[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                     U.S. DEPARTMENT OF AGRICULTURE 
                   FISCAL YEAR 2008 BUDGET PRIORITIES 
=======================================================================
                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

           HEARING HELD IN WASHINGTON, DC, FEBRUARY 15, 2007

                               __________

                            Serial No. 110-8

                               __________

           Printed for the use of the Committee on the Budget


                       Available on the Internet:
       http://www.gpoaccess.gov/congress/house/budget/index.html

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                        COMMITTEE ON THE BUDGET

             JOHN M. SPRATT, Jr., South Carolina, Chairman
ROSA L. DeLAURO, Connecticut,        PAUL RYAN, Wisconsin,
CHET EDWARDS, Texas                    Ranking Minority Member
LOIS CAPPS, California               J. GRESHAM BARRETT, South Carolina
JIM COOPER, Tennessee                JO BONNER, Alabama
THOMAS H. ALLEN, Maine               SCOTT GARRETT, New Jersey
ALLYSON Y. SCHWARTZ, Pennsylvania    THADDEUS G. McCOTTER, Michigan
MARCY KAPTUR, Ohio                   MARIO DIAZ-BALART, Florida
XAVIER BECERRA, California           JEB HENSARLING, Texas
LLOYD DOGGETT, Texas                 DANIEL E. LUNGREN, California
EARL BLUMENAUER, Oregon              MICHAEL K. SIMPSON, Idaho
MARION BERRY, Arkansas               PATRICK T. McHENRY, North Carolina
ALLEN BOYD, Florida                  CONNIE MACK, Florida
JAMES P. McGOVERN, Massachusetts     K. MICHAEL CONAWAY, Texas
BETTY SUTTON, Ohio                   JOHN CAMPBELL, California
ROBERT E. ANDREWS, New Jersey        PATRICK J. TIBERI, Ohio
ROBERT C. ``BOBBY'' SCOTT, Virginia  JON C. PORTER, Nevada
BOB ETHERIDGE, North Carolina        RODNEY ALEXANDER, Louisiana
DARLENE HOOLEY, Oregon               ADRIAN SMITH, Nebraska
BRIAN BAIRD, Washington
DENNIS MOORE, Kansas
TIMOTHY H. BISHOP, New York

                           Professional Staff

            Thomas S. Kahn, Staff Director and Chief Counsel
                James T. Bates, Minority Chief of Staff



















                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, February 15, 2007................     1
Statement of:
    Hon. John M. Spratt, Jr., Chairman, House Committee on the 
      Budget.....................................................     1
    Hon. Paul Ryan, a Representative in Congress from the State 
      of Wisconsin...............................................     2
    Hon. Mike Johanns, Secretary, U.S. Department of Agriculture.     3
        Prepared statement of....................................     7
    Dr. Deborah A. Frank, director, Grow Clinic for Children at 
      Boston Medical Center, and principal investigator, 
      Children's Sentinel Nutrition Assessment Program (C-SNAP)..    52
        Prepared statement of....................................    58
    Denise Holland, executive director, Harvest Hope Food Bank...    64
        Prepared statement of....................................    68


                     U.S. DEPARTMENT OF AGRICULTURE
                   FISCAL YEAR 2008 BUDGET PRIORITIES

                              ----------                              


                      THURSDAY, FEBRUARY 15, 2007

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 2:08 p.m., in room 
210, Cannon House Office Building, Hon. John M. Spratt, Jr. 
[Chairman of the Committee] presiding.
    Present: Representatives Spratt, DeLauro, Cooper, Allen, 
Kaptur, Becerra, Doggett, Blumenauer, Berry, Boyd, McGovern, 
Etheridge, Hooley, Moore, Bishop, Ryan, Bonner, Hensarling, 
Lungren, Tiberi, Alexander, Smith.
    Chairman Spratt. I would like to begin this hearing, the 
first thing, I welcome and thanks to our three distinguished 
witnesses, on the first panel, the Secretary of Agriculture, 
Mike Johanns, in addition, Deputy Secretary Conner and Budget 
Officer Scott Steele, and Chief Economist Keith Collins.
    Furthermore, I would like to welcome our witnesses on the 
second panel, Dr. Deborah Frank and Denise Holland of the 
Harvest Hope Bank in South Carolina.
    Thank you, all of you, for taking time out to meet with us 
today. Your testimony and your answers to our questions will 
help us as we move forward with our own budget, and we value 
your contribution and your addition to the budget process.
    The purpose of this hearing is twofold. In the first panel, 
we want to discuss both USDA's 2008 budget request and USDA's 
proposals for reauthorizing the Farm Bill that expires at the 
end of this year, a major hurdle as we go forward in this 
fiscal year.
    This hearing will provide the members of this Committee a 
chance to ask the Secretary in greater detail and depth how his 
budget and the Farm Bill will impact important programs that 
provide valuable services to our communities.
    For example, Mr. Secretary, we would like to explore with 
you in greater detail your proposals for the Department's food 
and nutrition programs. We are likewise interested in 
understanding how your proposals will impact rural communities 
which many of us represent, such as your proposed changes in 
the Rural Housing Program.
    Because the Farm Bill is expiring this year, we are given a 
significant opportunity to improve the programs that provide 
safety nets not only for the nation's farmers and ranchers but 
also for natural resources, for rural communities, and for low-
income citizens.
    I know, Mr. Secretary, that you and your Department have 
spent considerable time and energy over the past two weeks 
meeting with interested groups and explaining your proposals to 
those of us here in Congress.
    I appreciate your willingness to meet with us on this 
Budget Committee and give us an opportunity to learn in greater 
detail how your proposals would reform the Farm Bill.
    We are particularly interested in discussing with you 
USDA's proposals on the commodity, conservation, and nutrition 
titles of your bill. There are some inconsistencies with your 
budget request for 2008 also that members may wish to explore.
    We have a second panel, and we will hear on the second 
panel from two guests who have taken the problem and tackled 
the problem head on of poverty in their communities, and hunger 
in their communities.
    According to the USDA, in 2005, 34 million Americans were 
food insecure. Nearly 11 million were hungry, went to bed 
hungry, 606,000 of them children. Unfortunately, many of the 
families struggling with hunger live in my State of South 
Carolina and I know the problem firsthand. I have seen it 
firsthand, but it is one that afflicts the whole country.
    Dr. Deborah Frank spends her days treating poor children 
suffering from malnutrition at her Boston clinic. Another part 
of the country, but still no part of the country escapes this 
problem.
    Denise Holland is the Executive Director of the Harvest 
Hope Food Bank which provides food for 149,000 people in 
central South Carolina who otherwise would have to do without.
    I look forward to hearing from both witness, Dr. Frank and 
Mrs. Holland, about the real people who they are trying to help 
and their suggestions for how we in the Congress can help also.
    Mr. Secretary, we welcome you here today. We will accept 
your statement for the record so that you can summarize or 
paraphrase as you please. But before going to you, let me offer 
the floor to Mr. Ryan for any comments he may wish to make.
    Mr. Ryan. I thank the Chairman.
    I also, too, want to extend our heartfelt welcome to 
Secretary Johanns. It is nice to have you here.
    There is no question that the Farm Bill provides programs, 
a critical safety net for our family farmers across the nation. 
This is certainly true in my home State of Wisconsin where 
agriculture is a $51 billion industry in our State's economy. 
And in my district where we contribute heavily to the nation's 
output of dairy, corn, and soybeans, it is a big issue where I 
come from.
    That said, there is no question that these programs can be 
reformed and improved to better meet the needs of the family 
farmer. Not only do we need to make these programs more cost 
effective, we need to do a better job of allocating resources 
for these programs to those who actually need them.
    I do not believe that we should be sending federal support 
checks for hundreds of thousands of dollars to any one farmer 
who is probably pretty well off already. That was never the 
point of these programs.
    We have got to ensure that we are focusing this assistance 
to helping the family farmer who for reasons completely outside 
of their control, weather, disease, pest damage, et cetera, are 
going to run into trouble every now and then.
    Those are the people these programs were intended to help 
in the first place. Along these lines, I am pleased to see in 
the President's budget a proposal to means test for farm 
program assistance.
    One of the main provisions of this plan would be to 
prohibit commodity program subsidies to producers who are among 
the top 2.3 percent of American farmers with adjusted gross 
incomes above $200,000 or more.
    I also support the President's proposal to update the 
financial instruments that are available to family farmers. 
And, finally, I believe we should return to a freedom to farm 
model which allows our nation's farmers to make their own 
production decisions without interference from the federal 
government.
    There are a lot of ideas out there on how Farm Bill 
programs can be improved, and I think we need to have those 
discussions. The key is to ensure that we are helping those who 
actually need help while at the same time providing enough 
freedom and flexibility for farmers to respond to the ever-
changing marketplace and run their farms as they see fit.
    I look forward to this upcoming debate on the 
reauthorization of the Farm Bill, and this process will come 
through the Budget Committee. So this is something that each 
and every one of us in the Budget Committee are going to have 
to be mindful of and hopefully can help shape this discussion 
and send it in the right direction as we move forward.
    With that, Mr. Chairman, I want to thank the Secretary for 
coming. I look forward to your testimony.
    Chairman Spratt. Thank you, Mr. Ryan.
    Mr. Secretary, the floor is yours, and we look forward to 
your testimony.

   STATEMENT OF MIKE JOHANNS, SECRETARY, U.S. DEPARTMENT OF 
     AGRICULTURE; ACCOMPANIED BY CHARLES F. CONNER, DEPUTY 
  SECRETARY; W. SCOTT STEELE, BUDGET OFFICER; KEITH COLLINS, 
                        CHIEF ECONOMIST

                   STATEMENT OF MIKE JOHANNS

    Secretary Johanns. Mr. Chairman, thank you. It is an honor 
to be before this Committee.
    And to all the members, I look forward to your questions.
    What I would like to do is provide the Committee at the 
outset here with an overview of the Department's programs and 
maybe a few highlights from the 2008 budget request. I will 
begin, though, by providing a brief overview of the 2007 Farm 
Bill proposals that we announced on January 31st. In doing so, 
I will be better able to explain how the Farm Bill and the 
budget fit together.
    So starting with the 2007 Farm Bill proposals. The 2007 
Farm Bill proposals and the 2008 budget were developed on 
parallel tracks. The Administration's Farm Bill proposals 
represent the final phase of what has been nearly a two-year 
process.
    We listened closely to producers and stakeholders all 
across the country and took a reform-minded and a fiscally- 
responsible approach to making farm policy more equitable, more 
predictable, and protected from challenge in the world trade 
arena.
    While I firmly believe that the current law was the right 
policy for the times, times do change and they have changed. 
When the 2002 Farm Bill was passed, commodity prices were low, 
exports had declined for several years in a row, and the debt-
to-asset ratio on agriculture was right at 15 percent.
    Now, today, we just see a vastly different economic 
picture. Commodity prices are strong for most program crops. 
Exports have set records now several years in a row, including 
a record 68 billion in 2006. And projections are that we will 
reach another record this year, $77 billion.
    We are experiencing the lowest debt-to-asset ratio in 
recorded history. We have never been at this level before. It 
was at about 11 percent in 2006. Add to all of this the 
enormous impact that renewable energy has had on our Ag economy 
and it is pretty clear times have changed.
    The time has come to move forward with a farm program that 
is market oriented and considers more than commodity prices 
alone when determining the appropriate level of governmental 
support.
    Farm Bill proposals bolster this Administration's 
commitment to conservation programs that protect our natural 
resources. That would be an increase of $7.8 billion over the 
ten-year score.
    We propose an additional $1.6 billion over that same time 
frame to advance the development and the advancement of 
renewable energy. This is targeted at cellulosic ethanol. This 
will help us to achieve the President's goal of reducing annual 
gasoline use by ten percent in ten years.
    We propose funding to support $1.6 billion in loans to 
rehabilitate more than 1,200 rural critical-access hospitals. 
Another $400 million would be focused on trade and making sure 
our producers have a level playing field in the global market.
    These are just a few highlights. I could do a couple of 
hours on these proposals. I will not do that. But when 
combined, the proposals would spend about ten billion less than 
was spent in the 2002 Farm Bill over the past five years 
excluding ad-hoc disaster assistance.
    Importantly, they uphold the President's plan to eliminate 
the deficit in five years. On the other hand, looking forward, 
our proposals would provide about five billion more than the 
projected mandatory spending if the 2002 Farm Bill were just 
simply extended.
    And this comment brings me to our budget proposal. The 2008 
budget accommodates our Farm Bill proposals, and here is how it 
is done.
    It includes an additional 500 million per year in the total 
for the Commodity Credit Corporation. This, if you will, is a 
placeholder in the budget, and it would be spread over the 
various titles of the bill. This level extended for ten years 
would cover the full estimated cost of the proposals.
    The President's 2008 budget funds our highest priorities 
while exercising the kind of fiscal discipline that is 
necessary to achieve the goal of strengthening the economy and 
balancing the budget by 2012.
    Before I present the highlights, let me take a moment to 
explain how USDA expenditures are divided. USDA outlays are 
estimated to total about $89 billion in 2008. That would be 
roughly the same level as for 2007.
    Of the total outlays for the Department, 59 percent support 
domestic nutrition assistant programs. Spending for farm and 
commodity programs, although we are probably best known for 
that, account for about 19 percent of our budget.
    Conservation and forestry account for about 11 percent and 
the remaining 11 percent represents a whole host of other 
programs from rural development to research to food safety, 
animal and plant health, international programs, and 
administration.
    Another way to look at our budget is the breakdown between 
the mandatory side and the discretionary side. For 2008, 
mandatory outlays represent 75 percent of the Department's 
total while discretionary programs account for about 25 
percent.
    Mandatory outlays are actually dominated by a few programs. 
The nutrition assistance programs, including food stamp and 
child nutrition programs, actually account for 76 percent of 
our mandatory outlays for 2008.
    Farm programs funded by CCC and crop insurance account for 
about 24 percent of our mandatory outlays. Funding for 
nutrition assistance programs has grown from about 60 percent 
of our mandatory spending in 1999 to 76 percent in 2008.
    During the same time period, total spending on farm 
programs has declined from about 40 percent to 24 percent of 
the mandatory spending.
    Farm program spending through CCC is very highly variable. 
It reflects impacts of weather and changes in commodity 
markets, as well as emergency spending that may be allowed to 
address natural and economic disasters.
    The dramatic increase in ethanol production has 
significantly increased the demand for corn, and what that 
does, of course, is it pushed corn prices higher. This is 
expected to significantly reduce CCC outlays in the next few 
years.
    Both the Administration and the Congressional Budget Office 
January baselines for CCC showed this effect. We are not really 
in much disagreement there. CCC outlays are estimated to 
continue at an average of 12.4 billion from 2008 to 2017 under 
a simple extension of the current law.
    Mandatory costs of the Crop Insurance Program are estimated 
to be five billion in 2008, which is roughly double the level 
of ten years ago. These costs are expected to grow roughly two 
percent a year from 2008 to 2017.
    Turning now to our food and nutrition programs, the 2008 
budget fully funds the expected requirements of food stamps and 
child nutrition programs. Total outlays for these programs are 
expected to continue to increase by about four percent a year 
over the next several years due to inflation and changing 
demographics of the nation. Most significantly, an increase in 
school-age population.
    Although no program changes are sought for the child 
nutrition programs, a number of legislative changes are 
proposed for 2008 to improve access to food stamps as well as 
target them to those most in need.
    On the discretionary side of the ledger, outlays for USDA's 
2008 discretionary budget are estimated to be about 22 billion, 
about the same level as 2007, and I might add the same level as 
2006.
    The 2008 budget for discretionary programs reflects the 
President's priorities to encourage economic growth, increase 
our security while recognizing that fiscal discipline is 
absolutely necessary.
    The budget requests the resources necessary to protect the 
food supply and agriculture from a variety of threats that 
could have a devastating effect on animal and human health. 
This includes increased monitoring and surveillance of the food 
supply and development of technology that will enhance our 
ability to detect and respond to emergencies. That would 
include avian influenza and bovine spongiform encephalopathy, 
BSE.
    A record level of funding is also requested for meat, 
poultry, and egg product inspection. Another priority for the 
Department is a continued focus on expanding renewable energy 
resources. Funding for research that will improve cellulosic 
ethanol production and conversion of biomass into biofuels is 
increased.
    In addition, our rural development programs will increase 
the amount of financial support available to leverage private-
sector funding for small- and large-scale renewable energy 
generation activities.
    The budget also reflects the resources necessary to meet 
the requirements of the neediest in our nation. It supports 
average monthly participation of 8.3 million participants in 
the WIC Program, Women, Infant, and Children, an increase of 
100,000 participants per month over 2007.
    We are also providing 15 billion in rural development 
loans, grants, and other assistance for rural America. The 
Department will continue to foster environmental stewardship by 
providing conservation technical assistance to farmers and 
ranchers and landowners.
    The budget also includes four billion in mandatory spending 
for the Department's major conservation efforts which will 
support a record cumulative enrollment of 250 million acres in 
the various conservation programs.
    The budget for the Forest Service provides sufficient 
wildlife fire resources to protect communities and natural 
resources and provides for sustainable forests and communities 
through full funding of the Northwest Forest Plan and 
continuation of the Payments to States Program.
    We made difficult choices to keep spending under control 
while funding our priorities and balancing the budget. The 2008 
budget includes proposals to terminate low-priority or 
duplicative or poorly-performing programs.
    Let me just wrap up and say I look forward to working with 
Congress on the 2008 budget. I also look forward to working 
with Congress in crafting new farm policy. We are eager to 
ensure appropriate level of funding is made available to 
strengthen U.S. agriculture in rural America.
    With that, I will conclude my statements, and all of us 
here at the table look forward to answering your questions.
    [The prepared statement of Mike Johanns follows:]

                Prepared Statement of Hon. Mike Johanns,
               Secretary, U.S. Department of Agriculture

    Mr. Chairman and Members of the Committee, I am here today to 
discuss the programs and budget of the Department of Agriculture. I 
appreciate your interest in the Department of Agriculture and the 
benefits the Department's programs have for farmers, consumers, and a 
variety of other constituents. I am joined today by Deputy Secretary 
Chuck Conner; Scott Steele, our Budget Officer; and Keith Collins, our 
Chief Economist.
    The Administration has recently released two important documents 
that highlight our priorities for 2008. On January 31, 2007, I 
announced a comprehensive set of Farm Bill proposals to replace the 
expiring Food Security and Rural Investment Act of 2002 (2002 Farm 
Bill). On February 5, we released our 2008 budget. The Farm Bill 
proposals will modify some of the projected spending in portions of the 
budget. The Farm Bill proposals and the 2008 budget were developed on 
parallel tracks. Our priorities, including conservation, renewable 
energy, rural development and others, are covered in both the Farm Bill 
proposals and the 2008 budget. I will assure you that we are upholding 
the President's plan to eliminate the deficit within five years.
    I would like to provide the Committee an overview of the 
Department's diverse programs, review some key trends in our mandatory 
programs, including an overview of our 2007 Farm Bill proposals, and 
provide the highlights of our 2008 budget request for discretionary 
programs.
                       2008 total budget outlays
    USDA outlays are estimated to total $89 billion in 2008, roughly 
the same as the level estimated for 2007. Of the total outlays for the 
Department, 59 percent supports domestic nutrition assistance programs, 
including: food stamps, school lunch, and the Special Supplemental 
Nutrition Program for Women, Infants, and Children--better known as the 
WIC Program. Spending for farm programs, including commodity payments, 
farm loans and crop insurance, accounts for about 19 percent. 
Conservation and forestry programs account for about 11 percent. The 
remaining 11 percent represents all of the other programs operated by 
the Department--rural development, research, food safety, animal and 
plant health, international programs and administration.
    Another way to look at our budget is the breakdown between 
mandatory and discretionary spending. For 2008, mandatory outlays are 
$67 billion, or 75 percent of the Department's total. Outlays for 
discretionary programs are estimated to be $22 billion, or 25 percent 
of total outlays for the Department. The Department's largest 
discretionary program is WIC. Other programs in the discretionary 
category include the Forest Service, rural development, research, food 
safety, and plant and animal health.
                           mandatory outlays
    Mandatory spending is dominated by a small number of relatively 
large programs. Nutrition assistance programs, including Food Stamps 
and Child Nutrition Programs, account for $51 billion, or approximately 
76 percent of mandatory outlays. Crop insurance and farm programs 
funded by Commodity Credit Corporation (CCC) account for $16 billion, 
or approximately 24 percent of mandatory outlays.
    Within the mandatory category, the trend has been an increase in 
the share of outlays associated with the nutrition assistance 
programs--from 60 percent of mandatory spending in 1999 to 76 percent 
in the 2008 estimate. Mandatory nutrition assistance programs are the 
Food Stamp Program and Child Nutrition Programs, which includes the 
National School Lunch Program. The increase in nutrition assistance 
outlays is largely due to food cost inflation and increasing 
participation.
                         farm program spending
    During this same period, outlays for farm programs and crop 
insurance have declined from 40 percent to 24 percent of mandatory 
spending. Farm program spending can be highly variable, largely 
reflecting changes in commodity markets as well as emergency spending 
to address natural and economic disasters in the agriculture and rural 
economy. Mandatory spending on farm programs funded through CCC, 
including the Conservation Reserve Program (CRP), has decreased from a 
record-high of $32.3 billion in 2000 to just over $20 billion in 2006. 
We expect this trend to continue with CCC outlays estimated to decline 
to $11.7 billion in 2008 under current law, which assumes a simple 
extension of the 2002 Farm Bill. CCC outlays under the current law 
baseline are estimated to increase to an average of $12.4 billion 
annually from 2008 to 2017.
    The reduction in CCC outlays in 2007 to 2008 is driven largely due 
to higher crop prices. Prices are higher because of the dramatic 
increase in the demand for corn for ethanol production. Additionally, 
most of the other major commodities are also at relatively high price 
levels. These high commodity prices have lead to a significant 
reduction in CCC outlays, which indicates that farmers are relying more 
on the market for revenue than payments from the Government. Both the 
Administration and the Congressional Budget Office January baselines 
for CCC commodity programs show this effect. The rising demand of farm 
products for biofuel production coupled with strong export demand are 
expected to keep prices of most of the major CCC supported commodities 
at high levels for the coming years.
    The 2002 Farm Bill authorized a major expansion of other 
conservation and environmental programs administered by the Natural 
Resources and Conservation Service. These programs are authorized by 
Title II of the 2002 Farm Bill and include: the Environmental Quality 
Incentives Program (EQIP), the Conservation Security Program (CSP), and 
the Wetland Reserve Program (WRP). For 2007 and 2008, nearly $2 billion 
in mandatory funding will be spent each year on these programs. From 
2008 to 2017 the annual costs for these programs are estimated to 
average between $2 billion and $3 billion, assuming extension of the 
2002 Farm Bill. Within the amount for total CCC outlays, CRP accounts 
for $2 billion per year in 2007 and 2008 and will average approximately 
$2.5 billion annually over 2008 to 2017 under current law.
                             crop insurance
    The other major component of USDA mandatory outlays is the Federal 
crop insurance program, a significant element of the farm safety net. 
Through the crop insurance program, farmers and ranchers are able to 
reduce the impact of natural disasters. Crop insurance is delivered 
through private insurance companies that share in the risk of loss and 
opportunity for gain. The companies are reimbursed for their delivery 
expenses and receive underwriting gains in years of favorable loss 
experience.
    The mandatory costs associated with the crop insurance program 
include premium subsidies, indemnity payments (in excess of premiums), 
underwriting gains paid to private companies, reimbursements to private 
companies for delivery expenses and other authorized expenditures. 
While these costs are considered mandatory, they are subject to the 
annual appropriations process. Recognizing the uncertain nature of 
forecasting crop losses, in recent years, appropriations acts have 
provided ``such sums as necessary.'' For 2008, the budget estimates 
about $5 billion for the mandatory costs of the crop insurance program, 
which is roughly double the level of ten years ago. These costs are 
expected to grow roughly 2 percent a year from 2008 to 2017 with 
estimated total costs of over $6 billion in 2017.
                food stamps and child nutrition programs
    The 2008 budget fully funds the expected requirements for Food 
Stamp and Child Nutrition programs. For Food Stamps, the budget 
includes nearly $37 billion to fully fund estimated Food Stamp 
participation and food cost inflation. Food Stamp participation is 
projected to decline modestly from 26.3 million in 2007 to 26.2 million 
in 2008. The budget provides over $14 billion for Child Nutrition 
Programs. This will support National School Lunch Program participation 
of 31.5 million children each day as well as food cost inflation.
    Total outlays for Food Stamps and Child Nutrition Programs are 
expected to continue to increase approximately 4 percent a year over 
the next several years due to inflation and the changing demographics 
of the Nation, most significantly, an increase in the school-age 
population growth.
    Although no program changes are sought for the Child Nutrition 
Programs, a number of legislative changes are proposed to improve 
access to Food Stamps as well as target them to the neediest. The 2008 
budget includes proposed legislation to continue to exclude special 
military pay when determining food stamp benefits for deployed members 
of the armed services. Military personnel often receive supplements to 
their basic pay when they serve in combat. This proposal supports the 
families of servicemen and servicewomen fighting overseas by ensuring 
that they do not lose Food Stamp Program benefits as a result of this 
additional income. Further, the budget includes a proposal to exclude 
all retirement and education savings accounts from being counted as 
resources for eligibility determinations. This will help families 
access food stamp assistance without putting their future security at 
greater risk in their time of need.
    In addition, the budget reproposes legislation to restrict 
categorical eligibility for Temporary Assistance for Needy Families 
(TANF) recipients to those receiving actual cash assistance. Under 
current law, households that receive TANF services, including receipt 
of an informational pamphlet published with TANF funds, but which do 
not receive cash assistance, can be deemed categorically eligible for 
food stamps. Those receiving in-kind benefits under TANF could still 
qualify for food stamps by meeting the income eligibility criteria.
                        2007 farm bill proposals
    I would like to take this opportunity to briefly outline the 
Administration's 2007 Farm Bill proposals, their potential budgetary 
impact, and how they are accounted for in the President's 2008 budget.
    The Administration's Farm Bill proposals represent the final phase 
of a nearly two-year process. We listened closely to producers and 
stakeholders all across the country and took a reform-minded and 
fiscally responsible approach to making farm policy more equitable, 
predictable and protected from challenge in the world trade arena.
    We started with the 2002 Farm Bill and propose to improve it by 
bolstering support for emerging priorities and focusing on a market-
oriented approach.
    While the current law has served its purpose, the time has come to 
move forward with a farm program that is more market-oriented and 
considers more than commodity prices alone when determining the 
appropriate level of Government support. The proposals continue this 
Administration's commitment to increase conservation programs that 
protect our natural resources and focus support on renewable energy 
that will help lead us to the President's goal of reducing annual 
gasoline use by 20 percent in ten years.
    Let me touch briefly on a few areas where specific increases in our 
resources will help us continue to make progress in strengthening 
agriculture, rural America and environmental protections.
    Highlights of the proposals include (funding reflects ten year 
totals):
     Reforming commodity programs to save $4.5 billion through 
modernizing marketing assistance loans, tightening payment limits and 
closing loopholes, while enhancing the safety net with a revenue based 
countercyclical program and increased direct payments.
     Increasing conservation funding by $7.8 billion, 
simplifying and consolidating conservation programs, redesigning the 
Environmental Quality Incentives Program (EQIP) to include a Regional 
Water Enhancement Program;
     Providing $1.6 billion in new funding for renewable energy 
research, development and production;
     Targeting nearly $5 billion in funding to support 
specialty crop producers by increasing consumption through food 
assistance programs, funding specialty crop research, and expanding 
export markets;
     Supporting beginning farmers by increasing their direct 
payments by $250 million, reserving a percent of conservation funds, 
and providing more loan flexibility for down payment, land purchasing 
and farm operating loans;
     Strengthening disaster relief by establishing a revenue-
based counter-cyclical program, providing gap coverage in crop 
insurance, linking crop insurance participation to farm program 
participation, and creating a new emergency landscape restoration 
program;
     Simplifying and consolidating rural development programs 
while providing $1.6 billion in loans to rehabilitate all current Rural 
Critical Access Hospitals and $500 million in grants and loans for 
rural communities to support high priority rural infrastructure 
projects;
     Dedicating nearly $400 million to trade efforts to expand 
exports, fight trade barriers, and increase involvement in world trade 
standard-setting bodies; and
     Modernizing and renaming the Food Stamp Program to improve 
access for the working poor, better meet the needs of recipients and 
States, and strengthen program integrity.
    These proposals would provide approximately $5 billion more over 
ten years from 2008 to 2017 than the projected mandatory spending if 
the 2002 Farm Bill were extended. The 2008 budget makes accommodation 
for this by including an additional $500 million per year to the 
funding total for CCC. This level extended for ten years would cover 
the full estimated cost of the proposals. Under these proposals, we 
would spend approximately $10 billion less than what was spent under 
the 2002 Farm Bill over the past five years, excluding ad-hoc disaster 
assistance, upholding the President's plan to eliminate the deficit in 
five years.
                   2008 discretionary budget request
    Outlays for USDA's 2008 discretionary budget are estimated to be 
approximately $22 billion, about the same level as 2007 and 2006. The 
2008 budget for discretionary programs reflects the President's 
priorities to encourage economic growth and increase our security, 
while recognizing that fiscal discipline is absolutely necessary.
    The budget requests the resources necessary to protect the food 
supply and agriculture from a variety of threats that could have 
devastating effects on animal and human health. This includes increased 
monitoring and surveillance of the food supply and development of 
technology that will enhance our ability to detect and respond to food 
emergencies, including threats from avian influenza and bovine 
spongiform encephalopathy (BSE). A record level of funding is also 
requested for meat, poultry, and egg product inspection.
    Another priority for the Department is a continued focus on 
expanding renewable energy resources. Increased funding is 
significantly increased for research to help lead to more efficient 
production of cellulosic ethanol and conversion of biomass into 
biofuels. In addition, our rural development programs will increase the 
amount of financial support available to leverage private sector 
funding for small and large-scale renewable energy generation 
activities.
    The budget also requests the resources necessary to meet the 
requirements of the neediest individuals in the Nation. It supports 
average monthly participation of 8.3 million participants in the WIC 
program, an increase of 100,000 participants per month over 2007. We 
are also proposing $15 billion in rural development loans, grants and 
other assistance. At the proposed level, over 39,000 homeownership 
opportunities would be provided and 16,500 multi-family housing 
projects that provide housing for 460,000 low-income tenants, most of 
whom are elderly, would be maintained.
    The Department will continue to foster environmental stewardship by 
providing conservation technical assistance to farmers, ranchers, and 
landowners. As I mentioned earlier, the budget includes nearly $4 
billion in mandatory spending for the Department's major conservation 
programs, which will support a record cumulative enrollment of 215 
million acres in these programs.
    The budget for the Forest Service provides sufficient wildland fire 
resources to protect communities and natural resources, and provides 
for sustainable forests and communities through full funding of the 
Northwest Forest Plan and continuation of the Payments to States 
Program. Fire suppression funding is at the ten year average. In 
addition, the budget provides funding to continue implementation of the 
President's Healthy Forests Initiative to mitigate the threat of 
catastrophic wildfires. Resources proposed in the budget will reduce 
hazardous fuels on an estimated 2.95 million acres of land, an increase 
of 50,000 acres over the acres expected to be treated in 2007.
    Tough choices had to be made as well to keep spending under control 
and achieve a balanced budget. This means doing more with less, 
eliminating programs that are not getting the job done, or cutting out 
wasteful spending. Therefore, the 2008 budget includes proposals to 
reduce funding or terminate low-priority, duplicative, or poorly 
performing programs. These include a reduction of $438 million in 
earmarks in research programs and research facilities construction.
    In closing, I want to emphasize that the USDA budget fully supports 
the President's goals to strengthen the economy, increase security, and 
restrain spending. The budget addresses these goals by funding our 
highest priorities. These funding priorities strengthen agriculture and 
rural economies, protect our food supply, build on our conservation 
efforts, and provide for the neediest individuals.
    That concludes my statement. I will be glad to answer questions you 
may have on our proposals.

    Chairman Spratt. Mr. Secretary, you touched upon the so-
called baseline for mandatory programs. The baseline based upon 
current expenditures is substantially lower than it was several 
years ago when the existing Farm Bill was adopted.
    That baseline is important to us in projecting what the 
budgetary costs of different provisions is going to be and, 
frankly, in the House whether or not we have a PAYGO 
application and assuming that certain things will be provided 
for.
    How confident are you that the baseline we are working with 
this year is a firm, reliable number given the fact that it is 
based upon commodity prices that are at historic highs?
    Secretary Johanns. Mr. Chairman, we are confident of that 
baseline, and here is what I would offer in that regard. And I 
might even ask, if you do not mind, for Dr. Collins to offer a 
thought.
    We will be spending a lot of time in the months ahead 
talking about baseline for this Farm Bill. The reason why the 
baseline is at the lower level is very straightforward. 
Commodity prices are high.
    We look at our carry-over and all of the other information 
that we look at in terms of making projections about prices and 
when it is all said and done, there is not going to be that 
much difference between us and where CBO is at.
    We all have to start from some place. We started trying to 
figure this all out as we were thinking about our Farm Bill 
proposals because we had to have a number. You are going to go 
through pretty much the same process. And, again, I think when 
it is all said and done, there is not going to be a lot of 
disagreement about our baseline.
    Dr. Collins may offer a thought on commodity prices, but I 
am confident in telling you I think we are at that baseline and 
I think it is a good baseline.
    Mr. Collins. Mr. Chairman, as you well know and members 
know, baselines are both art and science. They have been very 
variable over the years. At the Department of Agriculture, we 
follow the convention of the Congressional Budget Office 
starting last year and we started using, quote, stocastic or 
probablistic baselines.
    That alone adds a couple of billion dollars as kind of a 
cushion to our baseline spending. We went in that direction 
because we felt that just picking one specific scenario of 
prices in costing out based on that was a little too 
unreliable.
    Nevertheless, we are using one specific scenario of prices, 
high corn prices, as you mentioned, but we do provide a 
probability distribution around that and estimate outlays based 
on a number of alternative outcomes.
    I would say, commenting on the Secretary's point, if you 
look at our ten-year score for commodity programs, it is only 
several billion dollars different than the Congressional Budget 
Office's score. So we are in this together, hopefully 
accurately.
    We have lower corn costs. That is the most sensitive and 
the most expensive commodity program. We have lower corn costs 
than the Congressional Budget Office because of the high demand 
for ethanol. But we offset that with much higher cotton costs, 
and that is mainly the difference between our two baselines. In 
sum, the aggregate total is very, very similar.
    Chairman Spratt. The budget that you sent us includes $500 
million a year over the time frame of the budget. Is this 
largely to give you some cushion in case the commodity prices 
you are assuming do not obtain?
    Mr. Collins. No. The 500 million a year simply represents 
our total ten-year budget expenditure or, excuse me, the 
increase in budget authority that we expect our proposals would 
result in over ten years. That is $5 billion over ten years. So 
we annualized that and made it $500 million and put that in our 
budget as a placeholder. So the concept there is budget 
authority, $500 million in 2008, reflective of----
    Chairman Spratt. For all titles of the bill?
    Mr. Collins. For all titles of the bill, yes, sir.
    Chairman Spratt. The deficit impact over five years is 
about $489 million. Are you aware of that?
    Mr. Collins. What impact, sir?
    Chairman Spratt. The impact on the deficit over five years 
is about $489 million.
    Mr. Collins. You are talking about the total outlays 
associated----
    Chairman Spratt. Yes, sir.
    Mr. Collins [continuing]. With all titles of the Farm Bill? 
I do not know the exact number, but it is something very large 
like that.
    Chairman Spratt. Let me ask you, Mr. Secretary, about rural 
development programs. I represent lots of small towns in the 
rural south, between Charlotte, North Carolina and Columbia, 
South Carolina. I have got all the small towns and rural 
communities.
    And, frankly, your Rural Development Administration has 
been a Godsend to these towns. They provide financing, funding 
that otherwise is simply not attainable. They do not have the 
credit rating, the standing, the capacity to repay. And both 
with respect to rural development and rural housing, these 
programs are critically important.
    I am dismayed to see that there are some fairly significant 
cuts in rural development and rural housing. What is the 
philosophy behind that?
    Secretary Johanns. You are absolutely right. As we did our 
Farm Bill forums across the country and I started commenting on 
this, I heard no negative comments about our rural development 
programs. And I literally went through all of my forums, not a 
single negative comment. If anything, people were lining up to 
say this is doing a great job for my community or my county. So 
they are very popular.
    Let me approach this in a couple of ways. One is that from 
the standpoint of the 2008 budget, the 2008 budget includes 
about $14 billion for rural development programs. This is 
essentially the same level as 2007. The entire 15 million will 
be directed into those rural programs. It may be job 
opportunities. It could be a variety of things.
    The 2008 budget includes 4.8 billion for single-family 
housing to support home ownership opportunities, 1.5 billion 
for water and waste water disposal loans and grants, 690 
million for telecommunications, 4.1 billion for electric loans. 
And I could go on and on.
    But then going on to our Farm Bill proposal, we are 
proposing some things that we heard about when we were out 
there doing the forums and things we are very excited about.
    For example, we have in this country about 1,283 rural 
critical-access hospitals that really need to be brought up to 
standard. We are proposing to fund a $1.6 billion loan program 
so all of these hospitals can be rehabilitated. And these are 
in the most rural areas of our country.
    And we will submit for the record a list of the states and 
the number of hospitals.
    [The information follows:]
                    critical access hospitals (cahs)
    A Critical Access Hospital (CAH) is a hospital that is certified to 
receive cost-based reimbursement from Medicare. In order to qualify for 
CAH, a hospital must meet the following criteria:
     Located in a rural area
     Provide 24-hour emergency care service
     Average length of stay of 96 hours or less
     More than 35 miles from a hospital or another CAH or more 
than 15 miles in areas with mountainous terrain or only secondary roads 
or certified by the State as being a ``necessary provider'' of 
healthcare services to residents in the area
     Beginning on January 1, 2004, CAHs may operate up to 25 
beds for acute (hospital-level) inpatient care, subject to the 96-hour 
average length of stay for acute care patients.





Alabama......................          3    Alaska.........         10
Arizona......................         12    Arkansas.......         27
California...................         21    Colorado.......         25
Florida......................         11    Georgia........         35
Hawaii.......................          9    Idaho..........         26
Illinois.....................         51    Indiana........         36
Iowa.........................         82    Kansas.........         84
Kentucky.....................         30    Louisiana......         27
Maine........................         15    Massachusetts..          4
Michigan.....................         35    Minnesota......         80
Mississippi..................         28    Missouri.......         35
Montana......................         45    Nebraska.......         65
Nevada.......................         10    New Hampshire..         13
New Mexico...................          6    New York.......         13
North Carolina...............         22    North Dakota...         31
Ohio.........................         34    Oklahoma.......         34
Oregon.......................         25    Pennsylvania...         12
South Carolina...............          5    South Dakota...         38
Tennessee....................         16    Texas..........         74
Utah.........................          8    Vermont........          8
Virginia.....................          7    Washington.....         39
West Virginia................         19    Wisconsin......         58
                                                            ------------
Wyoming......................         14
                                              Total........      1,283

As of October 2006

    We are also proposing additional new money, if you will, to 
use that terminology, $500 million additional to try to deal 
with the backlog of water and waste disposal systems and other 
rural infrastructure.
    We think this will conservatively bring that backlog down 
by 30 percent, maybe more. And this was done in the 2002 Farm 
Bill. It is something we are continuing here. That would be in 
addition to the other programs we are doing.
    We are doing about $500 million for renewable energy and 
energy efficiency grants, $210 million in budget authority to 
support loans for this purpose.
    So I guess what I would say to you, Mr. Chairman, if you 
look not only at the budget, which is about the same where it 
was at in 2007, but look at some of the things we are doing in 
terms of our proposals, you can see we have a very robust 
proposal here.
    Chairman Spratt. Well, I am dismayed to see that, for 
example, rural development, if my numbers are correct, is cut 
by $226 million, 18 percent below the 2007 level, in the name 
of streamlining and consolidating.
    Do you really think you can save that amount of money in 
streamlining and consolidating and still have as much money to 
use for actual grants and loans?
    Secretary Johanns. Part of our Farm Bill proposals, for 
example, are to do some streamlining and just a better job of 
delivering these programs. Those are things that we just feel 
obligated to do. How can we manage the program better, more 
efficiently and, therefore, get money to people who really need 
it out there in rural areas?
    I could keep going. I mean, I could talk about some of the 
things we are doing in terms of targeting funding for 
cellulosic ethanol. That is very clearly going to help rural 
areas much like corn-based ethanol has helped in the corn 
belts.
    So there are a lot of exciting things in our proposal that 
I think make a lot of sense, have a lot of support from farmers 
and stakeholders out there. As we did our Farm Bill forums, 
they talked to us about these things.
    Chairman Spratt. I could go on and on and on, and we could 
have this exchange.
    Section 515, for example, a lot of these section numbers 
stand out to me because I have seen the very projects that are 
represented and they are still taking hits. And I will take 
your word for it that the puts equal the takes in this bill, 
but I am concerned about programs that I have seen work very 
well.
    And you may be able to streamline them from your 
administrative standpoint, but your local loan officers, your 
local State officials, and your borrowers are fairly well 
familiar with things like Section 515, like business and 
industry, the old B&I, guaranteed loan. And I sort of go by the 
philosophy that if it is not broke, do not fix it. But we will 
take your word for it for today.
    We have got other members here who have questions to you, 
some of whom are on the Ag Committee, and I will come back a 
little bit later today and ask you some further questions.
    Mr. Ryan.
    Mr. Ryan. Thank you, Chairman.
    First, Secretary, I just want to commend you for putting 
milk on an equal playing field with the other commodities. That 
expired before the other programs in the Farm Bill did. That to 
me seemed like an unfair thing. And the fact that you put milk 
in your budget tells me that we are going to treat milk fairly 
like we should do the other commodities. Then let us get on to 
the business of reforming all of these commodity programs on an 
equal playing field. So I just wanted to commend you for that, 
number one.
    I want to ask you about the ethanol quotas. In the 
President's State of the Union address, he recommended, and 
correct me if I am wrong, going from the current 7.5 billion 
gallon quota by 2012 to 35 billion gallons by 2017. Am I right 
on those numbers? Is there enough corn to plant in America to 
meet that?
    Secretary Johanns. That is a great question. We are not 
going to do that all with corn, not unless something dramatic 
happened. That is why in our Farm Bill proposals, we are 
proposing to target the funding at cellulosic development.
    Mr. Ryan. How soon or how well developed is cellulosic 
ethanol technology such that it can contribute to, you know, 
reaching that quota?
    Secretary Johanns. I have been surprised at how far along 
it is. I think many people, including myself, have been saying 
sometime within the next five years, this will be efficient, 
cost-effective production.
    But having said that, companies come to my office and talk 
about being ready to build a cellulosic plant. I know that 
there are companies working with the Department of Energy for 
grants.
    So I am very optimistic based upon what they are telling 
me, based upon the research that is going on there. But very 
clearly the point here is you have got to develop that industry 
to reach those goals. It cannot all come from corn. It is not 
possible.
    Mr. Ryan. Actually, the wood chipping in Wisconsin is a big 
forestry industry.
    Secretary Johanns. Yeah.
    Mr. Ryan. And the wood cellulosic looks like it is fairly 
promising. But having said all of that, pretty much the only 
game in town right now is corn. And the big talk that I hear 
in, you know, Wisconsin is in the past, the conservation people 
along with the corn and beans people all kind of got along with 
each other.
    And so now you are beginning to see some friction between 
the priorities of conservation, you know, CRP, things like 
that, and these ethanol programs. And I think there is a 
concern out there that you are going to see one displace the 
other because of these quotas, because of these prices.
    Would you care to comment on that and give me your 
prediction?
    Secretary Johanns. We share that concern. You know, we 
support all of agriculture, whether that is the dairy farmer, 
the fat cattle guy, or whoever it is, the corn grower, soybean 
grower.
    But very definitely this has ramped up very quickly and 
today you have corn prices that are in the vicinity of $4.00. 
So that means that the input cost for that dairy farmer has 
basically doubled relative to corn very, very quickly.
    But having said that, here is kind of our best read on this 
situation. Very definitely there is a period of adjustment 
going on, and I think that is going to last for the next 12 to 
24 months. Those high corn prices are doing what the market 
tends to do; they are causing more farmers to make a decision 
about moving acreage from some other commodity into corn.
    We certainly have some flex there. If you look at, for 
example, soybeans, we grew the largest crop ever last year. We 
have the largest carry-over ever. So you literally would have 
some flex.
    It is possible that some of the conservation contracts 
coming up, maybe somebody will look at that and say, well, I 
had it in conservation, but it is a corn crop. You know, that 
is not going to be one for one acres.
    And then really on a more long-term basis, and I am not 
talking about a decade, I am talking about what I believe will 
be sometime in the next five years, if not sooner, I do think 
you will see a robust cellulosic ethanol industry develop.
    For example, in your State, this would be very helpful. One 
of the things that we proposed in our Farm Bill proposal in 
addition to other cellulosic projects is a new $150 million 
wood to energy program. That material laying on the bed of that 
forest, does it make sense to convert it into cellulosic 
ethanol? It may make sense. It may make good economic sense and 
it may be good for that forest.
    Mr. Ryan. If I could go into that then. And in Wisconsin, 
because, you know, the top half of the State is pretty much all 
forest and it is forestry paper, the wood to ethanol cellulosic 
production cost is 55 cents a gallon.
    So if it costs a cellulosic wood ethanol refinery 55 cents 
to produce a gallon of ethanol, and that ethanol, I am told, is 
more efficient than corn ethanol, why do we have to subsidize 
ethanol at 1.26 a gallon and why do we have to guarantee, you 
know, that kind of a markup?
    Secretary Johanns. I was asked a similar question before 
the House Ag Committee. And today the subsidy is directed at 
corn-based ethanol and that sunsets. I think that runs until 
2010, if I am not mistaken.
    There may be a point in 2009 or something where Congress 
looks at this and tries to make a decision about whether that 
should or should not continue.
    Mr. Ryan. Correct me if I am wrong, but it is sort of a 
triple layer of incentive. There is a tariff, a 54 cent a 
gallon subsidy, and then the quota on top of it, the production 
quota. Those are sort of the big three incentives.
    Are all of those necessary now given that we have got this 
new quota on top to foster this kind of production and if we 
are going to go to a 35 billion gallon quota of just domestic, 
would it not make good sense to allow some imports in if we 
literally do not have enough, you know, ground to plant the 
stuff on?
    I mean, do we need all three of these incentive programs to 
make this industry vibrant and work? And, look, I come from 
corn country. But, nevertheless, I think it is important to ask 
these questions.
    Secretary Johanns. Yeah. My deputy reminds me that these 
programs would be available for other biomass products. They 
would be available for that wood to ethanol idea that you are 
talking about.
    The answer to your question is this. Three years ago, if 
you read articles about ethanol, you would probably be reading 
will it survive. It has been around a long time. I mean, 
ethanol production has been around a long time, but not very 
efficiently, not very effectively, not very cost effective.
    That changed very quickly here. And, yes, admittedly, the 
last couple of years have been good years for the ethanol 
industry. We like to see that.
    Congress has made a policy choice that until 2010 that that 
support should be there and that support will help the industry 
and help the industry stabilize. And there is a lot of other 
good purposes, less dependence on foreign oil----
    Mr. Ryan. Absolutely.
    Secretary Johanns [continuing]. Environmental, et cetera. 
So we sit here today not taking issue with that policy choice. 
We have not proposed any changes in any of those items that you 
have mentioned.
    Now, like I said in our proposal, though, we say let us 
focus on cellulosic ethanol. Corn-based ethanol is doing pretty 
well here. Let us focus on cellulosic. So our dollars are 
really directed at that.
    Somewhere out there, long after this Secretary is gone, 
Congress may look at that policy and say we can make 
adjustments here. But for the time being, through 2010, you 
have that in place.
    Mr. Ryan. Well, I guess that is the question. You know, 
like I said, I come from ethanol country. We are building 
eleven ethanol plants right around my area.
    So the question is, this industry, has it succeeded to the 
level now where it is mature enough to sort of stand on its own 
or to better stand on its own or not? You just basically 
answered that question, but I think that is a question we need 
to think about.
    I just want to finish with one quick question. DOHA may be 
back on track now. I mean, you hear this stuff. You know, one 
day, DOHA is dead, the next day, it is revived. We had over the 
Ways and Means Committee Ambassador Schwab here yesterday who 
said, you know, we may have a chance at DOHA again. And I hope 
we do.
    But the EU Commissioner for Agriculture, Fisher Bohl--I 
think I am pronouncing that correctly--has complained that this 
new Farm Bill proposal is contradictory toward DOHA. I am not 
sure that she is correct, especially when you compare our 
programs to European programs.
    But would you care to comment as to whether or not you 
believe your proposed reauthorization of the Farm Bill and the 
farm programs is in keeping and consistent with our direction 
to try and make DOHA work?
    Secretary Johanns. Yeah. I read those comments. In fact, 
when Maryanne Fisher Bohl was here in Washington, I took the 
opportunity to meet with her, and she had a lot of questions 
about the Farm Bill. And interestingly enough, after our 
meeting, she made a comment that she thought it was a better 
Farm Bill.
    I was asked a similar question yesterday near the end of 
the testimony by Bob Goodlatte before the House Ag Committee, 
and I said this. We want more market access from the European 
Union. They also have very high subsidies that need to come 
down.
    And I will just be very candid in my response. I think they 
were trying to talk our proposal down. That is just my personal 
opinion of it.
    There is no doubt that something like direct payments, for 
example, that are not tied to price or production, that are 
decoupled from that are generally regarded as non-trade 
distorting and trade compliant.
    Our increase in our conservation programs, $7.8, I suppose 
we could have put that into something really trade distorting. 
We did not in our proposal. And what does that mean? 
Conservation programs again are generally regarded as trade 
compliant, green-box programs.
    So if you tip down through the list of things we are 
proposing, although I will not tell you we wrote a Farm Bill 
based upon trade; we wrote a Farm Bill, we hope, based upon 
good policy and good for farmers and good for rural America, 
but I do believe that this Farm Bill approach makes a lot more 
sense in terms of the trade issue.
    Final thing I will say. It is important. I do not know 
where every member stands on trade. Maybe there are some people 
anti-trade. Maybe there are some people pro- trade. I do not 
know.
    But I will tell you this. Eighty percent of the cotton we 
grow in this country is exported, eighty percent. Fifty percent 
of our rice is exported. About every third row of our row 
crops, the crops you are interested in, go into the export 
market. That is changing because of ethanol, but it is still a 
major piece of what we do.
    And we keep setting records in selling our products 
overseas. We are good at it and we have great products. So I 
just think you have to pay attention to that. You certainly do 
not want to take a step back.
    And then the final thing. This cotton case is for real. We 
aggressively defended it. We lost. It was taken up on appeal. 
We aggressively defended the appeal. We lost. Brazil is now 
saying you have not fully complied. We are going to 
aggressively defend that.
    Canada just filed a case against our corn program, a 
commodity that is important to your State, and Canada was 
joined by a whole list of other countries almost overnight. I 
mean, literally within 72 hours, Canada was not standing alone. 
Now, we will aggressively defend that too.
    But, again, I just think we need to pay attention. We need 
to be mindful that for the American farmer, trade is really 
important. Let us do it right. Let us get a level playing 
field, all of those things, but this is really important to 
agriculture.
    Mr. Ryan. Thank you.
    Secretary Johanns. Thank you.
    Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary.
    I apologize that we had to cancel the Agricultural 
Appropriations Subcommittee this morning, but so many of our 
colleagues on that Committee were paying their respects to our 
colleague, Mr. Norwood.
    Let me try to address two areas in my time here. First, I 
just wanted to add in this area my comments to what the 
Chairman spoke about in terms of rural America. And as I look 
at this budget, we are looking at real budget shortchanges in 
terms of rural development and housing programs.
    And let me just catalogue for a second. Cut to Rural 
Community Advancement Program by 21 percent, $120 million cut 
in water line and waste treatment programs, defunding rural 
empowerment zone, empowerment communities. We are looking at 
the budget terminating Rural Business Enterprise Program, Rural 
Business Opportunity Grant Program, an estimate of about 19,000 
plus fewer jobs in rural areas in 2008.
    And, finally, the comment that my colleague, Mr. Spratt, 
made about the Direct Single-Family Housing Loan Program, which 
is a request for elimination, and the zeroing out of the 
Section 515 Multi-Family Housing Direct Loan Program, which 
would result, I might add, in about plus 2,100 fewer units of 
rehabbed or built housing in 2008 than in 2006.
    I think there are serious problems with what is happening 
in the budget on rural development, but I just want to posit 
that. And I want to move on to an issue with regard to the 
State of Indiana and the Food Stamp Program, Mr. Secretary.
    The State of Indiana, I think, as you know, plans to 
contract out virtually all of the administration of their Food 
Stamp Program and programs like Medicaid. It is a $1.6 billion 
contract over a ten-year period. Food stamps share the 
administrative cost of $328 million. Project federal food stamp 
benefits that the contractor would help to issue in this period 
are in excess of $8 billion.
    Just flat out for myself, I am opposed to contracting out 
these services.
    Under the Indiana contract, the State is going to turn over 
80 percent of their staff and business operations to a private 
company, to IBM, next month. December 18th, USDA's Midwest 
Regional Office gave Indiana the approval to roll out the plan. 
Their letter said that it had lots of questions. It would 
approve the rollout for one year, 2007, 2007 being the key 
year. Next month, 80 percent is the shift of that workforce. 
How can we shift back to the old system after a year?
    So, in essence, USDA's approval has set this in motion for 
the long haul. USDA said they had numerous questions on how the 
operations on the ground would work. Governor Daniels moved 
forward, signed a ten-year contract with IBM. Yet, Indiana did 
not answer any of USDA's questions about what the arrangement 
entails.
    February 8, 2006, USDA asked for another letter, plain 
English, narrative description of the certification process, 
and that is a quote, that describes what the State and IBM each 
would do. The suggestion here is that the agency continues to 
be unclear.
    Question. I want to understand how USDA approves a contract 
in December without understanding what the State is proposing 
to do. You have got a February letter. We continue not to know 
whether contract compliance complies with the federal law.
    How do we grant an approval without knowing the project is 
going to comply with federal law? It is a $1.6 billion 
contract. They have not answered any questions. And we have got 
80 percent of the function and those services moving within the 
next 30 days.
    Secretary Johanns. Okay. I will offer a couple of thoughts 
on that. First thing, if I might just mention, the rural 
development issue. I think, and I can go through those account 
by account or somebody more knowledgeable even than I am can go 
through them, but I think part of what is happening here is 
that in many areas, we are moving toward guaranteed loan 
programs versus grant programs. We have been doing that for a 
number of years. It is probably not the case in all cases, but 
I am guessing that is a part of what you are talking about.
    We just feel that oftentimes we get more for the dollar in 
those programs than just an outright grant. But, again, we can 
go through those with you.
    In terms of Indiana, we have had a few states, not a lot, 
that have looked at the question of how best to administer the 
Food Stamp Program, and Indiana is one of those states.
    The letter you are referring to, I have in front of me, 
dated February 8, 2007, where our regional administrator wrote 
to Mitchell Rube--hopefully I am pronouncing that correctly--
and Indiana Family and Social Services Administration, and you 
are absolutely right, said we need this information. We need to 
have you explain the narrative.
    Actually, it is, as you know, a very extensive letter. It 
is three pages from this administrator saying explain to us 
these items. But the letter goes on to say that they need the 
information by February 20th, because it is currently scheduled 
to change over, I think, on March 19th.
    Ms. DeLauro. Nineteenth, uh-huh.
    Secretary Johanns. I can assure you we will pay very close 
attention to this. I can assure you that Indiana has to comply 
with the law and the requirements and satisfy us that what they 
are doing is not going to jeopardize somebody who is receiving 
food stamps. And that is how we approach this. If they are not 
ready, they are not going to be ready.
    Ms. DeLauro. Mr. Secretary, the example in Texas, it has 
been a complete failure, so much so that I believe that on a 
bipartisan basis, the Subcommittee last year said that we were 
not going to take further steps in terms of any kind of funding 
until we understood what was going on.
    Millions of people, thousands of people, let me say, left 
off, eligible people in that area. We are talking about on 
March 19th, and you are going to look at something on February 
20th, and we have set in motion a process here which is going 
to take 80 percent of those services that are going to be 
shifted, 1,500 people losing their jobs without knowing how, in 
fact, the services are going to be delivered.
    This is a radical approach. This is not a pilot program. 
You do not deal with 80 percent on a pilot program, and that it 
is going to be phased in. There is some impression that there 
is a phase-in. That is not accurate.
    I am troubled. I have to be honest with you. I am just 
troubled by the lack of oversight on what appears to be a 
major, major departure from service delivery on a program that 
we know after so many years through this--through our 
Subcommittee, we have worked very, very hard on a bipartisan 
basis to make sure that the Food Stamp Program is working and 
working well.
    We are now going down a new philosophical, ideological 
conceptual basis here about which we have prior example of 
failure, and we appear to be moving in that direction again 
with failure.
    I must tell you that as an appropriator, I am very 
concerned as to what we are going to do about being able to 
limit what can be done without understanding very clearly what 
is going to happen in this area.
    I have gone way over my time, but I think you understand 
the strength of my feelings on this issue, Mr. Secretary.
    Secretary Johanns. I do.
    Chairman Spratt. Thank you, Ms. DeLauro.
    Mr. Hensarling.
    Mr. Hensarling. Thank you, Mr. Chairman.
    Mr. Secretary, again, I want to thank you for being 
responsive to me and other members of Congress that represent 
districts that have significant cow-calf operations and for 
what you all did six, seven months ago in helping at least 
partially reopen the Japanese market. It was certainly 
important to a lot of Ag producers in the Fifth Congressional 
District of Texas.
    Could you just give me a quick update on where we are in 
our dealings with the Japanese in fully reopening that market?
    Secretary Johanns. I would love to. Thank you for your 
compliment.
    The Japanese market is open to U.S. beef. However, it is 
limited to all beef from animals 20 months and under. That was 
an agreement that the Department had reached with Japan 
immediately prior to my arrival.
    The market opened up. And if you will remember, we had a 
problem with one of the shipments and so the market closed, and 
it took us about six months to get it back and opened.
    Here is the good news. The Japanese consumers responded 
very well. We are selling beef in Japan faster than we can keep 
it on the shelves. They have responded very, very well.
    Here is the problem though. Twenty months is not based upon 
any international standard. It is not acceptable to us, and we 
need to move that forward.
    We had an understanding with Japan that for the first six 
months of shipment of beef into their country, we would see how 
things were going. That six months is now expired. It expired 
in January. And now we are asking Japan and really all of our 
trading partners to move to the international standards.
    We are going to continue to push that issue, continue to do 
all we can to get that market completely opened based upon OIE 
standards. So good news, beef is there. Bad news is we want to 
sell more there. We believe we can safely and under 
international standards. They are not there yet.
    Mr. Hensarling. Thank you, Mr. Secretary.
    Having been on this Committee for a number of years, I have 
realized that about 90 percent of the time, somebody uses the 
term cut. What they really mean is some program did not 
increase quite as fast as they hoped it would be.
    I have not looked at the programs the gentle lady from 
Connecticut was alluding to. I assume she used the term 
properly.
    But just for the record, do I understand that the 
Administration is proposing to increase food stamp spending 
three and a half percent, child nutrition, 1.4, and WIC, 4.2 
percent? Are those accurate numbers?
    Secretary Johanns. I do not have those in front of me, but 
you are right. These programs have continued to grow. We also 
fund contingencies there. So if the programs grow more than 
anticipated, we will have money to continue to respond.
    Mr. Hensarling. So no reductions in federal nutritional 
assistance programs are being proposed?
    Secretary Johanns. Full funding. We fund whatever we 
believe the need is going to be, and then in addition to that 
fund a contingency program to cover anything additional that 
may come along.
    Mr. Hensarling. And just for the record, although I do not 
know if you have this in front of you, according to OMB, since 
the Administration came into office, at least through 2006, I 
see where food stamp spending is up 81 percent, child nutrition 
up 30 percent, and WIC is up 24 percent from 2001 through 2006.
    Do those sound roughly accurate figures?
    Secretary Johanns. Yes.
    Mr. Hensarling. Thank you.
    Secretary Johanns. We have never been shorted in these 
programs. The President is very supportive of these programs. 
And so our outreach has been exceptional, and we continue to 
add people to the programs.
    Mr. Hensarling. Mr. Secretary, there are those in Congress 
who believe the only way to help the Ag producer is by 
producing a larger federal assistance check. In my dealings 
with Ag producers in the Fifth Congressional District of Texas, 
I come to some different conclusions.
    You deal with a lot of Ag producers. People I hear from 
think it is very important that we get rid of the death tax. 
People I hear from, particularly my cattle producers, tell me 
we need to create more trade agreements so we can export some 
of this good Texas beef.
    I hear people say we ought to open up ANWAR and OCS so that 
we can achieve greater energy dependence and bring down the 
cost of diesel and other fuels to power up their farm 
machinery.
    So are there other proposals of the Administration that 
would help the Ag producer besides increasing the size of the 
federal check?
    Secretary Johanns. You know, we did Farm Bill forums all 
across the country, and I did over 20 of them myself. Did one 
in Texas, as a matter of fact, at Lubbock. And what I started 
seeing about halfway through those, because this is what 
farmers were saying to me, is that good farm policy is 
certainly a good Farm Bill, but it is so much more than that. 
Good farm policy is good trade policy, good tax policy. It is 
all of those things hitting on all cylinders, if you will, and 
it makes a huge difference in terms of where agriculture is at.
    You know, I draw comparisons between 2001 when we sat down, 
or 2002, to write the last Farm Bill and today. And they are 
real comparisons. We have set records in trade in that period 
of time. We have set records in net farm cash income.
    I can tell you the balance sheet for agriculture has never 
looked stronger. The debt-to-asset ratio is low. The net equity 
is, I do not know, it is above $1.6 trillion. And, actually, 
our subsidies have been going down.
    If you make the case that it is subsidies, then the all-
time banner year for agriculture should be 2000 because we hit 
$32 billion in subsidies. And I think you would not have to 
look very far and farmers would tell you that that was not a 
good time. In fact, it was a very, very difficult time.
    So what is going on? Well, trade was not very good. A lot 
of things were not working very well for farmers. A lot of 
things are working well now. You know, I am absolutely 
convinced that it is so much more than the Subsidy Program. It 
is all of the other things. And I started saying that at Farm 
Bill forums and farmers would reinforce that, reinforce this 
idea that it is a whole list of things that need to work right.
    Mr. Hensarling. Thank you, Mr. Secretary.
    Chairman Spratt. Mr. Cooper.
    Mr. Cooper. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for cutting duplicative and 
poorly-performing programs, including, as I understand it, 
what, $438 million in congressional earmarks because we need to 
focus on our budget problems.
    I am still worried, though, about efficiency of delivery of 
your services. It is my understanding that the Natural 
Resources Conservation Service alone has 3,800 offices around 
America. Is that true?
    Secretary Johanns. I do not have it in front of me. That 
would not be a surprising number to me.
    [The information follows:]

    The Natural Resources Conservation Service (NRCS) has 3,800 offices 
located in all States, Puerto Rico, U.S. Virgin Islands, American 
Samoa, Guam, the Northern Mariana Islands, Micronesia, Palau and the 
Marshall Islands. Of the 3,800 NRCS offices, 98 percent are in the 
field. Staffs in these offices either provide direct customer service 
or critical technical and administrative support generally located 
within conservation districts. Over 2,500 of the total field offices 
are USDA Service Centers which are co-occupied by NRCS, FSA and RD.

    Mr. Cooper. And then there is the Farm Service Agency, the 
Rural Development agencies. Do they have an equivalent number 
of offices around the country?
    Secretary Johanns. They are collocated. So, yeah, it would 
be very comparable. Again, I can get you exact numbers and 
would be happy to do it. But that would definitely be in the 
ballpark.
    [The information follows:]

    The Farm Service Agency (FSA) has 2,372 field offices and Rural 
Development (RD) has 825 field offices.

    Mr. Cooper. Do all these counties have farms located within 
them?
    Secretary Johanns. You know, we went through and still are 
going through the issue of FSA offices. And that is not a 
popular thing to go out there and propose the closing of an 
office as you might expect.
    But the answer to your question is, there are probably some 
counties out there where agriculture is fairly limited at this 
point, just simply because of urban sprawl and development and 
all the things that go on.
    We have many offices, probably a third of FSA offices have 
less than three employees. And you are talking about programs 
that are hugely complex, change a lot. They can change, you 
know. And we are asking these three people to master those 
programs and answer the phone and run the computer and do all 
of the other things.
    Mr. Cooper. Mr. Secretary, you are not in office to do the 
popular thing necessarily.
    Secretary Johanns. Oh, we are going to do everything we can 
to be efficient here.
    Mr. Cooper. Can you tell me what the rent is that is paid 
by these 3,800 offices or the cost of the offices?
    Secretary Johanns. We would be happy to supply that. I, 
again, do not have that in front of me, but I would be happy to 
supply it.
    [The information follows:]

    The rental payments for NRCS's 3,800 field offices totaled $62.2 
million in FY 2006.

    Mr. Cooper. Can you tell me productivity per worker? Like 
in those counties without any farms, what are these people 
doing?
    Secretary Johanns. You know, again, if you have very few 
farms there, then that is going to impact the workload 
obviously.
    Mr. Cooper. Is there any other federal agency that has this 
many field offices?
    Secretary Johanns. I cannot imagine there is. I would have 
to believe we are in every county in the United States.
    Mr. Cooper. How many offices have you reduced in your 
tenure as Secretary of Agriculture?
    Secretary Johanns. Here is what happened. We headed out to 
consolidate and close FSA offices. It was not popular here on 
the Hill. I agree, I am not here to win a popularity contest.
    But Congress has added to an appropriations bill as of a 
year ago a very specific process now that we have to go 
through, and we are doing that. I think 21 states or 22 states 
are somewhere in the stage of getting that process done and 
other states will follow that. But Congress has spoken to us on 
this and given us the rules by which we can engage here with 
these offices.
    Mr. Cooper. So if we speak to you loudly enough, you just 
go away and stop proposing closing offices that have no farms 
left in the county?
    Secretary Johanns. No. That is not the case at all. I mean, 
that very clearly is not the case. We have----
    Mr. Cooper. May we look forward to your closure proposal 
then or can you give us a list of the offices that have no farm 
constituents left?
    Secretary Johanns. We would be happy to supply whatever 
information you need. I can tell you this. We continue to work 
through that congressional mandate literally State by State. 
And, yes, you can look forward to hearing from us repeatedly as 
we work through that process and bring our ideas to you as to 
how best to manage this system.
    [The information follows:]

    The 732 nationwide counties with no field offices include 28 
counties that have been designated as non-agricultural because they 
have little or no agriculture and 704 with limited agriculture. Any 
USDA program needs for these counties are handled by neighboring field 
offices.

    Secretary Johanns. And, yes, in some states, there are 
fewer offices. There are going to be. But we have to follow the 
mandate. I----
    Mr. Cooper. What matters is efficient delivery of services.
    Secretary Johanns. I agree.
    Mr. Cooper. And the IRS code is complicated, too, but we do 
not have IRS field offices in every county in America, even 
though presumably everyone is a taxpayer.
    Secretary Johanns. You and I do not have much debate on 
this. I think what I want to achieve is exactly what you want 
to achieve, and that is a more efficiently-run system. And we 
are going to work to do that.
    Mr. Cooper. I look forward to your including it in your 
testimony next year.
    Mr. Ryan. Mr. Cooper, would you just yield for one second?
    Mr. Cooper. I would be delighted to.
    Mr. Ryan. Mr. Secretary, when you respond to Mr. Cooper, 
would you mind just CC'ing us with the same information?
    Secretary Johanns. Absolutely.
    Mr. Ryan. Appreciate that. Thanks.
    Secretary Johanns. Sure. Of course.
    Chairman Spratt. Mr. Tiberi.
    Mr. Alexander.
    Mr. Alexander. Yes, Mr. Chairman. Thank you.
    Along the line that Mr. Cooper was talking, if we looked at 
efficiency only, we might look at doing away with some of the 
435 congressional seats across the nation too.
    Secretary Johanns. I will not even go there.
    Mr. Alexander. The 502 Direct Loan Program, Mr. Hensarling 
said something about some of the programs just being reduced 
and not cut or eliminated. But I understand that that 502 
Direct Loan Program has been zeroed out. And you suggested 
earlier that the Guaranteed Loan Program is more efficient in 
your opinion.
    But my question is, is the Guaranteed Loan Program worth a 
whole lot to some people if they cannot be guaranteed a loan?
    It is my understanding that many of those institutions out 
there are so upset with the way the SBA Program has been 
working that they just do not want to fool with it anymore. So 
if you have someone out there that needs a loan and they look 
at a program called a Guaranteed Loan Program and they cannot 
get a loan, that is a poor guarantee.
    Secretary Johanns. Let me offer a few numbers here, if I 
might. In the Guaranteed Loan Program, our 2008 budget would 
support $4.8 billion in guaranteed loans, and that would be a 
$1.7 billion increase over prior years.
    The Guaranteed Loan Program does have the capacity to serve 
families with very low incomes. About 30 percent of the 
homeowners that are currently served by our Guaranteed Loan 
Program actually have incomes that are about 50 to 80 percent 
of the area's median income. These are people who are quite 
poor. The rest have income levels in the 80 to 115 percent. So 
even at that level, very definitely these folks are quite poor 
also.
    We expect under the 2008 budget to provide about 39,000 
home ownership opportunities. So I guess what I would say to 
you is this. We have actually had good success with this 
program, and the numbers seem to back it up. It seems to be 
operating well, and we seem to be reaching out to people who 
really, really need our help through the Guaranteed Loan 
Program.
    So I think the USDA is the only federal agency at this 
point that had anything left of a Direct Loan Program. But I 
will provide you whatever you need to try to assist in your 
deliberations. But I think this is a program that is actually 
working quite well out there.
    Mr. Alexander. Okay. Going back earlier, you were talking 
about ethanol production and we talked about corn and wood 
chips and cow chips and everything else to convert to ethanol, 
but we never talked about sugar cane or sugar from the 
production of sugar cane or sugar beets.
    In your opinion, is that worth looking at?
    Secretary Johanns. Yes. In our cellulosic ethanol 
proposals, I use that as kind of a generic description, but 
sugar cane and beets would be included in that. They would 
benefit from this program. And absolutely it is worth it.
    You know, if you go to Brazil, that is the raw material, if 
you will, sugar cane that produces their ethanol. And I have 
been to a plant in Brazil where literally the trucks were 
coming in with the cane to process it into ethanol. So the 
answer is yes.
    I will also tell you my personal hope is that both cane and 
beets look at this as a real opportunity for the future of 
these industries. I just think the current program is over time 
not going to work very well for them. In fact, I would argue it 
is hard for me to imagine it works very well even during the 
life of the next Farm Bill. And that is a whole separate 
discussion. But they very definitely would qualify under the 
cellulosic programs.
    Mr. Alexander. Okay. Thank you, Mr. Chairman.
    Secretary Johanns. Thank you.
    Chairman Spratt. Mr. Allen of Maine.
    Mr. Allen. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here.
    I have got two questions and I will try to get those out 
and let you deal with them in turn. The farming community in 
America is fairly diverse and regional. Flexibility and 
management is critically important. I am concerned that the 
Farm Bill proposal may decrease rather than increase regional 
flexibility.
    Let me give you an example. The Senior Farmer's Market 
Nutrition Program was a new program in the 2002 Farm Bill that 
gives seniors vouchers that they can spend at farmer's markets. 
Maine was one of the first states to take advantage of that 
program, and it has been a phenomenal success.
    For example, community-supported agriculture was not really 
widespread in Maine when it began and now we have a large 
number of farmers, and participation has increased 
dramatically.
    Now, under Maine's system, farmers are paid up front with 
$100 for each participating senior, and the seniors then get 
deliveries of fresh fruits and vegetables throughout the 
growing season. But when the program became permanent and not a 
pilot, USDA approved a set of rules that really crippled 
Maine's program. They set a number of different rules that made 
it impossible for the program to continue.
    So the first question is, how does the USDA plan to address 
regionally-specific nutritional and agricultural needs in 2008, 
and would you be willing to revisit the idea of flexibility in 
the Senior Farmer's Market Nutrition Program?
    The second question involves the Regional Equity Program 
which provided base funding of about $12 million to each State 
for conservation programs. That did help northeastern states 
like Maine. But in the Farm Bill proposal, the USDA has cut 
that Regional Equity Program.
    We are very concerned that Maine may get really very little 
money even though farming, we may not export a lot, but the 
farming industry in Maine is really critically important.
    So I am curious how you would address the problem of the 
backlog in conservation funding and in the absence of a 
Regional Equity Program, how you would propose to address the 
needs of those areas which are historically under-served 
agricultural communities?
    Secretary Johanns. In reference to your first question, I 
would be happy to look at whatever we have done and see if 
there is something we can do to try to fix the problem that you 
have got there. So let me just answer it that way.
    Let me also point out this is probably on the positive side 
of the ledger. In one of our proposals, we take that senior 
voucher program and we set it off in terms of that being 
considered as part of your assets to determine whether you 
qualify for any other nutrition program. We do that with the 
senior voucher program in our proposal, college savings, and 
one other item I am not remembering right now. Oh, military 
combat pay. But I will look at that.
    In terms of the 12 million, you are right. What we have 
proposed to do in our Farm Bill proposal is to base 
determination on the merit of the application. The $12 million 
that was set aside by previous action, I think, kind of sets a 
placeholder for states like yours.
    We did approach it differently. We said, look, let us just 
look at the merit of the application, see who qualifies based 
upon the merit. If your State does better in that application, 
that is great, but that is how we approached it.
    Mr. Allen. If I could just follow-up there.
    Secretary Johanns. Sure.
    Mr. Allen. The question we have is, given the diversity of 
agricultural communities around the country, what criteria are 
you going to use to judge whether a program in Maine is 
comparable to a program in Nebraska or Texas? It is that issue. 
The base funding to keep agricultural programs going in this 
area is very important to us, and we are not sure how a merit 
program would work.
    Secretary Johanns. We do it now. I mean, our conservation 
programs, at least in part, are based upon criteria and 
scoring. And so it is part of the charge to the USDA to figure 
that out and do it fairly. And I think we do.
    Yeah. The criteria, it is not something we just put out 
there. It has to go through rule making, and we receive 
comments, and then we end up with what the criteria will be. 
But we do it now. So the answer to your question is, we do it 
now.
    But admittedly what we are proposing does not create a 
stakeholder place for any State. We say we would go through 
that merit-based system that we are familiar with and decide 
which applications rank where and which ones then would get 
funded.
    The good thing about our conservation programs, almost 
always there is more demand than we have money for. And so they 
have to be scored some way and that is how we do it.
    Mr. Allen. Okay. Thank you.
    Secretary Johanns. Thank you.
    Chairman Spratt. Mr. Smith from Nebraska.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Secretary, you spoke about rural critical-access 
hospitals, and I am glad you did. I believe that in Nebraska--
my district alone has 48 of them, 65 in Nebraska. And it is a 
delivery system that is working very well in terms of 
streamlining services.
    There has been some give and take along the way within 
these rural communities, but I would say in large part, it has 
been very popular even though there is kind of some 
centralizing of services.
    And so if you would care to share some of the rationale. 
You said it was on renovation, I believe, of some of these 
facilities. Would it be limited only to renovation or could you 
expand on that a little bit?
    Secretary Johanns. New equipment would be a part of that, 
but it is basically to bring that hospital up to modern 
standards.
    As you know, in the Third District of Nebraska is a perfect 
example. Many of these hospitals are in small communities and 
very, very rural areas. When that hospital closes, healthcare 
disappears for a lot of miles.
    And that is what we are trying to avoid. We are trying to 
not only avoid that hospital closing, but we want it to have 
state-of-the-art medical care, life-saving capabilities. So if 
somebody has a heart attack or there is a farm accident or a 
car accident or whatever, they can get to that hospital and 
receive that life-saving medical treatment.
    So it is an excellent program. In my judgment, we should 
have done these hospitals sooner. But we have got the proposal 
to do all of them in our Farm Bill proposal. And I really 
think, like your district, it is going to be very, very well 
received really across the country.
    And we will submit for the record a list of the states and 
number of hospitals impacted. I am going to guess that maybe 
not every State, but the majority of states have critical-
access hospitals that will benefit from this proposal.
    Mr. Smith. Okay. Thank you.
    I yield back the balance of my time.
    Chairman Spratt. Mr. Doggett.
    Mr. Doggett. Thank you, Mr. Secretary, for your testimony.
    Secretary Johanns. Yes, sir.
    Mr. Doggett. Let me say that I think there are some 
provisions in your proposal that have great merit----
    Secretary Johanns. Thank you.
    Mr. Doggett [continuing]. Particularly those that focus on 
the question of whether we can continue to make unlimited 
amounts of payment.
    I know that you have one proposal that picks a figure of 
200,000 after appropriate deductions and the like. I am not 
sure if that is precisely the right level, but it is certainly 
the right direction.
    We cannot do all the things you are being asked to do today 
and that we are being asked to do as a Committee if it is a 
blank check. But I need to center in and have great concern in 
the same area that Congresswoman DeLauro raised with you 
earlier, and that is the disaster and unmitigated failure of 
privatization of food stamp services in my home State of Texas.
    Indeed it is an issue that a number of members of the Texas 
delegation wrote the Department of Agriculture about before 
Texas ever proceeded with its misbegotten contract with 
Exensor, a company based in Bermuda that will not even pay the 
taxes due that its competitors pay here in the United States, 
but wants lots of taxpayer business.
    Despite the promise of great savings, this privatization 
contract has cost federal taxpayers money in additional 
administrative cost.
    There is also, I think, serious disruption of service of 
low-income families in the area of Texas that I personally 
represent as a result of this pilot, including a delay to more 
than 3,000 families in the first three months alone.
    Now that Texas has revised its contract with Exensor and 
limited the privatization scheme, I think we need to draw 
lessons from the mistakes made in Texas by Texans and the 
mistakes made in Washington by a Department that approved Texas 
moving forward with this back-room deal.
    In January, as I think you are aware, USDA wrote Texas not 
once but twice asking for information before any further 
rollout of its more narrowed privatization plan. The State has 
apparently provided no answer.
    And my question is whether or not we are going to have any 
more oversight from your Department than we had in approving 
this contract initially and whether the oversight will consist 
of anything more than just writing letters that are not 
answered of the type that you sent to Indiana.
    But in Texas, the answer did not specify any February 20th 
date. In fact, the last letter seemed to express the dismay 
your regional administrator, just please give us some 
information, and Texas has not done that.
    Secretary Johanns. I do not have the Texas letter in front 
of me, but let me promise you I will. My attitude toward this 
is that we want a program that is run well, period.
    We think we have made great strides in the food stamp area. 
You know, our error rate is as low as it has been really ever.
    Mr. Doggett. Well, of course, that is one of the reasons 
that I am so concerned about the Exensor contract, because the 
error rate went up. We had a good Food Stamp Program before the 
current Administration down there started wrecking it by giving 
all the work in a privatization scheme to Exensor saying they 
would save our taxpayers money when, in fact, it ended up 
costing us money.
    And I do not quite understand why it is you have only 
written letters asking for information and, yet, our old buddy, 
Mitch Daniels, who we have had a little experience with in this 
Committee and his earlier role, decides he wants to make the 
same mistakes in Indiana, and you all are letting them go on 
and follow in this case the wrong Texas----
    Ms. DeLauro. Will the gentleman yield?
    Mr. Doggett. I yield.
    Ms. DeLauro. I thank the gentleman.
    And thank you, Mr. Secretary.
    I want to take your word that you want to have a program 
that is run well. And Mr. Hensarling is not here, but my 
problem is not that--we are looking at the process here and how 
we are going to put families in jeopardy.
    I just really want to ask you, based on the February 20th 
date and your own desire to have well-run programs, if you will 
give a commitment to this Committee that you will ask the State 
of Indiana to delay that transfer until we have had a chance to 
be briefed on the specifics on what you are requesting from the 
State and are satisfied and that we are satisfied that Indiana 
is, in fact, complying with the law.
    Can we have that kind of a commitment from you, Mr. 
Secretary?
    Secretary Johanns. I can give you this commitment, that 
until we are satisfied that they are going to comply with the 
law and run a good program, they would not go forward. I would 
say that about any State.
    Now, here is what I would offer to you. I really want to 
spend a little bit more time seeing where Indiana is at. This 
letter went out, I think, a week ago today.
    Ms. DeLauro. February 8th.
    Secretary Johanns. And maybe the response is going to be on 
our desk by close of business today or tomorrow. Bottom line is 
this. We want the program to run right. We are proud of our 
Food Stamp Program. It is doing great things out there. We are 
enrolling numbers that I would imagine people did not even 
think we would ever get to. We are helping a lot of people.
    I think in our Farm Bill proposals, for example, we are 
doing some very positive things in this area. I want to make 
sure what runs what, and I will follow-up on your request.
    Ms. DeLauro. And if we can be briefed on this program. If 
this Committee can be briefed on this program. It is a hundred 
percent federal benefits in this program that are being 
transferred, half of the $328 million in federal dollars that 
are the administrative costs.
    I thank the gentleman. I did not mean to infringe on your 
time.
    Mr. Doggett. You are willing, as I understand it, to brief 
the Committee on that? This is just not being sure you did a 
good job like you thought you did a good job or your 
predecessor did in approving the Exensor contract, but you are 
going to give us a chance to hear about it before all this 
happens?
    Secretary Johanns. We are always happy to be before this 
Committee.
    Mr. Doggett. I just ask you to do the same thing for Texas 
as well on this new program because those letters did not have 
a February 20th deadline. One of them was January 4th. One of 
them was January 12th. The latter one said please let us know 
when we can expect to hear from you regarding the State's 
decision and subsequent information.
    As best I can determine, the State has not even told you 
when they would tell you. And this is just not acceptable 
oversight.
    Thank you, Mr. Chairman.
    Ms. DeLauro. Thank you. I thank the gentleman.
    Thank you, Mr. Chairman.
    Secretary Johanns. Here is what I can do. I will follow-up 
on your comments relative to both states, and we will send 
somebody in your direction with the latest information we have 
and give you each a briefing. And hopefully we can answer the 
question.
    Mr. Doggett. Or whatever you get from the states.
    Secretary Johanns. Yes.
    Ms. DeLauro. That is right.
    Thank you very much, Mr. Secretary.
    Chairman Spratt. Mr. Lungren.
    Mr. Lungren. Thank you very much, Mr. Chairman.
    And, Mr. Secretary, and your colleagues, it is good to have 
you here.
    I have got a whole host of questions all the way from the 
California impact from this Farm Bill, since California has a 
little different agricultural reality than the rest of the 
country, to trade, which is very important to our farmers in 
California, and forestry.
    Probably the poorest area in my district is a place called 
West Point in Calavaras County, has one of the highest 
percentage of children on food stamps, one of the lowest per 
capita income, and it used to be a thriving community with a 
very, very strong forestry industry.
    Those are all important questions, but let me ask one that 
I do not think has been touched on and I am concerned about. 
And I realize you share responsibility with DHS on that, and 
that is the area of agri-terrorism.
    I am concerned of the vulnerability of our food chain all 
the way from the farm to its final delivery point, the 
vulnerabilities that we have within that, and whether or not we 
are putting enough attention, and that includes funding for 
research on that, and whether or not we on the federal level 
are coordinating not only with the states but with the private 
sector in that regard.
    I have had some classified briefings on the potential. It 
is enough to concern me. It is enough to suggest, at least in 
my mind, that this is a very strong vulnerability that not only 
could do damage to us economically in short order but could do 
human damage as well.
    And could you tell me what your Department does in that 
regard and how you coordinate with the Department of Homeland 
Security in that regard?
    Secretary Johanns. We do. If it is agri-terrorism, we work 
with the Department of Homeland Security. But if it relates to 
an agricultural product, we would lead on that issue.
    Here is kind of how it breaks down. We have in the budget 
request about $341 million, and that is all part of the Food 
and Agricultural Defense Initiative. That would be our piece of 
that. Funding would include a 148 million increase for critical 
ongoing efforts.
    So we work with Homeland Security. But, actually, it even 
goes beyond that. We would work with Health and Human Services, 
for example, if there was a threat to human health.
    And then there is the piece of this that is hard to 
quantify from a budget standpoint, but it is very real, and 
that is situations like avian influenza. As you know, Congress 
put out a pretty substantial amount of money to deal with avian 
influenza issues. There has been an aggressive coordinated 
national effort, all departments, doing table-tops, sitting in 
the same room, doing their planning together. And that was in 
response to avian influenza, but I can tell you all of that 
work, all of that planning, all of that effort will serve us if 
it is avian influenza or a bioterrorism sort of attack.
    So we feel very, very strongly that the cooperation here is 
good, the effort between departments is seamless. The money 
that has been sent our way by Congress has been appreciated. 
And I think we have a very, very robust system here. So it is 
an excellent question, and I think we are doing some good 
things here.
    Mr. Lungren. Something I would love to follow-up with you 
about, the level of education that we are focusing on to inform 
members of the agricultural community about some of the very 
easy ways that you could introduce some very damaging diseases 
to our country and how we make sure that that educational 
system goes all the way down to the workers.
    But let me just ask this about the area of forestry. What 
do I tell folks in some areas like West Point about the federal 
government's attitude? I know we have the Health Forest 
Initiative. We have some programs that try to assist those 
communities with payments for the schools.
    But I have never seen people that were more devastated in 
terms of not having an opportunity for jobs in an area where 
there were generations, and some of these people were Native 
Americans living in this area, but all of them were people who 
wanted to continue to live in the area, but, frankly, they 
cannot find jobs because they talk about the restrictions we 
have placed on the forests of the United States and the 
inability for us to actually allow them to make any 
contribution.
    Secretary Johanns. I have personally visited areas 
throughout the country where at one time, there was a very 
robust industry and now there is virtually no industry. Like 
you, I have met with families where literally they are facing 
the prospect that they are out of work because the industry 
simply is dying.
    Let me just tell you. I fundamentally believe that you can 
have a very robust industry that is sensitive to the forests, 
sensitive to the environment. Not everybody agrees with that.
    In your State, there is a healthy measure of litigation. It 
is incredible.
    Mr. Lungren. I plead guilty to being an attorney.
    Secretary Johanns. Well, I am an attorney too. Not to speak 
ill of our brethren, but any forest issue we address in your 
part of the country, you can almost guarantee that not only 
will our rules be challenged but everything else that you could 
possibly imagine.
    Mr. Lungren. I know my time is up, but just one thing. And 
that is I wish the President and some members of his cabinet, 
when we are talking about alternative energy sources, in 
addition to talking about switch grass, would also talk about 
the fuel that we have in our forests.
    If we could somehow use that as a source of creating 
alternative for energy, it would create those jobs in this 
area. It would clean up that fuel and it would give us an 
advantage in the area of energy independence that would be 
extraordinary.
    Secretary Johanns. In your State, you are absolutely right, 
but that is true all across the country. In our Farm Bill 
proposals, forest biomass would qualify for all of the things 
that I have talked about with cellulosic ethanol. In addition, 
we have 150 million for wood to energy program. We have a grant 
program we are proposing for innovative solutions to local 
forest management issues.
    We share your vision here. We think there is a great 
opportunity here. Again, I think you will end up with a 
healthier forest, a better managed forest, and you are not 
going to have the situations we often face in your State with 
forest fires where quite honestly they catch that ground cover 
and you are off to the races.
    Mr. Lungren. Thank you for the indulgence, Mr. Chairman.
    Chairman Spratt. Mr. Blumenauer.
    Mr. Blumenauer. I would like to follow-up on where Mr. 
Lungren and the Secretary left this. In part, there are things 
I think we can do in terms of tax and in terms of agricultural 
policy that levels the playing field in terms of what we do 
with biomass and get away from the specter of too much in corn 
that has all sorts of bizarre and unintended consequences, not 
the least of which for agriculture.
    And I appreciate what is there, and I think there are 
things we ought to be doing in terms of how we provide the tax 
and subsidy incentives.
    I have three questions. I will lead with my first one just 
to say part of it, I think the solution is being more 
thoughtful and aggressive about how we deal with the problem of 
fire fighting. We have had what, three of the six last year and 
spent over a billion dollars in fire fighting cost.
    There is some work that is absolutely environmentally 
benign and, in fact, would be supported by environmentalists if 
we put some serious money into it and not pushing the limits 
with some legislation you do not have to do, but fine tuning 
legislation.
    My colleague, Peter DeFazio, has some legislation that is 
not controversial, that will not be tied up in court, that will 
put people to work in communities like yours, and make those 
communities safer and fire resistant.
    But there is a flip side to that and that is we have to 
stop treating our rural communities like suburban bedrooms 
where people are going to get urban level of fire protection by 
locating places where they simply are not safe. It is bad for 
forest management practices and it puts people at risk and draw 
your costs of fire fighting up 100 or 1,000 times.
    And when you put global warming on top of this and then you 
have people going up into the hinterlands--I think the 
estimates are that there will be one million more people living 
in suburban Denver in this--we will not have enough money to 
fight the fires.
    So my first question to you, and I know there will not be 
time to do justice to it because I probably will not even get 
to my other two questions, but I would like a serious response 
about what you are willing to do to redirect some money in 
these noncontroversial ways that will put these people to work, 
provide some biomass material, and make the community safer, 
and concurrently that we start having State and local 
governments be responsible for not allowing people to sprawl 
into areas where they are not safe. It undermines the 
environmental and forest characteristics, and provides huge 
fire fighting liability. Question one.
    Secretary Johanns. Okay.
    Mr. Blumenauer. Question two, shifting gears, and, again, I 
will be happy to have something in writing at a later time, 
deals with in the international arena. I mean, I love the 
authorization of up to 25 percent of our food aid as cash for 
local and regional purposes overseas, not spending a gazillion 
dollars to take dramatically subsidized crops around the world 
and putting local poor farmers out of work so we have got to 
give them more aid in the long run.
    I would love to have a more detailed response in ways that 
would allow our food aid program to reach more people, more 
quickly, with a more efficient use of the taxpayer dollar.
    This is one, Mr. Chairman, I hope we can get our arms 
around and work with.
    And last but not least, I would love to have a response in 
terms of what you think the future will be if we are unable to 
take our farm and trade policies in a way that deals with 
things like Brazil whacking us on cotton subsidies or Canada on 
corn. What is the likely exposure for American agriculture?
    These three questions, if you would, I am keenly interested 
and want to work with you. I appreciate the rhetoric that was 
advanced and some of the proposals.
    I come from a State that, you know, we produce more 
agricultural product than my other friend, the other Earl from 
North Dakota. We produce more agricultural product. We get one-
sixth, one-sixth of the total federal benefit in subsidies for 
commodities, for environmental, all of the things combined.
    So I like where you are going. I like the approach. Your 
reaction to those three questions would be useful.
    Secretary Johanns. All three are great questions, and I 
will have to be a little abbreviated because of time, but I 
would love to sit down, talk with you more about your thoughts 
here.
    Mr. Blumenauer. A written response is fine. I do not mean 
to impose on my colleagues.
    Secretary Johanns. That is all right. I can hit these 
pretty quickly.
    We set out to do a Farm Bill proposal that simply would be 
more equitable, and that meant more equitable across farmers. 
Sixty percent of U.S. farmers are not subsidized with cash 
subsidies. They are not.
    In our proposal, we have about $5 billion for what we call 
the specialty crop producer.
    Mr. Blumenauer. People who grow food----
    Secretary Johanns. Yes.
    Mr. Blumenauer [continuing]. That we eat.
    Secretary Johanns. As you know, it is everything from 
research to phyto sanitary, sanitary, purchasing more fruits 
and vegetables. The 25 percent food aid issue is something we 
believe in. It is in our proposal. And it makes a lot of sense.
    We want to buy food here, too, but there are certain 
emergency situations where literally being able to get food to 
somebody is a life or death situation not in two months or 30 
days, today. I mean, literally today. We are not taking all of 
the food aid, but we are saying this 25 percent would give us 
the flexibility to go out there, purchase food, get it to those 
people who need it very, very quickly.
    And then in terms of your ideas on forests, we are open to 
ideas. The current system, I will just be very candid, is not 
working very well. Maybe nobody is happy about this system. 
Maybe environmentalists are unhappy. Maybe people whose job 
depends upon working in logging are not happy. There has got to 
be something we can do here. And I would love to sit down with 
you more extensively.
    Mr. Blumenauer. I appreciate that.
    I appreciate your indulgence, Mr. Chairman. Fifteen 
seconds, if I may.
    I hope you are also considering with the emergency aid, you 
know, you have to do it fast with cash because of time 
constraints. I hope you will also consider in some of those 
areas where we come in with heavily subsidized American food, 
it puts the local farmer out of business and those people end 
up starving, unless we do it on a permanent basis. I hope you 
will use that as a consideration for cash payments as well.
    Secretary Johanns. And under this proposal, you could 
literally go into that marketplace and acquire food, and that 
is where we would buy it. So we think this would work well in 
certain circumstances, not necessarily in every circumstance. 
We are not asking for 100 percent.
    Chairman Spratt. Mr. Berry.
    Mr. Berry. Thank you, Mr. Chairman.
    Mr. Secretary, we appreciate you being here today.
    And, Mr. Conner, we appreciate you being here.
    And my next remarks are not intended to reflect on you two 
guys at all, but I worked with Scott Steele and Keith Collins 
for a couple of years down at the Department and there are few 
people in this town or any place that I have greater respect 
for. And I wanted to recognize that.
    Secretary Johanns. Great. Thank you.
    Mr. Berry. In this Committee, we endlessly hear the 
discussion that if you just lower the tax rate that the economy 
will bubble up out of the ground and everybody will be eating 
rainbow stew and drinking free bubbly.
    And, you know, my first thought about that is if it works 
like that, how come we are broke, how come the nation is $9 
trillion in debt?
    My question to you is, the only justification I have ever 
been able to see for a farm program was to guarantee adequate 
production and processing capacity to be sure that our people 
had safe food supply.
    Has anyone ever calculated the value to the economy of 
having the cheap and safest food supply of any economy in the 
world?
    Secretary Johanns. I would be confident that somebody has 
done calculations and I would be confident in telling you that 
I agree with that statement. We are blessed. We are blessed by 
exactly what you are saying, a very safe, wholesome food 
supply, and we generally spend less of our disposable income 
than just about anybody in the world. That is a very positive 
thing for people.
    Mr. Berry. Well, I think so too. Now, the next question I 
have is, most of that is going to change under a Farm Bill 
since the 1930s. And we keep tinkering with these Farm Bills. I 
am a farmer myself. I have been there. I still own one of those 
things. Anybody that thinks it is the road to riches needs to 
go buy one and learn a whole lot.
    But it is big business. It requires a lot of money, a lot 
of capital investment. And you do not have to be a rich person, 
but you cannot produce and process the amount of food and fiber 
that we are going to be required to produce in this country and 
do it on the cheek. The technology demands that you have that 
kind of capital investment.
    Now, I know there is still a few small operations out 
there, and that is just all well and good. But I would wonder 
if anyone has considered the value of Farm Bill to getting us 
in this position where we do have cheap food and fiber.
    And before my time runs out, I have got another issue. You 
talked about trade a while ago. The rice industry thinks that 
the Department of Agriculture has absolutely walked away from 
us on the GMO issue with long-grain rice in Europe. And it is 
beyond me why either the USTR or you, Mr. Secretary, cannot 
stand up to the Europeans and get us at least an even break on 
that issue because there is no health risk or anything 
involved. And if we are waiting on them to give us the 
information that they have about how this happened and all 
that, I will not get any response from them.
    But the other thing I would say is, and I got into this 
business by getting involved in conservation programs and 
working to see that conservation programs were put in place and 
learning about those things, the Natural Resource Conservation 
Service in Arkansas has the worst leadership of any government 
agency I have ever seen. It is a train wreck. The farmers have 
come to hate it, and they do not even want to do business with 
them. The landowners want nothing to do with them if there is 
any possible way to avoid it.
    And I have talked to people at your agency over and over 
again about it and nothing has been done about it, and I would 
encourage you to look into that and see if you cannot do 
something to make it better.
    Secretary Johanns. I will.
    Mr. Berry. And I thank you.
    Secretary Johanns. Thank you. I will. I will look into the 
last issue you mentioned.
    A couple of things I would offer very, very respectfully 
because I do not want to launch off into a discussion about tax 
policy. But, actually, revenues are up. I mean, double digit. 
It is rather remarkable.
    And having worked around budgets a long time, you know, you 
have your base upon which you tax and you have your rate upon 
which you tax that base, and there are a number of ways to 
approach this, but one way is if you can get that base moving 
and investing and employing and doing all of those things, that 
is going to impact the rate upon which you apply, so----
    Mr. Berry. If it was working any better, Mr. Secretary, we 
are going to be broke.
    Secretary Johanns. Well, the fact of the matter is the 
revenues are coming in at historic levels. That is probably why 
there is so much emphasis these days upon balanced budget and 
spending and earmarks and all of those things. But the revenues 
are very, very strong.
    The other thing I would mention, you know, I share your 
philosophy about farm policy. I think we are the beneficiaries 
of some really great things that have happened. But the 2002 
Farm Bill was not the same as the first Farm Bill passed. Each 
Farm Bill tends to build upon the shoulders of the last Farm 
Bill, and hopefully we do it a little better each time.
    And we feel very strongly that our proposal is that for a 
variety of reasons, and I will not launch into that. But just 
in terms of dollars and cents, if you reauthorize the 2002 Farm 
Bill and just said let us do it all again same way, do not 
undot an I, do not uncross a T, you would be spending $5 
billion less than our proposal.
    Now, we worked to make sure our proposal would fit within 
the balanced budget goals, and it does, but the reality is that 
we think there are some things here that make a lot of sense in 
that Farm Bill proposal.
    Last thing I would say, and Keith would probably know this 
off the cuff, I think our rice exports have stayed strong.
    Now, I would agree with you on the EU. And believe me, we 
are standing up to them. We are not going to back down. I do 
not care if it is hormones and beef or if it is the rice issue 
or whatever else the flavor of the day is with them, we are not 
going to back down. This is something we take very, very 
seriously because with rice, 50 percent of that crop needs to 
be exported.
    So I just want to assure you, Congressman, I am not going 
away. I am not backing down, and I do not see the USTR backing 
down on this issue either.
    Mr. Berry. If the Chairman will indulge me this. How have 
you stood up to them?
    Secretary Johanns. On every issue we have with the EU, we 
have either filed claims against them in the WTO, we have 
worked to negotiate better results. I will tell you in every 
way we can push the envelope with them, we have. We have not 
walked away from your rice farmers.
    Mr. Berry. But we still do not have access to that market.
    Secretary Johanns. Yeah. They closed access to that market. 
Congressman, here is what I would tell you. Under our rules 
here in the United States, we could close access to markets and 
we do. And we do not like it, but sometimes you have to do it.
    Now, in this case personally, I do not see anything unsafe 
going on here, and we are going to do everything we can to push 
this issue and force this issue. So I want you to know I am not 
walking away from this. We are absolutely committed to getting 
rice back into the EU and every market in the world, every 
market.
    Keith.
    Chairman Spratt. Mr. McGovern.
    Mr. Collins. Mr. Chairman, the Secretary asked me if I 
would amplify one further comment of his----
    Chairman Spratt. Yes, sir.
    Mr. Collins [continuing]. If that is all right with you. I 
would just follow-up on what the Secretary said. Yes, we are 
having difficulty with the European Union, but I think if you 
want to look at the whole array of activities the Department of 
Agriculture has conducted with respect to rice, you have to 
look at the other markets besides the European Union, which 
could have closed to us and did not because of the work the 
Department of Agriculture has done.
    I could point to Canada as a good example and the 
aggressive efforts we had with Canada to maintain that long- 
grain market.
    I would also point out that before the rice year started, 
we expected to export 97 million hundred weight of rice. Then 
we had the problem with Liberty Link Rice. We thought exports 
were going to fall off the chart. They did not. And the large 
measure is because of the export market maintenance that the 
Department of Agriculture conducted around the world.
    And as we sit here today, we expect our rice exports will 
be 102 million hundred weight for the year, actually more than 
we thought before we discovered Liberty Link Rice in the rice 
supply.
    Thank you, Mr. Chairman.
    Chairman Spratt. Thank you.
    Mr. McGovern.
    Mr. McGovern. Thank you, Mr. Chairman.
    And thank you, Mr. Secretary, for being here, and I 
appreciate your testimony.
    I want to take my five minutes to say a few words and ask a 
couple of questions dealing with the issue of hunger.
    Secretary Johanns. Yes.
    Mr. McGovern. And let me begin by saying that I think the 
food and nutrition programs under USDA's jurisdiction are among 
the most important programs we have. And they deliver essential 
food assistance to one in every five Americans and they address 
hunger in communities all across the country and in every 
single congressional district.
    I am sorry my friend, Mr. Hensarling, is not still here. He 
went through kind of quoting a litany of numbers, and I would 
just say that the question really should not be about whether a 
program is level funded or cut or increased. The question 
should be whether these programs are adequately funded to meet 
the needs that we have in this country.
    And you began by saying that you believe that these 
programs are indeed funded to meet the needs. I would 
respectfully disagree with that. When I look at this budget, I 
have to tell you I am a little bit concerned that it is 
inadequate to the task of addressing let alone eliminating 
hunger and food insecurity in this country. And the job of 
doing that rests not just with your agency. There are other 
agencies too. I had this discussion with Secretary Leavitt when 
he was here the other day.
    But let me start with senior citizens. Many seniors need 
special diets and adequate nutrition for their medications to 
work. Yet, they lack access to adequate food.
    I was explaining to Secretary Leavitt about a visit I had 
to an emergency room in Massachusetts, Massachusetts Hospital 
about doctors telling me about senior citizens coming there 
with all kinds of ailments because they are taking their 
medication without adequate food. These seniors are 
dehumanized. They are demoralized when they have to choose 
between food and medication or rent or utilities. Yet, once 
again, this budget just like last year proposes to eliminate 
the Commodity Supplemental Food Program, which is a modest $107 
million.
    And while I am touching on the subject of seniors and food 
stamps, we both know why so many eligible senior citizens do 
not take advantage of the Food Stamp Program. They only qualify 
for a $10.00 minimum monthly benefit, and the $3,000 asset 
limit has remained the same for many years and unlike most 
programs for elderly, there is not index for inflation.
    I think these are changes that need to be addressed in the 
Farm Bill, but I do not see any such proposals in your budget. 
And if these necessary changes were made, which I think they 
should be made, they will have a budget impact.
    So I would like to get your comments on that. But before I 
do, I want to get my second question in with regard to 
children.
    Nearly 80 percent of food stamp recipients are households 
with children, so changes in eligibility can have a devastating 
effect on whether working families are able to put food on the 
table for their kids.
    Data provided by many faith-based organizations, food 
pantries, and food banks clearly shows that many families 
exhaust their monthly food stamp benefits about two-thirds of 
the way through the month. Yet, the changes in eligibility 
proposed in this budget actually reduces the number of families 
eligible for food stamps rather than increasing the amount of 
the benefit or expanding the number of families eligible for 
the benefit.
    So in that respect, I think we are going in the wrong 
direction. For the 280,000 families slated to lose their food 
stamp eligibility under this budget, approximately 400,000 of 
their children will also lose their access to free school 
lunches.
    So in addition, I think this budget once again fails to 
provide the necessary funding for universal school breakfast 
programs, after school feeding programs, the summer feeding 
programs, leaving more and more kids hungry, under- nourished, 
food insecure. Again, all of these programs remain 
significantly, in my opinion, under-funded with very limited 
reach.
    Now, I guess, my question, Mr. Secretary, is that at a 
minimum, why can we not get a budget that adequately addresses 
hunger in America, I mean, or at least addresses the needs of 
our children and our senior citizens?
    This budget, I think, tolerates hunger. And that is not to 
take away from the positive in this budget to try to deal with 
hunger, but it does not anywhere go near where we need to go to 
eliminate the problem in this country. It makes no effort to 
move America forward in cutting hunger in half or even reducing 
it by a third.
    And so I would like your reaction to that, but also make a 
suggestion that maybe you or someone in this Administration 
should head up an inter-department or interagency task force 
designed specifically to deal with the hunger issue. Maybe 
cutting hunger in half by the year 2015, you know, or even 
doing better than that. But I do not see in this budget how we 
get to that goal.
    And, again, if you could deal with this hunger issue, you 
know, we can control healthcare costs, we can get a more 
productive workforce, kids are going to learn better in school. 
I mean, all the benefits are very obvious to me. But, yet, we 
are not there with this budget. And I would appreciate your 
response.
    Secretary Johanns. I will ask Chuck Conner to offer a few 
thoughts. He works this issue a lot and so he probably has some 
special insights that I do not.
    But a couple of thoughts that I might offer. I do not think 
any Administration in the history of this country has more 
aggressively and fully funded nutrition programs than this one. 
They are growing. We fully fund them. We establish a 
contingency program so if there is additional growth that we 
did not anticipate, we could handle that.
    I think the senior program you are talking about, the 
Commodity Supplemental Food Program, let me just be very clear, 
in that proposal, we have outreach dollars to reach out to 
seniors. We feel very, very strongly that if they qualify for a 
nutrition program that we should get them on that program.
    This Commodity Supplemental Food Program is only in a few 
states, if I remember correctly, a few states, and I think a 
couple of reservations, if I am not mistaken. It is a very, 
very limited program. And in my judgment, there is just no 
doubt that the greatest impact you are going to have is through 
the Food Stamp Nutrition Program.
    And then the other one you mentioned, I think you are 
probably referencing the eligibility issue.
    Mr. McGovern. Yes.
    Secretary Johanns. And, again, if those citizens qualify 
for the Food Stamp Program, we want them on the Food Stamp 
Program, but this is a situation. And, again, the Deputy works 
this more than I do, but this is a situation where maybe they 
have qualified for job training or something and so they are 
automatically put there. And we are saying, wait. What it 
should be about is qualifying them for the Food Stamp Program. 
If they qualify, let me just assure you, we are going to get 
the benefit of that program.
    Chuck.
    Mr. Conner. Well, Congressman McGovern, I think the 
Secretary has touched upon, you know, the key highlights of 
this. Again, I think the data would show pretty clearly that 
our outreach efforts in this Administration to reach those 
people that are eligible for food stamps but for whatever 
reason in the past have failed to sign up for the program has 
been, you know, a real benefit to this country.
    And the data that was cited earlier by another one of your 
colleagues, I think, is the right data to show that we have 
reached a tremendous number of people with this program.
    Mr. McGovern. Yeah. But one of the problems I mentioned is 
that for a lot of senior citizens, they have a $10.00 minimum 
which, you know, is nothing. And, you know, so, I mean, part of 
the issue is not just, you know, outreach, it is also having a 
benefit that is, you know, reasonable.
    And we are not indexing this for inflation. We are not 
recognizing the rising costs. And I mean, I know my time is up, 
but I will again just point that out and say that I think we 
need to work on that.
    And, again, I would urge the Secretary, you know, maybe 
this interagency task force or maybe a White House summit on 
hunger, but I think we need to focus on this issue in a way 
that--you know, with all due respect, I think we have a long 
way to go.
    Mr. Conner. Just a quick----
    Chairman Spratt. Go ahead quick.
    Mr. Conner. Just a quick closing comment on that point in 
terms of the level of benefit. In our budget proposal, we do 
provide six months worth of benefits to those transferring into 
the Food Stamp Program away from the CSFP Program. I believe 
that benefit is about $22 million worth in the bill so that 
they do have a significant transition there.
    Mr. McGovern. But that is much smaller than the elimination 
of the Commodity Supplemental Food Program which the 22 million 
does not make up for what has been taken away.
    Mr. Conner. Well, depending upon their level of food stamp 
benefit they get once they qualify. That is correct.
    Chairman Spratt. Mr. Etheridge.
    Mr. Etheridge. Thank you, Mr. Chairman.
    Mr. Secretary, good to have you back.
    Secretary Johanns. Thank you.
    Mr. Etheridge. Thank you.
    Since we are talking about the budget, let me ask you a 
question. If you would enlighten me, I want to return to the 
conservation piece for just a moment.
    You talked about how important it was, and I happen to 
agree with you. It is important to me and certainly to my State 
of North Carolina and I think all states.
    North Carolina is one of the top five states in total 
livestock production in this country. It is a major crop 
producer, and we also have a growing influx of people from all 
over the country, a number of retirees moving there, and so we 
are growing very rapidly.
    So conservation funding helps strike a balance between farm 
and these growing cities. Using programs like Farm Preservation 
and CRP are very important in a State like ours, and I think in 
most states.
    So my question is this. We are being asked to set aside 
billions of additional funding for conservation for the next 
Farm Bill, which I happen to agree with. However, I am 
perplexed, and I hope you can straighten me out, with the 
President's own budget recommendation that we now have, for 
this year alone cuts conservation funding by almost $400 
million.
    Secretary Johanns. Here is what I can offer. We are kind of 
at an unusual intersection here, and I guess it happens during 
every Farm Bill cycle.
    Mr. Etheridge. Before you start, there is one other point I 
want to make. At a time in a State like ours and a lot in the 
southeast, we are seeing growth in poultry and pork, an area 
where obviously you can appreciate conservation is really 
needed.
    We have got morbidity on animals that through EQUIP you 
have got to deal with. You got land conservation. These things 
really are a grave concern, and I am not sure these two things 
are meeting, you know. We are sort of like this.
    Secretary Johanns. Yeah. This gets so complicated, I almost 
need the budget guy to explain it. But as I understand it, it 
is a cut to the baseline. It is not a cut in terms of 
absolutes.
    But here is another thing I would offer. We are kind of at 
this unusual intersection here where we have a budget process 
going on, but we also have a Farm Bill process going on. And 
this September, the current Farm Bill basically expires. It 
expires with the 2007 crop year, and hopefully we will have a 
new Farm Bill ready and up and going.
    And in the new Farm Bill, as you point out, we 
substantially increase funding for conservation programs, about 
$7 billion. In some of the programs that work very, very well 
in a State like yours and in the cattle industry, like our 
proposal for EQUIP is like an additional $4.2 billion.
    Mr. Etheridge. But is that not a gap, Mr. Secretary? You 
are asking here and we are cutting here, and we do not have a 
bridge.
    Secretary Johanns. No. Scott, if you can walk us through 
this. I do not think that is the case.
    Mr. Steele. Yes. Mr. Congressman, yeah. We have 
authorizations that are funded in the 2000 Farm Bill that take 
some of these programs to higher levels than we are actually 
proposing in the budget. For example, EQUIP would go 
potentially in the 2002 Farm Bill, the one point two or three 
billion dollars.
    This program has been traditionally funded at about a 
billion dollars by Congress. Last year, they funded at a 
billion dollars. We are proposing to again fund it at the 
billion dollars.
    In waiting for the transition of the Farm Bill, we are 
going to have some new rules and regulations, new ways of 
operating these programs. So rather than making a change in the 
2008 budget, we would rather make those changes in the Farm 
Bill context and then raise the money based on the new 
proposals that come forward in the Farm Bill.
    So there is no absolute cut, for example, in EQUIP. We are 
still maintaining the same level. We just are not increasing it 
to the full authorization in the 2002 Farm Bill in 2008.
    But the out-years, as the Secretary said, we are going to 
be ramping up EQUIP. We are going to be ramping up CSP, and 
these other conservation programs will see an increase of 
something like $7 billion.
    Mr. Etheridge. In the authorization?
    Mr. Steele. Well, in our proposal----
    Mr. Etheridge. What about the appropriation side where the 
budget is?
    Mr. Steele. Well, that is a year-to-year thing. Now, you 
know, they can combine, put limitations on as they have in the 
past and do that, but, you know, that is up to----
    Secretary Johanns. Mr. Etheridge, the seven billion, 
though, is mandatory funding that would not be subject to 
appropriation.
    Mr. Etheridge. Okay. I see my time is running down. Let me 
just make a point that I am sorry my friend from Texas is not 
here. When he was talking about farmers and the checks they get 
recognizing that one good year does not necessarily mean a 
long-term successful operation when a piece of equipment today 
costs a quarter of a million dollars that just a few years ago 
may have cost the farmer or operation 100,000.
    So it has a significant impact. It has been my experience 
that most farmers are not sending those checks back. I assume 
you do not have an agency taking those checks when they are 
sent out. And the last time I checked, we do not have a whole 
lot of farmers who are retiring to the Bahamas.
    Thank you, Mr. Secretary.
    And I yield back.
    Chairman Spratt. Ms. Hooley.
    Ms. Hooley. Thank you, Mr. Chair.
    Mr. Secretary, I have a couple of issues. There are a lot 
of issues I would like to talk to you about, but I want to try 
to stick to two.
    The ``National Forest Land Adjustment For Rural Communities 
Act'' would authorize you to provide a source funding for a 
four-year extension of the `` Secure Rural Schools'' to help 
fund this initiative. The Administration recommends that we 
sell a number of National Forest Systems' land around the 
nation.
    My question is, approximately how much revenue do you 
anticipate generating from your proposal? How do you anticipate 
counties would make up the difference? What happens four years 
from now and is that not a little bit like selling your seed 
corn?
    Given the fact that this was tried last year, you know, why 
are we doing this again? And then what additional steps have 
you taken to further the reauthorization of this `` Secure 
Rural Schools Act,'' which affects 42 states and 4,400 school 
districts across the country?
    And the reason I talk about this is I am from Oregon, and I 
am from a State where this is just devastating to our rural 
communities, our rural counties. This is money that we said 
because you have all of these federal lands in your county that 
we are going to pay you in lieu of taxes. That is where it 
started. Then it was timber receipts and then it was the `` 
Secure Rural Schools.''
    And we have literally pink slips going out today and 
tomorrow and the next day where you are cutting down the 
Sheriff's Department so they cannot operate, DA Departments so 
they cannot operate. In one instance, laying off a number of 
jail guards, actually is against the State law where they would 
have to go on that one.
    So this is a very serious problem for those of us that have 
a lot of federal lands. So that is why I want to talk about `` 
Secure Rural Schools.'' First question.
    Second question, again being from the Wallamette Valley 
that grows 1,200 different crops, most of those are vegetable, 
tree nuts nursery crops represent--the specialty crops 
represent about 50 percent of the farm gate receipts with $50 
billion and, yet, as you heard my colleague say, only receive a 
fraction of USDA funding.
    And I think it is a little ironic because most of these 
farmers--and I grew up on a farm in North Dakota, a wheat 
farm--but most of the farmers in Wallamette Valley are small 
farmers. They grow crops that are easily damaged. I mean, if 
you are a strawberry grower and you have rain at the wrong 
time, you do not have any sunshine at the wrong time, your 
crops go under.
    So these are small farmers growing the foods that we need 
to supply to--you just heard one of my colleagues talking about 
hunger. I mean, we need to supply more of these foods to our 
schools. These are fresh vegetables, fresh fruits. Small 
farmers, certainly a lot of uncertainty, so sort of what your 
take is on that.
    And I know in 2004, the President signed into law the `` 
Specialty Crops Competitiveness Act,'' which authorized $44 
million for specialty crop block grants for states, for 
research, for marketing, education, pest control, so forth.
    However, since that act has been signed into law, the 
President has largely left this unfunded. So my question is, 
does the President's budget include anything for this program 
and, if not, does this budget include anything that benefits 
this vital segment of U.S. agriculture?
    Secretary Johanns. Yeah. Let me, if I might, visit with you 
about specialty crops. Then I am going to ask Scott to maybe 
walk us through the budget on the program that you talked about 
at the start of your comments.
    Ms. Hooley. ``Secure Rural Schools.''
    Secretary Johanns. Yes.
    Ms. Hooley. Okay.
    Secretary Johanns. ``Secure Rural Schools.'' I will tell 
you, Congresswoman, without any hesitation that specialty crops 
have never been a part of farm policy like we are proposing 
they be a part of it in the proposal we released three weeks 
ago.
    The specialty crop legislation that you are talking about, 
all discretionary funding, and it has been a challenge to have 
much funding come out of that bill.
    Here is what we are proposing, and this would be mandatory 
funding. We are proposing about a $5 billion program for 
specialty crops, 2.75 billion to purchase fruits and vegetables 
for our food assistance programs, an additional 500 million to 
increase the purchase of fruits and vegetables in our school 
meals.
    And the schools could use those fruits and vegetables in 
whatever way they feel would be best. They might do a snack 
program. They might do fruits and vegetables with their hot 
lunch program or if they have a morning breakfast, they might 
do it there.
    We are providing a $250 million increase for the Market 
Access Program, that is a program targeted at nonprogram 
commodities again, to promote. Very popular program.
    We are providing 20 million to address sanitary, phyto 
sanitary issues, again directed at specialty crops. We are 
increasing the technical assistance for specialty crops, and 
our specialty crop farmers, the waste from those crops would be 
eligible for all of our energy programs.
    In your area, you will benefit from conservation proposals 
and some other things we are proposing, but I would 
specifically mention that in your area, you would benefit from 
a proposal we have that includes $1.7 billion for regional 
water programs. And, again, I am confident that that would be 
very helpful to you.
    We have had a very, very positive response to our proposal 
from specialty crop producers because, quite honestly, they 
just did not have much place in previous farm policy. But when 
we did our Farm Bill forums, these farmers showed up and said, 
you know, we want a place at the table, not subsidies. No one 
asked me in that industry for cash subsidies, but for research, 
purchasing fruits and vegetables, market promotion, sanitary, 
phyto sanitary.
    And we have hit on every issue here, and I think it is the 
most bold initiative for the farmers that you are talking about 
of any Farm Bill proposal ever made to date in farm policy.
    Now, let me ask Scott to talk to you a little bit about the 
budget numbers here.
    Ms. Hooley. Okay, because I would like to have a sense of 
if you talk about $5 billion for specialty crops, how does that 
compare to the commodity crops. That is what, 50 percent 
production.
    Secretary Johanns. Yeah. I know. I know. Commodity crops 
are going to get a sizable amount of money.
    Ms. Hooley. Give me a ballpark figure of the comparison of 
the five billion compared to----
    Secretary Johanns. Thirty-five billion.
    Ms. Hooley. Okay. And even though these are the small 
farmers, the farmers that have----
    Secretary Johanns. Here is what I would say. That is the 
direct subsidy number.
    Ms. Hooley. Okay.
    Secretary Johanns. I can promise you I did not hear a 
single specialty crop farmer at any Farm Bill forum I did show 
up and say, you know, I want to be subsidized. Treat me just 
like soybeans or corn or whatever. In fact, they do not want to 
be because they worry that it will distort the marketplace. But 
they did want funding for the research, et cetera, and----
    Ms. Hooley. And the market access?
    Secretary Johanns. Yeah, and all the others I have 
mentioned.
    Ms. Hooley. Okay.
    Secretary Johanns. So this is a much larger place in farm 
policy for this group of very important farmers than has ever 
happened, ever. I promise you that.
    Go ahead, Scott.
    Mr. Steele. Thank you very much.
    On the ``Secure Rural Schools'' situation, and you probably 
know as much as I do, but I do not work for the Forest Service. 
I am a Departmental Budget officer, but I will try to explain 
to you what we are trying to do on this.
    Basically, as you know, there are two pieces of legislation 
that apply to rural schools. There is something called, you 
know, the `` 1908 Act''----
    Ms. Hooley. Right.
    Mr. Steele [continuing]. Where these counties that have a 
large timber production in their counties got 25 percent of the 
timber receipts.
    Ms. Hooley. Right.
    Mr. Steele. The problem is we have had a very vast 
reduction in timber production and timber sales around the 
country, something from over ten billion board feet down to 
something like two billion board feet.
    Ms. Hooley. Right. And that is probably not going to 
change.
    Mr. Steele. And that may not change. And that is something 
beyond our control a little bit because of court cases and 
things like that.
    But in the year 2000, there was a bill passed by Congress 
which allowed these school areas, these counties to get, you 
know, the benefit of additional amounts of money that Congress 
enacted. And that law was in effect from 2000 to 2006.
    Ms. Hooley. Right. Because we said on the ``Forest Practice 
Act'' that we were going to reduce the amount of forest cut.
    Mr. Steele. Yeah.
    Ms. Hooley. And so this was to make up the difference.
    Mr. Steele. Make up the difference. And we understand that. 
Now, unfortunately, that second piece of legislation, the `` 
2000 Act,'' expired in 2006. It has not been extended by 
Congress in 2007, although we did propose something in last 
year's budget. We again are proposing something similar in the 
2008 budget which would extend this type of program for four 
years.
    Now, I understand that there is some controversial aspects 
of our proposal in terms of selling off some of this land.
    Ms. Hooley. Yeah, because what do you do four years from 
now?
    Mr. Steele. Well, then we will have to readdress it. But, 
you know, you have got to do something with the legislation 
here in Congress. And the Under Secretary, Mark Rey, has told 
us that, you know, he is willing to work with Congress and the 
committees to help work out a solution to this problem.
    However, there is a problem in 2007 because we are not 
collecting any money. This is a lag, one year. You have to 
collect the money, then pay it out the next year. So right now 
there is a hiatus in terms of funding for 2007. We would 
continue this in 2008, but I think the payments would not be 
made until 2009.
    Ms. Hooley. Right.
    Mr. Steele. So there is a lag problem in the funding here, 
and we realize that problem, but we are going to have to work 
with the committees on the Hill here to try to figure out a way 
to solve that problem.
    Ms. Hooley. I just want you to know how serious the problem 
is and literally----
    Mr. Steele. But, still, I mean, it is not a total 
substitute. They could still fall back to the `` 1908 Act'' and 
get some payments based on the timber receipts from that 
county. It is not a solution, but they are not totally without 
some source of funding there.
    Ms. Hooley. Okay. Thank you.
    Chairman Spratt. Mr. Boyd.
    Mr. Boyd. Thank you very much, Mr. Chairman.
    Secretary Johanns, gentlemen, welcome.
    Let me start, Mr. Secretary, by saying I know of your deep 
love for the land. You were reared on the land and have a great 
respect for those who farm it. And I have a great respect for 
you and the way you handled yourself.
    I want to start by saying two things. One is thank you for 
the Department's work on behalf of the citrus industry relative 
to citrus canker. I know you were not there during the whole 
fight that has been going on a lot of time, but obviously we 
lost the fight in terms of eradication. But now you are helping 
us develop a policy or a plan to live with it. And we 
appreciate that.
    By the way, our citrus farmers are doing pretty well, 
better than they have been doing because of market prices and 
reduced stocks.
    I also want to say that many of those of us in the farm 
community are not opposed to Farm Service Agency mergers and 
consolidations. We know that needs to come, and we would along 
with Mr. Cooper encourage you to continue that in a reasonable 
and rational manner so that we can serve our farm community, 
but do it at the lowest possible cost to the taxpayer.
    I want to ask two questions, Mr. Secretary. One is a 
general question. The other one, we are all parochial in a way, 
and you may know what that is going to be.
    First of all, let me associate myself with Marion Berry's 
remarks, not all of them, but certainly the ones where he 
talked about our national agricultural policy and the 
importance of that to our economy, but not only to our economy, 
but to our national security.
    Those of us who grew up on a farm and have parents and 
grandparents that owned a farm during the depression days 
understand how important the national agricultural policy and 
government's involvement is in this.
    Commodity prices have traded in a very narrow range for 40 
years. We have only been able to stay competitive, Mr. 
Secretary, because we stayed ahead of the curve on research and 
development. Research and development is of critical import, 
and the ways that we deliver that research and development is 
through our land grant universities, system research and 
extension services, and our ARS.
    Secretary Johanns. Yes.
    Mr. Boyd. There are real cuts, not the cuts--I am sorry Mr. 
Hensarling is not here--but there are real cuts in your budget 
proposal.
    Would you address how you think we can stay competitive and 
help me a little bit here, and do you have a plan soon for 
upping those research numbers?
    Secretary Johanns. I think what you are looking at is the 
earmarks. And if you just look at number to number, without 
earmarks, it looks like there has been a real cut. But if you 
recognize that those are earmarks, that is what has happened 
there. I think our funding for research is actually up some 
excluding the earmarks. So that is the number you are looking 
at.
    I will also point out to you again we are kind of at this 
unusual intersection between budget and Farm Bill. But part of 
our proposals relative to Farm Bill are for really an 
aggressive effort to expand our research capability. We are 
proposing some internal reorganization so we will have it under 
one umbrella. It makes a lot of sense.
    But we are also proposing additional funding, and we think 
that we can create a better working relationship between what 
is referred to as our intramural research and the extramural 
research that goes on.
    The other thing I would mention I think would be very 
interesting to you, we are proposing a billion dollars in 
additional research in our Farm Bill proposals directed at 
those nonprogram crops, those specialty crops. Again, this was 
something that we were asked to fund.
    So I think when you look at it, set off the earmarks, and 
you and I do not have to have a debate about earmarks; that is 
a big discussion point these days, our research dollars are 
actually pretty strong.
    But I would ask you also to look at our Farm Bill 
proposals. I think we are doing some pretty exciting things 
there in terms of our proposal.
    Mr. Boyd. I will, Mr. Secretary. But earmarks are not when 
you turn money over to the ALRS for the Land Grant University 
to work specifically on problems in the agricultural area. 
Those are real dollars when they are eliminated. So I 
appreciate your answer on that.
    My second question, Mr. Secretary, you may know about this. 
Can you tell me from a parochial standpoint--again, those of us 
in the southeast, peanut crops has always been a very important 
program. You know, we changed it in a major way in the 2002 
Farm Bill, and the storage and handling is a critical and 
important part of that, we believe, to keep southeast farmers, 
you know, growing that crop. Can you expound a little bit about 
your thoughts on that----
    Secretary Johanns. Yes.
    Mr. Boyd [continuing]. And the fact that that portion of 
the Farm Bill expired in 2007?
    Secretary Johanns. Yeah. We have pretty well gotten out of 
the storage business, if you will. There are only two crops 
that get anything for storage, and one would be peanuts and one 
would be cotton.
    When the peanut program was changed, and I just educated 
myself on this late yesterday afternoon after appearing before 
the Ag Committee in the House, that storage was put in place 
for four years. So that has now expired.
    And, again, it would be in keeping with our approach, and 
that is to move away from paying for storage. And so that is 
what has happened here with the peanut industry. That is 
probably why you are maybe getting calls from your peanut 
producers. But that was only designed to be a four- year 
program. It has now run out and expired.
    Mr. Boyd. If you would indulge me for 15 seconds, Mr. 
Chairman.
    I think that they ran out of--I was not in the room when 
they wrote that 2002 Farm Bill, but I assume they ran out of 
money and that is one of the areas they cut. And, 
unfortunately, that is not in the baseline and now it is a 
problem for us.
    Secretary Johanns. Yeah. You will run into that problem. 
The MILC program is not in the baseline, for example.
    Mr. Boyd. Thank you, Mr. Chairman.
    Chairman Spratt. Thank you, Mr. Boyd.
    Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary, and gentlemen. Glad to see you 
again and thank for the great job you do.
    My questions will center in two areas. One deals with 
strengthening local food systems by small- and medium-sized 
producers that are largely unsubsidized, and improving 
nutrition.
    What tends to happen in a Farm Bill or in the way USDA 
approaches these is they are scattered all over the place and 
it is not looked at coherently. And I just wanted to draw that 
to your attention.
    So, for example, in the WIC Farmer's Market Program, 
excellent program for--I do not have to explain to you what 
that is--for children, for mothers, many of those families do 
not eat enough fresh fruits and vegetables. Helps our local 
farmers who tend to be frozen out of the processing facilities 
far away and cannot get their product to market. As we approach 
a new Farm Bill and you look at your budget, I would really 
have you look at that program.
    Another program is the Senior Farmer's Market Nutrition 
Program. I think you were informed I would be asking you about 
that one because that has been a test program since 2000, 
giving very small amounts of money to our seniors so they eat 
better and get fresh fruits and vegetables. There has been a 
cap on that at $15 million around the country, and over half 
the states do not even have any prototype program.
    We have one prototype program in Ohio which we have worked 
on now in our region for, I think, going on four or five years. 
And rather than USDA learning from these prototypes, what is 
happening in a State like Ohio, we have heard, based on some 
regulations that came out of USDA in December, now what they 
want to do is take a program and begin breaking it apart, 
putting it in other parts of the State where there is no 
experience.
    And I would just urge you, Mr. Secretary, to look at these 
programs in a way that they operate over a period of time. You 
strengthen the local food system. You strengthen the ability of 
unsubsidized crop producers to provide good nutritious food. I 
would not bound you by just those programs, but rather look at 
the area Offices on Aging in regions all over this country. I 
would urge you to go see the Director of that over at HHS.
    The area Office on Aging in the largest community I 
represent serves a million meals a year, a million meals a 
year. The area Office on Aging hates the food. All we need to 
do is to get our producers a little help in processing and we 
can provide a really good meal to a million people a year. If 
we can do that 12 months out of the year, we can then begin to 
move that food into the local schools.
    We have never been able to get USDA to do this. I think I 
am going to propose a new piece of legislation as part of the 
Farm Bill in order to do this. But you understand it because 
you are an agriculturalist at heart.
    So if you were to just take the Senior Farmer's Nutrition 
Program as part of that, could you tell me, would you 
consider--your budget does not say this--not capping the 
program at 15 million and drawing on the experience of regions 
that have painstakingly tried to make it work with seniors 
across this country rather than in many ways dismantling what 
you have been about creating since 2000? Would you consider 
that?
    Secretary Johanns. Yeah, although we took a little 
different approach. And I would love to sit down with you more 
and talk about this. But in the programs that you have talked 
about, the additional funding that we are dedicating to our 
nutrition programs to buy fruits and vegetables, those programs 
could take advantage of what we are proposing.
    And it is a substantial amount of money. It is not an 
insignificant amount of money, and I think it would be, yeah, 
3.25 billion available. At least that is what we are proposing. 
And, again, mandatory funding is our proposal.
    So it is something that if Congress acts on it, it would be 
there and available.
    Ms. Kaptur. But what links them to the farmer? What creates 
the continuum from farm to table? What is the mechanism?
    Secretary Johanns. Well, these crops especially, you are 
buying straight from that farmer. Again, I think these will 
help specialty crop farmers whether they farm an acre or are a 
very large producer of specialty crops, because we are 
literally going out there again with our proposal with a 
substantial amount of money and buying those crops. And that 
would come in an area like yours. It would be available for the 
programs you have talked about.
    Now, the Senior Farmer's Market Program, I will tell you I 
like the program. I think it does do a lot of good things. I 
would be happy to take a look at that and how well that is 
working.
    Ms. Kaptur. Thank you.
    Secretary Johanns. But, again, I think if we can have a few 
minutes of your time sometime, we would love to walk you 
through our proposals here because I think they would make a 
lot of sense and work for what you are describing.
    Ms. Kaptur. Yes. We need a more coherent mindset at USDA to 
draw them together. It sounds like you are already there. I 
would love to meet with you on that.
    I know my time is expired, Mr. Secretary. The amount we are 
going to pay on interest this year on the debt is 20 times more 
than your discretionary budget.
    Secretary Johanns. Yeah.
    Ms. Kaptur. So I thought I would just let you see this 
chart because it is a concern of all of ours. Our trade deficit 
is as bad as our budget deficit, and the major category of that 
is petroleum, $250 billion a year, about an $80 billion 
deficit, the most important category of trade deficit.
    I just wanted to ask you, who at USDA or where in your 
budget--we see a billion dollars set aside for proposed change 
from the baseline for this coming fiscal year. Who is the czar 
of energy? Collin Peterson here in the House has set up a new 
Subcommittee, Conservation, Energy and Natural Resources. Who 
at USDA is thinking about this in an integrated way?
    Secretary Johanns. We established something that I think is 
really doing very well and doing some exciting things. It is an 
Energy Coordinating Council. Keith Collins is on that. But the 
Chair of that is our rural development person, Tom Dorr. And 
Tom has a lot of fire and enthusiasm. If you have not met Tom 
Dorr, I would really recommend it. He is really good. And he 
would love to sit down with you on energy issues.
    Ms. Kaptur. Mr. Secretary, I would be very willing to work 
with any of my colleagues on this Committee or Mr. Peterson and 
just have a briefing for any members interested in agriculture 
and energy----
    Secretary Johanns. We would love to do it.
    Ms. Kaptur [continuing]. Prior to the Farm Bill. I would 
just offer that up.
    And I know my time is expired, and I thank the Chairman.
    Chairman Spratt. Thank you very much.
    Now, let me say to our panel thank you very much for being 
here today, for your forthright answers and your forbearance in 
helping us to understand the Farm Program. We appreciate you 
coming and we appreciate what you have added to our knowledge 
of the program and your budget request.
    Secretary Johanns. Thank you, Mr. Chairman.
    Chairman Spratt. We probably will have some questions for 
the record as we come to an understanding of what you are 
requesting. We may need to send you a copy of those, and we 
would appreciate a prompt response.
    Secretary Johanns. Yes, of course.
    Chairman Spratt. Thank you very much indeed.
    We next have a panel that will take up the topic of 
interest and concern to all of us, and that is hunger in the 
United States.
    USDA has estimated that 34 million individuals are food 
insecure. And USDA, the Department of Agriculture has a number 
of programs to address this problem of hunger in America, food 
stamps, school lunch, WIC, Women, Infants, and Children, the 
Commodity Supplemental Food Program, which the Administration 
is proposing to terminate, and the Emergency Food Assistance 
Program.
    Our two witnesses who are about to come forward are Dr. 
Deborah Frank, the founder and Director of the Grow Clinic at 
Boston Medical Center, and Denise Holland, the Executive 
Director of the Harvest Hope Food Bank in South Carolina.
    This hearing is held at the request of Jim McGovern, and I 
yield to Jim McGovern for an opening statement.
    Mr. McGovern. Thank you, Mr. Chairman. And I appreciate you 
accommodating me on this.
    And I want to thank both Ms. Holland and Dr. Frank for 
being here. I know Dr. Frank very well, and the work that she 
is doing at Boston Medical Center is really quite incredible. 
But both of these individuals are doing unbelievable work and 
are battling hunger in their respective communities and 
actually serving as models for the rest of the country to 
follow.
    One of the reasons why I had requested this additional 
panel was essentially out of a sense of frustration that we do 
not talk about hunger very much in this Congress and especially 
on this Committee where a lot of the discussion tends to be 
around numbers.
    As I mentioned to Secretary Johanns, I think it is 
important that we understand that there are people behind those 
numbers. And a lot of people do not realize this, but the 
United States of America actually signed a treaty to cut world 
hunger in half by the year 2015. And the last time I checked, 
the United States was still part of the world.
    And I fail to see in this budget the mechanisms or the 
funding or the strategy to even reach that modest goal of 
cutting hunger in half by the year 2015.
    And notwithstanding some of the good things that Secretary 
Johanns is doing, the fact of the matter is that we have a lot 
of kids who are eligible for the free school lunch program 
during the school year who do not get summer feeding in the 
summertime. We get people who are not taking advantage of the 
Food Stamp Program in part because the benefit is too low, not 
just because that they cannot go through all the paperwork to 
register.
    The other day when Secretary Leavitt was here, I asked him 
some questions about the fact that a lot of senior citizens are 
showing up in emergency rooms ill because they are taking 
medication on an empty stomach and that we needed to do 
something about that, especially wanted to control healthcare 
costs. I mean, that seems to me to be one way to do it. And his 
response to me was, well, I assure you I am against hunger.
    Well, I have never met anybody who is for hunger. But what 
we lack is the political will to actually reduce and eliminate 
hunger. It is something we can do. And I just hope as we 
formulate our budget here that this takes a high priority.
    And, again, I thank the Chairman for allowing this panel to 
come before us, and I hope that this panel will shame us into 
doing what we need to do to end hunger in America. So thank you 
very much.
    Chairman Spratt. I might add that Dr. Deborah Frank is a 
graduate of Harvard Medical School, a professor at Boston 
University School of Medicine, a pediatrician, and an authority 
on the growing problem with hunger in the United States and 
especially its effects on children.
    Ms. Denise Holland from my State, South Carolina, runs 
something called the Harvest Hope Food Bank, serves 18 counties 
throughout South Carolina, 12 in my district, providing for 350 
member agencies, which are food pantries, soup kitchens, 
emergency shelters, the kids cafe, feeding 149,000 people every 
year. She is also a Treasurer of the South Carolina Food Bank 
Association and plays a leadership role in a number of civic 
organizations.
    You have had to wait through all the afternoon, and we 
appreciate your patience and look forward to your testimony.
    Dr. Frank, if it is agreeable with both of you, we will 
begin with you. Pull the microphone up to you because this room 
does not have very good acoustics.

 STATEMENTS OF DEBORAH FRANK, M.D., DIRECTOR, GROW CLINIC FOR 
  CHILDREN, BOSTON MEDICAL CENTER; DENISE HOLLAND, EXECUTIVE 
   DIRECTOR, HARVEST HOPE FOOD BANK, COLUMBIA, SOUTH CAROLINA

                   STATEMENT OF DEBORAH FRANK

    Dr. Frank. Thank you. I would like to thank you for the 
concern that you and Representative McGovern and the members of 
the Committee have shown for the well-being of Americans at 
greatest nutritional risk, which are our children followed 
closely by our elderly.
    I am a researcher as well as a clinician. I am involved in 
the Children's Sentinel Nutrition Assessment Program which 
works in the states of many of the people on this Committee, 
including Pennsylvania, Maryland, Minnesota, Arkansas, and 
Massachusetts.
    And I know you have had a lot of numbers and because I 
teach in a med school, I cannot help show you more numbers and 
more slides. But I really want to remind you what I know as a 
clinician, that every number comes with a name and a face.
    And let me tell you about a little boy that I will call 
Sam. He was born in our hospital at a reasonable birth weight, 
six pounds, and then when he was sent into my clinic, which 
only takes kids who are scaring their neighbor health center 
doctors, at 13 months of age, he only weighed 17 pounds, which 
is the weight of a normal little boy of 17 weeks. He was all 
head, eyes, and ribs and long eyelashes, but his skin was so 
pale, I thought I could see right through him. And he had the 
most abnormal blood count I had seen in ten years. I thought 
maybe he had leukemia.
    But then when I sat down to take his medical history, it 
became clear that the reason his blood count was so abnormal 
and he was so malnourished is that his family was trying to 
keep him from experiencing hunger by filling him up with a 
mixture of cornstarch mixed with water, and he was never 
allowed to go to bed hungry.
    People get very emotional about our children going to bed 
hungry. Their parents try very hard to, quote, always have 
something in their stomach. But he was very seriously 
malnourished.
    Once we were able to help his mother get onto the WIC 
Program, which she did not realize she was still eligible for 
now that he was a year, and also to get the family on food 
stamps, he began to look much better. He no longer looked like 
he had a fatal illness. But the last time we saw him, he was 
still developmentally delayed and on a waiting list, as many of 
my patients are, for Head Start.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Now, this child is not unique. As the first chart shows, 
the best way for an American family to suffer food insecurity 
is to have a young child under the age of six and even more 
under the age of three. You can see that households with 
children young enough to need a sippy cup are almost twice as 
likely as those without children to be food insecure.
    And this really is scary because, as you probably know, the 
last couple of prenatal trimesters and the first three years of 
life are unique periods of rapid growth of body and brain. And 
if the nutrition for that development is not adequate of 
quality and quantity, the whole trajectory of the child's life 
is changed.
    Any one of you could come visit this problem firsthand 
either in one of our sites or in your State. I would be happy 
to network you.
    Now, the bland term of food insecurity does not sound very 
alarming. But even at the mildest levels, we found that it 
threatens health and development of young children.
    The nutritional status of a woman when she enters pregnancy 
and the amount of weight she gains during pregnancy are the 
crucial determinants of her baby's weight and the baby's birth 
weight is the crucial determinant of what we call infant 
mortality, which means dead babies.
    And as you know, there are huge gaps in this country in who 
suffers from dead babies. We are getting better, particularly 
in, you know, medical meccas at keeping these very low birth 
weight babies alive. But the lower the birth weight, the more 
likely that this child will survive with lasting impairments 
and school failure.
    This is one reason that WIC is so important. It has lowered 
infant mortality rates dramatically. But the problem does not 
end at birth. For everybody, including the elderly, 
malnutrition injures the immune function, which is the body's 
ability to fight infections.
    With any illness, as anybody who has raised a child knows, 
children lose weight. But in my house, your house, when the 
baby gets over what we technically refer to as prevailing crud, 
they can eat as much as they want. They replenish themselves 
nutritionally and they very soon are growing normally, and, 
again, normally what we call immunocompetent.
    In poor families where, as Representative McGovern said, 
people are running out of food quite routinely. If the child 
gets sick, particularly at the end of the month, there is 
nothing extra. There is not even enough. So the child is left 
underweight, more susceptible to the next infection, and down 
the cycle they go. The same actually also happens with elderly.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    This infection malnutrition cycle is shown in the next 
chart, which shows that after giving everybody credit for all 
their background characteristics, children from food insecure 
families--they do not have to rate hungry, just food insecure--
are 90 percent more likely to be in poor health and 30 percent 
more likely to have required a hospitalization in their short 
lifetime. These are kids in my research project across the 
country who are only kids under three. So that is a lot of 
hospitalization.
    We have also found that WIC protects kids from this kind of 
underweight. Now, when we see a kid who is underweight and 
infected and sick, if they have decent access to decent 
healthcare--I was interested to hear about your rural 
hospitals--we can get them back to growth and health if we can 
get them adequate nutrition and adequate doctoring.
    But even so, they are left with lasting deficits in their 
cognitive development posing serious implications for their 
future ability to participate in the global knowledge economy. 
And I heard a lot of conversations about strengthening the 
economy in the previous panel. But if we want to strengthen the 
economy of the future, we have to strengthen the brains of the 
babies of today.
    And even iron deficiency, which WIC is very good at 
decreasing without slowed growth, is associated with decreased 
IQ into adult. So if you are iron deficient as a baby, you are 
much more likely to have a low IQ as an adult.
    And this is not just a baby problem. In older kids, there 
are multiple studies, including one from Mr. Berry's region in 
Arkansas and the Mississippi/Louisiana Delta that shows that 
food insecurity is not just associated in older children with 
poor physical health, but with decreased school achievement and 
reading and math, more behavior and emotional problems, which, 
of course, makes it harder for the other kids in the classroom 
to learn, and actually increased risk of suicide in adolescent 
girls.
    So we have an endemic problem that is even now worse than 
it was in 2000. So when you are a doctor and you see a health 
problem that is all over the place, you want to know what are 
the possibilities for prevention and treatment. And I can tell 
you that there are several medicines, but you are the ones who 
can prescribe them. I cannot.
    The first is the Food Stamp program, which buffers even in 
food insecure households, some of the deprivation of the 
children. And we know that when a family loses food stamps, 
their kids become sicker and more food insecure. WIC and school 
meals are also good medicines, but I understand that they are 
liable to be diluted.
    There is good research just recently published that show a 
huge sample, not ours, that show that children who were on food 
stamps and WIC from birth and stayed in it cost Medicaid much 
less in terms of failure to thrive, malnutrition, and anemia.
    And there is another recent study, also government funded, 
who followed 8,000 kids from kindergarten to third grade. Those 
whose families started to receive food stamps in that period 
had much greater improvement in their reading and math than 
those whose families stopped receiving food stamps.
    Now, what is going on with these good medicines? You have 
heard a lot of discussion about how we have expanded access 
and, in fact, that is true, but it is like the flu vaccine. 
Well, certainly more kids are getting flu vaccine this year 
than got it last year. But it does not reach anywhere near all 
of the eligible people enough to control the epidemic.
    One in five kids who is eligible for food stamps do not get 
them, and particularly at risk are citizen children of the 
immigrants, but it is all kinds of kids.
    Secondly, even if you get the medicine, the dose is what we 
call subtherapeutic. We know if your kid has strep throat, the 
doctor says make sure you give four doses a day for ten days. 
If you do not, the kid is going to get sick again.
    Well, food stamps is that kind of low dose. It is not that 
it is no good. Penicillin is a good medicine. But the average 
benefits of dollar per meal per person, and that is based on a 
thrifty food plan, which is a theoretical estimate of what it 
would cost to purchase foods representing a minimally-adequate 
diet. We did a study in Boston, and this has been replicated in 
Seattle, and there are very similar findings in other parts of 
the country.
    Next slide, please.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    This is just like a medical meeting where there is a lag.
    A family of four in Boston cannot even purchase the thrifty 
food plan assuming they get the maximum benefit of a $1.40 per 
meal per person, which nobody does.
    If you say, yeah, but, Mrs. Jones, that is not a good diet 
for your family's health, you really need to use this low-cost 
version of the Surgeon General's diet, they come up about 
$1,800 a year short, which is completely impossible for them to 
provide from their cash resources because they are trying to 
get to work, keep the house warm, keep from becoming homeless.
    So the Administration's recent budget proposal does not 
address the problem of broadening access or the adequacy of 
food stamps to purchase a healthy diet. And it threatens to 
dilute the WIC medicine by hampering the educational component.
    And one of the groups that is at risk are those who are so 
poor that they are currently eligible for noncash welfare 
benefits. Somewhere around 280,000, and I was told 329,000 
working families with children making the transition from 
welfare to work will lose food stamps and then their kids will 
probably also lose school meals and WIC.
    So besides the failures of this preventive care in the 
proposal that I understand it, and it is not my expertise, as 
far as I can tell, it does nothing to address the issue of 
getting things to an adequate dose to enable families to 
purchase a healthier diet.
    To put things in context, one person eating the South Beach 
diet for one day has to spend as much as the maximum amount, 
that nobody gets, the government would allot for a family of 
four on the same day under food stamps rules current and 
proposed.
    Now, I know I am talking to a Budget Committee and not a 
medical meeting, even though you think maybe I forgot. But I 
know that your obligation is to make sure that America's 
resources are wisely spent.
    However, I have described to you a miracle drug which cuts 
babies' chances of dying, decreases ill health and 
hospitalizations in children, and it sounds like in old people, 
too, and behavioral and emotional problems, and increases kids' 
school achievement. You can test them until they are blue in 
their face. If they come to school hungry, they cannot learn.
    With your budget expertise, you can readily understand the 
implications of the fact that one average two- to three- day 
pediatric hospitalization, not ICU, just plain old pneumonia or 
something like these kids get, costs about $11,000, which would 
fund a year's worth of food stamps and WIC for many children.
    Now, I understand that you are not only balancing domestic 
expenditure and needs but also grappling with international 
ones. And I was told you are going to have to go off for a 
debate on this, but lest you think that I am wildly 
unrealistic, I would leave you with a statement made by Winston 
Churchill, who I do not think anybody would refer to as a 
starry-eyed liberal.
    In the middle of World War II, when Great Britain was 
dealing with homeland security problems, orders of magnitude 
greater than ours, Churchill announced on the radio that there 
is no better investment for any society than putting milk into 
babies. And I am sure you will be equally statesmanlike.
    Thank you.
    Chairman Spratt. Very much indeed.
    [The prepared statement of Deborah Frank follows:]

 Prepared Statement of Dr. Deborah A. Frank, Director, Grow Clinic for 
    Children at Boston Medical Center, and Principal Investigator, 
       Children's Sentinel Nutrition Assessment Program (C-SNAP)

    Mr. Chairman and Distinguished Committee Members: I would like to 
thank you for the concern for the well-being of American citizens at 
greatest nutritional risk, our children. You have always shown this 
concern and are again showing today by inviting a pediatrician to 
speak. As a researcher from the Children's Sentinel Nutrition 
Assessment Program (C-SNAP), a multi-site project in Pennsylvania, 
Maryland, Minnesota, Arkansas, and Massachusetts, which provides the 
most current and largest dataset in the nation about the food security, 
health, and development of very young, low-income children, I will be 
sharing lots of data with you. As a clinician, I cannot forget that 
every number comes with a name and a face, like my patient, whom I will 
call ``Sam.'' Although he was six pounds at his birth in our hospital, 
when we met Sam at thirteen months of age, he weighed only 17 pounds, 
which is the weight of a normal little boy of seven months. He seemed 
to be all head, eyes and ribs with long eyelashes and a skin so pale it 
seemed you could see right through it. His blood count was so abnormal 
that I initially worried that he might have leukemia. However, when we 
sat down to take his medical history, the reason for Sam's condition 
became clear. This child, his mother, and his father were living in one 
room on the father's minimal earnings as a part-time gardener, and Sam 
was being fed a diet primarily composed of cornstarch mixed with water, 
especially when the winter meant there was little work for his father. 
Sam never ``went to bed hungry'' since his worried mother made very 
sure he was really full of cornstarch, but he was clearly seriously 
malnourished. Once we were able to assist his mother in enrolling this 
youngster in WIC and food stamps, his weight rapidly improved. But when 
we last saw him, he was delayed developmentally and like too many 
children in my clinic, on a waiting list for Head Start. It is on 
behalf of the many food insecure young children like Sam all over the 
country, who are invisible to all but their parents and their doctors, 
that I appear before you today.
    Sam is by no means unique. As this chart shows that the surest way 
for an American family to suffer food insecurity, defined by the USDA 
as ``limited or uncertain access to nutritionally adequate food for an 
active and healthy life for all family members,'' is to have a young 
child. This chart, based on 2005 USDA national data, groups together 
all children under 6 years and does not focus the microscope on the 
most vulnerable children of all, those from birth to three. To 
understand the health of those children, we must turn to the data from 
the Children's Sentinel Nutrition Assessment Program (C-SNAP, www.c-
snap.org), which monitors the well-being of children during the 
critical period of brain growth between birth and three years. In the 
families of the most susceptible of all children, the rates of food 
insecurity range from more than 1 in 10 to nearly 1 in 5. For your 
interest, we have appended a chart for the members of the committee 
showing the most recent rates of food insecurity in your states, with 
specific data about the youngest children in the states where we are 
conducting C-SNAP. We welcome visits from the members of the Committee 
to C-SNAP sites and Grow Clinics in your states, so that you can see 
the problem firsthand. In addition to C-SNAP sites, there are Grow 
Clinics in Los Angeles, Houston, New York, and Florida to which I could 
readily refer you.
    Now, the bland term `food insecurity' does not sound very alarming. 
But whatever we call it, food insecurity, even at the mildest levels, 
is a well-documented threat to health and brain function at all stages 
of life. The effects of food insecurity are particularly devastating in 
prenatal life and early childhood when humans undergo unprecedented 
growth of body and brain. Nutrition of inadequate quality or quantity 
stunts this growth and development, jeopardizing the whole future 
trajectory of the child's life.
    The nutritional status of a woman as she enters pregnancy, and the 
amount of weight that she gains during pregnancy, are critical 
predictors of whether the child will be born low birth weight, the most 
important cause of ``infant mortality,'' which is how doctors refer to 
dead babies. Although we are getting better technically at keeping low 
birth weight babies from dying, the lower the birth weight the more 
likely that a child who survives will suffer from lasting impairments 
and school failure. This simple relationship explains why the nutrition 
counseling and healthy foods that the Special Supplemental Nutrition 
Program for Women's, Infants, and Children (``WIC'') provides to 
pregnant mothers have been so effective in enhancing the survival of 
America's children. In a five-state study, WIC was directly responsible 
for lowering infant mortality rates by 25% to 66% among Medicaid 
beneficiaries (Mathematica Policy Research, Inc. 1993),
    After birth, nutrition continues to exert major influences on 
health and development. At all ages, malnutrition impairs immune 
function leading to the infection/malnutrition cycle. With any acute 
illness all children lose weight. However, in privileged homes once the 
acute illness is resolved, children rapidly rebound, increasing their 
dietary intake to restore normal growth. For many low-income families, 
where food supplies are uncertain even for feeding well children, once 
a nutritional deficit has occurred due to normal childhood illnesses, 
scarce resources means there is no additional food to restore a child 
to his/her former weight and health. The child is then left 
malnourished and more susceptible to the next infection, which is 
likely to be more prolonged and severe, and followed by even greater 
weight loss. It is this infection/malnutrition cycle, which explains 
this chart showing that infants and toddlers from food insecure 
families, after considering numerous background characteristics, are 
90% more likely to be in fair or poor health and 30% more likely to 
have required a hospitalization in their short lifetimes. We have found 
(Black et.al, 2004) that babies under one year old who are eligible for 
WIC but do not receive it are 34% more likely to be seriously 
underweight than similar babies who receive WIC, with obvious 
implications for protecting babies from this deadly cycle.
    With intensive nutritional and medical efforts, malnourished 
children can recover growth and health, but all too often malnutrition 
inflicts concurrent and lasting deficits on their cognitive 
development, posing serious implications for the malnourished child's 
future ability to participate in the global knowledge economy. Lack of 
nutrients available to the brain during any part the critical period of 
brain growth from the last two prenatal trimesters through the first 
few years of life will lead to deficits in the part of the brain under 
development. Even iron deficiency anemia in early life (which WIC 
participation decreases) without slowed growth is correlated with 
lowered IQ all the way to adulthood. Four to five year old children who 
participated in WIC in early life have higher vocabulary and digit 
memory than those who did not (National WIC evaluation, USDA, 1986).
    As knowledge of the importance of nutrition for proper brain 
functioning has evolved, awareness has also increased with regard to 
brain function; although brain size and structure can be most affected 
by malnutrition in early life, brain function can be seriously affected 
at any age. In older children multiple research studies all over the 
country including the Arkansas-Mississippi-Louisiana Delta, (Casey, 
Szeto et. al. 2005) have shown that food insecurity is associated not 
only with poorer physical health but with decreased school achievement 
in reading and math and more behavior and emotional problems, including 
risk of suicide in adolescent girls. (Jyoti, Frongillo, and Jones 2005; 
Casey, Szeto, Robbins et.al; 2005; Alaimo, Olson, and Frongillo, 2002)
    This alarming and widely prevalent condition is threatening all of 
America's children, but particularly the poorest, including Hispanic 
and African American children and citizen children of immigrant 
parents, where rates of food insecurity far exceed those that I have 
presented for the general population. So what are possibilities for 
prevention and treatment? I can tell you that there are several ``good 
medicines'' for this problem but they can only be prescribed by you. 
The first is the Food Stamp Program, which our research has found, 
buffers young children in food insecure households from themselves 
suffering food insecurity; parents are better able to protect their 
children. Moreover, we know that families and children who lose food 
stamps suffer increased rates of food insecurity and that the children 
are much more likely to be in poor health. Other good medicines include 
WIC and school meals, which may also be diluted under the 
Administration's proposals. Recent research shows that participation in 
the Food Stamp Program and/or WIC starting at birth is associated with 
decreased rates of Medicaid payments for children's anemia and 
malnutrition (termed ``Failure to Thrive'' in medical settings) under 
age 5. (Lee et al 2006) Moreover, participation in these programs 
decreases the likelihood that these children will be the subject of 
child abuse reports. In older children, particularly girls, food stamps 
have also been shown to decrease the risk of obesity (Jones, Jahns, 
Laraia, and Haughton, 2003) Another recent study demonstrated that 
among 8000 children followed from kindergarten to third grade, those 
whose families began to receive food stamps achieved significantly 
greater improvement in reading and math then those whose families 
stopped receiving food stamps. (Frongillo, Jyoti, and Jones, 2006)
    So what is going on with these good medicines? Why haven't they 
cured the problem? There are two issues. First, like the flu vaccine, 
these medicines do not reach all of the eligible people. At least one 
in five children who is eligible for food stamps does not receive them. 
Particularly at risk for not getting the medicine are citizen children 
of immigrant parents who comprise 12% of all American children. For 
want of this ``medicine'' these children suffer from serious increases 
in rates of food insecurity and ill health, a risk even greater than 
those faced by other poor children. Secondly, even when America's 
families get food stamps, the dose is often what we in pediatrics would 
call ``sub-therapeutic,'' akin to not giving enough penicillin to 
really cure a strep throat. The average food stamp benefit is a dollar 
per meal per person per day. We have shown in the report entitled, `The 
Real Cost of the Healthy Diet,' that even assuming a family of two 
adults and two children receive the maximum possible Food Stamp benefit 
($1.40 per meal per person per day), which few real life families 
actually do, they would come up short about $800 a year if they tried 
to purchase the government recommended Thrifty Food Plan market basket 
shopping in Boston. (I would like to enter into the record a link to 
this report: (http://dcc2.bumc.bu.edu/csnappublic/HealthyDiet--
Aug2005.pdf)) Similar findings have been reported across the country 
from cities like Seattle. Moreover, as you probably know, the Thrifty 
Food Plan is USDA's theoretical estimate of what it would cost to 
purchase a market basket list of particular amounts and kinds of food 
representing a minimally adequate diet. It is the government's lowest 
cost meal plan and does not reflect current scientific thinking about 
nutrition and health. As the chart shows, if our family of four tried 
to purchase the most economically reasonable version of the Surgeon 
General's most recent dietary recommendations, their costs would exceed 
the maximum possible food stamp allotment by nearly $2,000 a year. This 
is an impossible expense for families who are constantly trading off 
how to have money to get to work, keep a roof over their head, or keep 
the house warm while trying to provide healthy meals.
    From what I understand, the administration's most recent budget 
proposal fails to address either the problem of broadening access to 
food stamps or of the adequacy of food stamps to purchase a healthy 
diet, and threatens to ``dilute'' the WIC `medicine' as well. This 
budget proposal does contain some sensible measures, such as excluding 
from calculations of eligibility for food stamps retirement and college 
savings, and combat pay Unfortunately, at the same time, it also 
proposes that families who as so poor that they are currently eligible 
for non-cash welfare benefits will nevertheless lose their food stamps 
and their children may consequently lose access to free school meals. 
Thus 280-329,000 American working families with children who are making 
the transition from welfare to work will lose this crucial work 
support. Currently, food stamp participants with pregnant women or 
young children are automatically eligible for WIC--as a result of this 
new policy, without food stamps, these families may also lose their WIC 
benefits.
    WIC, one of the mere 17% of Federal programs that the OMB has given 
its highest rating of ``Effective,'' also suffers under the President's 
budget, with a $145 million cut to Nutrition Services funding. 
Nutrition Services funding enables WIC to provide the invaluable 
nutrition education, counseling and referrals that are essential to 
WIC's ability to achieve positive health outcomes. Under the 
President's proposed cut, Nutrition Services funding would be frozen at 
2006 levels with the result that there will be $1.42 less for every 
mother and child served with which to deliver critical public health 
nutrition and other social services. As a pediatrician who frequently 
refers pregnant women and their children to WIC, I am concerned that 
this cut will diminish the quantity and quality of WIC nutrition 
services, including loss of professional nutritionists, and thus 
decrease WIC's remarkable effectiveness.
    For the nation as a whole, the reduction of $145 million represents 
the loss of nutrition counseling and health referral services to some 
800,000 clients. This is especially alarming, given that the USDA is on 
the verge of changing the WIC food packages to align with the most 
recent Dietary Guidelines for Americans and the current infant feeding 
practice guidelines of the American Academy of Pediatrics--an exciting, 
long-anticipated change that will greatly help WIC to keep providing 
quality services that meet clients' nutritional needs, but will also 
require a lot of hard work by the states to implement. The proposed cut 
in Nutrition Services funding will jeopardize states' ability to 
successfully roll out the newest and best ``nutrition medicines'' for 
children. Finally, in contradiction to the President's own WIC 
technology initiative embodied in the Child Nutrition and WIC 
Reauthorization Act of 2004, the President's budget has provided no 
money to meet WIC's Management Information Systems (MIS) needs, another 
critical component to successful issuance of the new food packages, by 
managing the program's integrity and containing food costs
    Besides these failures of ``preventive care'' for children at risk 
of food insecurity, nothing in the current proposals would addressed 
the problem of increasing the ``dose'' of food stamps to a level that 
would enable families to purchase healthier diets for their children. 
To put things in context, one person eating the South Beach diet for 
one day has to spend as much as the maximum the government would allot 
for a family of four on that same day under the current and proposed 
food stamp rules.
    I know that I am addressing a budget committee and not a pediatric 
conference, and, therefore, your obligation is to make sure that 
America's resources are wisely spent. However, I have described to you 
a miracle drug which cuts babies' chances of dying, decreases American 
children's ill health, hospitalizations, and behavioral/emotional 
problems, and increases children's level of school achievement. With 
your budget expertise you can readily understand the implications of 
the fact that one average 2-3 day pediatric hospitalization costs about 
$11,000, which would fund years worth of food stamp and WIC benefits 
for many children. Of course, I also realize that you are not only 
struggling with the cost of domestic problems but with international 
ones, however, I would like to leave you with a statement made by 
Winston Churchill, whom no one would call a starry-eyed liberal. In the 
middle of World War II, when Great Britain was dealing with homeland 
security problems orders of magnitude greater than ours, Churchill 
announced on the radio, ``there is no better investment for any society 
than putting milk into babies.'' I know, as policy-makers, that you 
will be equally wise leaders of a society under stress.
                              bibliography
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        M. et al. [erratum appears in Pediatrics 2001 September; 
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WIC Impact on Infant Growth, Health, and Food Security: Results of a 
        Multi-site, Multiyear Surveillance Study. Black, Maureen, 
        Cutts, Diana. Frank Deborah A, Geppert, Joni, Skalicky, Anne, 
        Levenson, Suzette, Casey, Patrick, Berkowitz, Carol, Zaldivar, 
        Nieves, Cook, John, Meyers, Alan and C-SNAP Study Group. 
        Pediatrics, 2004; 114(1):169-176. http://
        pediatrics.aappublications.org/cgi/content/full/114/1/169
Child Health-Related Quality of Life and Household Food Security. 
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        Adolescent Medicine. 2005; 159(1):
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        Carol, Frank, Deborah A., Cook, John, Cutts, Diana, Black, 
        Maureen, Zaldivar, Nieves, Skalicky, Anne, Levenson, Suzette, 
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        Pediatrics. 2004; 113(2):298-304. http://
        pediatrics.aappublications.org/cgi/content/abstract/113/2/298
Child Food Insecurity Increases Risks Posed by Household Food 
        Insecurity to Young Children's Health. Cook, John T. Deborah A. 
        Frank, Suzette M. Levenson, Nicole B. Neault, Tim C. Heeren, 
        Maureen M. Black, Carol Berkowitz, Patrick H. Casey, Alan F. 
        Meyers, Diana B. Cutts, Mariana Chilton. Journal of Nutrition. 
        2006 April; 136 (4):1073-6. http://dcc2.bumc.bu.edu/
        csnappublic/publications-abstracts.htm
Food Insecurity is Associated with Adverse Health Outcomes Among Human 
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        Patrick, Frank, Deborah A., Berkowitz, Carol, Cutts, Diana, 
        Meyers, Alan and Zaldivar, Nieves. Journal of Nutrition. 2004; 
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Welfare Reform and the Health of Young Children: A Sentinel Survey in 
        Six US Cities. Cook, John, Frank, Deborah A., Berkowitz, Carol, 
        Casey, Patrick, Cutts, Diana, Meyers, Alan, Zaldivar, Nieves, 
        Skalicky, Anne, Levenson, Suzette Heeren., Tim. Archives of 
        Pediatric and Adolescent Medicine. 2002; 156:678-684. http://
        archpedi.amaassn.org/cgi/reprint/156/7/678.pdf
Heat or Eat: Low Income Home Energy Assistance Program and Nutritional 
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        Skalicky, Anne, Cook, John, Levenson, Suzette, Meyers, Alan, 
        Heeren, Timothy, Cutts, Diana, Casey, Patrick Black, Maureen, 
        Zaldivar, Nieves and Berkowitz, Carol. Pediatrics. 2006 Nov; 
        118(5): e1293-e1302
Lower Risk of OverWeight in School-Aged Food Insecure Girls Who 
        Participate in Food Assistance. Jones, S. J., Jahns, L., et 
        al., Results from the panel study of income dynamics child 
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Food Insecurity Affects Children's Academic Performance, Weight Gain, 
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        A., Levenson, Suzette, Skalicky, Anne, Cook, John Berkowitz, 
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        children's sentinel nutrition assessment program reports
    1. Food Stamps As Medicine: A New Perspective on Children's Health, 
February 2007.
    The Food Stamp Program is America's first line of defense against 
hunger and the foundation of our national nutrition safety network. 
Physicians and medical researchers also think it is one of America's 
best medicines to prevent and treat childhood food security. The report 
demonstrates the important protective effect of food stamps on child 
food insecurity and for citizen children of immigrants. http://
dcc2.bumc.bu.edu/csnappublic/Food%20Stamps-Medicine%202-12-07.pdf
    2. Safeguarding the Health, Nutrition, and Development of Young 
Children of Color, September/October 2006.
    An article summarizing C-SNAP's two reports on children of color 
and the buffering impact of nutrition assistance on their health and 
well-being as well as the way in which food insecurity puts young 
children of color at increased developmental risk. Published in Focus 
Magazine, a bi-monthly magazine of the Joint Center For Political and 
Economic Studies. http://dcc2.bumc.bu.edu/csnappublic/SeptOct2006-
Children%20of%20Color.pdf
    3. Nourishing Development: A Report on Food Insecurity & the 
Precursors to School Readiness among Very Young Children, July 2006.
    A report of original C-SNAP findings demonstrating that the 
foundations of school readiness are laid long before the start of 
formal education begins. http://dcc2.bumc.bu.edu/csnappublic/
Nourishing%20Development%20Report%207-06.pdf
    4. `The Impact of Food Insecurity on the Development of Young Low-
Income Black and Latino Children;' & `Protecting the Health and 
Nutrition of Young Children of Color: The Impact of Nutrition 
Assistance and Income Support Programs'--Research Findings from the 
Children's Sentinel Nutrition Assessment Program (C-SNAP), (Prepared 
for the Joint Center for Political and Economic Studies Health Policy 
Institute), May 2006.
    A pair of reports demonstrating the increased vulnerability of 
young black and Latino children from low-income households to 
developmental risk linked to food insecurity and the buffering effect 
that family support programs can have on young black and Latino 
children's health and growth. http://dcc2.bumc.bu.edu/csnappublic/
Children%20of%20Color%20Reports%20May%202006.pdf
    5. The Real Co$t of a Healthy Diet: Healthful Foods are Out of 
Reach for Low-Income Families in Boston, Massachusetts, August 2005
    A report from a research team from the Boston Medical Center 
Department of Pediatrics revealing that, on average, the monthly cost 
of the Thrifty Food Plan (upon which Food Stamp Program benefits are 
based) is $27 more than the maximum monthly food stamp benefit 
allowance. A low-cost healthier diet based on the most recent nutrition 
guidelines exceeded the maximum monthly food stamp benefit by $148--an 
annual differential of $1776. This is an unrealistic budgetary stretch 
for most families who qualify for nutrition assistance. http://
dcc2.bumc.bu.edu/csnappublic/HealthyDiet--Aug2005.pdf
    6. The Safety Net in Action: Protecting the Health and Nutrition of 
Young American Children, July 2004.
    A comprehensive summary of C-SNAP findings showing the positive 
impact of five public assistance programs on young children's food 
security, growth, and health. http://dcc2.bumc.bu.edu/csnappublic/
CSNAP2004.pdf
    7. The Impact of Welfare Sanctions on the Health of Infants and 
Toddlers: A Report from the Children's Sentinel Nutrition Assessment 
Program, July 2002.
    A report based on C-SNAP findings published in the July 2002 
Archives of Pediatric and Adolescent Medicine. Welfare sanctions and 
benefit decreases have serious negative implications for infants and 
toddlers' health and food security. http://dcc2.bumc.bu.edu/
csnappublic/C-SNAP%20Report.pdf

                                        HOUSE BUDGET COMMITTEE MEMBERSHIP
----------------------------------------------------------------------------------------------------------------
                                                               Average Percent of Food
                                                              Insecure Households 2003-   C-SNAP Rates of Food
                           Member                              2005 by Member's State         Insecurity**

----------------------------------------------------------------------------------------------------------------
MAJORITY:
    1. John M. Spratt, Jr., SC, Chair.......................                    11.0%
    2. Rose DeLauro, CT.....................................                    11.0%
    3. Chet Edwards, TX.....................................                    15.2%
    4. Jim Cooper, TN.......................................                    11.8%
    5. Thomas H. Allen, ME..................................                     9.8%
    6. Allyson Y. Schwartz, PA..............................                     8.3%                       13%
    7. Marcy Kaptur, OH.....................................                     9.7%
    8. Xavier Becerra, CA...................................                    13.3%
    9. Lloyd Doggett, TX....................................                    15.2%
    10. Earl Blumenauer, OR.................................                    14.2%
    11. Marion Berry, AR....................................                    13.7%                       11%
    12. Allen Boyd, FL......................................                    13.2%
    13. James P. McGovern, MA...............................                     7.5%                       19%
    14. Betty Sutton, OH....................................                     9.7%
    15. Robert E. Andrews, NJ...............................                     8.9%
    16. Robert C. ``Bobby'' Scott, VA.......................                    10.2%
    17. Bob Etheridge, NC...................................                     9.8%
    18. Darlene Hooley, OR..................................                    14.2%
    19. Brian Baird, WA.....................................                    13.2%
    20. Dennis Moore, KS....................................                    11.5%
    21. Tim Bishop, NY......................................                    11.9%
    22. Vacancy*............................................
MINORITY:
    1. Paul Ryan, WI Ranking Member.........................                     8.5%
    2. J. Gresham Barrett, SC Vice Ranking Member...........                    11.0%
    3. Jo Bonner, AL........................................                    12.5%
    4. Scott Garrett, NJ....................................                     8.9%
    5. Thaddeus G. McCotter, MI.............................                     9.6%
    6. Mario Diaz-Balart, FL................................                    13.2%
    7. Jeb Hensarling, TX...................................                    15.2%
    8. Daniel E. Lungren, CA................................                    13.3%
    9. Michael K. Simpson, ID...............................                    11.3%
    10. Patrick T. McHenry, NC..............................                     9.8%
    11. Connie Mack, FL.....................................                    13.2%
    12. K. Michael Conaway, TX..............................                    15.2%
    13. John Campbell, CA...................................                    13.3%
    14. Patrick J. Tiberi, OH...............................                     9.7%
    15. Jon C. Porter, NV...................................                    10.4%
    16. Rodney Alexander, LA................................                    14.4%
    17. Adrian Smith, NE....................................                     8.7%
----------------------------------------------------------------------------------------------------------------
*Rep. Lois Capps, (D-CA) resigned from the Budget Committee on January 19, 2007 to accept assignment to another
  Committee.
**The Children's Sentinel Nutrition Assessment Program has sites in the following states: Arkansas, Maryland,
  Massachusetts, Minnesota, and Pennsylvania. Sites in California and Washington, D.C. are dormant. Food
  insecurity rates reflect the problem among our study population, who are low-income, urban families.

    Chairman Spratt. And now Denise Holland who comes at the 
problem from a different direction, and that is practical 
solutions, and her contribution to that is truly phenomenal.
    We are glad to have you here to share your experience and 
wisdom with us.

                  STATEMENT OF DENISE HOLLAND

    Ms. Holland. Chairman Spratt and honorable members of the 
Committee, I want to thank you for this wonderful opportunity 
to be here and testify before you today.
    I will summarize my testimony, but with your permission, 
submit my full testimony for the record.
    My name is Denise Holland. I am the Executive Director of 
Harvest Hope Food Bank in Columbia, South Carolina, which 
serves 18 counties. We serve the Capitol City of Columbia, but 
most of our counties are rural in nature, particularly those in 
the PD.
    I also am representing America's Second Harvest, the 
nation's food bank network, which is the nation's largest 
hunger relief organization.
    Mr. Chairman and members of the Committee, I have been a 
food bank director for nine years. Since coming to Harvest Hope 
Food Bank, I have a seen a dramatic increase in hunger and 
poverty in Columbia and particularly in the rural communities 
outside of Columbia and also around the country.
    Last year, we served more than 149,000 needy people in a 
region of over 1.2 million. This represented nearly 75 percent 
of the 200,000 people estimated by the Census to live in 
poverty in our community.
    On any given week in central South Carolina, including the 
Fifth Congressional District, some 19,100 different people 
receive food assistance from Harvest Hope Food Bank through 
local volunteer-led and community-based organizations.
    Long ago are the days when the chronically unemployed and 
homeless men represented the majority of the people we serve. 
Today our member agencies, food pantries, soup kitchens, 
congregational meal sites, we are seeing the working poor. 
These are working poor who are families with children, and 
particularly the elderly. Most are not receiving welfare and 
all are faced with the challenges of finding affordable housing 
and adequate healthcare.
    Today we see way too many children in soup kitchen lines, 
too many working parents at food pantries, and too many elderly 
people who choose between can I pay for my utility or can I 
eat.
    The USDA's most recent economic research study of the 
prevalence of hunger insecurity found that more than one in ten 
American households, including 35 million people in all, are 
food insecure or, as we say in South Carolina, they are hungry.
    Of this total, 12 million are children. This data shows 
that South Carolina has the fourth worst rate of food 
insecurity in the nation and the highest rate of households, 
15.5 percent, with very low food insecurity. For me in South 
Carolina, that would be very hungry. But statistics can often 
be too abstract, so I would like to share a very personal story 
with you.
    About six months ago, I was behind a family in a local 
grocery store. While I waited in line, I watched a mother with 
three children choosing which foods to put back because her 
food stamp benefit was not enough to pay for all of it.
    One of her daughters, I am assuming to be about nine or ten 
years old, appeared very sad. The mother said I know, honey, 
these are some of your favorite foods, but I just do not have 
enough left at the end of the month to pay for these so we have 
to put them back. I am very sorry. The little girl looked down 
and I thought she was going to cry in addition to myself.
    I quietly told the mother that I completely understood her 
situation. I would be glad to take care of those few items for 
her and handed my business card. I wanted her to personally 
come see me. She broke down in tears as I did and hugged me, 
very thankful that I could do that for her because with nine 
days left in the month, she was not going to make it until her 
next food stamp allotment came in.
    Food stamps are a lifeline for working families, and any 
reduction in this program would affect tens of thousands of 
families and significantly impact our donated food system.
    The current food stamp benefit is extremely beneficial. It 
is helpful. But with America's Second Harvest and through our 
own hunger study which we participated with them, we found that 
the food stamp benefit only lasts 2.3 weeks of the month.
    At Harvest Hope Food Bank, we have our own on-site 
emergency food pantry and the other 350 member agencies who 
report back to me each month report the last two weeks of the 
month are much worse than the first two weeks of the month, and 
that is because that food stamp benefit does not last that 
long.
    I worry about how this President's budget proposal will 
affect those working poor families.
    In South Carolina, in my 18 counties, we run about 13 kids 
cafe sites. Last year, I stopped at an elementary school where 
some children were eating through one of those sites. That 
night, we were serving chicken and collard greens, rice and 
peaches, all wonderful South Carolina food.
    One little boy there who I sat down beside was greatly 
enjoying his meal. And I asked him, well, what did you do for 
dinner before you were able to come to this kids cafe site. He 
reached down in his pants pocket and he pulled out a quarter, 
and he said I used to just go buy a package of crackers with 
the peanut butter between them because my mommy works two jobs 
and she is not there at night to give me something hot to eat.
    These are real-life examples, but they fuel my passion 
every day to work hard to make use for every available resource 
so that no child just has crackers to eat at night.
    I am particularly concerned with the President's fiscal 
year 2008 budget proposal. It funds or in too many instances 
cuts a number of programs that are utilized by many of the low-
income people we serve in South Carolina. These are not people 
who want a handout. They are people who want a hand up.
    In South Carolina, there are presently 227,000 households 
participating in the Food Stamp Program. In talking to the 
South Carolina Department of Social Services who works very 
closely with us, the President's proposed budget would 
negatively affect an estimated 68,000 South Carolina 
households. These are not merely numbers. They are real people. 
They are real people who we see.
    If we are serious about ending hunger in this nation, we 
should be increasing access to the Food Stamp Program, not 
making it more difficult for eligible households to qualify. We 
should be increasing support for low-income families and 
seniors who need supplemental food assistance to help them make 
it through the month.
    Mr. Chairman, the nation's food banks are like the 
proverbial canary in a mine shaft. We see the effects of poor 
economies, layoffs, rising energy, health, and housing costs 
often way before they show up in government statistics.
    Nationally 35 percent of emergency food recipients have to 
choose between buying food or paying rent or mortgage. Another 
42 percent choose between buying food and paying their utility 
bills. The problem is real. The problem is serious. Our 
families should not have to go hungry in order to avoid being 
homeless or without heat.
    I spoke recently to several groups in Columbia who are 
funding some privately-funded organizations, and I talked about 
the community of homelessness in Columbia might be this big. 
But if we do not reach out to families who are struggling in 
this way, that I see as this gap, that community of homeless 
people will turn in to this group.
    The President's budget has again targeted for elimination 
of the Commodity Supplemental Food Program. Last year, the 
Congress rejected this proposal, and we hope you will again do 
so.
    Last year, my food bank provided more than half a million 
pounds of CSFP commodities to 1,250 low-income seniors each 
month, making a total of 15,000 distributions.
    At our on-site emergency food pantry, 400 of them come to 
me the second Thursday. They come in wheelchairs. They are in 
walkers. They greatly appreciate that food.
    The elderly population in South Carolina is one of our 
fastest-growing populations. And in 32 states, this program is 
very needed, is very appreciated. In South Carolina, while we 
have it in six counties, I desperately wish we had it in all 
46.
    I do not know where we will find the resources to help 
those who would lose the benefits of this program under the 
Administration's budget. Please do not accept this proposal or 
the Administration's suggestions for losing program benefits 
who will be able to participate in the Food Stamp or other 
programs. This is simply not true. Many are ineligible or 
unable to access food stamps and those who are eligible will 
not be able to obtain the same quantity and value of food they 
receive in their CSFP food packages at retail prices.
    The elderly we serve love to get their box. It is important 
to them that that is how they receive that assistance. 
Unfortunately, the Administration's budget and Farm Bill 
proposals fall short for reducing hunger in South Carolina and 
it falls short for the rest of our country.
    Although most of the food we provide to needy families is 
sourced from the private sector, we rely heavily on federal 
commodity programs, especially the Emergency Food Assistance 
Program, TEFAP, to stabilize some leverage to those private 
donations.
    Meanwhile, since the enactment of the last Farm Bill, bonus 
and surplus government donations to our programs has fallen by 
some 60 percent nationwide. At the same time, requests for food 
assistance has increased by eight percent or more nationally. 
At Harvest Hope Food Bank, we have had a 39 percent increase in 
the need for food due to hunger and food insecurity.
    The fiscal year 2008 budget resolution and the next Farm 
Bill offer an opportunity to strengthen the system of farm to 
table for our nation's poor and hungry. As this Committee 
deliberates on the fiscal year 2008 budget resolution and how 
much will be provided for the new Farm Bill, I respectfully ask 
this Committee to reject the Administration Food Stamp and CSFP 
budget proposals and provide adequate funding for the nutrition 
title of the next Farm Bill so that our needy families and 
children and elderly will find a place in the budget and at our 
Farm Bill table.
    In conclusion, Chairman Spratt and members of the 
Committee, I appreciate you allowing me to tell our story. In 
South Carolina, those passions of feeding the people run deep 
as they do across the entire nation.
    Our hope is the budget resolution will provide adequate 
discretionary funding for Nutrition Assistance Program for 
fiscal year 2008 and will also provide some new funding for the 
nutrition title of the next Farm Bill.
    Your Committee's continued support and leadership can pave 
the way toward ending hunger in America.
    You know, several years ago, we had a wonderful opportunity 
in our food bank. There was a lady who came in. She was 
suffering from cancer, and she spent a little bit of extra time 
with our counselor, but she had three little boys who came with 
her.
    Those three little boys were a little precocious, so we 
took them back to the packing area, one of our volunteers did, 
and allowed those little boys to pack their own bag of food to 
take home with them that day. They did not realize exactly that 
that is what they were packing.
    But in the end, as they were rolling their cart out to the 
church van that had brought them and their mother there, the 
middle little boy looked up at his older brother and said we 
have never had this much food before. It kind of looks like 
Christmas. And the older little boy put his hand on his little 
brother's shoulder and he said, you know what, that is what 
good people do to help people like us.
    The hungry people in this nation are good people, and you 
are good people, and we need to work together to help them.
    Thank you very much.
    [The prepared statement of Denise Holland follows:]

                 Prepared Statement of Denise Holland,
               Executive Director, Harvest Hope Food Bank

    Chairman Spratt, and members of the Committee, I want to thank you 
for the opportunity to be here and testify before you today. My name is 
Denise Holland, and I'm the Executive Director of the Harvest Hope Food 
Bank in Columbia, South Carolina. I'm here representing the Harvest 
Hope Food Bank, which serves 18 counties in central South Carolina, as 
well as America's Second Harvest--The Nation's Food Bank Network.
    America's Second Harvest--The Nation's Food Bank Network is the 
largest hunger relief organization in the United States. Second Harvest 
member food banks serve all 50 states, the District of Columbia, and 
Puerto Rico. Nearly every community in the United States is served by 
an America's Second Harvest food bank and its local network of food 
pantries, congregant feeding programs, after school programs, and 
programs that serve the elderly. This work is accomplished through 
programs operated by congregations of every religious persuasion, civic 
organizations, and social welfare agencies. More than 50,000 local 
programs are included in this system of private sector support for the 
poor and needy in our communities.
    Mr. Chairman and members of the Committee, I have been a food bank 
director for nine years working to feed and serve hungry and needy 
people in my state. Since coming to Harvest Hope Food Bank, I have seen 
a dramatic increase in the problem of hunger and the complexities of 
hunger and poverty in Columbia, in the rural communities outside of 
Columbia, and around the country. And as the problem has grown worse, 
the profiles of the people affected by the threat of hunger have 
changed. Long gone are the days when the chronically unemployed and 
homeless men represented the majority of the people we serve. Today 
many of the people receiving food assistance from our partner programs 
are working; they are most likely not receiving welfare, and are often 
faced with the challenges of finding affordable housing and adequate 
health care. Today, we see too many kids in soup kitchen lines, too 
many working parents at congregational food pantries, and too many 
elderly people having to choose between paying utility bills and 
eating.
    Three months ago, the United States Department of Agriculture 
(USDA) released its annual prevalence estimates of food insecurity. The 
USDA estimates are an objective and authoritative measure of the state 
of food insecurity in our nation. In releasing these new food 
insecurity estimates, the Department chose to abandon using the term 
``hunger'' and replaced it instead with ``very low food insecurity.'' 
Changing words to describe hunger does not change the prevalence of 
hunger in America and in my state of South Carolina. Despite the word 
change, these prevalence estimates are generated by a highly reputable 
agency of the Federal government--USDA's Economic Research Service--and 
these statistics are viewed as the final and authoritative word on the 
problem of hunger in America.
    The most recent USDA prevalence estimates find that more than one-
in-ten American households--including 35 million people in all--live in 
food insecure households. Of the 35 million people deemed food 
insecure--in South Carolina, like the rest of the country, we just call 
them hungry--more than 12 million are children. In South Carolina we 
are 48th of 50 states and the District. We have the fourth worst rate 
of food insecurity in the nation--and the highest rate of households 
with ``very low food insecurity,'' or hunger, with 15.5%.
    In addition to the USDA estimates of food insecurity, America's 
Second Harvest also conducts independent research on the prevalence of 
the hunger problem and measures how well food banks are doing as they 
work to address this problem. According to independent research by 
Mathematica Policy, Inc. for America's Second Harvest, an estimated 25 
million unduplicated people nationwide--including nine million children 
and nearly three million seniors--received emergency food assistance 
from our network food banks in 2005. That represents an 8% increase 
over 2001 and an 18% increase from a decade ago.
    On any given week--this week, for example--four and a half million 
people are lined up for emergency food boxes at pantries or for hot 
meals at community kitchens across the nation. More than a third of the 
people served by our food programs--36%--are employed, and of our 
emergency food recipients, 70% reside in households were deemed food 
insecure using the USDA standards.
    But national statistics can often be too abstract. So let me 
discuss the problem of hunger in South Carolina--and my community in 
and around Columbia, my home. The Harvest Hope Food Bank serves 18 
counties in central South Carolina. It not only serves the capitol city 
of Columbia and its suburbs, but it also serves small towns, and rural 
areas. Last year, the Harvest Hope Food Bank served more than 149,000 
different needy people in a region of over 1.2 million people. Of the 
200,000 people estimated by the Census to live in poverty in our 
community--nearly three-fourths had, at some time, turned to our 
partner agencies for food and services. This is incredible and shameful 
in a nation so blessed by a strong economy and agricultural abundance.
    On any given week in central South Carolina--including the 5th 
Congressional District--some 19,100 different people receive food 
assistance from the Harvest Hope Food Bank through local, volunteer 
led, and community-based agencies. These numbers matter because they 
allow you to see the challenge we face in South Carolina and in food 
banks and hunger relief organizations all across the country. Food 
banks and their agencies are the last defense against hunger for many 
low-income and working families. It is a good thing that this network 
of food banks and community based agencies exists, because more and 
more we are seeing people who must give up buying food at the grocery 
store so they can pay the rent, the utility bill, address a health 
emergency, or just put shoes on their children's feet. These are people 
who are falling through the cracks in our nation's safety net.
    Approximately six months ago, I was behind a family in the grocery 
store. While I waited in line I watched a mother with three children 
face the dilemma of choosing to put back some groceries because her 
food stamp benefit was not enough to obtain what she had in her buggy. 
She had chosen very nutritious foods but was short $17 dollars and was 
returning good food items such as peanut butter, jelly, bread, cheese, 
cereal and frozen chicken. One of her daughters, I'm guessing that she 
was about 9 or 10 years old, appeared very sad. I heard the mother say, 
``I know, honey, these are some of your favorites but I just don't have 
enough left at the end of the month to pay for these so we have to put 
things back-I am so sorry.'' The little girl looked down and I thought 
she was going to cry. I quietly told the mother that I completely 
understood her situation and could I pay for these items for her and 
handed her my business card. She broke down in tears and hugged me 
around the neck very thankful that I could do this for her because, 
with approximately 9 more days left in the month, she was not going to 
make it until her next food stamp allotment came in. I share this with 
you because this is definitely the reality for working families. The 
food stamp benefit is extremely helpful but, according to the America's 
Second Harvest Hunger study, it only lasts 2.3 weeks a month. This is a 
devastating reality for a family to face. It is especially devastating 
for children to have to worry about what they are going to eat. Food 
stamps are a lifeline for working families and any reductions in this 
program will affect tens of thousands of families and significantly 
impact our donated food system. At Harvest Hope Food bank, our 
pantries, and especially our own onsite pantry, experience a dramatic 
increase in the need for food toward the end of every month because the 
current allocation, while extremely helpful, needs to be increased. It 
certainly does not need to be decreased. I worry about how the 
President's budget proposal will affect working poor families.
    At one of our Kids Cafe sites last year, I stopped to visit a table 
where elementary school children were eating. That night they were 
having chicken, collard greens, rice and peaches. All great southern 
food! I looked at one little boy who seemed to be greatly enjoying his 
meal and I asked him, before he came to our Kids Cafe site, what he did 
for dinner. He reached in his pants pocket and pulled out a quarter and 
said, ``Before coming here, I would stop by a gas station and buy me a 
pack of crackers with peanut butter in them, because my momma works two 
jobs so she is not at home at night to fix something hot.'' This has 
fueled my passion to make sure that I must work hard with every 
available resource at my disposal to make sure that no child only has 
crackers to eat at night. How can we possibly expect our children to 
succeed in school when they are hungry?
    To meet these needs in our communities, the food bank system was 
created to secure private donations of food and surplus government 
commodities, warehouse those donations and then distribute them to 
local partner agencies. This system allows us to receive donated food 
and produce from all around the country and provide it to needy people 
in my community. Food banks are the lynchpin in a massive network of 
private, charitable hunger relief that operates in nearly every 
community throughout the nation.
    The local agency system in South Carolina and around the country is 
largely comprised of faith-based entities, with three-fourths of the 
pantries in our system being part of the community support provided by 
churches, synagogues, temples and mosques. These local hunger relief 
agencies reflect the very best of America, the broad array of America's 
social fabric and religious life; they also highlight the public and 
private sector successfully working together to address a major public 
health and social issue. I would like to commend the South Carolina 
Department of Social Services for their support in our hunger relief 
efforts. They are a highly valued partner in the fight to eliminate 
hunger and actively participate with us.
    Our agencies rely heavily on volunteers to provide hunger relief, 
with two-thirds of our partner programs relying entirely on volunteer 
support. The volunteers in our system are crucial to our work. An 
estimated one million different people comprise the volunteer work-
force around the country. These volunteers provide an average of 53 
hours of labor annually, or put another way, they donate a full-time 
work week plus overtime each year to help their needy neighbors. Using 
the current minimum wage, the value of volunteer labor in our network 
in a typical week is estimated at $8.2 million, or nearly a half a 
billion dollars per year.
    The volunteers that keep our system moving don't just ladle soup or 
pack food boxes. They provide additional support to needy families that 
come to the pantries for assistance. Often the lack of food is just the 
presenting problem and the beginning of a relationship toward self 
sufficiency. Partner agencies provide after school tutoring in Kids 
Cafe programs, community support to seniors, counseling and training 
for jobs, housing support, mental health services, and an array of 
other support services that transform lives. Using a commodity that we 
have an abundance of--food--we are able to engage, educate, and empower 
people toward self sufficiency. This is the transformation that food 
programs provide everyday.
    Our charitable food system has evolved and become more 
sophisticated as the face of hunger has changed. The need for much 
better food stamp referrals is based on the reality that little more 
than one-third (38%) of the people we serve are enrolled in the Food 
Stamp Program, even though nearly two-thirds (64%) reside in households 
with incomes below the Federal poverty level. We provide utility 
assistance and referrals to other public programs because the research 
shows that 53% of those we serve had to choose between buying food or 
paying their utility bills, 35% had to choose between buying food and 
paying their rent or mortgage, and 41% had to choose between buying 
food and paying for medicine or medical care.
    Mr. Chairman, these facts are unacceptable in a nation as wealthy 
as ours. In America today we allow nine million children a year to rely 
on private charity to ensure that they don't go to bed hungry. We must 
do better. This Committee has an opportunity in the budget process to 
help reduce hunger and support the very effective efforts of the 
emergency food providers to meet the hunger needs in their communities.
    I am particularly concerned with President's Fiscal Year 2008 
Budget proposal. The President's budget request funds--or in too many 
instances cuts--a number of programs that are utilized by many of the 
low-income people we serve in South Carolina. These are families that 
do not want a hand out, but a hand up. They want to work toward self 
sufficiency, but the system that should support that goal is too often 
is stacked against them.
    Let me provide one example of what I mean. The President's budget 
request proposes eliminating categorical eligibility in Food Stamps for 
families that are on TANF but receiving non-cash assistance. The non-
cash assistance takes several forms, such as government supported 
child-care or day care, transportation, and other work supports. The 
categorical eligibility is meant to allow these families--typically, 
single working moms with children--to continue to receive TANF and food 
stamp benefits while they transition from welfare assistance to work 
and eventually self-sufficiency. Yet, the President's proposal would 
deny them food stamp benefits if their meager income or assets rise 
above the typical food stamp income threshold--which for a typical low-
income household of three, a single working mother with two children is 
approximately $1,799.00 gross income per month.
    In South Carolina there are 227,000 households participating in the 
Food Stamp Program. The President's budget proposal will negatively 
affect an estimated 68,000 South Carolina households. It will not only 
increase the number of families who will have to go without food but it 
will also increase the number of people who will have to rely on 
donated supplies. At Harvest Hope Food Bank we never turn down any 
resource and we actively work to recruit more food resources. It is 
important to keep in mind that these numbers represent real people. And 
the challenges I face, on a day to day basis, to provide food for those 
in need are constantly growing. Removing any resource for being able to 
provide food would be devastating.
    Mr. Chairman, increasing access to the Food Stamp Program should be 
a goal of this Administration and of the Congress. With the 
participation rate of eligible individuals in the Food Stamp Program is 
at only about 60% nationwide--and only a little better in South 
Carolina, where the rate is about 65%. More can, and should be done to 
ensure that low-income families who need supplemental food assistance 
to feed their children get the help they need. Needy seniors, legal 
immigrants and the working poor are all underrepresented in the Food 
Stamp Program and the President's proposal does little to address this 
problem.
    Food stamps are the cornerstone in the nation's efforts to reduce 
hunger and help low-income families achieve self-sufficiency. Harvest 
Hope Food Bank and all of the nation's food banks are committed to 
continue working to improve and strengthen the Food Stamp Program. For 
instance, food banks across the United States participate in food stamp 
outreach activities with private funding and with the support of USDA. 
And it is in these public private partnerships that we leverage our 
resources, build strong networks, and best serve those in need.
    Mr. Chairman, the nation's food banks are like the proverbial 
``canary in the mine shaft.'' We see the effects of poor economies, 
lay-offs, and rising energy, health, and housing costs, often before 
they show up in government statistics. Of course, we must always 
remember that these statistics represent more than mere numbers: they 
represent real people in our own neighborhoods and communities who are 
struggling to make ends meet. We see the family that struggles to pay 
the rent and therefore cuts into the family food budget. Nationally, 35 
% of emergency food recipients have to choose between buying food and 
paying the rent or mortgage. Another 42% have to choose between buying 
food and paying their utility bills.
    These families have to make difficult decisions and face heart 
wrenching trade-offs. When the President proposes cutting Low-Income 
Heating and Energy Assistance (LIHEAP) as he has in this budget 
request, it exacerbates the problems for those families that are 
already struggling to figure out how they will pay their utility bills. 
Or if the President proposes cutting Section 8 housing vouchers, as he 
suggested in this budget, it again only forces many of these families 
to choose between paying rent and putting food on the table. In 
Columbia South Carolina, the problem is very real and the estimated 
4,500 people who live in public housing or receive Section 8 housing 
vouchers would rather pay rent and go hungry than be homeless. Just 
this past weekend our food bank was broken into and all we could find 
missing was several packages of meat. Food is a grave concern.
    The President's budget request makes a number of reductions in 
funding for programs that, if allowed, will increase the number of 
people that turn to food banks for food assistance--while 
simultaneously cutting support for the very private sector charitable 
agencies that are meant to serve these families. One program targeted 
for elimination in the President's budget is the Commodity Supplemental 
Food Program (CSFP).
    CSFP provides specialized monthly supplemental food packages of 
USDA commodities for low-income seniors and low-income, nutritionally 
at risk pregnant women, post-partum women, infants and children up to 
age six. The CSFP food packages are not meant to provide a full diet, 
but rather provide critical supplements to at-risk populations, 
especially seniors. In my food bank, we provided more than half a 
million pounds of CSFP commodities to 1,250, low-income seniors last 
year each month for a total of 15,000 distributions. And yet the 
President's budget proposes to eliminate the CSFP on the hope that the 
almost 442,000 seniors--91% of the program's caseload--who are now 
participating in CSFP will instead enroll in the Food Stamp Program. 
Yet, the Department knows that the CSFP senior population--and indeed 
seniors all across America--participate in the Food Stamp Program at 
very low rates. They have difficulty in negotiating through the 
application process and even greater difficulty in utilizing the 
benefits when they get them. But through CSFP, we are able to provide 
not just the food package, but also community-based support, which 
allows us to be able to check in on these senior citizens; see how 
they're doing and learn what other services beyond food assistance they 
may need. CSFP is a truly remarkable program that could help many more 
needy senior citizens, but the President's budget has targeted this 
program, once again, for elimination.
    The elderly population in South Carolina is one of the fastest 
growing populations in the state. Three food banks in South Carolina 
participate in the CSFP program. These food banks utilize 47 sites in 6 
counties; they provide a total of 3,705 seniors with a monthly 
nutritious box of food. Because the need is so great, especially in 
rural areas where there is a high concentration of elderly, we have had 
to establish a waiting list. When these seniors come to our food pantry 
they are often in wheelchairs, or rely on walkers. They are always 
thrilled to have the food.
    Which brings, Mr. Chairman, to what I believe is a missed 
opportunity in the President's budget. Today, you have heard from the 
Secretary of Agriculture Mike Johanns about the upcoming Farm Bill 
reauthorization. The Farm Bill provides an opportunity to address the 
problem of hunger and under-nutrition in our communities in a profound 
way. Unfortunately, the President's budget and the administration's 
Farm Bill proposal fall far short of reducing hunger in South Carolina 
or the rest of our country. The President's budget proposal makes no 
new investments in The Emergency Food Assistance Program (TEFAP), a 
program that provides USDA commodities to food banks and other local 
charities for distribution to needy people through church food 
pantries, soup kitchens and shelters.
    During the past four years, we have had a 39% increase in the need 
for food due to hunger and insecurity. We have also seen, during that 
time, a trend where public-sector food donations have not adequately 
kept up with the requests for food assistance that we face in our 
communities. Although most of the food we provide to needy families is 
sourced from the private sector, we rely heavily on Federal commodity 
programs, especially TEFAP, to stabilize and leverage those private 
donations.
    Since the enactment of the last Farm Bill, there has been a 
troubling decrease in commodity donations through TEFAP. Since 2003, 
steadily rising farm commodity prices have reduced the need for USDA to 
purchase surplus commodities for market support purposes under the 
Department's Section 32 authority. Although the TEFAP mandatory 
purchases set by Congress have remained stable, the surplus or bonus 
commodities--constituting more than half of all TEFAP donations to food 
banks--have fallen off. Since 2001 bonus commodities have fallen by 
more than 60%. At the same time requests for food assistance have 
increased by 8% or more. Moreover, inventories held to support CSFP and 
support its costs have virtually disappeared, leaving this program 
under funded when appropriations are not sufficient to offset this 
shortfall.
    I understand that in the upcoming debate on the Budget and on the 
Farm Bill, the choices may be few and the competing interests many, but 
with respect to TEFAP and the other commodity donation programs we 
clearly find mutual and compound interest. Many of the commodities 
donated to TEFAP, CSFP and other commodity donation programs are 
acquired to support farm prices and provide a farm safety net. These 
programs also serve as a nutrition safety net for millions of hungry 
people. Moreover, TEFAP commodities offer some of the healthiest and 
most nutritious food distributed to our agencies. TEFAP commodities 
stabilize our distribution when private donations are lagging or can 
help extend private donations enabling the food mix to be more 
complete.
    TEFAP is critical to the estimated 25 million low-income people 
that access these commodities through food banks and the agencies we 
serve. The Fiscal Year 2008 Budget Resolution and the next Farm Bill 
offer the opportunity to strengthen this system of farm-to-table for 
our nation's poor and hungry. As this Committee deliberates on the 
Fiscal Year 2008 Budget Resolution and how much will be provided for 
the Farm Bill, it is crucial that Congress: increase mandatory food 
purchases for TEFAP; stabilize the surplus commodities provided to the 
program through Section 32; and find a way to maintain CSFP caseloads 
when commodity inventories disappear, and seek a long term solution to 
the lack of programs in many areas with unserved needy seniors. With 
demographic trends moving as they are, the nation needs a strong senior 
nutrition safety net.
    The compelling need to strengthen and enhance the Food Stamp 
Program so that it can reach more eligible Americans, and the 
substantial decline in government commodity stocks donated to the TEFAP 
and CSFP in the face of increased demand upon the charitable food 
system argue strongly against the President's dangerous plan to 
eliminate CSFP and weaken the Food Stamp Program. I respectfully ask 
this Committee to reject these administration proposals, and provide 
adequate funding for the nutrition title of the next Farm Bill so that 
all of our nation's hungry will have a place at the table.
    Efforts to increase access to food stamps for so many of those who 
are eligible but not participating is one of the fastest ways to 
succeed in our nation's battle against hunger. With the next Farm Bill, 
we can also find creative ways to capitalize on the many potential 
sources of support for TEFAP and CSFP--government commodities, industry 
food donations, private charitable donations, infrastructure and 
administrative grants, increased volunteers, etc.--so that these 
programs can operate with dependable and sufficient resources to meet 
their ever growing need. We must find a way to ensure that our needy 
families and children, and the elderly find a place in the Budget and 
at our Farm Bill table.
    Several years ago, three boys were visiting our food pantry with 
their mother who had cancer. The boys were taken to our packing area to 
give their mother a little private time with our volunteer counselor. 
While they were there, they did not realize they were helping our 
volunteers pack the bags of food that they were going to take home. The 
food was a combination of our donated supplies and TEFAP commodities. 
When they finished and were wheeling their cart to the Church van that 
brought them to us, one little boy looked at his older brother and 
said, ``This is for us * * * Wow! We have never had this much food at 
our house, it is kinda like Christmas.'' The older brother, with a 
great deal of compassion and maturity, put his hand on his little 
brothers shoulder and said, ``Well, we have a lot to be thankful for, 
because this is what good people do to help people like us.''
    In conclusion, Chairman Spratt and members of the Committee, I 
appreciate your allowing me to tell my story, and the story of many who 
are daily engaged in trying to end hunger in our country, one community 
at a time. Our hope is that the Budget Resolution will provide adequate 
discretionary funding for nutrition assistance programs in Fiscal Year 
2008 and will also provide some new funding for the nutrition title of 
the next Farm Bill. Your committee's continued support and leadership 
can help pave the way to ending hunger in America.
    Mr. Chairman, there are lots of good people in this country just 
like ourselves who need our help with these programs. My prayer is that 
help will continue. Thank you.
    I look forward to answering any questions you may have.

    Chairman Spratt. Jim McGovern.
    Mr. McGovern. First of all, let me thank you both for your 
testimony. And I wish the Administration witnesses were here to 
hear this because I think you make the point that needs to be 
made, and that is that, you know, we all talk about balancing 
budgets and numbers and stuff, but that there are people behind 
these numbers and that when you make these adjustments or these 
reductions or you do not keep the programs adjusted for 
inflation and people do not get to take advantage of some of 
these programs, that means people go without food.
    And if you are not moved by the moral argument of making 
sure people in this country have enough to eat, then I think 
you both made a case that you should be moved by just the 
numbers, because if the child goes without food, then he or she 
is going to grow up to be an unhealthy adult, and the 
healthcare costs, you know, as a child, you know, and as an 
adolescent and then as an adult, you know, are quite high. And 
I think sometimes we do not make those connections.
    You know, when I look at programs that address child hunger 
in America, you know, you look at programs like WIC, food 
stamps, school lunches, school breakfasts, summer feeding 
programs, the Commodity Food Supplemental Program, Head Start, 
Early Start, and so on, none of them are adequately funded. And 
so we get into this little debate here, well, you know, we have 
a little increase over last year's level, but last year's level 
was not fully funded to meet the need and a little increase 
does not meet the current need.
    But if food stamps and child nutrition programs were 
adequately funded, would that be sufficient to improve the 
health and development of our children and, if not, what are 
the survival issues your work has identified as necessary to a 
child's health and learning, and how can we in Congress bring a 
more effective approach to addressing child hunger and poverty 
in America?
    Dr. Frank. In medical terms, these child nutrition programs 
are what we call necessary, but not sufficient. For example, 
like heat or eat is an unbelievable issue in the whole northern 
tier. But even keeping the lights on in the southern tier is a 
huge issue, and keeping refrigeration so the food does not 
spoil.
    And we have found that currently with the current funding, 
and I understand it is going to be cut a whole bunch, 17 
percent of eligible families get LIHEAP. If you are eligible 
and do not get it and you are a baby, there is a 30 percent 
greater chance that you show up in an emergency room, you are 
going to be sick enough to be hospitalized. And that is a 
pretty drastic tradeoff.
    This is just published in Pediatrics, okay, that if you 
take a whole bunch of kids and they are all eligible for 
LIHEAP, income eligible, but only 17 percent of them get it 
because that is the level of the funding of the program, and 
then you think about all the background differences, if you are 
a baby who is eligible for LIHEAP, a kid under three and whose 
family is not getting it and you show up in an emergency room, 
you are 30 percent more likely to be sick enough to have to be 
admitted to the hospital.
    And, again, I can tell you that every admission, even short 
ones, are very expensive, would fund a lot of LIHEAP. And we 
found quite similar effects with housing.
    If you take people on waiting lists for what we call 
Section 8 and compared them to people who are getting it, so 
where they are absolutely similar in terms of eligibility, the 
entire wait for age curve or the baby, which is what affects a 
lot of things, brain growth, susceptibility to infection, for 
the kids who are eligible and do not receive it is shifted 
over, so you about double the kids who are in the dangerous 
underweight range. And that has also been published in a 
reviewed medical journal.
    So we have been taught to do evidence-based medicine. I am 
glad to have people here who are really interested in evidence-
based social policy.
    Mr. McGovern. Ms. Holland.
    Ms. Holland. We see a great correlation between children 
who are sick and children who are hungry. You know, when school 
is out and, therefore, free and reduced breakfasts and lunch is 
not available to those children, parents worry because it is 
not just one meal they are then replacing, it is three. And 
during those times, you see great differences in the families 
that are coming in and the health, just, you know, in looking 
at them, at the general health of them. So nutrition is 
incredibly important to them. Eating is incredibly important to 
them. REGINA
    For all the food banks within America's Second Harvest, we 
focus on making sure that they have, you know, fruits and 
vegetables. And particularly in South Carolina, we have 
programs to where we glean the fields, encourage the farmers to 
bring the extra crops in, and let us give those out throughout 
all of our member agencies. I think that is very, very 
important to it and, you know, helping them to make those good 
choices about nutrition.
    When the food stamp benefit is not enough, I think 
certainly they do make choices because they do need to fill 
hungry stomachs. That is what Dr. Frank spoke of earlier. You 
know, it is much cheaper to buy the Ramen noodles, ten cents a 
package, but there is no health there.
    So I do think it is incumbent upon all of us to increase 
the health of all those populations that we do by providing 
them not only adequate supplies of food but good nutrition as 
well.
    Mr. McGovern. Thank you.
    Chairman Spratt. Mr. Etheridge.
    Mr. Etheridge. Thank you, Mr. Chairman.
    Let me thank both of you. I wish every member of Congress 
and the Administration could have heard your testimony.
    I do not know if questions are adequate. Your testimony 
speaks for itself. But I want to share a couple of points and 
ask you one question.
    Prior to coming to Washington, I served as the State 
Superintendent of Schools in North Carolina for eight years. I 
know what you are talking about.
    My wife had just retired as a child nutrition director for 
our county schools. And she consistently shared with me you 
could always tell the child that was hungry because they ate 
well on Friday and were first in the cafeteria on Monday 
mornings.
    We ought to have a breakfast program for every child in 
America and no matter what their background is because I think 
that would do a lot for academics. It would also help some 
other issues.
    One point I will share with you before I ask a question. We 
have a program that we just kicked off jointly in the last two 
years. We have a State Farmer's Market in Raleigh. And the 
agencies came together and we got some State money and a little 
bit of federal and most of it is private, and built a receiving 
center from the farmer's market all the excess produce that we 
could pull together because a lot would go bad and we could not 
use it. And they would get it immediately. They can freeze it, 
reprocess it, and then they provide meals for families.
    Something just to think about. I wish we had more money to 
do that.
    Let me ask you one question, both of you. In addition to 
being on this Committee, I serve on the Ag Committee, and 
realizing the dollars we need. But is there anything that we 
need to do statutorily to change some things that you are 
working with that we can help make your job easier from a 
standpoint of things we do in agriculture for the programs that 
flow to the local level?
    If you do not know today, check it out, let me know. We 
would sure like to make the job easier and distribute the 
resources more readily because you are out there, as my wife 
always reminds me when I come home, where the rubber meets the 
road. And you see the problems. And if I can get that 
information, we would certainly be happy to try to deal with 
it.
    Dr. Frank. The one thing I can address from clinical 
experience is in our hospital, we have volunteer lawyers and 
law students, and a good chunk of their time is spent helping 
people apply for food stamps and trying to deal with being 
irrationally turned down or stuff being lost.
    I mean, the fact that it should take a lawyer to get a low-
income family under food stamps, and, of course, that is a 
boutique program, you know, I mean, it is not a really good use 
of money or people's time. I think it speaks for itself.
    But it is the only program where people do not just have to 
account for their income but have to account for their outlay. 
And the documentation is so complex that it sometimes takes a 
lawyer. I mean, I cannot do it.
    Ms. Holland. Thank you.
    I would like to get with my colleagues with America's 
Second Harvest to respond to you on your question. But one 
thing that does come to mind, every food bank with America's 
Second Harvest, we do not leave any stone unturned when it 
comes to gathering food. It is a partnership between private 
donations of food and dollars and the Public Assistance Program 
through Department of Agriculture. We greatly depend on both of 
those to supplement each other to put an end to hunger.
    I know in the State of South Carolina, we work very closely 
with local farmers and growers to bring fresh produce in. You 
know, our clients of our food pantries across the State really 
love that.
    I think being able to adequately recognize their donations 
and what all those donations do for us give them the correct 
monetary tax benefit is very important to them and it is very 
important to us because we depend on that food so readily.
    But thank you. I would like to get back with you on that.
    Mr. Etheridge. Mr. Chairman, with your indulgence, one 
little point.
    Chairman Spratt. Certainly.
    Mr. Etheridge. We in North Carolina, we have a lot of sweet 
potatoes, and I am sure each State has their own commodities. 
And every fall, a lot of that gets ditched in the ground 
because they do not have processing when people could use it.
    And I would be interested if you would share in your 
thinking on that because I think I am going to talk to some of 
my colleagues to find a way that we maybe can get some 
companies to ramp up and process----
    Chairman Spratt. We had a member here by the name of Tony 
Hall of Ohio. And Tony had developed this program in Ohio where 
they did go out and glean the harvest. And it was a very well-
organized program and lots of volunteers participated in it. It 
certainly should be something that would work in North Carolina 
beautifully.
    Mr. Etheridge. They ought to be able to do it.
    Ms. Holland. From a food bank perspective, we love that. 
And, in fact, the Society of St. Andrew regularly drops 
potatoes for us and we bring in college students that bag them. 
You know, there was a Martin Luther King Day activity. It was a 
wonderful activity.
    Mr. Etheridge. Great food bank. Thank you.
    Thank you, Mr. Chairman.
    Chairman Spratt. Mr. Blumenauer.
    Mr. Blumenauer. Thank you, Mr. Chairman. I appreciate what 
you and Mr. McGovern have done.
    And I agree with you, Jim, it would have been nice to flip 
the panels and have the Secretary spend an extra----
    Chairman Spratt. We should have done that. The custom is we 
always take the Secretary first, but it would have been very 
instructive for the Secretary of Agriculture and his 
lieutenants to have heard your testimony, some of the most 
compelling authoritative testimony I have heard in 24 years.
    Mr. Blumenauer. I am sure he is watching C-SPAN.
    And I appreciate the protocol and what needs to be done. 
But it might be that we arrange for a video in all seriousness 
of what we have done, if we could, because I think the 
Secretary is a person of generous spirit, and I truly think it 
would be useful for him.
    I come here today hard on the heels of a farm forum I had 
at home in Portland this weekend with one of my colleagues, Sam 
Farr, from California who journeyed. And we listened to people 
on a statewide basis come in and talk about what should happen 
with the Farm Bill. And we had people from the Wheat League and 
we had people from nutrition programs, from schools, people who 
were involved with organic--I mean, the whole range of people. 
But it was interesting, the subtext is talking about how to put 
the pieces together in a way that made more sense.
    And I deeply appreciate this testimony, Mr. Chairman. I 
appreciate the language and would just posit if you have more 
suggestions.
    I mean, Doctor, you were saying infant mortality, we are 
talking about dead babies.
    Ms. Holland, you were talking about food insecurity, but it 
is really hungry kids. I mean, the extent to which you have 
ideas that you have road tested for us of helping us reframe 
the debate, what is the hunger equivalent of the, quote, death 
tax that we might be able to drop into the political lexicon 
and help drive the discussion? If you have some thoughts, I 
would be very interested in that.
    You may or may not have been here when I posed a question 
to the Secretary about our practice of shipping commodities 
overseas when at times, this food drives local farmers out of 
business, and that now the Administration is looking at taking 
a few of these dollars, not all of them, not most of them, but 
a fraction of them, 25 cents on the dollar perhaps, and buying 
local food to help people be self-sufficient and doing it 
faster.
    If we could use your thought about local produce, local 
commodities, that there might be some provision in the bill 
that helps us buy food from local producers who would like to 
do that. And in some cases, if they had some revenue stream for 
local produce, local products, they might be able to give 
slightly better prices.
    I know that in my community, they are involved with 
gleaning and whatnot, but we might be able to help stabilize 
local agriculture, have steady through-put to help you round 
out the diet rather than relying on occasional shipments of 
surplus commodities which may not really be what is necessary 
to provide the nutrition that is required. And your thoughts in 
that regard would be helpful.
    I am on another Committee where the Chairman, Chairman 
Rangel, is driving an agenda in a very thoughtful fashion about 
the high cost for society of poor people. And one of my 
particular areas of interest is that the poor actually pay 
more. They pay more for substandard healthcare. They pay more 
for food. They pay more for milk. They pay more for their 
mortgages. I mean, these are working people.
    And I would like to maybe try and get you in touch with the 
Ways and Means Committee staff because I think, Mr. Chairman, 
there may be something in what Charlie is doing with poverty 
that may be able to--there may be some tax elements that might 
make a difference, not just in the Budget Committee.
    The streamlining the process that was offered up, I mean, 
Oregon was ranked as one of the two most food insecure states. 
It was brutal. It was shameful. We found that the single-most 
effective thing we did to move us to the middle of the pack is 
to try and negotiate this goofy process.
    Somebody told me it was almost as complicated to apply for 
food stamps as for an OPEC loan, the private overseas 
investment loan of millions of dollars. They streamlined that. 
We have really made it hard on these folks. So your notion of 
the streamlining.
    And last but not least, I would urge that you redouble your 
efforts with your national network. I mean, you have got 
amazing compatriots around the country who are starting to make 
progress with the local food banks, with people in the 
agricultural community, academics.
    And if there is a way that we can work with you in 
broadening the national advocacy, I thought this was amazingly 
compelling, and I hope that there are ways that we can think 
about ways to link out so this happens locally around the 
country. As our fellow members are having their own hearings 
and workshops about the Farm Bill, that we make sure that what 
you represent is there in force.
    Thank you very much.
    Dr. Frank. Thank you.
    I mean, it is true. I mean, poor people pay more for worse 
food. In our State, you know, the WIC Farmer's Market vouchers 
are ten bucks for the whole summer, and we did have a State 
Farmer's Market Program that it went under. I mean, it was 
really simple stuff like, well, suppose we double the farmer's 
market vouchers and also for the elderly. That would certainly 
mean that there would be more people buying produce from local 
farmers. I mean, I am no economist. I am just a doctor, but it 
seems kind of does that work?
    Mr. Blumenauer. We have some folks in Oregon who think it 
might.
    Ms. Holland. In South Carolina, as many states across the 
nation, they have what is called a SNAP Program, a Supplemental 
Nutrition Assistance Program. In North Carolina, I know there 
is a very good one. And we in South Carolina are trying to 
model and request a Supplemental Nutrition Assistance Program 
with our State legislature.
    The proposal there would follow the North Carolina work 
which says the State allocates some money to help food banks 
purchase locally-grown foods to help supplement the supplies 
that we have. We would very much like to see that in South 
Carolina. I know many states have been very successful with it.
    And I guess the critical piece of that is all the supplies 
of food, and it does for us with Food Banks, we work hard to 
have a good mixture from every available resource that we have, 
but, you know, every one of those was critically important to 
us and would not want to see any of those diminished at all.
    Chairman Spratt. Mr. Blumenauer?
    Mr. Blumenauer. No.
    Chairman Spratt. Thank you so much for your testimony. We 
will take it to heart. But we very much appreciate your 
testimony and coming here today, your patience and forbearance 
and waiting for the opportunity to testify. But you have made a 
lasting impression on us, and we will be taking the advice you 
left us with.
    I have got one question. You spoke to the Food Supplemental 
Program, Supplemental Food Program. The President's budget also 
has a proposal that would terminate food stamps for some 
families that receive food stamps because they receive noncash 
welfare services.
    How would that affect food stamp beneficiaries with whom 
you deal?
    Dr. Frank. Well, I see a huge number of families who are 
struggling to work and take good care of their children. They 
want to be good workers and good parents, and they already 
unbelievably stretch. And it is very difficult for working 
families because they have to recertify much more often, and 
this would be a disaster.
    It really seems, you know, for all the piety about people 
playing by the rules, why would you take food away from 
families who are playing by the rules, trying to get off 
welfare, trying to get retooled to enter the job market? I do 
not get it.
    I mean, I can tell you if you take away food stamps from 
people who had it, you can guarantee their kids will be more 
food insecure and be in poorer health. I mean, you know, that 
is a repetitive pattern.
    It also looks like from the big kid data, which is not my 
data, they will do worse in school. So you already have the 
information, I think, you could extrapolate.
    Ms. Holland. Chairman Spratt, eliminating food stamp 
categorical eligibility would hurt tens of thousands of 
families in South Carolina that are currently receiving food 
stamps. It would remove----
    Chairman Spratt. CBO tells us the impact nationally would 
be about 200,000 families. I do not know what that translates 
to in South Carolina. I have got a number here that looks a 
little large. But what you are saying is the impact is 
substantial? It is not minimal?
    Dr. Frank. And if there is 280,000 families, that is 
500,000 plus children. It is half a million children at least 
depending.
    Ms. Holland. The hurt would be deep and would be felt in 
South Carolina.
    Chairman Spratt. Thank you very much.
    Jim, do you have any further questions?
    Mr. McGovern. I just want to thank you both. I mean, I 
think it has been an incredible hearing. And, you know, as 
somebody who cares about these issues along with Chairman 
Spratt, I think you have given us a lot to work with here.
    And, again, I mean, I think the challenge for us is to try 
to get people to feel the urgency that we have to deal with 
this issue, and that it is not just a moral issue. I mean, if 
you want to be fiscally responsible, it is an issue that you 
have to deal with. And it is not sufficient to say that, well, 
we have increased this program by a half a percentage point or 
a percentage point. The question is, are we meeting the need?
    And the other thing is, you know, if you take away, you 
know, the food stamps for, you know, working families, they may 
not be working families very much longer. They may have to go 
on to some other sort of assistance because, you know, they 
just cannot afford it anymore.
    But this has been very, very helpful, and I appreciate you 
coming here. And, believe me, your testimony will be widely 
circulated. Thank you.
    Dr. Frank. Thank you for having us.
    Chairman Spratt. My next stop is to see Charlie Rangel. 
That is why I have had time in and out of the room. And I will 
convey to him that we just had two witnesses that need to come 
before his Committee also.
    Thank you for coming. Thank you for your testimony
    Dr. Frank. Thank you.
    [Whereupon, at 5:37 p.m., the Committee was adjourned.]

                                  
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