months now, rather than years, of developing a process for the
conversion of soft wood timber into ethanol.
Is there similar research going on in this part of the
world relative to the use of your timber products for the
manufacture of alternative energy?
Mr. Lorensen. Chairman Chambliss, there is, and indeed we
have been doing a lot of work, and a study will be presented
next week with regard to opportunities around bio-energy in
Oregon.
But there's a huge opportunity in Oregon, not just to
create ethenol, but to burn wood for the generation of heat and
energy, and at least in this context, the Western States, that
represents really what I call a quadruple win, and again if it
gets into the Farm Bill, can provide support for that, that
would be a big help.
But in terms of bio-energy, the potential there, if
successfully implemented, results in healthy forests, obviously
provides energy and jobs, but it also would reduce CO2
emissions greatly.
Again, you saw a lot of emissions yesterday, and I
apologize for the smoke, but it's really a choice of how you
want to oxidize your forests, and you can oxidize them in a way
that will produce energy and jobs, or you can oxidize them in
the way that causes the Federal treasury to spend a lot of fire
suppression dollars.
The Chairman. Mr. Koompin, proposals have been made to
provide more money to specialty crop industry, as we have been
around the country talking with farmers relative to specialty
crops. These proposals range from state block-grants to
research money to some type of Counter Cyclical Program.
Which of these ideas or others do you think would benefit
the industry most, and do you have any particular ideas you
want us to put in the world?
Mr. Koompin. Yes. I think the block-grant programs for the
States work very well, here 4 years ago, when that was
authorized. That works very well. We definitely need more
dollars for research. And that can be very broad or very
narrow.
Just the introduction of the energy problem that we're
facing today is going to help any specialty crop. The nice
thing about specialty crop production is you have the ability
to raise a multitude of crops, given our environmental
parameters or frost dates and so forth.
But, you know, you may envision the day that we are back in
the late 1940's and early 1950's where I think the latest
statistics I read that fully 50 percent of the farm ground in
the United States was dedicated to energy production; and in
the form of grasses, grains, hays, for the horse feed.
And maybe life is a full circle and we will come back to
that. So any kind of research.
Potatoes lend themselves very well to research manipulation
and direction.
With that being said, the Russet Burbank is still the
largest potato plant and he's been around for 105 years, so
history's with us. Continuation of the MAP funds.
Anything that would help us export our products, that's a
new growth area for potatoes, has been and will be. We survived
the low carb diet, but we did take a little hit. But we're
coming back and rebounding nicely.
Any investment in prevention from introduction of pests;
with trade, we know it is going to be a two-way street. We have
to be critical that we don't let anything in that devastates
not only the potato industry but horticulture of any kind.
And then of course any kind of transportation relief that
can be handled by the Federal Government, and that truly is a
Federal Government problem. We have 50 states with 50 different
laws. And the interstate system has to be our artery. And so
any of those above mentioned, Chairman Chambliss, would be
greatly appreciated by the potato industry.
The Chairman. My son-in-law is a vegetable grower. He
prides himself in the fact of being a specialty crop producer,
that he doesn't look to the government for help with respect to
farm payments.
But he and I have talked from time to time about this issue
of planting flexibility, and you addressed it in your opening
comments.
What would be the result, do you think, in the specialty
crop industry in this part of the country if we changed our
planting flexibility provisions in the next Farm Bill?
Mr. Koompin. Mr. Chairman, I can't give you a specific
figure, but I will be able to give you a specific figure in a
month, and it may be available now.
The National Potato Council has hired a private economic
firm to ferret that number out. It would be in the hundreds of
millions.
We've got approximately a two billion dollar industry in
the state of Idaho, as far as potatoes. That's total processing
value added as well as farm gate. And I can assure you
nationwide that if planting flexibility changed, it again puts
one farmer, without redoing the whole Farm Bill, because if
you're going to subsidize a potato crop in Indiana, or tomato
crop in Indiana, by not taking away either base acres or farm
program payment, and that's what happens now.
And so it's somewhat controlled. But if you eliminate that,
then you are in effect subsidizing that crop of tomatoes or
potatoes, on what used to be soybean, corn ground. And if you
are going to subsidize that acre of potatoes in Indiana, you
are definitely probably going to have to subsidize the crop in
Idaho, Washington or in Oregon, and you can do that in lots of
different ways, I guess.
You can create--increase everybody's base acres across the
nation. And we have to make sure that whatever provision we do,
we do not jeopardize one farmer's ability to compete with the
government subsidy to another farmer.
The Chairman. Mr. Brentano, you indicate support of
conservation programs in your testimony. What's the right
balance between land retirement programs like the CRP and
working land programs like EQIP?
Mr. Brentano. All in all, I guess I believe that it's not
an either/or issue. One is a conservation program and one is a
program within the conservation title which helps farmers and
ranchers to comply with all the laws.
A program like EQIP, which is far more technical and helps
with the best management practices and is quite project
specific, is the way we like to see things. We like to see the
land being in production and we think that that's probably the
best way to go about things for us.
The Chairman. You mention the need for new regulatory
structure for addressing plant, pest and disease issues at the
USDA, and you specifically note that the basic features of
HACCP could apply to the nursery industry.
How much would compliance with this new system cost the
industry?
Mr. Brentano. Right. Much like HACCP, we like to look at a
new system, which is based on the system's approach where we're
looking at the way that the production is done rather than an
end regulation point.
As far as the cost to industry, right now we have a test
pilot in Oregon that we've done with core nurseries. The costs
to the industry vary greatly. Some of our nurseries are
showing, and they're fairly large nurseries, but anywhere from
18 to $20,000 a year, up to one of our larger nurseries,
showing it to be closer to $80,000 a year for their costs.
What the cost would be to government is really hard to tell
at this point. But I think that's why we're pushing for some
research and a science-based program which would have a big
test pilot element to it.
Frankly, right now our system is somewhat broken, if you
look at issues that have come up, like Emerald Ash Borer or the
Phytophthora ramorum. These can be quite devastating and close
the market.
So perhaps the system where we are looking at what we're
doing in the fields and preventing and not allowing in the
disease or the pest could be actually less costly in the end.
The Chairman. Mr. Gallo, your comments and your numbers
relative to the increase in imports into this country are
particularly interesting.
I don't know whether you have any similar numbers to tell
us what sales of domestic wines, what's happened to the sales
of domestic wines, whether we've seen a huge increase in that
over the last several years, during that same period of
increasing imports, but I would suspect it probably is, it's
your industry, thanks to any number of reasons, most
importantly the quality of products that your winery and other
wineries around the country are producing now.
But the Market Access Program, which you mention in your
testimony, has been a critical program, and is one that as we
reauthorize the Farm Bill, we will be talking a lot about,
particularly as we talk about trade. How has the Market Access
Program affected your industry? Is it something we ought to
expand on in general? Tell me your thoughts relative to that.
Mr. Gallo. Thank you, Mr. Chairman. MAP, for the wine
industry, is really the U.S. version of what every other major
wine producing country offers their producers to help fund the
promotion of exports.
What does that mean? What that means is for the producer,
it allows them to attend trade shows, it allows them to taste
retailers and import trade on their products, it allows them to
bring visitors to their wine country, and if you look at all
our competition, all our competition enjoys similar programs.
However, they tend to be funded at higher levels and supported
by their governments.
Now, let me address the benefits of MAP and what return we
have seen in this country as a result of it.
First off, MAP has been very successful in introducing our
wines to international importers, consumers and retailers. I
think the success is best illustrated by the growth of our
exports over the last decade.
In 1994 the value of our exports was about $196 million,
the value of California wine exports outside the United States.
By the year 2004, 10 years later, that value had swelled to
$808 million.
Now, there's still a lot of work to do. There's still a lot
of opportunity. Because even with that success, we only have a
5 percent market share of the global wine export market.
So, to answer your question, I believe that the success of
the program should justify that, A, it should continue, and
more importantly, it should be increased as the expanding needs
of all the participants demand it.
Senator Smith. Mr. Gallo, though I'm a teetotaler, Oregon's
wine industry is such an important part of our agriculture,
I've had to learn a little bit about winemaking from Jim Bernau
and others.
I have recently read an article that talked about France is
actually taking acreage out of grapes, and the point of their
doing that is to keep their prices high.
And as you noted in your opening testimony about
Australia's success, and I would probably throw New Zealand in
that as well, it seems that it isn't just the government
involvement but also they are meeting quality standards
comparable to those in Europe, and they're doing so at
dramatically lower prices.
Is that what, in your view, is that part of the equation
here?
Mr. Gallo. Which part? The lower prices?
Senator Smith. The lower prices and equal quality.
Mr. Gallo. Quality is what this business is all about. This
isn't a commodity business. This is a specialty crop. And
specialty crop is all about value added, value added either in
the product itself, quality, being can you offer the same
quality at a given value, or can you offer a wine style or
taste that can't be offered somewhere else, it's no longer a
commodity because you can't compare the price, or whatever
other type of value adding you can add to it, such as if people
come and visit the wine country, they leave with an experience
that is beyond the product itself.
Now, just to address, you know, the French comment that you
made, you know, they state that they're taking out acreage to
raise prices.
I think more than anything else, that may be true. But
however the biggest driver is they have a tremendous surplus in
Europe. And right now you're seeing that the government is
actively spending dollars to buy the grapes to distill into
fuel ethanol, which I can assure you, you know, grapes should
not be used by the Farm Bill for any sort of ethanol
production. It is not the most cost-effective means of fuel.
So I think----
Senator Smith. Some of my colleagues seem to live on it.
Pretty good fuel.
Mr. Gallo. Human fuel versus automobile fuel.
Senator Smith. You know, it is interesting, and I
understand obviously there's expensive ones and there's Two
Buck Chuck.
One of the investors in Two Buck Chuck told me that he
moves 2,000 cases a day through Costco. And I know the
industry's expanded dramatically in California.
I'm from Eastern Oregon, and I never thought I would see
what I see today, and that is hundreds, maybe thousands of
acres of potato, wheat land, it's all in vines now. And I'm
wondering if the industry isn't in danger of becoming a
commodity.
Is there a glut? I mean, that's what makes it a commodity
ultimately on a world market.
Mr. Gallo. Worldwide, there is a surplus of grapes in the
ground. Hands down, there is a tremendous surplus out there.
But yet those producers who focus on quality, who focus on
investment in new process technology, investment in new
viticultural technology, investment in just simply how you run
a fermentation so you can have a clean fermentation, all leads
to a better product, and it's rewarded by the consumer. So even
in a commodity----
Well, let me step back. Even in a surplus situation, if
you're competing on quality, it doesn't matter if there's a
surplus out there.
Now, the issue with Two Buck Chuck is a little more
complicated. Let me talk about the subtlety of Two Buck Chuck.
Senator Smith. That fellow told me after the first drink he
couldn't tell the difference between one versus the other
anyway. I don't know, but that's what he said.
Mr. Gallo. It depends on the size of his drink. Two Buck
Chuck was the result of a planting boom in California that went
through the 1990's.
In grapes, unlike most commodity crops, but I'm sure a lot
of specialty crops, especially tree fruits follow this way, is
that you don't get your first crop, and you don't get a full
crop until your third year of production.
So there is a lag effect. And as a result, if you see a
trend and it's trending upwards, like any agricultural
situation, you know, farmers look at their neighbors and they
say, you know what, this is a good business to be in, you can
make more money, they jump on board.
It doesn't become apparent, it's not visible, what are the
supply and demand, because you have hidden supply coming on
line. Once that comes--So you had a lagging supply curve, and
it would further cause problems, we had a slight slowdown that
followed the bust of 2000, which was the internet bust, and
combined resulted in a glut in California, but the market
forces did self-correct it, and we are now in balance.
So, just in four or five short years, the industry was able
to get in balance.
How do you do it? Some vineyards came out of the ground.
And some entrepreneurs, like my Uncle Fred, Two Buck Chuck,
managed to find that he can buy wine, and buy grapes cheap,
during that glut period.
Senator Smith. And that's going away, so that will go away,
too?
Mr. Gallo. I think Two Buck Chuck has evolved. In the
beginning it was literally a better opportunity than putting it
to the still.
And then now with Two Buck Chuck specifically, it's a
partnership with Trader Joe's, and as a result, they have a
longer term contract and with that, you can assign supply to
that program and you work on thinner margins with a guarantied
supply, or guarantied volume.
Senator Smith. Well, I thank you for helping me to
understand that.
Mr. Koompin, I was one of the creators of the Conservation
Security Program. And I'm certainly open to changes and
expansions.
And I'll tell you a part of what has driven my involvement
in it. I have seen my farmer neighbors for years be penalized
by the cost of environmental farm practice regulation.
What I was trying to do was reward them for it, and to help
have the dual benefit to the environment and without the
penalty to the farmer.
But I know it's a very limited program, it's frankly very
underfunded, even at the authorized levels, it is nowhere near
funded by the USDA.
But my motive in being involved in it was frankly my fear,
and I say this for the education of those who are here, if you
read the New York Times, the Washington Post, was it the
Journal of Constitution in Atlanta?
The Chairman. Communist.
Senator Smith. The communist. The support for agriculture
mirrors the population of those involved in agriculture. It's
probably 2 percent, if you want to be liberal right now, in
terms of how you calculate it. And these farm programs are
deeply unpopular.
What is popular is environmental issues.
And so my thinking was, how could I help my farmers get
ready for the world of tomorrow, because if there is not public
support for farm programs, farm programs are in jeopardy every
time a new one comes up, and everyone has said they need more;
and the world community, and you have my commitment, you have
the Chairman's commitment, we're not going to let Paris,
France, determine the ag policy for Paris, Texas.
But the facts are that our country, long before Saxby and I
showed up in the Senate, we became members of the WTO, and WTO
rules are going to tighten and tighten and tighten, ultimately
even reducing European subsidies, which are two-thirds more
than ours, and frankly their taxpayers can't afford what their
current programs are, but they're going to tighten.
And a lot of these things will lose public support, these
farm programs, unless we can find some replacement.
So, what I'm simply saying, and stating, is that we need
your help to look for other ways consistent with WTO rules and
regulations that will allow us to be helpful to the farm
community. CSP, I believe is one of those. And so it's simply
an invitation for you to be open with my office, to make it
bigger, to make it better. It is consistent with the WTO
regulations.
Mr. Koompin. I can address that real quick, Senator Smith,
and due to lack of time, my comments on the great vision of the
CSP program was cut out, but now maybe it is a good time to say
the idea, the principle, the vision of the CSP program, we
realize in the farming community, is the way government support
of agriculture is probably heading, if you followed it at all
in the last 20 to 30 years, and especially since the WTO.
So, you know, our thanks and pat on the back for that
program as far as it was envisioned. The problem with the CSP
program is of course the implementation of the funding.
Senator Smith. Yeah.
Mr. Koompin. So, do we think that, are we going to look
better in the eyes of the nation? Yes, we are. And can we make
that CSP program or something like it work? Yes, we can.
But it cannot target watersheds and for the most part I
envision that there will be areas that will never, ever be
able. So that how do you----
Then you get back to the questions we raise, how can we
justify a $40,000 payment to Joe in watershed A, and the poor
guy raising the same crop in a different state or in the same
state, or in the same county, does not get that.
So, that's a definite problem. But we do, our hands would
be ready to help work out any program you come up with, and we
will be after some ideas.
Senator Smith. We will need your help, because I think you
are right to perceive it as the future.
Rather than ask more questions of more panelists, Mr.
Chairman, I will ask it through written, through the record.
But I do want to make note for the record the presence of
Katie Koba. Katie, there you are. Katie is the Director of
Oregon Department of Agriculture, and we're honored to have you
here, Katie.
The Chairman. Thank you. Mr. Lorensen, I can't help but
note, as we are sitting here talking, we are hearing those
airplanes take off, and I suspect that maybe a hundred percent
of them are heading toward that fire out at Lake George.
As Senator Smith and I flew over that yesterday, when those
airplanes take off from here, they are a mighty big looking
piece of equipment, but when you look at them dropping the
retardant and the water on that fire, they pale in comparison
to the size of that fire. But hopefully we're going to see that
controlled short term.
To all of you, again, thank you very much for being here.
We look forward to continuing to dialog with you, and we would
like to be able to use all of you as a resource as we move into
the writing of this next Farm Bill. So, thank you very much.
We will now move toward panel three, if these members will
come forward, Mr. Jim Bernau, Turner, Oregon, representing the
Willamette Valley Vineyards; Jennifer Euwer Hunt from Hood
River, Oregon, representing the Pear Bureau of the Northwest
and Northwest Horticulture Association; Mr. Doug Krahmer from
St. Paul, Oregon, representing the Oregon Blueberry Commission;
and Mr. Mark Wettstein, Ontario, Oregon, representing the
Nyssa-Nampa Beet Growers Association.
Again, we'll follow the same format. Mr. Bernau, welcome to
our panel, and we'll start with you to take any opening
comments from you.
STATEMENT OF JIM BERNAU, WILLAMETTE VALLEY VINEYARDS, TURNER,
OREGON
Mr. Bernau. Mr. Chairman Chambliss, Senator Smith, thank
you for supporting the wine industry each in your own way.
My name is Jim Bernau, and I am the founder and CEO of
Valley Vineyards, a publicly held Winery in Turner, Oregon. Our
winery currently farms over 250 acres of vineyard land and we
sold last year about 140,000 cases of wine.
I also serve as the Chair of the Legislative Committee of
the Oregon Wine Growers Association and am here on their
behalf.
At $3.5 billion grapes the sixth largest crop in the United
States, research conservatively estimates, that the production
of wine and wine grapes and their related industries produced
more than $90 billion of economic value to the U.S. economy in
2004.
Our industry accounts for over a half a million full-time
jobs, and roughly 18 billion in annual wages. Additionally
about 30 million tourists visit wineries each year, spending
approximately $2 billion. The industries pays 4.3 billion in
Federal taxes and almost five billion in local and state taxes.
Almost 10 percent of the approximately 3,500 wineries in
the United States are in Oregon.
Oregon's focus is on a high quality wine and wine grapes
that translate into high quality of life for our neighbors and
our communities. We're environmental stewards of the land. Over
37 percent of our acreage is farmed with certified sustainable
practices.
Despite our growth, we have tens of thousands of marginal
acres of land lying fallow, under-used, some with dying fruit
and filbert trees on them.
A 2005 study of the Oregon wine grape industry found our
economic impact was about 1.4 billion. We generate about 8,500
jobs and pay more than 200 million in wages. We attract high
value tourists who spend more than the average tourist,
boosting hotel and restaurant sales.
In 2004 our wineries generated tourism revenue that
approached $100 million.
As you heard from Mr. Gallo, over 25 percent of the wine
consumed in the United States is imported, supported by well
financed foreign government programs, a threat to the
development of the Oregon wine industry.
Our industry respectfully asks that the 2007 Farm Bill
finance greater support of specialty agriculture. We have
several specific suggestions.
One, sustain and grow the funding of the Northwest Center
for Small Foods Research.
Two, provide continued support for the Market Access
Program.
Three, we appreciate your role in creating the Conservation
Security Program and ask that you expand it.
Authorize mandatory funding of the $5 million a year from
the Commodity Credit Corporation to establish the national
clean plant network.
Expand the state block-grants for specialty crops program.
Provide a funding mechanism to support industry-government
research partnerships.
And, seven, we appreciate our growing partnership with
rural development. The Oregon Wine Board has applied for a
value-added producer grant to support our efforts to increase
the sale of Oregon wine out throughout the nation. The State of
Oregon constitutes approximately 1 percent of the nation's
population but accounts for nearly half of all of Oregon wine
industry sales.
Thank you very much for the opportunity to testify before
you today.
[The prepared statement of Mr. Bernau can be found in the
appendix on page 56.]
The Chairman. Thank you. Ms. Euwer.
STATEMENT OF JENNIFER EUWER, PEAR BUREAU
NORTHWEST AND NORTHWEST HORTICULTURE ASSOCIATION, HOOD RIVER,
OREGON
Ms. Euwer. Good morning, Chairman Chambliss. I am Jennifer
Euwer, a fruit grower in the Hood River Valley. My husband
Steve Hunt and I farm a total of 240 acres of--Is this on?
The Chairman. I think it's just quit on you.
Ms. Euwer. Is that better?
The Chairman. No. Let's stop for a minute.
Ms. Euwer. My husband Steve Hunt and I farm a total of 240
acres of pears and cherries and apples. My family has grown
pears in Oregon since 1912, the Columbia Red Anjou variety
being initially discovered in one of our orchards.
I appreciate this opportunity to provide comments about the
importance of several components of the 2007 Farm Bill.
Nutrition, the MAP program and research.
The 2007 Farm Bill provides an excellent opportunity to
bring agricultural policy in line with Federal health and
nutrition recommendations.
A strong fruit and vegetable agricultural policy will
benefit tree fruit growers while at the same time make it
easier for Americans to benefit from consuming a diet rich in a
variety of fruits and vegetables.
The 2005 dietary guidelines issued jointly by USDA and the
Department of Health and Human Services recommends that all
Americans eat five to 13 servings of fruits and vegetables a
day. These guidelines are the strongest statement ever about
the need to increase consumption of fruits and vegetables,
recommending that Americans double their consumption of
produce.
For children, making fruits and vegetables more readily
available at locations where kids spend a lot of their time,
such as in schools, is one of the most effective means of
increasing their consumption of produce.
I believe that the upcoming Farm Bill should include
language to expand the successful fresh fruit and vegetable
snack program to all 50 states, including Oregon, and to double
funding for the Department of Defense's fresh fruit and
vegetable program for schools.
This would go a long way to promoting the health of the
nation's school children, while improving the economic health
of the nation's fruit and vegetable farmers.
The USDA's Market Access Program is another initiative that
deserves to be fully funded in the new Farm Bill. It benefits
growers and allows for USA pears or other U.S. agricultural
products to be more competitive in overseas markets.
By helping expand USA pear exports the MAP program helps
stimulate more demand and therefore stronger overall returns
for my fellow pear growers and me.
With the help of the MAP funded promotional activities,
U.S. pear exports have established a record value in each of
the past seven seasons. Prior to the inception of the MAP only
10 percent of the crop was exported. Today that percentage is
closer to 35 percent.
I see the MAP program as a vital part of the upcoming Farm
Bill and something that is ideally suited to support high value
products such as pears and cherries and maintaining the export
competitiveness of U.S. products.
Agricultural research funding at both land-grant
institutions and USDA's agricultural research service should
also be a major focus of the next Farm Bill. We need advances
in technology, especially labor-saving devices, if we are to
remain competitive on a world market. And I'll point out that I
brought the cherries in the back of room, and I grew them, but
they were bred in Canada.
The Chairman. This country of origin, labeling issue is
tough.
Ms. Euwer. Well, I just planted some more that were bred in
Europe. The best way I can see to keep our fruit growers
producing--the nutritional fresh produce that they provide for
America is to provide an environment conducive to their
profitability.
Fully funding MAP to help our exports, expanding produce
consumption through good and extensive nutrition programs, and
providing for increased agricultural research funding are three
specific policy objectives that I think Congress should achieve
during its work on the next Farm Bill.
Thank you, Mr. Chairman. I am happy to answer any
questions, especially about what would happen if I had to pay
$50 an hour as a pear grower in Hood River.
[The prepared statement of Ms. Euwer can be found in the
appendix on page 65.]
The Chairman. Thank you very much. Mr. Krahmer.
STATEMENT OF DOUG KRAHMER, OREGON BLUEBERRY COMMISSION, ST.
PAUL, OREGON
Mr. Krahmer. Thank you, Mr. Chairman, and Senator Smith. My
name is Doug Krahmer. I'm co-owner of Blue Horison Farms in St.
Paul, Oregon.
On our farm we produce a variety of commodities, including
blueberries, grass seed, hazel nuts, clover, wheat, flower
seeds and fresh cut flowers.
The produce industry has experienced tremendous changes
over the last several years. We've worked hard to remain
profitable, satisfied consumer demands and conform to and
develop new technology and compete in an increasingly global
marketplace.
Many of our products are highly perishable and are driven
by risk taking entrepreneurial spirit that we produce in the
produce industry continue to engage in. We take tremendous risk
each year, not knowing if Mother Nature, retail channels, and
the marketplace or any other number of issues will or will not
stand in the way and cause us to lose or gain in the investment
we have made.
Our markets is highly volatile. Yet we have never relied on
traditional farm programs to sustain our industry. Instead, we
look to each other to promote efficiency and reward market
competition that so marks our industry.
Unfortunately, the marketplace in which we operate is
becoming less neutral and even handed. Regulations driven by
food safety concerns, responses to food defense requirements,
and other very legitimate consumer and customer needs, are
placing more and more burdens on farmers and their partners who
pack and ship perishable agricultural commodities.
In our effort to respond to these needs, we are obligated
to introduce costly measures and undertake expensive actions.
Farmers shoulder the responsibility of supplying high
quality food that is safe, and nutritious, while not being too
expensive for the consumer. We work hard at this, helping to
continue to ensure the miracle of abundant fresh food
production in the United States at prices the American--that
are low to the American people by world standards.
We do not support the extension of the 2000 Farm Bill. We
believe government policy should provide incentives for private
investment, tools to increase profitability, and help to those
producers who are committed to constant improvement to better
serve consumer needs.
We do not want policies that sustain yesterday's business.
We want investment in the future. Ultimately the goal of any
farm policy should be to enhance the tools necessary to drive
demand, utilization, and consumption of our products, and not
distort the production of those products with respect to
domestic and international markets.
The 2002 Farm Bill began to make progress toward those
objectives and was further enhanced through the Child Nutrition
Reauthorization Act of 2004, and the Specialty Crop
Competitiveness Act which we signed into law in December of
2004.
The fruit and vegetable industry strongly supports
maintaining or strengthening the current U.S. planting policy
which restricts producers from growing fruits and vegetables on
acres receiving program payments.
Fruit and vegetable producers are concerned that any
alterations in this provision would allow commodity producers
to mitigate any startup cost or mitigate risk inherent to fruit
and vegetable production resulting in unfair competition.
I would refer you to my written comments, and I thank you
for the opportunity to testify here today.
[The prepared statement of Mr. Krahmer can be found in the
appendix on page 83.]
The Chairman. Thank you very much, Mr. Krahmer.
Mr.Wettstein.
STATEMENT OF MARK WETTSTEIN, NYSSA-NAMPA BEET GROWERS
ASSOCIATION, ONTARIO, OREGON
Mr. Wettstein. Senator Chambliss and Senator Smith, members
of the committee, thanks for this opportunity.
My parents moved from Utah in the winter of 1946 and I was
born that spring, and my mother at 91 told me this spring how
big the sugar beets were that year.
I farm with my brother Louis. We farm 1200 acres. 350 acres
is in sugar beets, 175 acres is in onions, and the rest is
divided among alfalfa, wheat and corn.
Eight years ago there was 1200 growers that bought
Amalgamated Sugar Company, also known as White Satin. These
sugar growers are in Magic Valley and the Treasure Valley.
And in order to raise the capital to buy that company, it
cost us $400 a share, which allowed us to grow one acre. We
purchased 350 shares, so we could grow 350 acres of sugar
beets, at a cost of $140,000. Minus our tractors, the equipment
to plant, cultivate, and harvest sugar beets, would be another
hundred thousand.
If the sugar beat industry went south, we would lose at
least $200,000. That investment would just be gone.
Once an industry like sugar beets leaves an area, it never
comes back.
Idaho and Oregon is the second largest producer of sugar
beets in the United States.
There are thousands of jobs that rely on this crop, and it
has an economic return of almost two billion dollars.
Six miles from our farm is a little town called Nyssa,
Oregon, population, 3,000. And in 1938 the sugar factory was
built there, and 2 years ago this factory closed because of
economic reasons. It wasn't ready to cave in. It was well run,
well maintained, and very efficient, but it just wasn't
economical. 300 people worked there. The payroll was 12
million, and another million-and-a-half went into the local
economy for parts and services.
But there are two forces at play on sugar. One is the food
producers who have put pressures on sugar to keep it low, and
in the last 20 years, ice cream, candy and bakery products has
gone up between 30 and 50 percent, where the return to the
sugar grower has gone down 20 percent.
The other force are the trade deals, that we've allowed too
much sugar into this country. We are the fifth largest producer
of sugar. Also the fifth largest consumer. Yet we are the
second largest importer of sugar.
And so we are able to produce sugar for the U.S. market.
But because of the trade deals, there's too much sugar on the
market.
And so we support the Farm Bill because we hope that that
would give us some guaranties against the glut that would come
in from NAFTA, CAFTA, Columbia and Peru. This has operated at
no cost to the taxpayers. And we feel that the American
consumer doesn't want to be in a position to have to rely on
foreign sugar.
And I have a longer version of our industry's position that
I'd like to submit, and I thank you for this opportunity.
[The prepared statement of Mr. Wettstein can be found in
the appendix on page 123.]
The Chairman. Thank you, and certainly your statement will
be included in the record.
Mr. Bernau, during the consideration of the 2002 Farm Bill
there it was much discussion of increasing our investment in
the development of rural America, and specifically how wineries
might contribute to this goal through the value added producer
grant program that you alluded to.
Has your industry been able to take advantage of the value-
added producer grant program and if so, what types of
investments and rural development have been made by the
beneficiaries?
Mr. Bernau. Chairman Chambliss, first of all we do view
this program to be very important. We have not had an
opportunity yet to receive funding, but we have made
application for funding.
A $265,000 value added producer grant has been requested.
It has the support of our Oregon rural development. We estimate
that this will increase the sale of Oregon wine by 117,000
cases, generating $16 million in revenue.
So, it will pay for itself many times over if we're able to
obtain the grant and implement this plan.
The Chairman. Proposals have been made to provide more
money to the specialty crop industry, and these proposals range
from state block-grants to research money to counter cyclical
programs.
You alluded to the state block-grants which have been
received very favorably in this part of the country.
Which others would benefit the wine industry the most and
what ideas do you have about the funding of those proposals?
Mr. Bernau. The state block-grant program has been helpful
to us. We actually did receive some money to expand our out-of-
state sales. It was a small amount of money, which we matched
with industry money, and increased our presence in specific
markets. So that has been very beneficial.
You know, I spent a considerable amount of my time in my
earlier testimony talking about the economic impact of our
industry.
When I was just getting my first grapes off of my vineyard,
and when Senator Smith first entered the Oregon State Senate,
our industry was very small. Generating very little tax money.
But just my little company last year paid $237,000 in
Federal excise tax and $625,000 in Federal Income Tax. When
that piece of ground I'm on, paid nothing. It was an abandoned
plume orchard. So, the leverage is remarkable, when you apply
these funds to these programs.
The Chairman. This year you mentioned the importance of
nutrition-related programs, export market development programs
and research programs.
Given the current budget situation of many competing
priorities in the next Farm Bill, which of these do you believe
will most directly benefit producers of specialty crops?
Ms. Euwer. I wouldn't rank them. I think they are all very
important. The nutrition program in particular is so
beneficial, both to the producers and to the consumers, that it
seems clearly important to fund that.
Market Access Program looks to me to be very valuable in
helping both the producers and the import/export balance in the
United States. And research is always very important.
My point about the cherries was simply that these are
things that are being done in other places, Breeding programs,
for example, and we need research in the United States. It's
harder and harder to come by research money, and very important
for our industry.
The Chairman. Our school lunch programs all across the
country are taking more and more advantage of the local crops
grown in certain areas.
Do you find that the school lunch programs in Oregon are
taking advantage of buying specialty crops that you grow or
folks in your organization grow?
Ms. Euwer. I don't really know.
Senator Smith. Ask blueberry guy.
Mr. Krahmer. Blueberries, they do.
Ms. Euwer. I think they do some, but I don't know to what
extent.
The Chairman. Well, I will ask Mr. Krahmer, relative to
blueberries, are school lunch programs taking advantage of
blueberries?
Mr. Krahmer. Yes. I think they have been. You know,
blueberries over the last few years have certainly been higher
priced than some of the other berry crops in Oregon, but I
know, even our Marion blackberries and some of the other
specialty berry crops in Oregon have used the school lunch
programs to get some of their excess fruit out of the market
and into the schools where it can be used for nutrition.
The Chairman. OK. Let me address this again to you, Mr.
Krahmer, and Ms. Euwer. A broad coalition of specialty crop
interests have formed the Farm Bill Working Group and include
within their 2007 Farm Bill priorities mandatory allotment of
funding for specialty crop production within the EQIP program.
Given the current participation levels by the specialty
crop industry and conservation programs, such as EQIP, will the
industry be able to utilize the mandated increase access?
Mr. Krahmer. I can answer that. Yeah. Our industry is
strongly in favor of both the EQIP program and CSP.
EQIP program, for example, I planted some berries in the
last few years that I've used the EQIP program to help fund a
drip system, and it does a variety of things.
Number 1, it reduces the amount of water that I'm pulling
out of the rivers to irrigate that crop. It allows me to put
the water only where the plant needs it. It allows me to better
utilize my fertilizers and my disease control methods.
I don't--I'm not putting water on the bush and encouraging
disease up in the bush.
And so, yeah, we're--we use that program. We believe that
it's very advantageous for our industry to be able to afford
some of these new technologies to better the environment.
The other thing on the CSP is many of the specialty growers
have put in these conservation practices, from sod, waterways,
minimizing irrigation, doing integrated pest management, all of
these kind of things on our own.
And what CSP does, as Senator Smith alluded to earlier, is
it comes in and it actually rewards us for having used those
practices in the past.
Ms. Euwer. I would answer much the same in our area. There
are many, the CSP is in effect in Hood River, and we are being
rewarded for the things that we were already doing. And I think
that that was a very good way to address that problem.
And EQIP, while I have not used it personally, many of my
neighbors have, to do much of the same, water--specialty water
irrigation, and I just don't happen to be as close to a stream
as other people.
But even those of us who haven't participated in it
directly have seen what the other farmers are doing, and people
are doing it on their own because they're seeing it
demonstrated, and so it is actually benefiting I believe even
people who aren't directly involved in it.
The Chairman. Mr. Wettstein, you mentioned trade agreements
and their affect on the current sugar program, and frankly your
comments reflect one reason that I have been saying that the
extension--or an extension of the current Farm Bill is really
impractical because what's going to happen is that beginning
January 1, 2008, which would be within 3 months of the
expiration of the current Farm Bill, we will see imports from
Mexico being increased under NAFTA.
We also have some other agreements that will allow
additional imports of sugar.
And just recently USDA and OMB have come out with some
numbers which suggest that the current No Net Cost Program, the
current No Net Cost Sugar Program, will all of a sudden have a
cost that will begin at about $30 million a year and very
quickly will go to possibly as high as about $300 million a
year. Now, that's from a cost standpoint, what it will do. So
that's going to be a problem.
What will the additional imports that are going to be
allowed under our trade agreements, including NAFTA, do from a
practical standpoint to the sugar industry in this country?
Mr. Wettstein. Well, first off, the sugar industry is not
happy at all with any of its trade policies. It allows more
sugar into this country, which makes it so we have to produce
less, and because of the over-supply, we are paid less.
But with the NAFTA agreement and some of the other
agreements, when that expires, we're unclear exactly just how
that will affect us, because we don't know how much sugar they
will bring into this country, will export into us. We don't
know ourselves what our market will be doing in this country,
how much sugar we will be using.
And the problem with Mexico is they have never played by
the rules. They have denied a side letter to the agreement on
sweeteners, and they have a soda tax. So that stops our supply
of sweeteners into their country.
So, if we just have a glut of sugar come into this country,
we're done. The producers of sugar in this country are through.
The Chairman. Well, I'm sure you're familiar with the fact
that the USDA and USDR just recently entered into an agreement
with Mexico relative to the export in the United States of high
fructose corn syrup down there, which is going to have a
significant impact.
I realize that that decision is not popular in your
industry, and I guess we'll have to see how it affects it over
the next several months, as we get into the Farm Bill.
Last, Mr. Wettstein, what is your industry's outlook for
commercial production of ethanol from sugar, and do you
envision a market for ethanol from sugar in this country?
Mr. Wettstein. The USDA was supposed to have conducted a
study that was to be completed in July on this very topic. And
I haven't seen that report.
But Luther Markwart in Washington, D.C., has I think seen
it. And I talked with him yesterday, and he said that it was
just not economical right now to convert sugar into ethanol
without it being highly subsidized.
I think it is like Ernest Gallo said, it would be like
converting grapes into ethanol. It could be done, and probably
the only place that it's viable at this point would be Hawaii.
But until technology is developed and commercialized, it
probably won't be viable for at least 10 years.
The Chairman. OK. Senator Smith?
Senator Smith. Mr. Wettstein, as I believe I understand,
the plant that you spoke of that closed, that was the former U
& I Sugar, or White Satin, is that the plant you are speaking
of?
Mr. Wettstein. It was one of--Amalgamated Sugar.
Amalgamated Sugar had four factories, four refineries, and this
was one of them. This was the fourth one.
Senator Smith. The other four are open?
Mr. Wettstein. The others are open. And so our beets are
transloaded and shipped to Nampa, Idaho, to be processed.
Senator Smith. So that plant is still open in Nampa?
Mr. Wettstein. Yes.
Senator Smith. OK. The plant that closed, and the others
that are still open, are they making money?
Mr. Wettstein. You know, it's interesting what happens in 1
year. A year ago we had 500,000 tons of sugar in storage, and,
a hurricane in Louisiana and Florida devastated the sugar cane
industry, and so the USDA came to Amalgamated and said, you can
put that sugar on the market.
Senator Smith. So it got valuable all of a sudden.
Mr. Wettstein. Right.
Senator Smith. But that's an aberration. Katrina I hope
doesn't come every year, for their sakes, not for yours.
Obviously, some of these plants, and the industry as a
whole, were in extremous long before NAFTA and CAFTA, is that
an accurate statement, but those have complicated it?
Mr. Wettstein. It's complicated it. This plant closure was
not an isolated case. In the last 10 years one-third of all the
U.S. mills and refineries have closed.
Senator Smith. I'm aware of that. And certainly in Hawaii,
there's very little cane sugar done there now. Many mills have
closed there.
How uncompetitive are sugar beets to sugar cane? Or to high
fructose corn? What's the cheapest producer of sugar?
Mr. Wettstein. I think it's more economical to produce
sugar cane, because of the process. We are the world's most
efficient at producing sugar, and we're doing that on top of,
high labor cost and environmental regulations.
We can compete with any country in the world. We just can't
compete with their sugar that's highly subsidized.
Senator Smith. And how much of a damage do things like
Splenda and Aspertain, these various nonsugar sweeteners, how
much of a factor is that to the industry's difficulties?
Mr. Wettstein. I think that's sort of cyclical. It's
something sort of fad-ish. It's like using margarine and
butter. Some people will use Splenda and some will use sugar,
and I think it is just a matter of taste, but I don't think it
has had a real huge impact on our industry.
Senator Smith. Ms. Euwer, do you employ people in your pear
business?
Ms. Euwer. Yes.
Senator Smith. Are any of them migrant workers?
Ms. Euwer. T1Yes.
Senator Smith. As you employ them, I imagine you're very
careful to look at their documentation?
Ms. Euwer. Yes.
Senator Smith. And is it hard to tell which are legitimate
or which are fraudulent?
Ms. Euwer. Yes.
Senator Smith. Should you be fined if one of them, you
learned months later, from the Social Security Administration,
that a number doesn't check out?
Ms. Euwer. No.
Senator Smith. Do you have a way to determine in advance,
is there anything you could do as an employer of migrant
laborers to determine the legality when they first show up to
work?
Ms. Euwer. Not that I know of.
Senator Smith. I don't know of anything either.
So I agree with your statement, and I think the reason I
have asked you that is to demonstrate just how unfair some of
the proposals are to American agriculture and other employers
who make a good faith effort to comply but have no government
system by which to determine legality now.
And frankly, the INS tells me it would be years before they
could ever determine or develop such a system. And I simply
state that for the record, to show the unfairness of some of
the demagogoery that you hear on the radio waves.
Do you pay the minimum wage?
Ms. Euwer. No.
Senator Smith. What do you pay?
Ms. Euwer. We may $8.00 an hour in general, and we picked
our cherries by the hour this year because we didn't think we
were in full production, although it turned out we almost were.
But we paid $12 an hour for that.
And when people are picking during our harvest period,
they're making 14, $15 an hour, plus the housing that's
provided to them, they have housing provided for both them and
their families and their utilities.
Senator Smith. So, you pay, when you factor in all the cost
of employment----
Ms. Euwer. I try not to think about it.
Senator Smith. You pay well above the $7.50 Oregon minimum
wage?
Ms. Euwer. Yes.
Senator Smith. Way above. What do you think of the proposal
by some that you ought to pay $50 an hour so you can hire--you
could be certain that you could get American born citizen
labor?
Ms. Euwer. That would put the fruit industry out of
business. And in Hood River, the development pressures are so
great that that land, once it went out of fruit production,
would be lost, paved over, never to be seen again in the form
of agriculture.
Senator Smith. Where would American pears come from? Where
would pears come from that Americans would then eat?
Ms. Euwer. The largest source of pears I think that we eat
right now are from South American, from the Rio Negro Valley in
Argentina.
Senator Smith. So those who cavalierly throw out the
suggestion for you, really what they're advocating is the
destruction of your industry, of your business, and frankly
Oregon agriculture as well as many other industries.
Ms. Euwer. Yes. But I don't think people realize that.
Senator Smith. I don't think they do either. Has the debate
made it difficult for you to find employees, anyone at this
point?
Ms. Euwer. We personally have not had difficulty finding
employees. We've had the same people working for us for a very
long time.
Senator Smith. Have you heard that in your industry?
Ms. Euwer. Yes. Especially, you know, for people that don't
have housing. Smaller farmers who can't afford to have as much
housing, yes. And as we get into cherries, too, it's different
than pears. Pears, we can pick pears for 2 months. We had to
pick our cherries in 4 days. So you need a lot more people. And
that's something that we hadn't really experienced before this
year. And that is a different situation than we have been in
the past.
Senator Smith. Have you ever had a green pea and pear
salad. I'm trying to promote----
Ms. Euwer. I had a delicious pea salad the other day at the
deli on Mt. Hood.
Senator Smith. Did you put pears in it?
Ms. Euwer. No. I just ate the peas. I love peas.
Senator Smith. Oh, you are a great American.
The Chairman. Did you ever try peanuts in that salad?
Ms. Euwer. I take peanuts in my salads, too.
Senator Smith. Mr. Bernau, have you ever tried Two Buck
Chuck?
Mr. Bernau. Yes, I have.
Senator Smith. Are yours better than that.
Mr. Bernau. The Two Buck Chuck has introduced many, many
new consumers into the world of wine. And they're trading up.
They're trading up. Once they've tried the wine, they're
looking for wines of higher quality.
And so the glut of wine that produced the Two Buck Chuck
has produced a whole new set of customers for us.
Senator Smith. I only asked that for the sake of humor, but
I really do renew my question to you as to Mr. Gallo, do you
see the vintner industry in danger of becoming a commodity, or
do you see it as a value-added quality, ultimately can keep--
can make a difference?
Mr. Bernau. Your line of questioning is excellent. Because
it does reflect on what's happening internationally. And that's
why I modified my first remarks to add the point of difference
about the land that's planted.
The land that's planted in Spain and France and other areas
that are affected by the new world wines of Australia, are in
the many, many hundreds of thousands of acres, planted for a
long, long time.
What we have here in Oregon is only about 14,500 acres
planted, a very small amount of acreage. And I pointed out that
many more acres are still available for planting.
We produce products of high quality, which consumers are
trading up to.
Just because consumers are trading away from low quality
wines doesn't mean there's an excess or a surplus. What it
really means is that consumers are changing their habits.
They're drinking less, which is good. They're moderating their
lifestyles, which is good. They're concerned about health and
safety. And so they're drinking less, but they're drinking
higher quality.
The wine sales in Oregon are very high. Just our own
depletions from our distributors to their customers are up over
130 percent year-to-date. What this means is there is a
substantial opportunity for the American public, the taxpayer,
and the Congress. Very small amounts of investment that allow
us to grow, will leverage a great deal of economic activity,
provide a lot of opportunity.
Senator Smith. Well, I wish you well, and all of you. Thank
you so very much for your contribution to the Senate record.
You have added measurably to our understanding. And we
compliment you for what you do, and we thank you, on behalf of
the Nation that is well fed because of folks like you.
We've got to improve nutrition, work on obesity, and it's
ironic that on the one hand we are trying to reduce hunger and
yet reduce obesity. So we've got to find that balance, I
suppose.
But I think the things that you produce by and large are
good for people, and certainly we hope they're good for your
families and your businesses, and all the best to you.
The Chairman. Well, to this panel, as with our other two
panels, thank you very much for your great input. We again wish
to continue to dialog with you, use you as a resource as we
move toward writing this Farm Bill. And thank you for taking
time to come to Redmond today to spend some time with us and to
really open our eyes to western agriculture. So, again, thank
you for being here.
Senator Smith. Mr. Chairman, may I say again on behalf of
Oregon agriculture how much we appreciate the Chairman of the
Agriculture Committee. As I said, this is the first time in
history an Ag Chairman's come to Oregon to hold a Farm Bill
hearing, so how about a round of applause for Chairman
Chambliss.
[Applause.]
The Chairman. Well, you're kind. Thank you very much. And,
again, thanks to all of you in the audience who came out today
to participate and to listen to the testimony that we've had.
I would remind you that if any of you are interested in
submitting a statement into the record, as we move forward with
writing the next Farm Bill, you're certainly welcome to do so,
by just going onto our website at Senate Ag Committee, you can
find exactly how to do that.
I want to say to the folks here at the Deschutes Fair and
Expo facility, thank you for being great hosts to us. Boy, what
a magnificent facility this is. I am very impressed with it.
And particularly thanks to Roxie Toteroff, I hope I've said
that right, Roxie, to Lois Tillman and to Grover Earp, who I
understand is a relative of Wyatt Earp.
I assume, Grover, your family migrated here from Dodge
City, Kansas, because we all know that that is the home of the
gun fight at O.K. Corral.
We in Georgia are pretty proud of the fact that Valdosta,
Georgia, which is very close to my home town, is the home of
Doc Holiday. So Doc and Wyatt and all the Earp family out there
did pretty well at the O.K. Corral.
But we're pleased that you all would extend such
hospitality to us today. And we thank you for that.
The record for this hearing will remain open for 5 days,
and I wish to note specifically that we have a statement from
Senator Wyden that without objection will be added into the
record.
And with that, thank you very much for being here. Thanks
for your participation. And this hearing will now be closed.
[The prepared statement of Senator Wyden can be found in
the appendix on page 48.]
[Whereupon, at 11.30 a.m., the hearing was adjourned.]
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A P P E N D I X
August 15, 2006
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DOCUMENTS SUBMITTED FOR THE RECORD
August 15, 2006
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