[Senate Hearing 109-639]
[From the U.S. Government Printing Office]

                                                        S. Hrg. 109-639



                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION


                             July 17, 2006


                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry

  Available via the World Wide Web: http://www.agriculture.senate.gov


30-130                      WASHINGTON : 2006
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                   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

            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


                            C O N T E N T S



Regional Farm Bill Field Hearing: Cape Girardeau, Missouri.......    01


                         Monday, July 17, 2006

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, 
  Committee on Agriculture, Nutrition, and Forestry..............    01
Lincoln, Hon. Blanche, a U.S. Senator from Arkansas..............    02


Emerson, Jo Ann, a U.S. Representative from Missouri.............    07

                                 Pane I

Beetsma, Ron, Representing the National Grain Sorghum Producers..    16
Bredehoeft, Neal, Representing the American Soybean Association..    11
Combs, Paul T., Representing the Missouri Rice Council, USA Rice 
  Producers Group, USA Rice Federation, and USA Rice Producers 
  Association....................................................    10
Helms, Allen, Representing the National Cotton Council...........    09
Hilgedick, Terry, Representing the Missouri Corn Growers 
  Association and Environmental Resources Coalition..............    13
Thaemert, John, Representing the National Association of Wheat 
  Growers........................................................    17

                                Pane II

Held, Jonothan, Representing WineAmerica.........................    32
Purdum, Larry, Representing the Diary Farmers of America.........    33
Rogers, Ray, Representing the Arkansas Farm Bureau State Forestry 
  Committee......................................................    35
Sonnenberg, Dean, Representing the Sunflower Association.........    34

                                Pane III

Briggs, Mike, Representing the National Turkey Federation........    47
Hinkle, Jim, Representing the National Wild Turkey Federation....    48
John, Mike, Representing the National Cattlemen's Beef 
  Association....................................................    45


Prepared Statements:
    Beetsma, Ron.................................................    82
    Bredehoeft, Neal.............................................    74
    Briggs, Mike.................................................   126
    Combs, Paul T................................................    63
    Held, Jonothan...............................................    94
    Helms, Allen.................................................    58
    Hilgedick, Terry.............................................    77
    Hinkle, Jim..................................................   133
    John, Mike...................................................   119
    Purdum, Larry................................................    98
    Rogers, Ray..................................................   115
    Sonnenberg, Dean.............................................   113
    Thaemert, John...............................................    91
Document(s) Submitted for the Record:
    Statement of Forestry in the state of Missouri...............   146
    Statement of Jane Williams on the behalf of the Arkansas 
      Animal Producer's Association..............................   148
    Statement of Max Thornsberry on the behalf of the R-CALF USa.   155
    Statement of Missouri Department of Conservation.............   165
    Statement of Missouri School Nutrition Association...........   168
    Statement of National Campaign for Sustainable Agriculture...   170



                             JULY 17, 2006

                                       U.S. Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                                 Cape Girardeau, MO
    The committee met, pursuant to notice, at 9 AM on the 
campus of Southeast Missouri State University. The Honorable 
Saxby Chambliss, chairman of the committee, presiding.
    Present: Senators Chambliss, Talent, and Lincoln.


    The Chairman. This hearing will now come to order.
    First of all, let me welcome everybody to the second field 
hearing of the Senate Agriculture Committee. We're very pleased 
to be in Cape Girardeau this morning. I want to thank all of 
our witnesses for taking time to be here. And they're all busy 
and they're all heavily involved in agriculture so for them to 
take away from their business at this time of the year, I know 
is critical, but we appreciate that very much. And for those of 
you who are here to just observe the hearing, thank you for 
taking time to be here. This is my second trip to Cape 
Girardeau. I'm pretty excited about being here today. My first 
trip to Cape Girardeau, I was not all that excited because it 
was, unfortunately, for the funeral of my dear personal friend 
and former colleague in the House, Congressman Bill Emerson.
    Bill was a true friend of mine, a true friend of Senator 
Lincoln, with whom he served in the House also, and Bill 
certainly was a strong advocate for agriculture. He taught me a 
lot about commitment, a lot about principle and a lot about 
faith as we worked together chairing the 1996 Farm Bill debate.
    And to come back to Bill's home town and have a chance to, 
ultimately hear when she gets here, visit with his and 
recognize his widow Jo Ann Emerson, who so ably represents this 
congressional district now, is certainly a real pleasure for 
    We're going to be joined by Senator Jim Talent and 
Congresswoman Jo Ann Emerson shortly, and when we do--when they 
do join us, they will recognize a few other folks who are in 
the audience today so we're going to save that until they get 
    In the meantime, I am joined by my good friend and my 
colleague on the Senate Ag Committee, Senator Blanche Lincoln 
from the state of Arkansas. We have a number of witnesses from 
Arkansas today and I'm sure a number of folks in the audience 
from Arkansas. And let me tell you, Blanche and I have been 
good friends for many years. This is my twelfth year in 
Congress. Blanche was a member of the House when I was elected 
to the House in 1994, and because we both have a keen interest 
in agriculture and other interests, too, in common, she and I 
became very good friends as well as good partners in working 
together toward what is in the best interests of American 
Agriculture. And I will have to tell you, there is no better 
partner for me when it comes to fighting for agriculture and 
promoting the interest of agriculture than Senator Blanche 
Lincoln. So I am really, really pleased that she could join us 
today and I will turn to her in just a minute for some 
    I want to thank Southeast Missouri State University and the 
people of Cape Girardeau for hosting us today. In particular,
    I'd like to recognize Doctor Ken Dobbins, President of the 
University, who will also join us shortly with Senator Talent 
and Congresswoman Emerson, as well as his assistant Debbie 
Bolton. I know they have spent many hours getting ready for 
this hearing and we greatly appreciate their hospitality and 
all the work that they have done. I also want to thank all of 
you for coming today, and I know many of you have traveled 
great distances to be here and we very much appreciate your 
interest and attendance at this important hearing.
    The committee held its first Farm Bill hearing on June 23rd 
of this year in Albany, Georgia, and I believe it was a 
complete success. As we continue to hear thoughts on the next 
Farm Bill from producers around the country, I look forward to 
hearing from the farmers and ranchers in this very important 
agricultural area. The committee also has hearings scheduled 
this week in Pennsylvania and a week from today in Iowa; and 
then we will be in Texas, Nebraska, Oregon and Montana during 
August. Our goal is to hear from producers in diversified 
regions as well as interests as we prepare for the next Farm 
Bill. We will hear today from a wide variety of agricultural 
sectors, and I especially want to thank our witnesses for 
taking time out of their schedules to be with us and providing 
their views. You are all extremely valuable to this Farm Bill 
Reauthorization process. As we approach the next farm bill, it 
is vitally important that farmers and ranchers from around the 
country have an opportunity to be on record with not only what 
they think of the current Farm Bill, but what they expect out 
of the next farm bill, so we look forward to your testimony.
    At this time, I would like to turn to Senator Lincoln for 
any comments she has before we begin the testimony of our 


    Senator Lincoln. Thank you, Mr. Chairman. And I certainly 
want to thank the chairman for holding this hearing, but 
certainly for his incredible leadership. He is accurate, we are 
a good partner when it comes to working hard on behalf of 
American Agriculture. It means a tremendous amount to both of 
our states, and it's a delight to work with and I'm proud to do 
so and look forward to what we've go ahead of us in terms of 
working through the issues of a new farm bill. But I do 
appreciate his leadership. He is always there for us and always 
working hard on behalf of agriculture and the issues of the 
committee. I also want to say a special thanks to the Southeast 
Missouri folks here for doing such a tremendous job in setting 
us up and having a great place for venue. I want to thank all 
of our panelists, but I particularly want to thank, and make a 
personal welcome, to several of the Arkansans that are here 
testifying. Of course Allen Helms is on the first panel. Allen 
is with National Cotton Council and he is a neighbor of mine 
over there in East Arkansas and I'm proud of all of the 
impressive leadership he has provided for production 
agriculture and agriculture in general in this country. Mr. Ray 
Rogers from Nashville, Arkansas, who does a great job and 
will--I think you will see, has a tremendous insight into the 
timber and forestry industry in Arkansas and nationally. We're 
proud to have him. And my good friend Jim Hinkle, who also will 
be here with the Wild Turkey Federation from Mountain View, who 
is also a longtime friend and somebody I trust, who has good 
common sense and forward thinking in terms of what it is we're 
looking for in the nation's capital, that's going to reflect 
well on the people we represent in our home state.
    I also appreciate the time that everyone has taken to come 
here. I think these are very important arenas for us to be able 
to discuss the issues. The Chairman has provided us this 
opportunity as one that we must seize, and that is to come out 
into the country and look at all of the diverse issues that we 
deal with in the farm bill. As he mentioned, there will be many 
more of these in other parts of the country. We know that 
agriculture is essential to our nation's economy. We also know 
that it's a part of our way of life. But we also know that it 
is different across the country and it is important for all 
agriculture to be well understood in the farm bill and 
certainly to be given the kind of safety net, as well as other 
components in the farm bill that are going to allow our 
producers all across this country to continue to provide a safe 
and abundant and affordable food supply. So we're excited about 
not just today's hearing, but also the ones that will follow 
that provide the kind of knowledge and unique insight into our 
nation's farm policy that we need as we go into performing that 
task of redoing the 2007 Farm bill.
    I am a farmer's daughter. I come from a seventh generation 
Arkansas farm family in East Arkansas. My dad was a rice farmer 
in the Arkansas, Mississippi delta. But I'm also a United 
States Senator and I'm proud to be able to bring those two 
things together in a way that I hope to be productive for 
Arkansas and for our country. I certainly take a tremendous 
amount of pride in telling others about the farmers that I 
represent in Arkansas, and what American farmers provide this 
nation and the world. I think today we enjoy the opportunity to 
hear firsthand, certainly farmers and those involved from my 
state and across the mid-south about the importance of the farm 
safety net and the role that it plays in their ability, and all 
of our ability, to provide a safe and abundant and affordable 
food supply that all Americans really depend on and sometimes 
take for granted. And that's why it's so important that we have 
these types of hearings where we can really, you know, better 
understand what it is we need to provide producers in order for 
them to continue to do the incredible job that we know that 
they can do and have been doing.
    So as we gear up for the next farm bill, I hope all of you 
will keep in close contact with me, and certainly with the 
committee and my colleagues on the Senate committee. We have a 
task ahead of us. It's going to be filled with a lot of 
different types of issues as we go into much of the trade 
initiatives that are out there, as well as the safety net 
programs and some of the things that we want to see ourselves 
meeting as we go into those trade talks. And so I'm excited 
about that opportunity but definitely with the understanding of 
knowing that without the input from you all, we cannot be as 
productive as we possibly should be and could bee.
    So with that, Mr. Chairman, I'd like to welcome our 
colleagues here, Senator Talent and my good friend Jo Ann 
Emerson. Jo Ann and I served as co-chairs of the Delta Regional 
Authority Caucus and a whole host of other things. She is a 
delight to work with, as is Senator Talent, and I will mention, 
as Saxby did, how wonderfully I was received by Bill Emerson 
when I first came to the Congress in 1992. He was just 
wonderful. We had a conversation on the phone for 45 minutes 
the first time I called Bill, and I told him, I said, ``You 
know, in my part of the country when you move into the 
neighborhood, you take somebody a batch of rolls or a pie or a 
cake,'' and I said, ``My cooking is not that bad, I just don't 
have a whole lot of time.'' And he was real cute, and we 
visited for 45 minutes and when we hung up, he said, ``You 
know, I've spoken with you more, or longer, than your 
predecessor in 20 years.'' And he said--so Bill and I 
immediately initiated the civility caucus.
    And we had some wonderful meetings. And maybe--hopefully we 
can continue a lot of that, but we certainly do with our 
colleagues here in Missouri, and so we're delighted to be here 
with them.
    Senator Talent. Sometimes that caucus can meet in a phone 
booth in Washington.
    Senator Lincoln. That's true. That's true. Well, Bill and I 
certainly made sure we met, and Jo Ann and I meet too. So thank 
you, Mr. Chairman. And thanks to all of you all for being here.
    Thank you, Blanche, for making the trip out today, too, and 
being with us. And we are now joined by, as I said earlier, my 
good friends Jim Talent and Jo Ann Emerson. Jim and I served 
together in the House. Our offices actually were right across 
the hall from each other, during my--during his last couple of 
years in the House, and Jim Talent brings a lot of knowledge 
about agriculture to the Senate Ag Committee. But what he 
mainly brings is a strong work ethic. Jim, again, is one of 
those folks that were in your fox--when you're on the foxhole, 
you want him in there with you, particularly when it comes to 
agriculture. Jim is just a terrific guy. He's a good friend and 
we also served on the Senate Armed Services Committee together. 
And there are a few interests in Missouri relative to airplanes 
and some other military issues that Jim is just as strong an 
advocate for as he is for agriculture. So, Jim, thanks for 
hosting us here today and allowing us to come to Southeast 
Missouri State, and I told him we're going to leave the 
introduction of some local officials and whatnot to you, so I 
will turn to my dear friend Jim Talent at this point.
    Senator Talent. I thank you, Mr. Chairman. Now I want to 
thank you and Senator Lincoln for being here. I think Senator 
Lincoln's presence shows that this is a regional effort here.
    In other words, the hearing of the Senate--the Agriculture 
Committee, but we're looking for the input from regional 
agriculture. We have a number of great witnesses, and we want 
to know what people think needs to happen with the farm bill.
    It's an honor to have you here, Mr. Chairman, and you're 
going to find out, if you don't already know, that Missouri is 
a crossroads of American agriculture, just like it's a 
crossroads of the country as a whole. It's a very diverse 
state. We have a lot of--a wide range of climates and 
topography. I like to tell people we are seventh in both 
soybean and watermelon production. Which tells you a little 
about the diversity of Missouri agriculture. We're second in 
beef cow operations, third in the number of turkeys raised. We 
really do have a little bit of everything. And Missouri is a 
big part of a national agricultural economy that produces and 
we should never forget it's the safest and the most abundant, 
the best tasting, least expensive food supply, not only in the 
world but in the history of the world. There's a lot of good 
people in the production chain who deserve credit for that, but 
at the heart of food production in the United States, and also 
at the center of our rural communities that produce our food 
and fiber, is the American family farmer and rancher. And 
that's why I have been assuring everybody, as you have been and 
Senator Lincoln has been, that we are going to write a farm 
bill that supports our family farming and ranching sector and 
it's going to be written by us in the congress, primarily the 
House and Senate Agriculture Committee. We're--it's not going 
to be written by our trade representatives, it's not going to 
be written by our trading partners and it's not going to be 
written by the Office of Management and Budget. So that's why 
we are here and they are not here to get input in terms of what 
ought to be in that farm bill. I'm also a believer that it 
would be very unfair of us to change our programs, particularly 
to lessen or diminish them, while we're in the midst of ongoing 
International Trade Organization. That's why Senator Lincoln 
and I co-sponsored legislation to extend the current farm bill 
until well after any--the Doha round is completed and any new 
agreement has been enforced. We don't want the people we're 
negotiating with to believe that we're going to unilaterally 
disarm. No matter what anybody suggests, that's not going to 
happen. We are going to support our--we're going to support 
programs on our family farmers and we're not going to change 
those programs unless and until we get a good deal in things 
like market access, and that good deal is going to have go 
through the Congress to be effective.
    I also want to mention, Mr. Chairman, I've done this a lot 
around Missouri, what does the safe and inexpensive food supply 
cost the Federal taxpayer? Of course it's an enormous boon on 
balance to our economy. But the domestic support programs are 
three-quarters of 1 percent of the total Federal budget. For 
that, we sustain an agriculture industry that produces 25 
million jobs, three-and-a-half trillion dollars in economic 
activity, and more important, gives us the security of knowing 
that we can feed our own people no matter what. We're never 
going to be at the mercy of foreign countries with regard to 
food as we currently are, at least to some extent, with regard 
to energy.
    George Washington wrote in 1796 that agriculture is of 
primary importance in proportion to the nation's advance in 
population and in other circumstances, and in Missouri, this 
truth becomes more apparent and renders the cultivation of the 
soil more and more an object of public patronage. I think he 
saw that we were going to be the storehouse and granary for the 
whole world, which is what we've become, and we're all 
committed to that and we know that part of that bottom is the 
family farmer and rancher. And I certainly would agree with 
Senator Lincoln. I think that this is one of the great things 
about serving on this committee is that we do--try and do 
things in a pretty bi-partisan fashion. We have our 
disagreements, but they're honest disagreements; we get them 
out on the table; and we resolve them.
    I get to introduce Jo Ann Emerson, but before I do that, I 
want to acknowledge several local dignitaries who I understand 
are here. I know Ken Dobbins is here. Ken is the President of 
Southeast Missouri University. Ken, thank you for being here.
    And Doctor Randy Shaw, who is the Dean of the School of 
Polytechnic Studies. Where is Randy? I'm told he--thank you for 
being here, Randy. We also have two of our great state 
senators, Jason Crowell and Rob Mayer are here. Jason is from 
Cape Girardeau and Rob is from--Yeah, we just came from--we 
just came from a ribbon cutting for the Show Mobile, which is a 
great--it's going to be a great touring rural health care 
facility. We're going to bring a wellness care, as well as a 
primary care, to people all around Southeast Missouri.
    Also--I don't know if he's here or in the Show Mobile, but 
Nathan Cooper is the state representative of Cape Girardeau, 
and Billy Pat Wright, Billy Pat from Dexter is here. Thank you 
for coming.
    And I know Jo and I want to mention, Mr. Chairman, we had a 
loss yesterday--in Plains we had a loss yesterday. Ott Bean, a 
great state representative--you knew him, I think, Blanche, 
lost his long battle with cancer.
    It was yesterday, wasn't it, Jo?
    Ms. Emerson. No, this morning.
    Senator Talent. This morning. And we don't--I think Ott 
would probably want us to get on with the hearing and not be 
preoccupied with him, but I wanted to mention that to those who 
did not know and ask that you would keep his family in your 
    It's a great pleasure for me to introduce a really, really 
great lady, a classy congresswoman, a woman who fights for 
Southeast Missouri like a tiger in the congress, and is also a 
great and good friend of mine, and all of us here, really. She 
just does a fantastic job, including on agriculture, and I know 
she wants to make a few comments. And it's a sign of how--how 
highly thought of Jo Ann Emerson is that she is--here we are at 
a Senate Agriculture Committee Hearing and she is sitting here 
at the table with us.
    Senator Lincoln. And I'll say, we initiated it, that they 
didn't give her a subpoena.
    Senator Talent. A Senator is voluntarily giving up time to 
a House member. It just goes to show you.


    Ms. Emerson. I want to thank you, Jim. Thank you all very 
much. I really appreciate this moment of time to be an honorary 
Senator I don't relish the work that you all have to do in the 
Senate, just given your lack of rule that----
    Ms. Emerson. Anyway, I do want to say, first of all, Jim 
and Senator Chambliss and Senator Lincoln, I greatly appreciate 
this opportunity. Just--I have to take a couple of minutes.
    You know, Jim has come--we go together on farm tours every 
summer, and really learn so much from all of our producers, 
whether they are row crop, livestock, dairy, you name it, and, 
seriously, when you don't grow up on a farm, Like Blanche did, 
we have to learn from our producers, and I can't begin to tell 
you how much we have learned from all of you and I want to 
thank you for it, and I'm just so thrilled that we can have 
Senator Talent on the Ag Committee, because agriculture is the 
most important part of our Missouri economy and I'm very proud 
of the fact that we, in Southeast Missouri, the 8th District, 
have the most diverse agricultural district in the state and 
one of the most diverse in the country, growing everything but 
citrus and sugar. I also want to say, about Senator Lincoln, 
that she----
    Senator Talent. And we're open to that, by the way.
    Ms. Emerson. And so--do you know how much it costs to 
convert sugar beets to ethanol, right? And Senator Lincoln and 
I have worked a long time together, both in Agriculture on the 
Delta regional--our Delta Regional Caucus, on the Mississippi 
Valley Flood Control Association issues, and there is really no 
better friend that we could have from the other party, but I 
really don't think of her as of the--of the other party at all 
because, as Jim says, and we all say, on agriculture issues, we 
work as a team and it's very much more regional in nature. And 
Blanche's successor, Marion Berry, who represents her old 
congressional district, and I pretty well introduce every bill 
-- AG bill together just like Bill and Blanche did, just like 
Jim and Blanche do as well. And then let me say about Senator 
Chambliss, whom I have known for many, many, many years, what 
an enormous opportunity we have having him as chairman of the 
Senate Agriculture Committee. You all probably don't remember, 
or maybe you do, that back in 1996 when we were writing the 
Farm Bill of 1996, it was Saxby, Bill Emerson, Richard Baker 
and Larry Combest who was the past House Ag Chairman, who 
actually held out and we would not have ever had the concept of 
an LDP in place had it not been for the four of them. And I 
can't tell you how important that has been to the sustaining 
our agriculture here in Southeast Missouri. But even more 
importantly, I have to say--and I realize that we have media 
here so I am on record saying this, I am so pleased that we 
have the Senate actually taking the lead on writing the farm 
bill this year, because when you have the nexus of the Midwest 
and the Mid-south, if we don't have folks who understand 
southern agriculture and rice and cotton, then we just get 
policies that will be not good. And so with you all at the 
helm, and Senator Talent there fighting for us, I mean, we're 
just blessed and I want to thank you all so much. I'm just glad 
that it turned out that way this year that the Senate takes the 
lead on that. You know, I have these prepared remarks and I 
know that for the record you're supposed to give them, but 
certainly all of our Senate colleagues very well understand 
that--how critical it is, No. 1, that agriculture not be taken 
hostage in any kind of budget reconciliation legislation we do. 
They have been in the forefront. I think we've all worked 
really well together in making sure that our negotiators at the 
World Trade Organization understand, as Jim says, that we will 
not unilaterally disarm. I'm very pleased that we had a really 
good effort in the Senate like we did in the House, in trying 
to extend the farm bill. Certainly that's my position, and it 
wasn't as popular in the House as it was in the Senate, you 
all, but needless to say, I think we understand what is at 
stake here, but I think--I'm hopeful that, again, that you all 
will hear in this hearing, and I apologize for having to leave, 
we have votes tonight so I actually have to head back to Saint 
Louis to catch a plane, but we all have a lot of challenges and 
we know we have a lot of challenges in drafting the next farm 
bill. Obviously not knowing exactly what kind of money we're 
dealing with is one thing, but I know that you all will do the 
great job that you always do on this front to ensure that the 
hopes and dreams and desires of out producers and our 
constituents will take the lead in writing the next farm bill.
    And certainly, as I said, the Senate--I can count on you 
all more, I think, than the House side to make that happen. And 
so I just look forward to--and I want to thank you all for 
coming to Cape Girardeau, Missouri, my home town, to conduct 
this very, very important hearing for the future of 
    The Chairman. Well, thank you, Jo Ann, for joining us.
    And we wouldn't dare come to Cape Girardeau without you 
being here. I've already told these folks I'm much more excited 
about being here this time than I was at Bill's funeral last 
time. He was such an inspiration to so many of us and to have 
you follow in his footsteps is really a lot of fun for us 
because you bring a lot of Bill Emerson to--he was not just a 
great inspiration, but a great friend to me and you bring so 
much of him to the table. So thanks for being here this 
    All right, we're going to start with our first of three 
panels this morning. And I will introduce this panel and, 
gentlemen, the way I introduce you is the way that you will 
give your opening remarks, and Allen, we're going to start with 
    Allen Helms is from Clarkedale, Arkansas. He represents the 
National Cotton Council.
    Paul T. Combs from Kennett----
    Ms. Emerson. Kennett.
    The Chairman. In South Georgia, it would be pronounced 
Kennett--representing the Missouri Rice Counsel, USA Rice 
Producers Group, USA Rice Federation, and US Rice Producers 
    Mr. Neal Bredehoeft, Alma, Missouri--now we have an Alma,
    Georgia, I know I'm not going to mess that one up, 
representing the American Soybean Association.
    Mr. Terry Hilgedick, from Jefferson City, Missouri, 
representing the Missouri Corn Growers Association and the 
Environmental Resources Coalition.
    Mr. Ron Beetsma, Chillicothe, Missouri, representing the 
National Grain Sorghum Producers.
    And Mr. John Thaemert, Sylvan Grove, Kansas, representing 
the National Association of Wheat Growers.
    Gentlemen, welcome this morning and Allen, we'll start with 


    Mr. Helms. Mr. Chairman, members of the committee, thank 
you for holding this hearing and providing the opportunity to 
present testimony on current and future farm policy.
    My name is Helms. I operate a diversified farming operation 
and gin in Clarkedale, Arkansas. I also serve as Chairman of 
the National Cotton Council. There are several key reasons for 
the stability of cotton production in Missouri, West Tennessee 
and Arkansas. They include the successful boll weevil 
eradication, stable and effective farm program and new cultural 
practices and technology. Unfortunately, the US textile 
industry has not fared as well. Cotton farmers are deeply 
concerned with the loss of our manufacturing customer base. We 
are committed to work with them. Manufacturers have indicated 
strong interest in making revisions to our Step 3 import policy 
and developing a possible WTO compliant replacement for Step 2.
    Rapid decline in raw cotton consumption by domestic mills 
has created challenges for cotton farmers who must identify 
export markets to replace domestic consumption. This adjustment 
places added pressure on our infrastructure including surface 
transportation and port facilities. While the cotton fiber is 
our principal product, cottonseed and its products account for 
12 percent of the value of the crop. As ethanol production 
increases, one of the by-products, dried distillers' grain, has 
depressed the value of cottonseed and meal, a not intended 
consequence that adversely affects farmers, cottonseed 
processors and merchants.
    Mr. Chairman, thank you for your efforts to develop and 
maintain a sound agricultural policy which is so important to 
this area and to the nation. I also want to acknowledge the 
work by Senators Talent and Lincoln in--that they have devoted 
to maintain sound policies. We believe the current farm law 
provides a stable and effective national farm policy, a 
combination of direct and counter-cyclical payments provide an 
effective means of income support without distorting planting 
decisions. Direct payment provides financial stability required 
by our lenders and suppliers, those who would promote 
replacement of counter-cyclical payment with a higher direct 
payments risk taking land out of producers hands, so it is 
important to maintain a balance. Also, higher direct payments 
would cause unexpected problems with payment limits. We 
strongly support continuation of the marketing loan. Marketing 
loans respond to low prices, it does not cause low prices. It 
is effective because it triggers when necessary, and it ensures 
that US cotton farmers are not residual suppliers. It is also 
critical that all production remain eligible for the marketing 
loan. Arbitrary limits signal our competitors that we are 
willing to be competitive on only a part of our production.
    Frankly, most cotton farmers in the majority of the 
industry would be satisfied with an extension of current laws, 
the provisions in the legislation authored by Senators Talent 
and Lincoln. They want more US--we are increasingly concerned 
over the Doha Negotiations. Other countries cannot match the US 
level of market access. We should either withdraw or reduce our 
effort or offer our domestic support. I also want to emphasize 
that the agreement that singles out US cotton for additional 
inequitable trade will not be accepted by US cotton producers.
    I am pleased to assure you and your colleagues that the 
cotton industry is prepared to continue to work with all 
interests to develop and support continuation of a balanced and 
effective policy for all US agriculture. Thank you for this 
opportunity to testify today and I will be pleased to respond 
to question at the appropriate time. Thank you.
    [The prepared statement of Mr. Helms can be found in the 
appendix on page 58.]
    The Chairman. Thank you. Mr. Combs.


    Mr. Combs. Good morning, Mr. Chairman, Senator Talent,
    Senator Lincoln. I'm Paul T. Combs, a rice producer and 
farmer from Kennett, Missouri. I serve on the Missouri Rice 
Council and I'm chairman of the USA Rice Producers Group and my 
testimony today is on behalf of both USA Rice Federation and 
the US Rice Producers Association. As Congress prepares for the 
next farm bill, the US rice industry supports maintaining an 
effective farm safety net that includes a marketing loan 
program as well as income support payments and planting 
flexibility. At this time, rice producers and others in 
production agriculture face an uncertain farm policy due to 
repeated proposals to cut our farm programs and the ongoing 
Doha Agreement. For these and other reasons, the US rice 
industry supports extension of the 2002 Farm Bill in its 
current form until such time as the WTO provides a multilateral 
trade agreement that has been approved by Congress.
    There are a number of key factors that support extending 
the 2002 Farm Bill until a final WTO agreement is in place.
    One, any reduction of current programs and spending levels 
on the farm bill results in unilateral disarmament by the US 
and ultimately weakens our negotiating position with other 
    And, two, writing a farm bill in advance of a final WTO 
agreement could result in a very short-term bill that must be 
rewritten when new trade bills are in place.
    No. 3, the 2002 Farm Bill was a fiscally responsible 
approach too farm policy and provides a safety net when needed.
    As you know, my Senators Jim Talent and Kit Bond, along 
with Senator Lincoln and other Senators have introduced a 
measure in the Senate to extend the current farm bill through 
the crop year after Congress approves a WTO agreement and we 
support such practical legislation.
    To be a viable family farm, we must use economies of scale 
to justify the large capital investment costs associated with 
farming today. Payment limits have the negative effect of 
penalizing viable family farms the most when crop prices are 
the lowest and support is the most critical.
    The US rice industry opposes any further reduction in the 
payment limit levels provided under the current bill, and we 
appreciate the efforts of the Chairman and the members of this 
committee to cut through the rhetoric of those who apparently 
would like to see reductions in support of rice and other farm 
families, and for your efforts in continuing to focus on the 
realities of the US food and fiber production system.
    Forty to fifty percent of the annual US rice crop is 
exported, so trade is clearly good for our industry, and 
despite the continuing trend toward market liberalization, rice 
outside the United States has remained among the most protected 
agricultural products. In addition, US policies intended to 
punish foreign nations to encourage regime change, 
disproportionately hurt US rice producers. Unilaterally imposed 
US trade sanctions have played a key role in destabilizing the 
rice industry at certain times and restraining its long term 
market potential in countries such as Cuba, Iran and Iraq. In 
conclusion, US farm policy must provide a stabilizing balance 
to markets and reliable planning horizon for producers. We urge 
you to recognize how well the current farm bill is working for 
US agriculture and to consider ways to maintain its structure 
as we begin the debate on the next farm bill. In the interim, 
however, the US rice industry supports an extension of the 2002 
    Mr. Chairman, we thank you for holding this hearing in 
Missouri today and the opportunity for the US rice industry to 
express our views on our nation's farm policies.
    [The prepared statement of Mr. Combs can be found in the 
appendix on page 63.]
    The Chairman. Thank you. Mr. Bredehoeft.

                      SOYBEAN ASSOCIATION

    Mr. Bredehoeft. Good morning, Mr. Chairman, Senator Lincoln 
and Senator Talent. I'm Neal Bredehoeft, soybean, corn and hog 
farmer from Alma, Missouri and a member of the American Soybean 
Association Board of Directors, and until last week, served as 
SA's chairman. I very much appreciate the opportunity to appear 
before you today.
    Mr. Chairman, soybean producers in the Midwest, as well as 
other regions of the country, support the safety net we now 
have under the 2002 Farm Bill. Most soybean farmers would also 
support extending current programs when Congress considers new 
farm legislation next year. Unfortunately, the current budget 
baseline for farm program spending declines over the next ten 
years and will probably not accommodate the expected outlays 
based on current support levels. We would need additional 
funding, as was made available in 2001 for the 2002 Farm Bill, 
in order to extend existing programs. Given the outlook for 
Federal budget deficits, as opposed to surpluses in the coming 
years, we will be fortunate to keep the funding level we have.
    And after facing cuts in the agriculture budget last year, 
we can expect Congress to consider further reductions in 
spending after the elections this fall. So budge factors alone 
are likely to force Congress to look at changing the current 
farm bill in this year's--in next year's farm bill.
    The second reason we need to look at alternatives to the 
current farm program is the potential for additional WTO 
challenges of current programs. We are familiar with the 
results of the Brazil's case against the US cotton program last 
year. In order to avoid sanctions, the US will need to change 
the Direct Payment program to eliminate the planting 
restrictions on fruit and vegetable crops. Also, both the 
Marketing Loan and Counter-Cyclical Programs were found to 
cause serious prejudice and could be subject to other crops, 
including soybeans.
    We're also watching the current negotiations on WTO 
agreements. Last October, the Administration offered to make a 
60 percent reduction in outlays permitted under the most 
production and trade-distorting programs, including the 
Marketing Loan and dairy and sugar price supports, and a 53 
percent overall reduction in all trade-distorting programs. ASA 
and other farm organizations are insisting that importing 
countries make equally aggressive reductions in their tariffs, 
including on soybean and livestock products. If an agreement is 
reached and approved by Congress next year, we will need to 
make major changes in current farm programs.
    Given these uncertainties, ASA's policy on the 2007 Farm 
bill is that, No. 1, there be no further cuts in the CCC budget 
baseline for agriculture spending; No. 2, that farm programs 
not distort planting decisions between crops; and that, three, 
that future programs be WTO compliant to avoid challenges like 
the cotton case. To explore alternatives, ASA organized a Farm 
Bill Task Force last year, which has been working with other 
farm organizations to look at so-called Green Box programs that 
would be considered non-trade distorting under the WTO.
    The result of this analysis indicate a variety of options 
that would guarantee 70 percent of historical income and would 
still be WTO compliant. These options include basing the 
guarantee on whole farm versus specific commodity income, 
looking at using either net or gross income, and guaranteeing 
income for only program crops, for program crops and 
horticulture crops, and also livestock. The cost of these 
options range from 3.3 billion dollars per year to up 10 
billion dollars per year for a 70 percent guarantee.
    Neither ASA nor any other organization participating in 
this analysis has endorsed the revenue guarantee concept.
    Instead, we are now working with other groups to see how 
revenue guarantee could be combined with one or several other 
farm programs to create a more effective safety net for 
    Mr. Chairman, ASA is also very supportive of proposals to 
strengthen conservation, energy, research and trade titles for 
the 2002 Farm Bill. We are particularly interested in looking 
at programs that would support soybeans as a source of 
renewable energy and to promote domestic biodiesel production 
through the Commodity Credit Corporation. The CCC has operated 
a bio-energy program since 2001, providing payments to 
biodiesel producers who utilize domestic feed stocks such as 
soybean oil. This program has facilitated expansion of domestic 
biodiesel production, but the program sunsets after 2006. 
Therefore, ASA urges Congress to authorize and fund a biodiesel 
bio-energy program. With regard to conservation and research, 
we are concerned by recent actions that have depleted funding 
for these programs in order to pay for disaster assistance or 
to cover budget reduction commitments. ASA supports increasing 
funding for conservation payments to producers on working lands 
such as through the Conservation Security Program. We also 
believe that a significant number of acres currently locked up 
in the Conservation Reserve Program could be farmed in an 
environmentally sustainable manner, given the enormous increase 
in no-till farming practices that have been implemented over 
the past 10 or 15 years.
    Finally, we strongly support maintaining funding for trade 
promotion activities under the Foreign Market Development and 
Market Access Programs, and for international food aid.
    Thank you again, Mr. Chairman, for the opportunity to be 
here today.
    [The prepared statement of Mr. Bredehoeft can be found in 
the appendix on page 74.]
    The Chairman. Thank you. Mr. Hilgedick.


    Mr. Hilgedick. Thank you, Mr. Chairman. On behalf of 
Missouri's 15,655 corn farmers, thank you for the opportunity 
to testify this morning. My name is Terry Hilgedick. I'm a 
farmer from Central Missouri. I also serve as president of the 
Missouri Corn Growers Association and a board member of the 
Environmental Resources Coalition. Before discussing MCGA's 
recommendation for the Farm Bill, allow me to show a bit of our 
environmental success story right here in Missouri. While data 
shows most corn growers are good stewards of the land, MCGA is 
working with producers to help them do an even better job of 
protecting the environment by accelerating the adoption of 
farming practices that improve water quality while maintaining 
or improving profitability. With those goals in mind, the MCGA 
has assembled a partnership of businesses, as well as 
governmental organizations, to proactively address water 
quality and environmental issues. It's known as the 
Environmental Resources Coalition. This coalition is dedicated 
to maintaining, improving and enhancing land and water 
    In order to accomplish such a mission, ERC partnered with 
such governmental agencies as the Environmental Protection 
Agency, the United States Department of Agriculture, the 
Missouri Department of Natural Resources, Missouri Department 
of Agriculture and Agriculture Research Service, as well as 
industry groups such and Syngenta and Bayer.
    MCGA and its affiliate ERC, are committed to quality 
agricultural stewardship. This is evident in many agricultural/
environmental projects which we are currently involved in.
    One of those projects, our first project, is called the 
WRASP program. The WRASP program dealt with the scientific 
discovery of how atrazine and its metabolites move throughout 
the entire watershed, including losses at field level and 
transport through the stream and river basins. Essential Best 
Management Practices for atrazine were developed that allow 
farmers to continue to use the product while limiting its 
exposure to the environment. WRASP was the second--was the 
largest automated collection project of its kind in the 
    The scientific results were very positive and are currently 
being prepared for publication.
    The Stewardship Implementation Project will be viewed as 
the second stage of WRASP. It's the implementation of a lot of 
the lessons learned from the WRASP research. It seeks to take 
the management practices developed by WRASP and disseminate 
them throughout key watersheds by engaging farmers in a 
friendly on- farm demonstration. A key goal for the SIP project 
is the fair implementation of the TMDL process, the total 
maximum daily load requirement. Additionally, data acquired in 
the SIP project has been used successfully to remove four 
water-bodies from the state 303d list, which is a list of 
impaired water bodies compiled by the Missouri Department of 
Natural Resources.
    Generally speaking, MCGA and ERC support the Conservation 
Title of the current farm bill. We seek to maintain current and 
future funding levels at their maximum level. The general 
consensus of corn farmers is that direct payments in the 
commodity title of the bill should not be sacrificed by 
replacing them with increased conservation funding. That being 
said, we do have thoughts and suggestions we would like to 
offer on the Conservation portion of the Farm Bill.
    The 2007 Farm Bill should reinforce the original commitment 
of the Conservation Reserve Program to soil conservation rather 
than wildlife habitat. With that focus in mind, we should 
continue to enroll and give deference to taking the most 
environmentally fragile acres out of production. CRP management 
practices should be broadened to be more flexible to those with 
land enrolled in the program. For instance, if soil 
conservation is the primary focus of the program, allowing 
farmers to periodically mow CRP acres makes more sense than 
requiring tillage of those acres.
    We need to collectively evaluate the future of the vast 
resources of the nearly 40 million acres in the CRP program. Do 
we have a long-term plan for this resource? Where are we going 
with the resource? Will this be maintained as a land bank?
    Will it be returned to production? Can the less fragile 
acres be developed as a cellulosic ethanol reserve bank?
    The Conservation Security Program. The current 
implementation is not streamlined and consistent from county to 
county. We need forward-looking programs that the CSP will 
require more specially trained staff than before, not less. A 
better, more uniformly applied process for application, coupled 
with properly trained technical assistance providers, would go 
a long way toward improving this valuable program.
    The current program does not seem to adequately reward 
growers for past conservation practices implemented, such as 
terracing. There is a disproportionate incentive to encourage 
new conservation practices. That scenario seems to set up a 
double standard as those who have been stewards of the land for 
a long time and do not receive the same reward as those spurred 
to implement such practices by incentives provided by CSP.
    Recently atrazine received full re-registration from the 
EPA. Our WRASP data played a role in proving that farmers can 
successfully manage atrazine in an environmentally friendly 
manner. Atrazine is a valuable tool used in corn production and 
its loss would have cost producers billions of dollars per year 
to find alternatives. In spite of this, the CSP program takes a 
dim view of atrazine in the pest management section. The 
pesticide management component is based on an outdated Window 
Pesticide Screening tool standard for a herbicide's 
environmental impact. Under this standard, any crop using any 
amount of atrazine does not qualify for payments under CSP. Our 
WRASP project directly contradicts the standard by proving that 
atrazine can be a benefit to the environment and farmers 
through prudent and responsible application and use.
    On to the Commodity Title. We believe that American 
producers are best served by an extension of the commodity 
title of the 2002 Farm Security and Rural Investment Act until 
a WTO agreement is reached. It is nearly impossible to 
formulate a comprehensive new policy with an unknown farm 
subsidy and trade variables hanging over our head. While the 
satisfaction level with the current bill is high, the 2002 bill 
is not perfect. In a given year, large crops at low prices 
allow raiding of the marketing loan program while growers in 
short crop areas in the same year are largely left out of the 
safety net. Since loan deficiency payments are based on current 
year production, revenue suffers from the reduced production as 
well as overall farm program benefits.
    Recommendation for the Energy Title of the Farm Bill. A 
wave of renewable fuel growth has been a God-send for rural 
America. Expansion of the farmer-owned ethanol industry can be 
considered one of the brightest spots on rural economies today.
    We attribute these successes to the entrepreneurial spirit 
of American farmers and the assistance of the Farm Bill. Any 
new farm bill must have an energy title to continue the 
revitalization of rural America.
    As significant as the WTO is, it is not nearly as important 
as an energy component in the 2007 bill. The demand for corn 
created by the ethanol industry will influence corn prices more 
substantially than will any increased exports resulting from 
the WTO agreement. More needs to be done to foster domestic 
market access rather than dealing with all too fickle foreign 
markets which may or may not materialize from a WTO agreement.
    The Federal Renewable Fuel Standard was a monumental 
accomplishment which provides a baseline for renewable fuel 
usage nationwide. We are open to a wise and prudent upward 
adjustment to the standard as needed to help foster the 
renewable fuels industry out of its infancy and into maturity.
    As our farmers move closer to providing the energy needs of 
our nation through ethanol and biodiesel production, an 
expansion of the RFS will ensure that our homegrown products 
have a position in the marketplace.
    One final point deals with crop insurance. The Federal crop 
insurance program can be improved with a modification to the 
program what would offer better protection to farmers without 
substantial cost increases. High risk designations all too 
often exclude growers that would otherwise participate in crop 
insurance. A subject close to the hearts of many Missouri 
farmers is crop insurance for losses caused by the man-made 
spring rise on the Missouri River. Farmers in the Missouri 
River valleys are being put into an impossible position. The 
level of risk that they are being asked to withstand is 
unconscionable. The inflexibility of the US Fish and Wildlife 
Service, US Army Corps of Engineers and the USDA through this 
whole process has been monumental. Although we have made it 
through one spring rise without substantial harm, do not assume 
that government imposed flowing and crop damage will not happen 
in future years.
    In summation, we believe the 2002 Farm Bill is, for the 
most part, is meeting the needs of American agriculture by 
acting as an effective safety net for our food, fiber and fuel 
producers. We support policies that enables American farmers to 
be globally competitive, responsive to markets and 
environmentally responsible. We look for programs to provide 
producers with access to global markets, access to capital, 
advances in technology and risk management. As mentioned, there 
are modifications that should be made to enhance some programs 
and we look forward to working with our partners in Missouri 
agriculture and the US Congress to make any necessary changes.
    Thank you.
    [The prepared statement of Mr. Hilgedick can be found in 
the appendix on page 77.]
    The Chairman. Thank you. Mr. Beetsma.


    Mr. Beetsma. Thank you, Mr. Chairman. I would like to thank 
you for the opportunity to express my views on the next farm 
bill and the impact the farm bill will have on our family 
farming operation. I am Ron Beetsma. I serve as a delegate to 
the National Sorghum Producers. I am a partner in our family 
farm operation near Chillicothe, Missouri, where I farm with my 
two sons and a brother and operate 6500 acres. Planting sorghum 
is ergonomically smart--is an ergonomically smart thing for me 
to do on my farm. Sorghum is a profitable crop that uses fewer 
inputs than other crops, helping me hedge my risk against 
summer heat and drought. Our farm also produces corn and 
soybeans, and we are involved in a farmer-owned ethanol, 
biodiesel and food processing cooperatives and a farm-run 
Identity Preserves venture. I understand that foreign policy 
may look extremely different 5 years from now because of a 
potential WTO agreement and the current budget situation. If 
that is the case, I ask that you keep in mind the cyclical 
nature of the agricultural economy. Any new farm programs need 
to be available to the family farm operations like mine when 
the agricultural economy slows down. Looking at the current 
farm programs, direct payments and marketing loan programs 
provide our operation with the most protection. If Congress is 
to change our current programs, I ask that the committee 
preserve the equitable relationship between commodities. Also I 
would like to ask, if we do have a WTO agreement and we change 
our farm program, that those changes be vetted with the ag 
    I am more concerned about having good policy than I am in 
rushing to change the current programs because our farm laws 
are expiring. Regarding conservation programs, sorghum is a 
water sipping crop and it uses less water than other crops in 
my rotation. If a greener farm bill is to be developed, I ask 
that those programs reward crops that use less water and need 
fewer inputs. For example, the EQIP Program works well, but I 
am told by fellow sorghum farmers that they have seen overall 
water use actually increase rather than decrease.
    Finally, ethanol production is also making sorghum 
producers money. Fifteen percent of the sorghum crop is made 
into ethanol. But that's about the same percentage as the corn 
crop. I receive better prices for my crops with the ethanol 
plants in my area. The next farm bill needs to expand the role 
of the energy market and strengthen those prices for my 
operation and my neighbors.
    You have a great challenge rewriting our nation's farm 
laws. Mr. Chairman, the sorghum industry will work with you as 
you develop these farm programs.
    Thank you for your time and I'll be glad to answer any 
questions you may have.
    [The prepared statement of Mr. Beetsma can be found in the 
appendix on page 82.]
    The Chairman. Thank you very much. Mr. Thaemert.

                         WHEAT GROWERS

    Mr. Thaemert. Thank you, Mr. Chairman and members of the 
committee. My name is John Thaemert. I'm a wheat farmer from 
Sylvan Grove, Kansas, and currently serve as the First Vice 
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 2007 Farm Bill.
    The 2002 Farm Bill has some strong points and the wheat 
growers that I represent believe the next farm bill should 
build on these strengths. But while wheat growers generally 
support current policy, much of the 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 loan deficiency program. 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 
    Also, the target price for wheat is set considerably lower 
than market projections indicated and short crops due to 
weather disasters have led to higher prices. As a result, there 
have been very little support from the counter-cyclical program 
As you can see by the chart in my testimony, the support level 
for wheat compared to other commoditi4es for the 2002 through 
2005 crop years is relatively low. We are not, in any way, 
suggesting that other crops receive too much support, we are 
simply stating that wheat producers need a viable safety net 
also. Undoubtedly America's farmers would rather depend on the 
markets than the government for their livelihoods. The current 
economic and trade environments do not offer a level playing 
field in the global marketplace. This fact, coupled with 
escalating input costs and devastating weather related crop 
losses, have been especially troubling for many of our members.
    These issues, and a potential change in the WTO rules have 
led us to begin looking at other options for the 2007 bill. We 
are examining the impact of increasing the direct payment. This 
component provides the most reliable cash-flow and, as such, 
greatly aids in securing operating credit. We are also studying 
an increase in the wheat target prices more in line with 
today's market conditions while leaving the current structure 
of the loan program as is. Another concept involves altering 
the counter-cyclical program to be based on revenue rather than 
price alone. I expect our full board will be looking closely at 
the effects of these options and others for the Commodity Title 
in the near future, and will soon recommend specific proposals.
    Also, our members would like to see conservation programs 
continue as presently authorized but be fully funded. We also 
believe strongly in the pursuit of renewable energy from 
agricultural sources and support additional incentives for 
further research and development of renewable energy, 
specifically cellulosic ethanol.
    In closing, I must state that we are firmly committed to 
developing an effective 2007 farm and food policy and welcome 
the opportunity to work with you to do so.
    Thank you for this opportunity and I welcome any questions 
you may have.
    [The prepared statement of Mr. Thaemert can be found in the 
appendix on page 91.]
    The Chairman. Thank you very much. Let me begin this by 
noting that the comments that each of you made relative to your 
specific crop is exactly what we're looking for as we get 
around the country. Some of the testimony we heard in--this 
morning was similar to testimony we heard in South Georgia. 
Some of it will be similar to what we'll hear in Iowa next 
week. But there are other parts of the country that--it's going 
to vary a little bit, so what you've had to say this morning is 
keenly important to us. We have a series of questions that I'm 
going to ask, and again, I want to go right down the panel, 
Allen, and we're going to start with you on this first one, 
because we want to establish a record everywhere we go relative 
to these particular questions.
    How would you prioritize the programs of the farm bill 
generally and the Commodity Title specifically? How would you 
rank the relative importance of the direct payment program, the 
marketing loan program and the counter-cyclical payment 
    Mr. Helms. Of course within the farm bill, I think there's 
no question we would prioritize the commodity programs as far 
as the market loan would be our No. 1 priority, and I think 
that we would certainly put the conservation program with a 
high priority, but the commodity programs would be the No. 1 
priority within the commodity programs, we certainly think that 
the market loan is--is our best part of the program and it's 
absolutely necessary for us to be viable producers. And then 
the counter-cyclical program is certainly a very strong section 
in that as well. And the direct payment program certainly are 
important, too. We feel that the whole package is important to 
us. If I had to prioritize it, that's the way I'd do it.
    The Chairman. Mr. Combs?
    Mr. Combs. Mr. Chairman, the commodity title is by far the 
most important title for the rice producers, and that would be 
the highest priority for us, and that would probably be 
followed by conservation and then research and trade. And 
within the commodity title, the marketing loan program is by 
far the most important and it's even more so that way in 
Missouri because we have several thousand acres of rice that 
are not covered by---- they're not in the base program payments 
because our rice acreage has expanded so much in Missouri. 
We've got thousands of acres of rice that are covered by the 
marketing loan program but are not covered by the direct or 
counter-cyclical payment system.
    The Chairman. Mr. Bredehoeft.
    Mr. Bredehoeft. From our viewpoint, as far as the commodity 
title, it's important that we have a strong safety net as far 
as the soybean industry is concerned, but when you look at the 
other titles, when you look at research and conservation, of 
course the energy title is very important. Trade is very 
important. All four of those are about equally important. If we 
have a good safety net, then we can fund these other titles 
appropriately. I think there's where you can look into the 
future, so to speak, and you do that research then it does 
promote new--you can find new uses. You can find the trade, you 
can find new markets, to make that commodity title it becomes 
important to the future. So I think when you have---- when 
you're looking at it, the commodity title in the short term is 
the--it's important to have a strong safety net but those other 
areas, we need to get into the research, energy, trade and 
conservation, those are the ones that will help us long term.
    The Chairman. And Mr. Hilgedick:
    Mr. Hilgedick. Senator, I would look at the commodity title 
as the most important section, followed by the energy title. 
We've seen a lot of benefit out in the ethanol industry and the 
corn growers in general would be assisted by the bio- energy 
program. Get jump started with the ethanol plants going into 
production. The third most important would be the conservation 
section. As far as rating the commodity programs, given the 
current price forecast, I would probably have to choose direct 
payment as the most important portion, followed by marketing 
loan and by counter-cyclical.
    The Chairman. Mr. Beetsma.
    Mr. Beetsma. As far as the commodity title is concerned, I 
would rank the direct payment--depending on your area, the 
direct payment would be probably the most important in the 
semi- arid areas where you--maybe not raise a crop, but for us, 
the areas that we're in, the LDP is probably--would be real 
important. To those two are interchangeable. And then the 
counter-cyclical payment would be definitely a distant third.
    The Chairman. Mr. Thaemert.
    Mr. Thaemert. As far as which type of a farm bill we would 
prioritize as top, no doubt, everybody here was testifying, to 
commodity title, the boom and bust cycle of production 
agriculture, we're all aware of, if we could keep that safety 
net in place, everything else would fall into place behind it.
    We've got to keep our producers on the land. We've got to 
keep our agricultural infrastructure in place, otherwise the 
trade title and conservation title, we need those stewards on 
the land working. All those other things are irrelevant if you 
don't have that safety net and provide that, that economic 
safety for those producers on the land. So the commodity title 
is by far the most important for our members. As far as the 
relative importance of the various components of the farm bill 
as is, by far, you gather that from my testimony, the direct 
    It's pretty hard to go to a lender and say, ``Well, I think 
I might get an LDP this year,'' or ``I think Japan is going to 
increase their trade with us and prices might go up.'' But when 
you've got a direct payment, you can show that to the lender.
    They know that you're going to get cash-flow and they know 
that you're going to be a good credit risk. So the direct 
payment is by far our favorite tool. I think the direct payment 
is what you can build a lot of things into, too. I think direct 
payment should be looked at as possibly stacking, maybe say 
coupling that with an increased direct payment if you--if you 
go up a risk management account and put some money into cover 
that top tier of losses, those shallow losses that just eat 
away at a producer after--year after year after year of losses, 
if you could have a direct payment in a farm savings account, a 
risk management account that you can draw on through tough 
times, you get an increased direct payment as a result of 
establishing one of those in a local financial institution. 
That's a thought that I think we could look at. Also, there are 
some private sector insurance companies that may look at 
insuring that level of loss that, again, creates those back-to-
back shallow losses that are so devastating to producers. I 
think a direct payment could be used to fund some of that in 
the way of, say, an insurance type of payment for--for that 
type of program. But direct payment is by far. And as you guys 
on the committee probably know, we haven't gotten, as wheat 
producers, much benefit from the counter-cyclical or loan 
deficiency. So it really is somewhat irrelevant to the wheat 
    The Chairman. Mr. Combs, we'll start this second question 
with you. Payment limits are always being shot at. Do we need 
to change payment limits in the next farm bill?
    Mr. Combs. Payment limits should not be reduced in the next 
farm bill.
    As we talk about in our statement, they're already plenty 
restrictive when it comes to the high cost of production crops 
like rice and cotton. We don't think they should be limited and 
we think that all production should be eligible for the 
marketing loan program.
    The Chairman. Mr. Bredehoeft.
    Mr. Bredehoeft. I think Mr. Combs probably covered it well. 
From my viewpoint, too, we're--ASA is opposed to payment limits 
and, you know, with the increased cost of production, why we're 
happy with that and we'd just as soon they not reduce it 
    The Chairman. Mr. Hilgedick.
    Mr. Hilgedick. I would agree with Mr. Bredehoeft. Our 
position is that we see no reasons to lower payment limits from 
the current level.
    The Chairman. Mr. Beetsma.
    Mr. Beetsma. I am in agreement with the group. We've had 
to--over the years, we've had to restructure our own ownership 
of our farming operations so it would be possible to use the 
payments that were available to us. And to--to drop it would 
be--farms are getting larger. They're not getting smaller.
    And we need to keep these payments where they're at or 
increase them.
    The Chairman. Mr. Thaemert.
    Mr. Thaemert. The National Association of Wheat Growers is 
officially against any type of reduction in payment 
    But if we do look at an increase in the direct payment, of 
course we'll have to increase that payment limit. There's a 
$40,000.00 direct payment, $65,000.00 for counter-cyclical and 
$75,000.00 for market loan at this time. I would again point to 
the fact that many producers have not used those higher tiers 
of payments. So it would make sense if they had some 
flexibility to switch between those, whichever tier you needed 
that flexibility. But the direct payment is something we really 
focus on. If we're going to increase the direct payment, then 
we need to increase that payment limitation. I like the way you 
phrased that question. We can expect to further reduce the 
payment limitations. Gosh, I hate to hear that. But we are 
officially opposed to that. So I know there's going to be some 
attack on those payment limitations, but we, again, stand 
completely opposed.
    The Chairman. Mr. Helms.
    Mr. Helms. Well, I think I'd probably come right out and 
say we'd like to see them raised. We certainly don't feel that 
there should be any reduction. As we see what's happening 
within agriculture with a lot of rising--our input costs are 
constantly rising, it just makes it that much--much more 
difficult to be--to be able to work with any kind of lower 
payment limits. And also, we're concerned with any rules of 
eligibility that might with the payment limits.
    The Chairman. Mr. Bredehoeft, the Doha Round of 
negotiations seeks to provide additional market access for US 
agriculture goods in exchange for cuts--forced cuts in domestic 
farm payments. How important are exports to the future of 
    Mr. Bredehoeft. Well, from the soybean industry viewpoint, 
they're very important because we export 45 percent of our crop 
every year, not counting the soybean and meal destined for the 
livestock industry. I mean, that does get supported, too. So 
the exports are--trade is a very key part of our policy, that 
we increase that trade, increase those exports. Since we have 
96 percent of the world's population living outside of the 
United States, and we're looking at new markets, new avenues to 
sell our soybeans and soybean products, naturally that's where 
it's going to go. Thus we're going to have more options there 
than we are in the United States. So exports are very important 
to the soybean industry.
    The Chairman. Mr. Hilgedick.
    Mr. Hilgedick. Exports are important. But in contrast to 
the growth of the renewable fuels industry and our domestic 
demand that has been so richly enhanced by it, legislation and 
by the entrepreneurs and various growers, we see that as 
probably the largest potential growth sector in corn demand is 
to provide some sort of energy security for the country. What 
has gone on the last few days, it's been getting more and more 
and more important every day. So we see the need for exports--
-- increasing exports, but at the same time, demands driven by 
our own needs here at home outweigh those export possibilities.
    The Chairman. Mr. Beetsma.
    Mr. Beetsma. Nearly half the sorghum crop is exported. And 
according to the factory, if we have a Doha Agreement, we will 
actually see exports decrease. You couple that with the fact 
that we would be giving up domestic support to get that market,
    Doha would not be a good deal for the sorghum industry.
    The Chairman. Mr. Thaemert.
    Mr. Thaemert. We, as you know, export probably more than 
any other titles or any other commodity. This weighed heavily 
in our discussions. We discussed the adoption of biotechnology 
to wheat production and--and have struggled mightily with that 
and just recently come to agreement that we should adopt it 
halfway. We have a dependence on trade for wheat. Wheat is 
heavily dependent on exports. We do not, however, want to see 
any cut in domestic support. Just as I stated earlier, it 
doesn't make sense to cut infrastructure, cut our--cut our 
producers and--just for the sake of maybe having trade. Trade 
is a fickle political tool. We've seen that and we've seen that 
many times, one country may say, ``Well, now we're not going to 
trade with you because of this, that or the other thing.'' And 
that's not very--that's not very reliable for income for our 
producers. So we take care of our domestic support first. But 
the trade--trade is important. It's one of the tools. It's one 
of the tools that we need to keep in mind.
    The Chairman. Mr. Helms.
    Mr. Helms. Yes, we've seen our domestic textile industry 
decline. US cotton has become more and more relying on trade.
    We're exporting over two thirds of our crop currently and 
that will most likely continue to get to be a larger and larger 
percentage. So market access is very important to us. Effective 
market access into certain countries, particularly China, is 
very important to us. China is importing more cotton than our 
domestic industry is buying. So we--we particularly are 
interested in market access, and particularly in China and 
Southeast Asia, the Indian sub-continent, that area.
    The Chairman. Mr. Combs.
    Mr. Combs. Mr. Chairman, we export about 40 to 50 percent 
of the rice grown, and our concern is that any additional 
market access be full and meaningful. And, you know, if there's 
going to be an offset in domestic support, let's be sure we 
have access. Rice tends to be treated as a sensitive commodity 
by other countries and we don't need to be caught in that trap.
    Another thing we would observe is there is a market for a 
billion dollars worth of agriculture is to Cuba and it wouldn't 
cost a dime to US taxpayers if we start trading with them.
    The Chairman. Mr. Hilgedick, some organizations have 
explored the possibility of a revenue based approach for the 
commodity title. What are your thoughts on a revenue based 
approach to a safety net as a replacement for the current 
commodity program?
    Mr. Hilgedick. Senator, I've seen brief snapshots of some 
of those proposals that are out there. I think that's 
worthwhile to have a look at and arrive at an opinion. We have, 
however, those sorts of--that sea of change is going to take 
time to enact. There are some concerns from myself particularly 
with the depth of mass data that--that the data base is deep 
enough and broad enough to provide the sort of coverage and 
sort of revenue assurance, that the data is not flawed and it 
is fair and equally applied across the country. I can see 
border--a border concern between counties as far as cost and as 
far as revenue, that that could be an issue there. Also, for 
anything to work like that for us, as far as the corn growers 
association in Missouri, those sorts of coverages need to be at 
the farm level so that an individual farmer has the sort of 
true safety net that he needs to continue to farm. County level 
support, particularly in Missouri, we have tremendous 
variability within the counties. And farmers could be left out 
of the safety net entirely, should a county not be hit. So we 
see some value in some of those things. I haven't seen anything 
that I would be particularly prepared or ready to support at 
this time. I think that at least a transition period with an 
extension all the more important. It seems to make a lot of 
sense that we can evaluate those sorts of programs as they come 
along if they need to be evaluated because people's livelihood 
is going to depend upon those programs.
    The Chairman. Mr. Beetsma.
    Mr. Beetsma. Most of the research that's been done on this 
revenue insurance has been done in the Mid-west on the corn and 
soybeans. In the sorghum growing areas, it--the--the risk of 
production is much greater and so it's very possible not to 
have a crop in those areas. And if you have a 70 percent--70 
percent of zero is zero, so revenue insurance would not be good 
in those areas.
    The Chairman. Mr. Thaemert.
    Mr. Thaemert. You know, the devil is always in the detail.
    It would depend on how this thing is worked out. But as you 
heard my testimony, right now everything you've got is on price 
alone. If you've got no crop, price doesn't mean anything. You 
can't get a loan made on something you don't have. LDP is---- 
you can't get a loan on something you don't have and LDP is 
worthless. Revenue definitely, I think, considers--or, needs 
some--deserves some consideration. Again, the devil is in the 
details. If we put something together and try to push it and 
it's not been fully researched and it's not something that's 
beneficial, of course, you know, we would be opposed to that.
    But we are looking at--wheat growers are looking at some 
revenue based approaches. You know, I--one thing that I--I like 
to make the analogy of the farm bill, or--any other good policy 
is like a tool box that a farmer has. If you want good tools, 
there's various components that you use. You want good 
components and you want components that you can use, that are 
effective. Many of the components that we've had in the 
counter-cyclical and the LDP are not any good for wheat 
producers. But we don't want to replace that with a substandard 
tool either. It's something that we want to be very careful 
about having to do. One thing I think that if we do go for a 
base program, that we look at a net revenue program. We've 
dealt with an 2002 bill based on prices and projections from 
    We all know what the input costs have done in the last 
three years. It's been horrendous for fuel and fertilizer, for 
    Those costs have really been a burden on the producers. So 
that's something we need to look at. If we do something along 
those lines, maybe a net revenue program of some sort we can 
build on.
    The Chairman. Mr. Helms.
    Mr. Helms. We would be very concerned at this point in time 
to move into some type of revenue based program, you know.
    We don't think you can live up to the protection--risk 
protection that we have currently with the marketing loans and 
counter-cyclical programs. That we just don't feel that it's 
ready to--that there's anything there to--we've seen that would 
even come close to being as good for our risk as the programs 
we have, plus the fact that we're not sure that it---- it's 
fiscally responsible.
    The Chairman. Mr. Combs.
    Mr. Combs. Mr. Chairman, we don't see it even minimally 
replacing the commodity program. There may be a role with some 
revenue insurance in addition to the commodity program, but we 
don't see it replacing it unless producers spend hundreds of 
dollars to develop their land to be able to irrigate and spends 
thousands of dollars a year on fuel or--or energy sources to 
keep the water on so as not to suffer production losses. So we 
really have to see a specific program. It would be hard to 
envision them working.
    The Chairman. Mr. Bredehoeft, your association has done a 
lot of work on this, what are your current thoughts?
    Mr. Bredehoeft. Well, we started, like I said earlier, with 
a task force put together a year ago. We started looking at a 
couple of things, the WTO and also the budget constraints, so 
we started looking at this type of a program, revenue 
insurance, and of course we--we're still--and someone mentioned 
the devil is in the detail, and we still got a lot of details 
to work through on, on how that would affect, you know, from 
one area of the country to the other area, from one county to 
the other county as far as producers and how their costs, of 
course, align and, you know, whether it needs to be based on 
net or gross or however it needs to be based. You know, our 
viewpoint is probably--there's probably going to have to be 
something done different than we've done in the past, and this 
is just one option that we're looking at right now. And you 
know, like I said, we're not to the point that we've got all 
the details worked out and it's just now that we've got other 
commodities that we're working with to see how this would work 
out as a program for everyone concerned. So a lot of work to do 
but I think it's truly an option that we need to take a look 
    The Chairman. Mr. Beetsma, you must show an increase in 
conservation and energy programs coming to the expense of the 
commodity programs.
    Mr. Beetsma. I believe energy should be considered a 
national security issue. We should not cut the commodity 
program as a transition to agriculture changes to food and 
    Sorghum--as far as conservation goes, sorghum is basically 
the poster child for conservation, and many of these programs 
that have been implemented have not been successful in the 
sorghum producing areas.
    The Chairman. Mr. Thaemert.
    Mr. Thaemert. Short answer. No. Again, the commodity title 
is very important to the survival of that rural infrastructure 
of the producers on the land. Those producers on the land have 
been stewards of that property. Energy, by far, is one of the 
brightest spots, new spots, that production agriculture has. We 
should focus on that. But do we want to shift away from 
energy--or, shift away from food and focus on energy, I think 
not. I think food is very, very, very, very important and is 
the keystone of production agriculture. Energy is a vital and 
very important bright spot for the future of production 
agriculture. Conservation is something that farmers have always 
been proud of and work very hard to make sure their farms are 
in compliance, if not over and above compliance. I know there's 
a lot of emphasis from outside groups for conservation. Looking 
at how that might impact, I would like to emphasize that public 
funds does not equal public access.
    Property rights are still very important to the viability 
of rural agriculture on the world economy. I think that's 
something that I would hope you keep in mind as you go forward.
    The Chairman. Mr. Helms.
    Mr. Helms. I would answer what Mr. Thaemert down there did, 
no. You know, it--we feel that it would be--that it---- 
removing funds from commodity programs, for the conservation 
and energy programs would result in what we would think would 
be a very inequitable distribution of funds between different 
parts of the country, different commodities. It's something 
that we don't, in cotton, feel that we probably reap the full 
benefit of the program. We would hate to see monies moved to 
that energy type program.
    The Chairman. Mr. Combs.
    Mr. Combs. No. It should not be moved from commodity 
programs for conservation. They're apart. I mean, they're 
important. You know, the rice industry is unique in our ability 
to provide conservation habitat for waterfowl. And we 
participate in the conservation security program, which is a 
good program for the wetlands. But it's a supplement to the 
commodity program, not a replacement for it, as well as energy.
    The Chairman. Mr. Bredehoeft.
    Mr. Bredehoeft. No, I don't believe that those programs 
should be replaced with a commodity programs, but I--I think 
what we need is a strong safety net in the commodity program.
    And like I said earlier, when you look at the conservation 
title, when you look at the trade title and when you look at 
the energy title, I think those are--need to be funded, you 
know, and--but they need to be funded and--and completely 
    Those--a lot of times they do take money out of 
conservation for some other priorities, but like I said 
earlier, those are the things--those are the titles that will 
maintain US agriculture in the future. I look at the commodity 
title as a safety net, a short term safety net. But when we can 
increase trade and increase research, we can increase energy, 
then that's where we have long term stability on the family 
farm in US agriculture.
    The Chairman. Mr. Helms.
    Mr. Helms. I would say no, but a qualified no. As I'm 
representing the Missouri corn farmers, I feel that I also 
represent a youthful but exuberant ethanol industry. And the 
energy portion of the farm bill will be very important to the 
ethanol industry, and a continuation of the bio-energy program 
which I spoke about earlier, is key to helping get those plants 
up and started. The ethanol industry is owned by farmers and 
locally owned and those are long term projects that are 
expected to be there for decades. So the value of that is 
large. And secondly, we can do it cheaper than the oil 
companies. We can produce ethanol cheaper than they can. And a 
little help at the start, particularly the bio-energy program 
and some other programs that are scattered throughout the farm 
belt, is very key to getting those off the ground because they 
are such long term. It's not 1 year, it's a reward, a dividend 
long term.
    So a no, but a qualified no.
    The Chairman. Senator Talent.
    Senator Talent. Thank you, Mr. Chairman, and I appreciate 
you so thoroughly covering the ground. You've covered several 
subjects that were of great interest to me, so I think it 
allows me maybe to step back and check with the panel on a 
couple of things. We talked some about the WTO. And if I just 
said yes or no to you, how strongly do you feel that no deal is 
better than a bad deal? We'll start with you.
    Mr. Helms. Strongly. Strongly.
    Mr. Combs. Very strongly.
    Senator Talent. In other words, you're not hungry. They 
don't want you--you would not want our trade representatives to 
push the margin to come home with some kind of deal?
    Mr. Helms. Right.
    Senator Talent. That's what I thought. And I--another point 
that is very interesting, Mr. Chairman, how you asked them to 
rank the existing programs. Now just tell me if you're 
concerned about this because it's a concern that I have. Most 
of you said that marketing loan program was the most important, 
or one of the most important. Not everybody. Most said that.
    It is also I think probably one of the ones that I am the 
most concerned about given the current trend of the WTO 
    Do you have concerns about that? What can we do, those of 
you who really felt this was the most important, what do you 
think we can do, or should do in trying to protect that program 
from the WTO? What can we do? Do you have any ideas? You might 
be the most appropriate to comment, Mr. Helms.
    Mr. Helms. Well, we're aware that we very likely will get 
some reduction in our loan rates if in fact what talk is out 
there becomes a reality. What an agreement might be, I don't 
know that--you know, and we all still realize that there will 
probably be a--additional to go with those reductions, and 
maybe a counter-cyclical payment.
    Senator Talent. I meant vulnerable as an Amber box program, 
not in terms of what we negotiated, but just challenged under 
in a WTO suit of some kind. Not what we might negotiate away, 
but what might be taken away from us.
    Mr. Helms. Of course to lose--to lose an effective 
marketing loan, I honestly don't have a good answer to replace 
it. That's why I think this is absolutely necessary that we not 
lose it.
    Mr. Combs. Yeah. Let me offer one thing. I think it's 
important that we continue the program. We lost--we lost a case 
on step two, so let's not just throw up our hands and say, 
``Well, they're going to get the loan now and then they're 
going to get this and that.'' I mean, let's fight this thing. 
And if, you know, the WTO trade rules are not written 
necessarily clear and some of their procedures we don't agree 
with, but for our government to just unilaterally say we're 
going to throw up our hands and expect to lose, that's wrong 
and we would urge the government to vigorously defend our 
    Senator Talent. Right. It would be good to win a WTO case.
    Mr. Combs. It would.
    Senator Talent. I'm beginning to feel like our guys are 
Hamilton Burger and theirs are Perry Mason. Anyone that laughs, 
that dates you.
    Mr. Combs. If you think you're going to lose, you're going 
to lose.
    The Chairman. Before you leave that, though, Jim, I mean 
it's--this is a critically important question, folks, and all 
of you all know how hard I fought during the budget 
reconciliation to extend the farm bill and I--I still have some 
strong feelings about that, but one problem with extending the 
farm bill is that we don't want to expose any of our 
commodities to potential liability under the WTO. We don't want 
to go through the cotton--Brazil cotton case again. We want to 
feel comfortable as to where we are. And we know that the 
market loan issue on every commodity is a problem, or a 
potential problem. We don't know whether that's a problem or 
not, but a potential problem. And you're right, we thought that 
in 2002 that we were WTO compliant, but we also thought that we 
were WTO compliant in step two. So Jim's question is--and you 
may not have the answer today and we understand that, but it is 
an extremely important question, particularly if we do wind up 
extending the farm bill. How can we make sure, if we have to 
tinker with the farm bill in any way to extend it, how can we 
tinker with it to make sure that we're compliant.
    Senator Talent. That's exactly right. Let's all get our 
lawyers together, and we know what they've been holding, let's 
find a way to sustain that program, or maybe tinker with 
something that will give us a better argument. And then you're 
right, Paul, let's push the government to be aggressive for 
once and stand up. That's what the Chairman's--got at and what 
I was getting at with that. What--is there anything you could--
one thing I want to keep in mind as we do this, it seems like 
whenever we implement a new farm bill, we have this really 
terrible transition period. And we've all been through this 
where, you know, our constituents are calling up and they don't 
understand it and that doesn't seem ready, and keep in mind---- 
if you have any comment now, fine, and if you don't, keep in 
mind if we ever end up tweaking this, how we might write this 
in a way, or--or signal to you all or the administration in a 
way that enables us to make this transition a little bit 
    And keep timing in mind also. Do you have any questions or 
comments about that? But I wanted to--that's something I wanted 
to do as far as this process. Timing certainly gets smoother 
after implementation. Yes, Mr. Holmes.
    Mr. Holmes. We would just offer that a short term bill that 
you write and then have to rewrite with the WTO doesn't help 
that process. In other words, nothing an ag banker likes worse 
than uncertainty. And if you've got a farm bill that's got a 2-
year horizon, or a 1-year horizon instead of a five year 
horizon, that's a bad deal and that's why we would favor what 
you propose was an extension and then a long term farm bill.
    Mr. Bredehoeft. From my viewpoint, I would take it more 
down to the local level. When you implement a new farm bill, I 
know going into the last farm bill, there was a lot of 
uncertainty in the local offices, and even sometimes in the 
state offices, as we implemented that. And that's probably,
    Senator Talent, that's probably why you got the phone 
    People went to the office and, ``Well, they're not ready 
    Or if they thought they were ready and they'd get halfway 
through it and something comes up and they can't make a 
decision. And so I think there needs to be a substantial amount 
of training, I guess, before--long before we--before it's put 
out to the local office so they know exactly what needs to be 
    Senator Talent. One other point I wanted to make, Mr.
    Chairman and then you've covered the ground so well, I 
    I'll defer to Senator Lincoln. A couple of you mentioned 
surface transportation issues, the transportation issue. And 
yes, this is a hearing on the farm programs, but I don't want 
to let that pass. We could do an enormous service to the 
American farmer by investing in our transportation 
infrastructure so we can get product to the market. We're going 
to vote in the Senate this week on where to--to fund where we 
can get the rivers back under the control of--or, back in 
operation and we need to build roads and the highways. And I 
think Mr. Hilgedick mentioned the Missouri River, Mr. Chairman. 
I just want to flag something for you. We have been working for 
a long time to keep the Missouri River open and the Corps is 
insisting on having the right to do two spring rises in 
appropriate seasons, producing water problems twice in the 
spring, which will eventually result in floods. We are going to 
get the crop insurance so that it covers those floods, so you 
may--if we don't get this reversed, you may be reading the 
story sometime about how the government flooded these farmers 
and then paid them for the lost crops. And when that happens, 
don't say we didn't warn you.
    Senator Bond and I have been trying to do something about 
it because this idea of releasing all this water in the river 
in the spring is sure counter-intuitive and makes no--doesn't 
make any sense in terms of good old Missouri logic.
    Mr. Bredehoeft. Just for the record, I'm downstream from 
    Senator Talent. Thank you.
    The Chairman. Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman. You know, the 
discussion of what's most important, food production, energy, 
conservation, I just don't think they're mutually exclusive. I 
think that these are three points that we can bring together 
and dovetail beautifully as priorities of this farm bill and I 
hope we will. I think we will. They all support one another. 
They can support one another to the--to the degree that, you 
    I think we can reflect that we can minimize the risk in all 
of them if we marry them together and bring them together. And 
I hope that we will. We touched on an awful lot of things here 
and I just want to reiterate that--what Mr.----
    Mr. Thaemert. Thaemert.
    Senator Lincoln. Thaemert. What he had to say briefly, has 
reiterated a couple of times and that is unless farmers are 
allowed to remain the stewards of the land, the rest of these 
programs really don't matter. And that's what we continue to 
see is the loss of those family owned farms and the family 
businesses that are out there. And that's truly important.
    Just a couple of questions. Mr. Helms, you pointed out the 
importance of the counter-cyclical program and the marketing 
loan programs, you know, protecting us against some of the low 
crop prices. And, you know, some people look at forms of 
support to farmers as a catchall safety net, even in the event 
of natural disasters, prolonged droughts that are coupled with 
rising input costs. I know Mr. Combs mentioned it, too, that 
your crops, which are predominate in my state, are definitely 
capital intensive crops. These are crops that you're--you know, 
you're having to go to your bankers and ask for a sizable 
investment to even be in the marketplace or to--in anticipation 
of being in the market. Others point to crop insurance. And I'd 
just like to kind of see if they see that as a sufficient 
mechanism to farmers of all sizes to recover potential losses. 
And of course if we got the same mitigation of risk for the 
price that other farmers paying for their crop insurance, we 
would probably love it too. But unfortunately when you do have 
a capital intensive crop, you just don't get the same return on 
your dollar. The insurance industry doesn't provide you that. 
It's unfortunate but it's reality. Maybe you might just 
elaborate on the hesitation among farmers, certainly cotton 
growers particularly, I suppose in our part of the country, to 
rely on crop insurance. Is it really a viable option? You know, 
given our concern and our trouble with convincing the 
administration to provide disaster relief to farmers this year, 
you know, should we, as lawmakers, be considering including a 
permanent disaster program as a part of the next farm bill? How 
do we bring all that together in order to allow all of our 
commodities to be able to mitigate their risk in the market 
    Mr. Helms. Well, let me start with your last point first.
    You know, I think it would be a wonderful thing if we could 
have a permanent disaster program written into the farm bill. I 
think we understand the reality of that, that it would--where 
the offset, but that--you know, the offset is obviously going 
to be from some commodity programs that we would certainly not 
agree with. As far as farm--as far as crop insurance, for 
cotton farmers in this part of the--in this area, this part of 
the country, has not been a very viable option. The premiums 
that are--the premiums have been very excessive. The coverage 
still leaves us woefully short of recovering our expenses. So 
that currently, as it is now, and anything that we see any time 
soon is--is woefully inadequate to us. We can still lose the 
farm and have a huge claim. So it's--it is inadequate. And 
obviously this counter-cyclical program through the marketing 
loan, or--you know, we believe in them totally because they 
don't cover--they don't cover us in the case of any type of 
natural disaster or any type of weather disaster.
    Senator Lincoln. Anybody else? Yes.
    Mr. Hilgedick. If I might make a comment. With regard to 
crop insurance, I happen to fall in with them high risk 
category on our own farm and Senator Talent brought out the 
crop insurance situation along the Missouri River, and I farm 
within a stone's throw of the river where we are. The fact that 
people sometimes will point out that we just ought to up our 
crop insurance as somehow a policy of risk avoidance, for me 
that doesn't work and for a lot of growers it doesn't work. 
There are huge regional differences within the country as far 
as, you know, effective crop insurance really isn't reducing 
your risk, and in my part of the country, it's not very 
    Senator Lincoln. Well, I think that's important that it's 
not a ``one size fits all'' across the country. And I had 
noticed that Mr. Bredehoeft had mentioned in your testimony 
that we need--you talked about the group and what you're 
working about in terms of looking at a revenue guarantee, you 
do mention that it is combined with one or several other 
different types of farm programs as you're looking at it. I 
think that that's important to note that, you know, a revenue 
based system is not something you're looking at just solely to 
replace everything you have in conjunction with most of your 
other programs that already exist.
    Mr. Bredehoeft. Combinations.
    Senator Lincoln. And, Mr. Combs, as you know, I grew up on 
a rice farm and it's near and dear to my heart. And I think, 
like all of us, we've been closely monitoring the WTO talks and 
if there's anything my father taught me, it was that we cannot 
circle our wagons and sell our widgets and gadgets and 
hamburgers and rice to each other and survive. We know how 
important each one of you all has indicated a tremendous 
percentage of production that is traded on the global 
marketplace and how important that is. And I know that there 
are a lot of sensitive issues that still remain in and--even 
if--I mean, we certainly mean ``if'' we are able to convince 
the EU and others to substantially improve the market access 
offer in the coming weeks. And it's kind of starting to get 
down to the wire. But maybe you might further elaborate on the 
concerns in the rice industry from the tone of the talks in 
regard to those designation of sensitive product lines and our 
trading partners. We know that rice is a tremendous world 
    Mr. Combs. That's the real issue is just the whole 
sensitive product issue, you know, where we--for example, is 
treated as a sensitive product and so we gain access over 15, 
18 years. Well, if the president's proposal, which was a 60 
percent cut in domestic support occurred in year one and you 
don't get access until year 16, then in year 16, you're 
fighting that government because of some phytosamitary issue 
and we haven't gained anything. We've lost. And that's the real 
danger of a trade agreement, is to get treated as sensitive and 
you get real long term access and real short term coverage in 
the tradeoff.
    Senator Lincoln. Well, Mr. Chairman, in the interests of 
time, I think I could converse with these gentlemen all day 
long, because definitely my heart is in this and I do think 
that there are some real solid solutions that we can come up 
with working with you, but we got to keep farmers in business.
    Because if they're not in business, they're not going to be 
producing energy or food products and they're not going to be 
conserving the land. And I'll tell that to the panel. My dad 
was a farmer and he loved being a farmer but he sure loved to 
turkey hunt, too.
    The Chairman. Well, gentlemen, I thank you all very much.
    I think all three of us could sit here and dialog with you 
because you are the heart and soul of the farm bill from all of 
our perspectives. And I would say that all of us are concerned 
about this issue of trade. It is sort of hanging over our heads 
as we go into this and all of you are aware of that. But I 
mentioned it in--to hear your comments, for the most part, 
you're all very supportive of trade agreements and fair and 
balanced trade agreements. And I'll have to say that we have a 
strong attitude and our current trade advisor Susan Schwab is 
working very hard to make sure that agriculture is treated 
fairly. That's one of the main reasons, frankly, that we don't 
have an agreement to this point is because the folks that we're 
negotiating with have not been willing to be fair and balanced 
in their proposal like we have in the United States' proposal.
    She and I talk regularly. I'm sure that there's probably an 
e- mail waiting on me right now because she is in Saint 
Petersburg with the president and there will be some back door 
discussions relative to Doha, but just know that while trade is 
important and is something that we have got to continue to move 
down the road from appositive standpoint, that all of us, as 
members of the Senate Ag Committee, understand that the heart 
and soul of the farm bill is the commodity title and we're 
going to make sure that you're treated fairly and it is a 
balanced farm bill as we go forward the next time.
    Thank you very much for being here today. Thanks for your 
testimony. We look forward to staying in touch.
    We're going to have our next panel come down. We're not 
going to officially stop because we're--and take a break, 
because we want to make sure that we stay on time. So would the 
next panel come forward? (Panel I departed and Panel II was 
    The Chairman. Now we move to our second panel, Mr.
    Jonathan Held from Hermann, Missouri, representing Wine 
    Mr. Larry Purdum from Purdy, Missouri, representing the 
Dairy Farmers of America; Mr. Dean Sonnenberg from Fleming,
    Colorado, representing the National Sunflower Association; 
and Mr. Ray Rogers from Nashville, Arkansas, representing the 
Arkansas Farm Bureau State Forestry Committee.
    Gentlemen, welcome to our hearing today. Thanks again to 
you also for taking time to come and be with us. We look 
forward to your presentation and to have you answer a few 
questions. So, Mr. Held, we'll start with you.


    Mr. Held. Thank you, Chairman Chambliss, Senators Talent 
and Lincoln. I appreciate being able to be here today. My name 
is Jonathan Held. Along with my parents and two siblings, we 
own and operate Stone Hill Winery in Hermann, Missouri, and 
farm 145 acres of wine grapes. We are part of the thriving 
national grape wine industry. Grapes are the sixth largest farm 
gate value crop in the US at 3.5 billion dollars. In a recent 
economic study, it is estimated that in 2004, the production of 
wine and wine grapes and their related industries produced more 
than 90 billion dollars of value to the US economy. The 
industry accounts for 514,000 full-time jobs. It pays 4.3 
billion dollars in Federal taxes and almost 5 billion dollars 
in local and state taxes. Wineries are some of the best 
examples of ongoing viable small family farms. According to a 
Gallup poll last year, wine recently passed beer as the 
preferred alcoholic beverage in the United States. As a nation, 
we consume only about three gallons of wine per capita, and 
roughly 25 percent of this is imported. With the strong 
international competition, the American wine and grape growing 
industry must lead in the production of wines with superior 
quality, excellence and value.
    Over the past 2 years, the grape products industry has come 
together to form the National Grape and Wine Initiative, known 
as NGWI. The goal of NGWI is to triple the economic impact of 
the US grape and wine industry by the year 2020. The target is 
an economic impact of 150 billion dollars annually within 15 
years. To accomplish this goal, we want to establish a private- 
public effort to fund research that will make us the No. 1 
producer of quality grape products in the world. A modest 
increase in the Federal investment for viticulture research is 
justified based on the industry's contribution to the national 
economy and its importance as the sixth largest crop in the 
United States. The industry has created a national strategic 
research plan that identifies clear priorities for research 
that can help us triple our national economic impact in 15 
years. It is imperative that we increase Federal research 
dollars to improve the science of making US grape products. 
Such a partnership with the Federal Government would help us 
level the playing field with our foreign competitors. I request 
that the 2007 farm bill include the following: Provide a 
mechanism to support industry-government research partnerships 
such as the National Grape and Wine Initiative; Authorize in 
the farm bill mandatory funding of 5 million dollars a year 
from the Commodity Credit Corporation to establish the National 
Clean Plant Network of clean plant material; provide 
significantly increased funding to APHIS for the prevention of 
the introduction of plant diseases and pests; expand the State 
Block Grants for Specialty Crops Program, originally authorized 
in the Specialty Crops Competitiveness Act of 2004; provide 
continued support for the Market Access Program; and provide a 
thorough review of all farm programs to ensure that specialty 
crops producers have access to benefits comparable to other 
farmers. The grape and wine industry is faced with tremendous 
growth opportunities both in the US market and abroad, but we 
need your help and consideration in the Farm Bill to realize 
the growth potential and stay competitive with our foreign 
    Thank you for this opportunity to be here today and thanks 
for your work on behalf of American agriculture.
    [The prepared statement of Mr. Held can be found in the 
appendix on page 94.]
    The Chairman. Thank you. Mr. Purdum.

                    DAIRY FARMERS OF AMERICA

    Mr. Purdum. Thank you for inviting me here, Senators 
Chambliss and Talent and Lincoln.
    I'm Larry Purdum, a dairy farmer from Purdy, Missouri. My 
wife Alice and I milk from 135 cows. We've been in the dairy 
business for 45 years. I serve on the corporate board of the 
Dairy Farmers of America and I am chairman of our Dairy 
Political Action Committee and chairman of the Missouri Dairy 
    I have also a written testimony that I would like to leave 
with you that will detail a little more than what I hit on 
    First of all, we do support the continuation of the Federal 
Milk Marketing Order Program, but we feel like it's something 
that regulates something heavy needs to occasionally be changed 
and brought up to date under current marketing conditions.
    Based on a national supply and demand situation, which are 
largely influenced by areas of the country that have large 
surpluses of milk, the national situation does not necessarily 
reflect the needs of the Class I market. Therefore, we feel the 
need for a separate pricing system that allows all Class I milk 
to be priced differently than the current. And because of this 
situation, we are suggesting a policy change that would 
establish a floor for the Class I mover at no lower than $13.00 
per hundredweight. This solution would be market based and have 
no additional government cost. And we do think a safety net 
such as price supports is important. MILC, which I thank you 
people for, has been a big help in the past few years to the 
family dairy farm. But a Class I mover would also--of the 
$13.00 floor would be very helpful for us. We are, however, 
becoming very frustrated in our attempts to get the order 
systems, the Federal Milk RT Order System to recognize the 
increasing cost of transporting milk to the market, the very 
real impact of fuel costs and what they play in the 
transportation equation, and the manner in which these costs 
are not equitably shared among all producers in the Federal 
order system. The transportation cost issues have become 
increasingly important because of, No. 1, the transportation 
cost increases of diesel fuel, and No. 2, the flattening of the 
Class I price which was in the process of implementation of the 
``Order Reform'' by Congress in the year of 2000. Furthermore, 
the large increases in production nationally seems to cloud the 
view of what is needed in the Southeast and Eastern parts of 
the United States. The national price surface no longer 
recognized the cost to transport milk adequately. This is a 
problem when we attempt to source milk for the Southeastern 
consumers from out of the market or to transport it from my 
area to others of the Southeast.
    The dairy farmers who supply the Southeast markets we call 
the Southern Marketing Agency, have all banded together to try 
to be more efficient in our transportation costs. Specifically, 
we have asked that the existing transportation credit system be 
adequately funded. This system has been in place since the late 
1990's and helps to share the cost of bringing milk into--milk 
supplies from outside the Southeast into our market area. In 
June of 2005, the Southeast had to source 58 percent of its 
sales from outside sources outside the Southeast, milk brought 
in. Outside purchases in August 2005 were exactly double of 
August 2000. The over-the-road hauling cost in 1997 when the 
credit was implemented was $1.75 a mile. In 2005, they have 
increased to $2.35. I'm sure you're familiar with those kinds 
of costs. In 1997, this particular program would offset 95 
percent of the cost of bringing in surplus milk In 2005, the 
reimbursement rate, or what we could charge, covered only 40 
percent. So we need to bring that up to date and we need some 
current receipts. The numbers we're working off through the 
margin administrators are 10 years old and we need some cost 
adjustments on it. So our proposal is to update this 1997 
program is something we need your help with, we need to push on 
it, to get USDA interested in it. Some other things that we are 
very interested in, is we are interested in what ends up in the 
WTO negotiations. You know, we're familiar with what you've 
been talking with the gentlemen on the grain panel were talking 
about. We also are very interested in what happens in our 
immigration labor laws.
    And I will stop there, and Senator, you can ask me any 
questions that you have.
    [The prepared statement of Mr. Purdum can be found in the 
appendix on page 98.]
    The Chairman. Thank you. Mr. Sonnenberg.


    Mr. Sonnenberg. Thank you, Mr. Chairman and members of the 
committee. I appreciate the invitation to testify before you 
about this farm bill. I am president of the National Sunflower 
Association and I am here today on their behalf. I farm near 
Fleming, Colorado, where we raise sunflowers, corn, millet and 
    Sunflower is one of the minor oilseed program crops. It is 
a high oil seed crop that is produced on two-and-a-half million 
acres from the Canadian border to the south of Texas. Most of 
the sunflower is used in the manufacture of salty snacks such 
as potato and corn chips. Another segment of our industry is 
the in-shell sunflowers that are very popular with baseball 
players and to many of the rest of us Americans.
    The Federal farm program income support in the event of low 
prices or crop failure is the single most important part of the 
farm program for sunflower growers. The safety net provided by 
the 2002 farm bill, as with other oilseeds, relies primarily on 
the Marketing Loan Program. There is strong interest among the 
growers and the NSA to keep the Marketing Loan a viable option 
in the new farm program. If the Marketing Loan were to diminish 
or be eliminated, a similar provision such as revenue assurance 
would need to be developed.
    The NSA further believes that the benefits provided by the 
next farm bill must be equitable among eligible crops to 
prevent planting distortions, to prevent planting to harvest 
the highest maximum value for Federal dollars rather than 
marketplace. We also support continuation of the planting 
flexibility provisions that has been in place since 1996.
    The NSA supports the development and inclusion of a 
permanent disaster provision in the next farm bill. Such a 
provision would help mitigate the shallow losses that producers 
incur when crops do not exceed the standard 30 percent loss 
threshold that most crop insurance provides.
    While the NSA understands that the crop insurance program 
is authorized under separate legislation, we feel compelled to 
note that the overall policy provisions need to be strengthened 
in those regions of the country where multiple disasters have 
eroded farm yield history. Other provisions that need review 
include the cost of harvesting marginal yielding crops damaged 
by weather as well as the ability to expand crops into non- 
traditional growing areas.
    The NSA supports a stronger Energy Title in the next farm 
bill. As a part of this title, we also encourage that you 
develop and include options to grant Class I and II CRP in the 
Conservation Security Program acres back into bio-energy 
    In closing, I want to again thank the committee for the 
opportunity to testify, and we understand that the WTO 
negotiations, as well as budget deficits, may limit farm 
program options. However, we are prepared to think outside the 
box and work with you to develop a new farm bill. Thank you 
very much.
    [The prepared statement of Mr. Sonnenberg can be found in 
the appendix on page 113.]
    The Chairman. Thank you very much. Mr. Rogers.


    Mr. Rogers. Thank you, Mr. Chairman and members of the 
committee. My name is Ray Rogers and I'm a poultry farmer and 
have a cattle operation and I own and operate Rogers Timber 
Company in Nashville, Arkansas. I'm currently serving as 
Chairman of the Arkansas Farm Bureau's State Forestry 
    By any measure, agriculture is the backbone for the 
nation's economy, and an invaluable component to our national 
security. I believe the main purpose of the national 
agricultural policy is to maintain a stable, high quality 
affordable food and fiber supply for our nation. With that 
being said, I would like to address four issues in the farm 
bill that I think is critically important to the forestry 
    First, I strongly believe--No. 1, I strongly believe it is 
time that we increase our efforts into the area of bio- energy 
in order to reduce our dependence on foreign oil. Let me say it 
where I think we can all understand it. This high energy cost 
in fuel is killing me in my small business and the farmers 
that's out there trying to make a living that's buying any kind 
of fuel and energy right now. The Farm Bureau, and we support 
full research and development for the increased production of 
all forms of renewable fuels both from agriculture resources 
for energy use, including bio-mass, which includes waste-wood 
products. We favor bio-diesel incentives with tax credits of at 
least 10 years in duration, and through other appropriate 
measures such as a renewable fuel standard.
    Farm Bureau also supports the 25-25 vision which calls for 
25 percent of America's energy needs to be produced from 
working lands by the year 2025.
    Second, the environmental quality incentive program, known 
as EQIP, is a beneficial program provision. The Farm Bureau 
supports farmers and ranchers in their effort to voluntarily 
develop private resource management plans to manage their 
agricultural resources while meeting their production, economic 
and environmental objectives. EQIP provides forest landowners 
critical financial support on conservation practices to help 
maintain a healthy forest.
    Funds should continue to be prioritized and distributed on 
a local level, with the primary emphasis being on water quality 
and soil conservation. And I would like to see this program 
continued within the 2007 farm bill, though with price 
adjustments included so that the escalating prices of materials 
are accounted for.
    Third, the Forest Land Enhancement Program, known as FLEP, 
is under Title VII of the Forestry Program, totaling $100 
million. Arkansas was allocated $500,000 a year and, as you all 
know, the first year we were funded at a rate of $473,000. In 
2004, we received no funding. And down now to 2005, this past 
year, it was $112,000. Now, the main advantage that FLEP has in 
the farm bill is, it is giving--provides assistance to the 
small landowners. And when I'm talking about small landowners,
    I'm talking about landowners out there that own 31 acres or 
less, or 40 acres or less. It allows them to do reforesting 
practices and improve their forestry stands and provide for our 
natural resources. So that--that is an important program if we 
can get it funded fully. Which it hasn't been as of yet.
    The fourth thing that I would speak of, and I'm not an 
expert on this, but as you know new international rules and 
disciplines on domestic support programs currently are being 
abated as part of the Doha Round of trade negotiations in the 
World Trade Organization, I believe personally that the 
negotiations will not be concluded before the 2007 Farm Bill.
    If that's the case, I don't--you know, I don't believe we 
need to make a commitment of any kind on--until we know the 
market asset. As it sits, we must be able to take into account 
the agricultural policies that are developed through those 
negotiations for the future.
    The Farm Bureau does support the concept in the 2002 Farm 
Bill for the inclusion in the 2007 legislation. It is important 
that the negotiations on market access and domestic support be 
clearly defined before we draft a new farm bill or accept 
significant budget reductions.
    I would just like to close with, I know that the budget 
situation is drastically different going into the 2007 Farm 
Bill debate in comparison to the 2002 Farm Bill. And I also 
understand, and I know that you all know this, that the United 
States spends less than 1 percent of the total budget on 
agricultural policies and the programs which support it are 
funded as safe food and fiber supply in the Unites States. And 
I would just ask that you all fight hard and work with us to 
try to keep that funded, as much of it as we can, because it is 
important to all parts of our farm and production agriculture.
    Thank you again for the interest.
    The Chairman. Well, thank you. Those were very informative 
presentations. Mr. Held, let me start with you.
    There has been proposals to provide more money to the 
specialty crop industry in the next farm bill. What ideas would 
benefit your industry the most, and what ideas do you have for 
the funding of the proposals?
    Mr. Held. Obviously research is what we're after more than 
anything. Particularly we're looking to the State Block Grants 
for specialty crops. There's a huge diversity in our industry 
across the country. A lot of diversity of research is what we 
really need to remain competitive. We're really concerned about 
foreign competition. Many of these foreign competitors are 
investing heavily in research, particularly Australia. As far 
as where the funding goes, I'm no expert on how you work the 
budget out in Washington, D.C. I have all the respect in the 
world for you and the job you have to do. But the need is 
there. We see a huge tremendous potential, triple the economic 
impact of this industry. To do it, we need your help with 
    The Chairman. Mr. Purdum, we've got a dilemma that we're 
dealing with with respect to dairy. And that is that the 
aggregate measure of support for dairy is almost four and a 
half million dollars. If the WTO negotiations are successful, 
the United States is going to be restricted to 7.6 billion in 
our Amber Box. Those reductions would require proportional cuts 
in all commodities including dairy. So if we have to reduce the 
measure of support for dairy, is dairy going to be able to 
adjust to that kind of scenario, to fit--allow us to fit that 
number within the Amber box?
    Mr. Purdum. Senator, I don't know exactly how those numbers 
would fall yet, but I would point out that dairy has been quick 
to take steps, such as the CWT. We just increased that to a 
dime a hundred. This is funded completely out of the dairy 
farmers pockets. We have bought and exported several tons--
metric tons of cheese and butter and powder to other countries. 
We think we're really trying to help ourselves that way. 
Unfortunately, only 70 percent of the dairy farmers pay into 
that. See, it's voluntary and--and I wish that number would be 
a hundred percent. It probably never will be. There's always a 
few who want to ride on the shoulders of the rest. One of the 
programs, like I mentioned, has a $13 floor on Class I milk. It 
would be a straight pass through from the processors to the 
consumer. There is no cost there to the government.
    There is programs there that if we could work together, I 
think that we could get these programs that would help. And one 
of the reasons we need that, all three of you senators are from 
an area that is very deficient in milk. And we know that 
there's milk in abundance in the western sector of the United 
    But for the processor in Little Rock, Arkansas, or Saint 
    Missouri or Springfield, Missouri, or Georgia or 
Mississippi, the cheapest milk for that consumer is the milk 
that's close by.
    When you add the transportation cost, the cheapest milk is 
nearby. And we have a real dilemma in your part of the world,
    Mr. Chairman, because there just isn't enough milk and the 
dairies are going out, exiting the business, at a rapid pace 
because of the prices of feed and energy and things and the 
price of milk in those areas.
    The Class I isn't--it doesn't--it's flattened out in 
comparison to the Class III cheese prices to what it was 
several years ago. And there needs to be--we need to price 
Class I milk, the top quality milk we have that goes into the 
bottling plants, needs to be priced, in my opinion, off of 
something other than Class III cheese, which we have an 
abundance of it in certain areas of the United States, and yet 
it sets our milk price for Class I, our movers, to Class I 
prices. So I think we need to look at that, and as I said, I 
think the Federal orders are a very important part of our 
system but, you know, markets change and times change. And if 
we don't move that and change with it, then it's a broken 
system. And right now, we're very frustrated in trying to get 
help to make them realize what it costs in transportation that 
we have had in trying to move milk from west--areas out west 
into the South and Southeast so that we have enough milk for 
the consumer down there. A lot of times, dairy farmers in all 
three of your states have had to dig into their own pockets, 
40, 50 and 60 cents a hundred out of their milk pool to make 
sure the consumers had milk brought in from other areas. Again, 
as I say, the cheapest milk is the milk that's maintained local 
and sometimes we have to have new innovative ideas to keep that 
local milk where it's needed.
    The Chairman. Speaking of innovative ideas, you mentioned 
in your testimony, in the 2002 Farm Bill, we had a milk income 
loss contract program which it's been somewhat controversial.
    As you know, I have a lot of friends at DFA. I also have a 
lot of friends in the dairy industry around Guthrie. Some of 
them support this program and some of whom don't. What is--is 
there an official position from DFA relative to whether or not 
we ought to continue the MILC program or are there any ideas 
that you might have out there that it might be a subsidy 
program relative to the benefits that are provided to farmers 
from this program?
    Mr. Purdum. Well, our corporate board unanimously passed 
this $13 floor and that included dairy farmers from all parts 
of the United States. Now, we officially stand that we are for 
the MILC payment with no cap. That's the official stance of 
    But again, we did officially also pass the $13 floor as the 
DFA, what we--what we would hope for.
    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 
volubility in the marketplace? And should this option remain 
available only to cooperatives, or should processors and non- 
cooperative dairy producers also be able to utilize this risk 
management tool?
    Mr. Purdum. Well, we have a stance, again, at DFA where 
the--we want the co-op, I guess, to have that. And actually 
they're just a pass through. They're just helping me when I 
want to make a forward contract, they want me get in touch with 
the right people, or help handle it for me. And one of our 
problems there, Mr. Chairman, is, it's hard to educate our 
producers to knowing how and when to use those. At times you 
may--it's going to take time for that pass on. If they--the 
grain farmers are way ahead of us on understanding how to use 
futures to help. But we have--we want that option, you know, 
for our farmers. But I'm not sure that they're prepared to take 
enough advantage of it to--they think they still need some 
safety net of some kind, but I think there are ways of having 
it we can still do it within the budget.
    The Chairman. Mr. Sonnenberg, your testimony, I notice your 
support for a stronger energy title in the next farm bill and I 
think we all agree with that. Should an energy increase--should 
an increase in conservation or bio-energy programs come at the 
expense of the commodity programs?
    Mr. Sonnenberg. I don't think that it can be afforded for 
it to be. The energy programs are primarily ending up being 
owned by Wall Street and not at the farm level. If the support 
goes into the energy program, it's going to benefit us 
indirectly in the form of higher commodity prices, which will 
reflect in lower costs to the Federal Government. I don't think 
that we can set out a formula in front that says we're just 
going to reduce the farm support in order to have an energy 
    The Chairman. Some organizations have explored the 
possibility of an energy based approach for the commodity 
    What are your thoughts on a revenue based approach to a 
safety net as a replacement for our current commodity programs?
    Mr. Sonnenberg. I certainly think that there's a place for 
it. I think it has to be well thought out. One problem that we 
do have is that we're trying to expand the acreage base because 
we have an increased demand for sunflower oil. And we have a 
small pocket of sunflower production here in Missouri. It's 
primarily been for the birdseed base. You go someplace outside 
of that area if you want to add sunflower production, you can't 
get the insurance coverage until you have 3 years of production 
history. And so to come up with a full based coverage that 
would allow somebody to fall under protection of the insurance 
as soon as they add the crop rather than having a three year 
period where they're assuming all of the risk would be 
beneficial for us.
    The Chairman. Mr. Rogers, given the budget constraints, 
what would be the most helpful program for private forest 
    Mr. Rogers. For private forest landowners, I believe the 
most important thing that the agriculture sector could do is 
equip the--funding fully like EQIP or maybe increase it, 
because I think any time you cut 40 acres of timber, there's a 
lot of people out there that just don't replant it. And if 
there's some money available to help do that, and some 
assistance there for the Arkansas Forestry Commission, or 
whatever commission oversees that, I think it's a very 
important tool because of--it is a renewable resource but it 
takes several years to renew. And so I think any time you've 
got land that's not being put in production, it needs to--to be 
in some kind of timber production instead of just sitting idle.
    The Chairman. Is Arkansas a beneficiary of the CRP program 
with respect to pine tree planting?
    Mr. Rogers. Yes, they are. In fact, you see a lot of CRPs 
that's went from grass to pine tree production just because---- 
you know, I believe 58 percent of Arkansas is forested, has 
trees on it, and 50 percent of those trees are owned by the 
private sector, so it's a big help.
    The Chairman. Senator Talent.
    Senator Talent. Mr. Held, you mentioned APHIS. Elaborate on 
that a little bit. Do you think APHIS is under funded and if 
so, what concerns does that pose for the industry.
    Mr. Held. I do believe APHIS is somewhat under funded.
    When you're dealing with permanent horticultural crops such 
as grapes, we have a huge investment to plant. We're looking at 
10,000 acres--or, $10,000 an acre to establish a vineyard, and 
three to 4 years to get it into production.
    Clean plant material is of utmost importance, and viruses 
coming in from overseas on new cultures are an issue. 
Introduced pests that we initially thought were beneficial and 
later proved had side effects, these are a huge issue. The 
economic impact is tremendous. Right now in the Midwest, we're 
dealing with the multi-colored Asian lady beetle introduced as 
a beneficial insect on soybean crops. The downside of this is, 
once the soybean crop is over, they migrate into vineyards. 
Just a couple of these bugs in a lug of grapes basically ruins 
the resulting grape juice or wine. You get a product that 
smells like peanut oil that's gone rancid. We need to really 
work on keeping these types of pests out of the country. It's 
vitally important to expensive, permanent crops such as grapes.
    Senator Talent. When we look at what we're investing to 
upgrade an industry, you think it can all go down the tubes if 
you've got a virus or a pest in from abroad. It makes sense to 
fund APHIS. We appreciate what you and your family is doing in 
particular for Missouri's economy and for being here.
    Mr. Held. Thank you, sir.
    Senator Talent. Larry, talk a little bit more about your 
attempt to update the marketing order system to reflect 
transportation costs and how important that is even within the 
regions. And this is something I don't think we all understand.
    Mr. Purdum. Well, as I said a while ago, you know, if you 
go back to 2000, you know, through the market administrator, 
what they allowed us to collect and what was there, we were 
able to spend--we were able to cover 95 percent of the cost of 
bringing in supplemental milk. And by the year 2005, it had 
fallen under 40 percent. So that's 60 some percent to make sure 
we have milk in all the areas in the Southeast and South where 
it's needed, is actually being funded by the local producers to 
make sure it's there. I mean, it's--it's on our back. It's 
become on our back. Now there's a few independents and a few of 
the people that don't have to pay that. I have neighbors that 
sell not to a coop but otherwise, and they always have a better 
milk check than I do. That's because they don't get the 30 or 
40 or 50 cents taken out of their milk check to make sure the 
plants down there--processing plants have milk. And I don't 
know the answer to including them, but what I'm saying is, the 
market administrator in Washington, we--we--we have filed in 
January to get some help and we've heard nothing yet. But we 
need these numbers updated on transportation costs, Mr. Talent, 
because it's really hard on the producers in all states that 
these percentages represent. We're all in the same deal. The 
whole--actually, there's just two major production regions in 
the United States, East and West. And we've got an abundance of 
milk in the West looking for homes and you have a deficiency of 
milk, and particularly Class I milk, in the East. And I know 
it's hard to hold milk for--you know, maybe the industry is 
slowing down, but still, any encouragement to keep milk in that 
area, keep family farms in business, is the cheapest milk that 
can be had by the consumers.
    Senator Talent. And they're supposed to update those orders 
to reflect this sort of thing. I'm tired of having to do 
legislatively what they're supposed to be doing.
    Mr. Purdum. But I would request all three of your help, 
because we've tried--we've gone as far as we can go.
    Senator Talent. One other thing, Mr. Chairman--I'll ask 
this to Larry, what would the impact be if CERCLA was--if the 
EPA interprets CERCLA as--to cover animal waste, what is the 
impact on the industry if you become super fund sites?
    Mr. Purdum. I don't know how to answer that question.
    Senator Talent. It's pretty self-evident.
    Mr. Purdum. It could be some really big numbers, but I 
don't--I don't have numbers for that. But I know there is a 
bill and it's being circulated in the house to remove manure, 
which we consider a fertilizer, from the super waste fund. And 
certainly we hope that that happens for all--all--not just 
dairy, all the livestock industry.
    Senator Talent. You mentioned it in your testimony and I 
want to go over that. Thank you, Mr. Chairman.
    The Chairman. Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman. I just want to 
call on Mr. Purdum. Keeping you in business is probably the 
best way to mitigate the risk of things that happen outside of 
our control like the cost of transportation often times. I 
think the cost of fuel, and the cost of whatever, you know, as 
you said, keeping you in business is really the best way to 
mitigate this and not having to make sure that we're not 
hurting those types of additional commodities across the 
    Mr. Purdum. Milk is a very perishable product.
    Senator Lincoln. You're right. I got to tell you, from our 
school programs to those of us who go through two or three 
gallons a week, our boys are growing and it's an important 
issue. We appreciate your being here. Mr. Rogers, as I've said 
before, I do appreciate how much you being here representing 
the forestry industry in Arkansas. Your testimony talks about 
the pulp paper industry in our state as being our largest 
manufacturer. It's certainly enormously critical that we make 
every effort to sustain the facilities that often provide the 
primary source of jobs in our rural areas. But I'd also like to 
compliment you on making sure that people understand that as 
far as energy is concerned and renewable sources can be used, 
our pulp wood and paper industry cannot only continue to 
provide paper as a product, but it can also provide energy and 
other work is being done about using the leftovers on the 
forest floor, cellulosic conversion as well as the energy 
production that's being talked about and some of the projects 
that the entire pulp and paper industry are--are coming 
together to test and to put it out there as an energy 
production. I met with some of the workers from one of our 
plants down in McGee that said, you know, ``We love producing 
paper and we've been doing it for 25 years, but if we could 
produce energy, too, we're glad to do that.'' So we appreciate 
the fact that renewables are a very important part of what we 
need to focus on. I also want to highlight something else that 
you mentioned, and I think it is critically important as we go 
forward not only with the farm bill but also in the other 
committee I sit on, the Senate Finance Committee when we talk 
about tax initiatives in the Senate to encourage a lot of the 
things that we want to see happen. Renewable fuels, we've got 
to give industry at least some certainty of how long they can 
expect to get those incentives. Because to make those major up 
front investments without--with just having a tax incentive 
from 1 year to the next, is not enough. I mean, they've got to 
know that they've got a certain amount of time to be able to 
use those incentives to be able to recoup some of their costs 
in that major investment that they made. And I noticed that 
your testimony mentioned that, looking at a 10-year window as 
opposed to a two year window is worlds of difference in terms 
of what you can make as an investment. You've also mentioned 
the EQIP program an awful lot. I think my first question 
pertains to the impact of rising energy prices and the input 
cost that our forest landowners have seen. Obviously everyone 
has seen that--the increase in those costs, transportation 
costs, whether you're a commodity grain, milk, forest products 
or what have you. It has a devastating effect particularly--on 
all different areas, but some more than others because you 
don't have the ability to increase your prices to the consumer 
because your prices are regulated a different way. But if you 
could just elaborate on yours or anybody else's that you know 
of, experience with those rising fuel costs, and USDA's cost 
adjustments for EQIP, and to improve forest management 
practices, that might be helpful.
    Just maybe tell us your own story.
    Mr. Rogers. OK. Yeah, thank you for asking that question. 
I'm a small timber producer as it goes, but I still produce 
about 15,000 tons of fiber a year. Now, it takes me----
    I use around 2500 gallons of farm diesel, or red diesel, a 
month just to run the skidders and cutting machines and 
loaders. In 2004, I could buy that red diesel for 99 cents a 
gallon. Last week, or the week before, when I ordered my 
monthly fuel supply,
    I paid $2.59 for that same red diesel. That's 161 percent 
increase in a 2-year period. I don't--the timber producers or 
the grain haulers I believe are--are--a lot of our agriculture 
people that get the product to the mill or the processing plant 
don't have the luxury of putting a surcharge on their fuel. Now 
once that product, like wood or plywood or pulp and paper--or 
paper is produced, when it goes out the back end and it's 
hauled to California or hauled to New York, then those long 
haul companies do add a surcharge which takes care of their 
diesel increase. But we don't have the luxury of doing that.
    We're kind of at the mercy of what those mills want to pay 
    And so we're just--you know, we just have to come up with 
an increase somehow ourselves. And it comes off of my bottom 
line like it comes off of all of the other farmers and 
ranchers. And then in the logging business it's especially 
critical because----
    I'm just talking about the production side of it. I run 
seven contract truckers. We may haul that wood 100 miles. Our 
average haul probably is around 60 to 70. But you're looking at 
a truck that gets five to six miles a gallon of diesel. You 
know, I--there's truckers, contract log haul truckers, chip 
haulers, they're dropping like flies down in Southwest Arkansas 
because they just can't stay in business. As far as EQIP, I 
believe there has been some energy adjustments made in that at 
a rate of about 15--15 percent, I believe, Senator, but none of 
the forestry practice that I know of--and I may be wrong, but 
none that I know of in the EQIP program has got that 15 percent 
increase. It's been given to, you know, the other conservation 
projects. So I feel like, you know, at least give us some help 
to adjust the 15 percent across the board on any kind of---- 
because you know, you go to dragging a ripper and a dozer 
across 40 acres to get you ready for--the land ready to plant 
trees, you know, you're going to spend, I mean, the cost is--
it's just an astronomic cost. So that's kind of the dilemma 
we're in. And I have three small logging crews but, you know, 
we employ about 23 to 25 people, and that's families that 
depend on my operation to make a living. So we're kind of 
struggling right now with this energy cost.
    Senator Lincoln. Well, just to follow up on that very 
briefly, and do any of you all have comments about what our 
first--you know, some of the first steps we need to take in 
terms of renewable fuel, but Mr. Sonnenberg, you mentioned that 
you can't sacrifice a commodities program for an energy program 
because we're seeing so much of the investment for renewable 
energies coming from Wall Street. And that's not a bad thing.
    I know some of my colleagues do think it's a bad thing, but 
we can't do it all by ourselves out in rural America to get us 
domesticated or non-dependent on foreign imports. What's is the 
best next step in terms of renewable energy? Anybody got ideas 
on those? Gets us closer to the production of renewable fuel 
something in the farm bill?
    Mr. Sonnenberg. I think that we need submitting new acres 
to really make it viable. We're already competing among 
ourselves for acres. I think that some of the high quality land 
that's been under the conservation reserve program needs the 
opportunity to come back out in an orderly fashion to expand 
the acreage base again. We can achieve conservation by other 
means than just completely setting it aside to where it's 
unusable for this generation and future generations.
    Mr. Rogers. I'd like to speak to that, if I could. Now I 
think somebody in this first group mentioned that there were 40 
million acres of land set aside in the United States under the 
conservation project. The USDA did an assessment of the 
potential payoff from expanding production of this--to create a 
biomass as an industry on that 40 million acres. And the demand 
on that 40 million acres, a larger biomass industry would 
depend on bio-user crops, that is crops that produce 
specifically for the use of biomass for energy production, this 
acreage would be drawn from existing crop land, idle acres and 
conservation research acres, and manages to avoid any 
environmental damage that we could do--would do with crops 
ranging from switch grass to poplars to bio-energy crops, and 
that it's possible that that bio-mass energy, that 40 million 
acres, could possibly come to the fourth most important crop 
produced in the United States if we could turn around and make 
energy, ethanol or something out of that. That would be fourth 
in line with wheat, corn and soybeans. And it would also 
generate higher commodity prices because the farmers would have 
more land that they could farm, more markets. The estimation by 
the USDA is that it would be 14 percent higher with bio-energy 
crops using the 40 million acres, and that would boost farm 
incomes from three to six billion dollars a year. So I think 
that's a win, win situation if you could help the farmers by 
producing biomass energy on some of these acres set aside. And 
I don't think you have to cut commodity prices, and I'm not in 
favor of doing that because I would get hung out to dry by some 
of the rice farmers up there, Miss Lincoln, that you know if I 
said that. I don't think you ever benefit by robbing from Paul 
to pay Peter. That you need to attack both situations and I 
think we have a means. We do the best job in agriculture 
production of anybody in the world, and sometimes I think we 
forget that. When you give these farmers a chance to produce 
some kind of energy that we can use and get us away from so 
much dependency on foreign oil, that's got to be a better deal 
than what we're looking at now, in my opinion.
    Senator Lincoln. Thank you.
    The Chairman. Of course, my reaction to the initial comment 
there, Mr. Rogers, is I've got a--found a place to pheasant 
hunt, too. Make sure we don't put all them 40 million acres 
    Mr. Rogers. We've got a place and I like to hunt, too.
    The Chairman. All of you raised very good points relative 
to a number of issues. But this issue of alternative fuels and 
the opportunity we've got in agriculture is just fascinating to 
me. It's something that we're going to look to take advantage 
of. We don't know yet how we're going to be able to do it 
because if we--if we put a lot of money into it in the farm 
bill, obviously it's got to come from somewhere. But there's 
got to be other things that we can do. And one reason I asked 
you about your pine trees and CRP, that's primarily our CRP 
land in Georgia is planting the pine trees. There's some 
restrictions on you, I know, once you put it in that CRP. We're 
doing some research right now, as I'm sure other folks around 
the country are, maybe some at the University of Arkansas, but 
both Georgia Tech and the University of Georgia are doing a lot 
of research right now relative to the utilization of the--what 
we've always referred to as the trash that we leave in the 
woods, those tops and those limbs, and they're gathering those 
now and looking to utilizing those both from an energy 
production, as well as an alternative energy production. So I 
think there are a lot of things that are on the table as we 
move into this farm bill that you all have brought up today 
that can be of significant help to us and hopefully we can take 
advantage of. Mr. Held, I did have one question I wanted to ask 
you. I just want you to give me a definition of what you mean 
by a clean plant?
    Mr. Held. With horticultural crops, we plant a rooting that 
has been grown in either a nursery row or a greenhouse for 
roughly a year. If that plant has a virus infection or some 
other root rot disease or anything like that, we've gone to all 
this expense to put it in the ground and start growing it and 
establish the trellis and we're wiped out within a few years. 
We need to eliminate these viruses and diseases, organisms in 
the plant before we put it in the ground.
    The Chairman. Is that where most of the research is done in 
your industry? Like that?
    Mr. Held. It's not most of the research, but it's one of 
our big priority areas. And currently, in the Midwest, the 
vines or cultivar that we grow, we have no source of clean 
plant material.
    Senator Lincoln. What's the longevity of a grapevine?
    Mr. Held. It depends on the variety. The grapes that we 
grow in Missouri and Arkansas, a lot of the native American 
species, 50, 75 years. Some of the more tender cultivar, such 
as the hybrids, 35. If you attempt to grow some of the European 
grapes or the vines that have been brought in from California, 
they might not last but a couple of years because of our severe 
winters. There's a few of these in Arkansas.
    Senator Lincoln. OK.
    The Chairman. Well, gentlemen, again, thank you very much 
for being here. Thanks for your testimony. We look forward to 
staying in touch and dialog with you as we're writing this farm 
bill, and we're going to continue to call on you all as a 
resource. Thank you. (A brief recess was had.)
    The Chairman. All right, we'll continue with our third 
panel. First of all, we have Mr. Mike John from Columbia, 
Missouri, representing the National Cattlemen's Beef 
Association; Mr. Mike Briggs from Springfield, Missouri, 
representing the National Turkey Federation; and Mr. Jim Hinkle 
from Mountain View, Arkansas, representing the National Wild 
Turkey Federation.
    [The prepared statement of Mr. Rogers can be found in the 
appendix on page 115.]
    Gentlemen, thanks to all of you for being here. We look 
forward to your testimony and to dialog with you about some of 
these critical issues. Mr. John, we'll start with you. We look 
forward to your testimony.


    Mr. John. Thank you very much, Mr. Chairman, Senator 
Lincoln, Senator Talent. My name is Mike John. I'm a cattle 
producer from Huntsville, Missouri, and am a proud member of 
the Missouri Cattlemen's Association and I'm also currently the 
President of the National Cattlemen's Beef Association.
    Ranchers are an independent lot who are focused on working 
towards an agricultural policy which minimizes direct Federal 
involvement in our operations, achieves a reduction in Federal 
spending, preserves the right of individual choice in 
management of land, water and other resources, provides an 
opportunity to compete with foreign markets and does not favor 
one producer or commodity over another.
    There are many areas we can work on together to truly 
ensure the future of the cattle business in the United States, 
including conservation and environmental stewardship. Ranchers 
are a partner in conservation. Our livelihood is made on the 
land, so being good stewards of the land not only makes good 
environmental sense, it is fundamental for our industry to 
remain strong.
    The goal of conservation and environmental programs is to 
achieve the greatest environmental benefit with the resources 
available. Programs such as EQIP are extremely popular with 
cattlemen and we hope to see this type of cost share program 
expanded to include more producers. Cost share and working land 
programs serve to protect both the environment and the 
taxpayers' money. As we continue to look at this farm bill, we 
anticipate renewed attacks by activist groups such as PETA and 
the Humane Society of the United States who use extreme 
measures to try and force their views of vegetarianism and 
extreme environmentalism on others. Every person has a right to 
their own views, but to force them on others using questionable 
means is unacceptable. It's no secret that these activist 
groups want to put the US cattle industry out of business and 
the farm bill should not be a platform for their agenda. 
Outside of conservation and activist issues, there are several 
other issues that have the potential to impact the long-term 
health of the beef industry. One such area is trade. US 
cattlemen have been and continue to be strong believers in 
international trade. We support aggressive negotiating 
positions to open markets and to remove unfair trade barriers 
to our product. We supply government--we support programs such 
as the Market Access Program and the Foreign Market Development 
Program which help expand the opportunities for US beef, and we 
urge sustained funding for these long term market development 
efforts. We appreciate the committee's help in working to 
reopen foreign markets that were closed to US beef after the 
discovery of BSE.
    To grow our business, we have to look outside the US 
borders to find 96 percent of the world's consumers. We 
encourage the committee's continued strong and vigilant 
oversight of the enforcement of any trade pact to which 
American agriculture is a party.
    As with the 2002 Farm Bill, we fully expect to deal with 
several marketing issues. When looking at these issues, it is 
important to note that we support the critical role of 
government in ensuring a competitive market through strong 
oversight. This includes the role of taking the necessary 
enforcement action when situations involve illegal activities 
such as collusion in anti-trust and price fixing. However, 
government intervention must not inhibit the producer's ability 
to take advantage of new marketing opportunities and strategies 
geared toward capturing more value for our beef. A ban on 
packer owner--on packer ownership or forward contracting has 
been a farm bill debate for years. We are strongly opposed to 
those efforts because we feel that Congress is trying to tell 
cattle producers how and when to market their cattle. This 
strikes at the very basis of our business, which is utilizing 
the market to improve our returns and make a living. Each 
producer should be able to make their own marketing decisions 
whether they market their cattle through traditional channels 
or new and progressive channels. The market provides many 
opportunities and cattlemen should be allowed to access all of 
    As you can see, we are not coming to you with our hands 
out. Like I mentioned before, America's cattlemen are proud and 
independent and we just want the opportunity to run our ranches 
the best we can to provide a high quality product to the 
American consumer, and even more importantly, provide for our 
families and preserve our way of life.
    The open and free market is powerful and as beef producers, 
we understand and embrace that fact. Cyclical ups and downs of 
the market can be harsh, but the system works and we remain 
steadfastly committed to a competitive and free market system.
    It is not in the nations farmers or ranchers best interest 
for the government to implement policy that sets prices, 
underwrites inefficient production or manipulates domestic 
supply, demand, cost or price.
    We are coming to you in an effort to work together to find 
ways to use the extremely limited funds available in the best 
way possible to conserve our resources, build our industry and 
provide for individual opportunity and success. We ask for 
nothing more than a Federal agricultural policy that helps 
build and improve the business climate for cattlemen.
    We look forward to working with you on the 2007 Farm Bill, 
thank you.
    [The prepared statement of Mr. John can be found in the 
appendix on page 119.]
    The Chairman. Thank you. Mr. Briggs.


    Mr. Briggs. Good morning, Mr. Chairman, Senator Talent and 
Senator Lincoln. Thanks for this opportunity. My name is Mike 
Briggs. I'm currently the chairman of the National Turkey 
Federation, which basically represents all facets of the turkey 
business except for the wild turkeys. The turkey industry today 
is very vibrant. We produce about 270 million turkeys, which is 
about five million pounds of ready to cook weight worth roughly 
$8 billion in value. I should also mention, as Senator Talent 
did, is that Missouri is currently the third largest turkey 
producing state. The key to our industry's profitability is 
access to an affordable supply of feed. About 70 percent of the 
cost to produce a turkey is in the feed, and primarily what the 
bird eats is soybean and corn, with the corn being the most 
critical. The demand for corn worldwide has risen, primarily 
due to the fact of being used as a fuel source, and also the 
fact that China has now become a net importer of corn as 
opposed to an exporter.
    As you write the next farm bill, we would like you to 
remember that the singular most important thing that you can do 
to help the traditional feed consumer is by keeping up the 
support payments and allowing farmers the maximum amounts of 
flexibility to meet this growing demand. In writing the next 
farm bill, we ask that you do two things, one is maintain the 
payments so that farmers have maximum payments and also expand 
the aerable land available for production by ensuring that only 
truly environmentally sensitive land is enrolled in the 
conservation reserve program.
    Another major challenge is in the environmental area. We 
accept our agricultural environmental laws as part of our 
responsibility as good stewards of the land. Many of you are 
also aware that some are trying to extend the industrial 
environmental laws into agriculture and we thank those who have 
worked to prevent it. Whatever the environmental rules are on 
the books, the poultry and livestock producers will need to 
be--will need some help with compliance. In writing the next 
farm bill, we would urge you to, one, increase environmental 
quality incentive programs to the maximum extent possible.
    Second, consider increasing the percentage of EQIP funds 
that are reserved for livestock and poultry. And last, examine 
ways the EQIP funding could be used to facilitate projects that 
help turn animal waste into fuel.
    Finally, I'd like to mention two other matters, trade and 
research. Foreign markets are our fastest growing markets. The 
foreign market development program and market access program 
are vital to increasing value added poultry products, and we 
would look to have the new farm bill maintain that program 
funding at 2002 funding levels.
    Finally, Federal agriculture research is vital to our 
ability to provide safe and wholesome food. One example is the 
work that's being done in Georgia in regards to avian 
    USDA researchers have played a vital role in helping not 
only those of us in the United States to protect ourselves from 
the Asian form of avian influenza, but also other countries 
throughout the world. And we urge you to maintain, if possible, 
increased research funding, especially in the areas of food 
safety and animal disease control.
    Again, I'd like to thank you for this opportunity and I 
appreciate it and look forward to answering your questions.
    [The prepared statement of Mr. Briggs can be found in the 
appendix on page 126.]
    The Chairman. Thank you. Mr. Hinkle.


    Mr. Hinkle. Mr. Chairman, before I start on my text, I 
might mention that I had an opportunity to hear you speak at 
the national convention in front of several thousand people and 
you did a very excellent job of combining agriculture to 
farmers and ranchers and hunters of this country being the 
first conservationists, and I very much appreciate that speech 
and how you represented all of us in this country. I might also 
note that I noticed Senator Lincoln's influence on this panel 
here today, that, in fact, I am the last one and she saved the 
largest turkey for last.
    Mr. Hinkle. I am Jim Hinkle, board secretary of the 
National Wild Turkey Federation and former commissioner of the 
Arkansas Game and Fish Commission. NWTF is dedicated to 
conservation of the wild turkey and the preservation of the 
hunting tradition. We worked to bring the turkey population 
from 1.3 million in 1973 to 7 million today, thanks to state 
and Federal wildlife agencies, NWTF volunteers and partners, 
and your committee's efforts. Together, we spend more than $224 
million on conservation projects, helping landowners, producers 
and wildlife. Most important for NWTF in the next farm bill is 
an increased focus on forest management within the conservation 
programs. Our forests supply more than 50 percent of the 
freshwater flow for the lower 48 states. NWTF's greatest 
frustration regarding forestry conservation programs is with 
the Forest Land Enhancement Program. FLEP is a well intentioned 
program that this committee created, yet its funding was 
diverted to other uses despite strong support. One example 
where this program could help. NWTF's Operation Oak Program 
with funding support from Senators Lincoln and Chambliss, NWTF 
provided over 15,000 native oak seedlings to private landowners 
in Arkansas last year, impacting over 25,000 acres of wildlife.
    If this program had been funded as authorized, we could 
have done 50 times this amount of work. The forest--excuse me, 
the Forest Stewardship Program is one of the best programs to 
help forest landowners. Through this program, natural resource 
professionals has developed more than 260,000 management plans, 
improving almost 30 million acres of land. The EQIP program 
promotes agriculture production and environmental quality as 
compatible. In Missouri, approximately $1 million is spent 
annually on forestry and wildlife practices through EQIP.
    However, only 1 percent of EQIP's $1.1 billion is spent on 
forest management, and only about 5 percent of funds are for 
wildlife. The NWTF recommends at least minimal increases in 
EQIP funding and more targeting of funds to wildlife activities 
in our forests.
    Finally, we recommend that EQIP require more contribution 
agreements to allow NGO's to assist private landowners outside 
the cumbersome technical service provider process. The CRP has 
an excellent track record of providing landscape level 
conservation of soil, water and wildlife habitat. In Missouri, 
about 50 percent of the accepted acres occurs within a 30 
county wildlife, quail and prairie chicken priority area. Also 
54,000 new acres of prairie registration and 180,000 new acres 
of native grasses have been planted. We recommend requiring 
more wildlife friendly plantings of CRP land such as hardwood, 
long leaf pines and native grasses and forests. We also 
recommend that the WHIP Program broaden the number of target 
species and place more focus on long term benefits or practices 
and that it is totally funded.
    Hunting is an American tradition, as you well know, with 
18.5 million participants that contribute over 30 billion 
annually to our economy. To increase the benefit of 
conservation programs, we would recommend adding additional 
points to the CRP environmental benefits index for landowners 
which will, of course, help open up lands to public hunting.
    Thank you again for this honor and opportunity.
    [The prepared statement of Mr. Hinkle can be found in the 
appendix on page 133.]
    The Chairman. Well, thank you, gentlemen, very much. We--
obviously, from a conservation standpoint, the greener we 
become farm bill-wise, why the more compliant we become with 
WTO, so a lot of folks are pushing us to expand our 
conservation title. And let me just ask you, each of you, if 
you will, tell me what's the No. 1 conservation program that 
your folks take advantage of? What improvements could we make 
to that particular portion of the program?
    Mr. John. Well, I'd say, Senator, that the EQIP obviously 
is primary and improvements would be greater access--more---- 
more dollars and greater access to the program.
    The Chairman. As far as the program itself, do you think 
it's working pretty good?
    Mr. John. I think so. I mean, any kind of a working land 
program where you can still utilize and have activity on the 
ground and utilize a conservation program to help manage that, 
that process, those are all good programs. But EQIP 
specifically, since it already exists, is a good example of 
that type of program.
    The Chairman. Mr. Briggs.
    Mr. Briggs. I think I would agree also, Mr. Chairman. I 
think any time we can put--as we say in conservation, we put 
sunlight on the ground, anytime we can put money on the ground, 
I think these programs are very good and they're working, but I 
think we need more opportunities to get directly to that land.
    We need to reduce the red tape every place we possibly can. 
For example, in some of the programs, we have to have an 
engineer come out onsite to approve a project. There's a big 
backlog with that program. So it's not what the problem--it's 
not whether the project is good, it's the problem in getting 
the money on the ground to effectively be used.
    The Chairman. Mr. John, during the last farm bill debate, 
there was considerable discussion on competition in the 
livestock marketplace. What effect would--you talked a little 
bit about this but I want you to expand on it a little, what 
effect would bans on packer ownership of cattle and forward 
contracting and mandatory country of origin labels have---- 
labeling have on livestock producers?
    Mr. John. Well, it's our opinion and my opinion that those 
are almost non-competitive and non-market access type issues.
    We believe strongly that producers--progressive producers 
today are utilizing all of those tools as a way to either do a 
better job of risk management, plan for expenses, or to 
actually capture added value from their production. So we 
believe strongly that you have to have access and the market 
needs to be open and free, and free enterprise needs to take 
place and voluntary programs tend to offer those opportunities. 
And specifically, when you mentioned COOL, in the last farm 
bill, the language is what we're so violently opposed to. It 
just didn't create its desired effect. It singled out one basic 
enterprise within our whole industry and didn't share that 
access equally, not only amongst our own species, but it didn't 
put that same burden of cost on our protein competitors that 
are sitting at this table, so there were a lot of things wrong 
with the language of that bill. But what a voluntary country of 
origin labeling allows for producers to differentiate, and if 
you can differentiate, then you can capture value. And so we 
would--we would--just to reiterate, we're--we don't think we 
ought to be restricting market options, we think we ought to be 
opening more market options and allow producers the opportunity 
to take advantage of those programs.
    The Chairman. We have had a difficult time getting---- 
bringing to a conclusion the reauthorization of the mandatory 
price reporting. How important is that to your industry from 
your standpoint?
    Mr. John. I hope you continue to be successful. It's a---- 
in our view, it's a bad law, Mr. Chairman, and we sure don't 
want it to come to the light of day. Again, having said that, a 
voluntary country of origin labeling program that rewards a 
producer for meeting some requirement that one of our--one 
level of our consumers has, is viewed as valuable. It's very 
important, and so we would highly encourage the ability of 
producers to participate on a voluntary level if a retailer or 
a food service entity or somebody determined that there was a 
value--an added value for that product and label them.
    The Chairman. I was asking about mandatory price reporting.
    Mr. John. Oh, I'm sorry. I'm sorry. I get so--I'm tired of 
dealing with the COOL.
    The Chairman. Somehow I got that message.
    Mr. John. We would be in favor of mandatory price reporting 
and expanding on it. I think that a transparent open market is 
the best for all producers. So we think it needs to be funded 
and needs to be completed, and the sooner you can get that done 
and the sooner we can move forward, the better.
    The Chairman. You know, we, from a legislative perspective, 
or a policymaker perspective, we tend to criticize USDA, as 
well as other Federal agencies, more often than we pat them on 
the back, but I have been very strong in commending USDA, but I 
want to also commend the cattle industry for the way that this 
BSE issue has been handled. I think after the first initial 
case was found, from the time we found the last one, we haven't 
seen a blip there and it was handled very professionally by 
those in the industry, as well as USDA, and that's what 
frustrates me about dealing with the Japanese and some of these 
other folks with respect to reopening their markets. But just 
so you will know, and you can pass on to your fellow cattle 
producers, I think we're very close to resolving this issue 
again, and then hopefully we can see the reopening of some 
markets soon. And I will say to you, too, Mr. Briggs,
    Ambassador Schwab has been in Russia for the last couple of 
days, and a part of that has been dealing with the Russians 
relative to their accession into the WTO. Two major sticking 
points are intellectual property issues plus the sanitary---- 
bio-sanitary issues that are important to the poultry industry.
    And as you know, my state has been a big poultry producing 
state, as is Senator Lincoln's and Senator Talent's. And 
there's been a lot of frustration. I had a conversation with 
her the other day before she left just to make sure that before 
any agreement was struck, that there had to be an awful lot of 
concessions by the Russians on that particular issue because we 
just can't continue down that track of trying to improve our 
trade relationship with countries and yet at the same time for 
them to have the ability to arbitrarily cutoff that trade for--
on the basis of non-scientific supported issues. So we're 
working very hard to try to see if we can't clean up that 
particular issue before we wind up those negotiations with the 
    Senator Talent.
    Senator Talent. Thank you, Mr. Chairman. Mr. Chairman, I 
just want to note that we haven't had anybody from the Missouri 
Farm Bureau here and that's because they have a board meeting 
that's occupying all the top level people. Otherwise I'm 
certain that we would have had probably a witness and certainly 
someone in the audience. And they have been usually helpful to 
me and Kit as we think about the next farm bill, and I wanted 
to mention that.
    We covered, Mr. Chairman, a lot of the ground. Let me just 
ask Mike John about animal ID. It's a voluntary program and I 
certainly support it as such. Tell me where you're at in the 
process, how many producers have voluntarily enrolled and what 
you see as the potential benefits and what concerns, if 
anything, you have?
    Mr. John. How much time do we have?
    Senator Talent. Thirty seconds. No, take as much as you 
    Mr. John. Thank you, Senator. I appreciate all your help 
and support on this bill. I think it's been a little bit 
frustrating over time to see the amount of money that's been 
spent at APHIS and USDA on some kind of identification program, 
and we're--we're frustratingly behind on getting premises 
registered. So I'd say, on the first component of the animal ID 
system, the registered premises, and I don't think we're 
anywhere near where we should be on it. So what's involved with 
that is probably more education and more support from the local 
and national associations to get people educated and move 
forward with that. As far as animal ID and participation, the 
people that are participating today are doing so because there 
is some market incentive to do so because there is a reason and 
some value, source of name verification, added value that 
they're getting. And I think you'll see that and continue the 
increase at the rate it's been increasing. And I can't--I don't 
think anybody can give you a viable estimate or a reliable 
estimate on how many numbers that truly is. But I'd say in the 
state of Missouri, it could be as high as 10 or 15 percent of 
the producers who have actually participated in some 
identification program. And the other issue always comes down 
to voluntary or mandatory and, again, NCBA's position would be 
that, at least initially, it needs to be a market driven, and 
to do so then it has to be voluntary. And we also believe that 
the data should be held in private hands so that it isn't 
something that could be used against us in some manner. 
Confidentiality is an issue.
    And then you've got to weigh all that against whether it 
should be for just animal health disease surveillance or for 
more value added participation. And I think that's the stage 
that we're at right now. There are some private solutions that 
are available out there. USIO has a data base that's capable of 
tracking animal movements. But until we get premises 
registered, until we have the ability to track animals through 
auction markets at the speed of commerce and actually capture 
those transactions at some reasonable rate of expense and 
effort, it's going to be hard to go down the road where you 
have either mandatory or voluntary participation. We're moving 
forward. We're doing everything we can to get people interested 
and involved. And I think the retail food service and packing 
industry are putting quite a bit of pressure on the industry to 
start coming through on that. We'll have those market 
    Senator Talent. That's all I have, Mr. Chairman, except to 
add that I've sure appreciated their comments about CIRCLA not 
having been intended to cover animal agriculture and I think we 
all feel that way and we're going to work to try and get that 
    The Chairman. Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman. Mr. Johns, just a 
follow up with your animal ID, we talked an awful lot with---- 
all across the gambit of producers and agricultural commodities 
and other things, the input costs that are soaring for all of 
our--all of agriculture. In the terms of the ID understanding 
that--I don't know from my experience whether it's with animal 
disease or whether it's plant disease or what have you, if you 
don't eradicate most of it, or all it, you've got a real 
problem out there. What does--since it's a self-funded program, 
is that correct?
    Mr. John. Yes, ma'am.
    Senator Lincoln. You put--how much is--are there---- how 
much government dollars go into animal ID? Is there any Federal 
funding for it?
    Mr. John. There was--there's been about 84 million dollars 
spent up to the end of this budget year, and----
    Senator Lincoln. From the Federal Government?
    Mr. John. Yes, ma'am. But----
    Senator Lincoln. I guess my question is, is what kind of 
handicap does that put on your smaller members, or your smaller 
producers, your smaller cattlemen, cattle operations. But, you 
know, are you seeing an increase cost of that ID program? Which 
it sounds right to me, was it--I guess it was started in 
January, is that right? From your testimony, you were saying?
    The animal identification?
    Mr. John. Right.
    Senator Lincoln. But, I mean, what--what kind of a 
disadvantage does that put on operators.
    Mr. John. I actually don't think it is a disadvantage. In a 
voluntary system, they--they--actually the smaller producers 
being--being more than the large producers. There's a net 
benefit that is probably greater for small producers who don't 
have market access opportunity of the larger producers who have 
large truckload quantities and contract titles. Most of the ID 
process is on a per head basis, whether it's ear tags or data 
base management, so if you've got--if the cost is $5.00 a head 
and you've got one animal, it's $5. If you have 10 animals, 
it's $50.00. It's generally on a per head basis. So I don't 
really see it being discriminatory.
    Senator Lincoln. Unless it's mandatory.
    Mr. John. Exactly.
    Senator Lincoln. OK. Mr. Hinkle, welcome. Thank you so much 
for being here and----
    Mr. Hinkle. Thank you.
    Senator Lincoln [continuing]. Representing the hunters of 
    Particularly the turkey hunters. But as a conservationist, 
do we know--or, in most instances, are conservationists--our 
best conservationists are our Ag producers, Ag farmers who 
truly do have a tremendous insight about the land. Just a 
couple of questions. You mentioned the TSP, the technical 
service providers, you're--you referenced a need to do a better 
job of involving third party technical service providers, and I 
was wondering if you might elaborate on the specific concerns 
in that area? What are the main obstacles? How can we as a 
committee insure that the technical service providers are 
better utilized to help meet conservation goals, and can the 
NGO's that you mentioned be a possible third party person?
    Mr. Hinkle. Possibly. I think I touched on it briefly just 
a minute ago, Senator. In many cases, we like the result.
    It's a good program. We like the final answer. We just 
don't like everything we have to do to get there. It's--it 
takes a lot of time. It takes a lot of red tape. And when 
you're---- when you're working with a private landowner, when 
you're working with a person out there who would like to try to 
get all the benefit that they can for the resource, the more 
you boggle them down with red tape, the more they're going to 
get discouraged. I think that's the point that we would like to 
make today, is that we're not arguing that--at all that there's 
anything wrong with the program. It's just that it takes too 
long to put the dollar into the ground.
    Senator Lincoln. Right. Well, I think that's the practice 
of the forestry industry in the Arkansas that's really done 
well in terms of including landowners and everybody there, so 
we'll keep working at that.
    You also--I think you're certainly well aware of the FSA 
and how it works closely with the NRCS to administer some of 
the conservation programs, the CRP and several others. To 
facilitate that, many of our NRCS officers are collocated with 
the county FSA offices, and you know, we keep talking about e- 
government and how easy it's going to make people's lives. That 
is, if they know how to use it or they have access to it. But 
most farmers, I think, appreciate and really depend on hands-on 
existence from these administrative agencies to implement what 
can often be very complex on-farm conservation practices, 
whether they've got to meet certain NRCS goals and other things 
like that. If--if that is the case, in your view, what would be 
the impact on our conservation goals if the FSA offices across 
the country are consolidated and closed as has been called for 
in the USDA's FSA tomorrow proposal? Cutting it down.
    Mr. Hinkle. Well, of course it's a--basically from the NWTS 
standpoint, it's a convenience standpoint for us. We might have 
a regional biologist or a person out there in the field that 
might go to a field office that would be 50 miles away instead 
of 20 miles away. That's some concern, but it's not like all 
the different landowners having to go 50 miles away. So from 
our particular viewpoint, it probably doesn't impact us near as 
much as it does the farmer and the landowner.
    Senator Lincoln. But that's the person we've got to get on 
    Mr. Hinkle. Absolutely.
    Senator Lincoln. If we're going to see the product and the 
response out of conservation.
    Mr. Hinkle. I'm sure there's probably some room for some 
marrying, some tightening of some of these offices, but the 
more you restrict the public's accessibility to that process, 
the more red tape you have.
    Senator Lincoln. Well, I know as--as--your position on game 
and fish, you referenced WRP, a number of wetlands reserve 
program is very popular in Arkansas. I think you've rated it 
first in enrolled acres nationwide. And but we also had the 
highest number of unfunded applications. I guess just maybe in 
your viewpoint, from a--you know, a Wabat Commission and 
others, is it merely a funding issue or do you think that 
there's the same type of changes needed to address backlog. In 
other words, red tape and----
    Mr. Hinkle. The same--same kind of problems. We do not 
believe it's a funding issue.
    Senator Lincoln [continuing]. Whistles for wetlands. We'd 
like to see a little more funding just because we--we don't 
want to take it all in Arkansas, we want to share it with other 
    But we appreciate you gentlemen being here and thank you so 
much for your input.
    Mr. Hinkle. Thank you.
    The Chairman. Gentlemen, again let me just echo that.
    Thank you very much for your valuable testimony and taking 
your time to come be with us today, and we look forward to 
continuing to dialog with each of you as we move through this 
    I want to encourage anyone who is interested in submitting 
a written statement for the record to visit the committee's 
website at agriculture.senate.gov for details. We'll accept 
written statements up to five business days after this hearing.
    With that, we thank you for your interest in agriculture 
policy and this field hearing will now be adjourned.
    [Whereupon, at 12:22 PM the hearing was adjourned]

                            A P P E N D I X

                             July 17, 2006



























































































                             July 17, 2006