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



 
                FULL COMMITTEE HEARING ON FAMILY FARMER
                  AND RURAL SMALL BUSINESS PRIORITIES
                           FOR 2007 FARM BILL

=======================================================================

                      COMMITTEE ON SMALL BUSINESS
                 UNITED STATES HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 7, 2007

                               __________

                          Serial Number 110-28

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman


WILLIAM JEFFERSON, Louisiana         STEVE CHABOT, Ohio, Ranking Member
HEATH SHULER, North Carolina         ROSCOE BARTLETT, Maryland
CHARLIE GONZALEZ, Texas              SAM GRAVES, Missouri
RICK LARSEN, Washington              TODD AKIN, Missouri
RAUL GRIJALVA, Arizona               BILL SHUSTER, Pennsylvania
MICHAEL MICHAUD, Maine               MARILYN MUSGRAVE, Colorado
MELISSA BEAN, Illinois               STEVE KING, Iowa
HENRY CUELLAR, Texas                 JEFF FORTENBERRY, Nebraska
DAN LIPINSKI, Illinois               LYNN WESTMORELAND, Georgia
GWEN MOORE, Wisconsin                LOUIE GOHMERT, Texas
JASON ALTMIRE, Pennsylvania          DEAN HELLER, Nevada
BRUCE BRALEY, Iowa                   DAVID DAVIS, Tennessee
YVETTE CLARKE, New York              MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana              VERN BUCHANAN, Florida
HANK JOHNSON, Georgia                JIM JORDAN, Ohio
JOE SESTAK, Pennsylvania

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

               Kevin Fitzpatrick, Minority Staff Director

                                 ______

                         STANDING SUBCOMMITTEES

                    Subcommittee on Finance and Tax

                   MELISSA BEAN, Illinois, Chairwoman


RAUL GRIJALVA, Arizona               DEAN HELLER, Nevada, Ranking
MICHAEL MICHAUD, Maine               BILL SHUSTER, Pennsylvania
BRAD ELLSWORTH, Indiana              STEVE KING, Iowa
HANK JOHNSON, Georgia                VERN BUCHANAN, Florida
JOE SESTAK, Pennsylvania             JIM JORDAN, Ohio

                                 ______

               Subcommittee on Contracting and Technology

                      BRUCE BRALEY, IOWA, Chairman


WILLIAM JEFFERSON, Louisiana         DAVID DAVIS, Tennessee, Ranking
HENRY CUELLAR, Texas                 ROSCOE BARTLETT, Maryland
GWEN MOORE, Wisconsin                SAM GRAVES, Missouri
YVETTE CLARKE, New York              TODD AKIN, Missouri
JOE SESTAK, Pennsylvania             MARY FALLIN, Oklahoma

        .........................................................

                                  (ii)

  
?

           Subcommittee on Regulations, Health Care and Trade

                   CHARLES GONZALEZ, Texas, Chairman


WILLIAM JEFFERSON, Louisiana         LYNN WESTMORELAND, Georgia, 
RICK LARSEN, Washington              Ranking
DAN LIPINSKI, Illinois               BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois               STEVE KING, Iowa
GWEN MOORE, Wisconsin                MARILYN MUSGRAVE, Colorado
JASON ALTMIRE, Pennsylvania          MARY FALLIN, Oklahoma
JOE SESTAK, Pennsylvania             VERN BUCHANAN, Florida
                                     JIM JORDAN, Ohio

                                 ______

            Subcommittee on Urban and Rural Entrepreneurship

                 HEATH SHULER, North Carolina, Chairman


RICK LARSEN, Washington              JEFF FORTENBERRY, Nebraska, 
MICHAEL MICHAUD, Maine               Ranking
GWEN MOORE, Wisconsin                ROSCOE BARTLETT, Maryland
YVETTE CLARKE, New York              MARILYN MUSGRAVE, Colorado
BRAD ELLSWORTH, Indiana              DEAN HELLER, Nevada
HANK JOHNSON, Georgia                DAVID DAVIS, Tennessee

                                 ______

              Subcommittee on Investigations and Oversight

                 JASON ALTMIRE, PENNSYLVANIA, Chairman


CHARLIE GONZALEZ, Texas              LOUIE GOHMERT, Texas, Ranking
RAUL GRIJALVA, Arizona               LYNN WESTMORELAND, Georgia

                                 (iii)

  
?

                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Chabot, Hon. Steve...............................................     2

                               WITNESSES

English, Hon. Glenn, National Rural Electric Cooperative 
  Association....................................................     3
Buis, Tom, National Farmers Union................................     5
Noonan, Mike, National Association of Wheat Growers..............     7
Schwiebert, Mark, National Corn Growers Association..............     9

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    27
Chabot, Hon. Steve...............................................    29
English, Hon. Glenn, National Rural Electric Cooperative 
  Association....................................................    30
Buis, Tom, National Farmers Union................................    46
Noonan, Mike, National Association of Wheat Growers..............    55
Schwiebert, Mark, National Corn Growers Association..............    64

Statements for the Record:
American Trucking Association and Agricultural and Food 
  Transporters Conference........................................    70
Agricultural Retailers Association...............................    72
National Association of State Departments of Agriculture.........    80

                                  (v)

  


                    FULL COMITTEE HEARING ON FAMILY
                    FARMER AND RURAL SMALL BUSINESS
                   PRIORITIES FOR THE 2007 FARM BILL

                              ----------                              


                         THURSDAY, JUNE 7, 2007

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360 Rayburn House Office Building, Hon. Nydia Velazquez 
[Chairwoman of the Committee] presiding.
    Present: Representatives Velazquez, Cuellar, Braley, 
Clarke, Ellsworth, Sestak, Chabot, Gohmert, Davis, Fallin, 
Buchanan and Jordan.

           OPENING STATEMENT OF CHAIRWOMAN VELAZQUEZ

    ChairwomanVelazquez. Good morning. I now callthis hearing 
to order to discuss the 2007 Farm Bill priorities of family 
farmers and rural small businesses.
    Given that 90 percent of rural businesses are small, the 
Committee has a vested interest in agricultural and rural 
development issues. Today, we will hear from key agriculture 
industry representatives as they outline their small business 
priorities for the upcoming Congress.
    This is a timely hearing as the House Agriculture 
Subcommittee continues marking off various titles of the 2007 
Farm Bill this week. The Committee will look at what can be 
done to assist these farmers and related industries with 
competing and surviving in a global economy. The goal is to 
ensure small businesses in rural areas have the tools necessary 
to succeed. This includes an examination of the challenges 
facing the nearly two million family farmers, but it also goes 
beyond. Countless other small businesses are indirectly 
impacted by the agriculture economy including most rural 
businesses, grocery stores, food export companies, food 
processing plants, and restaurants.
    It is clear that small businesses in agriculture in rural 
America are facing many obstacles. Their bottom lines are 
affected every time livestock and commodity markets fluctuate. 
There is the lack of rain or energy prices rise. In spite of 
these barriers, the family farmer has been able to respond and 
continue to grow. Our rural economy has shown an ability to 
adapt and change with the development of new technologies. They 
have created opportunities by adding different uses for their 
products, from investing in renewable energy to identifying 
foreign markets for their products, family farmers have been 
resilient and local economies have benefited from it.
    Continued success depends not only on the existence of 
various farm support programs, but also on furthering rural 
development. Many rural areas continue to lack the basic 
infrastructure to market and sell their products. For example, 
we need to provide better access to broadband and ensure there 
are affordable transportation options such as rail. And if 
there are changes to our immigration policies they must address 
worker shortages in the agriculture industry.
    While tackling these, problems can come with a cost. Having 
a vibrant agricultural community is sound economic policy, 
whether it be creating new and improved programs or maintaining 
existing ones we must do what it takes to ensure family farms 
and small businesses in this area are thriving.
    Agriculture-related issues affect every Member's District. 
While it may seem that there's no connection between feed 
prices in Illinois and the price of beef in New York, the 
economics shows otherwise. American agriculture on farmers have 
an impact on those in urban districts and rural districts 
alike.
    The priorities presented today will be used by the 
Committee as it formulates ways to improve the economic 
environment for rural, small businesses. I look forward to 
hearing about what policies have been successful and if there 
are additional reforms needed to ensure future growth. The 
success of small companies in this sector can serve as a model 
for other industries.
    I appreciate the witnesses coming here today and I now 
yield to the Ranking Member Mr. Chabot for his opening 
statement.

                OPENING STATEMENT OF MR. CHABOT

    Mr.Chabot. Thank you, Chairwoman Velazquez, for holding 
this important hearing on one of the largest reauthorizations 
that Congress will undertake this year, the Farm Bill. It is 
appropriate that this Committee consider issues of the Farm 
Bill because the vast majority of farmers and businesses 
located in rural America are relatively small. The significance 
of the farmer reaches back across the misty chords of memory 
and the America consciousness. President Jefferson noted the 
importance of the yeoman or small farmer as the backbone of the 
American democracy. President Lincoln, when signing the 
legislation creating the Department of Agriculture, called it 
the people's department.
    Anyone who has read the novels of Laura Ingalls Wilder or 
Willa Cather knows that life on the farm is not easy, nor can 
one deny that rural America faces significant economic 
challenges.
    At the same time, it's important to remember that rural 
Americans are not the only ones facing economic difficulty. 
Urban areas throughout Ohio, for example, have long faced 
problems of the so-called rust belt. My District has lost many 
jobs as a result of factories closing. The need for economic 
development and revitalization are as important to the 
residents of the factory towns adjacent to the great Midwestern 
waterways such as the Ohio River and Great Lakes, as it is for 
the small towns scattered among the fruited plains.
    Today, the Committee will receive testimony from 
representatives of farm groups and those involved in rural 
economic development. Farmers and livestock producers play a 
critical role in maintaining the health of the rural economy. 
Therefore, it makes sense that these groups offer their 
suggestions on the path that Congress should take in promoting 
the health of the farm economy and rural America for the next 
five years.
    Despite increased revenues, stemming from tax cuts, the 
monies available to fund all the discretionary programs 
including those policies suggested by the witnesses are 
severely limited. This reality constrains the options that this 
Committee and this Congress have in meeting the needs of the 
small business communities in urban and rural areas. In our 
deliberations we will have to adopt those policies that are 
most cost effective, providing the greatest opportunities to 
the largest number of Americans. And once again, I thank you 
for holding this hearing and I yield back the balance of my 
time.
    ChairwomanVelazquez. Thank you. Now we're going to start 
with our panel this morning which is comprised of distinguished 
panelists and I welcome the Honorable Glenn English back to the 
Capitol and Congressman English serves as the Chief Executive 
Officer of the National Rural Electric Cooperative Association. 
Prior to assuming this post, Mr. English was elected by the 
people of Oklahoma's Sixth District to ten terms in the U.S. 
House of Representatives. As chief spokesman for the nation's 
consumer-owned co-op electric utilities, he represents the 
national interest of electric co-ops.
    Welcome, Mr. English, you have five minutes to make your 
presentation.

 STATEMENT OF THE HONORABLE GLENN ENGLISH, CEO, NATIONAL RURAL 
                ELECTRIC COOPERATIVE ASSOCIATION

    Mr.English. Thank you very much, Madam Chair. I appreciate 
that very much and it is a pleasure to be back in the Congress. 
It's always a pleasure to see many of our former colleagues and 
people who have come since I left the Congress.
    Electric cooperatives are very unique as far as those who 
are providers of electric power. There are some 930 electric 
cooperatives in 47 states across this country, so utility-wise, 
they're the only utilities really who cover the entire country, 
all the way from Alaska and Hawaii up to the State of Maine. 
However, we cover a lot of territory.
    We have some three quarters of all the land mass in the 
United States being served by electric cooperatives. We only 
have about seven consumers per mile or seven members per mile, 
so from an infrastructure standpoint, there are very few people 
and if you look at what they have to pay for as members and 
owners of those electric cooperatives because keep in mind that 
as cooperatives they are owned by the consumers themselves 
about 40 million consumers actually on it.
    Well, those 40 million people have got to pay for 42 
percent of the distribution infrastructure of this country. And 
that seven people per miles is the ratio in how these costs are 
broken out. Bigger power companies, investor-owned utilities, 
for instance, have some 35 people per mile and certainly on 
municipals they have 47 people per mile, so as you can see, the 
burden is distributed much more heavily with regard to those 
living in rural America. That also breaks out as far as 
revenues are concerned. About $10,000 per mile is the revenue 
that comes from electric cooperatives or two electric 
cooperatives. The investor-owned utilities about six times 
that, some $62,000 per mile and municipals about $86,000 per 
mile.
    So as you can see, you've got a few people bearing a huge 
amount of burden covering a huge part of the land mass of the 
United States in providing this service to people living in 
rural America. We are growing very rapidly. We are growing 
about twice as fast as the larger power companies, so you've 
got a lot of folks moving in different parts of rural America 
and of course, that is part of our responsibility.
    In addition to that, we are also running out of power 
capacity. As far as the generation that was built during the 
1980s, that's pretty much used up as far as we're concerned and 
that's pretty much the end of it for us. And the generation 
that we will have to acquire through building or through other 
means is going to be the most expensive generation history of 
this country.
    We started over a year ago started telling our members out 
there, member owners of these cooperatives that your rates are 
going to go up and they're likely to go up substantially, now 
the impact that has as far as rural America is concerned and 
particularly small business and small start-up businesses, we 
have a lot of ethanol plants, biodiesel plants that are 
starting up in rural America. Obviously, as is the case with 
any start-up business, that is going to be something that they 
most likely had not planned on and could be an additional 
burden.
    Our responsibility is electric cooperatives, since these 
are owned by consumers is really two things. Employees, 
directors that are elected by the membership out there, one is 
to keep the lights on, obviously provide power to those 
members; and the second is do our best to try to hold down 
those rates as much as we can. So we've got a huge challenge in 
front of us in dealing with this particular difficulty and the 
question is over the next 10 to 15 years is where we acquire 
the additional power that's going to be necessary. And given 
the fact we're growing faster than anyone in the electric 
utility industry, given the fact that the Department of Energy 
has said between now and the Year 2030 there will be a need for 
a 40 percent increase in the amount of power that this country 
needs to keep this economy going. Then obviously, we've got a 
huge challenge ahead of us as does the entire electric utility 
industry.
    But for rural America, for small business, for farmers, 
people that are living in those areas, obviously we've got a 
huge challenge in trying to hold rates down instead of simply 
letting this thing skyrocket. But it is going to go up and go 
up dramatically.
    Thank you very much. I'd be happy to respond to any 
questions.
    [The prepared statement of Glenn English may be found on 
page 31 of the Appendix.]

    ChairwomanVelazquez. Thank you.
    And now the chair will recognize Mr. Ellsworth for the 
purpose of introducing his constituent.
    Mr.Ellsworth. Thank you, Madam Chairwoman, it's probably 
appropriate that I take this introduction as a fellow Hoosier, 
maybe the only one in the room who can pronounce Mr. Buis' name 
properly on the first try.
    Tom Buis is the president of the National Farmers Union, 
NFU. Before moving to Washington, D.C. in 1987, Mr. Bias was a 
full-time grain and livestock farmer with his brothers Jeff and 
Mike in my District, the Eighth District of Indiana and his 
brothers continue to operate the family farm there.
    Mr. Buis has also worked as a Special Assistant for 
Agriculture for a man that I would call a role model, former 
Senator Birch Bayh. The National Farmers Union has represented 
farmers and ranchers in all states for over a hundred years, 
operating organized chapters in 32 states. As the president of 
the NFU, Mr. Buis is here this morning as an advocate for the 
interest of the family farmers in Congress.
    Mr. Buis, thank you and welcome.

    STATEMENT OF TOM BUIS, PRESIDENT, NATIONAL FARMERS UNION

    Mr.Buis. Thank you, Congressman, Madam Chairman, Members of 
the Committee. It is a honor to be here, and I do appreciate 
someone in Washington being able to pronounce my name on my 
first try. I get all types of attempts, and thank you, 
Congressman.
    You know, the Farm Bill and what is going to happen over 
the next several months is vitally important to rural America. 
In preparation for this, what we did at Farmers Union is we 
held Farm Bill listening sessions around the country. We held 
over 30 in about a 5-week period. The purpose was to get the 
input from the real people who farm and ranch and live in those 
rural communities for a living. I've often felt that one of the 
best quotes by any public official was by former President 
Dwight Eisenhower when he said ``farming is mighty easy is when 
your plough is a pencil and your a thousand miles from the 
nearest cornfield.''
    There are a lot of people in Washington, there are a lot of 
experts around the country who think that they know they 
answers. I've always felt that the real answers and the real 
solutions lie in the people that have to live, work, and raise 
their families in rural America. As a result of that, what we 
found out overwhelmingly was that farmers and ranchers felt 
that the 2002 Farm Bill was a big improvement over the 1996 
Farm Bill.
    It offered an opportunity to provide an adequate safety 
net, but times have changed since 2005. Reality is that we have 
less money to write a farm program going into this drafting 
process than we did back in 2002. Actually probably in real 
terms, it's back at the level of 1996, which did not prove to 
be a successful Farm Bill.
    So how do we protect the needs of rural American with less 
resources? We felt that we had to get creative, so we kind of 
broke things down in two components. One are the opportunities 
that are out there today, and the second are the challenges. 
The opportunities in rural America, and I know Mr. English has 
spent a lot of time out there, but I've never witnessed the 
optimism that exists today in rural America. It is primarily 
because of two issues.
    One is renewable energy. The boon in ethanol has been 
fantastic, not just for farmers and higher commodity prices for 
the products, but also for those rural communities. The only 
towns in rural America where you see the boards coming off the 
storefronts instead of going back up are those communities 
where an ethanol plant or a biodiesel plant has been built. I 
don't think any of us in the 30-some years of advocating use of 
renewable energy ever expected that kind of boon to the rural 
economy.
    We often talked about our energy security, we talked about 
higher commodity prices. But again, if you go to those 
communities you see not only jobs created by those ethanol 
plants, but you also see spin-off industries, small businesses 
to help service it. That helps the tax base. It helps fund the 
schools, it helps fund the hospitals. Certainly because most of 
the ethanol plants and biodiesel plants have been built are 
owned by farmers themselves. They are a cooperative. That 
money, those profits stay in those communities and get 
reinvested in those communities. That's a very, very positive 
development that needs to be continued.
    The other bright spot that we see in American agriculture, 
and this one kind of came as a surprise to me. I have farmed 
for 20 years and have been out here in farm advocacy for 
another 20. But when I went across the country, all the 
innovative and creative processes that are going on, and these 
are small businesses that are doing it, they're taking the 
initiative to promote local food, fresh food, direct to the 
consumer. From selling to school districts their fresh meat, 
having not just farmer's markets but working with institutions, 
and that trend sort of started at the upper end of the income 
level, where people with a lot of expendable income could 
afford to pay higher prices for fresh, organic, natural 
products. Now our challenge is how to keep continuing that and 
get it to people of all means of income. Because the product is 
fresh, anyone who has had fresh food out of the garden knows 
that it tastes a lot different than our current distribution 
system, which I refer to as sort of the McDonaldization 
approach where everything looks the same, tastes the same, 
costs the same, and at the end of the day probably lasts a 
lifetime with enough preservatives for shelf-life.
    Well, people want change and I think those are two 
positives we can build on. Specifics on the Farm Bill, I think 
everyone's goal is the same. There is a lot of differences on 
how we get there. If we get the current Farm Bill structure on 
the commodity title, which tends to get the most publicity, we 
have--we don't have enough dollars to provide an adequate 
safety net. We currently have three programs--the direct 
payments, the loan rates, and the counter-cyclical.
    What I think needs to be done and what we have recommended 
is you shift money out of direct payments into a counter-
cyclical safety net. That way, when farmers, when they get the 
price from the market, it doesn't cost the federal government 
any money. If you witness what has happened in the last couple 
of years, our federal expenditures have gone down because we 
did have higher prices. The number one goal of this Farm Bill 
ought to be to encourage that, so farmers get their money from 
the marketplace. I've never met a farmer or a rancher that 
wanted to get their money from the government first. They want 
to get a profitable price.
    So we recommended a counter-cyclical safety net, reducing 
the direct payments. If we did that, we could save enough money 
to also have approximately three billion dollars for other farm 
bill priorities--conservation, nutrition, permanent disaster 
program. I know each of you have to vote several times a year 
probably on disaster programs. We get as tired of having to 
promote disaster programs as you probably do on having to vote 
for them.
    We might as well be realistic. Weather-related disasters 
are going to occur. The crop insurance program helps, but it 
doesn't fully protect the interests of farmers and Congress has 
to step in. We ought to have a permanent disaster program. You 
can stop the abuses, you can make sure that it goes directly to 
those people who suffer losses.
    I see I am probably out of time. Let me mention two other 
things real quick. On the renewable energy, we have this 
tremendous opportunity. It's not just corn ethanol. It's not 
just biodiesel. It's also wind energy, it's cellulosic ethanol, 
and I think if we move in that direction we'll all be better 
off.
    And finally, broadband coverage in rural America. Rural 
America is under served in that capacity. We need an effort not 
unlike what they did when Franklin Roosevelt proposed helping 
electricity for every American. We need it in the broadband 
sector. Thank you.
    [The prepared statement of Tom Buis may be found on page 47 
of the Appendix.]

    ChairwomanVelazquez. Thank you, Mr. Buis. You will have 
more time during the question and answer period.
    Mr.Buis. Sorry, that Farm Bill is a big document.
    ChairwomanVelazquez. I know. Our next witness is Mr. Mike 
Noonan. Mr. Noonan is representing the National Association of 
Wheat Growers. The National Association of Wheat Growers 
represents various state wheat organizations, alerting them of 
possible programs that may affect the wheat industry in a 
particular state.
    Mr. Noonan is president of the Oregon Wheat Growers League 
and farms in Klamath County in Oregon. Sir, you are most 
welcome.

   STATEMENT OF MIKE NOONAN, PRESIDENT, OREGON WHEAT GROWERS 
   LEAGUE ON BEHALF OF NATIONAL ASSOCIATION OF WHEAT GROWERS

    Mr.Noonan. Is this on already? Yes. Madam Chair, Committee 
Members, first of all thanks for the opportunity to speak 
today. It's a great opportunity to come out here to Washington 
and take part in this Committee discussion. I'm Mike Noonan. I 
farm over 10,000 acres in the Klamath Falls area. I started as 
a young farmer. I got out of college and started with less 
than--started with 100 acres. So a lot of the things that I 
talk about is going to be about rural infrastructure and how to 
get a young farmer the basics it takes to get young farmers 
into farming and how it is all affected.
    It's a bright time for agriculture. High commodity prices, 
things are looking very good. Six dollar wheat. But as a 
farmer, you look at the good times and you look back to a lot 
of years where we were looking at $80 ton barley or less than 
$100 wheat, which is less than $3 a bushel. With that being 
said, one of our biggest concerns as wheat producers is the 
counter-cyclical payments, or the LDPs have never triggered for 
wheat growers in the last six to seven years. We've actually 
been left out of that by having a low-target price.
    We're not after a target price. One of the biggest things 
that we need is to continue our direct payment, which is 52 
cents, or raise it. To raise it right now is probably not what 
is going to happen. At least to maintain the direct payments is 
very important for rural infrastructure for a couple of 
reasons. It is bankable. It is a thing that a young farmer can 
take and it's going to be something that is for sure. It's 52 
cents every year or whatever the number is, and it is something 
that is bankable. Well, the LDPs and counter-cyclical, it 
changes and it's just not a sure thing.
    The other thing is it also helps us compete globally in the 
sense that with all the increased environmental and also labor 
issues that we have, it causes us to be able to compete with 
lower cost of production. Our production costs are higher. The 
other thing that we would like to see is full funding of the 
CSP program and other conservation programs, including ECIP. 
But the conservation security program gives us, rewards us as 
farmers for what we have done and encourages us to move forward 
with new conservation practices on our farm.
    I am currently moving to almost a third no-till farming 
now, incorporating carbon into the soil and it's really working 
for us in certain areas. So looking at that and full funding of 
the CSP and all watersheds, so that everybody can take part is 
definitely a priority.
    To technology, one of the big things that we see is 
switchgrass. We can see switchgrass growing with the right type 
of research, so that we can get the most biomass production. We 
can see it actually out on wheat acres, helping out with our 
renewable energy that we need within the nation. We could also 
look at high sugar wheat in the sense that it could be used. 
One of the things that is our concern, especially out in 
Oregon, is the fact that you have a situation that corn is 
going to be hauled all the way to Oregon to be made into 
ethanol. We've got a 25 by 25 resolution going on there, and 
you know we as Oregon farmers are looking through Oregon state 
and as a state looking how we can keep that more of a regional 
thing. So if we could take wheat into ethanol production or 
cellulose type switchgrass, I mean, that would be a great thing 
for us.
    Lastly, transportation. One of the things that my farm did 
to be successful was to add value. So adding value, we do 
transportation plus I also have a packing shed to pack my 
vegetables and we also have a trucking company. But one of the 
biggest things that we're under served in is in rail 
transportation. With that being said, the 100 car unit trains 
generally come out, but to the countryside, when you get out to 
really rural America where you need four or five railcars, most 
of the time we will wait to ship our crop until it is an off-
demand time.
    So if it is September or August type of harvest conditions, 
we'll wait and I will have to wait to ship grain until 
generally because the premium on rail cars is so high, I really 
can't ship it until--and that happen everywhere--until getting 
into November, December, into January when it is not demand 
time.
    Lastly, when it comes to work shortage, there's definitely 
a worker shortage in the countryside. I don't know what the 
answer is, but one of the things that I can see personally from 
my farm and within the people that work or the employers, farm 
employers in Oregon, is there needs to be a way for 
documentation of workers so you can be sure exactly of what is 
going on. One of the big concerns that I have is that when I 
hire somebody, they have a driver's license and a card, and 
great people by the way and a very big part of what we do. It's 
very hard to tell--it would be nice to have one national 
standard that would say when they come up, my secretary and my 
brother can take a look or I can take a look and we know that 
they're documented and also, we're an advocate for more workers 
so we can have--so they can take part in our businesses.
    [The prepared statement of Mike Noonan may be found on page 
56 of the Appendix.]

    ChairwomanVelazquez. Thank you, Mr. Noonan.
    Our next witness is Mr. Mark Schwiebert.
    Mr.Schwiebert. Schwiebert. Pretty close.
    ChairwomanVelazquez. Thank you. He serves on the National 
Corn Growers Association Corn Board. The National Corn Growers 
Association is a producer-directed trade association 
headquarters in St. Louis that represents the interests of more 
than 30,000 farmers. Mr. Schwiebert is a partner in a farm 
operation that grows corn, popcorn, soybeans, and soft red 
winter wheat in Harmon, Ohio.
    Sir, you are most welcome

 STATEMENT OF MARK SCHWIEBERT, CHAIRMAN, PUBLIC POLICY ACTION 
            TEAM, NATIONAL CORN GROWERS ASSOCIATION

    Mr.Schwiebert. Thank you, Madam Chairman, and also Ranking 
Member Chabot. The Members of the Committee, on behalf of NCGA 
National Corn Growers, I certainly appreciate this opportunity 
to share with you what our priorities are for the 2007 Farm 
Bill and the potential impact on the family owned farms and 
also rural businesses. As the Chairwoman just said my name is 
Mark Schwiebert. I am from northwest Ohio and I am a partner in 
a diversified cash grain operation.
    She also said the National Corn Growers Association does 
have about 32,000 dues paying members across the U.S., and over 
300,000 members contribute to corn check off programs across 
the United States, likewise. Over the past ten years we've had 
some relatively stable production, particularly from corn. 
That's been made possible by innovations in production 
practices and also technological advances. And that's helped 
ensure really ample supplies for feed for livestock, certainly 
for the expanding ethanol industry, new bio-based products, 
plastics, and others and a host of other uses in the corn 
industry.
    Moreover, investments made by American taxpayers in our 
nation's agriculture programs have helped produce a more stable 
financial environment for production ag. and a brighter future 
for our rural communities. I must emphasize that the farm 
safety net provided in the current Farm Bill is considered a 
critical component of most producers' risk management plans. 
It's important to note that NCGS supported the 2002 Farm Bill 
for the improvements that it made to our nation's agriculture 
policy. In short, the 2002 Farm Bill implemented the right 
policy for that time.
    Looking forward though, today's farm safety net is simply 
not designed to meet our producers' long-term risk management 
needs given the dynamic changes that are underway in U.S. ag. 
NCGA has developed a proposal to reform our commodity support 
programs, changes that would help ensure better protection 
against volatile commodity prices and significant crop losses. 
And what's really important is it provides those benefits when 
farmers truly need it the most and if we have questions after a 
while, we can delve into more details on that.
    Shift gears over to rural development. NCGA also views 
commodities support programs to be strongly linked to 
revitalizing our rural communities. We urge Congress to 
carefully evaluate those programs administered by the USDA and 
Small Business Administration that are better leveraging farm 
support dollars that facilitate investments and locally-owned 
enterprises.
    For many years, USDA rural development funds have been made 
available for much needed improvements in public 
infrastructure. Rural broadband, rural electric co-ops are 
certainly good examples of those. These investments to enhance 
the quality of life in rural America coupled with recent 
initiatives to bring more jobs to communities might be better 
described as rural economic development. While our members' 
experience indicates that direct value-added producer grants 
and loan guarantees for renewable fuel projects do indeed 
stimulate economic development generating a wide range of 
benefits that have been outlined by some of the other speakers 
this morning.
    If we are to continue building a more prosperous economy 
and a better quality of life for rural communities, NCGA 
believes the next Farm Bill can serve as an engine of growth 
for new businesses. Unfortunately we have seen these cost-
effective programs and other important rural development 
initiatives in the 2002 Farm Bill impacted by reduced funding 
and in a number of cases no funding at all.
    One of the most significant success stories for new value-
added businesses and employment opportunities is the ethanol 
industry. It started in a cottage industry size in 1980, about 
175 million gallons and in 2006 it has grown to an excess of 5 
billion gallons. And what's really interesting and important 
about that, this is with more than 1.8 billion gallons of that 
production coming from farmer-owned plants. I think that's a 
very significant point.
    For the U.S. economy, the ethanol industry in 2005 spent in 
excess of $5 billion for raw materials, inputs, goods and 
services, a lot of those coming from rural areas. It was 1.4 
billion bushels of corn in that same year. That's a $2.9 
billion value directly into the checkbooks of producers.
    And according to the Renewable Fuels Association, the 
remainder of spending by the industry for inputs such as--
includes chemicals, electricity, natural gas, water, labor, 
services, and we certainly don't want to forget does contribute 
tax revenue from those communities as well.
    While we now have the opportunity to advance the growth of 
domestically-produced renewable fuels and bio-based products 
with forward-looking farm policy, in addition to our proposed 
reforms of the farm safety net, NCGA supports rural development 
policies that encourage farmers to move towards ownership in 
higher-value markets and greater profits beyond the farm gate.
    NCGA's second task force report on grain belt agriculture 
concluded that and I quote, ``rural incomes in farm communities 
will benefit if national priorities begin to encourage self-
reliance and marketplace solutions.''
    Last, but not least, is conservation and stewardship. And 
that's priority for NCGA as well as agriculture policy promotes 
the best available practices to further improve the 
environment. Corn growers are certainly concerned with the 
health and well-being of American citizens and mindful of the 
need to balance environmental concerns with necessity for long-
term profitability.
    We certainly support the use of sound science to set 
environmental policy and use of voluntary programs to assist 
farmers in meeting and achieving those environmental goals.
    During the last 70 years, there's actually been fewer acres 
of corn under cultivation than there was 70 plus years ago, but 
we have had almost and 8 to 10 fold increase in the amount of 
corn produced during that same time. It's not just about 
growing more corn though. It's about how we grow it and we're 
making important environmental gains. We're able to reduce soil 
erosion. We're able to improve water quality and increase 
wildlife habitat and still produce that size of a crop. Well, 
we certainly do need to have continuation and a greater 
emphasis on working lands conservation programs that allows us 
to produce and still take good care of that.
     Madam Chairman, on behalf of NCGA, thank you very much for 
yours and your Committee's interest in this. I certainly 
appreciate the opportunity to discuss these goals with all of 
you this morning.
    [The prepared statement of Mark Schwiebert may be found on 
page 65 of the Appendix.]

    ChairwomanVelazquez. Thank you.
    Mr. English, I would like to address my first question to 
you.
    This Committee and the Congress have been looking at 
different ways to see how can we bring down overall energy 
prices. And it is an issue that reigns as a top priority for 
small businesses. And we know that the Farm Bill has a number 
of programs that affect the ability of new members to keep 
electricity rates down.
    Can you talk to us about the different programs that have 
been successful in helping reduce prices for your members and 
any of these programs that need to be revised or any changes 
that should be made to these programs so that they do 
accomplish the mission that they were intended?
    Mr.English. Well, thank you very much, Madam Chair. Let me 
just say I think this Committee is making significant 
contribution just giving us this opportunity to talk about it 
today and I appreciate that very, very much.
    One thing that I think that we've got to understand and 
keep in mind is that at some point we've got to come up with a 
plan. Now we've got several different agendas, I think that 
this Congress wants to address in a bipartisan manner. One is 
to reduce carbon emissions in this country and deal with 
climate change. That's a big issue. At the same time, we want 
to also make sure that we keep the lights on, as far as 
electric power is concerned. And that's no longer a given. And 
we also want to try to do our best to hold down the cost of 
power and what rates. We also want energy independence. All 
these things have got to come together and somehow we've got to 
resolve this out so that we've got a plan. We know where we're 
moving toward.
    I had a reporter about six weeks ago, Madam Chair, and his 
solution to dealing with climate change was to simply jack the 
rates up so high that people couldn't afford to buy power. Now 
I made the response to that, I said any elected official I know 
of that votes for that is going to be committing hari-kiri. 
That's basically what he's doing. I can't imagine going back to 
a constituent and saying by golly we're going to reduce carbon 
emissions in this country by making this power so expensive you 
can't use it and therefore we don't need any more electric 
power. That puts us right back to the dark.
    What I would suggest to you is this, I think we've already 
got many programs in place that make a lot of sense and we're 
moving in the right direction. As a Steering Committee Member 
of 25 by 25, they've laid out an implementation plan I think 
that makes a lot of sense as to how we can start moving toward 
relying on domestic fuel produced in rural America, renewable 
fuel.
    On our side, what we're looking at right now, in fact, 
there's going to be a meeting take place among many of our 
members about three weeks from now in talking about how we 
might be able to take all 47 states that we have electric 
cooperatives, figure out where we can be most productive, most 
effective as far as producing renewable energy and in effect, 
collectively do that. Let regions of the country that may not 
be suitable for renewables, make contributions and help invest 
and help bring this about so that in effect we're developing a 
new industry and we're able to move that power out of those 
regions into the areas of the country, urban areas that need 
renewable power and where it makes sense and helps us depend 
more on renewable power.
    At the same time, we've got to be focused on efficiency and 
there are many steps being taken by many of the utilities and I 
think Congress can certainly do more in this area. Primarily 
from our standpoint the Rural Utility Service is important. The 
Rural Utility Service and the loans that they make cost the 
federal government budget-wise about $25 million a year, $25 
million a year for a $4 billion program. And this is something 
that is vital as far as dealing with this infrastructure cost 
that I spoke of earlier where we've got 42 percent of the 
infrastructure we've got to maintain. We need to build 
transmission. We're going to have to produce more power and 
certainly the Rural Utility Service, if Congress sees fit to 
continue, can reduce those interest rate costs about 2 
percentage points.
    ChairwomanVelazquez. Thank you, Mr. English.
    Mr.English. Yes, ma'am.
    ChairwomanVelazquez. Mr. Buis, I know that the USDA, that 
they have a lot of programs to help farmers farm but none to 
help farmers on the business side. I just would like to ask you 
would you find it helpful for the Small Business Administration 
to provide counseling and technical assistance to your industry 
to develop strategies to better manage the natural risks 
inherent to farmers?
    Mr.Buis. Absolutely. I think we would welcome that. You 
know, oftentimes in agriculture we kind of get like everyone 
else kind of wed to one program or wed to one piece of 
legislation or one department. If you look at what has been 
happening recently in agriculture, it's not the Farm Bill 
issues that are really driving it. It was more the energy and 
tax provisions that provided for renewable energy. I think we 
need to look at a lot of different ways, because they are small 
businesses.
    ChairwomanVelazquez. Mr. Noonan, obviously the commodity 
title in the Farm Bill will have the biggest impact on wheat 
growers. Depending on a producer's needs, some commodity 
programs are a better fit than others. For farmers who grow 
wheat, it's direct payments. Are there any modifications that 
your organization is seeking in regards to this direct payment?
    Mr.Noonan. Thanks, Madam Chair. You know, we were running 
around the Hill yesterday trying to get a read on this Farm 
Bill, and there's a lot going on. It's very important and a lot 
of good ideas and then again, a lot of new ideas. All of them 
are probably good, but one of the basics like I hit on in my 
brief discussion there was a--there's some talk about cutting 
the direct payment. We're definitely not in favor of that. We 
need to at least maintain the 52 cent direct payment. Like I 
said before, it's got bankability and it creates a sure safety 
net every year.
    Loan deficiency programs and counter-cyclical payments, 
when they kick in, loan deficiency program for us, if the loan 
deficiency is raised, we wouldn't be against it, but at the 
same time it encourages us to carry a lot of wheat within 
storage in low-price years. Then we've seen in the past that we 
will have a couple million bushels in the State of Oregon 
carry-over, and then you just get into this LDP cycle that is 
not good for the free market.
    So with that being said, we're very cautious about LDPs and 
then what we really need--we're in favor of the direct 
payments.
    ChairwomanVelazquez. Mr. Schwiebert, you mentioned 
importance of commodity programs as a safety net for farmers. 
It seems that this farm bill will be limited in expanding the 
various incomes of work programs due to budget constraints. If 
there are little if any changes made to the commodity title, 
what impact will this have on corn growers?
    Mr.Schwiebert. Certainly we've seen a significant change in 
the price structure, but what also brings along with it is 
increasing input costs. Certainly, that has raised and enhanced 
the risks of that. So as to begin to make modifications to what 
we have experienced in the 2002 Farm Bill, it adds some 
additional inherent risk to that. What we've been looking at 
and proposing - it's kind of the gist of our proposal - is what 
we call a revenue counter-cyclical program.
    So what it's doing is it's targeting revenue at the farm 
level as opposed to just price alone. We think provides some 
benefits because it protects the producer from a variety of 
things. It could be a wild swing in prices. It could be a swing 
in production or a combination thereof. Because ultimately, 
it's revenue that pays the bills on the farm. We think that's a 
better approach and it also tends to be responsible recognizing 
there are constraints to the federal budget and how many 
dollars can float agriculture.
    An additional benefit of that you would bring along with 
that a built-in disaster aid program so we've been running each 
year about $1.8 billion spent annually on ad hoc disaster aid. 
Why not incorporate that so it would be reliable and so we 
could plan on that looking forward in the future. We think that 
provides a safety net with much smaller holes in the past.
    ChairwomanVelazquez. Does Congress need to consider other 
changes to the title, other titles of the Farm Bill to offset 
new commodity programs?
    Mr.Schwiebert. Well, certainly the PAYGO rules are going to 
have a pretty strong impact on that.
    We recognize the need for budget constraints is there. 
We're certainly not averse to taking a look and examining 
those. It's cases where you know the devil really is in the 
details and to say yes, we certainly agree with that, but not 
knowing the details is pretty tough to go out on the limb and 
make that promise.
    ChairwomanVelazquez. Thank you. I now recognize Mr. Chabot.
    Mr.Chabot. Thank you, Madam Chair, and Congressman English, 
I'll probably start with you first here. You had mentioned I 
think by 2030 that we're going to need to have an additional 40 
percent increase in our access in energy production, etcetera. 
And you also mentioned that some folks have suggested that one 
of our ways of dealing with our need for energy is to 
dramatically raise taxes and I think Tom Friedman of the New 
York Times and I believe Al Gore as well and some others have 
sort of in the past advocated that point of view, that we need 
to just tax it so that it makes it even more painful than it is 
now to buy gas or whatever our needs are.
    Would you tell us why that's not a good idea?
    Mr.English. Well, what I was struck by was the fact that I 
thought it was rather noncontroversial to say that you're 
trying to keep the lights on, and you're trying to keep the 
rates down. Now that, to me, I didn't see a whole lot that 
folks could object to that, but I found from this one reporter 
that it was in fact the case. He wasn't talking about raising 
taxes. He was just talking about raising rates. And one of his 
objections was to the Rural Utility Service and under the Farm 
Bill was the fact that it helped us in rural America keeping 
the rates down. Now he ignored completely the fact that about 
60 percent of all the co-ops have rates already higher than the 
neighboring investor-owned utility. He didn't care about that. 
He ignored the fact that we've got about half of all the 
electric cooperatives out there in this country serving three 
quarters of the land mass of this nation, that in fact, today 
have more than the national average as far as people living 
under the poverty line. So you've got some of the poorest 
people in this country. His deal is the only solution, the only 
way to deal with the whole question of greenhouse gases and 
carbon emissions is to raise rates. Now I don't think that's 
right and I'd be very surprised if the Congress decided to go 
down that path.
    Instead, what it's going to take, it's going to take every 
tool that we have at hand. It's going to take renewables. It's 
going to take more efficiency. It's going to take technology 
with regard to coal, because we're going to have to continue to 
use coal. That's the reality. MIT is even saying that, that 
you're going to have to have coal to meet that 40 percent 
increase we've got. We're going to have to have carbon capture 
and storage and that's expected to be commercially available 
where we can incorporate in our power plants by the year 2020 
and we need to do that.
    We need to also build more nuclear plants. We're going to 
have to do that. That's one way we can get at that. In fact, we 
need about three times the number of nuclear plants that we 
have on hand today. We need in plug-in automobiles to help 
reduce this, but you've got to have the power for those plug-
ins. So we've got to have more power to do all this and we need 
distributive generation. We need all this stuff. And I think 
that's what I was saying that we need a plan here. We've got 
some conflicting objectives that we want to get. We want to 
reduce carbon emissions. We want to move toward energy 
independence. We want to make sure small businesses out there 
that are going to give us that hope of reducing our dependence 
on foreign energy, namely, we've got what, 112 ethanol plants 
out there and about 30 some odd biodiesel plants. Those are 
small businesses. Our rates go through the roof, a big bunch of 
those biodiesel plants and ethanol plants are going under. 
There's just no way they can make it.
    So somewhere here we've got to reject this simplicity that 
the only answer is to raise rates. I guarantee you our rates 
are going to be going up and up to take care of any desires 
about anybody because this is going to be the most expensive 
power that we have to add that we've ever had in the history of 
not only electric co-ops, but the entire country and the entire 
industry. So that's where I think all this stuff comes down to. 
We rely on technology and developing technology and making our 
investment there, or do we go over here and say well, we'll 
take a simple rate and then we'll just jack the rates up so 
high that people have to conserve and they'll have to be more 
efficient. Now what that does to the economy and this nation is 
it drives into the tank. It destroys rural America. It destroys 
small business and it doesn't make any sense at all. But there 
are people, believe it or not, that are out there advocating 
that.
    Mr.Chabot. Thank you. Mr. Buis, and I think I used a lot of 
my time. If I could go to you next. You had mentioned about the 
very positive impact that ethanol has had in the rural 
community, agriculture, etcetera. Now there's also the other 
side to some degree that being number one, it takes a lot of 
energy in order to produce ethanol is my understanding as well. 
And so that's something that has to be dealt with to some 
degree and in addition to that, obviously, it drives up the 
price of feeding cattle, for example, and the consumers at the 
store when they're purchasing the food for their families, 
etcetera, it drives those up. So all of this has two sides.
    If you could sort of address that issue, as well?
    Mr.Buis. I'd be glad to, Congressman. Thank you. Number 
one, on the energy efficiency of ethanol, when this began some 
30 some years ago, I was working for a United States Senator in 
Indiana who actually chaired the first Alcohol Fuels 
Commission. And very frankly, it was called gasohol. It wasn't 
energy efficient. It wasn't economically efficient and truth be 
known, our real expertise was probably backyard stills along 
the Ohio River on how to even produce ethanol.
    But we've come a long way since then. Part of it has been 
public policy that's driven it. But it's also that investment 
and technology that Glenn just referred to into the industry. 
Now it's energy efficient.
    We produce more energy than it takes to produce the 
ethanol. It's also economically efficient. And I know there's a 
lot of critics out there. We hear well, this adversely impacts 
the livestock industry. Well, we're very sensitive to that. 
We're a general commodity organization, meaning we have farmers 
that produce all kinds of commodities, and heavy into cattle 
production. But 105 out of the last 120 months corn has traded 
and this is USDA statistics, at below the cost of production. 
And that means that those people who were using corn were 
basically being subsidized. A lot of people look at the 
commodity title and say oh, look at all that money going to 
those farmers. Well, actually, it was a bastard. The subsidy 
was going to livestock industry. The subsidy was going to 
consumers. It wasn't necessarily staying in the farmers' 
pockets. And they weren't making a profit from the marketplace. 
Now that's changed.
    Last year, when ethanol drove prices through the roof, 
suddenly people said well, you're not--now you're taking food 
out of people's mouths and that again is not true. We're still 
exporting almost as much as we're using for ethanol in this 
country and the other component that has to be looked at is how 
much percentage of that total food dollar is actually related 
to the raw commodity? I read where the cereal companies are all 
raising their prices blaming farmers. There's a penny's worth 
of corn in a corn flakes box. Other costs, factors out there.
     Mr.Chabot. They were also blaming the high cost of gas in 
transporting things around too which is clearly--there's many 
factors, but--
    Mr.Buis. Sure, if I might add though, whenever they raise 
those prices, when corn comes back down, you won't see corn 
flakes coming back down. It just doesn't happen. They stay up. 
So that direct relationship and if you look over, of course, 
the last 20 years, the farmers' share of that food dollar 
continues to shrink. We're paying as consumers the best deal of 
anyone in the world, less than 10 percent of our expendable 
income for food.
    Mr.Chabot. Thank you very much, Madam Chair, in the 
interest of the others on the panel, I will yield back.
    ChairwomanVelazquez. Mr. Braley.
    Mr.Brayley. Thank you, Madam Chairwoman and Ranking Member 
Chabot. I think this is a very important hearing. The Farm Bill 
used to be the FFA, the Food and Fiber for America Bill. And 
now it's more realistically called the FFFA, Food, Fiber, and 
Fuels for America. And I think that's a very significant change 
because a lot of us really saw the food and fiber as part of 
the benign things that showed up on our tables every day. We 
didn't really give it a lot of thought, but now that we've 
injected the fuel component, we've got a lot more volatility 
and a lot of enthusiasm for small business owners.
    I want to focus more on something that doesn't get as much 
attention as the fuel component and that's the ag. based 
chemical and industrial products component of where we go when 
next generation innovation from some of the things we've been 
talking about.
    And Mr. Schwiebert, I grew up in the small town of 
Brooklyn. I think you've got some distance relatives living 
there.
    Mr.Schwiebert. There are Schwieberts transplanted.
    Mr.Brayley. I'm familiar with the name. Congressman 
English, I may--I think I can say in fairly good confidence, I 
am the only Member sitting up here who is a member of a rural 
electric cooperative. My brother worked for an REC and during 
the ice storms of this spring when we had 350,000 people in 
Iowa without power, your members and the people who work for 
those cooperatives did outstanding work.
    But to give you some sense of what I'd like the panel to 
talk about, I spent the last week on the renewable energy tour 
of my District. I went to the U.S. Bioenergy ethanol plant 
that's being built right now near Dyersville, Iowa. I toured 
the Hawkeye Renewables ethanol plant near Fairbank which has 
been up and running and doing great things. And then I got a 
much different perspective by touring the ADM facility in 
Clinton, Iowa and that's where they are building the first PHA 
plant in the country that's going to use wet starch from a wet 
corn mill to make natural plastics that are biodegradable, 
environmentally sound, and also will give rise to a whole new 
generation of small business opportunity to compete with 
petroleum-based plastics.
    I also have a small utility in my District that came up 
with an innovation to replace lubricants in electric generators 
that used to be contaminated with PCBs with a soy-based 
biodiesel type of lubricant. So there's a lot of exciting 
things going on that don't get the attention that renewable 
fuels do and I'd like all of you to comment on what you see 
your members doing in the next five years to benefit us?
    Mr.English. Well, I think that's exactly right and what 
you're talking about is using that in the transformers with the 
oil from soybeans. That's something that's certainly being 
supported and looked at now. I know the Rural Utility Service 
is giving that a look as well as to whether we get in there. I 
think there are a few technical issues that still remain to be 
dealt with on that, but that makes a lot of sense and moving in 
that direction.
    And that's exactly what I'm talking about. If we can start 
laying this thing out and get a plan as to where we're going 
instead of this kind of skipping around haphazardly a little 
here and a little there and focus our resources and our 
attention, and that's what I find so exciting about the fact 
that we've got so many of our members who want to come together 
and invest in one great bit national entity to produce 
renewable electricity for not just for the local area, but for 
the country. And to really go into this on the basis that it is 
an effort to, in fact, provide that kind of renewable power 
that this country needs. And it fits right in. I know with what 
many of the farmer organizations have been trying to do, many 
of our farmers trying to do, and every one of them as you well 
know, those are all local folks that own those electric 
cooperatives. If they have the chance to do that, that it also 
has an opportunity to bring some revenue to the people back 
home, if the Congress will give us that chance.
    We've got to tweak the laws, make a few adjustments here, 
to make that kind of a plan and to move that forward, but it's 
also a way in which we can minimize those rate increases. 
They're going to go up, but we want to minimize that and have 
as little impact on this economy and certainly on small 
business and people in rural--living in rural America as we 
can.
    Mr.Buis. Thank you, Congressman, for that question because 
I think it sort of defines rural America. There's a lot of 
innovation and creativity out there. It's often having the 
programs and the funding and the incentives to take part in it. 
As we do this Farm Bill, one of the titles and I know Mr. 
English is very familiar with in his days in the House Ag. 
Committee, it often gets overlooked and shortchanged, it's 
research. Research and the technology and development. You 
know, corn deicer, for example, you can use on the roads. You 
can use it in the airport runways. Those type of products don't 
just happen. It takes some serious research. And federal 
research dollars usually are the first cut.
    You can look at any budget reconciliation package that's 
gone through this Congress and those are easier because the 
constituency often is in the future, not in the present and I 
think we really have to focus on that in this Farm Bill, 
especially with the limited dollars.
    Mr.Noonan. Well, in Oregon, one of the things we've got 
going right is now the Treasure Valley Renewable Energy and 
what it's doing, basically, is taking barley and what and it's 
just under process right now, and the byproducts are actually 
worth more than the ethanol that's produced. Using byproduct as 
an edible for like these food bars and stuff, so that's a 
perfect opportunity where the byproducts actually is what 
you're after.
    Another thing that's been happening is with use of canola 
meal and organic production of canola and using the canola oil 
as organic canola oil for edible uses. So there's a lot of 
things being stemmed here with all this discussion going on.
    The other thing that I'd like to hit on is you know a 
molecule is a molecule and with that being said anything that's 
oil based can also come from a plant. So we just hit the tip of 
the iceberg in what can really happen and with the ingenuity 
out in the countryside and the work ethic that's out there, I 
think you'll see a lot of the things that you're seeing at your 
home and we've only just touched the tip. It's going to be a 
lot about ethanol, but it's going to be a lot about the things 
we're going to make from the byproducts. So I've got to agree 
with you.
    Mr.Schwiebert. Thank you for that question as well. Some 
examples you can see right in front of us is you can take 
polylactic acid which is derived from corn starch and make 
drinking glasses as clear as this, use those, put those in a 
compost pile. They degrade to carbon dioxide and return to the 
soil to grow corn again. You can use it to make the carpet on 
this floor, even the clothes that you and I wear.
    What we're seeing today with fuel grade alcohol is the 
first generation of uses of renewable products, in this case 
corn, wheat, soybeans, other products as well, to launch us 
down a road of replacing our complete dependence on petroleum-
based industrial building components to those from bio-based 
products. Kind of going from a petroleum to a carbohydrate-
based economy for perhaps that stated as well.
    So we're on the first generation of that. The technological 
advances, the advances in biotechnology are certainly driving 
us down that road rather quickly. Sometimes it's almost 
surprising me how rapidly that's happening. But don't see today 
as we've reached the goal and we can set back and rest on those 
laurels. It's just barely begun. So I think the future is very 
bright. I think it positions rural American agriculture to 
certainly be not just a contributor of food and fiber, but also 
a strategic national advantage in providing energy and also the 
basic components for our industrial processes.
    ChairwomanVelazquez. Time has expired. And now I'll 
recognize Ms. Fallin.
    Ms.Fallin. Thank you, Madam Chairman, it's a pleasure to be 
here with you today and it's always good to see my fellow 
Oklahoman, Congressman English. Good to have you here and 
appreciate you coming and appreciate the good job you're doing 
and it's good to see you other gentlemen too.
    I'm just sitting here thinking about the current Farm Bill 
that we're getting ready to take up and listening to the debate 
and I came in a little bit late, but and thinking about the 
issues that you've been talking about at hand. Can you tell me 
and just reflecting back on the past, on the last Farm Bill 
that we had, I think it's always helpful for us to look at the 
good parts of the bill that we passed, maybe some challenges 
that were there and some opportunities that we might have in 
the upcoming bill. But what are some things that you saw in the 
last Farm Bill that you might think we should definitely not 
do, some things that were not helpful or some issues that 
became a challenge to your various industries?
    No one wants to answer that one.
    Mr.Buis. Well, there are a couple of things that I think we 
have to take a look at and one thing that we've recommended is 
shifting the direct payments to the counter-cyclical payments. 
We have high corn prices right now. We have high wheat prices. 
We have higher--I learned a long time ago, never say they're 
high. They're never high enough to a farmer, but it's tough to 
justify to Congress and anyone else paying a farmer when 
they've got a high price. And conversely, we all know prices 
don't stay high forever and they will come down and when they 
come down having that safety net that really kicks in when you 
need it.
    So we have suggested a shift in how you fund that. And base 
it on cost of production and the reason we say cost of 
production because if you really are talking about a safety 
net, the one gaping hole in the whole last Farm Bill is every 
farmer got caught with rising input costs that went through the 
roof. Agriculture is very dependent upon energy, not just the 
fuel, but the fertilizer, even the equipment is very energy 
intensive to produce.
    And the safety net when chosen by a price, whether it's a 
direct payment or a loan rate, doesn't move with that. And we 
were fortunate that last summer commodity prices went up 
because the rising input costs for farmers because energy was 
really hurting, we can't pass on those costs. We're price 
takers, not price makers. And you know, the old line is you buy 
retail, sell wholesale and pay freight both ways. Well, we also 
pay a fuel surcharge both ways and that's tough to pass on.
    Mr.English. One that I raise with you that it's not 
something that the Congress has allowed, but is happening, we 
had back--I'm going way back now. This is ancient history to 
all you all. Back in 1987, the Agriculture Committee was faced 
with a situation as far as rural development was concerned we 
had no money. There was no money that was available. We had 
very tight budgets and it was very difficult during that time 
and one of the areas that got cut back substantially was in 
rural development. So the question is well, what do you do 
about rural development? How do you help in rural development?
     And one of the ways that we did this was that we started 
quite frankly tasking some of the electric cooperatives to get 
involved in this to help out in this and finally developed a 
program which is now known as the REDLEG program in which 
electric cooperatives would, in fact, pay back their loans 
early and that would go into a fund and then the local electric 
cooperatives could make that available for local business loans 
to help small businesses, small industries come into those 
areas. And that's been a very productive program, not a big 
program. It isn't massive, but it is a way in which we could 
achieve that and that's kind of the back door way of trying to 
come up with the money to be able to do something out there.
    Well, what's happened here in the last couple of years is 
that the Department of Agriculture has started reaching into 
that fund and taking that money and using it for other 
purposes, using it for other purposes. $200 million has been 
taken out of that fund and used for other purposes. And that's 
wrong.
    And we're hopeful that Congress will speak out on that and 
put a stop to that kind of practice to allowing that sort of 
thing to happen. But that's not something that the Farm Bill 
allowed last time. I guess this is another one of those things 
and I know the frustration that each of you have is that seems 
like folks always figure out some way to do something different 
than what we intended when we passed the legislation. You get 
that kind of frustration. You leave any little inch there, 
there's always somebody who is going to figure out an angle to 
get after it and this is one of those cases and it's 
unfortunate.
    Mr.Noonan. Well, I keep going back to direct payments and 
they're very important to us. One thing was that we were pretty 
much left out of the LDP program in the counter-cyclical in the 
2002. Our target price was set so low and partially that was 
because we didn't want an oversupply. Storing grain doesn't 
create a free market. And when the target price gets too high 
what happens is and you drop, you get LDPs and a lot of time 
you're storing up grain to sell later. And we're just--we're of 
the mindset if we have moving our grain crop every year it's 
going to create opportunity in the free market.
    With that being said, you start talking about a safety net. 
And if we want to talk about cost of production, a real direct 
payment for recourse that would be equal with our low target 
price right now would be a $1.19 direct payment for the cost of 
production that you can look and that's exactly what we should 
have. Instead, we're getting 52 cents.
    So we're kind of left out in some of the Farm Bill. I think 
one thing that I urge you guys, all Congress to do, is to make 
sure we get a fair shake this time, because we really were left 
out a lot of it. We keep going back to the direct payment 
because it's something again that's bankable in rural America 
that counts. Yes, you pay it every year, but you know when 
you're budgeting, you know what it's going to cost. It isn't 
going to be like a counter-cyclical or an LDP. It's going to be 
differing depending on market years. You can set a straight 
line that you can both budget and count on our end.
    And then the other last thing is full funding of the 
Conservation Security Program.
    ChairwomanVelazquez. Okay, time has expired. IF you want to 
add, to answer a question, please do it in a short answer.
    Mr.Schwiebert. I'll be as brief as possible. One 
conflicting issue is you've got disaster aid, ad hoc disaster 
aid kicks in about every year. You've also got a pretty 
significant heavily subsidized crop insurance industry as it 
pertains to corn growers, sometimes that's that cross-purposes. 
To do both kind of undermines, one undermines the other. We've 
had some pretty good corn crops in the last number of years, 
some excellent production. Had some low prices with that. A lot 
of farmers, even though they had, you know, pretty good income 
levels from that, we're still able to receive a pretty large 
loan deficiency payment because of the low prices.
    Well, you know, you received generous benefits, and we're 
not complaining about that one bit, but it was times such as in 
a year where it wasn't a crucial need. What we're proposing in 
our plan really targets that to be delivered when crops are 
short, you know, yields are down and prices lower, or a 
combination thereof. So I think it would be a more efficient 
use of taxpayer dollars.
    ChairwomanVelazquez. Thank you. Ms. Clarke?
    Ms.Clarke. Thank you very much, Madam Chairwoman, Ranking 
Member Chabot, for holding this hearing on the Farm Bill. We're 
moving from Brooklyn, Iowa to Brooklyn, New York, so I just 
want to put that in perspective for you. As you know, Madam 
Chair, New York City has made great strides in maximizing 
sensibility to federal food stamp programs for eligible New 
Yorkers. But many potentially eligible people have not yet 
enrolled.
    I believe that Congress must take the next logical step to 
maximize the participation of small farmers in the program by 
modifying some of the guidelines that will bridge the gap 
between family farmers and low-income families. We need 
policies that promote a food system that is more sympathetic to 
the health needs of under-served communities around America, 
including support for market incentives and institutional 
procurement policies that favor healthy food, a seamless flow, 
if you will, of produce from small farms to urban consumers 
with the real meaningful, sustainable, expansion of the 
marketplace.
    The 2007 Farm Bill should support an increase in food stamp 
benefits to help more poor and low-income families to buy 
healthy foods, improve outreach and efficiency in the food 
stamp delivery as well as nutritional education.
    We must expand the scope and size of the USDA Community 
Food Projects Competitive Grants Program, to about $60.5 
million annually mandatory spending and add specific uses of 
fund in the flowing new program area into funding new program 
areas to meet the urgent need to supply healthy local foods to 
under-served markets. We must also expand farmers' market 
nutrition programs to 2002 authorized funding level of $25 
million and authorize these farmers' markets to be certified 
for WIC fruit and vegetable vendor status to give greater 
opportunities for seniors, nutritionally at risk women, and 
children to buy fresh, local, healthy produced foods.
    Having said all of that, I would like to raise a question 
with you, gentlemen. Over the past 15 years, most states have 
switched from pay-for-coupons for food stamps to debit cards, 
thereby removing the stigma of redemption at the checkout 
counter. As of last year, there were nine farmers markets in 
New York City that used EBT. The WIC program, which still uses 
paper, will mostly do the same. Most small farmers, of course, 
don't take plastic and have seen their sales plummet with the 
switch from paper.
    Without the expansion of the EBT card readers in rural and 
urban areas, small farmers fear that they will lose the bulk of 
Farm Bill that they get now and be shut out of those hundreds 
of millions of dollars. How can Congress help both small 
farmers and people struggling to feed themselves and their 
families?
    Mr.English. Well, I understand where you are coming from, 
but of course a lot of those folks that you are talking about 
through the food stamp program that we have had in the past, 
WIC programs, and others, live in rural America. The point that 
I was making earlier, an awful lot of folks living below the 
poverty are living it in rural America and have those kind of 
challenges and difficulties, no question about it. As far as 
making those improvements, I know that the Agriculture 
Committee historically has been very mindful of that, and 
believe it or not we've had Members of Congress from Brooklyn 
on the Agriculture Committee. I was thinking of Fred Richmond 
back years ago who was very active about that and Shirley 
Chisholm as well. They were very active and very vocal about 
that and I think certainly helped to keep that as a major part 
of the Farm Bill and did a great job.
    I can't help but given a little bit of an opportunity here, 
go back to this point. There are some real problems out there, 
and that's the reason why I keep harping on this rate thing. 
It's going to be so important for so many of those folks that 
are certainly living in our areas, but you're going to have the 
same thing in New York City, is this rate issue and if it gets 
out of hand, it's going to do great damage.
    I had one of the directors, who is a manager of an local 
electric co-op in Arkansas last month who was telling about the 
fact he had this lady who called him up, an elderly lady, and 
she was talking about the fact that she thought she had finally 
figured out how she was going to be able to pay her electric 
bill. She was having a real difficulty in paying her electric 
bill. As I've mentioned, a lot of electric co-ops, their rates 
are higher just because we don't have many people living out 
there to bear that burden on the infrastructure.
    It came down to the way that she finally figured out how to 
do this was she was only going to take her medication every 
other day. Now, that's with today's rates. That's what scares 
the daylights out of me, quite frankly, is that if we don't get 
a plan together to figure out how we're going to deal with 
energy independence, climate change, and recognizing the fact 
that we've got to use all the tools, and if these folks--and 
we've got them in this town, who see this as just simply well, 
we'll just jack it up. It's a supply and demand thing. That 
could do great damage. So I'm hopefully we can help you on 
that.
    ChairwomanVelazquez. Time is expired. We're going to be 
having votes soon, so I would like to recognize Mr. Sestak.
    Mr.Sestak. Thanks, Madam Chair. I just have one question, 
Mr. Buis, and maybe one comment to what you've said, 
Congressman English. You had mentioned briefly and had spoken 
about to build upon the Congresswoman's comments. It seems to 
be more desire in suburban and urban areas for access to fresh 
foods. Could you comment upon the potential economic impact 
that this might attend for the future. But also, what is it in 
the Farm Bill--you've mentioned in your written testimony, 
country of origin. But is there more that needs to be done? I 
mean, I can remember--of course, in Philadelphia, always going 
down to the wholesale market there--Ruben Amer, or Carmen 
Zirisky. I can still remember my pop saying we're going into 
Ruben. So it was always to my mind this desire to have this 
type of access. Is there more that can be done in the Farm Bill 
to open that part up?
    Mr.Buis. Absolutely, Congressman. You know, we sort of 
stumbled on this. Traditionally, fresh local food was the way 
that our food was distributed. We got beyond that, and now how 
do we get back to it? I think you're going to have to see some 
serious investment in both federal dollars to help people with 
the delivery and the marketing structure. You know, that's an 
obstacle for small farmers. They literally have to haul that 
product up there. There is no ready-made distribution program.
    I also think we need to adopt the type of policies as the 
Congresswoman just mentioned to make that food accessible to 
all federal nutrition programs, whether it is school lunches 
and school breakfasts or the WIC program or any of those. 
Federal policy will help drive it. Right now it has been a 
consumer thing on the high end. They are willing to open their 
check books to pay for quality, and you know people of all 
means ought to have access to that quality. It helps our 
producers.
    Mr.Sestak. Growing up, because we were eight kids, and my 
father worked the Philadelphia Shipyard, so this was the 
wholesale and we used to go in the back gate. But we did it 
because it was low prices, but there's now this desire on the 
higher end. I just was curious if there was any follow-on and 
what tools might help that market, because it seems to just--
you see these more and more. Because of time, also, one 
comment, Mr. Congressman.
    I think your comments are so spot on, and yet I think they 
actually undersell the challenge. I mean, I remember sitting 
down with an investor one time a few months ago who has done a 
lot of research, and if we want to bring China, and China does 
want to come up to the Ozzie and Harriet level of 1965--a car 
in the driveway, a dishwasher, a decent home. All the energy 
that we produced this year in this world would be needed times 
ten just to get into the 1965 standard of living of the United 
States. They want to go there.
    I think back in the military, you know, the Internet really 
did come from somewhere. It came from the DARPA program, the 
defense over there in the Pentagon. So whomever made the 
comment that we really do need the S&T and the R&D to get us 
out there. But there is also another element missing. We truly 
have to, as you so well said, the environment and the energy 
approach, strategically, which Congress doesn't do well. But 
the transportation, if that is imbedded in also, and we're 
patch working a broken system that we built after World War II.
    You just take what we're doing on our airports. All planes 
into Philadelphia come from 500--50 percent of all planes come 
from 500 miles away. Thirty percent of them come from 200 miles 
away. Well, why are we trying to expand that airport? Why don't 
we just put a bullet train? There is so much to be done in this 
area. We are nibbling at the edges. I am just very taken by 
your comments. I'm sorry to go on that. Thank you.
    Mr.English. I'll just say amen.
    (Laughter.)
    Mr.English. You're right on and the one question I think 
we've got as we take on these challenges is the question of 
whether Congress was going to sit on the fence and play Monday 
morning quarterback as to what ought to be done or whether 
Congress is going to join in and we get a partnership on this 
thing and deal and engage in these programs. We desperately 
need the Congress to get down with us and to form a partnership 
and move forward and solve these problems and take care of all 
these needs.
    Thank you.
    ChairwomanVelazquez. Any other? Yes.
    Mr.Noonan. I'd just like to add one thing to the 
Congresswoman from Brooklyn. You hit something right on the 
head. Young farmers trying to enter the market right now, 
there's so many dollars it takes to get into it. One way of 
helping would be the Farm Service Agency, they've got a low cap 
on entry for farmers. I think it's a $220,000. Well, with land 
values and just the cost of production, it would be nice to see 
that raised up for the opportunities so you have the 
infrastructure. They can go get the financing they need to get 
started.
    ChairwomanVelazquez. Okay, well, this has been a 
fascinating hearing and I want to thank all the witnesses. The 
only thing I would like to add is I have five farmer markets in 
my District and one of them is in a housing development project 
and you have to see the experience that these young kids are 
having, cultivating and even going into upstate farms and 
gaining from that experience. Crime activity has been going 
down. These young kids are unbelievable. They are so fascinated 
to see the interconnection that exists between access to 
quality foods and obesity issue that we have been dealing with.
    So I do believe that there is a great opportunity here to 
bridge the gap between rural and urban America and I hope that 
in a comprehensive way it's addressed in this Farm Bill.
    I will recognize Mr. Gohmert.
    Mr.Gohmert. Thank you, Madam Chair and I really appreciate 
that. I'll be very quick, very brief here, but we've got an on-
going problem right now in my District. Meetings are going on 
this week in some of the rural areas of East Texas. I think 
there are maybe 200 FSA offices in Texas over that, and anyway, 
we've got a whole slew of offices being closed in East Texas 
where I am. And I would just like very quickly to ask what's 
the role of the Farm Service Administration within your 
organization and what role do you see them playing? Very, very 
briefly, if I could get a response.
    Mr.Buis. Well, Congressman, the role of the Farm Service 
Agency is really important to rural America because that's the 
people that deliver whatever federal farm program Congress 
comes up with. It's also the people that administer disaster 
assistance. The folks live and work locally. They understand 
farmers. They know who's doing the right things and who is 
doing the wrong things. And it's a good system. I'm really 
concerned and we're very much opposed to these attempts that 
pop up about every four or five years to reduce the number of 
Farm Service Agency offices in states. Number one, besides 
delivering the service, it's oftentimes the biggest economic 
attraction in that local community. It draws people to town 
that helps the other businesses in town. But they do a good job 
and they do a great job at delivery of federal farm programs 
and we're opposed to their closing.
    Mr.Gohmert. Thank you and I couldn't agree with you more. 
That's my understanding. And in fact, one of my counties, 
Shelby County, they tell me produces more chicken fryers than 
any other county in the country and although what I was 
presented shows that they may have the second highest rate, 
they're very, very rural, they may have the second highest farm 
loan rate through FSA. All that the Texas FSA director and 
president or the chairman wanted to talk about is how it has 
one of the lowest commodity program rates. And anyway, so 
they're closing the office and saying we're going to 
consolidate it. But they also--it said they had tried to 
advertise and nobody was interested. I thought we had an 
agreement they would readvertise because I was told there was 
somebody that would take that, who would be perfect. And I 
thought we had an agreement and then instead, we find out 
they're closing three more offices in my District. And these 
are people that are feeding America with chickens and without 
the assistance, they're not going to be in business. And so 
anyway, I would appreciate any help I could get from you and I 
will give you any help I can to help make sure that America 
keeps eating good food and we help those get it to us who are 
really doing the work.
    Thank you very much, Madam Chairman.
    ChairwomanVelazquez. Sure. And with that I ask unanimous 
consent that Members have five legislative days to enter 
statements into the record without objection. So ordered. This 
hearing is now adjourned.
    [Whereupon, at 11:30 a.m., the hearing was concluded.]

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