[Senate Hearing 109-]
[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.]
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