    [Senate Hearing 109-149]
    [From the U.S. Government Publishing Office]

    AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
                                FISCAL YEAR 2006

                                  ----------

                            THURSDAY, APRIL 14, 2005

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 2:03 p.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Robert F. Bennett (chairman)
    presiding.
        Present: Senators Bennett, Burns, and Kohl.

                           DEPARTMENT OF AGRICULTURE

    STATEMENTS OF:
            ERIC M. BOST, UNDER SECRETARY FOR FOOD, NUTRITION, AND CONSUMER
                SERVICES
            WILLIAM T. HAWKS, UNDER SECRETARY FOR MARKETING AND REGULATORY
                PROGRAMS
            DR. MERLE D. PIERSON, ACTING UNDER SECRETARY FOR FOOD SAFETY

                 OPENING STATEMENT OF SENATOR ROBERT F. BENNETT

        Senator Bennett. The subcommittee will come to order.
        This is the third hearing that we have had on the USDA's
    budget request for fiscal 2006. And our witnesses today are Mr.
    Eric Bost, who is the Under Secretary for Food, Nutrition, and
    Consumer Services; Mr. William Hawks, the Under Secretary for
    Marketing and Regulatory Programs; and Dr. Merle Pierson,
    Acting Under Secretary for Food Safety.
        Gentlemen, we welcome you all. We see that Dennis Kaplan,
    your keeper, is here again, as he has been in the past. Mr.
    Kaplan, we appreciate your diligence and willingness to attend
    these.
        This is a very diverse group of activities for the
    Department of Agriculture. Mr. Bost manages the food stamps and
    WIC, a variety of other feeding and nutrition programs. And you
    control roughly half the budget, maybe a little more than half.
    So----
        Mr. Bost. About 62 percent.
        Senator Bennett. Sixty-two percent. All right. So everybody
    has to be very nice to you.
        Mr. Bost. I wish.
        Senator Bennett. You wish. All right.
        Dr. Pierson's principal agency is the Food Safety and
    Inspection Service. So you are concerned with the Canadian
    border and BSE and Avian flu and processing plants and all of
    the rest of that. So you are in the news a lot.
        And then Mr. Hawks manages the Animal and Plant Health
    Inspection Service, the Agricultural Marketing Service, and the
    Grain Inspection, Packers and Stockyards Administration. So
    these agencies foster the marketing of U.S. agricultural
    products. You are the sales arm, I suppose, of this group.
        So we are in the same situation we were yesterday. We have
    the supplemental on the floor. We do not have a vote scheduled
    in the moment, but we are subject to being interrupted. So I
    would hope that each witness would make a short summary so that
    we can proceed to questions as quickly as possible. And of
    course, we do have your complete written statements, and they
    will, indeed, become part of the record.
        Senator Kohl.
        Senator Kohl. Thank you once again, Senator Bennett.
        We are finishing off a busy week. We welcome Mr. Bost, Mr.
    Hawks, and Dr. Pierson, and we thank you for coming today to
    help us finish off this week of agriculture appropriations
    hearings.
        Together, you oversee budgets of more than $60 billion in
    mandatory and discretionary spending, with the vast majority of
    that money going to nutrition assistance programs. The missions
    that you represent--feeding the hungry, making sure the food
    supply in this country is safe, and protecting the health of
    this country's most important plant and animal resources--are
    each very important. And your agencies have received some of
    the rare increases that are to be found in the President's
    budget this year.
        So I congratulate you on pulling that off. Looking at the
    budget overall, it must have been a difficult task to do. This
    does not mean, however, that we don't have concerns and
    questions regarding your budgets. We do, and so we look forward
    to your testimony and look forward to having a chance to ask a
    few questions.
        Thank you very much, Senator Bennett.
        Senator Bennett. Let us go in the order in which you are
    seated across the way, starting with you, Mr. Bost, and then go
    across.

                           STATEMENT OF ERIC M. BOST

        Mr. Bost. Thank you, Mr. Chairman, and good afternoon,
    Senator Kohl.
        For the record, I am Eric Bost, Under Secretary for Food,
    Nutrition, and Consumer Services. You have my written
    statement. So I will be very brief in terms of my opening
    remarks.
        The President's 2006 budget request for the nutrition
    assistance programs is a record high $59 billion and ensures
    that all eligible low-income children, seniors, and families
    and individuals have access to nutrition assistance programs.
    Since I have been Under Secretary, I have focused on three
    major challenges: one, improving access so that all eligibles
    are able to participate in our programs; two, building a
    healthier United States by promoting better diets and a
    healthier lifestyle; and three, improving the accuracy and
    integrity in all of our programs.
        The 2006 request supports anticipated participation and
    costs for food stamps, WIC, and the Child Nutrition Programs
    and provides contingency funds in the amount of $3 billion for
    food stamps and $125 million in WIC.
        In terms of integrity, one of the things that we are very
    pleased with and very proud of, is that the error rate in the
    Food Stamp Program is at 6.63 percent. This is the lowest that
    it has ever been in the history of the Food Stamp Program and a
    25 percent reduction over the course of the last 4 years.
        The $5.5 billion request for the WIC Program would fully
    support the anticipated participation of 8.5 million persons,
    and continues our commitment to ensure that low-income pregnant
    women, infants, and children have access to healthy food,
    nutrition, education, and when necessary, referrals to other
    health and social services.

                              PREPARED STATEMENTS

        In closing, the President's direction and leadership has
    been very clear. The Administration's record funding request
    has priorities to ensure access, maintain and improve
    integrity, and to help Americans live longer, healthier, and
    better lives.
        I would be happy to answer any questions that you may have.
        [The statements follow:]

                       Prepared Statement of Eric M. Bost

        Thank you, Mr. Chairman, and members of the subcommittee for this
    opportunity to present the Administration's fiscal year 2006 budget
    request for USDA's Food, Nutrition, and Consumer Services (FNCS).
        I am here today to discuss with you the President's budget request
    that demonstrates the Administration's unwavering commitment to our
    Nation's 15 nutrition assistance programs--programs that ensure a
    nutrition safety net for the Nation's children, elderly and low-income
    households. I am proud of our accomplishments and proud to work for the
    President who provides clear and continued support for these programs
    that protect our children, elderly and low-income households from
    hunger; improve their nutritional intake; and help to prevent the
    health risks associated with poor nutrition and physical inactivity.
        Three principles have continuously guided our administration of
    these programs: (1) promoting access and awareness of the programs so
    that all eligible persons can make informed decisions about whether to
    participate with dignity and respect; (2) addressing the growing
    epidemic of obesity, with its staggering implications for both National
    health care costs and individual quality of life; and (3) enhancing the
    integrity with which our programs are administered. For these programs
    to be successful, our stewardship of public resources needs to inspire
    the trust and confidence of the American people.
        The President's budget for fiscal year 2006 requests a record level
    of $59 billion dollars in new budget authority to administer these
    vital programs. We will continue our efforts to improve the public's
    awareness of our programs and to, wherever possible, simplify our
    administrative processes. By doing so, we can better ensure all
    eligible persons have open and informed access to the nutrition
    assistance programs. Many potentially eligible individuals do not take
    advantage of our programs' benefits and assistance. Clearly, we have
    more work to do to reach those who are eligible for our programs.
        Our 15 programs provide nutrition assistance, including both access
    to healthy food and nutrition education and promotion to support and
    encourage a healthy lifestyle. With this nutrition mission in mind, and
    the Center for Nutrition Policy and Promotion's (CNPP) focus on
    providing a comprehensive Food Guidance System that is the basis of
    nutrition promotion for our programs as well as for the broader
    population, we play a critical role in the integrated Federal response
    to the growing public health threat posed by overweight and obesity.
        Finally, we will strive to enhance the efficiency and accuracy with
    which our programs are delivered. In fiscal year 2003, the most recent
    year for which data is available, we have once again achieved a record
    level of Food Stamp payment accuracy with a combined payment error rate
    of only 6.63 percent. This is the fifth consecutive year of
    improvement, lowering the error rate by over 4 percentage points and
    making it the lowest rate in the history of the program. We will
    maintain our efforts with State partners toward continued improvement
    in the payment error rate. While I am confident that the coming year
    will bring more good news about the administration of the Food Stamp
    Program, we do have concerns that the Farm Bill's provisions governing
    sanctions and incentives may diminish States' determination to maintain
    this progress. We will also continue efforts to address the issue of
    proper certification in the school meals programs in a manner that
    improves the accuracy of this process without imposing barriers to the
    participation of eligible children. We will also begin new analytical
    work under this budget request to better assess the accuracy of
    eligibility determinations in the Child and Adult Care Food Program.
        Hard work of USDA staff, of the Congress, and of our State and
    local program partners has accomplished many things, but important work
    remains to be done. This budget request provides critical support for
    this work. I would like to review the highlights of the request and the
    improvements in performance and results it is designed to support.

                                 PROGRAM ACCESS

        At its most basic level, ensuring program access must begin with
    making certain that sufficient resources are provided to these programs
    so all who are eligible and in need can have ready access to benefits.
    The President's fiscal year 2006 budget requests funds to support
    record levels of participation in the Food Stamp Program and the WIC
    Program. The Administration's strong commitment to adequately fund
    these critical programs acknowledges the inherent difficulties in
    anticipating future demand for program services, and provides for
    contingency funding should program costs exceed our estimates.
        For the Food Stamp Program, the budget continues the $3 billion
    contingency reserve appropriated in fiscal year 2005 but also offers,
    as an alternative, a proposal for indefinite budget authority for
    program benefits. This authority would be an efficient way to ensure
    benefits are funded as economic circumstances change. In WIC, the
    contingency reserve appropriated in fiscal year 2005 would be
    replenished to the $125 million level and would be available to the
    program should participation or food costs exceed the levels
    anticipated in the budget.
        Adequate program funding, however, is not enough to ensure access
    to program services for those who need them. The design of our programs
    must not create barriers that prevent eligible people in need of
    service from accessing our programs. We have recently implemented
    legislative changes brought about by the Farm Bill that expanded
    eligibility and simplified program rules to improve access to the Food
    Stamp Program and have worked diligently to encourage our State
    partners to take advantage of the new options. We remain committed to
    the fundamental principles of improving program delivery and ensuring
    access of eligible people who wish to participate in our programs as we
    move forward with the implementation of program changes enacted as part
    of the reauthorization of the Child Nutrition and WIC Programs last
    year.

                 COMBATING THE EPIDEMIC OVERWEIGHT AND OBESITY

        The statistics surrounding our National epidemic of overweight and
    obesity are staggering. Nearly 365,000 deaths a year are related to
    poor diet and physical inactivity; poor diet and inactivity are the
    second leading cause of preventable death after smoking. Obesity is
    costing Americans $123 billion in healthcare costs each year. About 60
    million American adults are obese; and, if this trend continues, this
    number will rise to 69 million by 2010; 64 percent of adults aged 20-74
    are either overweight or obese.
        Overweight, obesity and physical inactivity are major risk factors
    for chronic diseases such as diabetes, cardiovascular disease and
    cancer each of which undermines the quality of life, leads to premature
    death, and contributes to the costs I just mentioned. Diabetes has
    increased by 49 percent in the past 10 years, reflecting a strong
    correlation with obesity; 18 million people have diabetes, and it is
    increasingly diagnosed in children and adolescents; 1 in 3 persons born
    in 2000 will develop diabetes if there is no change in current health
    habits. Between 1971 and 2000, women's daily intake of calories rose by
    22 percent, while men increased their daily intake by 7 percent. Recent
    trends among children are alarming as well. In the past 20 years, the
    percentage of children who are overweight has doubled and the
    percentage of adolescents who are overweight has more than tripled. If
    we do not stem this tide, this may be the first generation of children
    that will not have a longer life expectancy than their parents.
        The Federal nutrition assistance programs can play a critical role
    in combating this epidemic by providing not just access to healthful
    food, but also promoting better health through nutrition education and
    promotion of physical activity. These FNS program services, along with
    the work of the CNPP to improve the diets of all Americans, are a key
    component of the President's HealthierUS initiative. I believe the
    American public is served well by USDA's continual contributions to
    addressing the critical nutrition-and health-related issues facing us
    today. The CNPP continues to have an integral role in the development
    and promotion of updated dietary guidance and nutrition education. The
    Dietary Guidelines for Americans (Guidelines), published jointly every
    5 years by the USDA and the U.S. Department of Human Services (HHS), is
    the cornerstone of Federal nutrition policy, allowing the Federal
    Government to speak with one voice. With the latest edition of the
    Guidelines released January 12, 2005, we have provided the American
    public with updated science-based advice that promotes health and helps
    to reduce the risk of major chronic diseases--including addressing
    obesity through diet and physical activity. For the first time the two
    Departments created a consumer brochure and released it along with the
    Guidelines to help consumers make smart choices from every food group,
    find a balance between food and physical activity and get the most
    nutrition out of their calories.
        While the Guidelines will continue to serve the American public as
    a representation of science-based Federal nutrition policy, USDA is
    completing its work on a comprehensive Food Guidance System, replacing
    the Food Guide Pyramid, that will serve Americans well by translating
    the principles of the Guidelines and interpreting them into healthful
    food choices. This new comprehensive Food Guidance System, due to be
    released later this spring, will provide a framework that the American
    public can use for selecting the types and amounts of foods they need
    for a nutritionally adequate diet. With the release and targeted
    promotion of both the Guidelines and the USDA's Food Guidance System, I
    believe the American public will be motivated to make more healthful
    food choices--and thus reduce the trends related to overweight and
    obesity and other nutrition-related adverse outcomes. Both the
    Guidelines and the new Food Guidance System will be widely and
    consistently promoted across the nutrition assistance programs through
    the Eat Smart. Play Hard.TM campaign, and within programs
    through Team Nutrition, WIC nutrition education, and Food Stamp Program
    nutrition education.

                    ENHANCING PROGRAM INTEGRITY AND DELIVERY

        With this budget request, we are asking the Nation to entrust us
    with over $59 billion of public resources. We are keenly aware of the
    immense responsibility this represents. To maintain the high level of
    public trust that we have earned as good stewards of the resources we
    manage, we will continue our ongoing commitment to program integrity as
    an essential part of our mission to help the vulnerable people these
    programs are intended to serve.
        This is not a new commitment. As I noted earlier, in fiscal year
    2003, the most recent year for which data is available, the Food Stamp
    Program achieved a record high payment accuracy rate of 93.4 percent.
    We have also been working to develop strategies to improve the accuracy
    of eligibility determinations in our school meals programs--an issue of
    mutual concern to all those that care about these programs. The Federal
    administrative resources provided for in this budget will allow us to
    advance our close work with our State and local program partners on
    both of these essential integrity initiatives--continuing both our
    successes in the Food Stamp Program and our intensified efforts in
    school meals.
        In the remainder of my remarks, I'd like to touch on several key
    issues:

                               FOOD STAMP PROGRAM

        The President's budget anticipates serving a monthly average of
    29.1 million persons in fiscal year 2006, an increase of 2.6 million
    over our projections of the current fiscal year. Our $40.7 billion
    request fully funds this level of service.
        While the President's budget anticipates continuing improvement in
    the Nation's economy, Food Stamp Program participation traditionally
    continues to rise for some time after the aggregate employment begins
    to improve. We have made a concerted effort over the last 3 years to
    raise awareness of the benefits of program participation and encourage
    those who are eligible, especially working families, senior citizens,
    and legal immigrants, to apply. In the past 6 months we have provided
    16 grant awards of approximately $2 million to community and faith-
    based organizations to test innovative food stamp outreach strategies
    to underserved, eligible individuals and families. While these efforts
    have brought more people into the program, many eligibles remain who
    could be participating but are not. We continue to aggressively promote
    the message that Food Stamps Make America Stronger, in the sense that
    the program puts healthy food on the tables of low-income families and
    has a positive impact on local economies. Particular attention has been
    focused on those legal immigrants who had their eligibility restored by
    the Farm Bill, the elderly, and working families.
        While we seek to encourage all who are eligible and in need to
    participate in the program, we also need to ensure access to the
    program is administered in an equitable manner across all States. The
    budget contains a proposal to eliminate categorical Food Stamp
    eligibility for Temporary Assistance for Needy Families (TANF)
    participants who receive only TANF services including, for example, an
    informational brochure and not cash benefits among persons with income
    above the normal food stamp threshold. This proposal, with partial
    implementation in fiscal year 2006, is expected to impact 161,000
    persons and reduce benefits by $57 million. When fully implemented in
    fiscal year 2007, this change is estimated to affect approximately
    312,000 individuals and save $113 million annually. The President's
    proposal restores equity among participants and ensures that Food Stamp
    benefits go to individuals with the most need while retaining
    categorical eligibility for the much larger number of recipients who
    receive cash assistance through TANF, SSI and General Assistance.
        The Budget also requests a continuation of a policy included in
    last year's Appropriations to exclude special military pay received by
    members of the armed forces serving in combat zones when determining
    food stamp benefits for their families back home.
        Over the next year, we will also be working with the Congress to
    consider renaming the Food Stamp Program to better reflect its purpose
    of providing nutrition assistance and promoting health among low-income
    families. No additional funding is being requested to support the name
    change.
        Also included in the budget is a proposal to add the Food Stamp
    Program to the list of programs for which States may access the
    National Database of New Hires. Access to this National repository of
    employment and unemployment insurance data will enhance States' ability
    to quickly and accurately make eligibility and benefit level
    determinations, improving program integrity. This proposal has modest
    administrative costs associated with it, but is expected to produce a
    net program savings of $2 million annually beginning in fiscal year
    2007.
        To ensure the adequacy of resources available to the program, and
    as an alternative to the traditional contingency reserve, we have
    proposed indefinite authority for program benefits and payments to
    States and other non-Federal entities.

                            CHILD NUTRITION PROGRAMS

        The President's budget requests $12.4 billion to support the
    service of appealing, nutritious meals to children in public and
    private schools and child care facilities through the Child Nutrition
    Programs in fiscal year 2006. In the National School Lunch Program, we
    anticipate serving almost 30 million children per day in fiscal year
    2006, for a total of more than 5 billion meals served during the fiscal
    year. Similarly, the School Breakfast Program will serve approximately
    9.6 million children each school day for a total of more than 1.6
    billion meals. The request for budget authority is an increase of $634
    million from levels appropriated in fiscal year 2005. In fiscal year
    2006, FNS will implement program changes and new activities resulting
    from the 2004 reauthorization of these programs. These include efforts
    to promote fruit and vegetable consumption, including the newly
    authorized Fruit and Vegetable Program, and our continuing efforts to
    promote healthy behaviors through support for implementation of local
    wellness policies. To complement the agency's efforts, we have created
    the HealthierUS Schools Challenge to encourage communities to improve
    the foods offered at school and other aspects of a healthy school
    nutrition environment and to recognize schools that have made those
    improvements.

                                      WIC

        In fiscal year 2006, the President's budget request of $5.51
    billion anticipates supporting critical services to a record monthly
    average participation of 8.5 million women, infants and children
    through the Special Supplemental Nutrition Program for Women, Infants
    and Children (WIC). This is an increase of 300,000 participants per
    month from anticipated fiscal year 2005 participation levels. The $125
    million contingency reserve, appropriated in fiscal year 2003 and
    reestablished in fiscal year 2005, remains available to the program
    should participation or food costs exceed our projections. We currently
    anticipate using a small portion of the reserve in fiscal year 2005;
    the President's budget replenishes the reserve to the $125 million
    level.
        The budget also reflects the Administration's commitment to work
    with its State partners to manage program costs to ensure future access
    to this critical program for all who are eligible and seek its
    services. We propose to cap the level of Nutrition Services and
    Administration (NSA) funding at 25 percent of the total level grants to
    States. We also are renewing our commitment to continue the long
    successful partnership with our State partners to contain food package
    cost growth through sharing of best practices and providing technical
    assistance in the implementation of food cost containment strategies.
    New funding of $3 million is requested in the budget to explore and
    develop new food cost containment strategies.

                      COMMODITY SUPPLEMENTAL FOOD PROGRAM

        The Commodity Supplemental Food Program (CSFP) serves elderly
    persons and pregnant and post-partum women, infants and children. The
    budget requests $106.8 million for this program, the same level
    appropriated, after rescission, in fiscal year 2005. With level
    funding, we anticipate a reduction in participation of approximately
    44,000 persons.
        We face difficult challenges and decisions with regard to
    discretionary budget resources. The Department will pursue all means to
    minimize the impact of straight-line funding for the program. However,
    we have chosen to seek level funding for this program for several
    reasons. First, CSFP is not available in all States. Second, it is only
    available at a limited number of sites within those participating
    States. Finally, a Program Assessment Rating Tool (PART) analysis
    revealed a number of program weaknesses and concluded that the program
    is unable to demonstrate results for its target population. We believe
    our limited resources are best focused on those programs that are
    universally available to serve these needy populations.

                 THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)

        TEFAP plays a critical supporting role for the Nation's food banks.
    This support takes the form of both commodities for distribution and
    administrative funding for States' commodity storage and distribution
    costs. Much of this funding flows from the States to the faith-based
    organizations, the cornerstone of the food bank community. The
    President's budget requests the fully authorized level of $140 million
    to support the purchase of commodities for TEFAP. Additional food
    resources become available through the donation of surplus commodities
    from USDA's market support activities. State administrative costs,
    critical support to the food bank community, are funded at $50 million
    in the President's request.

                       NUTRITION PROGRAMS ADMINISTRATION

        We are requesting $140.8 million in our Nutrition Programs
    Administration account, which reflects an increase of $2 million in our
    Federal administrative funding. This account supports Federal
    management and oversight of a portfolio of program resources totaling
    $59 billion, over 60 percent of the USDA budget. This modest increase
    will partially offset the personnel-related costs. As in past years, we
    will be carefully managing our administrative resources seeking cost
    savings to maintain our high performance at this funding level.
        While we understand the difficult budgetary circumstances the
    Federal Government now faces, FNCS must address the serious challenge
    posed by the impending retirement of close to 30 percent of its
    workforce over the next 5 years. I have begun that process by improving
    the management of human capital planning processes, strengthening
    services provided to employees, and implementing programs designed to
    improve the efficiency, diversity, and competency of the work force.
    With just nominal increases for basic program administration in most
    years, FNCS has reduced its Federal staffing levels significantly over
    time. We have compensated for these changes by working smarter--re-
    examining our processes, building strong partnerships with the State
    and local entities which administer our programs, and taking advantage
    of technological innovations. We are extremely proud of what we have
    accomplished and continue to seek new ways to meet the challenges
    before us.
        Mr. Chairman, I appreciate the opportunity to present to you this
    record level budget and what it means for the millions of Americans
    that count on us for nutrition assistance. I would be happy to answer
    any questions you may have.
                                     ______

        Prepared Statement of Roberto Salazar, Administrator, Food and
                               Nutrition Service

        Thank you, Mr. Chairman, and members of the Subcommittee for
    allowing me this opportunity to present testimony in support of the
    fiscal year 2006 budget request for the Food and Nutrition Service
    (FNS).
        The Food and Nutrition Service is the agency charged with managing
    fifteen nutrition assistance programs which create the Nation's
    nutrition safety net and providing Federal leadership in America's
    ongoing struggle against hunger and poor nutrition. Our stated mission
    is to increase food security, reduce hunger and improve health outcomes
    in partnership with cooperating organizations by providing children and
    low-income people access to nutritious food and nutrition education in
    a manner that inspires public confidence and supports American
    agriculture. The budget request clearly demonstrates the President's
    continuing commitment to this mission and our programs.
        A request of $59 billion in new budget authority is contained
    within the fiscal year 2006 budget to fulfill this mission through the
    fifteen FNS nutrition assistance programs. These critical programs
    touch the lives of more than 1 in 5 Americans over the course of a
    year. Programs funded within this budget request include the National
    School Lunch Program (NSLP), which will provide nutritious school
    lunches to almost 30 million children each school day, the WIC Program,
    which will assist with the nutrition and health care needs of 8.5
    million at risk pregnant and postpartum women, infants and children
    each month, and the Food Stamp Program (FSP), which will ensure access
    to a nutritious diet each month for an estimated 29.1 million people.
    The remaining programs include the School Breakfast Program (SBP), The
    Emergency Food Assistance Program (TEFAP), the Summer Food Service
    Program (SFSP), the Child and Adult Care Food Program (CACFP), the Food
    Distribution Program on Indian Reservations (FDPIR), and the Commodity
    Supplemental Food Program (CSFP) and the Farmers' Market Programs. FNS
    seeks to serve the children and low-income households of this Nation
    and address the diverse circumstances though which hunger and
    nutrition-related problems present themselves and affect our
    participants within the design and delivery methods of our programs.
        The resources we are here to discuss represent an investment in the
    health, self-sufficiency, and productivity of Americans who, at times,
    find themselves in need of nutrition assistance. Under Secretary Bost,
    in his testimony, has outlined the three critical challenges which the
    Food, Nutrition and Consumer Services team has focused on under his
    leadership: expanding access to the Federal nutrition assistance
    programs; addressing the growing epidemic of overweight and obesity;
    and, improving the integrity with which our programs are administered.
    In addition to these fundamental priorities specific to our mission,
    the President's Management Agenda provides an ambitious agenda for
    management improvement across the Federal Government as a whole. I
    would like to report on our efforts to address three specific items
    under this agenda; reducing improper payments and enhancing the
    efficiency of program delivery, building partnerships with faith and
    community based organizations, and systematically planning for the
    human capital challenges facing all of the Federal service.

                       THE CHALLENGE OF IMPROPER PAYMENTS

        Good financial management is at the center of the President's
    Management Agenda. As with any Federal program, the nutrition
    assistance programs require sustained attention to program integrity.
    We cannot sustain these programs over the long term without continued
    public trust in our ability to manage them effectively. Program
    integrity is as fundamental to our mission as program access or healthy
    eating. Our efforts to minimize improper program payments focus on (1)
    working closely with States to improve Food Stamp payment accuracy; (2)
    implementing policy changes and new oversight efforts to improve school
    meals certification; and (3) improving management of Child and Adult
    Care Food Program providers, and vendors in WIC. We have identified
    these 4 programs as programs susceptible to significant improper
    payments and will continue to enhance the efficiency and accuracy with
    which these programs are delivered. I am happy to report that in fiscal
    year 2003, the most recent year for which data is available, we have
    achieved a record level of Food Stamp payment accuracy with a combined
    payment error rate of only 6.63 percent. This is the fifth consecutive
    year of improvement, making it the lowest rate in the history of the
    program. With this budget request, we will continue our efforts with
    our State partners toward continued improvement in the payment error
    rate. We will continue efforts to address the issue of proper
    certification in the school meals programs in a way that improves the
    accuracy of this process without limiting access of eligible children.
    New analytical work will begin under this budget request to better
    assess the accuracy of eligibility determinations in the Child and
    Adult Care Food Program.

                FAITH-BASED AND COMMUNITY ORGANIZATIONS OUTREACH

        Faith-based organizations have long played an important role in
    raising community awareness about program services, assisting
    individuals who apply for benefits, and delivering benefits. President
    Bush has made working with the faith-based community an Administration
    priority, and we intend to continue our outreach efforts in fiscal year
    2006. The partnership of faith-based organizations and FNS programs,
    including TEFAP, WIC, NSLP, and the CSFP, is long-established. Most
    faith-based schools participate in the NSLP and many child care
    providers and sponsors are the product of faith-based organizations. In
    addition, the majority of organizations such as food pantries and soup
    kitchens that actually deliver TEFAP benefits are faith-based. Across
    the country, faith-based organizations have found over the years that
    they can participate in these programs without compromising their
    mission or values. They are valued partners in an effort to combat
    hunger in America. I am happy to report that in the past 6 months we
    have provided 16 grant awards of approximately $2 million to community
    and faith-based organizations to test innovative food stamp outreach
    strategies to reach underserved, eligible individuals and families.

                            HUMAN CAPITAL MANAGEMENT

        We currently estimate that up to 80 percent of our senior leaders
    are eligible to retire within 5 years, as is nearly 30 percent of our
    total workforce. FNS must address this serious challenge by improving
    the management of the agency's human capital, strengthening services
    provided to employees, and implementing programs designed to improve
    the efficiency, diversity, and competency of the work force. With just
    nominal increases for basic program administration in most years, the
    Food and Nutrition Service has reduced its Federal staffing levels
    significantly over time. We have compensated for these changes by
    building strong partnerships with the State and local entities which
    administer our programs and taking advantage of technological
    innovations. We are extremely proud of what we have accomplished; full
    funding of the nutrition programs administration request in this budget
    is vital to our continued success.
        Now, I would like to review some of the components of our request
    under each program area.

                               FOOD STAMP PROGRAM

        The President's budget requests $40.7 billion for the Food Stamp
    account including the Food Stamp Program and its associated nutrition
    assistance programs. These resources will serve an estimated 29.1
    million people each month participating in the Food Stamp Program
    alone. Included in this request is the continuation of the $3 billion
    contingency reserve provided for the program in fiscal year 2005. While
    we anticipate the improvement in the general economy will at some point
    begin to impact the program, predicting the turning point of
    participation continues to be challenging. To better meet this
    challenge, we have proposed, as an alternative to the traditional
    contingency reserve, indefinite funding authority for program benefits
    and payments to States and other non-Federal entities. In addition, we
    have made a concentrated effort to encourage working families, senior
    citizens and legal immigrants to apply for benefits.
        We need to ensure program access is administered in an equitable
    manner across all States. The budget contains a proposal to eliminate
    categorical Food Stamp eligibility for Temporary Assistance for Needy
    Families (TANF) participants who receive only non-cash TANF services.
    This proposal, with partial implementation in fiscal year 2006, is
    expected to impact 161,000 persons and reduce benefits by $57 million
    among persons with incomes above the normal food stamp thresholds.
    Fully implemented in fiscal year 2007, this change is estimated to
    affect approximately 312,000 individuals and save $113 million
    annually. The President's proposal ensures that Food Stamp benefits go
    to the individuals with the most need and retains categorical
    eligibility for the large number of recipients who receive cash
    assistance through TANF, SSI and General Assistance. Included in the
    budget is a proposal to add the Food Stamp Program to the list of
    programs for which States may access the National Database of New
    Hires. Access to this National repository of employment and
    unemployment insurance data will enhance States' ability to quickly and
    accurately make eligibility and benefit level determinations, improving
    program integrity. This proposal is expected to produce a net program
    savings of $2 million annually beginning in fiscal year 2007.
        The budget also requests a continuation of a policy included in
    last year's Appropriations to exclude special military pay received by
    members of the armed forces serving in combat zones when determining
    food stamp benefits for their families back home. Over the next year,
    we will also be working with members of this Committee to rename the
    Food Stamp Program to better reflect its purpose of providing nutrition
    assistance and promoting health among low-income families.

                            CHILD NUTRITION PROGRAMS

        The budget requests $12.4 billion for the Child Nutrition Programs,
    which provide millions of nutritious meals to children in schools and
    in childcare settings every day. This level of funding will support an
    increase in daily School Lunch Program participation from the current
    29 million children to approximately 30 million children. Requested
    increases in these programs reflect rising school enrollment, increases
    in payment rates to cover inflation, and proportionately higher levels
    of meal service among children in the free and reduced price
    categories. We will also put into practice program changes and new
    activities resulting from the 2004 reauthorization of these programs.
    These include implementing the newly authorized Fruit and Vegetable
    Program, and continuing our efforts to promote healthy behaviors by
    supporting the implementation of local wellness policies. We created
    the HealthierUS Schools Challenge to encourage communities to improve
    the foods offered at school and other aspects of a healthy school
    nutrition environment and to recognize schools that made improvements.

                                      WIC

        The President's budget includes $5.51 billion for the Special
    Supplemental Nutrition Program for Women, Infants and Children, the WIC
    Program. The request will provide food, nutrition education, and a link
    to health care to a monthly average of 8.5 million needy women, infants
    and children during fiscal year 2006. We will continue, with a budget
    request of $15 million, an initiative begun in fiscal year 2004 and
    authorized in the program's 2004 reauthorization, to enhance
    breastfeeding initiation and duration. The $125 million contingency
    fund provided in the fiscal year 2003 appropriation and reestablished
    in fiscal year 2005, continues to be available to the program. We
    currently anticipate using a small portion of the reserve in fiscal
    year 2005 for projected program costs; the President's budget
    replenishes the reserve to the $125 million level.

                   COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)

        The Commodity Supplemental Food Program (CSFP) serves elderly
    persons and at risk low-income pregnant and post-partum and
    breastfeeding women, infants and children up to age six. The budget
    requests $106.8 million for this program, the same level appropriated
    in fiscal year 2005. Under this funding level, we anticipate a decrease
    of 44,000. We face a difficult challenge with regard to discretionary
    budget resources. CSFP operates in selected areas in just 32 States,
    the District of Columbia, and two Indian Tribal Organizations. The
    populations served by CSFP are eligible to receive similar benefits
    through other Federal nutrition assistance programs that offer them
    flexibility to meet their individual needs. We believe our limited
    resources are best focused on programs available in all communities
    nationwide.

                 THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)

        As provided for in the Farm Bill, the budget requests $140 million
    for commodities in this important program. Our request for States'
    storage and distribution costs, critical support for the Nation's food
    banks, is $50 million. The Food and Nutrition Service is committed to
    ensuring the continuing flow of resources to the food bank community
    including directly purchased commodities, administrative funding, and
    surplus commodities from the USDA market support activities. Much of
    this funding is provided, at the local level, to faith-based
    organizations. Surplus commodity donations significantly increase the
    amount of commodities available to the food bank community from Federal
    sources.

                    NUTRITION PROGRAMS ADMINISTRATION (NPA)

        We are requesting $140.8 million in this account, an increase of $2
    million over our fiscal year 2005 level. This increase will partially
    offset personal-related costs of the FNS workforce in fiscal year 2006.
    Our request for Federal administrative resources is needed to sustain
    the program management and support activities of our employees
    nationwide. I believe we need this modest increase in funding in order
    to maintain accountability for our $59 billion portfolio and to assist
    States to effectively manage the programs and provide access to all
    eligible people.
        Thank you for the opportunity to present this written testimony.
                                     ______

     Prepared Statement of Eric J. Hentges, Executive Director, Center for
     Nutrition Policy and Promotion, Food, Nutrition, and Consumer Services

        Thank you, Mr. Chairman, and members of the Subcommittee, for
    allowing me this opportunity to present testimony in support of the
    Administration's budget for fiscal year 2006.
        With the Nation facing significant public health issues related to
    the quality of the American diet, I believe that the outcome-based
    efforts of the Center for Nutrition Policy and Promotion are keys to
    promoting more healthful eating habits and lifestyles across the
    Nation. Working from its mission to improve the health of Americans by
    developing and promoting dietary guidance that links scientific
    research to the nutrition needs of consumers, the Center for Nutrition
    Policy and Promotion has a critical role in how USDA meets its
    strategic goal to improve the Nation's nutrition and health.

     TRENDS SHOW NEED FOR REVISED NUTRITION GUIDANCE AND EDUCATIONAL TOOLS

        Recent studies of America's dietary habits and physical activity
    reveal disturbing trends. First, a combination of poor diet and
    sedentary lifestyle not only undermine the quality of life, life
    expectancy, and productivity, they contribute to about 20 percent of
    the 2 million annual deaths in the United States.
        Second, specific diseases and conditions, such as cardiovascular
    disease, hypertension, overweight and obesity, and osteoporosis, are
    clearly linked to a poor diet. Recent statistics are staggering with 64
    percent of adults (ages 20 to 74) being either overweight or obese.
    Children have not escaped this unhealthy outcome. Over the past 20
    years, the percentage of children who are overweight has more than
    doubled from 7 to 15 percent, and the percentage of adolescents who are
    overweight has more than tripled from 5 to 16 percent.
        And third, the lack of physical activity has been associated with a
    number of conditions, including diabetes, overweight and obesity,
    cardiovascular disease, and certain cancers. Supporting evidence
    indicates that about 30 percent of women and 25 percent of men get
    little or no exercise.

      DIETARY GUIDELINES FOR AMERICANS ESTABLISH FEDERAL NUTRITION POLICY

        In conjunction with the Department of Health and Human Services
    (HHS), USDA released the sixth edition of the Dietary Guidelines for
    Americans on January 12, 2005. USDA's involvement is critical in
    helping to stem and eventually reverse some of these disturbing trends.
        The basis for Federal nutrition policy, the Guidelines, provide
    advice for healthy Americans, ages 2 years and older, about food
    choices that promote health and prevent disease. These Guidelines not
    only form Federal nutrition policy, they also set standards for the
    nutrition assistance programs, guide nutrition education programs, and
    are the basis for USDA nutrition education and promotion activities.
    Finding Your Way to a Healthier You, which is based on the Guidelines,
    is but one of many strategies that will be needed to help consumers
    make smart choices from every food group, find their balance between
    food and physical activity, and get the most nutrition out of their
    calories.

              FOOD GUIDANCE SYSTEM SERVES AS PREMIER TEACHING TOOL

        The updated Food Guidance System, currently recognized as the Food
    Guide Pyramid, is used to help the American public consume a healthful
    diet. The goals for revising the USDA's Food Guidance System are two-
    fold: To provide the most up-to-date science and to use better
    implementation strategies to help Americans develop healthier
    lifestyles. This new system also supports two pillars of the
    President's HealthierUS Initiative: to ``Eat a Nutritious Diet'' and to
    ``Be Physically Active Every Day.'' We expect the new system to be
    released later this spring.
        USDA takes considerable pride in its approach to updating the Food
    Guidance System by maintaining an open and transparent process that
    employed the public notice and comment period in the Federal Register.
    Now, strategic promotion and implementation of the Food Guidance System
    in both the public and private sectors will be essential in
    transforming these scientific underpinnings into actionable, targeted
    strategies that will motivate Americans to develop and maintain
    healthful dietary and lifestyle habits.

       EFFECTIVE PARTNERSHIPS STRENGTHEN DISSEMINATION OF SCIENCE-BASED
                         GUIDANCE AND EDUCATIONAL TOOLS

        With your continued support and with robust partnerships among and
    between USDA agencies and other Departments, and with information
    multipliers from nutritionists, physicians, corporations, and others,
    we are in a much stronger position to address the problems of obesity
    and overweight. Over the past year, USDA and its partners, including
    the scientists of the Dietary Guidelines Advisory Committee, have
    updated the Nation's nutrition guidance. Now, with the collaborative
    efforts focused on how best to reach the various populations served by
    our diverse agencies and Departments, I am confident that we can begin
    to stem the nutrition-- and health-related trends that are so adversely
    affecting the American public.
        I thank the Committee for the opportunity to present this written
    testimony.

        Senator Bennett. Thank you, sir.
        Mr. Hawks.

                         STATEMENT OF WILLIAM T. HAWKS

        Mr. Hawks. Thank you, Mr. Chairman, Senator Kohl. It is
    certainly a pleasure to be with you to discuss the budget for
    Marketing and Regulatory Programs, which include Animal and
    Plant Health Inspection Service; Agricultural Marketing
    Service; and Grain Inspection, Packers and Stockyards
    Administration.
        We have identified in Marketing and Regulatory Programs
    some issues that need special attention over the next few
    years: enhancing market access by reducing technical barriers
    to trade and sanitary and phytosanitary (SPS) measures,
    improving plant and animal health and agricultural quality by
    continuing to work closely with the Department of Homeland
    Security and with farmers and ranchers to control endemic pests
    and disease, and harmonizing international standards by putting
    sanity back in some of the sanitary and phytosanitary issues.
        APHIS's primary mission is to safeguard animal and plant
    health, and APHIS has negotiated sanitary and phytosanitary
    regulations to maintain and open markets around the world and
    to protect the health of plants and animals.
        The trade issues resolution management efforts enable APHIS
    to negotiate fair trade in international markets. In fiscal
    year 2004, 112 SPS issues were resolved, allowing over $5
    billion worth of trade to occur. In June 2004, we launched a
    one-time enhanced bovine spongiform encephalopathy (BSE)
    surveillance program. To date, we have tested almost 318,500
    animals, none of which have been positive. In addition, we are
    moving ahead with a National Animal Identification System and
    are on schedule there.
        GIPSA facilitates the marketing of livestock, meat,
    poultry, cereals, oil seed, and related agriculture products.
    It also promotes fair and competitive trade. GIPSA is
    requesting an increased funding largely to significantly
    upgrade its critical information management systems and
    business functions.

                              PREPARED STATEMENTS

        AMS, Agricultural Marketing Service activities assist the
    U.S. agriculture industry in marketing their products and
    finding ways to improve their profitability. AMS' budget
    request seeks an increase of $10 million in the Marketing
    Services account to invest in the Web-Based Supply Chain
    Management System.
        This concludes my statement, and I will be happy to respond
    to questions.
        [The statements follow:]

                     Prepared Statement of William T. Hawks

        Mr. Chairman and members of the Committee, I am pleased to appear
    before you to discuss the activities of the Marketing and Regulatory
    Programs (MRP) of the U.S. Department of Agriculture and to present our
    fiscal year 2006 budget proposals for the Animal and Plant Health
    Inspection Service (APHIS), the Grain Inspection, Packers and
    Stockyards Administration (GIPSA), and the Agricultural Marketing
    Service (AMS).
        In addition to my statement, Dr. Ron DeHaven, Administrator of
    APHIS, Mr. David Shipman, Acting Administrator of GIPSA, and Dr. Ken
    Clayton, Acting Administrator of AMS have statements for the record.
        Under my leadership, MRP has addressed several broad goals and
    objectives to increase marketing opportunities and to protect American
    agriculture from damages caused by pests and diseases, both intentional
    and unintentional. The key to private sector financial success is
    relatively simple. First, offer the highest quality products. Second,
    produce them at the lowest possible cost. And, third, earn a fair price
    in the marketplace.
        MRP helps American farmers and ranchers do all three. AMS and GIPSA
    certify the quality of agricultural commodities and provide industry
    with a competitive edge earned by the USDA seal of approval for grading
    and inspection. APHIS protects the health of plants and animals,
    thereby keeping costs low. Additionally, AMS administers the commodity
    marketing order programs to help farmers earn fair prices; APHIS
    negotiates sanitary and phytosanitary (SPS) regulations to maintain and
    open markets around the world; and GIPSA works to ensure that livestock
    producers have a level playing field upon which to compete. A healthy
    and marketable product provides the foundation of competitive success.

                                MRP INITIATIVES

        MRP has identified three areas for special attention over the next
    4 years to make American agriculture more competitive. They include:
        Enhanced Market Access.--Market access can be impaired through
    technical barriers and SPS measures. MRP will work more closely with
    international counterparts to educate them about our systems; to learn
    more about the foreign country requirements; and to certify that U.S.
    products meet their standards.
        Improved Plant and Animal Health and Quality.--MRP will continue to
    work closely with the Department of Homeland Security (DHS) to prevent
    the entry of foreign plant and animal pests and diseases through the
    Agricultural Quarantine Inspection Program (AQI). We will continue to
    work with farmers and ranchers to control endemic pests and diseases at
    minimal levels. Through MRP's commodity grading and inspection
    programs, we will support our producers in the marketing of their high
    quality crops and livestock.
        Harmonization of International Standards.--MRP will provide
    leadership in an effort to bring sanity to the sanitary and
    phytosanitary measures. Since risk is inherent and fair trade relies
    upon the same standards being applied to all parties, MRP will increase
    its efforts with the World Organization for Animal Health and the
    International Plant Protection Convention to develop standards and
    processes for trade to exist, with restrictions and mitigations based
    on sound science to reduce risk. Moving away from an ``all or nothing''
    approach makes trade therefore less risky, as a localized or contained
    outbreak has fewer effects on exports and thus on the economy. In a
    similar vein, a level playing field in world markets depends on
    technical standards that describe the quality and other characteristics
    of agricultural products in a manner that does not discriminate against
    U.S. producers and shippers. MRP will redouble its efforts in a variety
    of international standard setting organizations to ensure that
    technical standards do not become technical barriers.

                                FUNDING SOURCES

        The MRP activities are funded by both the taxpayers and
    beneficiaries of program services. The budget proposes that the MRP
    agencies carry out programs costing $1.8 billion; with $436 million
    funded by fees charged to the direct beneficiaries of MRP services and
    $450 million from Customs receipts.
        On the appropriation side, under current law, the Animal and Plant
    Health Inspection Service is requesting $866 million for salaries and
    expenses and $5 million for repair and maintenance of buildings and
    facilities; the Grain Inspection, Packers and Stockyards Administration
    is requesting $40 million; and the Agricultural Marketing Service is
    requesting $88 million.
        The budget proposes user fees that, if enacted, would generate
    about $39 million in savings to the U.S. taxpayer. Legislation will be
    proposed to provide USDA the authority to recover the cost of
    administering the Packers and Stockyards Act, developing grain and
    other commodity standards that are used to support fee-based grading
    programs and for other purposes, and enabling additional license fees
    for facilities regulated under the Animal Welfare Act. I will use the
    remainder of my time to highlight the major activities and our budget
    requests for the Marketing and Regulatory Programs.

                   ANIMAL AND PLANT HEALTH INSPECTION SERVICE

        The fundamental mission of APHIS is to anticipate and respond to
    issues involving animal and plant health, conflicts with wildlife,
    environmental stewardship, and animal well-being. Together with their
    customers and stakeholders, APHIS promotes the health of animal and
    plant resources to enhance market access in the global marketplace and
    to ensure abundant agricultural products and services for U.S.
    customers. I would like to highlight some key aspects of the APHIS
    programs:
        Enhanced Market Access.--The Trade Issues Resolution and Management
    efforts are key to ensuring fair trade of all agricultural products.
    APHIS' staff negotiates SPS standards, resolves issues, and provides
    clarity on regulating imports and certifying exports which improves the
    infrastructure for a smoothly functioning market in international
    trade. Ensuring that the rules of trade are based on science helps open
    markets that have been closed by unsubstantiated SPS concerns.
        In fiscal year 2004, reopening markets for United States products
    posed the greatest challenges. In regard to beef markets that were
    closed to U.S. exports because of BSE, APHIS has been successful with
    reopening access to more than 20 countries. Altogether, APHIS resolved
    112 SPS issues in fiscal year 2004, allowing over $5 billion worth of
    trade to occur.
        Recent developments in biotechnology underscore the need for
    effective regulation to ensure protection of the environment and food
    supply, reduce market uncertainties, and encourage development of a
    technology that holds great promise. APHIS' Biotechnology Regulatory
    Services unit coordinates our services and activities in this area and
    focuses on both plant-based biotechnology and transgenic arthropods. We
    also are examining issues related to transgenic animals.
        Improved Plant and Animal Health and Quality.--While APHIS
    continues to work closely with the Department of Homeland Security
    (DHS) to exclude agricultural health threats, it retains responsibility
    for promulgating regulations related to entry of passengers and
    commodities into the U.S. APHIS' efforts have helped keep agricultural
    health threats away from U.S. borders through increased offshore
    threat-assessment and risk-reduction activities. APHIS has also
    increased an already vigilant animal and plant health monitoring and
    surveillance system to promptly detect outbreaks of foreign and endemic
    plant and animal pests and diseases.
        Between June, 2004, when we launched the one-time significantly
    enhanced surveillance program for BSE, and March 22, 2005, we have
    tested more than 284,000 animals. None have tested positive. Once we
    have evaluated the results of the enhanced testing program, a decision
    on the number of animals needed to be tested in the future will be
    made.
        In addition, we are moving ahead with the National Animal
    Identification System (NAIS). By late March, 44 States had premises
    registration abilities that are operational for the NAIS. The goal is
    to have all States operational for premises registration by mid-year
    2005.
        Because efforts to exclude foreign pests and diseases are not 100
    percent successful, APHIS also assists stakeholders in managing new and
    endemic agricultural health threats, ranging from threats to
    aquaculture to cotton and other crops, tree resources, livestock and
    poultry. In addition, APHIS assists stakeholders on issues related to
    conflicts with wildlife and animal welfare.

                           APHIS' 2006 BUDGET REQUEST

        In a year of many pressing high-priority items for taxpayer
    dollars, the budget request proposes about $866 million for salaries
    and expenses. There are substantial increases to support the
    Administration's Food and Agriculture Defense Initiative, address SPS
    trade barriers, and deal with specific threats to the agriculture
    sector. A brief description of key initiatives follows.
        A total of about $169 million for Foreign Pest and Disease
    Exclusion.--Efforts will focus on enhancing our ability to exclude
    Mediterranean fruit fly, screwworm, and foreign animal diseases. In
    addition, we also request funds to open new offices in Brazil,
    Thailand, India, Italy, and West Africa to facilitate U.S. exports.
        A total of about $239 million for Plant and Animal Health
    Monitoring and Surveillance.--Due to the critical role of APHIS in
    protecting the Nation from both deliberate and unintentional
    introductions of an agricultural health threat, the budget requests an
    increase of about $44 million, as part of the Food and Agriculture
    Defense Initiative. This includes initiatives that enhance plant and
    animal health threat monitoring and surveillance, including in those
    that could be introduced in wildlife; ensure greater cooperative
    surveillance efforts with States; enhance emergency coordination; boost
    animal vaccine availability; enhance regulatory controls of biological
    agents that pose a grave threat to human, animal, or plant health; and
    other efforts. We will continue efforts to build the NAIS.
        A total of $346 million for pest and disease management programs.--
    Once pests and disease are detected, prompt eradication reduces long-
    term damages. In cases where eradication is not feasible (e.g.,
    European gypsy moth), attempts are made to slow the advance, and
    damages, of the pest or disease. APHIS provides technical and financial
    support to help control or eradicate a variety of agricultural threats.
        The budget proposes a number of increases, including citrus canker,
    emerald ash borer, the brown tree snake, and rabies, as well as
    additional support for rural airports to protect against bird strikes.
    Other programs were reduced. For example, successes in boll weevil
    eradication efforts allow a reduction in that program.
        A total of $18 million for the Animal Care programs.--Additional
    funding will help APHIS maintain its animal welfare and horse
    protection programs despite the rapid growth in the number of new
    licensees and registrants. The budget includes a proposal to collect
    $11 million in registration fees charged to research facilities,
    carriers, and in-transit handlers of animals. Since these facilities
    are the direct beneficiaries of APHIS' services, it is appropriate that
    the costs be recovered.
        A total of about $86 million for Scientific and Technical
    Services.--Within USDA, APHIS has chief regulatory oversight of
    genetically modified organisms. To help meet the needs of this rapidly
    evolving sector, the budget includes a request to, in part, enhance the
    regulatory oversight of field trials of crops derived with
    biotechnology and initiate a regulatory role towards transgenic
    animals, arthropods, and disease agents. Also, APHIS develops methods
    and provides diagnostic support to prevent, detect, control, and
    eradicate agricultural health threats, and to reduce wildlife damages
    (e.g., coyote predation). It also works to prevent worthless or harmful
    animal biologics from being marketed.
        A total of $8 million for improving security and IT operations.--
    This effort builds upon efforts started with Homeland Security
    Supplemental funds. It also includes providing the State Department
    funds to help cover higher security costs for APHIS personnel abroad. A
    portion of the increase would also be used to upgrade key computer
    resources for eGov, cyber security, and other efforts.

            GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION

        GIPSA's mission is to enhance market access for livestock, meat,
    poultry, cereals, oilseeds, and related agricultural products and to
    promote fair and competitive trade for the benefit of consumers and
    American agriculture. GIPSA fulfills this through both service and
    regulatory functions in two programs: the Packers and Stockyards
    Programs (P&SP) and the Federal Grain Inspection Service (FGIS).
        Packers and Stockyards Programs.--The strategic goal for P&SP is to
    promote a fair, open and competitive marketing environment for the
    livestock, meat, and poultry industries. Currently, with 152 employees,
    P&SP monitors the livestock, meatpacking, and poultry industries,
    estimated by the Department of Commerce to have an annual wholesale
    value of over $118 billion. Legal specialists and economic, financial,
    marketing, and weighing experts work together to monitor emerging
    technology, evolving industry and market structural changes, and other
    issues affecting the livestock, meatpacking, and poultry industries
    that the Agency regulates.
        We conducted over 1,900 investigations in fiscal year 2004 to
    enforce the Packers and Stockyards Act for livestock producers and
    poultry growers and helped restore over $17 million to the livestock,
    meatpacking, and poultry industries.
        The Swine Contract Library began operation on December 3, 2003.
    Producers can see contract terms, including, but not limited to, the
    base price determination formula and the schedules of premiums or
    discounts, and packers' expected annual contract purchases by region.
    Thirty-two firms operating 51 plants accounting for approximately 95
    percent of industry slaughter are subject to the Swine Contract
    Library. GIPSA has received over 700 contracts to date.
        The Livestock and Meat Marketing Study, for which Congress
    appropriated $4.5 million in fiscal year 2003, faced a complex set of
    issues that has delayed its completion date. GIPSA announced an award
    to the Research Triangle Institute (RTI) in June, 2004. RTI assembled a
    coalition of researchers from Colorado State University, Iowa State
    University, Montana State University, North Carolina State University,
    and the Wharton School of Business. RTI is continuing preparations for
    data collection and the overall study and is scheduled to release study
    reports in mid-year 2005 and mid-year 2006. The first report will
    provide information about the types of livestock arrangements in the
    cattle, hog, and sheep industries based on a survey conducted by RTI.
    The second report will provide detailed economic analyses about the
    arrangements. Despite the delay, the study will be completed within the
    amount appropriated.
        Federal Grain Inspection Service.--FGIS facilitates the marketing
    of U.S. grain and related commodities under the authority of the U.S.
    Grain Standards Act and the Agricultural Marketing Act of 1946. As an
    impartial, third-party in the market, we advance the orderly and
    efficient marketing and effective distribution of U.S. grain and other
    assigned commodities from the Nation's farms to domestic and
    international buyers. We are part of the infrastructure that undergirds
    the agricultural sector.
        GIPSA works with government and scientific organizations to
    establish internationally recognized methods and performance criteria
    and standards to reduce the uncertainty associated with testing for the
    presence of biotechnology traits in grains and oil seeds. It also
    provides technical assistance to exporters, importers and end users of
    U.S. grains and oilseeds, as well as other USDA agencies, industry
    organizations, and other governments. These efforts help facilitate the
    sale of U.S. products in international markets.
        Our efforts to improve and streamline our programs and services are
    paying off for our customers, both in terms of their bottom lines and
    in greater customer satisfaction. FGIS' service delivery costs average
    $0.29 per metric ton, or approximately 0.14 percent of the $19 billion
    value of U.S. grain exports. In fiscal year 2004, approximately 1.8
    million inspections were performed by FGIS employees on more than 230
    million tons of grains and oilseeds.
        One indicator of the success of our outreach and educational
    initiatives is the number of foreign complaints lodged with FGIS
    regarding the quality or quantity of U.S. grain exports. In fiscal year
    2004, FGIS received only four complaints regarding poor quality and no
    complaints regarding inadequate weights from importers on grains
    inspected under the U.S. Grain Standards Act. These involved 96,695
    metric tons, or about 0.1 percent by weight, of the total amount of
    grain exported during the year.

                          GIPSA'S 2005 BUDGET REQUEST

        For 2005, the budget proposes a program level for salaries and
    expenses of $40 million. Of this amount, $20 million is devoted to
    grain inspection activities for standardization, compliance, and
    methods development and $20 million is for Packers and Stockyards
    Programs. The 2006 budget includes the following program increases:
        About $2 million for IT initiatives.--GIPSA needs to significantly
    upgrade its critical information management systems and modernize its
    business functions as part of a comprehensive eGov initiative including
    establishing an off-site, back-up Information Disaster Recovery
    Program. This effort will provide the basic enterprise architecture
    which will enable the Federal Grain Inspection Service to eliminate
    duplicate data entry currently used for maintaining agricultural
    product standards, recording certifications from grain inspectors, and
    responding to customer's requests for inspections and test results. The
    system will match, for the first time, all quality test assurance
    results with those obtained by re-inspection and Board appeals. The
    basic enterprise architecture will also enable the Packers and
    Stockyards Program to rapidly receive electronic information from
    livestock, meat packing and poultry operators, thereby reducing
    industry's costs of data submission. This large multi-year initiative
    would deliver improved performance and reduce costs years into the
    future.
        Nearly $1 million to develop new grain testing measures.--Domestic
    and export marketing opportunities will be enhanced for ethanol co-
    products, improved wheat quality, and low linolenic soybeans.
        User fees.--User fees, if enacted, would be charged to recover the
    costs of developing, reviewing, and maintaining official U.S. grain
    standards used by the grain industry. This fee proposal would enable
    GIPSA to recover $5 million in costs to develop, review, and maintain
    the official U.S. grain standards. Also, the Packers and Stockyards
    program would be funded by license fees of about $20 million that would
    be required of packers, live poultry dealers, swine contractors,
    stockyard owners, market agencies and dealers, as defined under the
    Packers and Stockyards Act. Current law provides the agency with
    registration requirements for the market agencies and dealers, but
    there is no authority for licensing fees. Both of these proposals are
    consistent with the Administration's efforts to shift funding for
    programs, which benefit identifiable groups, to user fees.

                         AGRICULTURAL MARKETING SERVICE

        The mission of the AMS is focused on facilitating the marketing of
    agricultural products in the domestic and international marketplace,
    ensuring fair trading practices, and promoting a competitive and
    efficient marketplace to the benefit of producers, traders, and
    consumers of U.S. food and fiber products. The Agency accomplishes this
    mission through a wide variety of publicly and user funded activities
    that help its customers improve the marketing of their food and fiber
    products and ensure that food and fiber products remain available and
    affordable to consumers. Consequently, most AMS programs enhance market
    access to current trading information, including availabilities of
    supply, location and size of demand, underutilized market facilities,
    and availability of means of transportation. In addition, the
    Standardization program contributes to the harmonization of
    international quality standards.
        Market News.--Market news reports improve market efficiency for all
    parties by offering equal and ready access to current, unbiased market
    information so that agricultural producers and traders can determine
    the best place, price, and time to buy or sell. AMS Market News
    provides this information by reporting current prices, volume, quality,
    condition, and other market data on farm products in more than 1,300
    production areas and specific domestic and international markets. The
    reports are widely distributed through the internet and news media. The
    Livestock Mandatory Price Reporting Program ensures access to
    information on meat and livestock trades continue to be available for
    producers in a consolidating industry. These data, including prices,
    contracts for purchase, and other related information on fed cattle,
    swine, lamb, beef, and lamb meat, are publicly disseminated in over 100
    daily, weekly, or monthly reports.
        Commodity Standards.--AMS works with the agricultural industry to
    establish and improve commonly recognized quality descriptions for
    agricultural commodities that support access to domestic and
    international markets. The Standardization program supports exports of
    U.S. agricultural products by helping to represent the interests of
    U.S. producers in a variety of international standards development
    meetings. AMS experts continue to participate in developing
    international dairy, meat, poultry, fruit, and vegetable standards.
    Recently, AMS' cotton specialists have been helping China adopt
    instrument testing and calibration standards for cotton comparable to
    those used in the United States to facilitate cotton trading between
    the United States and China. Compatible standards and classing
    procedures are in the interest of the United States, since China is the
    world's largest importer of cotton and the United States is its biggest
    foreign supplier.
        National Organic Program.--The National Organic Standards program
    supports market access for organic producers by setting national
    standards for organic products sold in the United States, which
    provides assurance for consumers that the organic products labeled
    ``organic'' uniformly meet those requirements. The U.S. organic food
    industry has increased to a $15 billion annual sales level and is still
    growing.
        Pesticide Data and Microbiological Data Programs.--AMS also
    provides consumer assurance and helps to maintain domestic and export
    market demand for U.S. foods by collecting pesticide residue data and
    microbiological baseline data. In 2004, the Pesticide Data program
    performed over 100,000 analyses on more than 12,000 samples. The data
    gathered and reported by AMS on pesticide residues and microbiological
    pathogens supports science-based risk assessments performed by a number
    of entities, including regulatory agencies.
        Transportation Services.--The Transportation Services program
    supports market access by facilitating the movement of U.S. agriculture
    products from farm to market. This program helps maintain farm income,
    expand exports, and sustain the flow of food to consumers by providing
    ``how to'' technical expertise, research, and data on domestic and
    international transportation to growers, producers, and others in the
    marketing chain, and for government policy decisions. The
    Transportation Services program also produces periodic publications
    that improve market access by providing information for agricultural
    producers and shippers on trends, availability, and rates for various
    modes of transportation, including grain and refrigerated transport,
    agricultural containers, and ocean shipping.
        Wholesale, Farmers, and Alternative Markets.--AMS program experts,
    in cooperation with local and city agencies, improve market access to
    market facilities by assisting local efforts to develop or improve
    wholesale and farmers markets, and to discover other direct marketing
    opportunities. This program also supports research projects to help
    agricultural producers discover new or alternative marketing channels
    and new technology.
        Federal/State Marketing Improvement Program (FSMIP).--AMS helps to
    resolve local and regional agricultural market access problems by
    awarding Federal matching grants funds for projects proposed by State
    agencies. In 2004, the FSMIP program allocated grant funds to 23 States
    for 27 projects such as studies on linking producers with new buyers
    groups and innovative uses for locally important agricultural products.
        Commodity Purchases.--USDA nutrition programs provide growers and
    producers with access to an alternative outlet for their commodities.
    AMS food purchases stabilize markets and support nutrition programs,
    such as the National School Lunch Program, the Emergency Food
    Assistance Program, the Commodity Supplemental Food Program, and the
    Food Distribution Program on Indian Reservations. AMS works in close
    cooperation with both the Food and Nutrition Service (FNS) and the Farm
    Services Agency (FSA) to administer USDA commodity purchases and to
    maximize the efficiency of food purchase and distribution operations.
    AMS, FNS, and FSA each provide a component of program administration
    according to their organizational structure and expertise. This complex
    system requires close coordination between the three agencies. To help
    control the vast array of details inherent to the procurement process,
    the Processed Commodities Inventory Management System (PCIMS) was
    developed more than 10 years ago to track bids, orders, purchases,
    payments, inventories, and deliveries of approximately $2.5 billion of
    commodities used in all food assistance programs every year and another
    $1 billion in price support commodity products maintained in inventory.
    PCIMS is still being used by the three agencies with modifications
    having been made over the years, when feasible, to add capabilities
    such as financial tracking or to meet changes in program delivery.

                            AMS' 2006 BUDGET REQUEST

        For 2006, the AMS budget proposes a program level of $742 million,
    of which $204 million (27 percent) will be funded by existing user
    fees, $450 million (61 percent) by Section 32 funds and $88 million (12
    percent) by appropriations, which includes $3 million to be derived
    from proposed new user fees. More specifically, the budget includes the
    following:
        An increase of $0.5 million to provide Market News on pork
    products.--A legislative proposal to extend and amend the Livestock
    Mandatory Price Reporting Program would include negotiated sales as
    well as formula and contract transactions on pork cuts for domestic and
    international trade. Currently, pork cut information is provided on a
    voluntary basis by buyers and sellers of pork products and includes
    only products traded on a negotiated basis. Consequently, these reports
    only cover 5 percent of total pork cuts traded. Under mandatory
    reporting, approximately 80 percent of pork products traded would be
    reported.
        An increase of $3.1 million to implement Country of Origin Labeling
    (COOL).--Beginning in 2005, AMS will be responsible for enforcing
    mandatory COOL for fish and shellfish. On September 30, 2006, mandatory
    labeling requirements will be expanded to include all other covered
    commodities. In order to ensure compliance with COOL, the budget
    proposes a surveillance and enforcement program. In 2006, AMS will
    initiate random audits of designated retailers to achieve a nationwide
    compliance rate of 70 percent for covered commodities reviewed. From
    2007 to 2010, AMS will increase its target compliance rate to 95
    percent to ensure that the public receives credible and accurate
    information.
        An increase of $0.9 million for the Pesticide Data Program and the
    Pesticide Recordkeeping Programs.--These funds are requested to
    maintain State partnerships critical to the administration of these
    programs.
        An increase of $10 million to begin development of the Web-based
    Supply Chain Management System (WBSCM).--The proposed system will
    significantly improve customer service and administrative efficiency.
    Discretionary appropriated funding is requested rather than mandatory
    Section 32 funding because the discretionary funding more accurately
    reflects the relative priority of the system versus other discretionary
    information technology needs. Implementation of WBSCM will improve the
    efficiency of Federal procurement of commodities by reducing ordering
    and delivery times from 24 days to 5 days.
        As Secretary Johanns testified before this committee last month,
    the 2006 budget funds our most important priorities while exercising
    fiscal discipline that is necessary to reduce the Federal deficit. The
    AMS budget has a number of proposals that moves us in the right
    direction while continuing to meet key priorities.
        A decrease of $4.0 million for the termination of the AMS
    Biotechnology Program.--The Biotechnology Program was initiated in 2002
    to develop the agency's capacity to test bio-engineered fruits,
    vegetables, nuts, and seeds. Due to difficulties in developing new
    testing methodologies as well as lack of demand for these services, the
    fee for service program has not yet been established. Should demand for
    these services become apparent, AMS will work with the affected
    industries to determine if alternative mechanisms can be utilized to
    facilitate the marketing of agricultural commodities by differentiating
    bioengineered from conventional commodities.
        $3 million in new user fees.--Appropriated funding would be reduced
    through the collection of user fees for the development of domestic
    commodity grade standards that are associated with a grading program.
    Users of grading services are direct beneficiaries of commodity
    standards and, therefore, should be charged for the development of
    commodity grades associated with the grading and inspection program. In
    order to implement this proposal, legislation will be submitted to
    Congress to authorize these fees.
        A reduction of $2.5 million in 1-year funding for a grant to
    Wisconsin.--This project dealt with the development of specialty
    markets under the Federal-State Marketing Improvement Program.

                                   CONCLUSION

        This concludes my statement. I am looking forward to working with
    the Committee on the 2006 budget for the Marketing and Regulatory
    Programs. We believe the proposed funding amounts and sources of
    funding are vital to enhancing market access, improving plant and
    animal health and quality, and achieving harmonization of international
    standards. It also reduces the deficit and protects American
    agriculture from terrorists. We are happy to answer any questions.
                                     ______

      Prepared Statement of Dr. W. Ron DeHaven, Administrator, Animal and
                        Plant Health Inspection Service

        Mr. Chairman and members of the Subcommittee, it is a pleasure for
    me to represent the Animal and Plant Health Inspection Service (APHIS)
    before you today. APHIS is an action-oriented agency that works with
    other Federal agencies, Congress, States, agricultural interests, and
    the general public to carry out its mission to protect the health and
    value of American agriculture and natural resources. This mission is
    vital not only in protecting the livelihoods of agricultural producers
    and the industries related to them, but also to United States homeland
    security. In working to carry out our mission, we rely on a set of
    interlocking protection strategies as depicted below:

        APHIS' protection system is based on a strategic premise that
    safeguarding the health of animals, plants, and ecosystems makes safe
    agricultural trade possible and reduces losses to agricultural and
    natural resources. All nine objectives in the protection system are key
    components of this strategic premise. Failing to succeed in any one
    objective endangers the entire system.
        APHIS' efforts begin with offshore threat assessment and risk
    reduction activities at the sources of exotic agricultural pests and
    diseases. Through our pest and disease exclusion programs, we follow
    animal and plant health throughout the world and use this information
    to set effective agricultural import policy, and facilitate
    international trade by clarifying and amending import requirements, as
    necessary. Our off-shore risk reduction activities also include
    conducting pest and disease eradication programs in foreign countries
    and pre-clearance inspection of certain commodities in off-shore
    locations; performing intense monitoring and surveillance for exotic
    fruit flies and cattle fever ticks in high-risk, border areas of the
    United States; and cooperating with the Department of Homeland
    Security's Bureau of Customs and Border Protection to inspect arriving
    international passengers, cargo, baggage, mail, and means of
    conveyance.
        To minimize agricultural production losses and export market
    disruptions, APHIS quickly detects and responds to new invasive
    agricultural pests and diseases, or other emerging agricultural health
    situations, through our plant and animal health monitoring programs.
    The Agency creates and updates endemic pest and disease information
    systems, and monitors and conducts surveys in cooperation with States
    and industry. APHIS also surveys for exotic plant pests and
    investigates reports of suspicious animal pests and diseases to reduce
    their spread, which eliminates significant losses and helps maintain
    pest-free status for export certification of agricultural commodities.
        APHIS also works closely with State, industry, and academic
    partners to maintain national detection networks and emergency response
    teams for plant and animal pest and disease outbreaks that may occur
    here in the United States. We work with these same partners to manage
    or eradicate economically significant endemic pests and diseases, and
    manage wildlife damage to agricultural and natural resources.
    Additionally, APHIS administers the Animal Welfare and Horse Protection
    Acts, and maintains the scientific expertise necessary to develop new
    methods to detect, diagnose, and control animal and plant pests and
    diseases.
        APHIS' mission of protecting the health and value of United States
    agricultural and natural resources encompasses a wide variety of
    activities, and the Agency strengthens key components of its protection
    system by focusing on several key objectives and strategies. I would
    like to present our recent accomplishments and budget initiatives for
    fiscal year 2006 to you in light of our five strategic mission
    priorities for the coming year.

    Ensuring the Safe Research, Release, and Movement of Agricultural
            Biotechnology
        Among our highest priorities for the next several years is
    continuing to build our recently established Biotechnology Regulatory
    Services (BRS) program. The growth of agricultural biotechnology hinges
    on the public's acceptance of this technology as safe, and APHIS'
    regulatory role is key to ensuring global acceptance. Through the BRS
    program, APHIS regulates the introduction (i.e., importation,
    interstate movement, and field release) of genetically engineered
    organisms such as plants, insects, microorganisms, and any other
    organism to ensure that they do not constitute pest threats.
        In fiscal year 2004, APHIS continued to strengthen the BRS program
    by reshaping the organization, enhancing its Compliance Unit, and
    increasing its workforce expertise (including the establishment of
    staffs devoted to environmental and ecological analysis and genetically
    altered animals). We are continuing our effort to significantly
    increase the rate of inspection for all genetically engineered crop
    field tests, with the target of inspecting each pharmaceutical and
    industrial field test site 5 times during the growing season. APHIS has
    also continued its efforts to increase the transparency of our
    biotechnology-related activities to the public and stakeholders. For
    example, we now announce the availability of environmental assessments
    (EAs) for field tests of genetically engineered plants used to
    manufacture pharmaceutical and industrial compounds in the Federal
    Register for a 30-day comment period, allowing stakeholders and the
    public to be a part of the decision-making process before APHIS
    approves a permit. We have also launched a new, more user-friendly
    website for our biotechnology-related programs that provides greater
    accessibility to our permits and decisions, news and upcoming events,
    and a link to our shared, comprehensive website developed with the Food
    and Drug Administration and the Environmental Protection Agency. In
    addition, we are continuing to make significant accomplishments in our
    international activities related to regulatory coordination. Among
    other things, we worked with Canada and Mexico to implement how trade
    of biotechnology products will comply with the articles of the
    Biosafety Protocol, thus helping to ensure uninterrupted trade between
    our countries. In the past year, APHIS personnel also met with
    approximately 20 teams of foreign officials (primarily from developing
    countries) to provide regulatory overviews and conduct risk assessment
    training.

    Strengthening Emergency and Homeland Security Preparedness and
            Responses
        The program activities under this strategic priority minimize
    agricultural production losses and export market disruptions by quickly
    detecting and responding to new invasive agricultural pests and
    diseases or other emerging agricultural health situations. The Agency
    focuses on preventing the introduction and establishment of pests and
    diseases by responding to outbreaks quickly and efficiently at the
    national, State, and local levels. We work to ensure early detection
    through formal plant pest surveys and animal disease surveillance
    programs as well as through outreach programs to our stakeholders and
    the general public.
        The Animal Health Monitoring and Surveillance (AHMS) and Pest
    Detection programs coordinate national detection efforts for animal and
    plant pests and diseases. Both work closely with State and university
    cooperators to ensure that any introduction of exotic or foreign pests
    and diseases is quickly detected. These programs are also working
    closely with USDA's Cooperative State Research, Education, and
    Extension Service to coordinate the National Animal Health Laboratory
    Network and the National Plant Diagnostic Network to increase testing
    capacity in the United States for economically and environmentally
    significant animal and plant diseases.
        To prevent foreign animal disease incursions, APHIS thoroughly
    investigates all suspicious situations. In fiscal year 2004, the AHMS
    program conducted 870 suspected foreign animal disease investigations,
    up from 480 in fiscal year 2003. The program is also continuing to
    implement an enhanced surveillance program in response to the December
    2003 detection of bovine spongiform encephalopathy (BSE) in Washington
    State. APHIS is sampling as many cattle from high-risk categories (such
    as those exhibiting signs of central nervous system disorders) as
    possible in a 12-18 month period. As of March 22, more than 284,000
    animals have been sampled under the enhanced surveillance plan, none of
    which tested positive. The enhanced surveillance effort will provide
    sufficient data and information to establish the probable prevalence
    level of BSE in the United States.
        To facilitate response efforts in the event of a future foreign
    animal disease outbreak, APHIS and its State and industry cooperators
    are establishing a National Animal Identification System (NAIS)
    designed to identify, within 48 hours of discovery, any agricultural
    premise exposed to a disease so that potential outbreaks can be
    contained and eradicated as quickly as possible. The NAIS is a
    networked computerized system that will allow us to identify livestock
    and poultry and record their movements over their life-spans.
    Currently, 44 States have premises registration capabilities that are
    operational in the NAIS, and our goal is to have all States operational
    by mid-2005. As of January 30, 2005, APHIS has awarded or committed
    more than $13 million to 42 States and Native American Tribes to focus
    primarily on animal premises identification, which is the foundation of
    the NAIS.
        Through the Pest Detection program, APHIS and its cooperators have
    established State, regional, and national Cooperative Agricultural Pest
    Survey (CAPS) committees to ensure that stakeholders at each level are
    involved in the process of targeting plant pests for survey each year.
    APHIS targets pests based on their risk of entry and potential to cause
    significant economic or environmental damage. In fiscal year 2004, the
    CAPS committees began institutionalizing a system to choose survey
    projects based on both the pests' risk factors and States' priorities.
    In 2004, the Agency and its cooperators conducted national surveys for
    20 high-risk pests and 424 individual surveys across the country.
        In fiscal year 2004, APHIS continued working with State
    cooperators, the American Soybean Association, and university partners
    to prepare for the arrival of soybean rust in the United States. As
    part of our efforts to minimize the impact of the disease, we trained
    more than 300 soybean producers, handlers, and consultants in soybean
    rust detection and worked with pesticide companies to ensure that
    options for fungicide mitigation would be available to soybean
    producers. We also assembled a soybean rust detection assessment team
    and put the assessment team into action early in fiscal year 2005 when
    the Agency detected soybean rust for the first time in Louisiana. APHIS
    and other USDA agencies are continuing to work with the soybean
    industry to help producers adjust to the presence of soybean rust in
    the United States through the development of monitoring and
    surveillance programs (and a website to disseminate up-to-date
    information about the disease's spread), predictive modeling techniques
    to identify at-risk areas for disease spread, and decision criteria for
    fungicide application.
        Under the Animal and Plant Health Regulatory Enforcement program,
    our Investigative and Enforcement Services unit continues to provide
    support to all APHIS programs by conducting investigations of alleged
    violations of Federal laws and regulations under APHIS' jurisdiction
    through appropriate civil or criminal procedures. Regulatory
    enforcement activities prevent the spread of communicable animal pests
    and diseases in interstate trade. In fiscal year 2004, APHIS conducted
    774 investigations involving animal health programs, resulting in 271
    warnings, 71 civil penalty stipulations, six Administrative Law Judge
    Decisions, and $158,625 collected in fines. APHIS also conducted 2,391
    investigations involving plant quarantine violations resulting in 214
    warnings, 807 civil penalty stipulations, 27 Administrative Law Judge
    decisions, and approximately $1.4 million collected in fines.
        The Agency maintains a cadre of trained professionals prepared to
    respond immediately to potential animal and plant health emergencies.
    APHIS' Emergency Management System (EMS) is a joint Federal-State-
    industry effort to improve the ability of the United States to
    successfully manage animal health emergencies, ranging from natural
    disasters to introductions of foreign animal diseases. The EMS program
    identifies national infrastructure needs for anticipating, preventing,
    mitigating, responding to, and recovering from such emergencies. By
    Presidential Homeland Security Directive, APHIS is restructuring its
    emergency response systems according to the National Incident
    Management System and developing an Incident Command System training
    curriculum for our employees. In fiscal year 2004, APHIS held two
    emergency response table-top exercises with Canada and Mexico designed
    to provide training to the employees involved, and identify weaknesses
    in our cooperative emergency response networks. The two recent
    exercises covered a simulated foreign animal disease outbreak and
    vaccine distribution from the vaccine bank.
        APHIS has been challenged with numerous emergencies over the last
    several years. We took quick and aggressive action to address plant and
    animal health situations with Mediterranean fruit fly, citrus canker,
    emerald ash borer, exotic Newcastle disease, low and high pathogenic
    avian influenza, wildlife rabies, sudden oak death, white spot syndrome
    disease, and BSE. Over $234 million of Commodity Credit Corporation
    funds was approved for these emergencies in fiscal year 2004.
        As reinforced by the Bioterrorism Preparedness and Response Act of
    2002, APHIS also tracks plant and animal disease agents that could be
    used in acts of bioterrorism. The Act requires that entities, such as
    private, State, and Federal research laboratories, universities, and
    vaccine companies, as well as individuals that possess, use or transfer
    select agents and toxins identified as a severe threat to animal and
    plant health or public health, register with the appropriate Federal
    authority--either APHIS or the Centers for Disease Control and
    Prevention (CDC). APHIS is cooperating with CDC to promulgate final
    joint regulations on requirements that facilities must meet if they
    wish to possess, transfer, or use select agents. Our fiscal year 2006
    budget requests the establishment of a new line item, Select Agents, to
    help consolidate and coordinate these activities throughout the Agency.

    Reducing Domestic Threats Through Increased Offshore Threat Assessment
            and Risk-reduction Activities
        Responding to introductions of invasive pests and diseases once
    they arrive on our shores is extremely costly for United States
    taxpayers and agricultural producers alike. Accordingly, APHIS is
    working to enhance its offshore threat assessment and risk reduction
    programs with the goal of reducing the need for expensive emergency
    response programs. Officials with our Agricultural Quarantine
    Inspection, Trade Issues Resolution Management, Foreign Animal Disease/
    Foot and Mouth Disease (FAD/FMD), and Import/Export programs track
    plant and animal health issues around the world and use the information
    to set import policies to ensure that agricultural diseases are not
    introduced through imports. This information also helps determine what
    pests and diseases might have pathways into the United States and
    informs our monitoring and surveillance efforts here at home. APHIS is
    establishing a formal international information gathering program under
    the FAD/FMD and Pest Detection line items to build on these efforts.
    The program has already placed three animal and plant health
    specialists in South Africa, Brazil, and the Dominican Republic, and
    the fiscal year 2006 budget would expand the program to collect
    information from 16 additional countries.
        APHIS also targets certain high-risk pests and diseases for
    eradication in other countries. Several devastating agricultural pests
    and diseases, including FMD, Mediterranean fruit fly (Medfly),
    screwworm, classical swine fever, and tropical bont tick are present in
    Central and South America or the Caribbean. Without the efforts of
    APHIS and cooperating governments to eradicate these pests and diseases
    at their sources, they would likely reach the United States through
    means of natural spread. Through the FAD/FMD program, APHIS and
    cooperating countries established a permanent barrier against FMD at
    the Panama/Colombian border. Under an agreement with Panama and Mexico,
    we collected 1,166 samples of suspected vesicular disease throughout
    Central America; fortunately, all tested negative for FMD. Through the
    international cooperative Medfly eradication program, or Moscamed, we
    cooperate with Mexico, Guatemala, and Belize to eradicate and control
    Medfly, thereby preventing the pest from moving north into the United
    States. In fiscal year 2004, the program reduced the infested area in
    the southern Mexican provinces of Chiapas and Tabasco by over 60
    percent.
        Because of climate and weather conditions, California, Texas,
    Florida, and other border States are vulnerable to outbreaks of exotic
    fruit flies and other agricultural pests such as cattle fever ticks.
    APHIS conducts preventive release programs (PRPs) of sterile flies in
    California and Florida to prevent Medfly from becoming established.
    Since the California PRP began in 1996, APHIS has detected only four
    Medflies in the State and reduced the number of Medfly infestations in
    the Los Angeles area by 97 percent, saving over $145 million in
    eradication costs. In response to a recent Medfly outbreak in Tijuana,
    APHIS extended the PRP to an additional 251 square-mile area to prevent
    the outbreak from spilling into California. APHIS also conducts
    intensive trapping activities and emergency response programs to ensure
    that other exotic fruit flies, such Oriental fruit fly, do not become
    established. In addition, APHIS operates Mexican fruit fly (MFF)
    suppression programs in Texas, and will enhance its efforts to ensure
    that MFF does not become established in the United States.
        To ensure our import regulations are enforced and adequately
    protect United States agricultural and natural resources, we work
    closely with the Department of Homeland Security's Bureau of Customs
    and Border Protection to monitor and intercept prohibited items that
    arrive at United States ports of entry. In fiscal year 2004,
    agricultural inspectors checked the baggage of nearly 69 million
    arriving passengers and cleared 48,335 ships and 2,580,470 cargo
    shipments. In total, agricultural inspectors intercepted 49,180
    reportable pests at land borders, maritime ports, airports, and post
    offices.

    Managing Issues Related to the Health of United States Animal and Plant
            Resources and Conflicts With Wildlife
        In addition to preventing the entry and establishment of new
    agricultural pests and diseases, APHIS works to limit the damage caused
    by those already present in the United States, eradicate certain
    established or domestic pests and diseases, and manage wildlife damage
    to agricultural and publicly owned resources. As with all our efforts,
    we work closely with State, Tribal, industry, and academic partners in
    these programs and leverage these partnerships for more efficient and
    effective operations. APHIS also enforces the Animal Welfare and Horse
    Protection Acts, which protect certain animals from mistreatment when
    used in commerce or for exhibition purposes.
        The Boll Weevil Eradication Program continues to make significant
    progress toward eliminating this serious cotton pest from the United
    States. As fiscal year 2005 began, more than 9 million acres of cotton
    spread over nine States were weevil-free. While fiscal year 2004
    activities were hampered by weather events, the program still expects
    that 90 percent of cotton acreage will be weevil-free by the end of
    this year. APHIS is also continuing Pink Bollworm eradication and
    suppression activities. Pending growers' approval, APHIS, its State and
    industry partners, and the Government of Mexico plan to implement a
    comprehensive cooperative eradication program in three phases. When
    compared with fiscal year 2001 trapping data, activities in phase one
    have already shown a reduction in pink bollworm adults by over 94
    percent in Texas, 97 percent in New Mexico, and 99 percent in
    Chihuahua, Mexico.
        APHIS also continues its effort to address the last stubborn
    pockets of endemic animal diseases such as bovine tuberculosis,
    brucellosis, and pseudorabies. Forty-six States are now accredited-free
    of bovine tuberculosis, and forty-eight have achieved class free status
    for brucellosis. At the start of fiscal year 2005, all fifty States and
    three United States territories had reached Stage V (free) status for
    pseudorabies. APHIS is working with State cooperators to focus on
    preventing the transmission of these diseases between wildlife and
    domestic livestock, and to identify remaining infected herds. In
    addition, relatively new efforts are now well underway to assist
    producers in controlling diseases such as low pathogenic avian
    influenza.
        APHIS' Wildlife Services (WS) Operations Program works to protect
    agricultural crops from wildlife damage; protect livestock from
    predation; prevent the transmission of wildlife-borne diseases to
    safeguard the livestock industry; protect and preserve natural
    resources, including threatened and endangered species; protect human
    health and safety by preventing wildlife collisions with aircraft and
    wildlife conflicts with humans; and protect wildlife damage to
    property. The program provided wildlife hazard management assistance to
    over 550 airports nationwide in fiscal year 2004, up from 42 in fiscal
    year 1990. APHIS also continues to reduce the threat that wildlife
    rabies poses to livestock and human health by maintaining a barrier
    against the spread of the disease to uninfested areas. In fiscal year
    2004, the WS Operations program reinforced oral rabies vaccination
    zones along the Appalachian Ridge through the distribution of more than
    6.3 million vaccine baits over 31,000 square miles, and in areas of
    Texas with the distribution of 2.75 million baits over 29,000 square
    miles.
        APHIS and its cooperators are increasingly aware of the connection
    between wildlife disease and both domestic animal and human health. For
    example, bovine tuberculosis in deer continues to affect Michigan's
    ability to eradicate the disease from its cattle population, and the
    transmission of chronic wasting disease between wild deer and elk and
    domestic deer and elk continues to be of concern. Accordingly, APHIS
    continued to implement its Wildlife Disease Surveillance and Emergency
    Response Program, and participated in disease surveillance and control
    activities for 15 wildlife and domestic diseases in fiscal year 2004.
        APHIS' Animal Welfare Program carries out activities designed to
    ensure the humane care and treatment of animals used in research,
    exhibition, the wholesale pet trade, or transported in commerce. The
    program places primary emphasis on voluntary compliance through
    education, but we also utilize inspection of records, investigation of
    complaints, and reinspection of problem facilities to ensure that
    protected animals receive an appropriate level of care. When education
    efforts fail to achieve voluntary compliance, APHIS personnel
    investigate alleged violations of Federal animal welfare and horse
    protection laws and regulations, and oversee subsequent prosecution of
    violators through appropriate civil or criminal procedures. In fiscal
    year 2004, APHIS conducted 288 animal welfare investigations, resulting
    in 205 formal cases submitted for civil administrative action. We also
    issued 120 letters of warning and resolved 56 cases, resulting in
    $92,972 in fines. Administrative law judges resolved another 41 cases,
    resulting in $455,642 in fines.
        APHIS continued to emphasize public education and outreach in
    fiscal year 2004 through participation in canine care workshops around
    the country with commercial breeders as the target audience; veterinary
    workshops to educate veterinarians providing services to regulated
    facilities; and, two exotic cat care workshops. Through regulatory
    inspections and educational efforts, the Animal Welfare program
    succeeded in raising the level of facility compliance from a baseline
    of 58 percent in 2001 to 70 percent in 2004.

    Resolving Trade Barrier Issues Related to Sanitary and Phytosanitary
            (SPS) Issues
        All of APHIS' efforts to protect the health of United States
    agricultural resources and keep them free of major pests and diseases
    support American farmers' ability to sell their products on the world
    market. In turn, our efforts to facilitate safe trade with other
    countries, including activities such as monitoring world agricultural
    health and providing assistance to developing countries to build
    regulatory capacity, help ensure that imported products will not
    threaten our domestic production capability and health status.
        Because of APHIS' expertise in animal and plant health issues and
    regulatory role, the Agency serves as a key resource in resolving
    sanitary and phytosanitary issues that become trade barriers. The
    Agency works closely with trade policy organizations, including USDA's
    Foreign Agricultural Service and the United States Trade
    Representative. Officials with our Trade Issues Resolution Management
    programs work to minimize trade disruptions caused by animal and plant
    health issues. In fiscal year 2004, reopening markets for United States
    poultry and beef posed the greatest challenges. Outbreaks of low
    pathogenic avian influenza (LPAI) and exotic Newcastle disease
    continued to affect poultry markets throughout the Americas, Asia, and
    Europe. However, since August 2004, the United States regained LPAI-
    free status under the World Health Organization for Animal Health (OIE)
    definition. As a result, APHIS reopened poultry markets in all 25
    European Union countries, Russia, Japan, and Chile, among others. The
    total value of United States exports of poultry and poultry products
    actually increased by 15 percent between January and August of 2004,
    compared to the same period in fiscal year 2003. APHIS continues to
    work with the limited number of trading partners that maintain bans on
    United States poultry because of LPAI, including China.
        In regard to beef markets that were closed to United States exports
    because of BSE, APHIS has been successful with reopening markets for
    United States beef in more than 20 countries. Canada and Mexico have
    partially reopened their markets to certain United States beef
    products, and we continue to work on reopening borders with Japan, a
    major export market for United States beef, as well as other Asian
    nations. APHIS has been successful in opening many export markets for
    other ruminant products, such as pet food and bovine embryos and semen,
    banned because of BSE.
        Altogether, APHIS resolved 112 sanitary and phytosanitary issues in
    fiscal year 2004, allowing over $5 billion worth of trade to occur. Our
    export accomplishments included opening new markets for pork to
    Australia and seed potatoes to China, and expanding existing market
    access for wheat to Brazil, grains to Canada, and corn to Argentina. In
    addition, we retained 23 markets for beef and beef products worth more
    than $330 million world-wide.

                        FISCAL YEAR 2006 BUDGET REQUEST

        The fiscal year 2006 Budget Request for Salaries and Expenses
    totals just over $866 million, an increase of $57.9 million over the
    fiscal year 2005 Consolidated Appropriations Act. About $6.5 million of
    the increase is for pay raises. Of the total request, approximately
    $436 million is identified in the President's Homeland Security
    initiative, including $299 million in discretionary funding. Of the
    $436 million, $174 million is identified in the President's Food and
    Agriculture Defense Initiative, which serves to protect the agriculture
    and food system in the United States from intentional, unintentional,
    or naturally occurring threats.
        The increase, approximately 7 percent above the fiscal year 2005
    appropriation, is for initiatives designed to address the increasing
    domestic and international threats to the health of United States
    agriculture. On the domestic side, these include continuing
    enhancements to our Biotechnology Regulatory Services program;
    enhancements to both animal and plant health surveillance systems and
    diagnostic capabilities; the ability to track animal and plant
    pathogens and toxins identified as Select Agents; the build up our
    animal disease vaccine bank; the ability to address wildlife disease
    threats to livestock health; and an investment to substantially reduce
    emergency fund transfers for a variety of plant pest and disease
    programs. In the international arena, APHIS plans to use additional
    funding to establish a formal international information collection
    program that will help us set agricultural import policy and inform
    others of our monitoring and surveillance efforts here in the United
    States; enhance CSF eradication in the Caribbean; complete construction
    of a new sterile screwworm production facility in Panama; and protect
    and expand the $53 billion annual agricultural export market, among
    other things.
        The following paragraphs detail some of the accomplishments
    expected under the fiscal year 2006 budget request:

    Ensuring the Safe Research, Release, and Movement of Agricultural
            Biotechnology
      --An increase of $4,320,000 for the Biotechnology Regulatory Services
            Program will allow us to continue to develop biotechnology
            regulatory infrastructure, policies, and regulations while
            conducting daily program operations, i.e., preparing risk
            assessments, issuing permits, reviewing petitions for
            deregulation, inspecting field test sites, building capacity in
            developing countries, and international activities.

    Strengthening Emergency and Homeland Security Preparedness and
            Responses
      --An increase of $16,893,000 for the Pest Detection Program to
            continue outreach to volunteers; surveying for cactoblastis
            (cactus moth) and soybean pests; increasing cooperative
            agreements with State cooperators by an average of $110,000 per
            agreement. We anticipate being able to detect 95 percent of
            newly introduced economically significant pests before they
            spread.
      --An increase of $6,707,000 for the Animal Health Monitoring and
            Surveillance Program to enhance the current disease monitoring
            and surveillance system by increasing and integrating its
            infrastructure in order to better protect the Nation's animals
            from the threat of emerging and foreign animal diseases.
      --An increase of $1,950,000 for the Wildlife Disease Monitoring and
            Surveillance Program to build an animal disease surveillance
            system that has domestic and international components for
            establishing methods for surveillance data collection in
            wildlife populations and investigating the prevalence of
            specific diseases that may move from wildlife to livestock or
            poultry populations. Wildlife disease specialists will be
            trained to respond to disease outbreaks within 72 hours by
            fiscal year 2006 with the ultimate goal of reducing response
            time to 24 hours.
      --An increase of $5,867,000 for the Veterinary Diagnostics Program to
            continue its investment in the National Animal Health
            Laboratory Network and begin a transition to new information
            technology that will align the program's abilities, efficiency,
            and effectiveness with the ever-growing demand for program
            services. The investment will increase the program's ability to
            respond to the threat of bio-terrorism and further APHIS'
            commitment to the safety of the United States livestock
            population.
      --An increase of $9,671,000 for the Emergency Management System
            Program to improve the response time for emergencies by 2 days
            to enhance the animal health emergency preparedness.
      --An increase of $25,651,000 for the Emerging Plant Pests Program to
            enhance survey and tree removal to control emerald ash borer;
            remove trees infected by and exposed to citrus canker; and,
            enhance the Agency's emergency response infrastructure.
      --An increase of $5,250,000 for the Select Agents Program to fully
            carry out the activities mandated by the Agricultural
            Bioterrorism Protection Act of 2002.
      --An increase of $928,000 for Animal and Plant Health Regulatory
            Enforcement to continue support to all APHIS programs by
            conducting investigations of alleged violations of Federal laws
            and regulations under APHIS' jurisdiction; overseeing/
            coordinating subsequent prosecution of violators through
            appropriate civil or criminal procedures; and providing Quick
            Response Teams to assist in market surveillance, border
            blitzes, and emergency program efforts such as those provided
            during exotic Newcastle and BSE emergency outbreaks in fiscal
            year 2003 and 2004.

    Reducing Domestic Threats Through Increased Offshore Threat Assessment
            and Risk-reduction Activities
      --An increase of $6,424,000 for the Foreign Animal Diseases/Foot and
            Mouth Disease Program (FAD/FMD) to place animal specialists
            overseas to collect information on FAD, and expand classical
            swine fever work into Central America, targeting Belize and
            Nicaragua.
      --An increase of $3,670,000 for the Screwworm Program to purchase
            essential equipment for its new sterile screwworm production
            facility in Panama, which will help establish a permanent
            barrier against the pest at the Panama-Columbia border.

    Managing Issues Related to the Health of United States Animal and Plant
            Resources and Conflicts With Wildlife
      --An increase of $770,000 for the Animal Welfare Program to respond
            to rapid growth in the number of new licensees and registrants,
            particularly in western States, by hiring eight new animal care
            inspectors and stationing them at key locations where workloads
            are most critical. Of the amount requested for Animal Welfare
            activities, approximately $11 million will be derived from new
            user fees.
      --An increase of $1,666,000 for the Fruit Fly Exclusion and Detection
            Program to be prepared to respond rapidly to domestic
            outbreaks, prevent the northward spread of the Mediterranean
            fruit fly into Central Mexico, and provide adequate numbers of
            sterile flies for the preventive release program in the United
            States.
      --An increase of $3,000,000 for the Wildlife Services Operations
            Airport Safety Program to enhance human safety by reducing
            wildlife strikes to aircraft.
      --An increase of $5,000,000 in funding for rabies under the Wildlife
            Services Operations Program to maintain the oral rabies
            vaccination barrier against spread of this disease to the west
            of the Appalachian Mountains.
      --An increase of $750,000 in the Wildlife Services Operations Program
            for brown tree snake interdiction activities in Guam to prevent
            the spread of this invasive animal to areas with fragile
            ecosystems, such as Hawaii and the Northern Marianas.
      --An increase of $5,000,000 in the Wildlife Services Operations
            Program to provide funding for Homeland Security (Food and
            Agriculture Defense) initiative of wildlife disease
            surveillance as requested in the fiscal year 2005 Budget.

    Resolving Trade Barrier Issues Related to Sanitary and Phytosanitary
            (SPS) Issues
      --An increase of $5,742,000 for the Trade Issues Resolution and
            Management Program to expand and retain markets to provide new
            market access and facilitate trade worth $2.4 billion in fiscal
            year 2006 in part through opening new offices in Thailand,
            India, Italy, West Africa, and Brazil.

                                   DECREASES

        To support our high priority programs, we propose several
    offsetting decreases:
        The high priority placed on deficit reduction limited the
    availability for certain activities. We propose decreases of
    $31,300,000 for the Boll Weevil program, which is possible because of
    the program's success and will not affect its ability to meet the
    target of complete eradication by 2008; $1,412,000 for the Brucellosis
    program; $1,855,000 for the Chronic Wasting Disease program; $1,128,000
    for the Grasshopper program; $15,435,000 for the Johne's Disease
    program; $829,000 for the Noxious Weeds program; and, $11.48 million
    for Wildlife Services Operations. Within the Emergency Plant Pests line
    item, we propose reductions of $13,682,000 for Asian longhorned beetle
    and $1,445,000 for sudden oak death. Within the appropriated
    Agricultural Inspection Quarantine program, we propose to shift
    $2,748,000 from the Hawaiian interline inspection program to our newly
    expanded National Plant Germplasm and Biotechnology Laboratory, which
    supports the Agency's emergency response capabilities, eradication
    programs, pest exclusion activities, biotechnology permitting programs,
    and the newly mandated Select Agents program. We are also proposing new
    user fees for the Animal Welfare program, which would generate
    $10,857,000 and replace the same amount of appropriated funding.

                                   CONCLUSION

        APHIS' mission of safeguarding United States agriculture is
    becoming ever more critical. Although the processes by which we protect
    America's healthy and diverse food supply are being increasingly
    challenged by increased trade and tourism, APHIS is committed to taking
    the lead in building and maintaining a world-class system of pest and
    disease exclusion, surveillance, detection, diagnosis, and response.
    Healthy plants and livestock increase our market potential
    internationally, and thus contributes to a healthy United States
    economy. Like the APHIS Strategic Plan, the APHIS Budget consists of
    interdependent components that, when combined, can truly protect the
    health and value of American agriculture and natural resources.
        On behalf of APHIS, I appreciate all of your past support and look
    forward to continued, positive working relationships in the future. We
    are prepared to answer any questions you may have.
                                     ______

      Prepared Statement of David R. Shipman, Acting Administrator, Grain
               Inspection, Packers and Stockyards Administration

                                  INTRODUCTION

        Mr. Chairman and Members of the Committee, I am pleased to
    highlight the accomplishments of the Grain Inspection, Packers and
    Stockyards Administration (GIPSA), and to discuss the agency's fiscal
    year 2006 budget proposal.
        GIPSA's activities are an integral part of USDA-wide efforts to
    support a competitive global marketplace for U.S. agricultural
    products. Our mission is to facilitate the marketing of livestock,
    poultry, meat, cereals, oilseeds, and related agricultural products,
    and to promote fair and competitive trading practices for the overall
    benefit of consumers and American agriculture.
        We fulfill our service and regulatory roles through our Packers and
    Stockyard Program, which promotes a fair, open, and competitive
    marketing environment for the livestock, meat, and poultry industries
    and our Federal Grain Inspection Service, which provides the U.S. grain
    market with Federal quality standards and a uniform system for applying
    these standards to promote equitable and efficient marketing.

                                  ORGANIZATION

        We carry out our mission with a dedicated staff of 722 employees
    working in partnership with a variety of State and private entities.
    Our Packers and Stockyards Program relies on three regional offices
    specialized in one of the following: poultry, hogs, or cattle/lamb. Our
    grain inspection services are delivered by the national inspection
    system, a network of Federal, State, and private inspection personnel.
    The system includes 10 GIPSA field offices, 2 Federal/State offices,
    and 56 State and private agencies authorized by GIPSA to provide
    official services.

                         PACKERS AND STOCKYARDS PROGRAM

        Our Packers and Stockyards Program (P&SP) administers the Packers
    and Stockyards Act (P&S Act) to ensure fair and competitive marketing
    in livestock, meat and poultry for the benefit of consumers and
    American agriculture. The P&S Act is intended to protect producers,
    growers, market competitors, and consumers against unfair,
    discriminatory, or deceptive practices that might be carried out by
    those subject to the Act. To meet this objective, GIPSA seeks to
    educate, regulate and investigate individuals and firms subject to the
    P&S Act; to respond to anti-competitive behavior, unfair, deceptive, or
    unjustly discriminatory trade practices; and to ensure livestock
    producers and poultry growers are paid for their products. GIPSA takes
    appropriate corrective action when there is evidence that firms or
    individuals have violated the P&S Act.
        The livestock, meatpacking, and poultry industries are important
    segments of American agriculture and the Nation's economy. With only
    152 employees, we regulate these industries, estimated by the
    Department of Commerce in fiscal year 2002 to have an annual wholesale
    value of $120 billion. At the close of fiscal year 2004, 5,678 market
    agencies and dealers and 2,015 packer buyers were registered. In
    addition, there were 1,443 facilities that provided stockyard services,
    an estimated 6,000 slaughtering and processing packers, meat
    distributors, brokers and dealers, and 202 live poultry dealers
    operating subject to the P&S Act.
        Our regulatory responsibilities are the heart of our mission to
    administer the P&S Act. To this end, GIPSA closely monitors practices
    that may violate the P&S Act. Last fiscal year, we conducted over 1,900
    investigations, of which 146 were handled by Rapid Response Teams. As a
    result of these investigations, the Packers and Stockyards Program
    helped restore over $17 million to the livestock, meatpacking, and
    poultry industries. The amount of monetary returns varies by year;
    however, in the first 5 months of fiscal year 2005 we have helped
    restore over $18 million to the livestock, meatpacking, and poultry
    industries.
        We continue to work with violating firms to achieve voluntary
    compliance, and continue to initiate appropriate corrective action when
    we uncover evidence that the P&S Act has been violated. During fiscal
    year 2004, with assistance from the Office of the General Counsel, we
    filed 15 administrative or justice complaints alleging violations of
    the P&S Act. These formal disciplinary complaints resulted in five
    decisions ordering the payment of $61,750 in civil penalties and
    suspending 12 registrants from operating for periods of 45 days to 5
    years.
        We regularly assist the FBI, State and local law enforcement
    agencies with their investigations. Some of our investigations involve
    overlapping jurisdiction, and sometimes these agencies call on GIPSA
    for its expertise. In addition, we communicate with our sister agencies
    within USDA, the Department of Justice, the Commodity Futures Trading
    Commission, and local and State governmental organizations to discuss
    common issues and when appropriate, coordinate plans.
        To ensure that producers and growers are aware of the protections
    the P&S Act provides, we have a hotline (1-800-998-3447) by which
    stakeholders and others may anonymously voice their concerns. In fiscal
    year 2004, 65 percent of the hotline calls received resulted in
    investigations. To encourage voluntary compliance, we regularly attend
    industry meetings and conduct orientation sessions (28 in fiscal year
    2004) for new auction market owners and feed mills to educate them
    about their fiduciary and other responsibilities under the P&S Act.
        Following the discovery of the bovine spongiform encephalopathy
    (BSE) positive cow in December, 2003, we established three special task
    forces to provide protection to livestock producers and members of the
    cattle industry commensurate with the P&S Act. These task forces were
    based in our Denver office which has lead responsibility for cattle,
    and included technical experts from our Atlanta and Des Moines regional
    offices and headquarters.
        The BSE Task Forces monitored livestock markets and packers for
    financial failures; reviewed changes in procurement practices; analyzed
    changes in market prices; received complaints from the public; and
    conducted 96 investigations. These investigations identified 11
    violations of the P&S Act. Two of these firms have corrected the
    violations; one investigation file has been forwarded for a possible
    formal complaint; and the remaining firms have been given an
    opportunity to comply with the P&S Act.
        Following the disclosure of avian influenza in February 2004 by the
    Animal and Plant Health Inspection Service (APHIS), we created a new
    Avian Influenza/Poultry Policy Task Force out of the Atlanta Regional
    Office. Like the BSE Task Force, the AI Task Force developed strategies
    to identify and respond to potentially unlawful practices unique to
    current market caused by the outbreak. In the current fiscal year, the
    AI Task Force will continue monitoring the industry and responding to
    the current AI situation.
        Together with our stakeholders and other interested parties, this
    year we developed and published two voluntary industry standards, in
    addition to two standards established earlier, for technologies used to
    assess quality and determine payment for livestock, meat or poultry.
    These standards help both producers and packers. Producers are more
    likely to get full value for the quality of livestock they produce and
    packers are more likely to pay only for the product they want to
    purchase. We will continue to work with stakeholders to develop
    additional standards, as needed, to enhance transparency in the
    marketplace.
        In fiscal year 2004 we also reviewed the current bonding
    requirements under the P&S Act and the returns to unpaid sellers from
    the bonds of failed firms. The results of this work are under review to
    determine whether regulatory changes are necessary to meet the
    objectives of the P&S Act.
        In fiscal year 2004, GIPSA implemented a web-based Swine Contract
    Library in accordance with the requirements of the Livestock Mandatory
    Reporting Act of 1999. Packers are required to file with GIPSA swine
    purchase contracts and monthly reports about the number of swine they
    expect to be delivered under contract in the next 12 months.
        The Swine Contract Library (SCL) includes information from swine
    packing plants with a slaughter capacity of 100,000 swine or more per
    year. Thirty-two firms operating 51 plants accounting for approximately
    95 percent of industry slaughter are subject to the SCL. GIPSA has
    received over 707 contracts to date. Information, by region, including
    price, premiums, discounts, grids, formulas, and other important
    contract terms extracted from offered and available contracts used to
    purchase hogs is now available to the public through the internet.
        The Livestock and Meat Marketing Study, for which Congress
    appropriated $4.5 million in fiscal year 2003, will have a delayed
    completion. GIPSA awarded $4,319,373 to the Research Triangle Institute
    (RTI) on June 14, 2004. RTI assembled a coalition of researchers from
    Colorado State University, Iowa State University, Montana State
    University, North Carolina State University, and the Wharton School of
    Business. RTI is continuing preparations for data collection and the
    overall study. RTI is scheduled to release study reports in mid-year
    2005 and mid-year 2006. The first report will provide information about
    the types of livestock arrangements in the cattle, hog, and sheep
    industries based on a survey conducted by RTI. The second report will
    provide detailed economic analyses about the arrangements. The study
    will be completed within the amount appropriated.

                        FEDERAL GRAIN INSPECTION SERVICE

        Our Federal Grain Inspection Service (FGIS) facilitates the
    marketing of U.S. grain and related agricultural products through the
    establishment of standards for quality assessments, regulation of grain
    handling practices, and management of a network of Federal, State, and
    private laboratories that provide impartial, user-fee funded official
    inspection and weighing services under the authority of the U.S. Grain
    Standards Act and the Agricultural Marketing Act of 1946.
        FGIS establishes terms and methods for quality assessments that the
    grain industry relies on to buy and sell over $51 billion of
    commodities annually. These standards for quality assessments provide
    the U.S. grain marketing system with the means to align post-harvested
    crop quality with the diverse quality needs of today's food and feed
    industry. GIPSA currently maintains more than 1,400 different quality
    assessment terms and methods to characterize the quality of grain and
    grain related products.
        We are expanding our work with producers, technology providers, and
    food and feed manufacturers to consensually identify the essential
    quality attributes that require standard measurement to effectively
    differentiate quality and add value to U.S. agriculture. For example,
    FGIS, working with seed companies and producers, has identified the
    need to measure the level of linolenic acid in soybeans, an attribute
    that improves the stability and lessens or precludes the need to
    hydrogenate soy oil. Hydrogenation produces trans fatty acids, which
    have been linked to health problems. We now need to work with the
    soybean industry and establish acceptable reference standards and rapid
    assay methods to measure the level of linolenic acid in soybeans, an
    initiative included in our fiscal year 2006 budget request. While
    commercial production of low linolenic soybeans will begin in 2005,
    some industry sources estimate that within several years, they will
    account for 20 percent of soybean acreage at a value of $5 billion.
        We are also working with the wheat industry in an effort to regain
    the U.S. wheat market share which has declined from 33 percent of the
    international market in 1995 to an estimated 26 percent in 2004. Our
    goal is to develop rapid measurement methods to differentiate wheat
    quality at the first point of sale and allow the U.S. wheat industry to
    better meet the needs of foreign buyers. To date, working with the
    wheat industry, we have identified several key quality attributes, such
    as gluten strength, that require rapid measures, as well as the need to
    validate international reference methods relating to the attributes.
    Gaining consensus on the salient wheat attributes and reference methods
    will allow GIPSA to pursue the development of rapid analytical methods
    for use at the first point of sale, another initiative included in the
    fiscal year 2006 budget.
        As we develop measures of new attributes entering the market, we
    are ensuring the current measurement methods are accurate and cost-
    effective. For example, we are working to transform the measurement of
    grain moisture. Maintaining current calibrations for moisture
    measurement is time consuming and resource intensive. Advances in the
    basic means to measure moisture, led by GIPSA, have the potential to
    greatly reduce maintenance costs and improve the accuracy of moisture
    measurements over a much wider range. These advances will benefit the
    entire grain industry, from producer to food manufacturer.
        Similar improvements are being implemented for wheat and barley
    protein measurements this year. In collaboration with industry and
    government officials throughout the world, GIPSA has advanced new
    Artificial Neural Network (ANN) technology for protein measurement,
    which reduces overall program costs and promotes greater harmonization
    with U.S. trading partners.
        We are introducing digital technology to improve the subjective
    assessments made by inspectors and, in some instances, replace them
    with objective measures. The percentage of broken rice is a critical
    factor for producers and the rice industry. Using digital technology,
    we have improved the consistency of measurements and simultaneously
    reduced the analytical time by over 75 percent.
        We are also working with stakeholders on grading standards to
    further facilitate trade. As the production of peas for feed has
    surged, as evident by a 108 percent increase in production from 2003 to
    2004, a need for national feed pea standards has evolved. We are
    working to meet this need. As the global competition in soybean markets
    intensifies, we are collaborating with the soybean industry to
    determine whether changes in analytical methods and grading standards
    would improve the United States competitive position. One grading
    factor under review is test weight per bushel, a factor used to market
    soybeans in the United States for over a half century, but not used by
    our major international competitors. We are also working closely with
    the wheat industry to ensure the wheat standards facilitate the
    expansion of the new and evolving market for Hard White Wheat. All of
    these activities improve the American agriculture's ability to deliver
    the specific quality of grain desired by food manufactures and
    consumers, and strengthen its competitive position in the global
    market.
        In the biotechnology arena, we are improving the reliability and
    accuracy of testing for the presence of modern biotechnology-derived
    grains to help U.S. agriculture avoid market disruption as trading
    partners around the world implement new import requirements. Our Test
    Kit Evaluation Program validates the performance of commercially
    available rapid tests for biotechnology-derived grains. Our Proficiency
    Program improves the performance and reliability of Government and
    private laboratories that test for biotechnology-derived grains in the
    United States and worldwide. More than 100 organizations participated
    in the program in fiscal year 2004, compared to 22 in 2002.
        In response to the results of the proficiency program, we are
    working to harmonize international reference materials and
    biotechnology measurement methods used in commerce to measure the level
    of biotechnology-derived events in raw agricultural products. The
    current focus of many laboratories is to assay for the presence or
    absence of a particular transgenic event, whereas the regulatory
    requirements evolving for agricultural products usually require
    reliable methods to measure the quantity of a biotechnology derived
    event.
        Our international outreach goes beyond work in the area of
    biotechnology. We work cooperatively with other government agencies to
    support market development and remove obstacles to U.S. grain reaching
    world markets.
        In recent years, we have focused on providing technical support to
    the Mexican and Asian markets. Last year, GIPSA worked with Mexico's
    private and public grain sectors to harmonize sampling and analytical
    methods with the goal of minimizing trade disruptions due to
    differences between GIPSA-certified quality and an importer's own
    quality assessment. We helped establish five grain inspection
    laboratories at major corn importing facilities in Mexico and trained
    personnel from Mexican commercial firms and government agencies on U.S.
    grain inspection policies and procedures. We also spearheaded the
    establishment of a Government-to-Government Grain Industry Consultative
    Group as a technical-level forum to address cross-border grain quality
    issues.
        Since fiscal year 2002, GIPSA has placed a temporary duty officer
    in Asia to address immediate and long-term issues in the region, to
    promote a better understanding and adoption of United States sampling
    and inspection methods to minimize differences in inspection results
    and to develop face-to-face relationships with customers, USDA
    Cooperators and Government officials. In October 2005, we placed an
    officer in Kuala Lumpur for 2 months, and this representative will
    return to Kuala Lumpur for 2 more months beginning March 2005.
    Following the completion of this assignment, GIPSA will place another
    representative in the region for a 4-month assignment to continue our
    work in the region.
        We also provide technical consultative services for international
    customers. During fiscal year 2004, GIPSA's consultative work included
    conducting assessments of agricultural standards and transportation
    management systems in South Africa, Botswana, Namibia, and Mozambique;
    helping establish grain inspection laboratories in Kenya, Uganda, and
    Tanzania; helping Egypt set up a biotech testing laboratory; helping
    Iraq set wheat contract terms that resulted in their importation of
    U.S. wheat, and giving a grain marketing seminar to Iraqi officials (in
    Jordan); working with Canadian and Mexican officials to establish a
    trilateral agreement on implementation of the Biosafety Protocol;
    continuing work with Chinese officials on trade issues to ensure their
    continued importation of U.S. soybeans; helping the USDA/Foreign
    Agricultural Service and Animal and Plant Health Inspection Service
    resolve various grain quality issues in other countries that would
    otherwise have restricted U.S. grain exports; and briefing visiting
    trade and governmental teams representing 55 countries around the
    world.
        In addition to facilitating the marketing of U.S. grain by
    developing grain quality assessment methods and carrying out
    international outreach efforts, GIPSA administers a national inspection
    system comprising Federal, State, and private laboratories. These
    laboratories provide valuable service to all sectors of the grain
    industry on a user fee basis, 24 hours a day, 7 days a week. The world
    recognizes the certificates issued by these laboratories as the gold
    standard for grain quality certification. Buyers and sellers around the
    world have confidence in and rely on the GIPSA certificate to trade
    grain.
        This confidence was earned. The dedicated Federal, State, and
    private employees of the national grain inspection system work
    tirelessly to ensure the integrity and reliability of the national
    inspection system. They issue over 3 million certificates annually,
    representing over 250 million tons of grain.
        GIPSA continuously works to improve service delivery by this
    network of laboratories and meet the needs of a changing market. In
    fiscal year 2004, we revised the regulations on appeal inspections
    under the U.S. Grain Standards Act to streamline the process and better
    reflect market needs. These changes improved service delivery time and
    reduced operational costs to both GIPSA and the grain industry. We also
    revised sampling and inspection procedures to better meet the needs of
    exporters shipping grain in small containers rather than large bulk
    vessels. As a result of high freight rates for bulk ocean vessels and
    an abundant supply of containers, the U.S. grain market experienced a
    significant increase in the use of containers to ship export grain
    overseas, especially to Asian markets. This shipping mode, once
    reserved for specialty, high-value grain, was being used for basic
    commodity grain and shifted the need for inspection services at
    interior locations.

                             EGOVERNMENT SOLUTIONS

        Our most ambitious undertaking to improve program operations and
    service to the public is a sweeping, multi-year project to upgrade
    information management systems and modernize our business functions.
    Our current information management system consists of several
    independent systems that have served specific purposes over the years
    well, but are not integrated. This has limited our ability to meet the
    growing demand for electronic, or web-based, delivery of our services.
    It also impedes our efforts to improve the cost effectiveness and
    efficiency of our internal business practices. The enterprise-wide
    system currently under development will modernize nearly every aspect
    of GIPSA operations and provide a great opportunity to improve current
    business practices and service delivery.
        New funding provided in fiscal year 2005 along with the redirection
    of existing funds has enabled GIPSA to begin the modernization process.
    Currently funded components of the new system will be deployed
    incrementally between 2005 and 2007. We have requested additional
    funding in fiscal year 2006 to support this important long term
    initiative.
        When completed, customers will have online access to the
    information and applications they need to file complaints with GIPSA
    via the Internet; receive status reports on a complaint; place claims
    against bonds required under the P&S Act; register as a grain exporter
    or livestock dealer; submit required annual reports; request grain
    inspection services; receive reports on service status; see the status
    of their user-fee account; and receive final certified results online
    which will, in turn, allow customers to integrate official inspection
    data into their own information and document management systems.
    Private and State inspection agencies interested in being authorized to
    provide official inspection services will also be able to apply for
    GIPSA designation and re-designation on-line. Once officially
    designated, these agencies will have direct access through the web to
    GIPSA's extensive quality assurance program to ensure their inspection
    results align with the official standards maintained by GIPSA.
        This modernization effort will create synergy across GIPSA programs
    and data sources, allowing GIPSA to improve internal program
    efficiencies and effectiveness. This large multi-year initiative will
    deliver improved performance and reduce costs years into the future.

                            PROTECTING THE HOMELAND

        In addition, GIPSA has dedicated resources to homeland security
    efforts. We continue to work closely with the USDA Office of Crisis
    Planning and Management (OCPM) to refine the Department's and the
    Agency's Continuity of Operations Plan (COOP) and to support and staff
    the Department's Crisis Action Team (CAT). In fiscal year 2004, GIPSA's
    COOP and CAT representatives participated in critical disaster-related
    exercises and training sessions.
        We provided technical assistance related to homeland security
    issues to a number of industry and governmental groups, including the
    USDA Homeland Security Working Group; worked with the National Food
    Laboratory Steering Committee to coordinate and integrate resources to
    support key components of the Food Emergency Response Network (FERN);
    and, in conjunction with USDA and the Animal and Plant Health
    Inspection Service, developed information for the USDA Sector Specific
    Plan that will be included in the National Infrastructure Protection
    Plan.

                              2006 BUDGET REQUEST

        To fund important initiatives and address the Agency's
    responsibilities, GIPSA's budget request for fiscal year 2006 is $40.4
    million under current law for salaries and expenses and $42.5 million
    for our Inspection and Weighing Services. These budgets include
    additional requests of $442,000 for employee compensation; $2,025,000
    to continue the modernization of our information management systems and
    business functions; and $950,000 for new grain testing measures. In
    addition our request includes a proposal to recover $25 million through
    user fees to cover the costs of grain standardization activities and
    Packers and Stockyards program activities.
        An increase of $442,000 for employee compensation will enable GIPSA
    to meet its objectives consistent with the priorities established by
    the Secretary of Agriculture. This critically important increase is
    needed to support and maintain current staffing levels to meet the
    current and projected increased demand.
        We are requesting an additional $2,025,000 for our IT modernization
    initiative. This multi-year project will upgrade information management
    systems and modernize our business functions. This request includes
    $1,000,000 to continue the development of eGov solutions; $775,000 for
    the formation of an Information Disaster Recovery Program, essential as
    we deploy the eGov solutions and our employees and customers become
    increasingly dependent on web-based applications for daily operations;
    and $225,000 for recurring costs associated with the operations of eGov
    solutions funded in fiscal year 2005 and deployed for operation.
        We are also requesting an additional $950,000 to develop new grain
    testing measures for ethanol co-products, wheat quality, and low
    linolenic soybeans. It is our responsibility to provide the U.S. market
    with the tools necessary to accurately and consistently measure a
    commodity's quality attributes, both chemical and physical, that our
    customers desire. New tests will facilitate the marketing of ethanol
    co-products, wheat, and low linolenic soybeans.
        Part of our appropriation request will be derived from proposed new
    user fees. The budget proposes a collection of 4.3 million from grain
    standardization user fees and $20.4 million from Packers and Stockyards
    program licensing fees. Both fees are proposed to assess those who
    benefit from the activities--the grain and livestock industries--rather
    than the general public.

                                   CONCLUSION

        Mr. Chairman, Members of the Committee, thank you for the
    opportunity to share some of the accomplishments made by our dedicated
    staff and highlight our future plans to facilitate the marketing of
    U.S. agricultural products and to promote fair and competitive trading
    practices for the overall benefit of consumers and American
    agriculture.
        I would be pleased to address any issues or answer any questions
    that you may have.
        Thank you.
                                     ______

        Prepared Statement of Kenneth C. Clayton, Acting Administrator,
                         Agricultural Marketing Service

        Mr. Chairman and Members of the Committee, I am pleased to have
    this opportunity to represent the Agricultural Marketing Service in
    presenting our fiscal year 2006 budget proposal. To provide a starting
    point for discussion of our budget proposals, I would like to begin by
    reviewing our agency's mission and some of the programs through which
    we carry out that mission.

                                    MISSION

        The goal of the Agricultural Marketing Service--AMS--is to
    facilitate the marketing of agricultural products in the domestic and
    international marketplace, ensure fair trading practices, and promote a
    competitive and efficient marketplace to the benefit of producers,
    traders, and consumers of U.S. food and fiber products. We accomplish
    our mission through a wide variety of appropriated activities and
    through our user-funded grading, certification, and Perishable
    Agricultural Commodities Act programs.

                               MARKETING SERVICES

        Our Marketing Services programs benefit agricultural producers,
    traders, and consumers of dairy products, fruits, vegetables, specialty
    crops, livestock and meat, poultry, and cotton. These programs
    facilitate marketing by providing information, technical expertise, and
    customer assurance.
        Markets operate more efficiently when all parties have equal and
    ready access to current, unbiased market information so that
    agricultural producers and traders can determine the best place, price,
    and time to buy or sell. In order to provide this information, AMS
    Market News reports cover current prices, volume, quality, condition,
    and other market data on farm products in more than 1,300 production
    areas and specific domestic and international markets. Market News
    reports are disseminated within hours of collection via the Internet.
    The data is also made available through electronic means and the news
    media. AMS reporters collect market news data for over 700 commodities
    from buyers and sellers, mostly on a voluntary basis. However, Congress
    established Livestock Mandatory Price Reporting in 2000 to ensure that
    information on meat and livestock trades would continue to be available
    for producers in a consolidating industry. These data, including
    prices, contracts for purchase, and other related information, are
    publicly disseminated in over 100 daily, weekly, or monthly reports on
    fed cattle, swine, lamb, beef and lamb meat.
        Another way to improve market efficiency is to develop commonly-
    recognized agricultural product descriptions for use in commercial
    sales and purchases. AMS' Standardization program works closely with
    interested parties in agriculture and the food marketing system to
    ensure that quality descriptions are aligned with current U.S.
    marketing practices. The agriculture industry uses these descriptions
    to convey commodity quality in purchase specifications and sales
    contracts. AMS Market News reports trading based on these commodity
    quality standards. AMS currently maintains about 600 U.S. agricultural
    quality standards for domestic and international trading of cotton,
    dairy products, fruits and vegetables, livestock, meat, poultry, eggs,
    and rabbits.
        The Standardization program supports exports of U.S. agricultural
    products by representing the interests of U.S. producers in a variety
    of international standards development organizations. AMS experts
    continue to participate in developing international dairy, meat,
    poultry, fruit, and vegetable standards. Recently, AMS' cotton
    specialists have been working to facilitate cotton trading between the
    United States and China by helping China adopt instrument testing and
    calibration standards for cotton comparable to those used in the United
    States. Compatible standards and classing procedures are in the
    interest of the United States, since China is the world's largest
    importer of cotton and the United States is its biggest foreign
    supplier.
        The National Organic Standards program provides assurance for
    consumers that organic products uniformly meet established requirements
    nationwide. The U.S. organic food industry has increased to a $15
    billion annual sales level and is still growing. AMS program staff
    works with the National Organic Standards Board to update and maintain
    a National List of approved and prohibited substances for organic
    production. AMS program personnel accredit State, private, and foreign
    certifying agents who certify that organic production and handling
    operations comply with national organic standards. By the end of 2004,
    AMS had accredited a total of 97 certifying agents--56 domestic and 41
    foreign.
        AMS also provides consumer assurance by collecting pesticide
    residue data and microbiological baseline data that helps to maintain
    domestic and export market demand for U.S. foods. In fiscal year 2004,
    the Pesticide Data program performed over 100,000 analyses on more than
    12,000 samples. The data gathered and reported by AMS on pesticide
    residues and microbiological pathogens supports science-based risk
    assessments performed by regulating agencies.
        Our Transportation Services program facilitates the movement of
    U.S. agriculture products to market. This program helps support farm
    income, expand exports, and maintain the flow of food to consumers by
    providing ``how to'' technical expertise, research, and data on
    domestic and international transportation to growers, producers, and
    others in the marketing chain, and for government policy decisions. The
    Transportation Services program also produces periodic publications
    that provide information for agricultural producers and shippers on
    various modes of transportation, including grain transportation,
    refrigerated transport, ocean rates and transportation trends, and
    agricultural containers.
        Our Wholesale, Farmers, and Alternative Markets program experts, in
    cooperation with local and city agencies, assist local efforts to
    develop or improve wholesale and farmers market facilities, and to
    discover other direct marketing opportunities. This program also
    supports research projects on marketing channels and market technology
    improvements, as well as numerous marketing conferences and workshops
    across the country.

                       PAYMENTS TO STATES AND POSSESSIONS

        AMS' Payments to States and Possessions program is more commonly
    known as the Federal-State Marketing Improvement Program, or FSMIP.
    This program helps to resolve local and regional agricultural marketing
    problems by awarding Federal matching grant funds for projects proposed
    by State agencies. These matching grants are made available to State
    departments of agriculture and other State agencies for 25 to 35
    projects each year, with the State agencies contributing at least half
    of the project cost. In 2004 the FSMIP program allocated grant funds to
    23 States for 27 projects such as studies on linking producers with new
    buyer groups and innovative uses for locally important agricultural
    products.

                                   SECTION 32

        AMS' Section 32 program purchases perishable non-price supported
    agricultural commodities--meat, poultry, fruits, vegetables, and fish--
    to encourage the exportation and domestic consumption of agricultural
    commodities. The purchased foods are donated to the National School
    Lunch Program and other domestic nutrition programs. In fiscal year
    2004, AMS purchased 1.52 billion pounds of commodities that were
    distributed by FNS through its nutrition assistance programs.
        Section 32 of the Act of August 24, 1935 permanently authorized an
    appropriation equal to 30 percent of customs receipts for this purpose.
    These funds, plus unused balances up to $500 million from the previous
    fiscal year, may be used by the Secretary to support markets by
    purchasing commodities in temporary surplus, for domestic nutrition
    assistance programs, for diversion payments and direct payments to
    producers, for export support, and disaster relief. AMS retains only a
    small percentage of the funds available under Section 32. In fiscal
    year 2006, 81 percent of the $6.3 billion total will be transferred to
    FNS to administer the Child Nutrition Programs and 1 percent to the
    Department of Commerce for fishery products.
        For 2006, AMS expects to obligate $850 million, of which $400
    million will be spent on purchases for the Child Nutrition Programs.
    Most of the rest is available to AMS' commodity purchases program for
    emergency surplus removal. Section 32 funds also finance AMS'
    administrative costs for commodity purchasing activities and Federal
    administration of marketing agreements and orders, which help to
    stabilize market prices for milk, fruit, vegetables, and specialty
    crops.
        My description of our programs is not complete without some
    discussion of our agency's extensive partnerships.

                                  PARTNERSHIPS

        AMS depends on strong partnerships with cooperating State and
    Federal agencies to operate many of our programs. State agency partners
    collect data, provide inspection, monitoring, and laboratory services
    for AMS, and otherwise maximize the value of both State and Federal
    resources through sharing and coordination. For instance, AMS' Market
    News program maintains cooperative agreements with 40 States to
    coordinate their local market coverage with the regional and national
    coverage needed for AMS market reporting. State employees who inspect
    shipments of seed within a State provide information to AMS' Federal
    Seed program on potential violations in interstate shipments. Our
    transportation and direct marketing programs work with Federal, State,
    city and local policy-makers to maintain an efficient national
    transportation system and expand and improve market outlets for U.S.
    agriculture.
        Two AMS programs that could not function without their State
    partners are the Pesticide Data and Pesticide Recordkeeping programs.
    The Pesticide Data program depends on its State and Federal partners to
    collect and test the product samples on which program results are
    based. In fiscal year 2005, the program will direct about 80 percent of
    its funding to its eleven State partners in reimbursement for services
    provided. The information generated by the program can be utilized by
    other USDA agencies, academia, agricultural industry, international
    organizations, and global traders, as well as Federal agencies such as
    EPA and FDA for policy and regulatory actions. Our Pesticide
    Recordkeeping program depends on 36 States and territories that
    participate with AMS in record inspection activities, and all 50 States
    plus Puerto Rico are involved with educational programs for certified
    applicators. Other USDA agencies provide pesticide recordkeeping
    inspections under interagency agreements where State inspectors are not
    available. In fiscal year 2005, the program expects to complete nearly
    4,000 compliance inspections of certified private applicator records.
    These programs cannot operate without adequate reimbursement to the
    cooperating agencies--State and Federal--for their costs.
        USDA food purchase programs have developed a partnership between
    USDA agencies that maximizes the unique expertise that each agency
    brings to the process. AMS works in close cooperation with both the
    Food and Nutrition Service (FNS) and the Farm Services Administration
    (FSA) to administer USDA's nutrition assistance and surplus commodity
    programs. AMS purchases the non-price supported commodities--meat,
    fish, poultry, egg, fruit and vegetable products--and FSA supplies the
    price-supported commodities--flours, grains, peanut products, cheese
    and other dairy products, oils and shortenings--that supply nutrition
    assistance programs administered by FNS such as the National School
    Lunch Program, the Emergency Food Assistance Program, and the Food
    Distribution Program on Indian Reservations, according to their needs
    and preferences.
        To maximize the efficiency of food purchase and distribution
    operations, AMS, FNS, and FSA each provide a component of program
    administration according to their organizational structure and
    expertise, but the system is complex and requires close coordination.
    AMS and FSA purchase for FNS the entitlement commodities provided to
    schools. Schools and other nutrition assistance programs can also
    receive bonus commodities that are purchased to support agricultural
    markets through AMS' surplus commodity program. AMS and FSA are
    responsible for issuing and accepting bids, and for awarding and
    administering contracts. FNS is responsible for taking commodity orders
    from the States, monitoring purchases and entitlements throughout the
    year, and for the overall administration of the commodity nutrition
    assistance programs. Before a purchase is announced, AMS and FSA
    specialists work with potential vendors, FNS, and food safety officials
    to develop a specification for each product purchased that details
    product formulation, manufacturing, packaging, sampling, testing, and
    quality assurance. After market conditions, availability, and
    anticipated prices are assessed, and recipient preferences determined,
    AMS and FSA invite bids for particular United States produced and
    domestic origin food products under a formally advertised competitive
    bid program. Bids received from responsible vendors are analyzed and
    contracts are awarded by AMS and FSA. FSA administers the payments to
    vendors, ensures the proper storage of commodities when needed, and
    assists in their distribution. Approximately $2.5 billion of
    commodities are purchased for all of the domestic and foreign food
    assistance programs every year and another $1 billion in price support
    commodity products are maintained in inventory.
        To better coordinate the operations between AMS, FNS, and FSA, and
    control the vast array of details inherent to the procurement process,
    the three agencies developed the Processed Commodities Inventory
    Management System, or PCIMS, more than eleven years ago to track bids,
    orders, purchases, payments, inventories, and deliveries. However,
    PCIMS is an aging system that often cannot be adequately modified to
    keep up with the agencies' business practice improvements, requiring
    program employees to develop electronic entries external to PCIMS and
    then update the system with the results. To resolve these problems and
    improve program operations, AMS, FNS and FSA have been working together
    to design a Web-Based Supply Chain Management System to replace PCIMS.
    We are requesting a funding increase in fiscal year 2006 to begin
    building the new system.

                        FISCAL YEAR 2006 BUDGET REQUEST

        This leads us to our budget requests for fiscal year 2006. In
    Marketing Services, we propose to amend the Livestock Mandatory Price
    Reporting Act to continue the program and include pork cuts, implement
    a new verification program for Country of Origin Labeling, start
    building the Web-Based Commodity Supply Chain Management System, and
    increase financial support for our State partners in the Pesticide Data
    and Recordkeeping programs.

                      LIVESTOCK MANDATORY PRICE REPORTING

        We are asking for an increase in program funding of $545,000 to
    include pork cuts in the Livestock Mandatory Price Reporting, or LMPR,
    program. The mandatory reporting system was established in response to
    concerns of livestock producers over the diminishing availability of
    data caused by market concentration. Mandatory reporting has been
    successful--it reports 80 to 95 percent of transactions involving
    purchases of livestock and sales of boxed beef and lamb, lamb
    carcasses, and imported boxed lamb cuts. Under voluntary pork
    reporting, AMS is able to gather only about 5 percent of transactions.
    This proposal would increase reported data on pork cut trades to 80
    percent. It will require packers to report on additional types of
    trades and products by including formula and contract transactions, as
    well as negotiated sales, of domestic and export sales of pork cuts.
    Mandatory reported information will also include value-added and case-
    ready products not usually reported on a voluntary basis.
        The addition of pork cuts under mandatory reporting requires an
    amendment to the Livestock Mandatory Reporting Act of 1999. USDA is
    also proposing an amendment to extend the mandatory reporting program,
    which currently expires September 30, 2005. USDA is reviewing the
    program's effectiveness and considering potential enhancements proposed
    by industry stakeholders, but supports continuation of LMPR.

                           COUNTRY OF ORIGIN LABELING

        Our second increase request is for $3.1 million to initiate a new
    Country of Origin Labeling, or COOL, program. We propose to establish a
    cooperative Federal-State surveillance and enforcement program that
    will verify that buyers are getting the required information concerning
    the source of covered commodities. Mandatory COOL provisions are in
    effect for fish and shellfish as of April 4 this year and on September
    30, 2006, for the remaining commodities covered by the 2002 Farm Bill.
    During fiscal year 2006, we will establish an audit-based compliance
    system for fish and shellfish, and then will incorporate the remaining
    covered commodities--ground and muscle cuts of beef, pork, and lamb;
    fresh and frozen fruits and vegetables; and peanuts--after those
    provisions go into effect. Until the mandatory rule becomes effective
    and for 6 months following the effective date, we will focus our
    resources on industry education and outreach to ensure effective and
    appropriate implementation of the labeling requirements.
        We plan to implement the audit-based surveillance activities
    through agreements with cooperating State government agencies. AMS will
    provide training and oversight, respond to formal complaints, conduct
    surveillance audits, and conduct educational activities. We will audit
    5 percent of covered retailers, over 1,800 each year, to achieve a
    compliance rate beginning at 70 percent and rising to 95 percent by
    2010. This program will ensure the public receives credible and
    accurate information on the country of origin for covered commodities
    while not overburdening the State agencies.

                         SUPPORT FOR COOPERATING STATES

        We request $889,000 to strengthen our financial support to our
    State partners for the Pesticide Data and Recordkeeping programs so
    that these programs can continue to function effectively. This increase
    will allow AMS to reimburse the States for rising costs, including
    salaries, benefits, and travel expenses incurred by State personnel in
    carrying out Federal program activities, and will help the States
    retain specialized and experienced personnel.

                    WEB-BASED SUPPLY CHAIN MANAGEMENT SYSTEM

        For fiscal year 2006, AMS is requesting an increase of $10 million
    in our Marketing Services account to develop WBSCM, a next-generation
    multi-agency food purchase and distribution tracking system which will
    significantly improve administrative efficiency and customer service.
    As I mentioned, this is a joint effort of AMS, FNS and FSA to establish
    a Web-Based Supply Chain Management system that can replace, and
    surpass, the functions of the current Processed Commodity Inventory
    Management System.
        WBSCM has undergone extensive reviews within USDA and has been
    approved within the Department and by OMB as meeting e-government
    requirements. Once functioning, the new system will create a singe
    point of access for customers, allowing the agencies to share
    information with them more quickly and conveniently. WBSCM will improve
    program efficiency by greatly reducing the time required for processing
    purchases; shortening delivery times; improving USDA's ability to
    collaborate with other Departments; improving reporting capability;
    reducing transportation, inventory, and warehousing costs; and enabling
    future system updates as needed. WBSCM is also designed so that it
    could eventually support agencies that manage similar commodity
    distribution programs for export. Although implementation of the new
    system will be a multi-year effort, increased efficiency, better
    coordination, and improved services should begin as soon as WBSCM is
    able to provide the services now being performed by PCIMS.

                                 BIOTECHNOLOGY

        The Biotechnology program is proposed for termination, reducing our
    Marketing Services budget by $4 million. AMS had anticipated the need
    to respond to industry requirements to differentiate between
    bioengineered and conventional commodities. However, technological
    issues and a lack of demand for fee-based quality assurance and
    laboratory accreditation services have reduced the need for such a
    program. Should demand for services become apparent, AMS will work with
    the affected industries to determine if alternative mechanisms can be
    utilized to facilitate the movement of agricultural commodities.

                                   USER FEES

        Our Marketing Services request also reflects $2.9 million in new
    user fees based on a proposed legislative change that would convert
    most of our domestic standards activities to user-fee funding. USDA has
    proposed an amendment to the Agricultural Marketing Act of 1946 that
    will authorize the agency to implement, collect, and retain user fees
    for domestic standards that are associated with AMS grading and
    certification services.

                             BUDGET REQUEST SUMMARY

        Our budget request includes $84 million for Marketing Services. We
    request $1.3 million in FSMIP grants funding--a decrease of $2.5
    million that was provided in fiscal year 2005 to support Wisconsin
    products. For administration of Section 32 activities, we request $11.5
    million to support commodity purchasing and $16.1 million for the
    Marketing Agreements and Orders program. Our Marketing Services and
    Section 32 administrative funding requests include an increase for pay
    costs.
        Thank you for this opportunity to present our budget proposal.

        Senator Bennett. Thank you.
        Dr. Pierson.

                       STATEMENT OF DR. MERLE D. PIERSON

        Dr. Pierson. Mr. Chairman, Senator Kohl, I am pleased to
    appear before you today to discuss the status of the Food
    Safety and Inspection Service programs and our fiscal year 2006
    budget request.

                               PATHOGEN REDUCTION

        Excellent progress has been made in improving the safety
    and security of the U.S. meat, poultry, and egg products
    supply. And as a result of implementing science-- and risk-
    based policies, we have seen significant reductions in E. coli
    O157:H7, Listeria monocytogenes, and Salmonella in FSIS
    regulated products. Also there has been a dramatic decline in
    recalls.
        What has been the impact of our science-based policies on
    public health? The Centers for Disease Control and Prevention
    will be publishing tomorrow a report that analyzes food-borne
    disease data for 2004. I am pleased to tell you that the CDC
    report will state that for 2004, there were important declines
    in food-borne illness.
        For E. coli O157:H7, there was a 42 percent decrease from
    the 1996-1998 baseline, a continuation of last year's downward
    trend. For Campylobacter, the decrease from the baseline was 31
    percent. Listeria monocytogenes, 40 percent, and Salmonella, 8
    percent.
        While we have made considerable progress, there is more to
    be done. The USDA is committed to further protecting public
    health through our continuing programs, such as those
    described, as well as several science-based initiatives that we
    are now working on.

                        FISCAL YEAR 2006 BUDGET REQUEST

        For fiscal year 2006, FSIS is requesting an appropriation
    of $849.7 million. The fiscal year 2006 budget requests an
    increase of $19.5 million to support a food and agriculture
    defense initiative in partnership with several other Government
    agencies.
        The budget request includes an increase of $13.9 million to
    provide for a 2.3 percent pay raise for FSIS employees. In
    addition, we are requesting $2.2 million in order to fill
    supervisory and administrative duties as we make better use of
    the scientific skills of our veterinary medical officers. And
    $139 million is proposed to come from a new user fee.

                              PREPARED STATEMENTS

        Mr. Chairman, thank you for providing me the opportunity to
    speak about these issues and our progress and to submit written
    testimony, which is much more extensive than I have just given
    you. I certainly do promise you that we will do our best to
    remain a world leader in public health.
        [The statements follow:]

                    Prepared Statement of Dr. Merle Pierson

        Mr. Chairman and Members of the Subcommittee, I am pleased to
    appear before you today to discuss the status of the Food Safety and
    Inspection Service (FSIS) programs and the fiscal year 2006 budget for
    food safety within the U.S. Department of Agriculture (USDA). I am Dr.
    Merle Pierson, Acting Under Secretary for Food Safety. With me today is
    Dr. Barbara Masters, Acting Administrator of FSIS.
        As we begin another new year at USDA, I am proud to emphasize
    several areas where we have used science based policies to effectively
    protect the health and well being of millions of consumers worldwide.
    These successes would not have been possible without the resources you
    have so generously given to us. I also will share with you our goals
    for this year, and will conclude with a discussion of the fiscal year
    2006 budget request.
        The crux of our public health challenge centers on combating
    biological, chemical, and physical hazards that range from the easily
    understood to those that evolve and present new and complex challenges.
    Thus, we must not only rely on existing knowledge and strategies for
    food safety, but also continue to introduce and evaluate new
    approaches. For me, as someone who has spent their entire career as a
    food scientist, I am particularly proud of the work our office and FSIS
    has done in developing science based policies to improve the safety and
    security of the U.S. meat, poultry, and egg products supply.
    Evaluating the Effectiveness of the 2004 Vision
        While there are many approaches to measuring success, we looked at
    indicators related to public health outcomes and pathogen reduction.
    Such an evaluation is essential in determining the success of our
    strategies and developing new ways to combat threats to public health.
    In our high-speed, fast-food world, it can be difficult for some to
    understand that successful science is not immediate gratification and
    it is not easily measured. But over time, positive results, or I should
    say, dramatic declines in foodborne illnesses or incidence of pathogens
    in products, show that our risk based approach is working.
    Breaking the Cycle of Multi-Million Pound Recalls
        One indication of our progress is that we have seen a break in the
    annual cycle of multi-million pound recalls. Through the use of risk
    assessments, working with partners along the farm-to-table continuum,
    and basing our policies on sound science, we have been able to break
    this vicious cycle. I will illustrate this by discussing our E. coli
    O157:H7, Listeria monocytogenes, and Salmonella policies.
        After a comprehensive risk assessment on E. coli O157:H7 was
    completed, we developed additional strategies to eliminate this
    pathogen in beef establishments. We required all of the approximately
    2,900 beef slaughter and processing establishments to reassess their
    Hazard Analysis and Critical Control Point (HACCP) plans relative to
    the potential presence and control of E. coli O157:H7 in raw beef. Then
    our scientifically trained personnel conducted the first-ever
    comprehensive reviews of the reassessed HACCP plans.
        I believe this type of forward thinking initiated by USDA/FSIS will
    continue to contribute to the dramatic improvements we have been
    seeing. For instance, let's take a look at results from our
    microbiological surveillance testing program for E. coli O157:H7 over
    the past 4 years.
      --In CY 2001, our testing program yielded 59 positive results out of
            7,010 samples;
      --In CY 2002, there were 55 positive results from 7,025 samples;
      --In CY 2003, there were 20 positives out of 6,584 samples; and
      --In CY 2004, there were only 14 positives out of 8,010 samples.
        The effectiveness of using sound science is also evident when we
    look at Listeria monocytogenes. Our 2003 interim final rule on control
    of Listeria monocytogenes in ready-to-eat (RTE) meat and poultry
    products, based on a thorough risk assessment, outlined three
    strategies that an establishment could choose from to control the
    pathogen depending on its product(s) and the environment in which it
    operates: Alternative 1, provides for a combination of a post-lethality
    treatment and a growth-suppressing agent or process; Alternative 2,
    provides for either a post-lethality treatment or a growth-suppressing
    agent or process; and Alternative 3, relies on sanitation as the
    primary mitigation. In January 2005, FSIS revised its sampling
    verification procedures so that more product samples are collected when
    an establishment relies solely on sanitation practices for Listeria
    monocytogenes control, while fewer samples are analyzed in situations
    where an establishment has more aggressive process control measures and
    interventions.
        In 2003, we released data that showed a 25 percent drop in the
    percentage of positive Lm regulatory samples from the year before, and
    a 70 percent decline compared with years prior to the implementation of
    HACCP.
        Our science based initiatives, including those used to counter E.
    coli O157:H7, have played a significant role in also reducing the
    prevalence of Salmonella in raw meat regulatory samples. If we look at
    the percentage of regulatory samples positive for Salmonella from our
    scientific HACCP verification testing program, we see an overall
    aggregate downward trend from 1998 through 2003. Salmonella presence in
    raw meat and poultry regulatory samples has dropped substantially over
    the past 6 years. Out of the number of regulatory samples collected and
    analyzed by FSIS in 2003, 3.8 percent tested positive for Salmonella,
    as compared with 4.29 percent in 2002, and 10.65 percent in 1998.
        While the regulatory prevalence of Salmonella across all seven
    product categories tested continued to decrease in 2003, we are
    concerned that the percentage of positive Salmonella tests increased
    slightly in three poultry categories. FSIS has been examining
    Salmonella testing data from 1998 to the present in order to clearly
    identify those plants displaying negative performance trends.
    Enforcement Investigations and Analysis Officers can now conduct in-
    depth HACCP and sanitation verification reviews at those facilities to
    help ensure that this increase does not continue. FSIS compares
    regulatory testing results to pre-HACCP baseline prevalence to provide
    context to the yearly data. These 2003 numbers are still under the
    standard for the aggregate data, but FSIS is working aggressively to
    reverse the upward trend.
        Let me also add that when there has been foodborne illness, FSIS
    aggressively explores both epidemiological links to products from
    individual establishments as well as conducts a food safety assessment
    to determine whether or not insanitary conditions exist. If the
    epidemiological link is found or insanitary conditions exist,
    appropriate regulatory enforcement action is taken.
        I have provided a brief overview of some of the measures I believe
    have broken the annual cycle of multi-million pound recalls. I would
    like to mention trends we are seeing in recall data.
        In the late-1990s, the number of recalls had been increasing
    steadily with at least one multi-million pound recall being conducted
    every year; however, this trend has dramatically changed in the past 2
    years.
      --In 1997, there were 27 recalls;
      --Followed by 44 recalls in 1998;
      --58 recalls in 1999;
      --76 recalls in 2000;
      --87 recalls in 2001; and
      --Reaching an all-time high of 113 recalls in 2002.
        After we implemented the science based policies I mentioned
    earlier, we saw a dramatic decline in recalls, culminating in a
    reduction of nearly 18 percent in the number of pathogen-related
    recalls, from 28 in 2003, to 23 in 2004. While this is certainly good
    news, we still have areas of concern. One of the areas of concern is an
    increasing trend in the percentage of recalls triggered by undeclared
    allergens. This is a troubling development. We have alerted industry of
    our concerns and are currently taking case-by-case action and are
    looking at broader policies to address it industry-wide.
        Perhaps even more dramatic is the fact that 2004 marked the second
    year in a row that we did not have a multi-million pound recall of meat
    or poultry in the United States. The decline in the number of recalls
    is just one of several indicators that highlight the dramatic
    improvements that can be achieved in our food safety system when
    government, industry, consumers, and academia work together and use
    science as a guide. Another measure of progress came from a Gallup poll
    released this past August. It found that more than 85 percent of
    Americans are confident in the Federal Government's ability to protect
    our food supply.
    Declining Foodborne Illnesses
        This news is encouraging, but the most significant measure of
    public health impact is the annual report published by the Center for
    Disease Control and Prevention (CDC) last spring in which they reported
    significant declines from 1996 to 2003 in illnesses caused by E. coli
    O157:H7, Salmonella, Campylobacter, and Yersinia.
        Specifically to the products USDA regulates, the CDC reported that
    illnesses caused by Salmonella Typhimurium, typically associated with
    meat and poultry, decreased by 38 percent from 1996 to 2003. Human
    illnesses caused by E. coli O157:H7, often associated with ground beef,
    declined 42 percent from 1996 to 2003. The decrease in E. coli O157:H7
    infections occurred primarily during 2002-2003.
        The CDC attributes the changes in the incidence of these infections
    in part to the control measures implemented by government and industry
    leaders, enhanced food-safety education efforts, and increased
    attention by consumer groups and the media. We are hopeful that if we
    continue on our current course, this reduction will not be just for 1
    year, but will continue from now until we have achieved the greatest
    reduction possible in the illnesses caused by these pathogens.
    Bovine Spongiform Encephalopathy
        Science based policies and recalls are two tangible methods that
    external parties see USDA conducting to protect public health. However,
    a significant amount of public health protection comes from the
    extensive strategic planning efforts to improve our systems and
    infrastructure that are not as easily recognized. I mention this in
    reference to the first case of bovine spongiform encephalopathy (BSE)
    detected in the United States in December 2003.
        The December 23, 2003, detection of a BSE positive cow, originally
    from Canada, at a slaughter operation in Washington State could be seen
    by many as a precursor to the implementation of our BSE measures.
    However, we had completed an extensive amount of groundwork on FSIS'
    four BSE measures before USDA's major policy announcements on December
    30, 2003. Our swift actions were unprecedented. The process for
    publishing FSIS' interim final rule on BSE normally would have taken
    several months; however, with the prior strategic planning this
    normally daunting task was achieved in less than 2 weeks, and was done
    at the time with an eye for protecting public health. Our BSE
    regulations add a significant level of protection to an already robust
    food safety system. FSIS' BSE related interim final rules will be
    published as final rules following an analysis of the more than 22,000
    comments received on the interim final rules and the BSE Advance Notice
    of Proposed Rulemaking (ANPR) as well as completion of the Animal and
    Plant Health Inspection Service (APHIS) enhanced BSE surveillance
    program and the Harvard BSE risk reassessment.
    Training for the Mission
        Strong, science-based regulations and policies are merely words on
    paper without personnel trained to carry them out. I would like to
    thank the Congress, and this Subcommittee in particular, for the record
    level of funding it has provided us in the area of training and
    education. Each training accomplishment directly correlates to
    improvements in the safety and security of the U.S. meat, poultry, and
    egg supply. We are extremely proud of our efforts in this area and I
    would like to share some of our successes with you today.
        A large segment of our inspection program personnel is receiving
    intensive training in sanitation procedures and Hazard Analysis and
    Critical Control Point (HACCP) system principals, based on the type of
    products produced at the establishments where the inspectors are
    assigned. We expect to have this segment of our workforce fully trained
    by the end of the current fiscal year. In 2003, FSIS inaugurated Food
    Safety Regulatory Essentials (FSRE) training, which was designed to
    better equip inspection personnel in verifying an establishment's HACCP
    food safety system. All participants receive training in the
    fundamentals of inspection, covering HACCP, the Rules of Practice,
    Sanitation Performance Standards, and Sanitation Standard Operating
    Procedures. This program also provides food safety training based on
    the types of products being produced at the establishments where
    inspectors are assigned. In fiscal year 2004, 1,700 individuals
    received the Agency's FSRE training, more than doubling the amount of
    students trained in fiscal year 2003.
        FSIS has also initiated a comprehensive multi-year training and
    education effort designed to ensure that every FSIS employee fully
    understands their role in preventing or responding to an attack on the
    food supply. To date, over 5,000 employees have received food security
    training. The Law Enforcement Academic Research Network (LEARN), which
    is carrying out the training, has stated that this effort is
    unparalleled in the Federal sector since training is being provided to
    such a broad base of our employees.
        Furthermore, FSIS has successfully launched training for newly
    hired Public Health Veterinarians (PHVs) and for newly hired food
    inspectors. We are also going back to train ``new hires'' to ensure
    that employees who did not initially receive this training are now
    fully equipped with the latest scientific knowledge. In addition, we
    now require entering Consumer Safety Inspectors to undergo and pass
    FSRE training. We are also in the process of implementing policies to
    require passage of mandatory training courses for entering Enforcement
    Investigations and Analysis Officers (EIAOs) and for PHVs. Specifically
    in 2005, we plan to provide training for 1,200 food inspectors, 400
    PHVs, 200 EIAOs, 75 import inspectors, and 40 front line supervisors.
    We also plan to provide FSRE training for 1,400 Agency personnel. I
    also would like to note that we offer seats in our workforce training
    courses to State inspection personnel.
        These numbers are impressive, but what is even more meaningful are
    the systematic changes at FSIS that this training effort has brought.
    Our workforce is becoming the most scientifically trained in the world.
    While we know these are merely the first steps, and that this knowledge
    still needs to be extended to all our employees, we have embarked on a
    path that will bring added protections to public health for generations
    to come.

    Food Security
        Ensuring the security of FSIS inspected products is indeed an
    awesome responsibility, and it is one which FSIS and its predecessor
    agencies have been equipped to handle for almost a century. Over the
    past several years, we have strengthened our focus on both intentional
    and unintentional contamination by conducting risk and vulnerability
    assessments. Specifically for food security, vulnerability assessments
    have provided a solid foundation from which we have launched many
    important initiatives to safeguard our food supply from any intentional
    threats.
        We have found these assessments are very powerful risk management
    tools that can be used to develop strategies and policies that reduce
    or eliminate the potential risk at vulnerable points along the farm-to-
    table continuum. It is difficult to manage a threat when we are unsure
    of its scope, so it was especially important to take a broad look when
    developing the risk assessments.
        The vulnerability assessments we conducted provided us the vital
    data regarding risks in our system that otherwise would not have been
    as apparent to us if we had not conducted them. If we had made food
    security decisions without performing vulnerability assessments, it
    would have been akin to aiming at a target in the dark without night-
    vision goggles. We would have had no idea if we had hit our mark. And
    when that mark is the security of the food on American tables, accuracy
    is crucial.
        What we gleaned from these vulnerability assessments helped us
    develop more effective intervention strategies, especially when it
    comes to surveillance and incident response plans. The assessments
    allowed us to rank food products and potential contaminating agents in
    order of highest concern. By using this risk based ranking, during
    periods of heightened awareness, our laboratories can examine samples
    for threat agents posing the greatest risk as identified in our
    vulnerability assessments.

    Communications
        Public health benefits from our efforts in training and in food
    security cannot be fully realized without a comprehensive and cohesive
    communications infrastructure. For example, the highly trained import
    inspector may only have a few critical moments to alert his colleagues
    across the country in the event of a food security incident. Without
    ``real time'' information, inspectors in Montana may not know to stop a
    suspect cargo. In an emergency, the American public cannot afford for
    precious seconds to be lost while information slowly synchronizes over
    outdated modems. We are maximizing the effectiveness of our resources
    in this area and continue to work towards seamless integration, both
    internally and with our other food safety partners.
        To be a successful public health Agency, our employees need the
    right information to do their jobs. This information needs to be
    communicated quickly and accurately, ensuring public health will be
    protected. Data that is delayed is less useful and in extreme
    circumstances could have limited value because it is too late and could
    threaten the safety of our meat, poultry, and egg product supply. It is
    vitally important that the Agency continue to receive the necessary
    funds to develop and upgrade its information technology systems, which
    will improve efficiency and enhance communication among all FSIS
    employees. For FSIS, the use of databases to track inspection program
    tasks is essential for food safety verification. It is a vital
    communication resource whereby inspectors can enter information about
    their daily food safety, security, and humane handling verification
    duties. Because of our public health mission, real-time information and
    connectivity is vital, especially between key sites for our inspection
    program personnel. This is particularly important because FSIS has a
    geographically dispersed workforce. Managers in the field and at
    headquarters must make crucial management decisions based on tracking
    and analyzing information from their employees and the establishments
    they regulate. A rapid exchange of information with the field is
    critical for FSIS supervisors and managers to make better informed
    decisions on food safety and security issues, thus better protecting
    public health. We seek your continued support in this area.

    Humane Handling and Slaughter Activities
        FSIS continues to ensure compliance with the Humane Methods of
    Slaughter Act (HMSA) in livestock slaughter establishments that operate
    under Federal inspection. As part of their routine, ongoing and
    continuous inspection and enforcement duties, all FSIS inspection
    personnel are expected to take appropriate action, including suspending
    operations, if appropriate, of a livestock slaughter establishment if
    they observe any violations of HMSA. Further, all FSIS inspection
    personnel are trained and held accountable for enforcing HMSA during
    the slaughter process.
        District Veterinary Medical Specialists (DVMSs) provide technical
    expertise and oversight for HMSA-related activities, and ensure that
    humane handling and slaughter activities and enforcement are handled
    consistently by inspection program personnel. The Agency's DVMSs and
    Deputy District Managers meet periodically as a group at the Technical
    Service Center in Omaha, Nebraska, to correlate on humane enforcement
    issues, and, in fact, one such meeting was just held in March 2005.
        FSIS has continued to refine humane handling verification and
    tracking procedures for inspection personnel. On February 18, 2005, the
    Agency issued FSIS Notice 12-05, to provide inspection personnel with
    additional information for humane handling and slaughter verification
    activities related to animal stunning and procedures for checking for
    conscious animals.

    Future Initiatives
        While we have made considerable progress, I stress that there is
    more to be done to decrease the number of foodborne illnesses in the
    United States even further. USDA is committed to further improving
    public health through food safety and security through our continuing
    programs such as those I have described as well as several science-
    based initiatives I would like to mention.

                Enhanced Data Integration
        In order to better protect public health, our first initiative is
    to anticipate and predict food safety risks through enhanced data
    integration. One significant way to accomplish this is through the
    analysis of FSIS regulatory sampling data, as well as other sources of
    data, including baseline studies, in order to detect trends and
    identify connections between persistence, prevalence, and other factors
    such as practices employed by plants, seasonal variations, and
    establishment size.
        However, there is a missing link here. FSIS would need access to
    industry data. Including data collected by the establishment would add
    robustness to FSIS' information and improve the quality and validity of
    decisions that are made. Ensuring the availability of data to FSIS from
    industry, academia, States, consumers, and others will be necessary to
    help us protect food safety risks. One way to accomplish this may be
    through the establishment of a repository to provide data integrity and
    confidentiality. We are examining this initiative and will have more
    details available in the near future.

                Associate Program Outcomes to Public Health Surveillance
                        Data
        Our next initiative is to improve the association of program
    outcomes to public health surveillance data. We are working closely
    with the CDC and the Department of Health and Human Services' Food and
    Drug Administration (HHS-FDA) to improve our ability to link foodborne
    illness estimates with different food groups. Data on foodborne
    illnesses due to specific pathogens needs to be connected with
    prevalence data for different pathogens in specific foods.
        The Foodborne Diseases Active Surveillance Network, or FoodNet,
    allows FSIS and our Federal, State, and local food safety partners to
    integrate this data by determining the burden of foodborne disease,
    monitoring foodborne disease trends, and determining the extent of
    foodborne diseases attributable to specific foods. By comparing and
    contrasting the characteristics of pathogens recovered from food
    samples with those recovered from foodborne illness patients, we are
    able to improve our ability to link foodborne illness data with
    specific foods.
        As indicated from my overview earlier of our accomplishments, USDA
    and its partners have made significant and dramatic improvements in
    food safety since the implementation of HACCP as the driving component
    of FSIS' enforcement of the Federal Meat Inspection Act and the Poultry
    Products Inspection Act. The number of foodborne illnesses attributed
    to FSIS-regulated products has declined markedly as have the rates of
    contamination in regulatory samples. However, the implementation of our
    new science-based initiatives is critical for us to strengthen our food
    safety infrastructure even further. Enhancing data integration and
    improving the association of program outcomes to public health
    surveillance data will provide the additional, essential tools we need
    to improve public health.

    Fiscal Year 2006 Budget Request
        I appreciate having the opportunity to discuss a number of FSIS'
    accomplishments with you. Now, I would like to present an overview of
    the fiscal year 2006 budget request for FSIS.
        Implementation of these budget initiatives is imperative to helping
    us attain FSIS' public health mission. In fiscal year 2006, FSIS is
    requesting an appropriation of $849.7 million, a net increase of about
    $32.5 million from the enacted level for fiscal year 2005, which
    includes $139 million to be derived from proposed new user fees from
    the industry.

                Food and Agriculture Defense Initiative
        The fiscal year 2006 budget also requests an increase of $19.5
    million for FSIS to support a food and agriculture defense initiative
    in partnership with other USDA agencies, the Department of Health and
    Human Services and the Department of Homeland Security (DHS). Food
    contamination and animal and plant diseases can have catastrophic
    effects on human health and the economy. The three Federal departments
    involved are working together to create a comprehensive food and
    agriculture policy that will improve the government's ability to
    respond to the dangers of disease, pests, and poisons, whether natural
    or intentionally introduced. Our food and agriculture defense
    initiative has five components:
      --The Food Emergency Response Network (FERN);
      --Data systems to support the FERN;
      --Enhancing FSIS laboratory capabilities;
      --Biosurveillance; and
      --Follow-up bio-security training.
        For FERN we are seeking an increase of $13 million; for FERN data
    systems we are asking for an increase of $2.5 million; for enhancing
    laboratory capabilities we are requesting $2.5 million; for
    biosurveillance we are requesting an increase of $417,000; and for bio-
    security training we are seeking an increase of $1 million.
        The first component of the food and agriculture defense initiative
    is FERN, a coordinated initiative between FSIS and the Department of
    Health and Human Services' Food and Drug Administration (FDA) to
    develop an integrated network of Federal, State, and local
    laboratories. FERN is an integrated laboratory network capable of
    providing ongoing surveillance and monitoring of the food supply, as
    well as conducting the extensive testing necessary in the event of a
    terrorist attack on the food supply. The FSIS fiscal year 2006 budget
    request for FERN seeks an increase of $13 million from fiscal year 2005
    which will enable the Agency to manage, maintain, and expand on the
    existing group of FERN labs. These funds will improve the Agency's
    ability to handle the greatly increased number of samples that would be
    required to be tested in the event of a terrorist attack on the meat,
    poultry or egg products supply. These State and local laboratories in
    the FERN network would play an essential role in conducting this
    expanded testing.
        The second and third components of the food and agriculture defense
    initiative provide further support to FERN. The electronic laboratory
    exchange network (eLEXNET) is a national, web-based, electronic data
    reporting system that allows analytical laboratories to rapidly report
    and exchange standardized data. The fiscal year 2006 budget request
    would provide funding needed to make eLEXNET available to additional
    FERN and other food-testing laboratories nationwide. In turn, the
    budget request would enhance FSIS' laboratory capabilities in order to
    detect new bioterror-associated agents, and to ensure FSIS' capability
    and capacity to perform the toxin and chemical testing that will be
    standardized across all FERN laboratories.
        Fourth, the food and agriculture defense initiative will allow FSIS
    to participate in an interagency biosurveillance initiative that would
    improve the Federal Government's ability to rapidly identify and
    characterize a potential bioterrorist attack. Funding this initiative
    will improve Federal surveillance capabilities and enable FSIS to
    integrate with DHS to compile FSIS surveillance information rapidly
    with threat information. This funding would also allow FSIS to focus
    its resources on the vulnerable products and processes identified
    during the Agency's vulnerability assessments of imported and domestic
    products and establish a Foodborne Disease Surveillance Communication
    system to coordinate with DHS systems.
        Because the realm of biosecurity is ever changing, FSIS must
    provide its workforce with the most up-to-date information possible to
    ensure that meat, poultry, and egg products are protected from
    intentional contamination. Therefore, the final component of the food
    and agriculture defense initiative is follow-up biosecurity training of
    the workforce. This additional training is essential as part of the
    ongoing effort to protect the public by educating the workforce
    regarding the latest Agency policies, threat agents, and
    countermeasures to those agents.

                Public Health Training
        The maturation of HACCP has widened the scope of all front-line
    inspection duties. While slaughter line inspectors have largely
    retained their traditional tasks, other front-line personnel have
    acquired more complex responsibilities related to public health,
    including food safety assessments, food security, and documentation and
    analysis to support detentions, recalls, or other enforcement actions.
        Further integrating front-line inspection and science will allow
    scientifically-trained FSIS personnel to most effectively utilize their
    expertise. For instance, FSIS intends to fully employ the scientific
    skills of its Public Health Veterinarians--systems analysis,
    epidemiology, biostatistics, microbiology, pathology, and toxicology--
    to safeguard public health. Accordingly, FSIS has been revising
    veterinary work assignments so that PHVs spend 25 percent of their time
    on public health assessment and assurance. As part of the fiscal year
    2006 budget request, FSIS is requesting an increase of $2.2 million for
    relief positions so that the Agency can take full advantage of the
    training, experience, and responsibilities of these highly-trained
    PHVs. The Agency and the public will benefit from more effective
    utilization of the technical knowledge and skills of our veterinarians
    through their expanded public health activities.

                Supporting FSIS' Basic Mission
        The FSIS budget request for fiscal year 2006 supports the Agency's
    basic mission of ensuring that the Nation's commercial supply of meat,
    poultry, and egg products is safe, wholesome, and correctly labeled and
    packaged.
        In order to fulfill the Agency's statutory obligations to provide
    continuous inspection of meat, poultry, and egg products, the budget
    requests an increase of $13.9 million for the FSIS inspection program
    to provide for the 2.3 percent pay raise for FSIS employees in fiscal
    year 2006 and to assure that the Agency is provided sufficient funds to
    maintain programs without disruption to industry operations.

                User Fee Proposal
        In fiscal year 2006, FSIS estimates it will collect $122.9 million
    in existing annual user fees to recover the costs of overtime, holiday,
    and voluntary inspection. Of the $849.7 million requested in the fiscal
    year 2006 budget, $139 million is proposed to be derived from a new
    user fee that would recover the costs of providing inspection services
    beyond an approved 8-hour primary shift. A legislative proposal
    authorizing this new fee will soon be submitted to Congress. This will
    result in significant savings for the American taxpayer.

    Closing
        We will continue to engage the scientific community, public health
    experts, and all interested parties in an effort to identify science-
    based solutions to public health issues to ensure positive public
    health outcomes. It is our intention to pursue such a course of action
    this year in as transparent and inclusive a manner as is possible. The
    strategies I discussed today will help FSIS continue to pursue its
    goals and achieve its mission of reducing foodborne illness, and
    protecting public health through food safety and security.
        Mr. Chairman, thank you again for providing me with the opportunity
    to speak with the Subcommittee and submit testimony regarding the steps
    that FSIS is taking to remain a world leader in public health. I look
    forward to working with you to improve our food safety system, ensuring
    that we continue to have the safest food supply in the world.
                                     ______

      Prepared Statement of Dr. Barbara J. Masters, Acting Administrator,
                       Food Safety and Inspection Service

        Mr. Chairman and members of the Subcommittee, I am pleased to be
    here today as we discuss public health and the U.S. Department of
    Agriculture's (USDA) fiscal year 2006 budget request for the Food
    Safety and Inspection Service (FSIS).
        FSIS has a long, proud history of protecting public health. The
    Agency was established under its current name by the Secretary of
    Agriculture on June 17, 1981, and its history dates back to 1906. FSIS'
    mission is to ensure that meat, poultry, and egg products distributed
    in interstate commerce for use as human food are safe, secure,
    wholesome, and accurately labeled. FSIS is charged with administering
    and enforcing the Federal Meat Inspection Act (FMIA), the Poultry
    Products Inspection Act (PPIA), the Egg Products Inspection Act (EPIA),
    and the regulations that implement these laws.
        Ensuring the safety of meat, poultry, and egg products requires a
    strong infrastructure. To accomplish this task, FSIS has a large
    workforce of approximately 10,000 employees, most of whom are stationed
    throughout the country and are present in plants everyday. In fiscal
    year 2004, over 7,500 inspection personnel stationed in about 6,000
    federally inspected meat, poultry, and egg products plants verified
    that the processing of 43.6 billion pounds of red meat, 52.8 billion
    pounds of poultry, and approximately 4 billion pounds of liquid egg
    products complied with statutory requirements. In addition,
    approximately 4.2 billion pounds of meat and poultry and approximately
    12.1 million pounds of egg products were presented for import
    inspection at U.S. ports and borders from 27 of 33 countries that we
    have determined have inspection systems equivalent to our own. Ensuring
    that these products are safe, secure, and wholesome is a serious
    responsibility.
        As you are well aware, these are compelling times in food safety,
    and it is because of your support that we are making real progress in
    improving the safety of the U.S. food supply. I would like to thank you
    for providing FSIS the necessary resources to ensure the safety of the
    food supply. In fiscal year 2005, FSIS received $7.2 million for
    important training activities, including entry-level field employee
    training, Food Safety Regulatory Essentials training (FSRE), and bio-
    security training. These funds are helping to move the public health
    agenda forward dramatically. Now, I would like to tell you about our
    accomplishments during the past year, and about our priorities for
    better ensuring the safety and security of meat, poultry, and egg
    products in the future.

                    FOOD SAFETY ACCOMPLISHMENTS DURING 2004

        The American public remains confident in the safety of the U.S.
    meat, poultry, and egg supply, in part due to the many food safety
    accomplishments FSIS made in 2004. In August of 2004, a Gallup poll
    found that more than 85 percent of Americans are confident in the
    Federal government's ability to protect our food supply.
        During the past year, FSIS has continued to make progress in
    breaking the cycle of foodborne illness through vigilant testing and
    science-based policies. The 2004 annual Centers for Disease Control and
    Prevention (CDC) report on the incidence of infections from foodborne
    illness showed significant declines from 1996 to 2003 (inclusive) in
    the incidences of Yersinia infections (down 49 percent), E. coli
    O157:H7 (down 42 percent), Campylobacter (down 28 percent), and
    Salmonella (down 17 percent).
        The decrease in E. coli O157:H7 infections occurred primarily
    during 2002-2003. We anticipate this downward trend to continue when
    the next annual CDC report is released this spring. The CDC report
    attributes the changes in the incidence of these infections in part to
    the control measures implemented by government agencies and the food
    industry, as well as enhanced food safety education efforts. The CDC
    report noted that the decrease in human E. coli O157:H7 infections in
    2003 followed an October 2002 FSIS notice to manufacturers of raw
    ground beef products that they reassess their HACCP plans regarding
    this pathogen. Our FSIS experience noted declines in the frequency of
    E. coli O157:H7 contamination of ground beef for 2003 and 2004.
        Progress continues in combating E. coli O157:H7. After a
    comprehensive risk assessment on E. coli O157:H7 was completed, we
    required all of the approximately 2,900 beef slaughter and processing
    establishments to reassess their HACCP plans relative to the potential
    presence and control of E. coli O157:H7 in raw beef. Then, our
    scientifically trained inspection program personnel conducted the
    first-ever comprehensive reviews of the reassessed HACCP plans.
        The same rigorous scientific and risk-based approach that CDC
    attributes to the reduction of E. coli O157:H7 illness was used in the
    formulation of the Listeria monocytogenes rule that became effective
    October 6, 2003. Since implementation of the interim final rule, 57
    percent of establishments that were not already testing for the
    pathogen have now begun testing, 27 percent have initiated the use of
    an antimicrobial agent to inhibit the growth of this organism, and 17
    percent started using post-lethality treatments.
        Our 2003 interim final rule on control of Listeria monocytogenes in
    ready-to-eat (RTE) meat and poultry products, based on a thorough risk
    assessment, outlined three strategies that an establishment could
    choose from to control the pathogen depending on its product(s) and the
    environment in which it operates: Alternative 1, provides for a
    combination of a post-lethality treatment and a growth-suppressing
    agent or process; Alternative 2, provides for either a post-lethality
    treatment or a growth-suppressing agent or process; and Alternative 3,
    relies on sanitation as the primary mitigation. In January 2005, FSIS
    revised its sampling verification procedures so that more product
    samples are collected when an establishment relies solely on sanitation
    practices for Listeria monocytogenes control, while fewer samples are
    analyzed in situations where an establishment has more aggressive
    process control measures and interventions.
        Other indicators of success in combating these pathogens include a
    decrease in the number of recalls initiated for E. coli 0157:H7,
    Listeria monocytogenes, and Salmonella. After we implemented the
    science based policies I mentioned earlier, we saw a dramatic decline,
    culminating in a reduction of nearly 18 percent in the number of
    pathogen-related recalls, from 28 in 2003, to 23 in 2004. While this is
    certainly good news, we still have areas of concern. One of these is an
    increasing trend in the percentage of recalls triggered by undeclared
    allergens. This is a troubling development. We have alerted industry of
    our concerns and are currently taking case-by-case action and are
    looking at broader policies to address it industry-wide.
        We are also further strengthening the partnerships we have with our
    sister agency, the Animal and Plant Health Inspection Service (APHIS),
    and are participating in its enhanced bovine spongiform encephalopathy
    (BSE) surveillance program. Under the program, FSIS collects samples
    from all antemortem condemned cattle, except for veal calves not
    exhibiting central nervous system symptoms, and provides the samples to
    APHIS for BSE testing. Condemned cattle have never been allowed to
    enter the food supply. The goal of the APHIS surveillance program is to
    test as many high risk cattle as possible during a 12 to 18 month
    period to determine the prevalence of BSE in cattle in our country. In
    calendar year 2004, 176,468 cattle were tested throughout the United
    States, compared to 20,543 in 2003.

                    HUMANE HANDLING AND SLAUGHTER ACTIVITIES

        FSIS also ensures compliance with the Humane Methods of Slaughter
    Act (HMSA) in livestock slaughter establishments that operate under
    Federal inspection. As part of their routine, ongoing and continuous
    inspection and enforcement duties, all FSIS inspection personnel are
    expected to take appropriate action, including suspending operations,
    if appropriate, of a livestock slaughter establishment if they observe
    any violations of HMSA. Further, all FSIS inspection personnel are
    trained and held accountable for enforcing HMSA during the slaughter
    process.
        District Veterinary Medical Specialists (DVMSs) provide technical
    expertise and oversight for HMSA-related activities, and ensure that
    humane handling and slaughter activities and enforcement are handled
    consistently by inspection program personnel. The Agency's DVMSs and
    Deputy District Managers meet periodically as a group at the Technical
    Service Center in Omaha, Nebraska, to correlate on humane enforcement
    issues, and, in fact, one such meeting was just held in March 2005.
        The Agency continues to encourage industry to implement good
    management practices for the humane handling of animals, and requires
    industry to abide by all of the requirements of USDA's regulations and
    HMSA. On September 9, 2004, FSIS published a Notice encouraging
    establishments to use a systematic approach to ensure that they meet
    the requirements of the law during handling and slaughter. With a
    systematic approach, establishments focus on treating livestock in such
    a manner as to minimize excitement, discomfort, and accidental injury
    the entire time they hold livestock in connection with slaughter. FSIS
    believes that establishments using a systematic approach to humane
    handling and slaughter can best ensure that they meet the requirements
    of the HMSA, FMIA, and implementing regulations.
        FSIS also continues to refine humane handling verification and
    tracking procedures for inspection personnel. On February 18, 2005, the
    Agency issued FSIS Notice 12-05, to provide inspection personnel with
    additional information for humane handling and slaughter verification
    activities related to animal stunning and procedures for checking for
    conscious animals.

            FSIS PRIORITIES FOR 2005--HOLDING OURSELVES ACCOUNTABLE

        FSIS is holding itself accountable for improving public health.
    Last year, we outlined a series of priorities to better understand,
    predict, and prevent contamination of meat and poultry products to
    improve health outcomes for American families. I am determined to build
    upon these priorities and continue to improve the Agency's
    infrastructure with greater attention to risk so that we can then
    improve our performance under the public health model. The six
    priorities, all equally important, that I am about to share with you
    will drive our policies and actions during this calendar year.

    Training, Education & Outreach
        The first priority is training, education, and outreach. This has
    been, and will continue to be, a high priority, and we at FSIS would
    like to thank the Subcommittee for its invaluable support in this area.
    FSIS can only achieve its public health, food safety, and food security
    missions with adequate preparation of its workforce through scientific
    and technical training that reflects the Agency's risk-based approach
    to food safety and security. Results demonstrate that a highly trained
    workforce will lead to definitive advancements in public health.
        A large segment of our inspection program personnel is receiving
    intensive training in sanitation procedures and Hazard Analysis and
    Critical Control Point (HACCP) system principles, based on the type of
    products produced at the establishments where the inspectors are
    assigned. We expect to have this segment of our workforce fully trained
    by the end of the current fiscal year. In 2003, FSIS inaugurated Food
    Safety Regulatory Essentials (FSRE) training, which was designed to
    better equip inspection personnel in verifying an establishment's HACCP
    food safety system. All participants receive training in the
    fundamentals of inspection, covering HACCP, the Rules of Practice,
    Sanitation Performance Standards, and Sanitation Standard Operating
    Procedures. This program also provides food safety training based on
    the types of products being produced at the establishments where
    inspectors are assigned. In fiscal year 2004, 1,700 individuals
    received the Agency's FSRE training, more than doubling the amount of
    students trained in fiscal year 2003.
        FSIS has also initiated a comprehensive training and education
    effort designed to ensure that every FSIS employee fully understands
    their role in preventing or responding to an attack on the food supply.
    To date, more than 5,000 employees have received bio-security training.
    The Law Enforcement Academic Research Network (LEARN), which is
    carrying out the training, has stated that the scope of this effort is
    unparalleled in the Federal sector since training is being provided to
    such a broad base of our employees.
        Furthermore, FSIS has successfully launched training for newly
    hired Public Health Veterinarians (PHVs) and for newly hired food
    inspectors. We are also going back to train ``new hires'' to ensure
    that any employees who did not initially receive this training are now
    fully equipped with the latest scientific knowledge. In addition, we
    now require entering Consumer Safety Inspectors to undergo and pass
    FSRE training. We are also in the process of implementing policies to
    require passage of mandatory training courses for entering Enforcement
    Investigations and Analysis Officers (EIAOs) and for PHVs.
    Specifically, in 2005 we plan to provide training for 1,200 food
    inspectors, 400 PHVs, 200 EIAOs, 75 import inspectors, and 40 front
    line supervisors. We also plan to provide FSRE training for 1,400
    Agency personnel. I also would like to note that we offer seats in our
    workforce training courses to State inspection personnel.
        Additionally, FSIS has enhanced training by taking training
    opportunities into the field. In August 2003, FSIS announced new
    regional training centers in Atlanta, GA; Dallas, TX; Philadelphia, PA;
    Des Moines, IA; and Boulder, CO, designed to provide comprehensive
    workforce training programs to FSIS field employees. Since October
    2004, more than 2,000 employees have been trained regionally. We
    currently have five regional trainers and plan to hire and train an
    additional ten by the end of the fiscal year, if not sooner.
        We have also posted the training modules for the Food Inspector,
    Public Health Veterinarian, and the FSRE training on the FSIS Web site.
    This is significant because it makes the materials we are using to
    train our workforce more accessible to everyone, including our food
    safety partners and industry. When Agency policies change, these
    training materials, including the information posted on the Web site,
    are updated to reflect the latest scientific information.
        FSIS has also extended its outreach to owners and operators of
    establishments nationwide through teaching workshops that provide
    detailed information about new directives. In 2004, five BSE and 11 E.
    coli O157:H7 workshops were held across the country to target all
    audiences concerned with food safety. We took the training materials
    used at these meetings and distributed them to approximately 2,000
    plants (both Federal and State) that slaughter cattle and process beef
    products. In addition, several workshops were Web cast allowing
    participants from across the country to interact with the instructors
    and experts free of charge. Including Web cast participants, nearly a
    thousand people took part in the BSE and E. coli workshops. We are very
    proud of these FSIS outreach efforts and the resulting food safety
    accomplishments.
        Because everyone has a responsibility for food safety, educating
    the public about its role is a crucial element in FSIS' food safety
    mission. All food preparers, from consumers to food service employees,
    must know and understand basic safe food-handling practices. These
    efforts must be broad enough to ensure that no segment of the public is
    uninformed about safe food handling practices, yet at the same time,
    target various segments of the population to positively influence those
    behaviors that pose the greatest potential risk. Communicating with the
    public about food safety must be accomplished in a manner that is
    easily understandable so that it is useful to every segment of the
    population. Thus, FSIS has developed innovative and collaborative
    methods for delivering the food safety message.
        One such innovative way of spreading the food safety message is
    USDA's Food Safety Mobile, which was introduced in March 2003. This
    eye-catching ``food safety educator-on-wheels'' brings food safety
    information to consumers and builds on our partnerships in communities
    across the country. Through the Food Safety Mobile, FSIS is sharing its
    food safety message with the public, especially culturally diverse and
    underserved populations and those with the highest risk from foodborne
    illnesses. Since its launch in March 2003, through September 2004, the
    Food Safety Mobile traveled more than 40,000 miles and appeared in 178
    events in approximately 129 cities in 47 States and Washington, D.C.
        FSIS consumer education programs are modeled on the concept of
    integrated marketing. Utilizing that concept, the Agency is developing
    a mass media campaign plan aimed at improving the safe food handling
    habits of consumers at home. The campaign plan will include elements
    such as TV and radio ads, and a comprehensive multi-year plan for
    implementation and evaluation of the campaign. As part of this program,
    USDA and the State of Michigan launched a pilot mass media campaign
    focused on food thermometer use called ``Is It DONE Yet? You Can't Tell
    by Looking. Use a Food Thermometer to Be Sure.'' The FSIS and Michigan
    State University project was designed to prevent foodborne illness by
    promoting thermometer usage among consumers when preparing meat and
    poultry. Results show a significant increase in the number of consumers
    who reported using a food thermometer.
        USDA's Meat and Poultry Hotline is an additional tool that FSIS
    uses to share its food safety message. The Hotline handled over 104,000
    calls and 111 media inquiries during fiscal year 2004. The Hotline
    provides recorded information and live assistance on food safety issues
    for both English and Spanish-speaking callers.
        In April 2004, as a significant expansion of our food safety
    education outreach efforts, FSIS launched its newly designed, consumer-
    focused Web site that provides users with the latest information about
    food safety. ``Ask Karen'', the virtual food safety representative of
    the Agency, contains answers to over 1,300 food safety questions. More
    than 39,000 questions have been asked and answered since mid-2004. Also
    new to the redesigned Web site is a constituent subscription service
    that provides subscribers with up to the minute food safety
    information. As of March 2005, more than 9,700 subscribers signed up
    for over 90,000 subscriptions. FSIS averages more than 280 new
    subscribers per week.

    Food Security
        FSIS has accomplished much in the area of food security, making a
    strong system even stronger. USDA has had an effective and robust
    infrastructure in place for many decades that has protected the public
    against intentional and unintentional threats to the food supply. This
    science-based food safety and security verification system, with HACCP
    as the foundation, is designed to prevent and control contamination of
    the food supply during processing, regardless of whether the
    contamination is naturally occurring or introduced intentionally.
        Recently, we issued and updated a series of directives to employees
    that outlined specific instructions on the procedures, monitoring, and
    sampling to be taken in the event the Department of Homeland Security
    (DHS) declares a Yellow, Orange, or Red Alert. We particularly wanted
    to ensure that all FSIS divisions had specific instructions in place so
    that the U.S. meat, poultry, and egg products supply could remain the
    safest in the world should a threat to the Nation occur. In addition,
    we issued a directive which defined what steps the Agency would take if
    an emergency incident occurs. These instructions specifically outline
    steps and procedures for FSIS personnel to take so that the agency's
    daily operations are not interrupted by an incident. Depending on the
    threat level, inspection personnel will conduct food security
    verification procedures on a daily basis at minimum.
        Within FSIS, we have established a full-time staff whose sole
    responsibility is food security--the Office of Food Security and
    Emergency Preparedness (OFSEP). That office is in the process of
    updating seven vulnerability assessments for selected domestic and
    imported food products. We have found that these risk-based assessments
    are very powerful risk management tools that can be used to develop
    strategies and policies that reduce or eliminate the potential risk at
    vulnerable points along the farm-to-table continuum. The vulnerability
    assessments we conducted provided us with vital data on some inherent
    risks in our food safety system that otherwise would not have been as
    apparent.
        These assessments allowed us to rank food products and potential
    contaminating agents in order of highest concern. Using this risk-based
    ranking, during periods of heightened awareness our laboratories
    examine samples for threat agents posing the greatest risk as
    identified in our vulnerability assessments. For instance, if DHS
    declares a specific threat to the food supply or a particular product
    or process, then our lab personnel will activate the emergency response
    plan and test up to 100 percent of all food safety samples for possible
    food security risks.
        Protection of the United States' food supply is critical for
    maintaining the safety and health of the Nation's citizens and the
    security of our economy. The Food Emergency Response Network (FERN) has
    been created to provide an integrated means of protecting the food
    supply at the local, State, and Nation levels. FERN is a coordinated
    initiative between the U.S. Department of Agriculture's Food Safety and
    Inspection Service (FSIS) and the Department of Health and Human
    Services' Food and Drug Administration (FDA) to develop an integrated
    laboratory network capable of providing ongoing surveillance and
    monitoring of the food supply, as well as conducting the extensive
    testing necessary in the event of a terrorist attack on the food
    supply. Specifically, laboratories participating in FERN are
    responsible for detecting and identifying biological, chemical, and
    radiological agents in food. The involvement, participation, and
    expertise of local, State, and Federal laboratories in FERN assures
    that all food commodities under all jurisdictions are covered by the
    network. The size of the network and its wide geographic representation
    are also important because they will enable FSIS to rely on State and
    local laboratories to participate in handling the numerous samples that
    will be required to be tested in the event that a terrorist attack on
    the food supply involves meat, poultry, or eggs.
        FSIS Program Investigators are vigilant in ensuring food security,
    through annual reviews, audits, and investigations and by conducting
    other activities, including assessing product handling facilities,
    providing guidance to meat, poultry, and egg products industry
    officials regarding food security principals, and distributing Agency
    food security publications.
        We have also utilized a risk-based approach in education materials
    prepared for our stakeholders. For instance, we have developed three
    sets of guidelines for different segments of the farm-to-table
    continuum: Food Security Guidelines for Food Processors; Safety and
    Security Guidelines for the Transportation and Distribution of Meat,
    Poultry and Egg Products; and Food Safety and Food Security: What
    Consumers Need to Know. All of these publications are available on
    FSIS' Web site at www.fsis.usda.gov.
        We are looking at ways to further improve our Automated Import
    Information System (AIIS), which uses statistics to choose imports for
    reinspection and allows our inspectors at all ports-of-entry to share
    data. From the vulnerability assessment, we have enhanced this network
    to account for certain food security issues, and we are working with
    other agencies, such as the Customs and Border Patrol, to integrate our
    database systems to enhance the flow of vital information to further
    strengthen our food safety system against intentional attacks.
        FSIS and USDA work closely with the White House and DHS to
    coordinate our food security efforts. Moreover, FSIS is an integral
    part of the White House Interagency Food Working Group, which is
    charged with developing an interagency strategy to protect the food
    supply and minimize it as a target for terrorist activity.
        In addition, we are working with HHS-FDA, USDA's Food and Nutrition
    Service, and Agricultural Marketing Service to develop training in food
    security awareness. We also recently entered into a cooperative
    agreement with HHS-FDA, DHS, and the National Association of State
    Departments of Agriculture to develop the best practices by which
    Federal assistance can be provided to States and localities
    expeditiously and effectively.
        We are also interacting more closely with the intelligence and law
    enforcement communities. We are building stronger relationships with
    intelligence and enforcement agencies, such as the Federal Bureau of
    Investigation, the Central Intelligence Agency, the Transportation
    Security Agency, and the Coast Guard.
        With respect to our trading partners, FSIS is seeking to enter into
    bilateral agreements with several countries to share information that
    would help secure the food supply. Agreements are being developed with
    Canada, and similar discussions are beginning with Australia, Japan,
    Mexico, and New Zealand.
        Finally, it is vital that all food slaughter and processing
    establishments, as well as all import and export establishments, assess
    potential risks in their operations and take steps to ensure the
    security of their operations. With that in mind, FSIS has developed the
    ``Industry Self-Assessment Checklist for Food Security'' and is
    developing outreach efforts to distribute this document to regulated
    industry. This voluntary checklist provides establishments with a
    constructive tool to evaluate their security plans to prevent
    intentional contamination of their products, thus helping to further
    ensure food safety and security and protect public health.

    Risk Analysis
        FSIS is committed to emphasizing science in the development of food
    safety policies. A scientific approach to food safety that incorporates
    risk analysis is critical to FSIS' ability to combat the ever changing
    threats to public health. Thus, another priority is risk analysis,
    which includes risk assessment, risk management, and risk
    communication. In addition to providing regulatory agencies with a
    solid foundation for policy changes, science-based risk analysis is
    necessary to help the Agency better predict and respond to food safety
    threats by allowing us to focus Agency resources on hazards that pose
    the greatest threat to public health. Analysis of FSIS regulatory
    sampling data, as well as other sources of data, including baseline
    studies, helps us detect trends and identify connections between
    persistence, prevalence and other factors such as practices employed by
    plants, seasonal variations, and establishment size. With that in mind,
    the Agency will begin collecting samples in late Spring 2005, for a
    baseline study for beef trimmings in raw ground beef production.
    Planning for additional studies is underway.
        In recent years, the Agency has conducted a number of risk
    assessments, most notably those with regard to E. coli O157:H7 and
    Listeria monocytogenes. As I stated earlier in my testimony, we have
    seen marked reductions in both pathogens, thanks, in large part, to the
    risk assessments that provided the scientific framework for our E. coli
    and Listeria monocytogenes policies. In the coming year, FSIS plans to
    conduct a similar risk assessment for Salmonella in raw ground beef and
    raw poultry products. Just last month, the Agency held a public meeting
    about two draft risk assessments--one for Salmonella in ready-to-eat
    (RTE) and poultry products and one for Clostridium perfringens in both
    RTE and heat-treated products that are not RTE.
        To fully realize the benefits of risk analysis, however, FSIS must
    develop methods for anticipating or predicting risk through enhanced
    data integration. FSIS is engaged in developing innovative ways to
    anticipate hazards, so that it can act to ensure that those hazards do
    not manifest themselves as public health problems. The Agency is
    currently examining its regulatory data to identify conditions that
    consistently have foreshadowed the development of significant problems.
    By identifying such conditions, inspection personnel can utilize data
    to alert establishments so they can take corrective actions that may
    prevent a hazard.

    Management Controls and Efficiency
        FSIS is looking for ways to best achieve our operational goals and
    objectives. In order to better focus its resources, FSIS is
    establishing a more fully documented management control program.
    Management controls are operational checks and balances that safeguard
    policies, procedures and structures to ensure that tasks are completed
    in the most efficient and effective manner. With more fully documented
    proper management controls, authority, responsibility, and
    accountability are more clearly defined and delegated. In addition,
    program performance is routinely analyzed, policies, and procedures are
    regularly updated, management decisions are transparent and traceable,
    documentation is accurately maintained, and supervision is appropriate
    and continuous.

    Communications
        The Agency has also embarked on a comprehensive effort to ensure
    that all levels of communications are as efficient, effective, and
    rapid as possible. We recognize that as a public health regulatory
    agency, we are only as effective as our communication systems. Nowhere
    was this more evident than in the post-September 11th environment we
    find ourselves in as a country and as an Agency.
        It is vitally important that the Agency continue to receive the
    necessary funds to maintain and upgrade its information technology (IT)
    systems, which will improve efficiency and enhance communication
    between and among all FSIS employees. For FSIS, the use of databases to
    track inspection program personnel tasks is essential for food safety
    verification. It is a vital communication resource whereby inspectors
    can enter information about their daily food safety, security, and
    humane handling verification duties. With the vast and dispersed number
    of meat, poultry, and egg processing facilities scattered across the
    country and throughout the world, our geographically dispersed
    workforce needs the ability to send, receive, analyze, and react to
    information gathered at any one of these potential hot-points, because
    it is critical to the protection of public health. As an Agency we are
    striving to ensure that our IT systems operate in a ``realtime data
    exchange'' environment. In addition, managers at the district level and
    at headquarters can make crucial management decisions based on tracking
    progress and analyzing the performance of their employees, as well as
    the establishments for which they are responsible. A more rapid
    exchange of information with the field enables FSIS supervisors and
    managers to make better informed decisions on food safety and security
    issues, thus better protecting public health.
        I have made it a very high priority to ensure that our numerous
    data gathering and storage systems operate in a seamless and
    cooperative fashion across the Agency and with our partners. We
    appreciate the support this committee has provided in the past to allow
    us to improve and update our communications systems.
        To be a successful public health Agency, our employees need the
    right information to do their jobs. Information needs to be
    communicated quickly and accurately; ensuring public health will be
    protected through safe and secure meat, poultry, and egg products. That
    is why the Agency has put together an Internal Communications Board and
    charged them with developing ways to enhance the flow of communication
    laterally and vertically within FSIS. This board is engaged in many
    projects to best meet the communication needs of our employees. One
    major activity is the new FSIS Intranet. The Intranet will be one-stop-
    shopping for all internal FSIS needs, providing access to notices,
    directives, regulations, policies, career tools, and up-to-date news
    and information about the Agency. The board has also been challenged
    with working on our Agency's image and message. It is crucial that all
    employees and stakeholders recognize and understand the critical public
    health mission of FSIS.
        We continue to strive to improve our communications both internally
    with our workforce and externally with stakeholders and our public
    health partners. As one partner in the U.S. food safety effort, FSIS
    strives to maintain a strong working relationship with its sister
    public health agencies. Cooperation, communication, and coordination
    are absolutely essential if we are to be effective in addressing public
    health issues. We made great strides in this area when we dealt with
    the BSE-positive cow discovered in December 2003, and as we implemented
    the new interim regulations this year. Moreover, we have been involved
    in discussions on establishing data sharing systems with other
    agencies, such as APHIS and CDC. Maintaining information technology
    support will allow for a collaborative effort between State and Federal
    agencies by fully integrating currently duplicative processes and data
    collection, such as surveillance and monitoring activities for human
    and animal diseases.

    The Continued Evolution of Inspection and Enforcement
        Another Agency priority is to continue the evolution of inspection
    and enforcement. A risk based approach, encompassing all we do and
    combined with the Agency's scientific commitment, will facilitate FSIS'
    ability to combat ever changing threats to public health.
        Today, we have a much better reaction to the hazard landscape. Our
    ability to target resources for food safety and security verification
    systems has greatly improved. FSIS has refined its risk-based approach
    from a fairly static environment to one that is more fluid and can
    better react to food safety challenges that exist, and those that may
    arise, in order to further improve public health.
        Specifically, our Agency works interdependently to assess data from
    FoodNet, other Federal agencies, and State public health agencies, as
    well as the FSIS Consumer Complaint Monitoring System (CCMS), to
    investigate hazards by identifying sources, conducting food safety
    assessments in regulated facilities, and conducting investigations in
    associated transportation, distribution, and storage facilities. In
    addition, food security monitoring procedures have been incorporated
    into inspection verification methodology at all domestic and import
    establishments. In-plant regulatory control actions as well as
    effective administrative and criminal proceedings have been and
    continue to be effective deterrents to violations of law.
        As we approach the completion of the first decade under HACCP, FSIS
    is determined to take a risk-based approach to food safety and security
    verification in order to realize the next dynamic in food safety. With
    recent developments in science and risk analysis, it is clear that
    there are enhancements that can be made to HACCP that offer a more
    complete approach to inspection and ensuring public health. This
    enhanced risk-based system builds on the strong foundation provided by
    the HACCP/Pathogen Reduction regulations and allows the FSIS workforce
    to more effectively utilize their expertise in assuring the safety and
    security of America's meat, poultry, and egg products.
        To meet its goal of protecting public health, FSIS will continue to
    review policies and regulations and work with interested parties to
    modernize and further enhance its inspection and food safety and
    security verification efforts, including the verification of humane
    slaughter and handling. It is clear that progress has been made, but
    through the continued evolution of inspection and enforcement, in our
    risk based system, FSIS intends to make the world's safest food supply
    even safer.

                        FISCAL YEAR 2006 BUDGET REQUEST

        I appreciate having the opportunity to discuss a number of FSIS'
    accomplishments with you. Now, I would like to present an overview of
    the fiscal year 2006 budget request for FSIS.
        Implementation of these budget initiatives is imperative to helping
    us attain FSIS' public health mission. In fiscal year 2006, FSIS is
    requesting an appropriation of $849.7 million, a net increase of about
    $32.5 million from the enacted level for fiscal year 2005, which
    includes $139 million to be derived from proposed new user fees from
    the industry.

    Food and Agriculture Defense Initiative
        The fiscal year 2006 budget also requests an increase of $19.5
    million for FSIS to support a food and agriculture defense initiative
    in partnership with other USDA agencies, the Department of Health and
    Human Services and the Department of Homeland Security. Food
    contamination and animal and plant diseases can have catastrophic
    effects on human health and the economy. The three Federal departments
    involved are working together to create a comprehensive food and
    agriculture policy that will improve the government's ability to
    respond to the dangers of disease, pests, and poisons, whether natural
    or intentionally introduced. Our food and agriculture defense
    initiative has five components:
      --The Food Emergency Response Network (FERN);
      --Data systems to support FERN;
      --Enhancing FSIS laboratory capabilities;
      --Biosurveillance; and
      --Follow-up bio-security training.
        For FERN we are seeking an increase of $13 million; for FERN data
    systems we are asking for an increase of $2.5 million; for enhancing
    laboratory capabilities we are requesting $2.5 million; for
    biosurveillance we are requesting an increase of $417,000; and for bio-
    security training we are seeking an increase of $1 million.
        The first component of the food and agriculture defense initiative
    is FERN, a coordinated initiative between FSIS and the Department of
    Health and Human Services' Food and Drug Administration (FDA) to
    develop an integrated network of Federal, State, and local
    laboratories. FERN is an integrated laboratory network capable of
    providing ongoing surveillance and monitoring of the food supply, as
    well as conducting the extensive testing necessary in the event of a
    terrorist attack on the food supply. The FSIS fiscal year 2006 budget
    request for FERN seeks an increase of $13 million from fiscal year 2005
    which will enable the Agency to manage, maintain, and expand on the
    existing group of FERN labs. These funds will improve the Agency's
    ability to handle the greatly increased number of samples that would be
    required to be tested in the event of a terrorist attack on the meat,
    poultry or egg products supply. These State and local laboratories in
    the FERN network would play an essential role in conducting this
    expanded testing.
        The second and third components of the food and agriculture defense
    initiative provide further support to FERN. The electronic laboratory
    exchange network (eLEXNET) is a national, web-based, electronic data
    reporting system that allows analytical laboratories to rapidly report
    and exchange standardized data. The fiscal year 2006 budget request
    would provide funding needed to make eLEXNET available to additional
    FERN and other food-testing laboratories nationwide. In turn, the
    budget request would enhance FSIS' laboratory capabilities in order to
    detect new bioterror-associated agents, and to ensure FSIS' capability
    and capacity to perform the toxin and chemical testing that will be
    standardized across all FERN laboratories.
        Fourth, the food and agriculture defense initiative will allow FSIS
    to participate in an interagency biosurveillance initiative that would
    improve the Federal Government's ability to rapidly identify and
    characterize a potential bioterrorist attack. Funding this initiative
    will improve Federal surveillance capabilities and enable FSIS to
    integrate with DHS to compile FSIS surveillance information rapidly
    with threat information. This funding would also allow FSIS to focus
    its resources on the vulnerable products and processes identified
    during the Agency's vulnerability assessments of imported and domestic
    products and establish a Foodborne Disease Surveillance Communication
    system to coordinate with DHS systems.
        Because the realm of biosecurity is ever changing, FSIS must
    provide its workforce with the most up-to-date information possible to
    ensure that meat, poultry, and egg products are protected from
    intentional contamination. Therefore, the final component of the food
    and agriculture defense initiative is follow-up biosecurity training of
    the workforce. This additional training is essential as part of the
    ongoing effort to protect the public by educating the workforce
    regarding the latest Agency policies, threat agents, and
    countermeasures to those agents.

    Public Health Training
        The maturation of HACCP has widened the scope of all front-line
    inspection duties. While slaughter line inspectors have largely
    retained their traditional tasks, other front-line personnel have
    acquired more complex responsibilities related to public health,
    including food safety assessments, food security, and documentation and
    analysis to support detentions, recalls, or other enforcement actions.
        Further integrating front-line inspection and science will allow
    scientifically-trained FSIS personnel to most effectively utilize their
    expertise. For instance, FSIS intends to fully employ the scientific
    skills of its Public Health Veterinarians--systems analysis,
    epidemiology, biostatistics, microbiology, pathology, and toxicology--
    to safeguard public health. Accordingly, FSIS has been revising
    veterinary work assignments so that PHVs spend 25 percent of their time
    on public health assessment and assurance. As part of the fiscal year
    2006 budget request, FSIS is requesting an increase of $2.2 million for
    relief positions so that the Agency can take full advantage of the
    training, experience, and responsibilities of these highly-trained
    PHVs. The Agency and the public will benefit from more effective
    utilization of the technical knowledge and skills of our veterinarians
    through their expanded public health activities.

    Supporting FSIS' Basic Mission
        The FSIS budget request for fiscal year 2006 supports the Agency's
    basic mission of ensuring that the Nation's commercial supply of meat,
    poultry, and egg products is safe, wholesome, and correctly labeled and
    packaged.
        In order to fulfill the Agency's statutory obligations to provide
    continuous inspection of meat, poultry, and egg products, the budget
    requests an increase of $13.9 million for the FSIS inspection program
    to provide for the 2.3 percent pay raise for FSIS employees in fiscal
    year 2006 and to assure that the Agency is provided sufficient funds to
    maintain programs without disruption to industry operations.
    User Fee Proposal
        In fiscal year 2006, FSIS estimates it will collect $122.9 million
    in existing annual user fees to recover the costs of overtime, holiday,
    and voluntary inspection. Of the $849.7 million requested in the fiscal
    year 2006 budget, $139 million is proposed to be derived from a new
    user fee that would recover the costs of providing inspection services
    beyond an approved 8-hour primary shift. A legislative proposal
    authorizing this new fee will soon be submitted to Congress. This will
    result in significant savings for the American taxpayer.

                                    CLOSING

        We will continue to engage the scientific community, public health
    experts, and all interested parties in an effort to identify science-
    based solutions to public health issues to ensure positive public
    health outcomes. It is our intention to pursue such a course of action
    this year in as transparent and inclusive a manner as is possible. The
    strategies I discussed today will help FSIS continue to pursue its
    goals and achieve its mission of reducing foodborne illness, and
    protecting public health through food safety and security.
        Mr. Chairman, thank you again for providing me with the opportunity
    to speak with the Subcommittee and submit testimony regarding the steps
    that FSIS is taking to remain a world leader in public health. I look
    forward to working with you to improve our food safety system, ensuring
    that we continue to have the safest food supply in the world.

        Senator Bennett. Thank you.

                             FOOD STAMP ERROR RATE

        Mr. Bost, you talked about the failure rate, food stamp?
        Mr. Bost. Yes, sir.
        Senator Bennett. And you are delighted that it is at 6
    percent, which you say is a significant decrease? Help me
    understand----
        Mr. Bost. Yes. It is a 25 percent decrease over the course
    of the last 4 years, which is the lowest that it has ever been
    in the history of the Food Stamp Program. We anticipate that
    when we release the results, probably in June of this year, for
    last year, it will be even lower.
        Senator Bennett. Well, help me understand what it means.
        Mr. Bost. Essentially, the error rate is a measure of an
    inaccurate determination of benefits. For example, an error can
    occur when a person goes into an office, in Sandy, Utah, and
    applies for food stamps. It is an error if they get either too
    much or too little. If it is just right, then it is perfect.
        Senator Bennett. I see. So the error rate has to do with an
    improper amount being given out?
        Mr. Bost. That is correct. An improper payment. The
    interesting thing is the fact that we are one of the few
    Federal programs where improper payments are measured, and
    reported every year.
        Senator Bennett. Okay. Good. I just hadn't understood what
    that meant before, and I----
        Mr. Bost. Well, it is something that we are very proud of
    in terms of working with our State partners. It demonstrates to
    everyone how seriously we take this, and it ensures that there
    is integrity in the program and that there is an accurate
    determination of benefits for people that come in to apply.

                            FOOD STAMP PARTICIPATION

        Senator Bennett. Can you explain the increase in
    participants?
        Mr. Bost. Well, I think there are probably three major
    reasons. First and foremost, provisions we implemented as a
    direct result of the farm bill, and the Food Stamp Program
    being reauthorized. Second, Congress made it easier for
    eligible persons to enroll in the program, and made it easier
    for the States to implement it. Also, we have seen the results
    of our outreach efforts, in terms of enrolling eligibles.
        Last, but not least, the beauty of the Food Stamp Program
    is that it responds to the changing tides of the economy. When
    the economy is not doing so well, you see an increase in the
    number of enrollees. When the economy is doing great, you see a
    decrease. Those are the three main reasons that we have seen an
    increase in terms of participation in the Food Stamp Program.
        Senator Bennett. Well, the economy is doing better, but you
    are still increasing?
        Mr. Bost. Right. But there tends to be a lag----
        Senator Bennett. I see.
        Mr. Bost [continuing]. In terms of when the economy goes up
    and participation declines. Interestingly enough, this month,
    was the first month, and while I am not ready to say that it is
    a trend yet, that participation didn't go up. It stayed the
    same and started to decrease, which would indicate to us--and
    like I said, I want to make this point that I am not ready to
    say it is a trend yet--that participation is on the decline.
        Senator Bennett. Okay. Well----
        Mr. Bost. The economy may be catching up with it.
        Senator Bennett. In the economy as a whole, the
    unemployment rate is a lagging indicator?
        Mr. Bost. That is correct.

                         WIC PARTICIPATION AND FUNDING

        Senator Bennett. And this lags the unemployment rate. Okay.
    Let us talk about WIC for a minute. We had a lot of angst about
    WIC last year because we had to add about half a billion
    dollars just to stay even as a result of the increase in milk
    prices.
        Mr. Bost. Yes, sir.
        Senator Bennett. Now you are asking for another $275
    million. What does that represent?
        Mr. Bost. Well, right now, we are serving about 8.2 million
    persons in the Women, Infants, and Children Program. We
    anticipate that rate going up to about 8.5 million persons, and
    these funds would fully support the expected participation
    rate.
        We believe that based on these numbers, we will be able to
    meet the needs of those persons that are eligible to
    participate in the program who seek services. We are also
    asking for a contingency fund of $125 million just in case our
    numbers are off.
        I want to add two points I think are very important. The
    issue of WIC and its associated costs are tied to two things.
    It is not only participation, but as you said, the cost of the
    WIC food package. When we saw a significant increase in dairy
    prices last year, I saw a significant increase in my overall
    WIC food costs.

                                 WIC FOOD COSTS

        Senator Bennett. Now do you have any forecast as to what is
    going to happen to food costs this year? Are we going to have
    another challenge as we get close to the final passage of the
    bill in September, where we are going to have to find some
    more, several hundred million dollars more?
        Mr. Bost. No. The preliminary numbers we have at this point
    would lead us to believe that we should not see a significant
    increase in those costs. But it is unpredictable. We are
    guessing in terms of looking into the future and trying to
    anticipate it.
        We have put some cost containment measures in place. We
    have been working with the States to ensure we are as efficient
    in the administration of this program as possible. That is one
    reason that we looked at the WIC-only stores in California and
    around the country. That increased our cost by an additional
    $30 million.
        We are looking at everything that we can possibly do to not
    deter eligible persons from participating in the program. I am
    working with the States to ensure that, one, we hold them
    accountable and, two, this program is operated just as
    efficiently and as effectively as possible.
        Senator Bennett. You will remember we took a great interest
    in WIC-only stores in the bill last year, and that interest
    continues.
        Mr. Bost. Well, it is something that we are very interested
    in also, Mr. Chairman. I wrote not only to California, but to
    every State in the country where there are WIC-only stores and
    encourage them to look at some cost containment measures.
        I want to make this point. We are not interested, we are
    not motivated in putting the WIC-only stores out of business.
    What I am interested in is controlling the costs.
        Senator Bennett. Yes. Yes, so are we. And we encourage you
    in that.
        Mr. Bost. Thank you.

                     NATIONAL ANIMAL IDENTIFICATION SYSTEM

        Senator Bennett. Secretary Hawks, national animal
    identification. You have asked for $33 million to continue the
    program, and that is in addition to some $18 million to $19
    million that was transferred from the Commodity Credit
    Corporation, and another $33 million that was appropriated last
    year. Can you give us a status on where this is and where you
    think it is going?
        Mr. Hawks. Yes, sir. I would be quite happy to.
        We did transfer $18.8 million from CCC last year. With
    those funds, we started cooperative agreements with 43 States
    and 16 tribes that we are working with. We held a series of
    animal ID listening sessions around the country. I personally
    attended every one of those. There were 16 of them, from one
    end of this country to the other.
        The consistent message that we were hearing from the
    countryside, and I felt it was very important to get out to
    where the real cowboys are, if you will----
        Senator Bennett. Yes.
        Mr. Hawks [continuing]. To get a good understanding of what
    was going on out there, was confidentiality of information, and
    the ability to be flexible as well as to have a system that
    would perform appropriately.
        Last October, the Administration submitted legislation, to
    address the issue of confidentiality. We will be resubmitting
    that. We had identified premise registration as the first order
    of business. We have accomplished that now. We have 45 States
    that are fully operational. We hope to have the rest of the
    States fully operational in the near future. We will start,
    hopefully by July, to issue actual animal identification
    numbers, individual numbers.
        Of the $33 million requested and appropriated in our 2005
    budget, we will take approximately $19 million and move forward
    with additional cooperative agreements. It is very important
    that as we move forward with this, we move forward in a manner
    that it does what we want to do. And I think there is a lot of
    misunderstanding about animal identification. The fact is we
    are looking at it from a disease control standpoint using the
    authority provided in the Animal Health Protection Act.
        And we only need a very small bit of information. We are
    looking at various technologies. Radio frequency identification
    is one of them. Retinal scans is one. DNA is one. So we are
    trying to, with these cooperative agreements, test multiple
    ways of doing this to make sure that we have a system that is
    economical and functional, and that the confidentiality issues
    are addressed.
        Senator Bennett. Very good. I am looking for a completion
    date. We start in July?
        Mr. Hawks. We will be able to issue those individual
    numbers in July. We actually are looking at a fully functional,
    potentially mandatory system by 2009. But we feel it is very
    important to move forward with this in a systematic manner.
        The last thing that I want to do or I think you want me to
    do is to be out there with a system that is not functional. We
    are doing this very cooperatively. We are preparing to publish
    in the very near future a current thinking paper, a strategic
    plan with timelines and dates, and get input back on that. So
    we feel like it has got to be a cooperative arrangement that we
    go forward with and that we not have something that won't be
    functional when we get through with it.

                               OVERSEAS PROGRAMS

        Senator Bennett. Okay. Tell me about your APHIS offices
    overseas. I understand you are talking about new offices in
    Brazil, Thailand, India, Italy, and West Africa?
        Mr. Hawks. Yes, sir.
        Senator Bennett. What do we expect to get out of that?
        Mr. Hawks. One of the things that I said in my opening
    statement is the fact that I want to see us put some sanity
    back in sanitary and phytosanitary trade issues. It seems that
    over the last few years, sanitary and phytosanitary issues have
    become the trade distorting practices of choice around the
    world. We only have to look at the situation with Japan right
    now and our beef, and not being able to open that market.
        But it is important to have, from a technical perspective,
    those people that can address these issues. As I said, we did
    112 of those SPS issues last year that allowed for $5 billion
    of trade to occur. So it is important to have those types of
    offices, the personnel there that can address these from a
    technical perspective, to maintain those markets, to open those
    markets and address those issues.
        That is the reason we have been increasing resources. And
    we have to constantly look at the areas and re-evaluate where
    those resources need to be because it is very important that we
    are prudent with our dollars, with your tax dollars.
        Senator Bennett. Sure. Sure.

                        FOOD EMERGENCY RESPONSE NETWORK

        Dr. Pierson, let us talk about FERN. You have requested a
    $13 million increase for the Food Emergency Response Network,
    and you say this will allow USDA to establish 100 laboratories
    that will be able to exchange data, inform the public, and so
    on.
        Why do we need 100 laboratories? How many do you have now?
    And I assume these are all existing labs with whom you will
    contract, rather than standing up brand-new ones. But let us
    understand where you are now, and 100 sounds like pretty
    ambitious. That is two a week. That is quite an administrative
    task to undertake.
        Dr. Pierson. Correct. As you correctly described, FERN
    would be the Food Emergency Response Network. As you know, FERN
    is a laboratory system that was put together in cooperation
    with the Food and Drug Administration and other partners to
    provide a system whereby we could have an immediate response if
    there is, in fact, a food-related emergency event, such as an
    intentional widespread contamination of foods.
        We feel it is much better to be prepared and to have a
    system in place that can respond immediately to provide that
    immediate result that is needed through analysis, rather than
    approaching it in a piecemeal way or more of a reactive way.
        What we are doing is to build upon existing resources. We
    are not asking to build new facilities or new laboratories.
    Throughout the United States, we have many very, very capable
    State laboratories and local laboratories. And our goal, yes,
    is to bring into the fold up to 100 laboratories.
        What we are working towards is to provide standard
    methodologies, and standard protocols that can be shared by
    these laboratories, so that we have a commonality of
    understanding as to how to approach and analyze the samples. It
    is very, very important that we have uniformity so we don't get
    some differences in response.
        Senator Bennett. Yes, I understand that. But you are
    talking two per State. Is that how it is going to be allocated,
    or is it going to be one per State and then the rest bunched
    some place?
        Dr. Pierson. We are looking towards adding about 15
    laboratories initially, and our ultimate goal is 100. This is a
    building process that we are going through, and we are
    establishing this infrastructure and then building upon that
    over a period of time.
        Senator Bennett. Will you have at least one per State?
        Dr. Pierson. That is eventually what we are looking for, at
    least one per State. Then, of course, there would eventually be
    more.
        I know I personally presented this proposal 2 years ago
    before the Association of Food and Drug officials, the
    consortium of State laboratories, and at that time, we were
    working with them to conceptually buy into this concept. We
    have a very good response, and so we are then looking to
    incrementally bring those labs online.
        Senator Bennett. Okay. Thank you very much.
        Senator Kohl.
        Senator Kohl. Thank you, Senator Bennett.

                          MILWAUKEE HUNGER TASK FORCE

        Mr. Bost, the Hunger Task Force based in Milwaukee was
    established in 1974 to work toward making sure that Milwaukee's
    young people received breakfast at school. Since then, their
    mission has been expanded, and now they advocate public
    policies that we hope will eventually stamp out hunger.
        Until this larger mission is accomplished, however, they
    serve nearly 45,000 people a month at their pantries, and
    nearly half are children. And they provide more than 60,000
    meals each month at their homeless shelters and meal programs.
    I think you are familiar with this.
        Organizations such as this one, local groups that work on
    the ground and actually carry out both public and private
    feeding programs, I believe have much to offer in the way of
    shaping good public policy, providing suggestions on how to
    improve what we are currently doing.
        I know that USDA has worked with the Hunger Task Force in
    the past and is currently working with them on their mozzarella
    cheese effort that I spoke of on Tuesday. I also know that they
    have many other ideas that I believe that we should hear and
    take into consideration.
        Mr. Bost, perhaps the best way to appreciate a group like
    this and the way they carry out what appears to be at times a
    very difficult task is to visit them in person and watch them
    in action. I know you have met with representatives of the task
    force on hunger for Milwaukee here in Washington.
        Mr. Bost. Yes, I have.
        Senator Kohl. And I wonder if I might prevail upon you at
    some point to get out there and see what they are doing on the
    ground and listen to them and have an opportunity to appreciate
    and to perhaps learn a little on how important their work is.
        Mr. Bost. Well, interestingly enough, Senator Kohl, I was
    scheduled to visit Milwaukee and had an opportunity to do that,
    except that I had a hearing.
        Senator Kohl. Today?
        Mr. Bost. No, it wasn't today. It was in the House. And so,
    yes, it was already scheduled. We are looking for an
    opportunity to have it rescheduled.
        Senator Kohl. I didn't know that. I think that is terrific.
        Mr. Bost. Yes. It was already scheduled. We had an
    opportunity to meet with the executive director not too long
    ago, and so there has been some correspondence. We are working
    on scheduling a trip for me to visit with them.
        Senator Kohl. I do thank you so much. That is a surprise,
    and I think it is great.
        Mr. Bost. Well, I don't know why you would be surprised. I
    told her that I was coming.
        Senator Kohl. Yes.
        Mr. Bost. It was a question of being able to get it
    scheduled.
        Senator Kohl. I thank you.
        Mr. Bost. You are quite welcome.

             PRIVACY PROTECTION OF CERTAIN SELLERS OF FARM PRODUCTS

        Senator Kohl. Secretary Hawks, last year, I inserted a
    provision--General Provision 776--to modernize the law
    governing agricultural lien central filing systems, to do it in
    a way that protects farmers from identity theft that could
    occur if their Social Security numbers were widely distributed.
        What has been done to implement this change, and can we
    expect at some point to have it completed?
        Mr. Hawks. Yes, sure. You actually threw me off with that
    question, Senator Kohl. I was not prepared to respond to that
    question. And so, I will have to get back with you on that.
        I know that in GIPSA, there's central filing. And so, I
    will have to say I am not prepared to give you an absolute as
    to where we are on that process.
        [The information follows:]

                                  Clear Title

        Section 1324 of the Food Security Act of 1985 (Act) authorized the
    Secretary of Agriculture to approve and certify central filing systems
    operated at the State level for farm products and to approve amendments
    to such certified central filing systems that have been proposed by a
    Secretary of State, provided that the proposed central filing systems,
    or amendments thereof, conform with the Act, as amended. Section 776 of
    the Consolidated Appropriations Act of 2005 allows a Secretary of State
    to propose the use of a unique identifier to be used in lieu of a
    social security number and allows the Secretary of Agriculture to
    approve proposed unique identifiers.
        The Grain Inspection, Packers and Stockyards Administration (GIPSA)
    is responsible for the administration of the Act. GIPSA posted on its
    web page a copy of the amended Act. GIPSA is in the process of updating
    the regulations and will be completed within one year. Section 776 does
    not provide GIPSA with the authority to create a selection system or
    method by which unique identifiers are produced. GIPSA will review any
    system proposed by a Secretary of State's office. Upon thorough review,
    GIPSA will determine whether to approve the selection system or method
    proposed.

        Senator Kohl. All right. I thank you, and we will----
        Mr. Hawks. Honesty is one of the things you will find from
    me. And I have already visited you in Wisconsin, too.
        Senator Kohl. Yes, I remember. At least on one occasion, we
    met at the airport on your way through.
        Mr. Hawks. We sure did.

                    TWENTY-FIVE PERCENT CAP OF WIC NSA FUNDS

        Senator Kohl. Secretary Bost, the budget request includes
    language to limit the funding for nutrition services and
    administrative expenses of the WIC program to no more than 25
    percent of the total amount provided. This will reduce funding
    available for nutrition services and administration, but more
    importantly, it changes the structure providing these very
    important dollars.
        On the surface, this may sound like only a reduction in
    administrative expenses. But there is more to it, as you know,
    than this what appears to be a more superficial explanation.
    This funding isn't just lights and office expenses, as you
    know. It includes nutrition education, obesity prevention,
    breast feeding support and promotion, prenatal and pediatric
    health care referrals, spouse and child abuse referral, and
    other vital services.
        Further, this request, by changing the way administrative
    funding is provided, will actually create a disincentive for
    food costs containment. In the past, administrative dollars
    were tied to the number of people you served. So you would keep
    food costs low, serve more people, and receive more
    administrative money.
        In this proposal, however, your administrative money is not
    tied to the number of people you serve. It is tied to the total
    amount you spend on food. So if you keep food costs low, you
    are not rewarded. You actually lose administrative dollars. And
    over time, this could actually drive WIC costs up.
        I think we agree that the WIC program provides more than
    only food. This request is more than just a cutback on lights
    and office. It will reduce essential services provided through
    the WIC program, and so I think it deserves some serious
    reconsideration.
        Do you have some thoughts that you would like to express?
        Mr. Bost. Yes, Senator Kohl. A couple of things. If you
    recall in my opening comments, we are always interested in
    ensuring that all of the programs that I am responsible for,
    are managed just as efficiently as possible. We believe that
    this proposal will cause, hopefully, in cooperation with us,
    some State agencies to seek ways to be much more efficient. We
    do not believe that it will compromise those core services that
    they are directly responsible for. That is the first point.
        The second point is that I had an opportunity to meet with
    the WIC groups when they were in town not too long ago. The
    commitment that I made to them is that we would be willing to
    sit down with them and entertain ideas in terms of the best way
    to get to the 25 percent cap that would not compromise their
    ability to provide the level of services that we are interested
    in providing.
        And last, but not least--and I am going to read this
    because I want to make sure that it is right--the percentage of
    total funds available for States for grants in 2005 is about 26
    percent. We are looking at bringing that down to 25 percent,
    which is only 1.5 percent. In addition to that, the funding
    available in fiscal year 2006 is about $1.3 billion, and for
    2005, it was a little bit less. So, it is another way that we
    believe we can work with our State partners, to say to them,
    ``What can we do to make this program as efficient as we
    possibly can, given the fact that we just don't have endless
    dollars available to run it?''
        No decision has been made at this point in terms of what
    the allocation formula would be. That was a commitment that I
    made to the group, that we would be willing to sit down and
    work with them to get to the point of putting the cap of 25
    percent in place.
        Senator Kohl. Good. Thank you.

                           SHARING DISTRIBUTION LISTS

        Secretary Pierson, it is my understanding that USDA is
    considering a rule that will publicly disclose any retail
    outlets that may have received tainted meat. To me, it seems
    that this is an idea that should be acted upon.
        Is this proposed rule still being reviewed by OMB, and do
    you have any information regarding if and when we can expect
    this rule to be promulgated?
        Dr. Pierson. Thank you, Senator Kohl.
        Yes, FSIS did, in fact, prepare a proposed rule relative to
    the sharing of distribution lists. That rule has gone through
    departmental clearance at all levels. It had been forwarded to
    OMB, and it is at a pre-decisional stage so I cannot publicly
    discuss the details of what is there.
        OMB has had a number of questions that they sent back to
    us. We are looking at those questions. I don't have an exact
    timeline on OMB's decision, but we are now considering the
    issues between us and OMB.
        Senator Kohl. You don't know when this might, in fact, wind
    up being effectuated or what?
        Dr. Pierson. I do not know.
        Senator Kohl. Can you----
        Dr. Pierson. At this time, I don't know.
        Senator Kohl [continuing]. Keep me abreast as to what is
    happening, when it is going to get published? As I said, I
    believe it is a good idea. I think most people believe this is
    a good idea.
        Dr. Pierson. Sure. Certainly, we will keep you posted on
    the progress.

                       FOOD STAMP CATAGORICAL ELIGIBILITY

        Senator Kohl. Secretary Bost, last October, Economic
    Research Service reported 11.2 percent of U.S. households were
    ``food insecure,'' which means hungry, at least sometime during
    2003, the last year for which data is available. One of your
    stated goals is to decrease the percent of food insecure
    families down to 7.7 percent by 2006.
        This budget contains, however, provisions to restrict
    expanded categorical eligibility for the Food Stamp Program,
    and as you say in your statement, it is going to kick more than
    300,000 people off the food stamp roles. I have heard the
    administration's argument on this. Essentially, you say that
    all people have to do is ask about receiving TANF and just pick
    up a flyer, and they are automatically eligible for food
    stamps.
        However, let us be honest. These are not wealthy families
    that are coming in to seek Federal assistance. These are
    working families, families struggling to make ends meet, while
    housing, gas, child care, health care, and utility prices
    continue to rise.
        In Wisconsin, one of the hardest-hit States in your
    proposal, this is 19,000 people who depend on food stamps each
    month and who will be denied this basic benefit. In Wisconsin,
    this proposal will take away the automatic eligibility for
    children in these families to receive free lunches at school.
        So how do you respond to these concerns, and what advice do
    you have for these families who can no longer depend on the
    Government and are increasingly unable to depend on emergency
    food?
        Mr. Bost. Senator Kohl, I think there are several things
    that I would say. First and foremost, we have instituted and
    implemented one of the most comprehensive outreach programs
    over the course of the last 10 or 15 years in terms of reaching
    out and attempting to enroll eligible families in all of our
    nutrition programs. That is the first thing that I would say.
        The second thing that I would say to you is that for those
    persons that are affected by this proposal, if they still
    believe that they are eligible to participate in the Food Stamp
    Program, they can still go and apply. What we are interested in
    accomplishing here is to ensure that we target those families
    that are in the greatest of need in terms of meeting their
    nutritional well-being.
        Last, but not least, we have seen, as the Chairman noted,
    that the food stamp roles in this country have significantly
    increased over the course of the last several years. Right now,
    we are serving over 25, almost 25.5 million people in the Food
    Stamp Program. I am continuing to do outreach in terms of
    ensuring that eligible people are enrolled. We have radio ads.
    We have a major campaign. We spent money in terms of access and
    participation grants.
        So, for people that believe that they are still eligible,
    we want them to come and to apply. This provision is there to
    specifically target those that are in the greatest need in
    terms of meeting their nutritional needs and providing food for
    children and their families. If they believe that they are
    still eligible to apply, they should go apply.
        Senator Kohl. Thank you, Mr. Chairman.
        Senator Bennett. Senator Burns.
        Senator Burns. Welcome, gentlemen. Nice to have you here,
    and I have only got a couple of questions. That will probably
    lead to another one, but you know how it is.
        We have pretty well gone over the BSE thing. I think Mr.
    Hawks probably got sick and tired of me in December a couple of
    years ago. I looked over my phone log, and you were on there a
    lot.
        Mr. Hawks. I never get tired of you.
        Senator Burns. But first of all, I thank you for the hard
    work that you did. I think we had a real problem on the first
    announcement of the cow in Washington State, and we did succeed
    in maintaining the consumer confidence in our beef that was
    here. And we took a little dip in the market, but it didn't
    last very long, and I think it was handled the best way I know
    how in as far as a bureaucracy is concerned.
        You know, I always worry about it. Every time I see a
    camel, I look at it and said, ``He had to be put together by a
    committee.'' Because nobody could come up with a conglomeration
    of that and make it work.

                      ANIMAL AND DAMAGE CONTROL IN MONTANA

        But nonetheless, I have got a couple of questions. In our
    country out there, Mr. Hawks, could you tell me, provide me
    with some details of the current status of the Animal and Plant
    Health Inspection Service and what we can expect? We have some
    concerns with that. We have some new problems and challenges on
    the horizon. Well, not on the horizon. They are here.
        And could you give me some kind of an idea of where you
    think that agency is going and some details on it?
        Mr. Hawks. Yes, sure. I would be quite happy to do that. I
    have actually visited your State quite a bit and actually
    have----
        Senator Burns. A lot of predators around, wasn't there?
        Mr. Hawks. There are a lot of predators around.
        Senator Burns. Two-legged ones.
        Mr. Hawks. And yes, sure, they are out there. No doubt
    about it.
        But that is a program that is obviously very important to
    an area like yours. Obviously, you have got a lot of different
    predators. I know that the wolves are an issue for your sheep
    producers, your cattle producers out there. We have
    consistently worked with the States and with your producers.
    And as I have said, I have personally been out there.
        So I think that program is online from where it needs to
    be. But a commitment that I will make to you right here is that
    we will work with you. You know, my favorite statement is
    ``working together works.'' So I am prepared to work with you
    if there are specific issues that we need to address there.
        Senator Burns. That cooperation is okay until it comes to
    the coyote and the wolf. You know, I can remember it was said,
    well, they will stay in the park, too, you know? But they found
    out that the wolves couldn't read the park signs. They fell
    down or.

                     NATIONAL ANIMAL IDENTIFICATION SYSTEM

        I know that the Chairman here has asked you a little bit
    about the national ID, and you have got some pilot projects
    that are out there now. And I understand there are some people
    in the private sector that are also working on this situation.
    Are we making any progress on a national ID?
        Now I will tell you that a national ID is not met with a
    lot of enthusiasm from some of us, me being one of those
    people. But nonetheless, I also know what reality is. And can
    you give me an update? And when do you think that you are going
    to make a decision on what this Department of Agriculture wants
    to do, or how do you read Congress on what Congress wants to
    do?
        Mr. Hawks. Senator, as you well know, I have been
    personally engaged in the animal ID. We held the listening
    session right there in Billings. I heard from quite a few of
    your producers out there what their interests were.
        You asked a question about the private sector. Obviously,
    there is a role for the private sector as well as the public
    sector here. We have got to work cooperatively.
        We will be publishing very soon in the Federal Register
    what we are calling a current thinking or a strategic plan to
    try to get input to make sure that this system that we put
    together is functional. The thing that we don't want is we
    don't want to have a lot of duplicative systems out there. We
    want something that will work.
        And you have got some unique situations out West with the
    brand States. So part of the goal of these cooperative
    agreements is to work to test things out there to make sure
    that it will work.
        You know, we have a diverse country. And when you go from
    Florida to the State of Washington, the agriculture is
    different. The livestock industry is a lot different. So we
    feel like we are making good progress. We have got 45 States
    now that are registering premises. We are going to be ready to
    do individual animal numbers, hopefully, by mid July.
        So I think at one of my listening sessions, a gentleman
    summed it up pretty good. He said, ``I think you are at a
    yellow light.'' He said, ``When you approach a yellow light,
    you have got a decision to make. You can either mash on the gas
    and speed up, or you can throw on the brakes. Either way, you
    may cause an accident.''
        So I think we are at that yellow light. And we hear a lot
    from a lot of circles that are saying ``mash on the gas.'' A
    lot of other circles are saying ``throw on the brakes.'' I
    think it is prudent that we do neither one rapidly, but that we
    make sure that we negotiate this intersection safely.
        Senator Burns. And I agree with that. I would say if this
    is one place where we are trying to write a national law that
    ``one size fits all'', that will be very difficult. And that is
    why I recommended early on that states, all you have to do is
    understand their system and certify it, and then you kind of
    step out of the way and let the States do it because usually
    they have the best handle, especially in animal health. They
    have got the best handle on where they are and the condition.
        Of course, we have got a brand law in Montana, and that
    helps us a little bit. But the hot brand is not the total
    answer, as you well know. But nonetheless, I still think the
    records, the owners, and their method of identification should
    be kept within the State borders.
        I think each State has got to do that in some way or other,
    through some sort of a reimbursement or whatever. Because I
    just don't think you can run a law like this that one size fits
    all. I just don't think you can do it.
        It is just like trying to write a farm bill that applies to
    Iowa and applies to the Golden Triangle in Montana. By gosh, it
    don't work. It just don't work because it don't rain at the
    same time. It don't freeze at the same time. There are just a
    lot of variables that makes it almost impossible to manage from
    Washington, D.C., from this place that I call 17 square miles
    of logic-free environment.
        And so, we deal with these issues that have real people
    involved, real faces. And I would say as you go down that line
    on identification that you look very, very hard and let the
    States handle it because we have a livestock department that is
    very efficient, understands it.
        Also we have a brand law in the same department, so we kind
    of know where these things go and where they come from. And I
    appreciate your patience on that.
        Mr. Hawks. Now, Senator, you are right. As I have already
    alluded, there is a lot of diversity in this country. And we
    are working very closely with the State animal health
    officials. And you are right. You have a very good----
        Senator Burns. Those records have got to be kept in those
    States. They cannot come back here.
        Mr. Hawks. Well, we want to work with you to make sure that
    we have a system that is functional. I hear what you are
    saying, but I am committed to having a good, functional system
    to----
        Senator Burns. I won't fund it. I won't fund it. Let us
    keep it in the States. That is where the records ought to be
    kept, okay? Strong letter to follow.
        Thank you very much.
        Mr. Hawks. Thank you.
        Senator Bennett. Senator Kohl, do you have any additional
    questions?
        Senator Kohl. Just one.
        Senator Bennett. Yes.

                            FSIS IMPORT INSPECTIONS

        Senator Kohl. Secretary Pierson, this committee has
    included report language for the past several years regarding
    FSIS import inspections. Specifically, the language instructs
    USDA to be especially vigilant in countries where a significant
    number of plants fail inspection.
        However, I understand that USDA has not been continuously
    vigilant, specifically in regard to Mexican plants. Of the nine
    audits USDA has conducted since the spring of 1999, in Mexico,
    more than one-fourth of the plants audited failed six of those
    times, and no comprehensive audit has ever been conducted. This
    appears to be a very high number of failing plants and no
    increased scrutiny.
        Does the USDA have any plans to increase audits in Mexico,
    considering their high failure rate? Or is it USDA's opinion
    that the current level is adequate to ensure that the plants
    exporting to this country actually meet the same standards on a
    continuous basis as plants in the United States?
        Dr. Pierson. Thank you. I do very much appreciate your
    remarks, and might I take you right up to today?
        We are actually getting a lot of criticism for being overly
    tough, which is an interesting statement. And I think what has
    happened is that we have implemented a rigorous system to
    ensure equivalency that countries exporting meat, poultry, and
    egg products to the United States, in fact, meet our
    equivalency requirements.
        We schedule, at least annually, audits of countries that
    export to the United States. We can, in fact, and do audit more
    frequently when countries are, let us say presenting problems
    and issues.

                ENFORCEMENT AUDIT OF MEXICO'S INSPECTION SYSTEM

        Specifically, Mexico, at one time, did have very serious
    difficulties. We worked very closely with Mexico, and we let
    them know very seriously that they needed to pay very close
    attention to their inspection system. It has to be an
    independent inspection system, one where the plants don't pay
    the inspectors, for example. That is a no-no for us. They have
    to be paid by their government, and they have to be government
    employees.
        We then make sure that we audit that system--the inspection
    infrastructure. The other part is we then audit plants, and I
    can say that fairly recently, within the past year, we have
    done a comprehensive audit of Mexico; and as a matter of fact,
    they have made vast improvements. I believe, Dr. Masters, we
    did not have any delistments of plants in that inspection, did
    we?
        Dr. Masters. It was an enforcement audit, and we can get
    the exact details of that audit.
        Dr. Pierson. Sure. We can present that to you. The outcome
    of that audit was, I would say, very positive. Mexico did work
    very hard to come up to speed to our equivalency requirements,
    and we were pleased with the work that they had done.
        So I can assure you that our audits are very thorough, and
    they are very rigorous. We expect countries to meet the same
    requirements that we have for our domestic suppliers or
    producers.
        [The information follows:]

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Kohl. I thank you.
        I thank you, Mr. Chairman.
        The Subcommittee will submit some additional questions from
    Members for your response.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]

                Questions Submitted by Senator Robert F. Bennett

                         LOW PATHOGENIC AVIAN INFLUENZA

        Question. The funding level for the Low Pathogenic Avian Influenza
    program was increased from $994,000 in fiscal year 2004 to $23 million
    for fiscal year 2005. The increase was provided to indemnify producers
    for losses and to increase surveillance activities. Can you provide an
    update on the status of the fiscal year 2005 funding and when we should
    expect this program to be fully implemented?
        Answer. This program has two components: the commercial poultry
    industry and the live bird marketing system (LBMS). The LPAI program
    will be fully operational when a regulation is passed for the
    commercial component of the program.
        The breakout of the funding is as follows:
      --$12,000,000 for Indemnities.--These funds will cover the indemnity
            and euthanasia, disposal, cleaning and disinfection costs of
            flocks that test positive for LPAI and need to be depopulated.
            Because this is a new program, we are in the process of
            developing a regulation that is specific to indemnities
            associated with LPAI outbreaks in both the LBMS and the
            commercial poultry industry. Fortunately, we have had no LPAI
            outbreaks this fiscal year and have not yet needed to use these
            funds.
      --$3,871,547 for Surveillance Activities.--Funds have been devoted to
            cooperative agreements with States that have significant LBMS
            activities, as well as State laboratories participating in the
            NPIP LPAI program. States are using these funds to provide
            personnel to inspect and collect samples within the LBMS, to
            conduct trace backs and trace forwards, and to support the
            additional laboratory activities associated with the NPIP
            program for the commercial poultry industry. Currently, 10
            States have established cooperative agreements and 11
            additional States have shown interest in joining the program by
            the end of this fiscal year.
      --$932,285 for Reagents and Costs of Administering Tests.--These
            funds have been provided to the National Veterinary Services
            Laboratory (NVSL) for the processing of samples submitted. NVSL
            has developed the agreement to contract out the production and
            distribution of test reagents. These test reagents have been
            distributed to State and industry laboratories approved to
            participate in the NPIP.
      --$4,326,693 for Salaries, Benefits and Staff Support.--These funds
            provided for the hiring of Federal personnel to assist with the
            implementation of the national program, and to support the
            States in managing and preventing LPAI infections. To date, we
            have hired 17 people and are in the process of hiring an
            additional 29 employees (i.e., veterinary medical officers,
            epidemiologists, animal health technicians, laboratory
            technicians, etc.).
      --$600,000 for the Center for Veterinary Biologics (CVB).--These
            funds have been used for the expansion of an Avian Influenza
            vaccine bank through a contract with a biologics company. While
            vaccines are not routinely used to prevent infections, vaccines
            still have a potential role in controlling the spread of an
            outbreak or in a situation where depopulation of infected
            flocks is not possible or feasible. APHIS anticipates that the
            Statement of Work (SOW) for this contract will be completed by
            the end of May 2005. The SOW will be submitted with a
            requisition, and the solicitation for bids will be prepared and
            published. APHIS anticipates signing this contract by September
            2005.
      --$513,575 for Education and Outreach Initiatives.--These funds are
            being used to train all newly hired veterinary medical officers
            and animal health technicians, and all LBMS participants in the
            recognition of avian influenza and the enhancement of
            biosecurity practices in live bird markets, auctions,
            wholesalers, distributors, dealers and producer facilities.
      --$555,900 for Information and Technology Support.--These funds are
            supporting the cost of certifying, accrediting, refining and
            securing an information technology system. The funds will also
            be used to purchase or enhance communications technology to
            support basic surveillance functions such as data collection,
            evaluation, and interpretation. This system is currently under
            development and is expected to be ready to implement by the end
            of the calendar year.

                       WEB-BASED SUPPLY CHAIN MANAGEMENT

        Question. The fiscal year 2006 budget request $10 million to
    develop a Web-based Supply Chain Management System (WBSCM). This system
    would replace the current system and allow for more efficiency in the
    purchasing and tracking of commodities for nutrition programs.
        Can you briefly describe the need for this new web-based program?
        Answer. The Web-based Supply Chain Management System (WBSCM) would
    replace the Department's Processed Commodity Inventory Management
    System (PCIMS). WBSCM is designed to improve management of USDA's
    domestic and international food assistance programs for a seamless,
    transparent, and efficient flow of food products throughout the supply
    chain process. PCIMS does not efficiently and effectively support e-
    government approaches to dealing with program clientele. It is based on
    1980's technology and its architecture is extremely inflexible and
    costly to maintain. In contrast, WBSCM's design uses proven commercial-
    off-the-shelf software that incorporates commercial best business
    practices in an open, flexible architecture to meet functional,
    operational and compliance requirements.
        The anticipated benefits of WBSCM include reduced costs for
    commodities, transportation, inventory and warehousing, which will
    benefit both customers and vendors. WBSCM offers improved reporting
    capabilities and more timely delivery of commodities, a shortened
    processing cycle, and improved collaboration and integration between
    associated programs within the Department.

               USDA AND DEPARTMENT OF HOMELAND SECURITY EMPLOYEES

        Question. The Department of Agriculture has transferred a number of
    employees to the Department of Homeland Security. Please update us on
    the current relationship between USDA and the Department of Homeland
    Security? More importantly, do you have any concerns with the current
    arrangement that this Subcommittee should be aware of?
        Answer. USDA and the Department of Homeland Security (DHS) continue
    to work cooperatively to ensure quality agriculture research and
    inspections remain a high priority. Scientists from the USDA's
    Agricultural Research Agency (ARS) are co-located with DHS scientists
    at the Plum Island Animal Disease Center, which houses the ARS research
    program and APHIS foreign animal disease testing. The relationship
    between these programs and the DHS testing and evaluation program has
    been defined in a plan which lays out respective agency roles in
    protecting American livestock from acts of bioterrism. This formal
    definition of roles facilitates cooperation between the departments.
    Additionally, APHIS and DHS' Customs and Border Protection (CBP) have
    established a joint quality assurance program to ensure that the
    quality of agricultural inspections is maintained and to facilitate an
    appropriate level of communications between CBP and APHIS. Additional
    details of these two endeavors follow.
        Agricultural Quarantine Inspections.--APHIS and CBP operations
    officials are meeting twice monthly to carry out quality assurance
    program activities and address ongoing operational issues at ports of
    entry. As part of the program, APHIS and CBP have conducted a pilot
    joint inspection blitz at the port of Detroit and joint reviews of
    operations at the ports of Philadelphia and Miami. Reviews of
    operations at the maritime ports of Long Beach, California; Port
    Elizabeth, New Jersey; and Seattle, Washington are planned for summer
    2005.
        APHIS Administrator DeHaven and CBP Commissioner Bonner met in
    early April 2005 to discuss agricultural inspection operations at U.S.
    ports of entry. In addition to continuing to implement the joint
    quality assurance program to evaluate operations at ports of entry, Dr.
    DeHaven and Commissioner Bonner have established a series of meetings
    at various administrative and operational levels to ensure that any
    problems with the inspection program are addressed by the appropriate
    officials. Operational managers are already meeting several times a
    month in conjunction with the quality assurance program, and Dr.
    DeHaven and Commissioner Bonner agreed to hold quarterly meetings to
    address any issues that cannot be resolved at the operational level.
    APHIS' Deputy Administrator for the Plant Protection and Quarantine
    Program and CBP's Assistant Commissioner will also meet on a monthly
    basis.
        APHIS and CBP officials are also continuing to address the large
    number of vacancies at ports of entry. With the transfer of the port
    inspection portion of the agriculture quarantine inspection function to
    CBP in fiscal year 2003, APHIS transferred 363 fully-funded vacant
    inspector positions from Agricultural Quarantine Inspection. This
    number has increased significantly through attrition in the last 2
    years. While progress has been made in filling many positions, APHIS
    encourages CBP to continue an aggressive recruitment and hiring
    program. APHIS assists CBP in recruiting by distributing vacancy
    announcements to a large pool of qualified candidates and expeditiously
    training those hired. Following the April 2005 meeting between Dr.
    DeHaven and Assistant CBP Commissioner Ahern, APHIS is enhancing its
    recruitment program for CBP vacancies through promoting the jobs to
    qualified candidates at job fairs and on college campuses. APHIS'
    Professional Development Center has 14 classes scheduled for incoming
    agricultural specialists (with space for 36 new inspectors in each
    class).
        Progress has been made in other areas, such as APHIS access to
    CBP's data systems. In March 2005, APHIS and CBP reached an agreement
    to allow APHIS users to access CBP's Automated Targeting System (ATS),
    which will allow APHIS to review incoming cargo manifests
    electronically and determine which should be targeted for agricultural
    inspections. At this time, 14 APHIS users are approved to access ATS,
    with 6 more in the approval process. APHIS is also placing two
    agricultural specialists in CBP's National Targeting Center to develop
    criteria for determining which incoming shipments to target for
    agricultural inspections.
        APHIS and CBP officials are working cooperatively to address
    operational inspection issues through the quality assurance program,
    which includes quarterly data reviews and port of entry evaluations.
    APHIS and CBP officials will continue cooperating through these
    channels to manage the agricultural inspection program. However, APHIS
    officials remain concerned about the large number of vacancies for
    agricultural inspectors at CBP.
        Plum Island Animal Disease Center.--The relationship between DHS
    and USDA is defined administratively by an annually renewed interagency
    agreement. The agreement provides for a local council at Plum Island to
    manage day-to-day resource issues. The agreement also provides for a
    Board of Directors of Agency Heads to manage the overall programmatic
    relationship at the Plum Island Animal Disease Center.
        The current arrangements are working. As programs change and ARS
    maintains a primary focus on protecting livestock from exotic diseases
    and DHS focuses on terrorism countermeasures, there may be a divergence
    in issues for each agency that could place stress on resources
    available for research and testing and evaluation. The Board of
    Governors' approach to dealing with programmatic issues will serve as a
    forum to resolve those issues.
                                     ______

                  Questions Submitted by Senator Conrad Burns

                           COUNTRY OF ORIGIN LABELING

        Question. Country of Origin Labeling is a hot issue in Montana. In
    order for producers to be ready to comply with the law when it takes
    effect on Sept. 30, 2006, they will need to know what's expected of
    them. USDA has already published the proposed rule, and taken all the
    public comment on beef labeling. Why not publish the rule now, and give
    producers advance notice of what they will need to do to comply, to
    minimize the burden?
        Answer. The Agency believes it is prudent to monitor the fish and
    shellfish industry's compliance with the interim final rule for
    mandatory country of origin labeling of fish and shellfish for an
    appropriate period of time prior to finalizing the regulation for the
    other covered commodities to determine whether there are any provisions
    that should be modified prior to implementation for the remaining
    affected industries. AMS published the interim final rule for mandatory
    country of origin labeling of fish and shellfish in the October 5,
    2004, Federal Register, and the regulations became effective April 4,
    2005. This rule provides for an active enforcement program to begin in
    October 2005, during which time the agency will focus its resources on
    education and outreach.

                     NATIONAL ANIMAL IDENTIFICATION SYSTEM

        Question. Can you give us an update on the Department's actions on
    Animal ID? In particular, can you address how USDA plans to address
    data confidentiality and cost to the producer?
        Answer. The National Animal Identification System (NAIS) will
    contain only information necessary for animal health officials to be
    able to track suspect animals and identify any other animals that may
    have been exposed to a disease. To ensure that officials have
    immediate, reliable, and uninterrupted access to this information in
    the event of a disease concern, certain basic data must be readily
    available to the Federal Government.
        Animal identification and tracking systems maintained by the States
    or regional alliances will be an integral part of the overall NAIS
    information infrastructure. The State and regional systems will be able
    to collect and maintain more information than is required for NAIS, yet
    only the required data need to be available for the national animal
    records repository.
        In order to secure full participation from livestock producers, the
    USDA is pursuing legislation to establish a system for withholding or
    disclosing information obtained through the animal identification
    system established by the Secretary of the USDA.
        APHIS understands that there is no ``one-size-fits-all''
    identification technology. Many methods are currently on the market,
    such as branding, radio frequency identification devices, and retinal
    scans. It is likely that some technologies will work better for certain
    animal species than others. Rather than focus on a specific technology,
    APHIS will focus on the design of the identification data system; what
    information should be collected; and, when the data should be collected
    and reported. Once the identification system is designed, the market
    will determine which technologies will be the most appropriate to meet
    the needs of the system. As specific technologies are determined, the
    standards for those technologies will be established to ensure
    compatibility across all sectors of the industry. For example, the
    cattle industry is recommending radio frequency identification eartags,
    using the international standards for radio frequency identification of
    animals.
        The NAIS must allow producers to use NAIS in coordination with
    production management systems, marketing incentives, etc., allowing for
    the transition to a ``one number--one animal'' system for disease
    control programs and other industry-administered programs. While
    animals must be identified prior to being moved from their current
    premises, producers can decide whether to identify their stock at birth
    or during other management practices.
        The integration of existing branding procedures into NAIS, while
    integrating animal identification technology standards (electronic
    identification, retinal scan, DNA, etc.) will be determined by industry
    to ensure the most practical and cost effective options are implemented
    and that new ones can easily be incorporated into NAIS.
        Question. USDA has funded a number of pilot projects to explore
    methods for implementing a national animal ID. What is the status of
    these projects? Is the Department providing these projects with clear
    guidance and expectations?
        Answer. Pilot projects for the NAIS are currently being conducted
    via cooperative agreements with States and tribes. Cooperative
    agreement funds are used to obtain resources to support data collection
    or the integration of data from existing systems. In July 2004, the
    first-round of awarding cooperative agreement funds through a
    competitive application process resulted in 29 project agreements. In
    October 2004, $1.5 million that had been previously reserved for other
    expenses became available for establishing 13 additional cooperative
    agreements.
        Most of the projects became ``active'' late in 2004 following the
    preparation and approval of each cooperators work plan. The application
    provided the States with specific objectives and the expected outcomes
    of each project. Cooperators are responsible for providing quarterly
    reports describing achievements in relationship to the original
    approved plan using specific performance measures required by the
    Department. Such measures include the number and percent of premises
    registered, the number of stakeholders reached through outreach, and
    the cost of attaining each of these measures. In States that have pilot
    projects, specific reports on the progress of the project are also
    required.
        Question. How do you plan to connect the results of all these pilot
    projects together into a national framework? Are there any industry
    models for bringing all these pieces together?
        Answer. The results of the pilot projects will be summarized to
    provide more direction on how the industry can most effectively collect
    animal identification and movement data. While there have been various
    projects in the past that provide valuable information, there remains a
    need to evaluate the practicality of data collection reflective of the
    vast diversification of the U.S. livestock industry. As more animals
    enter the voluntary system, the ability to collect and transmit the
    information from various production points and through service
    providers will continue to advance.
        Each of the pilot projects were selected for funding based on the
    merits of the project proposal. The criteria were broad based,
    soliciting projects that would demonstrate the adaptability of new
    technology, the coordination and integration of existing databases that
    may contain premises information, and the solutions to problems faced
    in certain regions of the country, such as brand inspection states. At
    the conclusion of the pilot projects, APHIS will evaluate the results
    using staff resources. We will determine what questions have been
    answered, what questions remain unanswered, and what new questions
    arose as a result of the projects.

                            BLUETONGUE RESTRICTIONS

        Question. As the Department works to harmonize trade regulations
    and scientific protocols with Canada, is the issue of bluetongue being
    addressed? How close are we to eliminating bluetongue restrictions that
    serve as a barrier to trade?
        Answer. The Canadian Food Inspection Agency (CFIA) and the USDA's
    Animal and Plant Health Inspection Service (APHIS) have expressed a
    commitment to work together toward harmonizing disease management
    policies. Both Agencies have initiated discussions regarding health
    status recognition for anaplasmosis, bluetongue, brucellosis, and
    tuberculosis that may be applied against additional categories of
    cattle and other livestock.
        Most of our trading partners have imposed some restrictions on the
    importation of U.S. cattle, goats, and sheep due to the presence of
    bluetongue viruses in the United States. USDA does not expect total
    elimination of these restrictions. Yet, the Department continues to
    work towards minimizing restrictions based on scientific evaluation of
    the disease presence in the United States. APHIS is continuously
    negotiating with country officials to eliminate or reduce restrictions
    not fully justified by the available science. For example, APHIS
    provided disease surveillance data to compel Canada to modify its
    restrictions in March 2004. The CFIA removed bluetongue testing and
    treatment requirements for U.S. feeder cattle imported from 39 States
    considered to have a low incidence of bluetongue. Feeder cattle from
    the remaining 11 States, which are considered to have a high incidence
    of bluetongue, are also not required to be tested provided they reside
    for at least 60 days prior to import in a low incidence state. These
    States include Alabama, Arizona, Arkansas, California, Florida,
    Georgia, Louisiana, Mississippi, Nevada, South Carolina, and Texas.
    Testing is still an option and should the feeder cattle be found free
    of bluetongue, the 60-day period will be waived. Historically, these
    high incidence states have not exported significant numbers of feeder
    cattle to Canada.
                                     ______

                    Questions Submitted by Senator Herb Kohl

                          AMS NATIONAL ORGANIC PROGRAM

        Question. Mr. Hawks, for the past 2 years, language has been
    included in the Senate report strongly encouraging USDA to hire an
    Executive Director for the National Organic Standards Board, and to
    create an on-going Peer Review Panel to oversee and give advice to the
    Secretary regarding the process for accrediting organic certifiers. Can
    you please give me an update on USDA's response to these directives?
        Answer. AMS has drafted a position announcement for an Executive
    Director after gathering input from the National Organic Standards
    Board (NOSB) regarding expertise and other qualifications required for
    the position. We expect the announcement to be posted by early June.
    The National Organic Program (NOP) is also working with the NOSB to
    formalize an ongoing Peer Review procedure and is awaiting input from
    the NOSB on the frequency, timing, and technical expert assistance
    needed to address peer review. The results of an AMS-initiated peer-
    review audit of the NOP accreditation process by the American National
    Standards Institute (ANSI) were posted on the NOP website in January
    2005.
        Question. If they have not already been implemented, can you please
    provide me with a date by which this will be completed?
        Answer. An executive director is expected to be hired later this
    summer. A peer review process is awaiting further input pending the
    upcoming NOSB meeting in August 2005.
        Question. Last April, USDA published and then rescinded four
    documents regarding organic standards and enforcement. It is my
    understanding that this caused significant confusion within the organic
    community, and that last October at a National Organic Standards Board
    meeting, USDA committed to publishing clarifications on the National
    Organic Program website in order to resolve this confusion. However,
    these clarifications have not yet been published. Can you provide me
    with a timeline for publishing these clarifications?
        Answer. The clarifications were posted on the NOP website on April
    22, 2005.

                              GIPSA IDENTITY THEFT

        Question. Mr. Hawks, last year I inserted a provision (General
    Provision 776) to modernize the law governing agricultural lien central
    filing systems and to do so in a way that protects farmers from
    identity theft that could occur if their social security numbers are
    widely distributed. Please provide me with information regarding what
    has been done to implement this change, and when we can expect it to be
    complete.
        Answer. Section 1324 of the Food Security Act of 1985 (Act)
    authorized the Secretary of Agriculture to approve and certify central
    filing systems operated at the State level for farm products and to
    approve amendments to such certified central filing systems that have
    been proposed by a Secretary of State, provided that the proposed
    central filing systems, or amendments thereof, conform with the Act, as
    amended. Section 776 of the Consolidated Appropriations Act of 2005
    allows a Secretary of State to propose the use of a unique identifier
    to be used in lieu of a social security number and allows the Secretary
    of Agriculture to approve proposed unique identifiers.
        The Grain Inspection, Packers and Stockyards Administration (GIPSA)
    is responsible for the administration of the Act. GIPSA posted on its
    web page a copy of the amended Act. GIPSA is in the process of updating
    the regulations and will be completed within 1 year. Section 776 does
    not provide GIPSA with the authority to create a selection system or
    method by which unique identifiers are produced. GIPSA will review any
    system proposed by a Secretary of State's office. Upon thorough review,
    GIPSA will determine whether to approve the selection system or method
    proposed.

                         AGRICULTURE BORDER INSPECTIONS

        Question. When Secretary Johanns appeared here this week, I asked
    him about a recent GAO report on Agro-Terrorism and, in particular, the
    problem that agriculture border inspections have decreased since that
    responsibility was transferred to the Department of Homeland Security.
        The Secretary mentioned a lot of the things the States are doing to
    protect the farm sector, but we need to know more about why the number
    of Federal agriculture inspections has declined over the past 2 years.
    The GAO report says that during that period, agricultural inspections
    at ports of entry, the first line of defense, have declined while
    imports have increased. According to DHS's own data, there were 40.9
    million agriculture import inspections in 2002 and that number dropped
    to 37.5 million in 2004. According to GAO, neither USDA or DHS can
    explain why this has happened.
        I realize that you could easily say this is DHS's problem, but
    protection of U.S. agriculture is your problem and if DHS is not doing
    its job, somebody had better raise some red flags. I would hope that
    somebody would be USDA. What kind of specific procedures do you use to
    coordinate with DHS on animal and plant health issues?
        Answer. APHIS is responsible for setting agricultural import policy
    and communicating any policy changes to DHS' Customs and Border
    Protection (CBP) officials. Agency officials notify CBP of any changes
    through designated points of contact. CBP has agreed to send time-
    sensitive pest alerts, issued when APHIS officials determine that a
    particular product poses a serious pest risk, to all field locations
    within 24 hours of receiving them. APHIS also has a series of
    comprehensive manuals that detail inspection procedures to be used at
    various types of locations and for specific types of cargo. APHIS
    officials update the manuals on a regular basis and notify their
    counterparts at CBP when changes have been made. All manuals are
    available to CBP and the public on APHIS' Web site.
        APHIS and CBP officials are also continuing to address the large
    number of vacancies at ports of entry. With the transfer of the port
    inspection portion of the agriculture quarantine inspection function to
    CBP in fiscal year 2003, APHIS transferred 363 fully-funded vacant
    inspector positions from Agricultural Quarantine Inspection. This
    number has increased significantly through attrition in the last 2
    years. While progress has been made in filling many positions, APHIS
    encourages CBP to continue an aggressive recruitment and hiring
    program. APHIS assists CBP in recruiting by distributing vacancy
    announcements to a large pool of qualified candidates and expeditiously
    training those hired. Following the April 2005 meeting between Dr.
    DeHaven and Assistant CBP Commissioner Ahern, APHIS is enhancing its
    recruitment program for CBP vacancies through promoting the jobs to
    qualified candidates at job fairs and on college campuses. APHIS'
    Professional Development Center has 14 classes scheduled for incoming
    agricultural specialists (with space for 36 new inspectors in each
    class).
        To ensure that the quality of inspections is maintained and to
    facilitate an appropriate level of communication between the two
    agencies, APHIS and CBP recently established a joint quality assurance
    program. Officials from both Agencies are conducting a series of port
    evaluations as part of the program. Additionally, APHIS conducts
    quarterly reviews of data collected by CBP through the inspection
    process for consistency and completeness. When APHIS officials notice
    anomalies in the data, they request that CBP investigate the issues and
    make any necessary corrections.
        Question. GAO says that DHS inspectors don't always get timely
    information about the arrival of high-risk cargo, but were you aware of
    such cargo when you were responsible for inspections?
        Answer. Prior to the transfer of the inspection program to DHS,
    APHIS officials accessed the U.S. Customs Service's automated targeting
    system (ATS) and automated manifest system to review incoming cargo
    shipments and determine which to target for specific levels of
    inspection. APHIS' port operations manuals also detail what types of
    incoming cargo should undergo specialized inspections.
        In March 2005, APHIS and CBP reached an agreement to allow APHIS
    users to access CBP's ATS, which will allow us to resume reviewing
    incoming cargo manifests electronically. At this time, 14 APHIS users
    are approved to access ATS, with 6 more in the approval process. APHIS
    is also placing two agricultural specialists in CBP's National
    Targeting Center to develop criteria for determining which incoming
    shipments to target for agricultural inspections.
        Question. Do you have information you need to be sharing with DHS?
        Answer. APHIS believes that all pertinent information regarding
    agricultural imports is being shared. APHIS officials communicate
    regularly with their counterparts at CBP and notify them of all policy
    changes. APHIS and CBP are working together through the joint quality
    assurance program to ensure that the two agencies are sharing all
    necessary information and effectively managing the agricultural
    quarantine inspection program.
        Question. I know there are some who suspect the reduced number of
    agriculture inspections is because DHS is assigning inspectors to other
    non-agriculture cargos. I hope that is not the case. But either way, I
    think that someone needs to hold DHS accountable to make sure that
    safeguards for the Agriculture sector are, at least, as strong as they
    were 2 years ago. Do you have, or do you think you should have, some
    way to ensure that plant and animal pests and diseases are being
    properly stopped at the border? After all, if they get past the border,
    spread, and get established, your job will be a lot harder and a lot
    more expensive. Don't you agree?
        Answer. APHIS officials believe that, if followed properly, the
    inspection protocols and procedures detailed in our port operations
    manuals should stop high-risk cargo at the borders for inspection.
    However, new pests and diseases could still be introduced through
    smuggling and means of natural spread.
        APHIS places a high priority on preventing the entry of
    agricultural pests and diseases through its pest and disease exclusion
    programs. These include regulatory activities and border inspections as
    well as off-shore risk reduction programs such as the international
    cooperative efforts to eradicate Mediterranean fruit fly from Central
    America and foot-and-mouth disease from Central and South America.
    APHIS also maintains emergency response capabilities to deal with pests
    and diseases that inevitably slip through our borders with the enormous
    volume of international travel and trade.
        Question. The Office of Inspector General is issuing a report dated
    April 14, 2005, on the subject of the transition and coordination of
    border inspection activities between USDA and DHS. In summary, the
    report includes the following observations:
      --Border inspection responsibilities were transferred from APHIS to
            DHS in March of 2003.
      --2,500 front line inspectors were transferred from APHIS to DHS.
      --APHIS could not assure that the DHS process for agriculture
            inspection operations contains adequate controls to safeguard
            U.S. Agriculture against entry of foreign pests and disease.
      --There was a reported 32 percent drop in the number of pest
            inspections following the transfer to DHS.
      --DHS has denied APHIS access to port locations even when access was
            requested, even to perform duties for which APHIS still has
            regulatory responsibility.
      --APHIS does not have a process to periodically review the extent and
            results of attention given to critical inspection areas.
      --APHIS and FSIS do not require DHS to notify FSIS of all incoming
            shipments, which could allow the shipments to bypass FSIS re-
            inspection.
      --APHIS has been unable to effectively evaluate or provide advice to
            DHS on agriculture inspection activities.
      --DHS has not provided adequate data on staffing levels and
            deployment of agriculture inspectors to APHIS for evaluation.
      --APHIS officials continue to express concern about how DHS is using
            inspection user fees.
      --APHIS needs to establish a more effective way to coordinate with
            DHS.
        Would you please respond to the findings of this report?
        Answer. APHIS is currently preparing its response to the findings
    of the report, which we must provide to OIG by June 6, 2005. In
    response to the observations that OIG pointed out, much progress has
    been made on many of the issues. As APHIS and CBP officials continue to
    work cooperatively through the quality assurance program, we will
    resolve many of the issues identified in the OIG's report, such as
    APHIS officials' ability to evaluate operations at ports of entry. For
    example, APHIS and CBP developed protocols recently that provide access
    to ports of entry for APHIS' port veterinarians.
        Additionally, APHIS Administrator DeHaven and CBP Commissioner
    Bonner met in early April 2005 to discuss joint management of
    agricultural inspection operations at U.S. ports of entry. In addition
    to continuing to implement the quality assurance program to evaluate
    operations at ports of entry, Dr. DeHaven and Commissioner Bonner have
    established a series of meetings at various administrative and
    operational levels to ensure that any problems with the inspection
    program are addressed by the appropriate officials. Operational
    managers are already meeting several times a month in conjunction with
    the quality assurance program, and Dr. DeHaven and Commissioner Bonner
    agreed to hold quarterly meetings to address any issues that cannot be
    resolved at the operational level. APHIS' Deputy Administrator for the
    Plant Protection and Quarantine Program and CBP's Assistant
    Commissioner will also meet on a monthly basis.

                        HIGH PATHOGENIC AVIAN INFLUENZA

        Question. Would you please provide information regarding actions
    taken by the Department to work with other countries on the containment
    of high pathogen avian influenza and steps being taken to avoid its
    introduction into the United States?
        Answer. APHIS participates in several international organizations
    that address animal health issues such as avian influenza. For example,
    issues pertaining to surveillance, and control and eradication of the
    high pathogen avian influenza (HPAI) strain H5N1 in Asia, are being
    directly addressed by the World Health Organization (WHO), the Asia
    Pacific Economic Cooperation (APEC), the United Nation's Food and
    Agriculture Organization (FAO) and the World Organization for Animal
    Health (OIE). APHIS has been an active participant in the OIE, has
    attended Expert Meetings at FAO, and has assisted in planning and
    leading FAO interventions (Rome and Bangkok, February 2004; Bangkok,
    July 2004; Rome, October 2004; Ho Chi Minh City, Vietnam, February
    2005).
        APHIS also takes steps to prevent the introduction of animal
    diseases by sharing knowledge and expertise with counterparts in
    foreign countries. For example, in September 2004, APHIS provided
    personal protective equipment supplies to the Philippines and
    coordinated a 3-day training course on AI and exotic Newcastle disease
    (END) to 40 Bureau of Animal Health employees in Quezon City, in the
    Philippines.
        USDA Deputy Undersecretary Lambert has proposed a conference among
    Asia-Pacific Economic Cooperation members designed to improve
    coordination between States and international organizations over AI-
    related issues, and to discuss the affects of AI on trade and other
    sectors. The USDA Foreign Agricultural Service, in coordination with
    OIE and FAO, is currently organizing this 2-day meeting scheduled for
    July 28-29, 2005 in San Francisco, California.
        As a primary safeguard against the introduction of HPAI (H5N1) into
    the United States, APHIS maintains scientifically-based trade
    restrictions on the importation of poultry and poultry products from
    affected countries. In many of these countries, APHIS had prior poultry
    and poultry product import restrictions in place because they were also
    known to have END. The import restrictions targeted against the
    introduction of END also effectively mitigate the risk of HPAI. These
    restrictions include:
      --Prohibiting the importation of live birds and hatching eggs from
            H5N1 affected countries;
      --Requiring imports of poultry products from East-and Southeast-Asia
            be processed or cooked in accordance with a USDA permit prior
            to importation;
      --Requiring all imported birds be quarantined at a USDA bird
            quarantine facility and tested for the avian influenza virus
            before entering the country; which now includes returning U.S.
            origin pet birds;
      --Developing a risk assessment that specifically considers the threat
            to the United States of HPAI introduction from Southeast Asia.
            This assessment is helping APHIS to identify and closely
            monitor pathways that are vulnerable to potential HPAI (H5N1)
            introduction. APHIS has also alerted the U.S. Department of
            Homeland Security to be especially vigilant in performing
            agricultural inspections for prohibited products at U.S. ports
            of entry handling passengers and cargo from Asia. In addition,
            APHIS is also increasing its monitoring of domestic commercial
            markets for illegally smuggled poultry and poultry products;
      --APHIS is working closely with international organizations like OIE,
            FAO, and WHO to assist HPAI affected countries and other
            neighboring Asian-Pacific countries with disease prevention,
            management, and eradication activities. By helping these
            countries prepare for, manage, or eradicate HPAI (H5N1)
            outbreaks, APHIS can reduce the risk of the disease spreading
            from overseas to the United States.
        USDA agricultural attaches are closely monitoring the HPAI
    situation in Asia and routinely report new developments.
        APHIS reviewed and provided input to the U.S. Department of Health
    and Human Services' Centers for Disease Control and Prevention (CDC) on
    its Pandemic Influenza Response and Preparedness Plan. APHIS provided
    guidance concerning its role in animal health and wildlife disease
    management. APHIS also collaborated with the CDC to draft
    recommendations to help prevent the transmission of HPAI (H5N1) to
    animal disease outbreak response workers.
        APHIS is conducting a multi-level outreach and education campaign
    called ``Biosecurity is For the Birds'' to provide disease and
    biosecurity information to backyard poultry producers. The campaign
    also encourages producers to report sick birds, thereby increasing
    APHIS' poultry foreign animal disease surveillance opportunities.
        USDA, Agriculture Research Service (ARS) supports APHIS and poultry
    industry action programs with epidemiology, molecular virology, and
    pathogenesis research on avian influenza. ARS has been/is:
      --Evaluating new AI viruses as they occur around the world and will
            continue to assist infected countries and agencies.
      --Currently classifying AI viruses received recently from the United
            States, Hong Kong, Italy, El Salvador, Chile, Netherlands,
            Indonesia, Vietnam, and South Korea for disease-causing
            potential.
      --Conducting research studies including: molecular characterization
            related to the lethality of the viruses; the search for genetic
            markers for this lethality, and investigating the epidemiology
            and spread of the viruses. Also, pathogenic potential of the
            viruses is being assessed in disease--free chickens held in
            biocontainment facilities.
      --Developing and evaluating techniques to predict which mild forms of
            virus will change to more deadly forms of the AI virus.
        In January 2005, APHIS initiated a $5 million, 3 year Coordinated
    Agricultural Project for the ``Prevention and Control of Avian
    Influenza in the United States.'' Seventeen States are working together
    to develop critical diagnostic tests and vaccines for detection and
    control. They are also working in live bird markets in California,
    Minnesota, and New York to study transmission risk factors and provide
    educational and outreach programs. For the first time, we will be
    conducting influenza surveillance in waterfowl of the four major
    flyways over the United States. The group is also studying how
    influenza emerges in domestic chickens and turkeys. Stakeholder and
    Scientific Advisory Boards include industry, other Federal and State
    agencies, and renowned avian influenza experts. This activity is also
    tightly coordinated with the Department of Homeland Security ``National
    Center for Foreign Animal and Zoonotic Disease Defense'' that includes
    work on four diseases, one of which is AI.

                         LOW PATHOGENIC AVIAN INFLUENZA

        Question. The Congress provided nearly $23 million in fiscal year
    2005 for pest and disease management activities relating to low
    pathogenic avian influenza. This represented a very substantial
    increase above the fiscal year 2004 level. The President proposes a
    slight increase for fiscal year 2006.
        Please provide information on how these funds are being used in
    fiscal year 2005 and how those purposes will differ with the use of
    fiscal year 2006 funds.
        Answer. This program has two components: the commercial poultry
    industry and the live bird marketing system (LBMS). The low pathogenic
    avian influenza program (LPAI) will be fully operational when a
    regulation is passed for the commercial component of the program. The
    use of funds in fiscal year 2006 will not significantly differ from the
    use of funds in fiscal year 2005 because States who signed their
    cooperative agreements in the last quarter of fiscal year 2004 will
    continue to participate in fiscal year 2005 and fiscal year 2006. Other
    States have been provided information to indicate their interest and,
    to date, 11 other States have shown an interest in joining the program.
        The breakout of the funding is as follows:
      --$12,000,000 for Indemnities.--These funds will cover the indemnity
            and euthanasia, disposal, cleaning and disinfection cost of
            flocks that test positive and need to be depopulated due to
            LPAI. Because this is a new program, we are in the process of
            developing a regulation that is specific to indemnities
            associated with LPAI outbreaks in both the LBMS and the
            commercial poultry industry. Fortunately, we have had no LPAI
            outbreaks this fiscal year and have not yet expended any of the
            indemnity funds.
      --$3,871,547 for Surveillance Activities.--Funds have been devoted to
            cooperative agreements with States in both the Eastern and
            Western regions that have significant LBMS activities, as well
            as State laboratories participating in the National Poultry
            Improvement Plan (NPIP) program. States are using these funds
            to provide personnel to inspect and collect samples within the
            live bird marketing system, do trace backs and trace forwards,
            and to support the additional laboratory activities associated
            with the NPIP program for the commercial poultry industry. For
            the LBMS program 10 States currently have cooperative
            agreements. There are 11 additional States that have shown
            interest in joining the program by the end of this fiscal year.
            The amount shown also includes travel costs and transportation
            of needed items.
      --$932,285 for Reagents and Costs of Administering Tests.--All of
            these funds have been provided to the National Veterinary
            Services Laboratory (NVSL) for the processing of samples. NVSL
            has developed and contracted out the production of these test
            reagents that have been distributed at no charge to State and
            industry laboratories approved to participate in the NPIP.
      --$4,326,693 for Salaries, Benefits and Staff Support.--These funds
            provided for increased Federal personnel in both the Eastern
            and Western Area and Regional offices and activities for
            implementation and compliance with program requirements to
            support the States in managing and preventing LPAI infections.
            Seventeen Federal personnel have been hired and the funds are
            being used for salaries, benefits, and staff support. We are in
            the process of hiring an additional 29 Federal personnel (i.e.,
            veterinary medical officers, epidemiologists, animal health
            technicians, laboratory technicians, etc.) to further support
            implementation of the program.
      --$600,000 for the Center for Veterinary Biologics (CVB).--Funds have
            been used for the expansion of an AI vaccine bank through a
            contract with a biologics company. While vaccines are not used
            routinely to prevent H5 and H7 infections, vaccines still have
            a potential role for assisting in the control of a large
            outbreak or in a situation where depopulation of infected
            flocks infested with avian influenza (AI) is not possible or
            feasible. APHIS anticipates completion of the Statement of Work
            (SOW) for this contract will be completed by the end of May
            2005. The SOW will be submitted to with a requisition and the
            solicitation for bids will be prepared and published. A
            contract will be signed this fiscal year.
      --$513,575 for Education and Outreach Initiatives.--Funds are being
            used for training all newly hired Federal personnel as well as
            all LBMS participants in the recognition of AI, and for the
            enhancement of biosecurity practices in live bird markets,
            auctions, wholesalers, distributors, dealers and producer
            facilities. APHIS continues to provide training courses, and to
            produce and distribute educational materials for the LBMS
            personnel and participants.
      --$555,900 for Information and Technology Support.--These funds are
            supporting the cost of certifying, accrediting, refining and
            securing an information technology system to collect AI data
            and acquiring the communications technology needed for carrying
            out the LPAI program. The system is currently under development
            and is expected to be ready to implement by the end of the
            calendar year.
        In addition to appropriated funding, on May 12, 2004, $13,700,000
    was transferred from the Commodity Credit Corporation (CCC) for use by
    the LPAI program. APHIS distributed $2.7 million to pay for Federal and
    State (Texas) personnel and supplies necessary to conduct the
    depopulation, surveillance and laboratory activities associated with
    this outbreak. Indemnity was also paid to the producer to cover bird
    losses and disposal, and, cleaning and disinfection. Of the remaining
    $11 million allocated to begin the LPAI program, $6 million was held in
    reserve to cover future indemnities and emergency costs is the case of
    future outbreaks. There was another outbreak in Texas in June 2004 and
    payment amounts are currently being finalized. APHIS distributed $2.2
    million in the form of cooperative agreements with States, particularly
    in the northeast, to support surveillance activities in the live bird
    marketing system. The Agency provided $1 million to NVSL to support the
    production and distribution of AI reagents to State and industry labs
    approved within the NPIP program. APHIS also provided: $600,000 to hire
    and support additional Federal field personnel, primarily in the
    Eastern Region; $500,000 to support the development of an AI vaccine
    antigen bank through a competitive contract with a biologics producer;
    and $300,000 to support laboratory activities in Delaware and Maryland
    where an outbreak of LPAI occurred in February 2004.

                            CHRONIC WASTING DISEASE

        Question. Chronic wasting disease has been present in the United
    States for a number of years and has been present in the State of
    Wisconsin. Now, it has been reported that this disease has been located
    in New York State. Obviously, the disease is continuing to spread.
    Please provide information on how funds for chronic wasting disease
    have been used in fiscal year 2005 and how the Department plans to use
    funds proposed for fiscal year 2006.
        Answer. Aside from congressionally directed funds, the total
    appropriated Chronic Wasting Disease (CWD) line item is divided equally
    between the farmed/captive cervid and the free-ranging deer and elk
    programs. Activities conducted as part of the farmed cervid program
    include laboratory testing; and the appraisal, indemnity, depopulation
    and disposal of voluntarily depopulated animals. Activities conducted
    as part of the wildlife program include establishing cooperative
    agreements with State wildlife agencies and Tribes, evaluating new
    testing technologies, and supporting methods development at APHIS'
    National Wildlife Research Center.
        The fiscal year 2006 President's budget proposes a 10 percent
    reduction in the CWD line item funding. This will result in various
    reductions, particularly in the areas of indemnities and cooperative
    agreements. With the recent detection of CWD in wild deer in New York,
    APHIS will continue to work with the International Association of Fish
    and Wildlife Agencies to revise the formula used for determining the
    amount provided for cooperative agreements with State wildlife
    agencies.
        Question. Please provide information on the problem of the
    continuing spread of this disease. Do you think current efforts by USDA
    and the States is effective in the control of this disease or is a
    different approach warranted?
        Answer. It is not entirely clear whether the disease is spreading,
    or whether our enhanced surveillance efforts are detecting disease that
    has been present in the cervid population for some time. Furthermore,
    much is still unknown about the modes of transmission for CWD, and the
    control measures currently in place may need to be adjusted as our
    knowledge improves. There is evidence of direct horizontal transmission
    from animal to animal and some degree of transmission through means of
    environmental contamination.
        APHIS is proposing a rule that will limit interstate movement of
    participating farmed cervids and identify contaminated properties where
    CWD is found, thus reducing the potential for disease spread. This rule
    should allow the industry to move well-monitored and low risk animals
    while detecting, and hopefully eliminating, CWD-positive herds through
    increased surveillance testing, indemnity and depopulation. If it
    becomes clear that transmission is occurring through the movement of
    cervid carcasses, products, or other materials, regulations could be
    promulgated to address that concern.
        Control of CWD in wild deer and elk is a much greater problem. Due
    to the complexity of authorities and jurisdictional responsibilities
    for wildlife management that are divided between States, Tribes and
    other Federal agencies, APHIS has worked diligently to develop a
    variety of management approaches that are currently being utilized in
    the monitoring and surveillance of CWD in wild populations. Because of
    this cooperative effort, the information gathered through wildlife
    surveillance continues to increase our understanding of this disease.

                                SUDDEN OAK DEATH

        Question. The President's budget includes a significant decrease in
    APHIS funding for sudden oak death. However, there have been concerns
    that this disease might be spreading to other States and regions of the
    country. Please provide an update on surveillance and other activities
    to detect, monitor, and control sudden oak death, including a
    description of areas where it has been located and the rate at which
    the disease has spread.
        Answer. APHIS is working with the U.S. Forest Service (USFS) and
    State cooperators to prevent the introduction of the pathogen
    Phytophthora ramorum (PR), which causes SOD, and prevent SOD
    development in new areas. To accomplish these goals, we are destroying
    plants with PR in nurseries, enforcing quarantines to contain PR,
    executing a 50-State national survey of high-risk nurseries, and
    tracking the origin and destination of infected plant material. These
    activities help determine the extent of PR migration, while minimizing
    its impact on commerce and the environment. Through these activities,
    we are protecting the Nation's landscape, the complex ecosystems that
    native oaks support, and the economic livelihood of several
    industries--such as forest products--from potentially huge losses.
        In January 2005, we implemented an Emergency Federal Order that
    requires all nurseries in California, Oregon, and Washington to have
    their nurseries found free of PR before they are shipped interstate.
    These actions are critical because some nurseries in these States have
    been responsible for widespread movement of PR, and because PR's host
    range is not yet fully defined. The Order has helped prevent further PR
    spread through nursery shipments, while still allowing the interstate
    movement of healthy plants. If PR is detected in the environment
    outside the West Coast, APHIS would implement an Incident Command
    System and initiate a rapid eradication or management response.
        When APHIS initiated SOD regulations in fiscal year 2002, PR was
    established in 10 California counties and one county in Oregon.
    Currently, PR is established in 14 California counties and one county
    in Oregon. It has not become established in any other State, or in any
    forested area outside the 15 counties. However, it has been detected in
    nursery stock in 21 States: Alabama, Arkansas, Arizona, California,
    Colorado, Connecticut, Florida, Georgia, Louisiana, Maryland, North
    Carolina, New Jersey, New Mexico, Oklahoma, Oregon, Pennsylvania, South
    Carolina, Tennessee, Texas, Virginia, and Washington.

                                JOHNE'S DISEASE

        Question. The President's budget includes a very substantial
    decrease in funding for Johne's disease. Please provide information on
    activities of the Department, including those in conjunction with the
    States, during fiscal year 2005 for control of this disease.
        Answer. The Johne's program is voluntary in nature and managed
    using a Federal, State and industry cooperative approach. It has been
    developed in cooperation with the National Johne's Working Group and
    the Johne's Committee of the U.S. Animal Health Association, State
    Veterinarians, and industry representatives. Each State has a Johne's
    Disease Group (comprised of producer, university, laboratory,
    regulatory and veterinary practitioner representatives) to assist the
    State with program development. In October 2004, APHIS, in conjunction
    with States, affected industries, and producers, developed a national
    Johne's disease strategic plan to help reduce the prevalence of the
    disease in the United States. The strategic plan includes the Voluntary
    Bovine Johne's Disease Control Program, which provides testing
    guidelines for States to use to identify cattle herds at low risk for
    Johne's disease infection and best management practices associated with
    controlling Johne's disease on infected farms. APHIS has established a
    National Demonstration Herd Project with the primary objective to
    validate the long term use of these best management practices on the
    control of Johne's disease. Secondary objectives include the creation
    of additional training materials for producers and veterinarians and
    evaluate testing and monitoring strategies to control Johne's disease.
    Currently, APHIS is completing the second year with 60 dairy herds and
    16 beef herds enrolled in the project. The project will provide more
    economic data for the costs of managing the disease and the costs
    versus benefits of control measures in the future. This demonstration
    herd project is a 5 year project, and interpretation of project results
    will start to become available in 2006.
        APHIS is continuing to look for greater sensitivity and specificity
    of diagnostic tests and testing strategies (such as validating pooled
    fecal culturing or environmental sampling as a way to screen herds to
    determine infection status). More sensitive tests could lead to earlier
    identification of infected animals, allowing for quicker disease
    containment actions.
        Question. Please provide information regarding the rate and extent
    of spread of this disease and the economic consequences it poses to the
    United States dairy industry.
        Answer. APHIS estimates that Johne's disease is present in
    approximately 22 percent of all dairy herds and 8 percent of all beef
    herds in the United States. Economic losses, associated with the
    disease resulting in reduced milk production and premature culling, are
    estimated to cost the U.S. dairy industry between $200 and $250 million
    per year.

                     NATIONAL ANIMAL IDENTIFICATION SYSTEM

        Question. The fiscal year 2005 Agriculture Appropriations bill
    included a number of provisions related to animal livestock
    identification programs, including the Wisconsin Livestock
    Identification Consortium. Please provide an update on how these
    programs have been coordinating their activities and explain to what
    extent these programs are contributing to a National Animal
    Identification program.
        Answer. The Wisconsin Livestock Identification Consortium (WLIC),
    through a cooperative agreement administered by APHIS, has developed a
    premises registration system that served as the prototype for a
    national Standardized Premises Registration System (SPRS) that APHIS
    now offers to any State wishing to use the system. Through the
    cooperation of many, the WLIC is working with Federal, State, and
    industry leaders to generate the public support necessary so that
    premises registration will become mandatory. The WLIC has also been
    able to build consensus on a variety of other issues including what
    pilot projects to support in the State, and how to implement the next
    phases of NAIS. From this experience, USDA has proposed in the draft
    program standard for NAIS that each State forms a similar animal
    identification coordinating committee composed of State, Federal, and
    industry stakeholders as part of the Stage I requirements.
        Another project, also funded as a cooperative agreement
    administered by APHIS, is the Farm Animal Identification and Records
    (F.A.I.R.) project. This project continues to demonstrate the value of
    automatic data collection at key locations in the United States. The
    Radio Frequency Identification (RFID) automatic readers in livestock
    markets and slaughter establishments in the original pilot States of
    New York, Pennsylvania, Wisconsin and California have demonstrated the
    ability of capturing animal identification associated with key
    movements and/or events. The project was also used to help manage the
    movement of cattle in Michigan to support the Bovine Tuberculosis
    eradication program in that State. Over 125,000 animal movements have
    been recorded using this system. Several other States are looking at
    the F.A.I.R. system to track animal movement. As this data collection
    infrastructure is utilized, it will provide a highly beneficial
    contribution to the implementation of the animal tracking phase of
    NAIS.
        Question. Please provide information regarding the types of
    technologies the Department is considering for use in implementing a
    National Animal Identification program.
        Answer. APHIS understands that there is no ``one-size-fits-all''
    identification technology. Many methods are currently on the market,
    such as branding, radio frequency identification devices and retinal
    scans. It is likely that some technologies will work better for certain
    animal species than others. The integration of animal identification
    technology standards (electronic identification, retinal scan, DNA,
    etc.) will be determined by industry to ensure the most practical
    options are implemented and that new ones can easily be incorporated
    into the National Animal Identification System. As specific
    technologies are determined, the standards for those technologies will
    be established to ensure compatibility across all sectors of the
    industry. For example, the cattle industry is recommending radio
    frequency identification eartags, using the international standards for
    Radio Frequency Identification of animals. When the industry widely
    adopts a technology, USDA will take the necessary steps to recognize
    the methods through regulatory changes.

                               WILDLIFE SERVICES

        Question. Please provide an update on activities relating to wolf
    predation measures in the Upper Midwest.
        Answer. Wolves continue to colonize much of the northern and
    central forest regions of Wisconsin. The gray wolf population continues
    to increase each year by an average of 12 percent. The number of wolf
    complaints that APHIS investigates each year has increased
    proportionally to the increase in the gray wolf population. Since 2000,
    the number of wolf complaints has increased by 231 percent. During
    2004, APHIS investigated 126 wolf damage complaints. Wolf depredation
    on livestock has steadily increased from 2001 to 2004. The increase in
    wolf complaints and damage is likely to continue until the gray wolf
    population levels off. APHIS responds to all wolf damage complaints in
    Wisconsin and utilizes a variety of techniques to resolve damage issues
    which include the use of non-lethal techniques such as electronic
    guards and visual deterrents.
        In Minnesota, depredation by wolves on livestock and poultry is a
    problem for some producers. While only a small percentage of the farms
    in the wolf range are affected annually, some of these farms will
    suffer substantial monetary loss in a given year. From 1976 through
    2004, the number of farms suffering verified wolf depredations ranged
    from 9 to 99 per year out of about 8,000. APHIS captured an average of
    135 wolves through Wildlife Services depredation control programs
    during the past 5 years. Minnesota's wolf population currently has
    stabilized at about 3,000 wolves. Sarcoptic mange, also known as
    scabies, had a noticeable impact on Minnesota wolves during 2000-2004.
    It is expected that wolves will continue to colonize more agricultural
    areas of the State and will cause increasing conflicts with livestock.
    Consequently, it will become necessary for APHIS personnel to resolve
    wolf damage problems at a growing number of farms scattered across an
    expanding wolf range. As depredation control actions increase, the
    number of wolves taken each year is also likely to increase.
        Question. Please provide information relating to beaver management
    in State of Wisconsin.
        Answer. Beavers continue to cause major damage to valued resources
    in Wisconsin. Since the population explosion in the mid 1980s, beavers
    have caused millions of dollars worth of damage to many resources
    including trout stream habitats, roads, timber, wild rice, and other
    sensitive habitats. In 1988, APHIS implemented a beaver damage
    management program in northern Wisconsin to assist cooperators in
    resolving beaver conflicts/damage. Currently, APHIS cooperates with the
    Wisconsin Department of Agriculture, Trout Unlimited, and the U.S.
    Forest Service in northern Wisconsin to protect over 1,200 miles of
    high quality trout streams. However, this represents only 10 percent of
    the trout stream miles in the State. APHIS also cooperates with nine
    county highway and forestry departments and over 50 local townships to
    protect roads and timber resources from beaver damage. APHIS resolves
    over 400 of these resource conflicts annually. The APHIS beaver damage
    management program is a cost-share program with cooperative funding
    coming from State and county governments and private entities. This
    cooperative program saves cooperators a potential loss of over $1
    million annually.
        Question. Please provide information relating to crane operations
    in the State of Wisconsin.
        Answer. The sandhill crane has experienced dramatic population
    increases over the last 20 years to the point that they are often
    implicated in agricultural crop damage situations throughout Wisconsin.
    In 2004, one potato grower alone reported over $37,000 in damages to
    his crop from feeding sandhill cranes. APHIS conducts site visits to
    assess damage and recommends abatement options to alleviate the
    problem. APHIS provides harassment devices, such as propane cannons and
    pyrotechnics, to make the birds uncomfortable in crop fields. Many crop
    owners get frustrated and often request a Federal depredation permit to
    lethally remove sandhill cranes that become accustomed to the
    harassment techniques. In 2004, APHIS received 55 reports of
    agricultural damage from crop owners who wanted to attempt to lethally
    remove cranes in Wisconsin. In the past, many crop owners were able to
    successfully deter sandhill cranes by using a corn seed treatment that
    was removed from the market in 2004 with no replacement pesticide. This
    will increase the pressure on APHIS to provide services.
        In addition, sandhill cranes can pose safety hazards at airports
    throughout the State. Several airports in Wisconsin have contacted
    APHIS to request recommendations and permits to remove or reduce the
    hazards caused by sandhill cranes using airport property. Sandhill
    cranes weigh on average 8-10 pounds, creating an extremely hazardous
    situation when encountered by aircraft while in flight. In 2004, APHIS
    was contacted by five airports who requested Federal depredation
    permits to lethally remove sandhill cranes that posed a risk to human
    health and safety and aircraft. In 2005, eight airports have requested
    these services.
                                     ______

                Questions Submitted by Senator Mary L. Landrieu

                               WILDLIFE SERVICES

        Question. What Wildlife Service methods development efforts are
    underway to reduce blackbird damage to the rice industry?
        Answer. In fiscal year 2005, APHIS' Wildlife Services Methods
    Development efforts to reduce blackbird damage to the rice industry
    include investigating non-lethal solutions. These include development
    of chemical bird repellents and baits to deter blackbirds from seeded
    and ripening rice, and improving methodology for reducing depredating
    blackbird populations on rice farms in Louisiana, Arkansas, Texas and
    Missouri.
        Question. What resources are allocated to this effort, and what
    additional resources would be required to accelerate methods
    development to reduce blackbird depredations on rice?
        Answer. In fiscal year 2005, APHIS allocated $313,998 ($289,998 for
    personnel and $24,000 operating expenses) to work on this problem,
    including two research biologists and two technicians. APHIS projects
    that an additional $400,000 is required to accelerate laboratory and
    field research efforts to develop and register a repellent for
    protecting seeded and ripening rice; to develop an improved lethal bait
    for reducing depredating blackbird populations; and to evaluate
    alternative management strategies on rice farms to reduce blackbird
    damage to rice in Louisiana, Arkansas, Texas and Missouri.
                                     ______

                   Questions Submitted by Senator Tom Harkin

                                  SOYBEAN RUST

        Question. Over the last few months, since the finding of soybean
    rust in Louisiana, a lot of work has been undertaken to establish an
    extensive surveillance and monitoring program to track the progress of
    soybean rust. Officials from USDA hosted a workshop in Indianapolis in
    early February to lay out their plans to establish a network of
    sentinel plots in cooperation with State governments and private
    groups. Soybeans were planted more than a month ago in the southern-
    most growing regions in the United States, and soon will be planted
    across our Nation. It is critical to have an early warning system in
    place to alert producers to treat their fields. I wrote to you on
    January 27, 2005 to urge you to allocate funds from the Commodity
    Credit Corporation to launch this early warning system against soybean
    rust, and I understand that this recommendation was endorsed by career
    USDA staff. What action has the Department taken to create this system?
        Answer. USDA's coordinated framework for the soybean rust (SBR)
    response includes five components: (1) monitoring and surveillance; (2)
    predictive modeling; (3) web-based dissemination of information; (4)
    decision criteria for fungicide application; and (5) outreach. The
    activities under these components build on our efforts to prepare for
    the arrival of the disease, which include cooperating with the soybean
    industry on a range of educational and awareness efforts and sponsoring
    the development of a predictive modeling system for SBR. The predictive
    modeling system is already functioning, and APHIS and cooperating
    officials are entering survey data into the system as it becomes
    available. Survey data is available on USDA's comprehensive SBR
    website, which also provides detection and identification tips,
    information on fungicide use, and local extension agents' contact
    information, among other things.
        APHIS is releasing $1.19 million from the Agency's contingency fund
    to support the monitoring and surveillance network with State
    cooperators and continued maintenance of USDA's comprehensive SBR
    website. APHIS is providing $800,000 of these funds to State
    cooperators through the Cooperative Agricultural Pest Survey (CAPS)
    network to establish sentinel plots for surveillance. APHIS officials
    have completed many of the CAPS agreements and are working diligently
    to complete the remaining agreements. State cooperators have already
    established sentinel plots in many areas, especially in southern
    States, and the results of surveys are already displayed on USDA's SBR
    website. APHIS is using $180,000 of the contingency funds to establish
    five mobile monitoring teams to provide timely support for the
    detection network. The remaining funds will support continued
    development and maintenance of USDA's SBR website and modeling system.

                           ORGANIC COST-SHARE FUNDING

        Question. Section 10606 of the 2002 farm bill created a national
    organic cost-share program to offset the cost of certification under
    the National Organic Program for organic producers and handlers. Five
    million dollars was provided for this program, to be available until
    expended. At this time, it appears there is roughly $1.5 million left
    for cost-share funding. It is unclear how long these funds will remain
    available for producers and handlers before running out.
        How long does USDA/AMS perceive the remaining roughly $1.5 million
    in cost-share funding will last before running out?
        Answer. AMS has obligated essentially all of the initial $5,000,000
    provided for cost-share funding. Of the total, $30,000 has been
    retained to cover unexpected spikes in utilization by the States.
        Question. Will sufficient funds last throughout fiscal year 2006?
    How much in additional funding would AMS need to keep this program
    active until the next farm bill?
        Answer. Based on current utilization patterns, we anticipate that
    the initial funding will be fully exhausted by the States by the third
    quarter of fiscal year 2006. It should be noted, however, that the use
    of funds by the States, in terms of amounts and timing, can be highly
    variable. We estimate that the States would require $1,200,000 in
    additional funding to keep the program active between the third quarter
    of fiscal year 2006 and passage of the next farm bill.

                     NATIONAL ANIMAL IDENTIFICATION SYSTEM

        Question. As USDA moves forward with implementation of a national
    animal identification system, it still remains unclear exactly where
    data will be kept as it is submitted by producers from across the
    United States. Does USDA plan to maintain and control a central
    database for all species of animals? Or, does USDA plan to maintain and
    control regional databases as a repository for all or certain selected
    species?
        Answer. The primary information system components of the National
    Animal Identification System (NAIS) would include the National Premises
    System and National Animal Identification and Tracking System. The two
    main NAIS information repositories would be maintained and centrally
    managed by APHIS. The overall system would allow for the identification
    of each premises and the recording and reporting of animal
    identification and animal movement data. Additionally, the system would
    associate or link the animal identification data to each premises where
    the animal or group was located and the specific dates on which the
    animal(s) was at the premises. Only information essential to the
    enhancement of animal disease surveillance and monitoring would be
    stored in a Federally-managed database under the NAIS.
        Premises registration systems for all species are currently
    maintained and operated by the States or regional alliances or third
    parties, and essential data is forwarded to the National Premises
    Information Repository. USDA is in the process of building a National
    Animal Identification and Tracking System and a National Animal Records
    Repository. Once participating State/regional and third-party systems
    have been evaluated for data compliance, APHIS would support the
    establishment of interfaces between these systems and the national
    repositories. The State/regional systems or third-party systems would
    be able to collect and maintain more information than is required for
    NAIS, but only the federally required data would need to be sent to the
    national repositories. NAIS data would be kept confidential to the
    extent allowed by law, and routine access would be restricted to State
    and Federal animal health officials when information is required to
    perform their responsibilities for maintaining the health of the U.S.
    herd.
        Question. Exactly who will house the data?
        Answer. The premises information and animal records repository will
    be maintained by APHIS at the Centers for Epidemiology and Animal
    Health facility in Fort Collins, Colorado. In the future, the system
    will be housed at the National Technology Information Center in Kansas
    City, Missouri. This move will give NAIS a more robust hardware
    infrastructure will full system security and 24/7 surveillance for
    system operation.
        Question. If private firms maintain the data how will USDA have
    control of and have access to that information?
        Answer. To ensure that animal heath officials would have immediate,
    reliable, and uninterrupted access to essential National Animal
    Identification System information in the event of a disease concern,
    certain basic data would be maintained at the Federal level.
    Accordingly, the two main NAIS information repositories, the National
    Premises Information Repository and the National Animal Records
    Repository, would be maintained and managed by APHIS. If data that is
    required by animal health officials to perform their duties is held
    privately, the same degree of access must be assured.

                            CONCLUSIONS OF HEARINGS

        Senator Bennett. Thank you very much, Senator Kohl.
        I have no further questions. Gentlemen, thank you for your
    service to the country and to the department.
        The hearing is recessed.
        [Whereupon, at 2:56 p.m., Thursday, April 14, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]