[Senate Hearing 109-819]
[From the U.S. Government Publishing Office]
S. Hrg. 109-819
REVIEW NOMINATIONS FOR USDA, CFTC AND FARM CREDIT ADMINISTRATION
=======================================================================
HEARING
before the
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
DECEMBER 6, 2006
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
Available via the World Wide Web: http://www.agriculture.senate.gov
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
SAXBY CHAMBLISS, Georgia, Chairman
RICHARD G. LUGAR, Indiana TOM HARKIN, Iowa
THAD COCHRAN, Mississippi PATRICK J. LEAHY, Vermont
MITCH McCONNELL, Kentucky KENT CONRAD, North Dakota
PAT ROBERTS, Kansas MAX BAUCUS, Montana
JAMES M. TALENT, Missouri BLANCHE L. LINCOLN, Arkansas
CRAIG THOMAS, Wyoming DEBBIE A. STABENOW, Michigan
RICK SANTORUM, Pennsylvania E. BENJAMIN NELSON, Nebraska
NORM COLEMAN, Minnesota MARK DAYTON, Minnesota
MICHEAL D. CRAPO, Idaho KEN SALAZAR, Colorado
CHARLES E. GRASSLEY, Iowa
Martha Scott Poindexter, Majority Staff Director
David L. Johnson, Majority Chief Counsel
Vernie Hubert, Majority Deputy Chief Counsel
Robert E. Sturm, Chief Clerk
Mark Halverson, Minority Staff Director
(ii)
C O N T E N T S
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Page
Hearing(s):
Reveiw Nominations for USDA, CFTC and Farm Credit Administration. 1
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Wednesday, December 6, 2006
STATEMENTS PRESENTED BY SENATORS
Chambliss, Hon. Saxby, a U.S. Senator from the State of Georgia,
Chairman, Committee on Agriculture, Nutrition, and Forestry.... 1
Cochran, Hon. Thad, a U.S. Senator from Mississippi.............. 2
Harkin, Hon. Tom, a U.S. Senator from Iowa....................... 9
Panel I
Keenum, Mark E., Nominee for Under Secretary for Farm and Foreign
Agricultural Services, U.S. Department of Agriculture.......... 4
Sommers, Jill E., Nominee to be Commissioner of the Commodity
Futures Trading Commission..................................... 6
Strom, Leland A., Nominee for the Board of the Farm Credit
Administration................................................. 7
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APPENDIX
Prepared Statements:
Harkin, Hon. Tom............................................. 18
Keenum, Mark E............................................... 20
Sommers, Jill E.............................................. 24
Strom, Leland A.............................................. 26
Document(s) Submitted for the Record:
Durbin, Hon. Richard J.:
Written letter of support for Leland A. Strom................ 32
Leahy, Hon. Patrick J.:
Written letter of support for Mark E. Keenum................. 33
Roberts, Hon. Pat:
Written letter of support for Jill E. Sommers, Mark Keenum
and Leland A. Strom........................................ 34
American Association of Crop Insurers, letter of support for
Mark E. Keenum............................................. 35
Copeland, Cook, Taylor & Bush, P.A., letter of support for
Mark E. Keenum............................................. 36
Ducks Unlimited, letter of support for Mark E. Keenum........ 38
International Dairy Foods Association (IDFA), letter of
support for Mark E. Keenum................................. 39
National Council of Farmers Cooperatives, letter of support
for Leland A. Strom........................................ 40
National Milk Producers Federation, letter of support for
Mark E. Keenum............................................. 41
The Farm Credit Council, letter of support for Leland A. Srom 42
Various agricultural organizations, letter of support for
Mark E. Keenum............................................. 43
Question(s) and Answer(s):
Baucus, Hon. Max:
Submitted questions to Mark E. Keenum........................ 48
Crapo, Hon. Mike:
Submitted questions to Mark E. Keenum........................ 49
Harkin, Hon. Tom:
Submitted questions to Mark E. Keenum........................ 51
Submitted questions to Leland A. Strom....................... 53
Submitted questions to Jill E. Sommers....................... 54
Keenum, Mark E.:
Written response to questions from Hon. Max Baucus........... 55
Written response to questions from Hon. Mike Crapo........... 57
Written response to questions from Hon. Tom Harkin........... 59
Sommers, Jill E.:
Written response to questions from Hon. Tom Harkin........... 62
Strom, Leland A.:
Written response to questions from Hon. Tom Harkin........... 63
Additional Material(s) Submitted for the Record
Committee questionnaire and Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report filed by Mark E. Keenum............................. 66
Committee questionnaire and Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report filed by Jill E. Sommers............................ 83
Committee questionnaire and Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report filed by Leland A. Strom............................ 100
REVIEW NOMINATIONS FOR USDA, CFTC AND FARM CREDIT ADMINISTRATION
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Wednesday, December 6, 2006
U.S. Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC
The Committee met, pursuant to notice, at 9:31 a.m., in
room SR-328a, Russell Senate Office Building, Hon. Saxby
Chambliss, Chairman of the Committee, presiding.
Present or submitting a statement: Senators Chambliss,
Cochran, Roberts, Coleman, Harkin, Leahy, and Salazar.
STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR FROM THE
STATE OF GEORGIA, CHAIRMAN, COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
Chairman Chambliss. Good morning. We here today to conduct
a hearing on three nominations to important posts in the
Federal Government. The nominees are Mark Keenum to be Under
Secretary of Agriculture for Farm and Foreign Agricultural
Services and to be a member of the Board of Directors of the
Commodity Credit Corporation; Leland Strom, to be a member the
Board of Directors of the Farm Credit Administration; and Jill
Sommers to be a Commissioner at the Commodity Futures Trading
Commission.
We all appreciate their willingness to come forward and
engage in public service.
One of the nominees, Mark Keenum, is no stranger to this
Committee, having served on Senator Cochran's staff for over 17
years. Mark has been a good friend of mine for many years and
Mark, it is indeed a privilege to have you being willing to
step up at the Department of Agriculture and continue your
public service.
I welcome all of the nominees and thank them for appearing
before the Committee.
For the information of Senators and staff, and after
consultation with Senator Harkin, I ask that any questions of
the nominees for the record be submitted by 4 p.m. today in
order to expedite the confirmation process.
Senator Harkin will be recognized when he gets here but I
want to say publicly how much I appreciate the cooperation of
Senator Harkin in getting these nominees up here in a very
expedited manner, particularly you, Jill. Jill has been a good
friend of mine for many years. She is a very capable person to
be going to the CFTC. We had to sort of pull and tug down at
the White House to get the paperwork, the bureaucracy. As the
Chairman the Appropriations Committee well knows, it is
difficult to endure sometimes. But we did. But it could not
have happened without Mark and without Senator Harkin's
cooperation, so I appreciate that very much.
At this time I will turn to my good friend from the State
of Mississippi, Senator Cochran, for an introduction.
STATEMENT OF HON. THAD COCHRAN, A U.S. SENATOR FROM MISSISSIPPI
Senator Cochran. Mr. Chairman, thank you very much.
I am pleased to join you in welcoming our nominees to the
Agriculture Committee today for their confirmation hearing. I
am especially pleased, of course, that Mark Keenum has been
nominated by President Bush to be Under Secretary of
Agriculture for Farm and Foreign Agricultural Services.
I do not know of anyone who would bring any better
qualifications to this job that Mark Keenum. He has an
Agriculture Economics degree from Mississippi State University.
He got graduate degrees from that university, including a Ph.D.
He was on the faculty as an instructor for a while and actively
engaged in research in some very important emerging agriculture
and aquaculture areas of interest and concern in our State.
He worked for the Extension Service. He has worked as a
research assistant at Mississippi State University, as I
pointed out. And he joined my office here in Washington as a
specialist in agriculture and agriculture economics.
He has really been an outstanding member of my staff, both
in helping to develop policy initiatives and monitor all the
legislation affecting the Department of Agriculture.
And then, when I was Chairman of this Committee, he was a
very valuable adviser and an assistant in helping shape policy
there, writing Farm Bills. He was actively engaged in several
Farm Bill hearings leading up to the bill, the crafting of the
language, negotiating with other member's staffs, and working
to work out differences in conference with the House, dealing
with the Administration over the years, all in a very
professional and thoughtful way.
His personal qualities are impeccable. He is courteous, he
is intelligence, he works hard, he has a sense of
responsibility, he has got good judgment.
So I am pleased to be here today and to congratulate him on
his nomination and to urge the Committee to favorably consider
the nomination and report it as soon as possible. We really do
need somebody in this position as soon as possible, and he will
do a great job in helping develop options for the next Farm
Bill. He will be a great resource in that process for the
Administration, as well as for the Congress, and particularly
this Committee in the Senate.
He and his wife, Rhonda, are close personal friends of
mine. She is, of course, in an important position at the White
House. They have four delightful, darling children who were a
little bit rambunctious a while ago, so we have not have not
invited them in to testify yet. They are a great family and
they will reflect great credit on the Senate family, I think,
in this new responsibility that Mark will have.
Thank you, Mr. Chairman.
Chairman Chambliss. Mark, obviously in this Committee,
there is no higher recommendation that can come from anyone
other than Senator Cochran, so you have got a lot to live up to
there. He referenced your children, and you being a good friend
of mine for so many years, the only thing I question is your
judgment to have four under the age of two. Wow.
Mr. Keenum. I am very blessed.
[Laughter.]
Chairman Chambliss. That is a great attitude to have.
We have statements from Senator Durbin supporting the
nomination of Mr. Strom, that we will place in the record.
[The prepared statement of Hon. Richard Durbin can be found
on page 32 in the appendix.]
[The prepared statement of Hon. Pat Roberts can be found on
page 34 in the appendix.]
[The prepared statement of Hon. Patrick J. Leahy can be
found on page 33 in the appendix.]
Mr. Keenum. Thank you very much, Mr. Chairman.
I would like to introduce my best friend and my wife for
the past 22 years, the mother of our four children, my wife,
Rhonda Keenum.
And somewhere, I am told, are my children. Here they come.
[Laughter.]
Mr. Keenum. We have 2-year-old triplets and their names are
Kathryn, Everett and Mary Phillips. And we have a 7-month-old
daughter named Victoria.
[Laughter.]
Mr. Keenum. As I said, Mr. Chairman, I am very, very
blessed.
Chairman Chambliss. Your job of crafting a Farm Bill will
be easy compared to going home at night.
[Laughter.]
Chairman Chambliss. Ms. Sommers.
Ms. Sommers. Thank you, Mr. Chairman.
My wonderful husband, Mike, is behind me. And we also have
a handful at home, a 3-year-old, a 4-year-old and a 2-year-old.
And we decided that today was not the day to bring them. It was
not a challenge I was up for today.
[Laughter.]
Ms. Sommers. Thank you.
Chairman Chambliss. Mr. Strom.
Mr. Strom. Thank you, Mr. Chairman.
Dr. Keenum. I can offer my wife. I would like to introduce
my inspiration of 29 years, Twyla is here with me today. And
she, at one time, owned operated a preschool for almost 15
years, so she can help today.
[Laughter.]
Mr. Strom. I have with me also my son, Derek, and his wife,
Kim. Derek is nearing the end of his Ph.D. work in particle
physics at Fermi Lab in Illinois.
I have with me also my daughter, Amber, who works for the
Department of Agriculture at the National Wildlife Research
Center in Fort Collins, Colorado; and my youngest son, Tyler,
who is a junior at Iowa State University, studying ag business
and economics.
Chairman Chambliss. Great. We are glad to have all of those
here.
All of you obviously have very impressive, very fine
looking families.
Before we take your statements, I would like to ask all
three of you to stand and raise your right hand.
To each of you, do you swear that the testimony you are
about to provide is the truth, the whole truth, and nothing but
the truth, so help you God?
Mr. Keenum. Yes.
Ms. Sommers. Yes.
Mr. Strom. Yes.
Chairman Chambliss. To each of you, do you agree that you
will appear before any duly constituted Committee of Congress
if asked to appear?
Mr. Keenum. Yes.
Ms. Sommers. Yes.
Mr. Strom. Yes.
Chairman Chambliss. Thank you, very much. You may be
seated.
We will now take any opening statements that you have.
Again, Mark, we will start with you, Jill, and Mr. Strom, and
go in that direction.
STATEMENT OF MARK E. KEENUM, NOMINEE FOR UNDER SECRETARY FOR
FARM AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF
AGRICULTURE
Mr. Keenum. Thank you, Mr. Chairman. Thank you, Senator
Harkin, as well, and distinguished members of the Committee. I
am both honored and humbled to appear before you today for
consideration for the position of Under Secretary for Farm and
Foreign Agricultural Services.
I would like to express my gratitude to President Bush for
nominating me and my appreciation to Secretary Johanns and
Deputy Secretary Connor, for the confidence they have bestowed
upon me.
I especially want to thank Senator Thad Cochran for his
gracious introduction.
I have been extremely fortunate to have been able to serve
Senator Cochran as his Legislative Assistant for Agriculture
for seven-and-a-half years and as his Chief of Staff for the
past 10 years. During my tenure with him, I have learned a
tremendous amount. In fact, I have spent many hours in this
very room, participating in staff deliberations, Committee
hearings and markups addressing numerous issues important to
American agriculture.
It has been an honor for me to serve Senator Cochran for
these many years and I owe a great deal to him for the person
that I am today. He has been a tremendous influence in my life,
both professionally and personally. Senator Cochran is a
thoughtful and deliberate decisionmaker. He also wants to know
the facts and not the rhetoric. Of the many things I have
learned from the Senator, the most important is how to treat
people, always with dignity and respect.
I was born in Starkville, Mississippi while my father was
studying agriculture at Mississippi State University. Early in
his professional life, my father went to work for the U.S.
Department of Agriculture. After over 30 years of service with
the Natural Resources Conservation Service, he retired and is
currently living with my mother on a small farm in the
Mississippi Delta. During my father's service with USDA, we
lived in several small rural communities throughout
Mississippi.
My paternal grandfather also worked for USDA, with the
former Soil and Water Conservation Service. He, too, owned a
farm in the Mississippi Delta, in addition to owning and
managing with my grandmother a small country story. I have very
fond memories of riding on a tractor with him as a young boy
while he plowed his fields. If confirmed, I would be a third-
generation employee of USDA.
I have grown up in and around agriculture all my life. My
experience has spanned from working as a farm laborer, a crop
scout, an agricultural extension specialist, an agricultural
research associate, and an agriculture economics professor, to
working with the members and the staff of the U.S. Senate
Committee on Agriculture, Nutrition, and Forestry during the
consideration of three Farm Bills and other legislative
initiatives important to American agriculture.
During my career, I have learned a great deal about the
complex nature of agricultural production that farmer's face
today. U.S. farmers and ranchers are the most efficient and
resilient producers in the world. Our Federal Government has a
key role to play in ensuring that U.S. farmers are able to meet
the challenges of producing a bountiful supply of safe and
affordable food and fiber products, despite the many risks they
face.
Farmers also should have the resources and support they
need from the Government to produce crops that can help to
reduce our Nation's dependency on foreign oil. Additionally,
with agricultural exports expected to reach a record of $68
billion this year, it is imperative for our Government to work
aggressively to promote U.S. agricultural products in the
international arena while pursuing fair access to vital export
markets.
Mr. Chairman, distinguished members, I have spent the
greater part of my career working within the Senate family, and
therefore I have a keen appreciation for the unique nature of
the legislative process. I believe this experience will be
especially beneficial during reauthorization of the Farm Bill
this coming year. During my tenure, I have especially
recognized the importance and the benefits of pursuing
solutions in a bipartisan manner.
I can pledge to this Committee that, if confirmed, I will
fully dedicate myself to the broad mission of this important
office and that I will commit to be accessible to all members
and staff.
Again, Mr. Chairman, distinguished members, I want to thank
you for allowing me to appear before you today and I welcome
any questions or comments.
Thank you Mr. Chairman.
[The prepared statement of Mr. Keenum can be found on page
20 in the appendix.]
Chairman Chambliss. Thank you.
Ms. Sommers.
STATEMENT OF JILL E. SOMMERS, NOMINEE TO BE COMMISSIONER OF THE
COMMODITY FUTURES TRADING COMMISSION
Ms. Sommers. Thank you, Mr. Chairman.
Chairman Chambliss and members of the Agriculture
Committee, I am honored to sit before you today as a nominee to
be Commissioner at the Commodity Futures Trading Commission.
It is a true honor and privilege for me to be nominated by
the President and be considered for this distinguished
position.
I would also like to thank Senator Roberts and his staff
for their support through this process, as well as the
Agricultural Committee staff for their assistance.
I have already recognized my wonderful husband, Mike, who
is here with me today and my children, who are at home.
I started working on Capitol Hill over 15 years ago for
Senator Bob Dole as an intern during the last semester of my
senior year in college at the University of Kansas. I worked
for him in various capacities for almost 5 years. And from
Senator Dole, I learned the importance of a fair and reasonable
decisionmaking process.
I grew up in a small town in Southeast Kansas, Fort Scott.
My parents have owned a small business in our farming community
for 38 years. My parents taught me the value of hard work and
integrity, and I promise to bring all of the values of my
Kansas roots with me to the Commission.
During my career, I have had the opportunity to work within
the futures industry. It is a fascinating world which is
constantly changing and innovating. For example, when I started
with the Chicago Mercantile Exchange in 1998, their electronic
trading platform was used for overnight or after hours trading
and the electronic volume was less than 15 percent of their
total volume. Today, the CME trades millions of contracts a day
electronically with a system that trades virtually 24 hours.
Fortunately, when Congress was tasked with reauthorizing
the Commodity Exchange Act in 2000, they saw that the industry
was quickly evolving and they created a framework to give the
CFTC the appropriate regulatory tools to keep pace with the
development in these markets. This bill and my work on it
shaped fundamentally my view of how the Government can and
should interact with these markets. The CFMA unleashed the
power of the free market on the futures industry and it did it
in a way without sacrificing a rigorous enforcement structure
at the CFTC.
The CFTC does an outstanding job of encouraging market
growth while ensuring the integrity of the market place and
protecting market users. The Agency has taken this mission
seriously and pursues very aggressive action against wrongdoers
in the market.
My regulatory philosophy rests on some of the basic
principles Congress stressed during CFMA, fair and flexible
supervision while providing strong and independent oversight.
Congress got it right with the CFMA. It did it through
encouraging competitiveness and assuring legal certainty.
Congress, in its wisdom, understood the truth, that American
entrepreneurs and traders are the best in the world if given
the power to succeed. Whether you are a farmer trading wheat in
Kansas City or a trader in Chicago buying Treasury Bonds, the
CFTC regulates each market with the proper level of oversight.
Every one of the contracts traded on each futures and options
exchange in the United States plays an important role, and
every market participant deserves to have confidence in the
integrity and efficiency of those markets.
I understand that there are several challenging issues
facing the Commission, but as a mother of three children under
five I know how to handle a challenge.
If confirmed by this Committee and the Senate, I would work
hard to ensure that the CFTC continues its role of encouraging
efficient, transparent and financially sound futures and
options markets while protecting the public from fraud,
manipulation and abusive practices.
Thank you for the opportunity to appear before you today. I
will be happy to answer any questions the Committee may have.
I would also like the record to reflect an oversight on my
SF 278 form that I found yesterday while going over it with the
Committee staff. On page five of seven, the Chicago Mercantile
Exchange stock should be listed as generating income between
$5,001 and $15,000 due to a sale of stock in June of 2005.
[The prepared statement of Ms. Sommers can be found on page
24 in the appendix.]
Chairman Chambliss. Thank you.
Mr. Strom.
STATEMENT OF LELAND A. STROM, NOMINEE FOR THE BOARD OF THE FARM
CREDIT ADMINISTRATION
Mr. Strom. Mr. Chairman, Senator Harkin, and distinguished
members of the Committee, I also have deeply honored and
humbled to have the opportunity to appear before you today as a
nominee of the President for the Board of the Farm Credit
Administration. And also. I would like to say again, I am very
proud to have my family with me today.
I am also very proud to appear before you today with the
support of my Senators from Illinois, Richard Durbin and Barack
Obama, as well as my Congressman, Speaker J. Dennis Hastert.
Being here today is far from the small dairy farm in which
I was raised in Kane County, Illinois. In the late 1800's my
grandparents settled in the picturesque rolling hills of the
Fox River Valley, about 40 miles west of Chicago, at the time a
good day's journey from the city.
One of my earliest farming experiences was at the age of 10
when my brother and I purchased a used John Deere 14T baler
and, pulling it behind an Allis Chalmers WD45 tractor on loan
from dad, began doing custom hay baling. Fortunately, my
brother was older and did most of the wagon loading until I got
a little bigger and could actually throw a bale of hay. Those
experiences though provided me a strong understanding of the
value of a good day's work, along with the satisfaction of a
job well done. Today, the city has reached our farm and my
small community is faced with the challenges that comes with
population growth.
Similarly, the agricultural industry today faces many
challenges. The issues of globalization, technology, energy,
and trade, are only a few examples of the myriad of forces
shaping the agricultural landscape of the 21st Century.
Over the years, I have had the honor and pleasure of
serving the ag industry in a variety of ways, from being a
board member of our local farm service cooperative and
organizations such as Farm Bureau, to serving as a member of
the Federal Reserve Bank of Chicago's Advisory Council on
Agriculture, Labor and Small Business.
In regards to this role that I have been nominated for, I
hope that you may find me uniquely qualified from an experience
standpoint, as I have been a member/borrower of the Farm Credit
System for nearly 30 years. Shortly after becoming a borrower
in the late 1970's, I was asked to run for the board of the
local Production Credit Association and was elected in 1981.
I have over 25 years of service to that organization, as
well as serving 9 years on the board of AgriBank, one of the
System's district banks. Over the last three decades, there
have been many other roles and assignments I have served, which
have given me a deep understanding and a great respect for the
role the System plays in the agricultural sector and in rural
America.
My service to the Federal Reserve has given me a better
knowledge of how the Farm Credit System fits into the overall
industry that lends to agriculture, which includes the
commercial banking sector as well as other sources of
agricultural credit.
During the ag crisis of the 1980's I gained a deep
understanding of the issues that confront the agricultural and
lending industries, and how important having sound business
practices can be to reaching success. I have a very profound
respect for the importance of the role that the Farm Credit
Administration plays as the arms-length safety and soundness
regulator of the Farm Credit System.
In closing, I would like to say that I take a strong
interest and pride in community and public service. From
coaching youth sports at home and serving on my local church
and school boards, to the Federal Reserve and the Farm Credit
System, I have always considered the calling of public service
a high priority in my life and, hopefully, something that I can
pass on to my children and future generations.
If you should find me worthy of this position, I look
forward to working with you toward a strong and prosperous
agricultural and rural America.
I thank the Committee for their time and consideration and
look forward to your questions.
[The prepared statement of Mr. Strom can be found on page
26 in the appendix.]
Chairman Chambliss. Thanks very much to all three of you.
Now that Senator Harkin has joined us, Tom, I will turn to
you for any opening comments you wish to make. But I want to
reiterate what I said in my earlier opening statement, and that
is you and I have always had a great working relationship. We
have worked in a very bipartisan way. And that has been no
better exhibited than by your cooperation and the cooperation
of your staff in expediting this hearing, particularly with
respect to Jill, as we just got her paperwork in the last day
or two.
Thank you for that and I thank Mark and all of your staff
for being so cooperative and willing to get this expedited.
As you and I know, it is the best interests of farmers and
ranchers across America that this happen and that is the spirit
we have always worked in and I thank you.
STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA
Senator Harkin. Mr. Chairman, thank you and let me might
repay that in kind by thank you for your leadership of this
Committee over the last couple of years and for your
willingness to move ahead on early hearings on the Farm Bill.
You went all over the country to get input from people in a lot
of different places around America. You came to Iowa, I know,
and went to other states. I want to thank you for that.
And I just want you to know that as I assume this gavel,
next month I guess, that we intend to pick up on that. I thank
you for that. You have laid a great groundwork for the input on
the Farm Bill. And I look forward to working with you closely
as we develop that next year.
Again, I want to thank you and I want to thank your staff.
Martha has been great in working with us through all of this.
And this Committee has always--I have always liked the fact
that we sit at a table. It has always been a kind of a nice
thing. I do not like these boxes and stuff.
Chairman Chambliss. Better than a submarine.
Senator Harkin. But it has always been a nice feeling for
all of the years I have been here to sit around a table. It
just has less of a partisan ring to it and stuff like that. And
that is the way we have tried to operate this Committee. I know
that we will continue to do the same in the future.
So I just thank you very much for all of your cooperation
and everything you have done, and look forward to a very smooth
transition and working with you on the upcoming Farm Bill.
I say the same to my good friend, Thad Cochran too. We have
always had a great relationship here on this Committee and
working with you all. We have got some tough battles ahead. I
know that, not so much here, I think budget problems more than
anything else, in terms of what we are going to get for our
next Farm Bill and everything.
But we have a good Committee, a great Committee. There is a
lot of issues out there confronting us that we will be facing
down the road.
These three nominees, I have looked at their backgrounds
and stuff, and I could not be more pleased with all of your
backgrounds and your expertise, and I hope that we can expedite
this and get it through the floor soon. I do not know when, Mr.
Chairman.
Chairman Chambliss. As soon as possible, tonight or
tomorrow.
Senator Harkin. Before Friday anyway, as I understand we
may not be back after Friday.
But I want to thank our three nominees for being willing to
serve the Government, to serve the public in these capacities.
As I said, and I will just ask that my statement be made a
part of the record, but all three of these positions are very
important, very vital to the smooth functioning of our markets,
in the case of the Commodity Futures Trading Commission, in
terms of the Under Secretary of Agriculture for Farm and
Foreign Agricultural Services, it covers a broad gamut of
things that we do. And of course, with the Farm Credit
Administration. All three are very vital functions.
I thank you for your past service and for being willing to
serve in this capacity, and hopefully we will get this done
very soon.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Tom Harkin can be found on
page 18 in the appendix.]
I know Senator Coleman has a very important hearing he has
to attend in a few minutes, so I am going to defer my questions
until the end and I will recognize Senator Coleman initially
for any questions he would like to begin with.
Senator Coleman. Thank you, Mr. Chairman. I greatly
appreciate that courtesy.
I want to make clear that I think these are all
extraordinary nominees. I hope that we can move very, very
quickly on their confirmations.
I really just have one line of inquiry to Dr. Keenum, and
again reflect, stating up front, this is a tremendous nominee.
I have some concerns about things that happened before you
are going to get to USDA, particularly regarding the sugar
policy, the Sugar Program. The concern I have is we had a sugar
market last spring thing that was in balance. There was a
disruptive impact on the sugar industry in Minnesota and North
Dakota due to bad weather in the beet regions, monstrous
hurricanes and cane sugar.
But we had a sugar market in balance, and USDA doubled
their inputs to compensate, the market was well supplied, the
sugar policy was working as designed.
On July 27, I do not have the charts here to show you, but
I am sure you are familiar with it, the USDA, by its own
actions, undermined the U.S. sugar market balance and has
severely threatened the no-cost operation of our sugar policy.
What happened on that date is USDA issued a decision that
sent the market into a nose dive. You can actually see that in
some of the graphics. It announced an increase to the then-
current import quota of 2005-2006, announced an import quota
for 2006-2007 that was more than half a million tons in excess
of our WTO and NAFTA import requirements, and promised Mexico
generous and unwarranted additional access for the last quarter
of 2007.
I think market prices since July 27th have dropped two to
three cents per pound, or more than 10 percent. Each one cent
drop in price means a loss for industry of $170 million in the
value of this year's crop.
Furthermore, sugar loan forfeitures are now a serious
threat, when they were not before. Raw cane sugar prices have
already fallen below loan forfeiture levels. Refined beet
prices are declining and nearly at forfeiture levels, as well.
Again, doctor, this is something you were not responsible
for. But what I would like is from you a commitment to work
with us and work with this Committee to restore balance to the
U.S. sugar market, eliminate the threat of sugar loan
forfeitures that would be very costly to American taxpayers.
Can I get that commitment?
Mr. Keenum. Absolutely, Senator.
In my review of the situation you described, the Department
of Agriculture, in July, did an estimate on U.S. domestic
production of sugar and they underestimated sugar yields. And
as such, they adjusted the tariff rate quotas to allow more
imported sugar to come into the U.S. markets. It had a negative
impact when we found out our actual yields were much higher
than had been estimated.
It would be my intent, Senator, to sit down and talk with
representatives of the sugar industry, get their input on this,
talk with the pertinent staff at USDA that has oversight over
the sugar program, at FAS and FSA, and get all the facts.
Because the law, as I understand it, is very clear. It
requires that the program be managed in a way that there is no
net cost to taxpayers. These actions and the estimations of the
yields are always unpredictable when you are dealing with
yields and weather and whatnot. But I think it is important and
incumbent upon the Government and the agencies that have
jurisdictions over these important programs to again comply as
best they can to the intent of the law. And again, the law says
to manage the program at no net cost to the taxpayers.
And because of these actions, we are at very close levels
of loan forfeitures. Again, this would be something I would
look at and take very seriously if I am confirmed.
Senator Coleman. I appreciate that, greatly appreciate it
and do look forward to working with you and working with the
Chairman and working with this Committee. I know this is
critically important, too, on the House side. Colin Peterson
represents these area, the Chairman of the Ag Committee.
The observation I have in working with staff on this is
that perhaps there was not an understanding that Mexico is a
net importer of sugar. So we set up a situation here where we
have Mexican sugar farmers are higher cost producers. Nearly
half the sugar industry in Mexico is owned and operated by the
Mexican government. There is a deficit--Mexico is a deficit
producer of sugar and corn sweetener and Mexico is a net
importer of sugar.
Somehow, I am not sure if all of this was calculated in
that final decisions. So it has had that impact.
Mr. Chairman. I appreciate, again, your courtesy. These are
just a few of the concerns I am hearing from my sugar
producers, concerned about unfair trade practices with respect
to Mexican sugar, the problems resulting in the failure to
enforce NAFTA. And I appreciate your pledge to work with us to
address these concerns.
Mr. Keenum. Absolutely. I look forward to working with you
and your staff specifically on this issue, Senator.
Senator Coleman. Again, Mr. Chairman, I look forward to
strongly supporting these nominations.
Thank you.
Chairman Chambliss. Thank you.
Senator Harkin.
Senator Harkin. Thank you, Mr. Chairman. I just had one
question for Mr. Keenum.
Mr. Keenum, we included a provision in the 2002 Farm Bill,
Section 1614, that directs the Secretary of Agriculture to
establish procedures to track the benefits provided directly or
indirectly to individuals and entities. We wrote that section
simply because USDA and Congress ought to know where the
taxpayers' money is going and there was a lot of concern at
that time.
We are now four-and-a-half years from when that requirement
was enacted. Unfortunately, the provision has still not been
implemented.
If confirmed as Under Secretary, by what date will you be
able to bring the Department into lawful compliance with this
requirement of the Farm Bill?
Furthermore, could you give a commitment to this Committee
that within 90 days of the date of your confirmation, the
Department will comply with this requirement of the Farm Bill
to assure that Farm Program payments are transparent and can be
traced to the individuals who receive the payments? Again, that
was in the Farm Bill, the last Farm Bill.
Mr. Keenum. Yes sir.
I will make every effort to do as you have requested,
Senator. I can pledge that.
I do not know the status of where that report is within the
Department. I know they have been working on this report and
the law does require it and it is public information and it
should be made available to the public as soon as it is
available to be released.
This will be a priority for me because, again, it is
required under, law, and I will make sure that any agencies
that I have supervision over will comply with the intent of
Congress fully. This is one of those areas.
So yes, Senator, I will pledge to you that, if confirmed,
that I will make every effort to do as you have requested.
Senator Harkin. I appreciate that very much. Thank you.
Mr. Strom. I see that again, you have got a long background
in credit and banks, director of your local Production Credit
Association, the First Farm Credit Services, AgriBank, and of
the Farm Credit Counsel. Obviously great experience. However,
it may raise questions about your ability to shift gears now
and become an impartial regulator of the System.
Again, what assurances can you give this Committee to
demonstrate that you will provide the necessary independent
oversight to assure the safety and soundness of the Farm Credit
System?
Mr. Strom. Senator, I have given this considerable amount
of thought because I do realize that my background in the Farm
Credit provides me a unique perspective on the System. But I do
realize, as I mentioned in my opening statement, I profoundly
understand the relationship that the Farm Credit Administration
serves as the safety and soundness regulator. And I commit to
you that I will work very hard to fulfill the role as a board
member and to see that that administration does provide the
oversight of both the Farm Credit System and Farmer Mac that is
needed. And I pledge that if tough decisions are needed to be
made, I am prepared to make those difficult decisions.
Senator Harkin. Thank you very much, Mr. Strom.
Mr. Chairman, I do not have any further questions. Thank
you and I hope we can get them through.
Chairman Chambliss. Thank you. Mr. Cochran.
Mr. Cochran. Thank you, Mr. Chairman.
I do not have any questions but I congratulate all three
nominees and look forward, as a member of this Committee, to
staying in touch with the work of your agencies and the
Department of Agriculture and I will expect that we will
probably have an opportunity to hear from you again at hearings
and as we work our way through the writing of this next Farm
Bill.
I congratulate all of you.
Thank you.
Chairman Chambliss. Thank you.
Mr. Salazar.
Mr. Salazar. Thank you very much, Chairman Chambliss.
Let me say at the outset that I very much enjoyed working
with you and with the staff on this Committee over the last 2
years. I appreciate your leadership and the work that we have
been able to do together. And I look forward to working with
all of this Committee, including Senator Harkin as the incoming
chairman, to work on the issues that are important to all of us
on a bipartisan basis.
I echo Senator Harkin's comments. I think when we sit
around this table, I think that the Senators who come here come
here because they really do care about rural America and
agriculture. And I think that that transcends Democrat or
Republican issues and how we move forward in the next several
years is something that I am very much looking forward to.
We sit on this Committee, I know, by choice and it is
certainly my choice to be here and I look forward to working
with all of you.
To the nominees, to Mr. Strom, Ms. Sommers, and Dr. Keenum,
I congratulate each of you and your families. I look forward to
supporting you in this nomination process. And again, I echo
the comments that have been said today, that I hope we are able
to get you confirmed very, very quickly.
I have a comment and question, two quick ones.
First, Dr. Keenum, I am concerned about some of the
perception that we have around the world on American
agriculture. Yesterday I had a meeting, and I think Senator
Harkin did as well, with the President of Costa Rica, Oscar
Arias. One of the things that he talked about was how it was
that American agriculture was being perceived in Latin America
and now American agriculture was being seen as the reason why
there had been a default and a breakdown on the world trade
negotiations.
And so my question to you, in the very important role that
you will play, is what steps do you think we can take to try to
improve the image internationally that American agriculture has
today?
Mr. Keenum. We have a very robust agricultural industry.
This year we are looking at agricultural trade exports that are
going to exceed $68 billion, and projections for this coming we
are going to be somewhere in the $70-plus billion range.
So obviously, we want to have good relations with our
trading partners. We depend on their markets. We count on up to
nearly a third of what we produced being exported to support
producer's incomes and market prices. Like I said, we have to
have good relationships with our trading partners. And it is a
two-way street, as well.
So if I am confirmed, I will do everything in my power to
always promote and protect the best interest of American
agriculture, but do it in a way that is fair and working with
our trading partners.
Mr. Salazar. I look forward to working with you on those
issues because I know that those issues are going to be
significant for us over the next several years.
To Mr. Strom, my question to you has to do with the Farm
Credit System and credit to be made available in the future
with respect to renewable energy initiatives. I think, based on
the conversations that this Committee has had over the last
year on the new Farm Bill, I think that one of the titles that
we would hope to be as robust as possible, and many feel that
by some of the publications they will be what we do with
respect to renewable energy opportunities across America.
I would like to know what your thoughts are in terms of
enhancing and capitalizing on opportunities for renewable
energy.
Mr. Strom. Senator, coming from my home State of Illinois,
where the ethanol industry now is in a growth phase with many
plants under construction, really with other sources of
renewable fuels available now and in the future, I am a strong
supporter of the area of energy and renewable fuels.
As far as the Farm Credit System, I can commit to you that
will I be supportive of looking into that area further. I know
that there is a considerable amount of work already going on
within the Farm Credit System in some of the financing efforts
to help finance construction of renewable fuels, processing
facilities, and so forth.
The future is bright, but I also think we have to watch
that segment of that industry so that down the road we do not
overbuild in that area also.
So I think it is a good and bright prospect for the future.
Some warrant caution, probably down the road. But as a
regulator of the Farm Credit System, I believe that the Farm
Credit System needs to be involved in a very positive and
proactive way in the expansion of that arena.
Mr. Salazar. Thank you.
And thank you, Mr. Chairman.
Chairman Chambliss. Thank you.
Let me just say that I have no specific questions,
primarily because Mark, I think I have asked you every question
I could ask you over 15 years. I hate, since I have got you
under oath, to miss this opportunity. But knowing your
background in agriculture, I know what a great job you are
going to do. And again, I just want to say to you that I thank
you for your willingness to serve.
Jill, you and Mike have been good friends of mine since I
have been here, in spite of Mark working on the other side. We
are going to excuse that. I really look forward to you going to
CFTC.
I have had a close connection with that organization
because my son used to work over there and I know how
critically important it is to farmers and ranchers to move
forward and really do the oversight job they need to do. And
under the current leadership there, you are going to be a huge
asset to them there.
Mr. Strom, again I have reviewed your record and I know of
your long background and your history in farm credit financing,
and there is no more critical asset for farmers and ranchers
than the ability to borrow money. I know you are going to be,
again, a huge asset to this organization, and we thank all
three of you for your willingness to serve.
I want to add, in addition to the letters of support
previously mentioned, we also have, in support of Mr. Strom, a
letter from the National Council of Farm Cooperatives, a letter
from the Farm Credit Council, that will be inserted into the
record.
[The following information can be found on pages 40 and 42
in the appendix.]
So those will be inserted into the record.
And again, any questions to be submitted for the record, I
mention to staff again, must be done by four o'clock this
afternoon. We expect to ask a discharge by unanimous consent,
with the cooperation again of Senator Harkin, sometime later
today and move these nominees within the next couple of days on
the floor of the Senate.
Unless there is any further business, we stand adjourned.
Thank you.
[Whereupon, at 10:15 a.m., the hearing was adjourned.]
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