[Senate Hearing 110-30]
[From the U.S. Government Publishing Office]
S. Hrg. 110-30
DISCUSSION OF THE
U.S. DEPARTMENT OF AGRICULTURE
FARM BILL PROPOSAL
=======================================================================
HEARING
[before the]
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
----------
FEBRUARY 7, 2007
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Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
DISCUSSION OF THE U.S. DEPARTMENT OF AGRICULTURE FARM BILL PROPOSAL
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
Available via the World Wide Web: http://www.agriculture.senate.gov
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
TOM HARKIN, Iowa, Chairman
PATRICK J. LEAHY, Vermont SAXBY CHAMBLISS, Georgia
KENT CONRAD, North Dakota RICHARD G. LUGAR, Indiana
MAX BAUCUS, Montana THAD COCHRAN, Mississippi
BLANCHE L. LINCOLN, Arkansas MITCH McCONNELL, Kentucky
DEBBIE A. STABENOW, Michigan PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska LINDSEY GRAHAM, South Carolina
KEN SALAZAR, Colorado NORM COLEMAN, Minnesota
SHERROD BROWN, Ohio MICHEAL D. CRAPO, Idaho
ROBERT P. CASEY, Jr., Pennsylvania JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota CHARLES E. GRASSLEY, Iowa
Mark Halverson, Majority Staff Director
Robert E. Sturm, Chief Clerk
Martha Scott Poindexter, Minority Staff Director
Vernie Hubert, Minority General Counsel
(ii)
C O N T E N T S
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Page
Hearing(s):
Discussion of the U.S. Department of Agriculture Farm Bill
Proposal....................................................... 1
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Wednesday, February 7, 2007
STATEMENTS PRESENTED BY SENATORS
Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee
on Agriculture, Nutrition and Forestry......................... 1
Chambliss, Hon. Saxby, a U.S. Senator from Georgia............... 2
Panel I
Johanns, Hon. Michael, Secretary of Agriculture, U.S. Department
of Agriculture, Washington, DC; accompanied by Keith Collins,
Chief Economist, U.S. Department of Agriculture, Washington,
DC; and Charles Conner, Deputy Secretary of Agriculture, U.S.
Department of Agriculture, Washington, DC...................... 4
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APPENDIX
Prepared Statements:
Cochran, Hon. Thad........................................... 62
Crapo, Hon. Micheal D........................................ 65
Salazar, Hon. Ken............................................ 67
Johanns, Hon. Michael........................................ 69
Document(s) Submitted for the Record:
Johanns, Hon. Michael:
Written response to questions from Hon. Tom Harkin........... 86
``2007 Farm Bill Proposals'', U.S. Department of Agriculture..... 90
Question and Answer:
Harkin, Hon. Tom:
Written questions for Hon. Michael Johanns................... 276
Baucus, Hon. Max:
Written questions for Hon. Michael Johanns................... 287
Chambliss, Hon. Saxby:
Written questions for Hon. Michael Johanns................... 289
Crapo, Hon. Mike:
Written questions for Hon. Michael Johanns................... 299
Grassley, Hon. Charles:
Written questions for Hon. Michael Johanns................... 300
Lincoln, Hon. Blanche L.:
Written questions for Hon. Michael Johanns................... 302
Lugar, Hon. Richard G.:
Written questions for Hon. Michael Johanns................... 303
Nelson, Hon. E. Benjamin:
Written questions for Hon. Michael Johanns................... 305
Roberts, Hon. Pat:
Written questions for Hon. Michael Johanns................... 307
Salazar, Hon. Ken:
Written questions for Hon. Michael Johanns................... 308
Thune, Hon. John:
Written questions for Hon. Michael Johanns................... 311
Johanns, Hon. Michael:
Written response to questions from Hon. Mike Crapo........... 313
Written response to questions from Hon. Patrick J. Leahy..... 314
Written response to questions from Hon. Ken Salazar.......... 316
Written response to questions from various Senators.......... 318
DISCUSSION OF THE
U.S. DEPARTMENT OF AGRICULTURE
FARM BILL PROPOSAL
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Wednesday, February 7, 2007
U.S. Senate,
Committee on Agriculture,
Nutrition, and Forestry,
Washington, DC
The Committee met, pursuant to notice, at 9:20 a.m., in
room SD-106, Dirksen Senate Office Building, Hon. Tom Harkin,
Chairman of the committee, presiding.
Present or submitting a statement: Senators Harkin, Leahy,
Lincoln, Stabenow, Nelson, Salazar, Brown, Casey, Klobuchar,
Chambliss, Lugar, Cochran, Roberts, Coleman, Crapo, Thune, and
Grassley.
STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA,
CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY
Chairman Harkin. Good morning. The Senate Committee on
Agriculture, Nutrition and Forestry will come to order.
This morning, we are pleased to welcome the Secretary of
Agriculture, Mike Johanns, to explain and answer questions
about the Administration's proposals for the 2007 farm bill. We
again welcome Deputy Secretary Chuck Conner and Chief Economist
Keith Collins, accompanying the Secretary.
You know, we commonly refer to the, quote, ``farm bill,''
when in fact that term captures only a fraction of what the
legislation is called upon to address. All Americans have a
stake in the farm bill. Its scope extends from helping
agricultural producers to conserving our natural resources,
promoting rural growth and jobs, alleviating hunger and
improving nutrition, investing in food and agricultural
research, and increasingly to securing our Nation's energy
future.
I want to thank you, Secretary Johanns, and your team for
making proposals that challenge us to take a new look at issues
and problems and to consider new approaches. We have a
responsibility to write a farm bill which looks to the future,
not one that clings to the status quo of the past.
Now, we made a good deal of progress, I think, in the Farm
Security and Rural Investment Act of 2002. But farm bills are
written for a limited number of years for a good reason.
Agriculture is among the most rapidly changing sectors of our
economy. Policies that worked at one time may not be well
suited to a new era filled with critical new challenges and
opportunities for farm families, rural communities, and our
entire Nation.
A core mission of the farm bill, of course, is promoting
profitability and income potential in agriculture and a degree
of stability and predictability in our Nation's food and
agricultural system. Americans have come to take for granted a
plentiful, wholesome, and affordable food supply, and it is in
our Nation's best interest to construct programs to help
agricultural producers survive the vagaries of weather and
markets.
But we also need a farm bill that looks much further ahead.
It must be bold enough and creative enough to prepare for and
master challenges and opportunities on the horizon. We are, as
you have said many times, Mr. Secretary, in the midst of
revolutionary changes in food and agriculture, most notably in
farm-based renewable energy. We put an energy title in the 2002
farm bill, and there is broad agreement that energy is perhaps
the key driving force in this farm bill. I commend President
Bush for his ambitious renewable energy objectives, although I
have some concerns that the budget lacks the resources
necessary to achieve those goals.
I also welcome your proposals, Mr. Secretary, to increase
our investment in agricultural conservation, rural development
and research, to help beginning farmers and ranchers, and to
improve USDA's efforts in promoting nutrition and health and
fighting hunger. We must do more in those areas.
So I guess my main question at the beginning is whether the
Administration's proposals, your proposals, are strong enough
and will we be able to back them up and strengthen them with
the budget that we have and the resources that we have.
Again, Mr. Secretary, I want to compliment you and your
team on a really good proposal. I think there is a lot of stuff
in there that we can work together with you on. I think it does
chart a new bold challenge to us here to work together to
achieve those goals. So again, the committee welcomes you and
the valuable contribution of your proposals to our work in
writing this new bill. I look forward to a good bipartisan
working relationship with you and the administration and with
my colleagues here in Congress in drafting and enacting this
vitally important legislation.
With that, I will turn to our distinguished former Chairman
and our Ranking Member, my good friend from Georgia, Senator
Chambliss.
STATEMENT OF SENATOR CHAMBLISS, A U.S. SENATOR FROM GEORGIA
Senator Chambliss. Mr. Chairman, thank you for holding this
hearing today.
As Chairman, as you know, I dedicated much of 2006 to
preparing for the reauthorization of the farm bill and this
committee spent many hours in field hearings listening to
producers about their farm bill needs. Secretary Johanns held
his own listening sessions around the country and points to
those sessions in his development of the Administration's farm
bill proposals. This hearing today is an important step toward
the farm bill reauthorization in that it will allow us to
explore the justifications for the Secretary's specific
proposals and engage in a dialog about impacts the proposal
could have on this Nation's farmers, ranchers, rural
communities, and the agricultural economy.
Mr. Secretary, welcome. We are always glad to have you back
before the Agriculture Committee. Dr. Collins, Chuck, we are
always pleased to see you here. Thank you for your efforts, and
we appreciate you bringing new ideas to the table as Congress
begins to debate the new farm bill.
My goal always has been to make certain that America's
farmers' voice is heard and their concerns are addressed in
this process. There are a lot of farmers, a number of ideas,
and a variety of ways in which concerns can be addressed. Each
Senator on this committee represents an important part of
agriculture country and we will each have an important role in
crafting the new farm bill.
When the 2002 farm bill was passed, the Congressional
Budget Office estimated that we would spend $110.6 billion on
commodity programs during fiscal years 2002 to 2008. I am proud
to say that because of the market-oriented direction in which
that farm bill took us, that we have spent much less than
originally estimated. Farm program spending under the 2002 farm
bill is now expected to cost approximately $25.3 billion less
than originally projected for fiscal years 2002 to 2008. And
even if we take into account recently enacted disaster
assistance packages, the 2002 farm bill has spent $19.2 billion
less than expected. These are impressive figures that we need
to consider in constructing the next farm bill.
One thing that the 2002 farm bill did provide to our
farmers and ranchers around America was a true safety net, and
frankly, Mr. Secretary, with your proposals, I see a tendency
toward guaranteeing farmers payments versus providing that
safety net. I am not sure what direction the committee is going
to decide to go, but it does steer us away from providing a
helping hand in the years when the farmers really have low
yields, low prices, and it moves us in a direction of making
sure that farmers get money from the Federal Government every
year irrespective of whether or not they plant crops.
Certainly, there are a lot of challenges ahead of us as we
work to complete the farm bill before portions of it expire.
But I trust that we can, Mr. Chairman, work in a bipartisan
manner to reach a consensus that will prove beneficial for each
of our States and our constituencies.
I thank you and look forward to the witnesses' testimony
today.
Chairman Harkin. Thank you very much, Senator Chambliss.
Secretary Johanns, again, welcome to the committee. Your
statement will be made a part of the record in its entirety.
Please proceed as you so desire. They put 10 minutes on there,
but do not worry too much about that. We want to hear your full
explanation and, of course, I then will open it up for
questions and different rounds at that time. So, Mr. Secretary,
welcome.
STATEMENT OF HON. MICHAEL JOHANNS, SECRETARY OF AGRICULTURE,
U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC; ACCOMPANIED BY
KEITH COLLINS, CHIEF ECONOMIST, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, DC; AND CHARLES CONNER, DEPUTY SECRETARY OF
AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC
Secretary Johanns. Thank you, Mr. Chairman. I have to tell
you, it is an honor for me to be back in front of the
committee. Members of the committee, I appreciate the
opportunity to visit with you. This is the first time I am
appearing before the 110th Congress and I feel, like I said,
very honored to be able to be here and speak about the farm
bill.
Our Department has worked very hard on these proposals, but
for that matter, farmers across the country did because of our
listening sessions. I am submitting for the record a very
extensive written statement, so I am going to speak from an
outline today and try to keep it to the point but fairly brief.
I would also mention that, for the record, Mr. Chairman, we
are submitting the book that contains our farm bill proposals,
so that will be a part of the record.
Thanks for acknowledging two people that were very key in
developing our proposals. I could not have a better Deputy than
Chuck Conner. I will tell you, Chuck has really led this effort
in the Department.
Chairman Harkin. Be careful what you say. We all know him.
[Laughter.]
Secretary Johanns. Yes, I know. I know. I will be careful.
And then, of course, every time we had a question about
analysis or background, we turned to Dr. Collins. My respect
for Dr. Collins grows daily. He does a great job for us.
We also have with us a whole host of people, but I would
mention one of our newest Under Secretaries, Mark Keenum, who I
think is very familiar to the committee. He works in this area
with our farm programs and also with our Foreign Agricultural
Service. And then Scott Steele, if there are budget issues,
Scott is here to address those.
This journey to the farm bill proposal started pretty soon
after I arrived a couple of years ago. We held 52 Farm Bill
Forums across the United States, really on a nationwide basis.
We received 4,000 comments. Our approach was always the same.
It was an open microphone, no prearranged testimony. We just
said we will be in a given location. Farmers showed up. They
would oftentimes drive hours to come to these forums and talk
to us.
I do appreciate, Mr. Chairman, you were at a forum that I
conducted in Iowa and that was pretty typical of the forums we
had across the country.
We received 4,000 comments. We did a summary of those
comments that is actually contained in this binder, but we put
it on the website, 41 summary papers, and then I turned to our
Chief Economist Keith Collins and I said, identify themes, and
we worked together and tried to identify themes out of the
comments. These were published in five theme papers that have
now been on our website for some period of time, filled with
excellent information, and again, led by the folks in Keith's
shop.
We then ended up with our farm bill proposals, which is
contained in this booklet, and as I said, we made that a part
of the record.
Let me just be very clear, and I mentioned this when I was
going through the confirmation process. I have a history with
the 2002 bill. I was the lead Governor for the Western
Governors and the Midwest Governors. In fact, Tom Vilsak and I
were co-lead Governors for the Midwest Governors in the
reauthorization of the 2002 bill. I have said many times, I
think it was the right policy for the times. Commodity prices
were low. Exports had declined for several years in a row. The
debt-to-asset ratio was at about 15 percent. That was not the
highest in history, but it was certainly a number that caught
probably everybody's attention. It was the first ever farm bill
with an energy title and it increased conservation spending by
about 80 percent.
But times do change, and farm bills reflect the changing
times. As the Chairman indicated, that is why we pass them for
a limited number of years and then reenact them, so we can
calibrate the changes that have occurred.
Today, as we prepare for a new farm bill, commodity prices
are strong for most program crops, and in some areas,
historically strong. Exports have increased every year to a
record $68 billion. We think in 2007 that number will actually
get to $77 billion. That will be yet another record.
In all of the recordkeeping the USDA has ever done, I can
tell you that we have the lowest debt-to-asset ratio in
recorded history. It is now about 11 percent as of 2006, and
the trend very definitely is in the right direction.
And renewable energy is a significant contributor to the
agricultural economy.
As we went around the country, we listened to stakeholders
and we built proposals based upon principles of reform and also
recognizing that fiscal responsibility was important. We knew
at some point we would have a baseline number we would have to
work with. The proposals we submit, I would respectfully
suggest to the committee, are more predictable. These proposals
are more market-oriented. They provide support when revenue is
low.
Senator Chambliss, I am very anxious to engage in a dialog
with you on some of the comments you have made because
actually, we believe the proposals we are making provide a more
predictable safety net for producers out there. But again, I
will save that for our discussion.
We believe these proposals are more equitable. They
distribute resources more equitably than previous farm bills
have done. And we support growers of specialty crops, for
example, who have had a small place in previous farm bills, but
very small. We also would respectfully suggest that these
proposals are better able to withstand challenge.
Again, many of you have an interest in, of course, all
commodities. Some have a very special interest because of state
production in cotton. Well, we have a WTO cotton case. We
cannot ignore it. We are now--the case is final in terms of the
ruling. Now they are trying to figure out whether we have
complied with the ruling. That is what the most recent case is.
And we believe it wisely and effectively spends tax dollars.
Let me just touch with a tad bit of detail on some of the
proposals. We are proposing to revise downward marketing loan
rates. I mentioned that when we released this almost--well, it
was a week ago. Here is how they were set. They were set based
upon the market. We did not go out there to try to just pick a
number. We set them based upon market experience over the last
5 years of the 2002 farm bill, the Olympic average, taking out
the high year, taking out the low year, and basing it on the
average of those 5 years.
The House approved a version of the 2002 farm bill before
it was sent over here to the Senate and loan rates were
established in that House-approved bill. We have proposed to
cap loan rates based upon that number that had been through
that process.
We now post about 8,000 daily prices, county prices, and
you can do the math. Eight-thousand times 365, I do not know if
we post them on holidays or not, Chuck, but if you do the math,
roughly around three million posted county prices. It is no
wonder you go out into the country and farmers are saying, our
county prices do not make sense. They do not compare with what
is happening in the next county. Quite honestly, it just
invites problems. We are changing that from a daily posted
price in our proposal to a monthly posted price.
We also increase direct payments by $5.5 billion. I can
tell you without a doubt, to the producer out there, this is
more predictable. It is not tied to price or production, and
although I am not the trade lawyer, I can tell you that
generally, payments not tied to price or production do not run
into the WTO challenges that you have in programs that are tied
to price or production. And for the young producer out there,
if this proposal is adopted, you take it to the bank.
Now, lowering loan rates for four of the major
commodities--corn, wheat, rice, and soybeans--the net effect
really is not financial. But notwithstanding, we went out there
and said, you know, in the third, fourth, and fifth year, we
should improve the safety net, so we identified a billion
dollars to raise those direct payments. If the projections are
accurate, the loan rate impact here really is not going to make
any change in terms of the financial aspect. It is about a
wash, and Keith may talk about that at some point.
We heard something very interesting out there relative to
the countercyclical, and Senator Chambliss, this might get to a
part of your comments. This seemed counterintuitive to me, but
we heard it in Kansas, we heard it in Nebraska, we heard it in
other places. Farmers showed up and said, you know, the
interesting thing about the 2002 bill, I am over-compensated
when I do not need it and I am under-compensated when I do. And
like I said, it sounded terribly counterintuitive to me. Let me
explain what those farmers were telling us.
In years of high production, the price goes down typically
and the countercyclical kicks in. And if they have raised a
crop, in fact, a big crop, they were able to pick a day to lock
in their LDP. And in 1 year, it happened at a time where we had
a 2-month decline in price because of Hurricane Katrina and
prices came back, so they locked in very high LDPs.
Now, let me take the other side of that. What about that
statement that says, in years where I need the safety net, the
2002 bill isn't there? Some of you will really relate to this.
What farmers were telling us there, and again, we have studied
this and it bore out, in years where their production has been
hit by drought or other circumstances, what tends to happen to
the price? The price goes up. It is a simple supply and demand
phenomena. The countercyclical does not kick in. They do not
get the countercyclical payment at a time when they are
experiencing drought, their neighbors are experiencing drought,
for example.
And I was told a thousand times out there--it is etched in
my memory--``Mike, you can't LDP a crop you can't raise.''
There are no loan deficiency payments on a crop you did not
raise. So at a time when the farmer needs us most, they have no
safety net. Is it any wonder that groups are here almost on an
annual basis saying, we need a disaster program, and there is
this annual debate, should it be $2 billion? Should it be $6
billion? Should it be $4 billion?
Our approach to this addresses a very important part of
that issue, and again, it came from farmers. We provide a
conservation-enhanced payment option. Let us say a farmer of a
program crop out there looks at the farm bill and says, you
know, prices are strong. I do not think I am going to get a
countercyclical or loan deficiency payment over the next 5
years. I will get my direct, but I will not get these other
programs. However, there are some conservation things that I
have been interested in getting done. Is there a program that
fits for me?
Under the proposal we are making, the answer to that
question is yes. Farm just the way you are. Raise your corn,
your wheat, your cotton, whatever you are raising. Work with us
on conservation ideas for your farm. We will raise your direct
payment 10 percent under our proposal. And so we get a benefit.
We assure that farmer an additional payment to assist in doing
those conservation efforts, totally voluntary. The farmer may
look at it and say, that is a good program for somebody, it is
not a good program for me. I will stay with where I am at. That
is fine. No problem with that at all. We give farmers another
option to look at.
We are also proposing to eliminate commodity program
payments on land acquired through 1031 exchange. This does
follow the land. Boy, I will tell you what, you go out there,
all I needed to do to start a farm bill forum debate was to
start talking about 1031, and I will tell you what, you got a
debate.
Farmers see this as raising their cash rents and their land
prices, and what we are saying is we are not proposing to
impact the tax code. You will still be free to do the 1031
exchange. We appreciate the jurisdictional issue here. What we
are saying is if you do that, then the cash commodity payments
under Title I would not apply to that land. You would not
receive those payments.
Now, if I might make a few comments about some of the other
changes we are proposing. I could spend hours on the commodity
title. It is complex. We know that. I will let that come out in
questions.
Let me talk about conservation. We are proposing an
increase of $7.8 billion in our conservation programs. We heard
from farmers,``we like conservation''. ``Your programs are so
complicated, they confuse us''. They are right. They confuse
us, to be very blunt about it. We are proposing simplification
and consolidation. We are proposing to create a new
Environmental Quality Incentives Program, which would include a
regional water program.
Senator Harkin, you have led the debate on the Conservation
Security Program. We are proposing more than doubling the
funding in this area, from about $300 million annually to $800
million. Most of the money for CSP under the current plan is
way out there in the ninth and tenth year. It spikes up like
this. We are proposing to level that out and increase the
funding by $500 million.
If our proposals are accepted, we would be able to offer
CSP on a nationwide basis--on a nationwide basis. It would not
be limited to watersheds like it is today. We believe over the
time of our--over 10 years, that we would increase acres from
15 million to 96 million, a substantial increase in what is
proposed, and I have to tell you, it just works better for us.
Trying to get out there nine or 10 years and then ramp that
program up that dramatically, it would just work better, I
think, for stakeholders and everyone if we could level that
funding out over the next decade.
We are providing $1.6 billion in new funding in our
proposal for renewable energy research, development, and
production, targeted at cellulosic ethanol. I am confident in
telling you, I think corn will always be a part of our ethanol
industry. It has got a tremendous footing in the market. It has
been around a long time, really successful in the last couple
of years. But if we are to meet our goals, if we are to meet
that goal that the President talked about in his State of the
Union of reducing gasoline consumption by 20 percent in 10
years, we need to move toward cellulosic.
But here is the positive thing about that. All of a sudden,
ethanol goes from a corn belt-based program to a national
program. If you have biomass in your State, you have forest
ground where literally you want to clean up what is laying on
the floor of that forest, you could have a biomass program. If
you grow grass in your State.
The other thing I would mention, we have made a proposal on
a conservation program where literally we would say you have to
meet your conservation goals. You have to deal with the nesting
season. You have to do everything you said you would do to meet
the environmental nesting requirements, but let us think about
a program that would allow a harvest, if you will, of something
from that conservation ground, and again, I emphasize in an
environmentally sensitive way, complying with all of the needs
of the nesting birds out there, but again, it gives farmers
another option.
We are providing $1 billion in loans and $500 million in
grants for rural communities. We have a list we could provide,
but across the United States, we have 1,280-some hospitals, if
I remember the number correctly--1,283 hospitals that have been
designated Rural Critical Access Hospitals. These hospitals
need to be rehabilitated. They need to be up to today's
standards. These are in very rural areas. Senator Nelson, we
would see these in our State, but you would see these across
the country. Senator Roberts, you would see these in Kansas.
These are hospitals that if that hospital closes, health care
disappears for miles and miles. We are proposing--we have not
had the money to finish these hospitals. We are proposing the
financing for this loan program--it is a loan program that
would do them all--during the life of this farm bill, we would
do all 1,283 hospitals, and again, a very important program for
health care.
We propose additional funding to deal with the backlog of
infrastructure programs, and we are proposing some
consolidation.
We are also targeting about $5 billion in funding to
support our specialty crop farmers across the country. As I
said, we did Farm Bill Forums across the United States. Our
specialty crop farmers made it clear, they did not want to be a
subsidized crop. They are not looking to be in Title I in terms
of a cash subsidy. What they were looking for was increase in
funding for research in phytosanitary and sanitary issues,
market promotion, those kinds of things, and so we have
identified funding here.
We have a number of proposals. We started every farm bill
forum with somebody from FFA, somebody from 4H. I was in both
programs growing up. They are great programs. They talked about
the challenges of starting out, beginning farmers. We are
proposing in the program crop area to enhance the direct
payment for beginning farmers by 20 percent. We are also
targeting part of our conservation programs and substantially
improving our loan programs for beginning farmers. The
improvements in the loan programs, the targeted enhancement and
conservation, would also apply to socially disadvantaged
farmers.
Now, we have not defined beginning farmers in our proposal,
although there is a definition in our loan programs, but that
would be one where we say to the committee, Chairman, we want
to work through this and try to figure out how this program
applies. But we proposed these ideas because I think they make
sense for the next generation of farmers.
And then I would also mention, and there is a lot of detail
that I will not go into here that we can certainly provide in
response to questions, we are doing a number of things in our
food assistance programs that are very beneficial. For example,
college savings, we are proposing that would not be computed as
a part of your assets. Your retirement account, we are
proposing that that would not be figured in as a part of your
assets. So again, it should improve access.
We are improving--we focused on this disaster assistance
area. A couple of things I would mention. One is the revenue-
based plan will simply work better. We are also proposing gap
coverage. We went out to farmers and they said, ``Mike, I can
buy crop insurance to cover 70 percent of my crop,'' or
whatever the number is. ``What do I do?'' Some farmers cannot
afford to lose that 30 percent and survive. Some can. Some can
manage that risk, not a good deal, but they can manage it. We
are proposing to cover that gap in our crop insurance proposal.
We are linking crop insurance participation to farm program
participation and we are consolidating ECP and EWP in one
emergency landscape program in our proposal.
A final thing I will mention, overall, I believe these
proposals achieve a funding balance. If you look at the
spending in the 2002 farm bill, from 2002-2007, this proposal
spends about $10 billion less. If you add into that the
disaster relief, it would be about $17 or $18 billion less. But
apples to apples, $10 billion less. However, if you just walked
in and said, ``I like the 2002 bill. Let us just reauthorize
it,'' some have said that, maybe less and less now, but some
have said that, and so if you just walked out on the Senate
floor and got those votes and the House floor and just simply
reauthorized it, this proposal actually spends $5 billion more
over the baseline. But most importantly, it fits within the
President's plan to balance the budget within the next 5 years,
and I would argue to you, it is a more predictable safety net
in terms of what farmers are trying to deal with, and that is
especially true in those areas that have struggled through
drought and those kinds of issues.
Let me just wrap up my comments and say, Mr. Chairman, I
thought your comments were right on target. We do a farm bill
every 5 years because it gives us an opportunity to ask
ourselves what has worked, what has not worked. We decided the
best way of approaching that was to simply ask farmers that
question and to try to fit our proposals and tailor them with
that as our base.
So with that, again, I am pleased to be here. If I took a
few more minutes than I thought I was going to, I apologize. As
you can tell, I feel passionately about what we are doing, and
I say finally, I look forward to working with you and the
committee on all of these important issues.
Chairman Harkin. Mr. Secretary, thank you very much. That
was a very comprehensive and well-presented, I think, analysis
of your farm bill proposal. It is a comprehensive bill. There
are a lot of good things in there that I think we should take a
look at. I think it is one on which we can work together as a
committee and work with you on as we move ahead.
[The prepared statement of Hon. Michael Johanns can be
found on page 69 in the appendix.]
Chairman Harkin. Just a couple of comments on what you said
there. I think you are right on target on doing something about
monthly posted prices rather than the daily.
I have a concern about the direct payments. It is going to
get harder and harder to explain to our colleagues here, and I
think the American people, why we should give a government
check to someone who is doing very well, who is making a lot of
money, but we are going to give you a check anyway. That is why
I, quite frankly, I had some questions about this Revenue
Assurance Program as it was brought up in the past. The more I
look at it, I think the more I like it, and I think it has a
lot of promise. Again, I just say, to my way of thinking, I
think that rather than bumping up direct payments, maybe we
ought to put more in the Revenue Assurance. Again, that is a
true countercyclical-type program.
Now, how that runs into WTO problems, I am not certain. We
have to work that one out, I think. But I think that is more
saleable than just a direct payment, again, to a farmer who is
doing very well.
The 1031 exchanges, right on target. I hear about that a
lot. In fact, I just want to say as an aside, I compliment you
on all the hearings you had around the country. I went to the
one in Iowa. You were right. It was wide open, no preset
agenda. Anybody could say what they wanted to say, and I
thought it was really a good exchange. But the 1031 exchanges,
you are right on target on that.
On conservation, I know that there is an urge to simplify
and we do have to simplify, but there are a lot of specific
things that we have tried to address in the past, whether it is
WHIP or WRP or EQIP or CRP. All of these address different
aspects of conservation, and I am not certain that sort of one-
size-fits-all. Within that framework, whatever we can do to
simplify, we should.
I again congratulate you and thank you for your proposal on
getting rid of the watershed basis on the CSP Program. I have
heard a lot of not good comments on that one in the past,
simply because of the anomalies which it brings up and the
inequities on that. So we can go to a true national basis on
that. We had some testimony in our hearings earlier on and we
are getting more information on proposals on how you do that
and we welcome any suggestions that you might have on that
basis, also.
I will say, however, I think that as much as I applaud your
willingness to move ahead on CSP, I think if you are going to
use CSP for renewable energy and cellulose crops where they can
harvest it in an environmentally sensitive manner, I think CSP
fits into that and I am not certain that that amount of money
that we have there will move farmers into that transition where
they can grow those kinds of crops, but that is for a later
discussion.
On rural development, I applaud your proposal on the
hospitals. I think that is long overdue, something I wish we
would have paid attention to in the past and we did not.
The Specialty Crop Program, while I think you are going
down the right track on that, I might have a question and
concern about how you want to do that. We have started a
program, a little pilot program in the 2002 farm bill that was
called the Fruit and Vegetable Snack Program. We started with
four States and 100 schools, 25 schools in each State, where
kids were given free fresh fruits and vegetables and it was
just to see what would happen. Well, what happened is every
single one of those 100 schools that started, not one has asked
to drop out of the program. We are now up to 14 States, if I am
not mistaken, and, I do not know, somewhere between 500 and 700
schools. I cannot get a quite good grip on exactly how many
schools.
But every State in which they have adopted this, the
schools that are not getting it are asking why they cannot get
it. It is a way to get fresh fruits and vegetables to kids in
elementary school. I have said before, my goal has been that in
10 years, that every elementary school kid in America gets free
fresh fruits and vegetables at snack time in their schools. I
hope that we can work on that as part of your program in
looking at specialty crops.
The enhanced direct payments to beginning farmers, I think
we should look at that. I have a little bit of concern about
that in terms of the definition and who gets that and whether
or not that ought to be balanced with long-term lower rate
interest rates, in other words, spreading things out over a
longer period of time and that rather than just an up-front
direct payment as such, but a balance between the two.
On food stamps, again, I congratulate you for looking at
the retirement assets. Senator Chambliss has a bill which
pretty soon--have you introduced it yet or not? I want to get
on it, but----
Senator Chambliss. It is ready to be dropped.
Chairman Harkin. It is ready to be dropped, working on the
asset limit and stuff. I looked it over and I told my staff to
put me on that bill right away. But it tracks a lot of what you
are saying.
And the crop insurance, we are going to have to take a look
at that gap coverage, group coverage that you are talking about
and see how workable that is. I do believe that crop insurance
should be strengthened. I think it provides, again, that safety
net when you are talking about farmers may not get something
when they do not have a crop. Well, that is what crop insurance
is for and we need to design it so that we do cover that gap
you are talking about, that 20 percent, 30 percent gap in
there.
So all in all, I thank you very much for your presentation
and for your recommendations. We look forward to working with
you on it.
I have one question that basically has to do with funding
and energy. I think there is a consensus, Mr. Secretary, and
you have said it in your statement, to move this farm bill
aggressively in the energy area, in renewable energy. But right
now, USDA is proposing about $160 million per year in funding
for energy programs. Correct me if I am wrong on that. Current
authorizations for essentially the same programs total over
$200 million per year, and appropriations from fiscal year 2003
through 2006 averaged about $175 million a year.
So again, if I am right on those numbers, then why are you
proposing less than recent appropriations or current
authorizations while at the same time the President is calling
for a very aggressive and expanded research and development
program on renewable fuels and bioenergy? So that is my
question. I am looking at the figures and it looks like we are
spending more now and authorizing more now than what you are
proposing.
Secretary Johanns. You are right in terms of spending
authorization, but let me, if I might, just run through some
numbers here that I have in front of me. The 2002 farm bill
provided mandatory funding of $14 million per year. It
authorized an additional appropriation of $49 million annually
through 2007. However, none of the additional $49 million of
authority was ever appropriated. It never came to be.
A couple of other things to think about before I talk about
our proposal. The 2005 Energy Policy Act extended the
authorization for appropriations to fiscal year 2015 and
increased discretionary funding by $200 million. We are not
proposing any change to that. So that is still there. We are
not proposing that that go away.
In addition, the USDA proposes an increase in mandatory
funding from $14 million to $15 million a year, so actually a
little bit better than what was in the 2002 bill.
Chairman Harkin. Fourteen to fifty?
Secretary Johanns. Fourteen to fifteen, one-five. Fourteen
to one-five, 15.
Additionally, the USDA's research title proposal also
includes a major investment for bioenergy. It provides $50
million annually for bioenergy and bio-based products research
initiative. This initiative was designed to be complementary to
the biomass research and development initiative.
Then finally, our proposal would accelerate the development
of technologies to better utilize low-value woody biomass by
authorizing $15 million in annual mandatory funding for Forest
Service research. Now, that is a pretty aggressive program. I
would also mention that we are also proposing a $2.1 billion
loan guarantee program to assist in building cellulosic ethanol
plants, and I would mention this funding is targeted at the
cellulosic area. But again, not to take away from anything we
might be doing out there now in corn. We will continue to do
those things, too.
The other thing I would mention, and this is an area I only
want to mention because I am not as familiar with the Energy
Department budget as much as I would like be, but there is an
energy initiative there that we work with the Energy Department
on, so when you put the whole initiative together, Chairman, I
think you will see that we have a very aggressive effort here.
You add into it the loan guarantee program and I think we can
do some very, very exciting things with what we are proposing.
Chairman Harkin. Mr. Secretary, I am sure my staff and
others will absorb that and look at that. You are right on the
$2.1 billion loan guarantee program. DOE has that. They cannot
administer anything. I mean, DOE, this is not what they have
done in the past. They have no history of doing this. They have
tried to do it. They cannot seem to get it done.
Well, we know how to do it, we being the Department of
Agriculture know how to do this. We have a long history in
doing this and it is time that we step up to the plate and I am
glad you did with the $2.1 billion. I think we ought to be out
there. As you know, we have got to break this chicken-and-egg
thing.
You can get investors in corn ethanol plants now. That is
no problem. You can raise a lot of equity on those. But
cellulose, that is pretty difficult right now. If there is no
supply, then you have got to put some loan guarantees out there
for cellulose plants and for farmers to raise the crops. They
say, well, why should we raise it? Where are the incentives?
Where is the market for it? So we have got to do both together
and I think that is sort of what you are doing.
But let me move ahead. I just want to ask one more
question. On the Conservation Security Program, your plan would
provide an increase of $500 million over the next 10 years,
spread the baseline funding from the two uncapped years in the
baseline back to raise the existing multi-year funding cap.
Chuck, I am finally understanding what you were doing here.
Well, you are going in the right direction. It is just not
enough, OK?
But the President's budget released Monday would reduce
spending for the Conservation Security Program in 2008 by $135
million and reduce the cap on CSP by $80 million between now
and 2015. So there is kind of an inconsistency there.
And the second part of my question has to do with
regulation. You are planning to take a whole year to redo the
CSP regulations. I do not know why. Between that and the
funding situation, this could mean the program might not enroll
any new farmers or ranchers for 2 years, and yet farmers and
ranchers like the program. They want to participate. We want to
do better conservation on working lands. We want to move into
bioenergy crops. This fits that perfectly. It seems to me it is
an existing program. It should not take you 2 years to get this
done.
So that is two. How about the inconsistency in the
President's budget, what you want to do, and why does it take 2
years and can you collapse that down?
Secretary Johanns. Let me address the 2 years and I will
ask Dr. Collins to visit with you about budget.
It is going to take us some time to do some regulations
here. Chairman, I would say this. If we can do it in a shorter
period of time, I will absolutely be committed to that.
Chairman Harkin. Well, you can.
Secretary Johanns. You are right. Farmers told us they
liked this program. You referenced their consternation about
this being limited to wetlands and they would say, well my
neighbor can get in it. I cannot get in it. They felt some
unfairness there--or watershed. It is not wetlands.
Chairman Harkin. Yes.
Secretary Johanns. And so whatever we can do to get those
regulations done and do this program, and I think at the end of
it, there may be some things here that you want to talk to us
about, but I think at the end of it, we are going to have a
better program, a more reasonably financed program, a program
that we can build upon year after year after year instead of
somebody worrying about the ninth year and the tenth year where
this program skyrockets in terms of the funding available.
I would sincerely argue to you, I think some of the things,
maybe not all, but some of the things you would like to
accomplish are necessary. We have to get through that
rulemaking process. If we can do it more expeditiously, I am
all for moving government along and we will take a look at
that. But we built something in and that is where you are
running into this issue about 2008.
Chairman Harkin. On the budget stuff, I will defer until
later. I have taken too much time as it is right now and I will
defer to that later. After everybody has had their rounds, we
will get back to that budget on that.
Secretary Johanns. OK.
Chairman Harkin. I will now yield to my colleague, Senator
Chambliss.
Senator Chambliss. Thank you, Mr. Chairman.
Mr. Secretary, let me make clear that our obligation as an
oversight committee dictates that we direct criticism where we
think it needs to go and we commend where we think we need to
commend. As you and I have discussed privately, I commend you
for thinking outside the box. We have got to make significant
changes in the way we approach agriculture in this country and
particularly government participation.
My criticism, though, is really directed in a number of
areas. I am going to try to focus on a couple of them relative
to your proposals, because at the end of the day, we both have
the same goal in mind and that is to make sure that we continue
to provide the most abundant, the highest quality, and the
safest food supply of anybody in the world. We cannot let
agriculture become a national security issue. And the way we
make sure that does not happen is that we continue to have
farmers all across America that produce that high quality of
food product.
Now, in your testimony, you have noted as a criticism of
the 2002 farm bill that only 9 percent of farms collected 54
percent of all government commodity payments, and that is true.
But what you have not noted in that testimony is that 9 percent
of U.S. farmers represent 70 percent of farm output. Now, this
9 percent that USDA considers commercial farms combined with
the next tier, representing 25 percent of all farms, which are
known as intermediate farms, consists of farm operators who
report farming as their major occupation.
The remaining farms, which are dubbed rural residence farms
by USDA, represent 65 percent of all farms and receive only
16.9 percent of government payments under the current farm
bill. But those farm operators list their major occupation as
something other than farmers. They are not the people who get
dirt under their fingernails and drive the tractors every day.
And while these rural residents' farms contribute in a positive
and significant way to our Nation's agricultural diversity, it
is fair to say that they do not incur the level of agricultural
risk of those intermediate or commercial farmers who provide
the bulk of the Nation's commodities.
Now, in the current farm bill, we have a $2.5 million
threshold for farmers to be able to participate in farm
programs. Now, that $2.5 million is gross income only, from
farming operations, significantly different from the adjusted
gross income and the level of $200,000 that you have proposed.
In addition, the current farm bill says that will be a 3-year
average and that 75 percent of that $2.5 million has to come
from farming operations, a major change from what you are now
proposing.
I called up--and under your proposal, a farmer who exceeds
that $200,000 limit gets no payments whatsoever in the
subsequent year. I called an equipment dealer and I said, tell
me what a piece of equipment costs. For example, what does a
big tractor cost that somebody who has got 500 acres or more
needs. A John Deere 8330 is $130,000. A small tractor is
$80,000. A 4 row cotton picker is $230,000. A corn combine with
a grain head is $260,000. With those numbers, in Georgia, it
was not that long ago you could buy a farm for that amount of
money, and these folks are now having to pay that for
equipment.
I point that out because under your limit of $200,000 of
adjusted gross income, a farmer would still have to make all of
his equipment payments. He would have to make all of his land
payments on any farm that he was purchasing. And yet if he had
a pretty good year 1 year, by the time he got to the next year,
he would not be able to participate in government programs, and
that is why I say that your proposal concentrates more on
direct payments to folks as to whether or not they farm or not,
as the Chairman referred to, and does not provide that safety
net, and I am going to give you an example.
Let us say that we pass this farm bill this year. It goes
into effect October 1, when the fiscal year begins. And let us
say you have a farmer in my part of the world who has a pretty
good year this year. He participates in government programs
under the cap that is set in place. He has an adjusted gross
income in excess of $200,000 from which, as I have already
said, he has got to make all these payments. But all of a
sudden, he has exceeded your cap. So that means that next year,
he does not participate in government programs. He gets no
payments under your proposal.
Now, let us say next year, when he needs those payments, he
has that drought that you referred to or he has extreme wet
conditions that you referred to and he does need those
payments. All of a sudden, because of this cap that you have
set, he gets no income. He gets no help from the government. He
has still got to make those farm payments. He has still got to
make those equipment payments. He has still got to reimburse
his banker. And granted, he has got the crop insurance program
to work with, but what am I missing here? Where is that safety
net that we want to give to our folks under your proposal with
that scenario?
Secretary Johanns. Very respectfully, here is what you are
missing. Our proposal is a 3-year average, so what you have
laid out there in terms of 1 year, another year, is actually
going to be substantially mitigated by a 3-year average. You
know, I grew up on a farm. I appreciate there can be
spectacular years followed by bad years. We understand that.
The other thing I would tell you is this. If you take a
look at adjusted gross income, the current law is $2.5 million.
It is also based on AGI. It is an AGI limit just like what we
are proposing.
I will tell you, at $2.5 million, and Keith always
remembers numbers better than I do, but I think if I remember
the numbers correctly, at $2.5 million, you are really not
impacting anybody to speak of. I think it is 0.0007 percent of
the tax filers in the United States who would be impacted by
that. It is--even under the proposal we are making, we are
impacting 2.3 percent of the tax filers in the United States,
2.3 percent, and it is actually, when you figure out who
actually is receiving payments, it is probably a much smaller
number than even that.
But getting beyond that, Senator, I certainly appreciate
also the cost of equipment. You are right, equipment is
expensive. If you are a major commercial farmer as we describe
it and as you have referenced, you go out and buy a new
combine, you could pay $250,000, $300,000. If you put bells and
whistles on it and it does the things that we can do with
current technology, these are very pricey operations.
However, if you go to Schedule F on the tax return, which
is entitled ``Profit or Loss from Farming'' or also it is just
basically the form where you consolidate your profit and loss,
in part one, you list all of your income, and then the Internal
Revenue Service through action by Congress allows you to start
deducting what you would deduct off of that income.
I could spend the next 10 minutes describing what you can
deduct. It is a long, long list. It is items 12 through 34,
everything from pension and profit sharing plans to rent,
lease, repairs, seeds, employee benefit programs other than
what is under pension and profit sharing. I mean, like I said,
I could tie up a lot of the committee's time telling you what
is computed in that, and I am talking about AGI. I am not
talking about the gross income. So you get to take all that
away before you have to worry a bit about the proposal we are
making.
And then you get to line 34, and tell me where else you
find this on anybody's tax return. The Internal Revenue Service
has five or six more spaces where you list other expenses.
Everything else that was not listed somewhere else, you get to
list other expenses, including machinery.
Now, the other thing I want to devote a moment to was your
question about the high cost of machinery. I do not deny it.
Whether you are a farmer in Iowa or a farmer in Georgia, there
is a cost of machinery. I asked for an example. I said, assume
for the purposes of discussion, when I spoke to somebody in our
economist division, I said, assume that a farmer spent $400,000
on equipment. How will that farmer's expense impact his AGI?
Now, here is what would happen. You can do Section 179
expensing. That will save you $108,000. Then on the balance,
the $292,000 balance, you can take depreciation, and based upon
2006 numbers, that would total $31,273. So now the farmer can
plug in, offsetting his income, $139,273 for that $400,000
equipment purchase.
Now, the other thing I would tell you is that farmer, let
us say he bought $400,000 worth of equipment. He probably did
not part with $400,000 in cash. There is probably some trade-in
value in the old equipment. I mean, there are a number of
things going on here. But the only point I will make to you is
that when you really slice and dice this, we project, and Keith
can explain how we do this, that we will probably impact a
billion-and-a-half over 10 years. But with the recognition that
we are basing this on AGI, that the farmer gets to take all of
these expenses off, again, here is what I would respectfully
suggest.
By any definition in any part of the country, these folks
are doing very well. My deputy said, these tend to be the
wealthiest folks in the county. I do not know if that is the
case or not. I do not live in every county. But I will tell
you, based on AGI, these folks are in the top 2.3 percent of
tax filers in the United States, and then slicing it even
finer, those folks who receive farm programs, it is even a
smaller number of that.
Now, there is probably some concern because we have people
from all over the country here about, well, Mike, I hear you,
but this impacts my part of the country more than other parts
of the country.
I have asked Keith to look into that and Keith is going to
offer a thought or two, and if you do not mind, I would like to
have Keith offer a thought. Keith?
Mr. Collins. Sure, Mr. Secretary. I can amplify your
comments by perhaps providing a couple of numbers.
I would say, first of all, the universe of people that we
are focused on here with this proposal is Schedule F filers,
people who file a 1040 return and have a Schedule F. In 2004,
there were a little over two million of those. Out of those two
million, 85,000--and that is a little bit different number than
our book because we have got some more recent data from the
Internal Revenue Service--about 85,000 of those farm
proprietors had adjusted gross income over $200,000. But now
out of those 85,000, many of them did not get farm program
payments at all. So out of those 85,000, 25,000 received farm
program payments.
So that means 25,000, or 1.3 percent of Schedule F filers,
received farm program payments, and they received 4.7 percent
of all farm program payments made. Mr. Chambliss, you mentioned
that commercial farms received 55 percent of all farm program
payments. Well, this group receives 4.7 percent of all farm
program payments.
I also should mention that there are other filers, those
who do not participate in a material way in the operation of
the farm. They file a 1040. They may not have a Schedule F,
usually do not. They file a Form 4835. They are landlords.
There is another 638,000 of those filers, and out of that,
there are 12,000 of them, or 13,000 of them that receive farm
program payments. That is about 2 percent of all the Form 4835
filers in the United States.
In total, when you add the Schedule F filers and the Form
4835 filers together, you have got about 2.7 million tax
returns and about 38,000 of those, or 1.4 percent, have
adjusted gross incomes above $200,000.
Now, we had a little bit of difficulty getting complete
State data, but as the Secretary mentioned, we do have some
idea of how this cuts regionally, but primarily just from the
Schedule F filing data. And if you look across the country at
where the most or the highest proportion of Schedule F filers
having adjusted gross income over $200,000 reside, it tends to
be the Northeastern States, States like New Jersey,
Connecticut, Massachusetts. In fact, the State with the highest
proportion of returns, Schedule F returns over $200,000 AGI is
the District of Columbia. Twenty-nine percent of tax returns
with Schedule F are over $200,000 in AGI.
In most of the States, particularly in the Southern States,
it is lower. Alabama, 4 percent of Schedule F filers have AGI
over $200,000. Mississippi, 4.4 percent. Georgia is a little
higher, 6.8 percent. But generally, that is the way it works
out. The coasts tend to be higher. The heavily populated States
tend to be higher. When you get into the plains States, Kansas
is 2.3 percent of Schedule F filers have AGI over $200,000. And
then again, out of that 2.3 percent, not all of those are
getting farm program payments.
So I think while there has been a lot of alarm about this
proposal and perhaps the heavy incidence of this proposal on
commercial farmers, when we look at the data, I think it turns
out to be less than what probably most people expect. Thank
you.
Senator Chambliss. Just very quickly as a follow-up, if the
$200,000 is a 3-year average, Mr. Secretary, then you need to
be clear in your book, because I am sitting here reading at
page 21. It says, $200,000 annually. It does not say anything
about average. So you need to make that clear, and that helps
some. It does say that you can have a couple of good years and
throw in a bad year and you are still going to be eligible.
However, I am also sitting here looking at Schedule F.
Irrespective of whether you have the average of $200,000 or
$2.5 million, you are still going to have to make these
payments. Now, you referred to Schedule F and here it is, and
Chuck, you are shaking your head. Show me on here where it says
you can deduct your farm land payments, that you can deduct
your equipment payments. These payments go on, and $200,000 is
a lot of money, but when you are talking about somebody having
to conduct a farming operation or that is a corporation,
whether it is an individual or whether it is a trust. If he has
$200,000 and has a million dollars' worth of equipment, plus
the land, the farm, there is no way he can do it.
But even irrespective of that, irrespective of whether it
is somebody that has a million dollars' worth of payments, or
if he has a small amount of payments, he has still got to take
it out of whatever that adjusted gross income is. Keith, your
numbers bear out the fact that farmers do a pretty good job of
taking a lot of expenses off of there, and I do not doubt that.
But the fact is, a $200,000 limit, even if it is over a 3-year
average period of time, is not going to allow your small
farmer, your farmer who farms 500 acres, the ability to
participate.
Keith, I think you hit it on the head better than anything
else. We are going to eliminate 85,000 farmers across America
with that limit from being able to get a helping hand when
times are tough, not in the good years, but when times are
tough, they are going to be eliminated.
My time is up. I have taken way more than I should. I may
have a chance to come back, Mr. Secretary. I do have, Mr.
Chairman, a list of questions that I will submit for the
record.
Chairman Harkin. Without objection, we will include those,
and we will include any questions that members were not able to
ask to send to the Secretary.
In order of arrival, we have Senator Nelson, Senator Crapo,
Senator Roberts, Senator Lugar, Senator Salazar, Senator
Klobuchar, Senator Cochran, Senator Brown, Senator Coleman,
Senator Lincoln, Senator Stabenow. I am told that Senator
Nelson will yield his first position to Senator Crapo, who
needs to make another appointment, so I recognize Senator
Crapo. We will try to do 6-minute rounds. I ask, Mr. Secretary,
if you can help condense the answers a little bit and we will
try to get through at least a first round and get into a second
round, but I am committed to be here as long as we need to
flesh out all the concerns that Senators have on your proposal.
Senator Crapo?
Senator Crapo. Thank you, Mr. Chairman, and thank you,
Senator Nelson. I am one of those who, I am sure like most of
us, have four hearings going on at this point and need to get
moving to another.
Mr. Secretary, I want to join with the comments of others
who already today have commended you for thinking outside the
box and submitting a very solid, good proposal to us for
consideration. By the nature of the way this works, though, I
am going to focus on some areas where I do have disagreement in
the few moments that I have. In fact, I am going to probably
spend my entire time on just one of those, and that is the
dairy program aspects of the proposal.
As you know, I have been a longtime opponent of the MILC
program, which I believe is regionally divisive and does not
really provide an effective, fair, or non-market-distorting
safety net for our dairy farmers, and I am disappointed that
the administration has embraced this program in its proposal.
In fact, the USDA itself has identified a number of flaws in
the past with the MILC program, and in a report issued in 2004,
the USDA found that the MILC program conflicts with the dairy
price support program and actually causes milk prices to stay
lower longer for all dairy producers. According to that report,
without the MILC program, the remaining dairy programs raise
the milk price by 4 percent compared to about 1 percent with
the MILC, on average over 5 years.
So I guess my question is, why, given this understanding by
the USDA of the problems we have with the MILC program, has the
administration endorsed it as a part of its proposal?
Secretary Johanns. As you know, to date, we have supported
the money for the MILC program. The President indicated he
would and we have, and we have honored that commitment. For
many dairy farmers in the Northeast, this is a safety net
program. You can argue about whether it is effective, whether
it is getting the job done, but it was put there. It has been
financed over the past 5 years.
We propose some changes, much like we have proposed changes
to a number of programs. We say it needs to be based upon the
historical average. We propose that the rate be cut down from,
I think, 34 percent the last year of the farm bill. It would be
at 20 percent. But we have made those kinds of proposals all
across our programs to try to make programs more market-
oriented.
Here is what I would say when I thought about this. I
certainly appreciate what you are saying and what you quoted
from some of our findings. Once a safety net is put in place
for people, however, it is very difficult to just snap your
fingers and say it goes away. That is going to cause some real
pain out there.
So we took an approach that basically says, we think we can
put enough change into this, enough reform into this, that for
the life of this next farm bill, it will step down and be a
more market-oriented approach.
The final thing I would say on it, I have had a number of
conversations with farmers in the milk area. I do think,
Senator, there is a growing discussion about how best to
approach milk programs in the future. I do not think it is
ready for this farm bill, but I do believe as we head into the
next 5 years with this in place, I do think that this
discussion will continue and my hope is that good things will
come out of it and we can take yet another step in the next
farm bill.
Senator Crapo. Well, thank you for your answer. I disagree
with your conclusions there. In fact, I think that we would
have a better safety net if we were to eliminate the MILC
program, but I understand what you are saying.
I wanted to get two other quick questions in here, so if I
could ask you to respond quickly to them, I would appreciate it
because I am running out of time already.
The first is you describe some changes that you are
proposing to the MILC program and my question is, do you
anticipate that this revised MILC program will be classified as
blue box or amber box under WTO rules?
Secretary Johanns. I am not the trade person and I would
feel a lot more comfortable if I could pass that question to
Susan Schwab. But I do think there is a chance this is blue
box.
Senator Crapo. OK. I will certainly ask her, as well, if
she could elaborate on that, maybe when you get a chance to
give me a fuller answer. I would appreciate it.
Secretary Johanns. Yes.
Senator Crapo. The last question--I want to stick with
dairy but shift subjects quickly--is on forward contracting. It
is not clear to me what the current position of the Department
is on forward contracting. In the past, the administration has
supported it, as I do. In fact, there was a letter by Secretary
Venneman to this committee stating the desire of the Department
to have Congress extend that program.
Do you continue to support the program? Does the Department
continue to support it, and if so, would you be willing to send
us another letter indicating that support?
Secretary Johanns. I absolutely would. We support that. We
have in the past. I do not know that we spent any time on that
issue in the farm bill proposal----
Senator Crapo. Right.
Secretary Johanns [continuing]. But we are so on the record
there, but I would be happy to do it again and----
Senator Crapo. I would appreciate that.
Secretary Johanns. I would be glad to do it. I will send
that and copy the committee.
Senator Crapo. Thank you. Mr. Chairman, we did it with 15
seconds to spare.
Chairman Harkin. Great example. Thank you very much,
Senator.
Now, we will go to Senator Nelson, and then Senator
Roberts, then Senator Lugar, and on.
Senator Nelson. Thank you, Mr. Chairman.
Mr. Secretary, thank you for being here today and a special
thank you to the former Chairman and Ranking Member Senator
Chambliss for conducting a field hearing out in Nebraska and
for listening very carefully to those who grow their crops in
rows and those who are engaged in agriculture with ranching and
cow-calf operations. We appreciate it very much.
Mr. Secretary, I have been watching the crop insurance
program for some time as it relates to a continuing drought.
The crop insurance program was never designed to try to have a
loss for 7 years in a row, and so the effect of that is that
the base continues to shrink each year so that if you have a
drought going long enough, in effect you are out of business
for crop insurance. I hope that you will take a very close look
at the crop insurance program to see what we can do to avoid
having that result. Averaging over years might make somewhat of
a difference, but there are some things that I think ought to
be considered and our staff would like to visit with you about
that.
I have a series of questions which I will submit to you, as
well, but one of the things that is important, I think, in this
farm bill is to stress what the purpose of it is. The purpose
is obviously to get payments to agriculture in a fair and
equitable way and one that complies with all the new
requirements. But it is also to protect our agricultural
production sources in the United States so that we do not have
to rely on other countries for production of our food because
we want to produce it here at home. If we like relying on other
countries and other parts of the world for 65 percent of our
oil, we will love importing 65 percent of our food and relying
on other countries to provide it for us. We do not want to give
away that.
So, really, this farm bill is about protecting and the
security of our food production here, not just safety but
security of being able to produce it here at home so that we do
not end up as a result of unfair trade practices, as a result
of other imports, that we are not in the position where we have
to rely on others for our food.
The second part of this is moving toward our own fuel
security with the biofuels, with cellulosic, with ethanol, and
you and I know what the ethanol industry started in Nebraska.
When I was Governor, we had one plant. When I left, we had
seven and you inherited that and we have continued to progress
along the way and it is very encouraging that we are looking at
switchgrass and other kinds of products that we can turn into
our own fuel. But it is about developing our fuel security, as
well.
So my challenge, I guess, and I tell you, I have no pride
of authorship, but you probably would not believe that, but
turning it into the Food and Fuel Security Act of 2007, because
that is what it is about. Now, there will be some that will
want to offer another word, ``fiber,'' too, so I will be
tripartisan, whatever it takes, but I think the emphasis has to
be on producing and having the security of our food here at
home. That is what these payments are about, keeping people in
agriculture, bringing new people into agriculture.
Someone said today that the average age of farmers in
Nebraska went up from 55 to 56. It still seems pretty young to
me, but I know that the trend is not necessarily the way we
want to go, or the number of farms that continue to decrease.
So that is what this is all about, and I applaud your
efforts to try to build a program that will really work toward
fuel and food, the security of both, because that is really
what this is all about, and I wondered if you might have any
comments you might make on that suggestion.
Secretary Johanns. I like the suggestion and I think it
does focus on reality. You know, if you think about how much we
are involved in the fuel issues, and I believe there is a great
opportunity to expand that on a nationwide basis. As I said in
my opening comments, I really look forward to the day and
envision the day when production of ethanol is a nationwide
phenomena, where it does move out of the corn belt and we move
into cellulosic ethanol. That is when every citizen can look at
that and say, we are benefiting from that investment that was
made by that Congress some years ago. I think it is exactly
where we need to be headed.
We did not try to name the bill. We only wanted to put our
proposals out. But I do agree with your thought that it
reflects reality. Twenty percent of our corn crop now is
essentially devoted to ethanol. That number is likely to
continue growing. I hope a future Secretary can come here and
start giving you statistics as to how much of our biomass in
the country is now being devoted to ethanol production, because
we have got a lot of it and it is an untapped source of energy
for this country.
Senator Nelson. Thank you. Thank you, Mr. Chairman. I
outdid Senator Crapo. I left 20 seconds.
Chairman Harkin. You sure did. Thank you very much, Senator
Nelson.
Now we go to Senator Roberts.
Senator Roberts. Thank you. Thank you, Mr. Chairman, and
thank you for holding this hearing, and thank you, Mr.
Secretary, for coming before us. As I said, the best way to
write a farm bill or any bill is to sit on the wagon tongue and
listen to farmers and you certainly followed that advice. My
word, you went to 52 listening sessions, including one at the
Kansas State Fair in Hutchison and handled that very well.
We are running the numbers and we are going to be with you
next week and so I am not going to be too pesky with you. I
want to thank you for your health care efforts. I think you
said 1,200, I think, Critical Access Hospitals. We have 84 in
Kansas, the most in any State, and I want to thank you for that
initiative.
I did not vote for this last farm bill. I checked with
staff. I checked the numbers out of Kansas State University and
seven out of the 10 years previous to that bill, the 2002 bill,
we would not have received a payment. Those were some of the
roughest years that we have had. And we have continued that.
Why on earth would I support a farm bill that seven out of 10
years when you really need the money you are not going to get
the money?
You said that, basically, in your testimony, but I want to
repeat it. It is on page six of 12 in the Wiesemeyer report. I
am not getting any payment for this, Mr. Chairman, or at least
I do not think I am, and if I am, I sure as hell do not want to
talk about it.
[Laughter.]
Senator Roberts. But at any rate, Jim Wiesemeyer, if James
Brown was the Godfather of Soul, he is the Godfather of
Agriculture Program Policy. On page six of 12, you say, well,
if you look at the current CCP, and farmers told us this, and
when they told us this, it seemed counterintuitive. I could not
figure out what they were telling us. But when we looked at it,
they were right. It is no wonder they were showing up asking
for disaster aid. You cannot LDP something you have not grown,
and they are right about that. But what tends to happen is that
prices go up and the CCP is not triggered and they are out.
They are flat out. If they have not raised a crop because of
drought, they have literally lost on their LDP and literally
lost on their CCP. Where is the safety net?
And that is what a lot of people were asking at the end of
the 2002 bill. Lord knows I do not want to extend that. And so
we had to rely on crop insurance and that is about all we had,
and that is why you are going to be facing on the supplemental
an emergency disaster bill for the 3 years of drought that we
went through out on the plains and your home State, my home
State, and other areas out there. So I want to thank you for
really figuring out what is wrong with the current program and
how to fix it.
We have to remember the lessons we have learned. I know you
have heard in the forums that the target price for wheat was
too low. We would get four cents of an increase. I am not going
to get into comparing the commodities. I do not want to do
that. I could, but do not want to. But the four cents comes in
the out years. Wheat growers are not very happy about this, and
so we are going to have to work on that.
I want to know, how does this formula help the wheat
producers who were essentially left out of the countercyclical
program under the 2002 bill? You do not have to answer that
right now because I do not have enough time to get into it, but
you could answer it for the record, and besides, you are coming
up to talk to me next week anyway.
Do you have any projections--and this would be for the
number cruncher of all time and the flyspecker over here, Dr.
Collins--do you have any projections that you could provide us
as to how the countercyclical payments would have looked over
the last 5 years compared to the current farm bill? We need to
know that.
You have traditionally opposed ad hoc disaster payments,
encouraging the producer to buy crop insurance. As somebody who
worked very hard in 2000 with Senator Bob Kerrey from Nebraska
to create a program that provides the necessary risk management
tools to producers, I am very concerned about the effects of
your proposal on crop insurance. The last farm bill already
robbed to use us as a bank, $2 billion from crop insurance. How
does taking additional money out of this risk management
program help producers? I do not understand that.
As the $200,000 adjusted gross income cap plays out in
reality, let us say that there are three brothers in Dodge
City, Kansas, operating jointly as Three Brothers, Inc. That
company has an AGI of $205,000. That means each brother
receives about $68,333 as their share. Does your proposal
really preclude any of the brothers from receiving Title I
payments? Does the $200,000 limit apply to the AGI of the
corporation or to each brother individually?
You also have a conservation enhancement payment under
Title I, that is the one where you say you will increase the
producer's direct payment by 10 percent if they forego a
marketing assistance loan countercyclical payment. I understand
that the conservation payments under Title II are not subject
to the new AGI limit in your proposal. So my question is, is
this proposal a commodity program or a conservation program and
which AGI limit would you propose applying to it?
Now, that is the laundry list of questions that I had for
you. We have got about 32 seconds. Obviously, you cannot answer
that, so why do not we just reserve all that until you come up
and talk to me next week. We will have a good talk about it.
Keith, you said 85,000 farmers were eligible but only
35,000 actually got payments, is that right?
Mr. Collins. Mr. Roberts, I said out of all of the Schedule
F filers, the what we call farm proprietors----
Senator Roberts. Sure, sure, sure.
Mr. Collins.--85,000 had AGI above $200,000, and out of
that 85,000, 25,000 actually got farm program payments.
Senator Roberts. Yes, but the other 60,000, with the way
the farm program was set up, we did not have a crop. So how can
you file on Schedule F if you did not have a crop and you are
not going to get a payment?
Mr. Collins. This was 2004 data, Mr. Roberts.
Senator Roberts. Two-thousand-and-four?
Mr. Collins. Correct. That is the latest IRS data we had.
Senator Roberts. Yes. Well, that is right in the middle of
our drought. We had 2003, 2004, 2005, 2006, and a blizzard.
[Laughter.]
Mr. Collins. It was also----
Senator Roberts. I mean, the reason they did not put it
down on Schedule F is with the way this farm bill is written,
if you do not have a crop, you do not get a payment, except for
crop insurance. I guess that is my answer to it. The other
thing is that 29 percent came from the District of Columbia.
What is that all about?
Mr. Collins. Apparently there are a lot of high AGI farm
proprietors in the District of Columbia.
Senator Roberts. Yes, there are a lot of absentee landlords
or something. By the way, Members of Congress make about
$170,000 and if all farm income counts, there are not going to
be many Members of Congress getting any farm program payments.
I do not have a farm.
[Laughter.]
Senator Roberts. Thank you, sir, and Mr. Secretary, thank
you. Chuck, it is good to see you and that guy with the glasses
on his nose behind you. I appreciate his work, too. Thank you,
Mr. Secretary.
Chairman Harkin. Thank you, Senator Roberts.
Now we turn to the person who really alerted us and the
whole country, I think, to the promise of cellulose ethanol,
who really kind of charted the course and led the way, and that
is Senator Lugar.
Senator Lugar. Thank you very much, Mr. Chairman.
Let me just join you and Senator Chambliss in commending
the Secretary, to begin with, for this book. This is really a
substantial contribution. Now, I do not want to be derogatory
to other Secretaries of Agriculture, but frequently, we have
had a suggestion of pamphlets and then disappearance. I
appreciate the fact that you are here, you have a book, you
have Chuck Conner, who came with me to Washington 30 years ago
and whose ministry in this thing I really respect so much, and
Keith Collins, who has done superb work really throughout this
period of time in amassing statistics that are impressive. So
this is important.
Now, I make that point because some of the agricultural
press have commented that commendation has come here or there,
but I think it ought to be very concerted. I am one person that
supports what you are doing, and even though we may argue over
specifics of this situation, this is a vast contribution.
Second, I wanted to commend you for sticking up for the
fact that farmers throughout the last three decades have gained
much of their growth through foreign trade. We have expanded
our markets. We need to continue to do that. I appreciate all
the disputes that are going on surrounding the WTO--loss of
jobs, outsourcing, all sorts of particular protections even of
American agricultural commodities, but this really has to be
something that is a mission for agriculture in the same way
that, second, you have commended energy.
The explosive possibilities of this are evident to any of
us who are in farm country now. I am amazed at the changes even
in a short time in rural counties in our State--tax revenues,
deposits in the bank, hope for the local Chamber of Commerce.
This is an extraordinary sociological phenomenon, quite apart
from whatever we are discussing with regard to individual
farmers. And it is just beginning.
This is so significant, the world trade business and the
energy revolution as it intersects agriculture, that if we did
nothing else but foster those two things, we will do a great
deal for most farmers in our country as well as most of our
citizens.
Now, let me just add with regard to the energy situation, I
am hopeful that specifically USDA can work in this bill or
elsewhere with those who are going to try to get higher yields
for corn or for beans or for whatever. We have all these static
estimates, only so many acres, only so many bushels. Now,
granted, the weather plays a big role, but the fact is that
there has not been much of an incentive to get corn to 200
bushels to the acre on an average and 250 in a good year, or
ditto to move ahead with beans. In all of our lifetimes, we
have seen those kinds of adjustments, but not for a while. I
think that is very, very important.
Likewise, with regard to corn ethanol, distillers' dry
grain, DDG. Some people are working out markets for that, new
deal, huge opportunity for income, and likewise a way of
meeting some of the needs of people who are feeding livestock,
who need to try to think through how those proteins can come to
their livestock.
A third thing I want to mention is the safety net item, I
think very important. Last farm bill, I proposed a safety net
situation and got 30 votes. It was an alternate farm bill. I
have no grief for that particular situation, but others have
thought through that and improved upon it a great deal.
Our payments, I believe, ought to be to keep farmers in
business and that, I think, can be done in part through what
you are suggesting. I hope we will be able to perfect that.
There are a lot of groups outside of agriculture deeply
interested in the equities of that.
And speaking of equities, I commend your attempt to try to
meet the criticism, not in agriculture, not in this committee,
but the ordinary people in life who say, why should a
millionaire get subsidies from me, a modest taxpayer? There
isn't any good reason for that.
And we have got to think about some degree of social equity
while we are thinking about subsidies. Some would say subsidy
is not a good idea at all. I am not going to go down that
route, but I would just simply say that, clearly, there are
limits to both the patience and the common sense of most people
when it comes to subsidies and taxpayers and transfers of
monies in America. And I commend you and Keith for trying to
get into that problem.
Now, let me just add that the conservation that Senator
Harkin has talked about is very important because that is our
heritage. The land that I farm or that I hope that my sons will
continue to farm will someday be farmed by other people.
Hopefully, it will be in better shape, we will have done better
with the water resources, improved the land resources, kept
White River from flooding more often, all the sorts of things
that are very important for our heritage, the assets of our
Nation. So we want to support those programs.
And finally, I would hope at the end of the day that all of
this bill costs the taxpayers of the country much less money. I
appreciate each of our committees would say, well, after all,
we are advocates for particular people. We are advocates for
farmers. I am a farmer in the sense that I own land, 604 acres.
We have got corn and soybeans and trees out there. I take these
programs very seriously. Someone is suggesting about recipients
of payments, I am a recipient of payments. The Environmental
Working Group and so forth lists me and our farm so everybody
can read how much is coming into our farm. So we understand
these issues.
But I would just say simply that it is very, very important
that we preserve the opportunity to farm for people, not just
family members. My sons are going to have that opportunity. But
there are very few sons, reportedly, in our State who are going
to have those opportunities. And just getting down to the
payments issue, the dilemma is that the talented young farmers
right now farming in Indiana, 2,000, 3,000, 4,000 acres, may
only own 50 or 100 of that. That is where the machinery is
being utilized, and they are doing a pretty good job. But the
equity of this is uncertain, I would say, and farmers are still
getting owner and the ownership situation. You cannot tackle
all of that, but the fact that you have tried to get into those
issues is tremendously important in terms of the continuity of
agriculture.
So I will submit my questions for the record, but I wanted
to take this time to make these comments. Thank you very much.
Secretary Johanns. Thanks for the comments. We appreciate
it.
Chairman Harkin. Thank you very much, Senator. Again, thank
you for your great leadership in this whole area. I look
forward to working with you on this whole area of bioenergy and
how we move ahead and couple that with conservation at the same
time. I think it is doable. I do not know exactly how to do it
right now, but I hope we can accomplish that.
Let me see, now, going down the list here, Salazar,
Klobuchar. Senator Klobuchar?
Senator Klobuchar. Thank you, Mr. Chairman.
Thank you, Secretary Johanns. And thank you for the visits
you have made to our State. I know that Congressman Collin
Peterson and I met with you when you were there at Farm Fest
and appreciate the work you have done in our State. I also
appreciate the focus that you have on energy. Like Senator
Harkin, I am concerned about the investment that we want to
make sure that when you look at the money we have put into oil
companies, that if we are really going to develop our own home-
grown energy, that we have to make a better investment than
this.
I also appreciate that you are talking about continuing the
MILC program. We would like to see it at the levels at least
that it is currently and not a cut. But it is very important
that we continue the MILC program as well as the sugar program.
But I thought I would focus today on disaster assistance.
You know, Minnesota farmers have been hit with heavy losses for
two consecutive years. We were hit with excess rain and
flooding in 2005 and again with drought in 2006, and in some
cases, the same farms in both years. The combined costs of the
disasters to Minnesota's farm economy was more than $700
million over both years. I have cosponsored the Emergency Farm
Relief Act of 2007 that was introduced by Senator Conrad to
compensate farmers for a portion of these losses. As we look at
the emergency supplemental funding for the war in Iraq, which
of course to support our troops, I understand, but emergency
funding for farmers is also important for rural America.
Given the fact that the 2002 farm bill commodity programs
have cost something like $25 billion less than originally
anticipated, why don't we see that kind of support for the $5
billion in disaster assistance for those farmers who suffered
losses over the last 2 years?
Secretary Johanns. In the farm bill proposal we have, I
would respectfully suggest to you that we have what I consider
some excellent ideas in terms of how to deal with disaster. For
example, Senator, there is just no question in my mind that the
revenue-based countercyclical is going to work better for those
individuals who have experienced disaster problems in a program
crop than just, without a doubt, than what we have now, because
what tends to happen in a disaster, price goes up. The current
program is triggered by price and they are out, and if they do
not raise a crop, they do not get the loan deficiency payment
under any circumstances, so they really lose on a couple of
accounts.
The second thing I would say is that one of the things we
heard from farmers was that the gap they could insure, whatever
the number is, 70 percent of their crop or whatever, but that
30 percent was the real problem for some farmers. For others,
it was not. They did not want to lose that, needless to say,
but they were at a point in their farming career where that
would be a part of the risk that they could manage if they had
to.
So our gap coverage says for those farmers who want to buy
that gap coverage, let us make it available. Let us put that in
our proposal. We have also proposed consolidating a couple of
programs that we use a lot in disaster, ECP and EWP, which
again, I think we confuse everybody about when these programs
apply and when they do not. We are proposing a different
approach.
Now, in terms of the disasters that we have been dealing
with, here is what I would say to you from our standpoint at
the Department. We have reached out in so many ways. I was
Governor of a State just north of Senator Roberts' State and in
the same vicinity of your State. Out of the 6 years I was
Governor, I think we had drought all 6 years. We had a couple
of years a little bit better than the others, but a very, very
difficult situation. I will tell you that when the Department
stepped up with the non-fat milk program, it was a huge help to
our farmers. It has been criticized and we have tried to be
mindful of the criticism directed at that, but it really was a
helpful program.
This last year, we went out. We identified additional
funding where literally we could block grant it into the States
and they could distribute it to dig wells deeper, buy feed for
the animals, buy hay. It was a very, very flexible program, and
again, a program well received.
I feel strongly we need to somehow solve this disaster
issue because it is an annual event here. How big, should it
happen, should it not happen, et cetera--how does a farmer ever
plan on that? I mean, that is no safety net. And farmers told
me that was no safety net.
I really believe that working with the proposals we have,
and maybe there are some other ideas, there are some things
that really will be a safety net for farmers in disaster relief
situations.
Senator Klobuchar. And I appreciate that. I would just also
appreciate, though, support for the supplemental, for Senator
Conrad's bill.
The other piece of this with the crop insurance, my concern
with this is based on a county-wide basis of loss, and we have
some big counties in Minnesota where you might have a part of a
county where a farm was totally wiped out and the rest of the
county is fine. Have you looked at that again and refiguring
that for that situation?
Secretary Johanns. I will ask Dr. Collins, who works this
area, to offer some thoughts on that.
Mr. Collins. Senator, we have looked at that and we decided
to go with the county basis because we already have in place
county area crop insurance programs. We have GRP, Group Risk
Protection, and GRIP, Group Risk Income Protection. If you look
at the national enrollment in crop insurance, farmers who buy
crop insurance policies today have about $20 billion of their
crop value that is not covered. That is the value of the
deductible part of their policy. We have county area policies
in place already today that would cover about $13 billion out
of that $20 billion deductible. So we already have on the
ground a county area-based policy that could be adopted to
cover the deductible portion of existing multiple peril crop
insurance policies.
So that is the reason we went to the county basis, because
it takes years to develop a crop insurance program, to
determine the appropriate actuarial rating, and we already have
done that over the last several years for the county-based
areas.
Now, I understand your concern. It is a legitimate concern,
and what you will find is that producers whose yields tend to
correlate with the county, this will be a great benefit to
them. For those producers whose yields do not correlate with
the county, they are going to have to buy up higher levels of
coverage with their individual crop policies. So it is true
that there are some tradeoffs there and I think we went with
the county basis because that was where we were best equipped
to deal with it.
Senator Klobuchar. Well, thank you, and we look forward to
working with you and I will submit some additional questions in
writing.
Thank you, Mr. Chairman.
Chairman Harkin. Thank you very much.
Senator Cochran?
Senator Cochran. Mr. Chairman, thank you.
Mr. Secretary, thank you and your staff for cooperating
with our committee and being here to describe the proposal the
administration is making for changes in the farm programs. We
know this is a complicated and wide-ranging effort and we
appreciate the hard work personally you have devoted to the
process and your openness in terms of going around and talking
and asking questions of people out in the country about what
their thoughts are and what their impressions are of these
proposals.
What I am hearing from some of my friends in my State of
Mississippi is that in cases of cotton and rice programs, the
changes that are proposed in the farm bill may very well end up
causing people to go out of farming, sell the land, and I
wonder, in that connection, has there been any effort to do an
economic income analysis or economic impact analysis of the
program in terms of job losses, economic consequences,
practical consequences as a result of these proposals, if they
are approved and enacted into law.
Secretary Johanns. I will ask Dr. Collins to talk more
extensively about the economic analysis. Let me, if I might,
though, offer a thought. I was in your State recently. In fact,
our first stop when we unveiled this was in Mississippi and we
had a great opportunity to talk to producers. It was a packed
house. They were very, very interested in what we were doing.
But let me, if I might, just zero in on cotton because we
were right there in the Delta. If you look at the adjustments
that we have made to the loan rate for cotton, for example, and
then look at the increase that we have made in the direct
payment, the increase in the direct payment is 65 percent. And
again, it is hard to figure out the micro level, the impact on
each farmer in each State, but I can tell you in an overall
picture the numbers are absolutely very close to each other.
But here are a couple of things, Senator, that I think are
really important. The first thing is cotton is plagued like any
other crop with weather issues. It may be especially true for
cotton. If you are irrigating cotton, you can withstand drought
and that sort of thing, but if you are not, you are just
praying that Mother Nature is going to be on your side this
year. The one thing about the direct payment I can tell you,
that is the one thing you are not going to have to pray about.
Maybe you should pray anyway, but I can tell you it is going to
be there. It is a mandatory provision, approved. That young
cotton farmer out there who is just getting started who has a
mortgage payment, an equipment payments, et cetera, can take
that to the bank. Under the current program, if they lose a
part of that crop, again, they cannot LDP a crop that they did
not raise, and if they have any uptick in the price, they are
not going to get the countercyclical kicking in and so they are
really, really out. They are really on the losing side of what
was supposed to be a safety net.
The second point I would mention, and again, I am not the
trade person so I even hesitate to bring this up other than it
is real. We aggressively defended our cotton program. We lost
in the first stage. We aggressively defended it again. We lost
in the second stage. Now there is a WTO panel and the purpose
of them being impaneled is to decide whether we have done what
is necessary to comply with the ruling. That is the only
purpose of the panel. Somewhere in your deliberation time here,
between now and the time the farm bill will be passed, my
expectation is you will get a WTO ruling there and then we will
know what that ruling is.
But as I said to cotton producers, folks, it is no safety
4net to go out there and suggest something that puts a bullseye
on your back. It is no safety net at all. As a general
proposition, if your payments, your direct payments are not
linked to price or production, they are green box. They are WTO
compliant.
Now, I will tell you, Senator, we did not sit down to write
a farm bill for the WTO. We sat down to write a farm bill that
we thought was good policy, but again, getting back to the case
of cotton, I cannot ignore it and none of us can because 80
percent of the cotton produced is exported. Like it, dislike
it, pro-trade, anti-trade, I know all the debate, but the
reality is that on any given day, we have got to be paying
attention to selling 80 percent of our cotton production into
that export market. We just are in a position where we have got
to pay attention to how best to do this.
And I can tell you, I think when you sort it all out, with
that increase in direct payment, with some of the things we are
doing, I will promise you I cannot tell you what happens to the
individual farm out there. I can tell you in terms of the
overall picture I believe this is a more secure, a more
predictable safety net, and I am not being critical of the 2002
bill. I supported the 2002 bill. If you turned the clock back,
I would do it again. But times do change and one of the changes
here is we have got to pay attention. We need that export
market for your cotton people.
So that is a long answer, probably more than you wanted----
Senator Cochran. I think you are absolutely right. The
export market is critical for agriculture generally, but
specifically for cotton. We understand that and we appreciate
your looking into it and trying to figure out what the
consequences are going to be. I think, to be fair with our
constituents, though, it would be a mistake to over-promise
that we are going to fix this in a farm bill. I do not know
that the votes are here to do that or the support from the
administration is available to help us do that. And so I am
trying to figure out what do we do now? How do we try to make a
transition if a transition is needed from some traditional land
use practices to something that could take the place of what we
have seen in the past.
I grew up in an era, as some of the others did, both my
grandparents had farms. Those days are so different from where
we are today, though. My recollections as a young boy of
picking cotton and chopping cotton, that just--nobody does that
anymore. You have got cotton pickers and mechanical--what you
have is a labor force that has built up and a culture of people
involved in providing the inputs, those fertilizers, seeds, and
on and on and on, businesses depend on this. If this crop just
disappears, it is going to have an enormous adverse economic
consequence on the South and particularly on my State of
Mississippi.
I just wonder if anybody has thought about that and thought
about, well, what are we going to do now? Just tell everybody,
good luck? Is there going to be any kind of effort to help with
a transition if that occurs in some of these areas? I am
worried about that.
There used to be economists, and this is not talking about
Keith or anybody in particular, but they would talk about,
well, there are going to be some financial dislocations. I have
heard that. I heard that when I got to Washington. What that
means is people are going to go broke. Some people are going to
go broke and it is going to be devastating.
I just am curious to know if you have thought through that
and what are we going to do about it.
Secretary Johanns. I come from a different part of the
country, admittedly, but financial dislocation language does
not impress me, either. I was very, very involved with farmers
during the 1980 crisis. In my lifetime, and hopefully in no
one's lifetime, do we see that again. We thought long and hard
about it.
I suppose, Senator, we could have walked into this
committee and said, well, we have done this because we have to
comply with the WTO. We wish you the very best. Not impacted
direct payments, taken that money, sent it to the bottom line
and had a big savings and touted that all over the country that
we have got this big savings. We did not do that. We tried to
figure out how best to approach this. And so that is why cotton
is getting--you know, the other four major program crops
starting in the third year going through the fifth year, they
get a 7 percent increase. We are proposing 65 percent for
cotton.
So you add all of that up, and again, I will suggest to you
that I think we have got some great ideas here. I have immense
respect for you, like everybody on the committee. I know that
you are trying to figure this out, too, just like we have been
trying to figure it out because we have to somehow decide how
best to approach this because that export market is important.
I would love to sit down with you or your staff or whoever you
want me to sit down with, walk through the numbers, try to show
you what we think these numbers mean, and, you know, just make
the case, because I think some of the very same things you are
debating in your mind today, we have debated. We have tried to
figure out how best to approach this.
I would again respectfully suggest, I think we have got a
really good idea here and a good approach and we are anxious to
try to make the case. So I offer that to you. I would be happy
to do it. Your concerns are certainly our concerns.
Senator Cochran. Well, we appreciate your response and your
interest in working to try to find some answers to our
questions.
I complement you on the conservation incentives. I like the
idea that you are expanding the Wetlands Reserve Program, the
Conservation Reserve Program. The Cellulosic Bioenergy Program
is something that I think we will be very interested in. These
are all options for land use, as well, and we just need to take
advantage of the opportunities we have to help make ends meet,
as they say.
Thank you very much.
Chairman Harkin. Thank you very much, Senator Cochran.
Senator Coleman?
Senator Coleman. Thank you, Mr. Chairman. It is kind of
like a blink of an eye here. I look to my right, and if you
count Roberts as a Chair on the House side, I think there is an
array of one, two, three, four, five Chairmen, former Chairmen
of this committee. I have not been here that long.
But I do have to say, Mr. Secretary, I do want to start off
by thanking you. And I have some concerns and kind of the
nature of this is that I will kind of target in on those, and I
do not even know if in the time we have that I will even get
the responses. We will have a further conversation. But I want
to thank you and your staff for your effort in this, for the
work you have done on the ground, for your commitment to listen
to the folks who this impacts, our farmers.
I have said I have some questions. I am going back home and
talk to the folks who have got the dirt under their fingernails
and let them tell me what is the impact of some of these
changes. But clearly, you have done the groundwork. You have
thought outside of the box. You are trying to deal with that
situation that says if you do not plant the crop, where is the
safety net? I understand that.
I have particular appreciation--I disagree with my
colleague from Idaho about the MILC program, and yet I will
join him on forward contracting. We should work together on
that. I share the concerns of many of us on sugar. I think you
have done a good job maintaining a program that is no cost to
the taxpayer.
I think we face some challenges in the future over some
trade issues and I think energy may be a solution and I applaud
the strong commitment to energy. I think a lot of it has come
out of this committee, by the way, and I think that is
important. On Foreign Relations, we had Alan Greenspan come
before the committee and he indicated that we could be doing 60
billion gallons of--about 60 billion. A lot of us thought it
was bold when we did 7.5 billion gallons of renewable fuel,
RFS, for this country. We are going to do 11 billion gallons if
we do nothing in the next couple of years. What we can get out
of corn may be 15 to 17 billion. We have got 60 billion, but we
have got to get there, and you have that commitment.
I share the commitment that is close to the heart of the
Chairman in conservation. Rural development, I have a
particular concern about Critical Access Hospitals, and you
touched this. I thought we had the most in the Nation. Kansas
may have, but we are pretty close and I visited almost half of
them. That is a difference. That is life and death. It is life
and death, those 25-bed hospitals, and so I applaud the work
that goes on there.
Let me at least phrase a few areas of concern, and one is
there is a--we have a farm policy to protect the farmers when
prices are low, not when prices are high. We cut marketing
loans by $4.7 billion. I think countercyclical cuts is $3.7
billion. I think these are two of the programs that help
farmers on the down side. And then we have slight and temporary
increases on direct payments.
My concern is what if predictions are wrong and prices
drop? I start with that concern. Do you need to pass unbudgeted
emergency relief like we did in the 1990's? So I have that
concern. Let me lay that out there. If there is time, you can
respond now or respond later.
I got a--and by the way, it is a big axe. If you look at
the cuts, the overall cuts, kind of if you weigh it in
totality, $3.7 billion from the current baseline below 2008,
2010, that is a lot of money to cut from the safety net. It is
a heavy axe that we are doing there.
I have a particular concern, if I can, just about wheat. I
want to put it on the table. Senator Roberts kind of mentioned
that. You stated publicly that wheat growers did not get a fair
shake in the last farm bill and so I am wondering if you see a
four-cent increase in direct payment that only comes in the out
years as equitable, especially in light of the fact that I am
hearing from a lot of folks in the wheat industry that the
countercyclicals do not do much for wheat.
And the particular concern I have is on your
countercyclical program, you make it revenue-based rather than
price-based, but what if--I have got folks in the Red River
Valley, if they lose their entire crop under their program and
cannot get a payment if prices are high for farmers in other
States that make their crop.
So my question would be are we covering--one of the
strengths of this proposal is we are saying, hey, we are going
to provide a safety net for folks who do not reduce the crop.
On the other end, if I have got folks who get wiped out and in
the rest of the country they are making theirs, then my folks
get left out, and I presume that applies for others. So help me
understand how your proposal would help farmers who suffer
complete crop loss, especially if the rest of the country has a
good year.
I could go on and on. If you can deal with the general
proposition that a lot of this is based on a sense that we
think prices are going forward, and God bless, they are. I
mean, energy has made a difference. Energy is the future.
Energy is the future. I do hope--I just have to say this--that
we look at sugar.
If we turned everything that is green into energy down the
road but exclude sugar, I think this could be a problem for our
sugar growers, and especially, by the way, as we look at NAFTA
and some other things where we have the prospect of a lot of
sugar coming in this country. I would hope that we would look
at energy, at ethanol as a way possibly to deal with the sugar
that is coming in so we do not upset our program. That may be
the safety valve and I hope that we kind of look to the future
in spite of some of the challenges of price now.
I have only got 24 seconds left. I will make this
statement. Let us continue the conversation, but I am very,
very concerned about if we are wrong on the price bet that our
farmers could face some big problems under this. But with that,
let me say this is a forward-thinking proposal. You have done
the hard work. I am very appreciative and I look forward to
working with you on this farm bill. Thank you, Mr. Chairman.
Chairman Harkin. Thank you, Senator Coleman.
Now, Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman.
Mr. Secretary, welcome to the committee and thank you so
much for joining us today with Dr. Collins and Mr. Conner.
Before I begin my round of questions, I would like to start
by acknowledging what is certainly a very detailed proposal and
one which is obvious you have put a great deal of passion into
and time, as well, in your listening tours. We want to thank
you for your work. I am certainly glad to know that you have
listened to a lot of farmers across the country who support the
current farm bill, and I presume as a result you propose
maintaining some of the basic structures here as we have seen
in the commodity title, the marketing loan, the
countercyclical, the direct payment. You have mentioned some of
your reasons for why you have dealt with them as you have.
But I do have some serious questions and concerns and I
look forward to working with you in the months ahead to try and
face those challenges that we all face across this country in
terms of the diversity of our States and the diversity of this
country and the products and commodities that we grow. So that
is important.
I would just like to point out that from the questioning,
Senator Nelson brings up the issues of markets and, you know,
how we meet those demands, and coupling that with Senator
Chambliss's remarks and the possibility of losing those 85,000
farmers as a result of the means testing that you have placed
in here, that production probably will shift overseas and as it
does, we will never see it again, more than likely. So I am
hoping that Dr. Collins, perhaps, or somebody might respond to
us with an answer in writing where you anticipate the foreign
countries that will compensate for any expected decline in our
production of those commodities as you talk about those export
markets, and if so, which countries those might be. So if you
all could provide that.
Then in reference, really, to your AGI proposal, this
recommendation kind of strikes me as somewhat inconsistent with
the Administration's approach to so many other policy
initiatives in terms of their ideas, I suppose. I serve on the
Finance Committee and I find it interesting that when we passed
legislation a few years back to stem the loss of manufacturing
jobs in this country, to my knowledge, no one in the
administration raised any question about the size of the income
of the manufacturer receiving the tax benefit. In fact, I think
we wished that all the manufacturers were doing better
economically than they were. We had just lost about some three
million manufacturing jobs. But in any event, Congress and the
administration thought it was important enough to step in and
help manufacturers compete in the global marketplace. That is
not always free and it is not always fair, as we know, and we
did so regardless of the manufacturer's size or income.
I think the same is also true of the Administration's
approach to energy policy. I also sit on the Energy Committee
and I have been spending a lot of time lately reviewing our
Nation's energy policy and, of course, see a lot of press about
record profits from the Nation's oil companies. As you are
certainly likely to be aware, the government provides a
considerable amount of assistance via the tax code and other
incentives for the energy sector, and yet to my knowledge, the
administration has not proposed a means test for oil companies,
either.
I hear most often that this is due to our need for energy
security and the necessity or the really necessary commitment
to the pursuit of energy independence, and yet we have not
extended those tax credits for the renewable fuels in a way
that is--it was not in the President's budget, anyway.
I guess, Mr. Secretary, just an explanation or your
comments in terms of to the committee why the administration
supports means testing for farmers but not for oil companies,
or why we should support means testing for our farmers when
they face the same, if not more, unlevel playing field in the
global marketplace. Now, I know you have made the comment
several times that you are not the trade person, and we are
certainly aware of that, nor was the farm bill written for
trade purposes. And yet we cannot operate in a vacuum and we
know that.
When we look at what it means to this country to not only
working farm families but all families to have a safe, and more
importantly, affordable food supply, secure food and fiber
supply produced here at home, it seems to me that it would be
as equally as high a priority in terms of the Administration's
policies and ideas of how they approach those things. So maybe,
I do not know, you have got an idea of how that----
Secretary Johanns. I will offer a thought or two, if I
could.
Senator Lincoln. Sure.
Secretary Johanns. Let me, if I might, just start out. You
use the terminology ``means testing.'' Keep in mind that the
2002 farm bill embraced that approach. It is in the 2002 farm
bill. It is a much higher level, like $2.5 million, and it
impacts really a sliver of the tax filers in the United States
because $2.5 million in adjusted gross income really is the
wealthiest of the wealthy. But $200,000 of adjusted gross
income, again, is, if you examine what we are saying they can
deduct under our tax code, they are getting a substantial
benefit, if you will, because of tax policy adopted by
Congress.
But then we go a step further in this area and we say, we
are going to not only recognize that, we are going to send
cash. We are going to send a subsidy. We are going to say to
hard-working families around the country that the money that
you pay in taxes will be distributed into a formula that sends
out a check to people who are raising these commodities.
Now, personally, I have said all along, I think it is a
wise Federal policy to invest in agriculture. Not everybody
agrees with me when I make that statement, but I believe it is
a wise Federal policy.
But when you look at the decision, is there a point at
which you become successful enough that you graduate from the
cash subsidy that we are sending, I think Congress has answered
that question repeatedly. Since 1970, payment limits have been
a fact of life. Payment limits have been a part of farm policy
now for over 35 years, dating back, I believe, to the 1970 farm
bill, and I will just be very candid with you, and maybe there
is somebody in this room who would disagree with me. You know
what? They haven't worked certainly not very well. Certainly
not very well. I think the common belief is that there is a
payment limit, but quite honestly, there are so many
opportunities to restructure, to redesign, to do this, that,
and the next thing.
This is vastly different approach than saying, there is a
tax credit contained in a farm tax return, or if you get oil
you get a tax credit or whatever, than literally distributing
cash out of the Treasury. I believe it is just a vastly
different approach. Thank you very much.
Senator Lincoln. Well, it seems to be also that you are
picking winners and losers and I just do not think that is our
business here, but hopefully we will have an opportunity to
work with you a little more and see what we can do to be a
little bit more diverse in terms of our approach, I will wait
for the second round, Mr. Chairman.
Chairman Harkin. Thank you, Senator Lincoln, Senator
Stabenow?
Senator Stabenow. Thank you, Mr. Chairman, and welcome, Mr.
Secretary and Dr. Collins and Mr. Conner. Welcome. We
appreciate all the hard work, and I would echo the sentiments
about the way in which you presented information to us in the
farm bill. I appreciate it very much.
When we look at agriculture in Michigan, it is our second
largest industry, and in the farm bill, I find myself needing
to be interested, as I have talked to the Chairman about
before, in every single page because we have a great diversity
of crops and everything from soybeans and corn and sugar beets
to apples and cherries and milk and pork and beef, as well as
Christmas trees. We have everything.
But I want to focus--and I will be focused on every piece
as a result of that, as well as rural development and premier
land grant universities like Michigan State University, my alma
mater, are in the State. So I care very much about all of the
farm bill.
But I want to focus on 50 percent of the crops that have
not been included in a substantial way in this farm bill, which
are specialty crops. I think it is important and I appreciate
the new focus that you have given. Senator Craig and I will be
reintroducing shortly our specialty crops bill that we hope--we
talked to the Chairman about incorporating into a new title and
are looking forward to working with the Chairman and Ranking
Member and committee to do that.
Let me speak to a couple of things related to specialty
crops now, because I think it is important that you have added
certain provisions. I do think, and I want to just emphasize in
the area of increased purchases for fruits and vegetables for
nutrition, which, as you know, is a win-win situation. We help
our fruits and vegetable growers. We also help our children, we
help seniors, we help others in terms of their nutrition.
I appreciate the proposed increase in Section 32 and the
dollars that you have proposed, an additional $200 million for
2008, $225 million for 2009, et cetera. I just want to
emphasize, though, that we attempted to do that. We put into
the farm bill in 2002 what we thought was going to be an
additional $200 million per year above current spending, which
at that time was $180 to $200 million a year. Unfortunately,
instead of seeing an additional $200 million added, we see
numbers like the 2005 purchase, according to CRS, which was
$135 million total, not with $200 million added to it.
So it is important to me, and I want to create language
however we create it in the farm bill to make it clear that it
is, in fact, additional money, not the difference between $135
and $200 million, and I am looking forward to working with you
on that, because the language in here is very positive. I just
want to make sure it gets translated because it is a critical
program. It is a critical program for our farmers.
I also want to ask, and I would welcome your comment on
that, Mr. Secretary, but I also notice that you are not
proposing to expand the Specialty Crop Block Grant Program and
I wonder if you might share why that would be the case as we
look at expanding opportunities for specialty crops in the farm
bill.
Secretary Johanns. Actually, let me address that first
issue. We agree with you. When I sat down with you, you pointed
out to me that you felt like you had made a step forward only
to find out that maybe you had not made any ground at all.
Senator Stabenow. Right.
Secretary Johanns. So at page 172 of our book, when we
referenced this additional funding, we describe it as provide
new mandatory funding for the purchase of fruits and
vegetables. Senator Harkin mentioned the snack program. We are
proposing to do this through the school lunch program. However,
Senator, I can tell you that our attitude has been if schools
are using this to benefit the children, maybe they do it
through lunch, maybe they do it through breakfast, maybe they
do it through a snack, we kind of view this, let the schools
decide what program works best. So we will try to work with you
on that, too. But yes, we heard you and we have included that.
Chuck, on the pilot program, Senator, is that what you were
referring to?
Senator Stabenow. There is a Specialty Block Grant Program
that we had in the past.
Secretary Johanns. I guess what I would say is this. The
additional funding here is about $5 billion, as you know.
Senator Stabenow. Yes.
Secretary Johanns. It is a significant marker for specialty
crop producers in the farm bill proposal. And what we are
proposing is that money would be in the research area, which we
have significantly boosted. So I think what you are referencing
in the pilot program, I think we have addressed but through the
research title, which specialty crop producers told us we
really would like some assistance in funding for research,
sanitary, phytosanitary, the purchases, and market promotion--
--
Senator Stabenow. Right.
Secretary Johanns [continuing]. And I think we hit all of
those areas pretty substantially.
Mr. Conner. And I think, Senator, if I could, I believe the
Specialty Crops Block Grant Program, as well, was an
authorization subject to appropriation. The programs Secretary
Johanns has described would all involve mandatory funding taken
directly out of the CCC, so we would not be subject to
appropriations in that regard.
Senator Stabenow. Thank you. This is certainly an important
step forward for specialty crops. There is no question that
research is a major piece of the commodity purchase. We have
other assistance, as well, tree assistance program, other
things that are very important for specialty crops.
Let me just, if I might, just ask one more----
Chairman Harkin. We have people that need to--can we go to
the second round? We will have a second round.
Senator Stabenow. Absolutely, Mr. Chairman.
Chairman Harkin. Now Senator Thune. Well, Senator Thune
left. Senator Grassley?
Senator Grassley. Thank you, Senator Harkin, Mr. Chairman,
and Mr. Secretary. First of all, I know you, as every other
member said, you have put hard work into your suggestions and I
think I ought to recognize that I am aware of that hard work
because you spent a great deal of time at the State Fair of
Iowa having a listening session and I imagine that was one of
more than 100 listening sessions you or your staff had around
the country, so you were diligently taking notes at that
meeting and I presume this is a result of that, so thank you
very much.
One of the things that everybody knows I have been
interested in and working hard with Senator Dorgan on is farm
payment limitations. I am going to go through a series of
questions, so if you could just make a note or a couple of
words that would remind you of what I am asking about.
I was wondering how you came to the number of $200,000 of
adjusted gross income for someone not to receive farm payments
down from the $2.5 million that is under current law. I am
happy to see that a payment limit section is in the farm bill
proposal. I do not know how it is going to work out. We will
have a chance to study that before we work on legislation, but
obviously, I am very much interested in payment limits, so one
way or the other, your way or the Dorgan-Grassley way, we have
to do something about payment limits so that 10 percent of the
largest farmers do not get 72 percent of the benefits, not that
that is the only problem.
The problem is a greater problem of the public relations
for farmers. There is only 2 percent of the population, when
city people might question whether or not we ought to help big
farmers get bigger so that they cut young people out from
getting started farming or young people renting land, whatever
the case might be, and it is all of the above. So that is one
issue.
Along the same line, though, I notice that you have
increased the payment cap to $360,000 without eliminating
generic certificates. I would be happy not to eliminate generic
certificates, but I would just like to have everybody that gets
a generic certificate get a 1099 so that we know they are
paying tax on it. We do not know that. Everybody else that gets
a farm payment, gets benefit from a program, has a 1099. So
that is a major issue.
But the $360,000 and also increasing the direct payment to
$110,000. Now, I was not here, but I was told that you made an
answer to Senator Roberts that this was in order to be WTO
compliant. Well, if you are WTO compliant at $110,000, you are
surely WTO compliant at $40,000, it seems to me.
Also, on another issue, I have been getting calls from
farmers to see if they would be able to get out of their CRP
contracts early. If you have not commented on that for some
other member, I would like to hear that.
I am concerned that through my discussions with farmers,
that they are concerned as I am about the huge concentration
that we have seeing the livestock industry, the vertical
integration, trying to control all aspects of livestock
production. I do not think the concentration is much different
than it was 100 years ago--well, 90 years ago when we passed
the Packers and Stockyards Act, not we, but when Congress did.
So I think it is fair that you ought to know that farmers get
nervous when just four firms, and now we are talking about
Swift being sold off, slaughter 71 percent of all the livestock
or cattle, 63 percent of the farmers. Is that much different
than where we were 100 years ago?
Could you also comment on why there is no mention of
consolidation in the farm bill proposal? Now, maybe
administrations do not generally do that because you want the
marketplace to take care of it, but we have the Packers and
Stockyards Act. We have Congress acting when there was a
problem of concentration at that time. Should we not be
concerned about this if we are concerned about the institution
of the family farm? Thank you.
Chairman Harkin. You have got about a minute to answer all
those questions.
Secretary Johanns. I will run through it very quickly.
Senator I do appreciate your leadership in this really
challenging area of payment limits. Here is what it came down
to. If you look at the whole constellation of issues, the
$360,000, which you point out that is what the limit would be,
some would probably argue that is too much. Some would probably
say, well, it should be more than that. But that was the number
that was familiar from the 2002 farm bill.
But really what the debate came down to is this. The most
effective way of approaching this and where you are going to
have the most impact is as we have proposed. These things
have--I mentioned maybe before you arrived, we have had payment
limits since 1970, and I will just be very blunt. None of them
have been very effective. New ideas come up. We get new laws.
We issue new regulations and all of a sudden everything just
gets restructured and people are writing stories the next year
saying, how are they getting around the payment limits? This is
certain. It is straightforward to administer, and so that is
how we arrived at that approach.
The CRP contracts, I am looking at that. In the next 60 to
90 days, we will have a lot better numbers as to what is going
to happen out there in farm country, how much corn is going to
be planted, and I can make an assessment as to whether we
should release CRP acres early. I understand I can do that. The
Secretary does have that power. I promise you, we are looking
at it, and as those numbers come out, please continue the
conversation with us. We should have a decision, I would say by
early summer, maybe even a tad bit before that, but in that
timeframe.
The concentration area, again, a very complicated area. Our
role, in my judgment, is administration of the Packers and
Stockyards Act, and as a recent audit or investigation showed,
not only is that our role, we need to be more forceful and do a
better job there.
I have to tell you, I came from a State that had a
constitutional ban on corporate farming. Just respectfully, I
would suggest we have to look at this area. That ban was thrown
out recently by the Eighth Circuit Court of Appeals, lost at
the District Court, lost at the Eighth Circuit. I think there
is a petition for certiorari pending before the U.S. Supreme
Court. Those efforts to try to regulate that kind of thing have
fallen on disfavor. South Dakota lost their ban, et cetera. So
bans in who can do this and who cannot do this, I think it is
just an area we are looking at. I won't offer any legal advice.
I am a lawyer, but I do not practice anymore, but I just again
respectfully suggest that is an area you have to pay attention
to if there is some thinking about this as farm bill policy is
developed.
Generally we do take a position that market forces should
regulate how things end up. That has just been my general view
through the years.
I think I hit everything.
Chairman Harkin. Pretty close. Thank you, Mr. Secretary.
Senator Leahy?
Senator Leahy. Thank you, Mr. Chairman. Having spent a
number of years as Chairman of this committee, I know how
difficult it is sometimes to put one of these hearings together
and to make it coherent and how difficult it is for the
Secretary. There have been times, Mr. Secretary--this is going
to come as a shock to you, but there have been times over the
years that a tad bit of parochialism has come into the
questioning here, and I hate to think--you think that Bob Gates
or somebody like that has trouble coming up here to explain the
war, and you have to understand, look around the diversity of
this committee and figure out what the parochial issue is for
each of us.
I was pleased with my talk with you last night and with Mr.
Conner, who as I said is well known to this committee. I
actually appreciate all you have done, Mr. Secretary.
I think, as I said, on the MILC program, I am glad to see
it in here. I think, though, that it has been cut too much. It
is one of the best--it probably is the best targeted program
USDA runs. It works with market forces to provide modest
assistance when the prices are low. Now we have soaring feed
costs and fuel costs and low milk prices. It is the worst
possible time to cut it. It is the most targeted program you
have in your Department.
I think the increased funding for EQIP is a good idea. I do
not agree with eliminating the regional equity provision. This,
I authored in the 2002 farm bill. You have States that receive
very little commodity program support, but having a $12 million
base of conservation funding is a good public policy. I am also
concerned about the Administration's plan to consolidate the
Farm and Ranchland Protection Program that was started in
Vermont.
I also wish the administration would reverse its position
in opposition to emergency disaster assistance. My State of
Vermont, Vermont is still trying to recover from first the
devastating floods that wiped out much of the corn and hay crop
last spring, then we had a drought on top of it. We had the
worst possible thing, increased fuel prices. I know Chairman
Peterson in the House indicated some willingness to move
disaster assistance, but I remember last year when we did this
on the Iraq supplemental, we were faced with a veto threat. We
are spending billions of dollars a month in Iraq for
reconstruction there. I wish we could take just a tiny bit of
what we are wasting in Iraq and spend it on our American
farmers.
Now, given the USDA's recommendation for a continuance of
MILC as part of the 2007 farm bill, do you support a 1-month
MILC extension from August 31 to September 30 in order to
assure there is not a lapse in the program?
Secretary Johanns. Senator, we do. In fact, I was just
asking Keith Collins, but I think we have built that in as we
tried to figure out where we ended up on the baseline. But let
me study that before I commit to that last statement. Let me
make sure----
Senator Leahy. Will you get back to me----
Secretary Johanns. Yes.
Senator Leahy [continuing]. Because obviously this is of
great significance not only in my State but several others, and
if you could give me a definitive response on that, it would be
very, very helpful.
Do you agree that the MILC program is highly targeted to
small- and medium-sized dairy farmers?
Secretary Johanns. It definitely works for small- and
medium-sized farmers. There are publications out there where we
have raised questions about the MILC program. But having said
that, in response to an earlier question from Senator Crapo,
here is my read on it and here is why we ended up. We made
changes pretty well across commodities equitably. It seemed
fair to approach the MILC program the same. But probably the
most important thing in terms of the decision to keep the
program was it is a safety net that was put in place.
Agriculture adjusts to that. I just--we heard over and over
again from farmers out there, we like the structure. We would
like to see you try to keep the structure in place. Here is
where we think changes are necessary.
And so that weighed on me and I decided to keep the
structure pretty well across the farm bill and the proposals we
have made, including MILC. I think it is very difficult for
farmers that we just walk in, boom, the safety net is over, the
MILC program is gone. So we proposed to keep it.
Senator Leahy. And in that regard, we touched this just
briefly last night when we talked, but 30-some-odd years on
this committee, I have supported a lot of commodity programs
that do not affect my State at all. This is one of the very few
that does. It is far more targeted than the others. I must
admit that I have a little bit of difficulty going back home
explaining why I am supporting things for Iowa, for any of
these other States, and Vermont, a program that affects a State
like mine, it is cut.
And last, will you look at this question of disaster
assistance? Again, just think of going to a farmer in my State
who has just been clobbered. They know we passed this
assistance in the past. We know the administration has cut it
out because they said we have to concentrate first on disaster
assistance to Iraq. Explain that to a farmer in my State, why
it is far more important for reconstruction and emergency fuel
assistance, everything else in Iraq than it is right here in
our own country when it is our tax dollars going to it. So
please, please look at this question of disaster assistance
again, and you and I should chat further on that because I know
my time is up.
Thank you. And again, thank you very much for your call
last night. I do appreciate that very much, and Mr. Conner,
too.
Secretary Johanns. Sure.
Chairman Harkin. Thank you very much. Let me see, now I
will go to Senator Salazar.
Senator Salazar. Thank you very much, Senator Harkin. I
have an opening statement and some questions, but I will submit
those for the record, and I assume that is without objection,
and I would appreciate it, Mr. Secretary, if you would respond
to my questions.
Let me just first say to both you and the Chairman that I
very much appreciate the work that you have done on the rewrite
of the 2007 farm bill. I think last year, through many of the
conversations that we had here and probably ten or 12 farm bill
listening sessions that I had in Colorado, there was a sense
that we would not be dealing with this issue here today in 2007
and it is through the leadership of Chairman Harkin as well as
through your leadership and all the work that you did last year
that we are here today.
Just as a general comment, I will tell you that I
appreciate the substance of what you have put into the farm
bill. I do think as one Senator from Colorado that it is
something that we can work from. You obviously will have lots
of input and back-and-forth as we go forward and we try to
improve on the product that you have brought here to us today,
but let me just say thank you to you and to Mr. Conner and Dr.
Collins and all of the staff that have been involved in putting
together this proposed farm bill. It gives us at least a
framework from which to start on.
I am going to ask a couple of questions. The first question
has to do with energy. I think for all of us, Democrats and
Republicans alike, this is one of the new great chapters of
opportunity for rural America, to bring rural America back into
a place of vibrancy and certainly in Nebraska with what you did
in ethanol and some of the things there, you were leading the
way.
My question to you is this. I am concerned that we do not
have the resources in here to be able to implement the vision
that I think is a shared vision in America for how we can grow
our way to energy independence. Senator Grassley and I, for
example, are cosponsoring the resolution that says 25 by 25, we
ought to be able to grow 25 percent of our energy from
renewable energy sources by the year 2025.
And I looked at the budget that you have presented here and
it looks like it is $978 million for the energy title over the
time period of 2008 to 2017. But when I take that amount and I
say, well, what does that mean in terms of the 50 States and
what they are going to get with respect to the grants and the
other programs that are articulated here, it essentially comes
out to about $1 million a year. A million dollars a year, Mr.
Secretary, with all due respect, I do not think gets us to
where we want to get. It does not get us to where the President
said that we ought to be getting with the 35 billion gallon
renewable fuel standard, I think by the year 2017.
And so I have this reaction without having studied this in
great detail that this is highly insufficient if what we are
going to do is to put an imperative on this energy opportunity
that we have for rural America. So can you just respond to
that. Is this adequate?
Secretary Johanns. Yes. What I will do for you, I in
earlier testimony walked down through all of the areas of the
USDA budget where we have increased funding and then just
reminded the committee that in addition to all of that, we had
added a loan guarantee program of $2.1 billion targeted at
cellulosic. But just suffice it to say, when you look at our
total energy proposals, and also recognizing we aren't
proposing to change anything that you have done already, that
is in the bank, if you will, but if you look at everything we
have targeted going forward, we have a very substantial energy
package and I will detail and outline that for you in a letter
to you, Senator, and a copy to the committee.
But part of what gets really confusing here is if you look
back, for example, and make comparisons, part of that money was
discretionary. It never got funded. It never made it to the
finish line, and so even though it was theoretically there, it
was never appropriated and we never were able to work with it,
so----
Senator Salazar. I would appreciate it, and I imagine that
my colleagues on both sides of this committee would very much
appreciate having a more robust explanation of what it is that
we are doing with respect to investments on this title of the
farm bill.
Secretary Johanns. We will.
Senator Salazar. Let me ask you one more quick question.
Coordination with respect to other agencies, the Department of
Energy. I just came from a hearing with Secretary Bodman,
talking about what he is doing there. How are we coordinating
what we are doing here with the Department of Energy? A quick
example is cellulosic ethanol. We heard from the experts at a
conference we had a week ago that it is almost a dream too far
away, not commercially feasible right now. How are you and DOE
coordinating to make sure that as a country we are having the
maximum impact on trying to achieve these visions that we have?
Secretary Johanns. Coordinated at every level. We have
people--I not only coordinate with my colleague on the Cabinet,
but we have staff people working----
Senator Salazar. Is there a specific renewable energy
working team that coordinates on an ongoing basis?
Secretary Johanns. I will allow Keith, if you do not mind,
to offer a few thoughts on that.
Mr. Collins. Sure, Mr. Salazar. There are several, in fact.
One is that USDA has created an Energy Council. It is chaired
by one of our under secretaries----
Senator Salazar. And DOE participates----
Mr. Collins. DOE participates in the Energy Council. We
also have a statutory group, the Biomass Research Development--
--
Senator Salazar. If you can get me an overview of that
coordination, it is important because it is important that our
government know what one hand is doing so we know how we are
moving forward.
Last question before my time runs out. Following up on
Senator Leahy's comments on agricultural disaster assistance,
Colorado is now under lots and lots of snow. We have 10,000
dead cows out in the Eastern plains and it is a problem that is
affecting Nebraska and other States. It has been a sore point,
frankly, between us in the Senate and the administration. I
would hope that you can get yourself, Secretary Johanns, and
the administration to support the agricultural disaster
emergency package so we can get that behind us and then
concentrate on the good product that you have brought to us
before and see how we can move forward and refine it and look
forward. It is just a request.
I thank you very much for being here today and thank you
again. As I said earlier, Chairman Harkin, I think a year, even
6 months ago, people were saying there is not going to be a
farm bill in 2007. I want to just say again, congratulations,
because I think when you go through a program that is a $100
billion program the way that we have and you have 5 years of
experience, no matter how good the program is, no matter how
visionary those people were who wrote it, you learn a lot in
that 5-year period and it would not be happening if it had not
been for your leadership and I really appreciate it.
Chairman Harkin. You are overly generous. I appreciate
that. But we worked hard on that. We got a good bipartisan
agreement on that. And I commend the administration. I think
the Secretary has come up with a good sound proposal. We will
work on it, obviously. Not everybody agrees on different things
in it, obviously. We have got a lot of work to do here. But I
am convinced we can come up with a good progressive forward-
looking farm bill. I think we are--I see certain things
emerging. Obviously, there are things we are going to have to
work out and there will be some contentious issues. I
understand that. But I still think we are headed in a direction
that we can all hopefully pull together on.
Senator Thune?
Senator Thune. Thank you, Mr. Chairman. I would also echo
my colleague from Colorado about dealing with the disaster
issue. If we could come to a resolution on that that deals with
the last couple of years of disasters in the Midwest, then we
could, I think, start with a clean slate, so to speak, as we
tackle this next farm bill and contemplate how we deal with
disasters going forward.
But I do want, Mr. Secretary, to thank you, Deputy
Secretary Conner, Dr. Collins, for what is a very good faith
effort that required a lot of thought, a lot of time, and a lot
of input from people all over the country, and I appreciate
your willingness to listen. Fifty-two meetings around the
country, many of which were attended by you, Mr. Secretary, I
think speaks really well of your commitment to getting a good
product that incorporates the input, the thoughts, the best
ideas out there from our producers who ultimately have to live
with and adhere to the policy that we enact here in the
Congress. So thank you for what was a very time-intensive and
laborious, I am sure, process, but one that is, when you look
at all the work that went into it and the product that you
produced, it was clear that you did--that there is a lot of
work that did go into it, and again, one that ultimately
hopefully will be of great benefit to our producers.
Let me just make a couple of general observations about--
and again, I won't get into specific questions. We will have
time to do that. I do want to interact with my producer groups
in South Dakota as they react to this and get their direct
input so that as we move forward, we can figure out what some
of the regional impacts of the bill are and how we can put a
bill together, assemble a bill, hopefully by the August recess,
that is something that we can--everybody can be happy with and
be able to vote out of the Congress and hopefully get signed
and enacted into law.
But there are a couple of questions that I have at the
moment and you talked about. One has to do with the budget. You
talked about a $10 billion reduction over the course of the
bill, $18 billion if you include disaster payments of the past
farm bill. And the question has to do with this, because it
seems to me at least some of the assumptions you are making
about prices going forward are maybe not optimistic, hopefully
they are realistic in terms of where prices are going to be in
the out years, but I recall going through when I was a member
of the House of Representatives trying to get disaster relief
enacted here, coming to the administration with a proposal that
essentially would say that we are achieving great savings in
LDP and countercyclical payments from not making payments today
that as a result of higher prices, and I wanted to apply those
savings toward disaster relief and the answer was, no way, you
cannot do that because in the out years of this farm bill, we
may not have these good prices and we have to have this
reserve.
It looks to me like that is what you are doing here. You
are assuming that these prices are going to stay at this level
and therefore there is going to be all this money that would
have been available under the previous farm bill that you can
call savings, and so you are cutting back on some of the safety
net-type programs.
I guess I would like to get you just to react to that
because it seems to me that you are building assumptions in
about prices in the out years here that could affect some of
these programs if, in fact, we get into a time when prices drop
precipitously.
Secretary Johanns. Here is what I would offer. Pretty soon
here, you will start exactly where we started. You will start
with a baseline, and all decisions will be based upon what you
do off of that baseline. Here is how you will get the baseline.
You will just say, well, if we just did the 2002 bill, kept
every ``i'' dotted and every ``t'' crossed and changed nothing,
what would that cost over the next 5 years? As the 2007 farm
bill, that is where your assumption is going to begin. That is
where our assumption begins.
In computing into that, you are going to have to make some
decisions, rational decisions, based upon price projections. We
did not just pull these numbers out of the air to get the
numbers to fit. That is the baseline you will start with. That
is the baseline that we started with.
Here is how it shapes up. If you compared the actual
spending that occurred from 2002 to 2007 in the farm bill that
we have today, this proposal will spend about $10 billion less.
Why? Because during a lot of that time, you had very low
prices. You paid out very large LDPs during the Katrina event
and those kinds of things happened. It has only been in the
last year or so that you started to see those prices go back
up. When I came here 2 years ago, the discussion was, what will
we possibly ever do with all this corn we have in reserve? Now,
that is not the discussion anymore.
Then if you did the 2002 farm bill again, let us just say
you said to me, Mike, I want the 2002 farm bill again, I do not
want any changes, no ``i'' undotted, no ``t'' uncrossed, this
proposal spends $5 billion more. It fits within the President's
plan, but it spends $5 billion more than that baseline, and you
will be finding that as you start to work through the numbers.
You say we have cut the safety net. We really have not.
Here is why we have not. If you look at cotton, the money that
increases the direct payment is basically what we have done in
terms of adjusting on loan rates. If you look at the other four
major program crops, which you grow some of them in your State,
wheat, corn, rice, and soybeans, an adjustment of the loan does
not make any difference. It is basically a net wash
financially. So we have not really impacted that safety net and
you will find that you won't impact it, either.
On the other hand, if you say, you know what, I just want
to keep all that the same and I am willing to take the money
away from the enhanced direct payment for those crops, those
four crops, which is an additional 7 percent in the third,
fourth, and fifth year, you have just cost those producers a
billion dollars, because we literally went out and found and
identified that money, recognizing that somewhere out there,
maybe ethanol is not quite as strong, et cetera, so let us
buildup the direct payment. But the nice thing about it, if you
approve that, your farmers can take it to the bank. It is done,
it is mandatory, and they can plan on that money being there.
You take that out, you just cost those producers across the
country a billion dollars, and adjusting the loan rates, I
think you are going to find, unless you make really radical
adjustments, you are going to find that it is a net zero
effect, or basically a wash. So it is not the reduction that
maybe you think.
And the last thing I would say, Senator, and I offer this
to everybody and I am probably getting myself in trouble here,
but I am happy to come out and explain this or sit down with
producers or your staff or whoever because it is complicated.
We would be happy to try to do some things to try to get people
out there to walk folks through what we have done here.
I think in a State like yours, because you are so similar
to Nebraska, you are going to like what we did.
Senator Thune. Well, I hope you are right. I know the
direct payment probably impacts differently across commodities.
A corn grower in Western or the middle of South Dakota
probably--I talked to one yesterday that said, ``I get about $8
an acre on my direct payments.'' So increasing it by 20 percent
is not a big deal. But on the other hand, I think you have to
weigh that versus the current program and what they would be
with the current loan rates, what they would be receiving.
So I guess the main thing is maintaining that, of course,
safety net for those down years, hoping that in the future, if
renewable energy continues to drive corn prices high--we have
got good corn prices, although that gets the livestock guys
upset. You do not want to go to a sale barn these days because
you will get the other side of high corn prices, which I am
sure you are hearing, as well.
But just a couple of things I will say. I know my time has
expired, but a couple other observations. One is there is a
concern that has been raised, too, about when you do the
national target revenue per acre, that going to a national does
not take into consideration what I think you heard from Norm
Coleman, some of the regional or local conditions that might
impact that, if you had a really bad year in one area of the
country.
And second, and this has to do with this whole issue that
was raised earlier by my colleague from Arkansas, ironically, I
have always supported payment limits, and at the time, I do not
think that the administration was in favor of it. Now the
administration is coming out in favor of it and now my
agricultural groups are saying they do not want them anymore.
So I am not sure who is being progressive and who is digressing
here, but there has been an evolution of thought on this, and I
think even when you get out of some of the Southern
commodities, you are going to hear from farm bureaus and corn
grower organizations in my part of the country that may have
some issues with that.
But nevertheless, it is a good start. You jumpstart the
process and we look forward to working with you, and Mr.
Chairman, look forward to working with you as we get this
process underway. Thank you.
Chairman Harkin. Thank you, Senator Thune. Senator Casey?
Senator Casey. Mr. Chairman, thank you for putting together
this hearing and for your great leadership of this committee on
very difficult issues, and I am going to thank you, Mr.
Secretary, for your public service and for the work that goes
into putting together the budget proposals that you and your
team have announced.
I have got a couple of questions. I do want to focus, as
Senator Leahy reminded us, some of us once in a while get
parochial. That is part of our job, to focus a lot of attention
on our home State. I know you have spent a lot of time in the
Commonwealth of Pennsylvania and I know some of these issues
will be familiar to you.
I want to speak in particular about dairy policy, and I
know you have been asked about this today. In our State, we
have got some 8,600 dairy farmers, a big part of our farm
economy, and if there was one resounding and consistent
question that I heard from dairy farmers across the State over
the last 2 years, it is a very simple question, but I know that
dealing with it is particularly difficult. What a lot of them
said to me very simply, and it is a question they have asked
for many years, is why doesn't Federal policy take into
consideration or have a full understanding and a policy that
reflects the true cost of production, what a dairy farmer and
his or her family have to endure just to survive.
And I know that it is a very broad question, and I also
want to ask particular questions about the MILC income loss
contract. But I just wanted to get your thoughts generally on
that very specific but, I think, very important question for
dairy farmers.
Secretary Johanns. I grew up on a dairy farm in Senator
Harkin's State, so I have been around dairy as long as I can
remember and I will share a story with you. I went to the
village where my great-grandfather came from in Germany 2 years
ago, and as we drove into this village, guess what was in the
middle? Dairy cows. So I guess we have been milking cows in my
family for a long, long time. I do have a familiarity here
probably that is maybe even more than the average Secretary
would have because my background is there.
The proposals we have made in our current dairy policy are
what I would describe as fairly modest. We keep the milk income
loss contact (MILC) program, probably surprised a few people by
deciding to do that because we have put out some information
questioning the program, but we do keep it.
We are making adjustments. It does go from a rate of 34
percent, stairsteps down to 20 percent, and it is based upon
historical production under our proposal. But that is really it
with MILC. We also keep the price support program at the
current level, and that is really the main area where we have
the ability to impact the dairy situation for farmers out
there.
I was questioned by Senator Crapo, why did you keep the
MILC program, and I said, you know, it is a safety net that was
put there and you just do not change that overnight. So my hope
is that the dairy industry, because I do think there is
conversation on what to do and I think they are going to have
some proposals, I would encourage the dairy industry to keep
that conversation going, because here is what you will find,
Senator. There is a huge diversity of opinion in the dairy
industry between your area of the country and as you move West.
As you move West, bigger operations, a lot of cows, you know,
it is just a different phenomena than what we would see in the
Northeast. In my judgment, both are valuable and we need to
develop dairy policy that is helpful.
The last thing I will mention, we get criticized a lot on
the milk marketing order system because it is slow and
cumbersome, and you know what? It is slow and cumbersome. I
wish I could figure out a solution to that problem. I would
make most dairy farmers more happy with this. It is a very
cumbersome process, not because I have got people dragging
their feet at the USDA, it is just the process is so
cumbersome. People are trying to get through these things, but
by the time we get to a decision, the issue that drove that is
sometimes a year or 2 years old.
So, boy, I am really hoping the dairy industry can work
with this committee and maybe have some ideas. I guess we would
try to be open to ideas. Of course, we would. But what we have
proposed here is fairly modest and I think most of the people
who are involved in dairy would agree with me.
Senator Casey. Well, I appreciate that. One thing I would
ask you to do, and certainly I would want to make myself
available at getting our schedules together, is to spend some
time in Pennsylvania listening to, as you have, I am sure, in
the past, listening to our dairy farmers and I hope we can do
that.
Let me just ask you in particular about MILC, and I know we
are--when I say the income loss contract. How did you determine
the reductions that would take place between fiscal year 2009
and fiscal year 2013, when you go from that 34 down to 20?
Secretary Johanns. Here is basically how we did it. Our
approach was to try to be equitable as best we could across
commodities. We had made adjustments in the marketing loan
rates, again, pretty well across the commodities based upon
historical market prices over the life of the last two farm
bills. We have kind of put that in place. Then we looked at the
MILC and said, how can we make the case that they were treated
about the same? And so that is really how we headed out there
to do it, and that is how we ended up with this stairstep
process.
The thought was originally, maybe we should just reduce it
straight out of the box. I wanted a more rational approach in
terms of adjusting it over time, so we did it over the 5 years
of the farm bill.
And actually, here is another interesting issue. I was
talking to Senator Thune about the baseline. Here is your
challenge with the MILC program. It is not in the baseline. It
is not funded out there. So when you sit down and say, I want
the MILC program, you are going to have to convince your
colleagues to find money somewhere to fund this program at
whatever level you want it funded at. It will be literally new
money added to the baseline, and Senator Harkin has been
through this. He is nodding his head. That is just the way it
is, so----
Senator Casey. I look forward to working with you and with
the committee and especially our Chairman.
Chairman Harkin. As I said earlier, I think we have a lot
of consensus on the committee to move ahead, but I said there
are going to be some contentious issues. I think we just tapped
one.
[Laughter.]
Chairman Harkin. It just has to do with different parts of
the country and what we are going to do. Well, we will just
have to work. We will work something out some way. But with the
budget constraints, Senator Casey, we really do have a problem
here without it being in the baseline, and how we resolve it, I
do not know quite yet.
We will start a second round. I will keep myself to 6
minutes and then go around again.
Just a couple, three things. CSP, just keep in mind--this
is not a question--but incentives. Think about it as an
incentive background for biomass and conservation together, for
biomass and conservation together. Think about it as an
incentive.
Second, on the program that you and I talked about when you
first came into my office, Section 9002, the bio-based
purchasing requirement for the Federal Government, we put a
provision in the last farm bill--it is in permanent law, by the
way--that requires the Federal Government to purchase bio-based
products as long as they are equivalent in price, performance,
and availability. Last September, you were very gracious to
come over to the Department of Defense where we had a 2-day
fair or whatever you want to call it, exhibitors. Forty-some
companies came there to demonstrate the goods they had that
were bio-based that could be purchased by the Department of
Defense.
You moved aggressively on this. I congratulate you for it.
At first. But we are still at only six products and what has
happened? It seems to have, from your initial endeavor to
really move this, it seems to have slowed down greatly and I do
not know why.
Second, I looked in your book. You have a proposal for $18
million over 10 years. That is $1.8 million. That is a small
increase from what we had, and I just wonder if that is going
to be adequate.
So, just briefly, address yourself to Section 9002 and what
you want to accomplish with that.
Secretary Johanns. Keith really spearheaded the
regulations, if I remember correctly, on this, and Keith, if
you could--I do not know how much of this you can remember, but
if you could help with this one.
Mr. Collins. Mr. Secretary, Senator Harkin, I agree with
you. It was a long time in getting the first proposed rule out.
We had to get guidelines out first through a proposed and final
rulemaking. As you indicated, we do have six items. Items are
classes of bio-based products with literally hundreds of
branded products subsumed under an item. We have six items that
have been designated for preferred procurement by final rule.
That final rule requires us to give agencies, Federal agencies,
a year after the promulgation of the final rule before the
mandate takes effect. That mandate takes effect this March
2007, because the six items were designated by final rulemaking
in March 2006.
We have two other proposed rules. The comment periods have
closed. We are preparing the final rules now. We are discussing
the final rules with the Office of Management and Budget and we
hope very soon to be able to issue final rules on two rules
which will designate an additional 20 items. Again, 20 items
being classes of bio-based products. When we have those 20
items designated, together with the original six, we will have
something in the order of 600 manufacturers producing over
2,000 branded products that will then be designated by final
rulemaking for preferred procurement under the program.
In addition to that, we have expanded greatly our outreach
efforts to other Federal agencies under our Assistant Secretary
for Administration, who has taken a tremendously enthusiastic
approach to reaching out to Federal agencies to ensure that
their own procurement regulations in each Federal agency meet
the requirements of the law and that they are up and ready to
run in March of 2007.
Chairman Harkin. I appreciate that. I do intend to use my
position as Chairman of this committee to call in the
Secretaries of Defense, Interior, Commerce, and a few others
and ask them why they are not implementing this part of the
law. It applies to them. It does not apply to the Department of
Agriculture, just for you for the rulemaking and coming up with
the products. But we need to find out why the rest of the
Federal Government is not focusing on this. Now, Gordon
England, the Deputy Secretary of Defense, gets it and he was
very promotive of this, but I just want you to know I will be
calling up these other people, too.
Mr. Collins. You are correct, though. We are required to
have the Federal Acquisition Regulation modified, but then in
addition to that, every Federal agency that has their own
procurement regulations have to modify those. At Agriculture,
we have a thing called AGAR, which is equivalent to the FAR,
and we had to revise that, as well. Every Federal agency has
that obligation.
Chairman Harkin. I know that, and I intend to ask them
that, too, call them up and ask them what they know about it.
Fruit and vegetable program, snack versus lunch, I notice
you geared toward the school lunch program there, then later on
you said schools should make the decision. But keep in mind
that you can just keep putting more and more and more stuff in
the school lunch program, Mr. Secretary, but as teachers told
me and principals told me, kids come to school in the morning
and they get the growlies right around about nine o'clock in
the morning, or maybe they have had a sugar breakfast and then
they crashed on that sugar and what do they get? They go to the
vending machines or they eat cookies or something like that.
So what has happened is with this snack program is they are
able to get fresh fruits and vegetables which get them through
that, evens them out. We had all kinds of information about how
they study better and everything. So I just want you to think
about that in terms of how we move ahead on that.
And the question I have--I am running out of time--is why
do we not have a rule yet updating the school meal patterns to
conform to the recent dietary guidelines if you are going to
move into school lunch programs? We do not have a rule yet, and
I am just wondering. If you do not have an answer, maybe you
can submit it for the record.
Secretary Johanns. I will submit that for the record, if I
could.
Chairman Harkin. I appreciate that. I have 17 seconds.
Technical problems. I agree with you on changing the food stamp
name program. That is good. And you said about providing a
bonus or something like that, up to 25 percent or something
like that if they buy fruits and vegetables. I do not know if
you have put that in or that is my own head work. But I need to
know about technical problems. If you use your EBT card and you
go through and let us say you give a bonus to someone to buy
fresh fruits and vegetables, what are the technical problems?
What if we wanted to say, OK, if you buy $10 worth of fruits
and vegetables and you swiped your card, you will get a bonus
of 25 percent on that. I just need to know what technical
problems, and again, if you do not know that, you can submit
that for the record.
Secretary Johanns. We will answer--we will get a technician
to answer that, but just so the record is clear, our proposal,
we have not submitted a proposal to bonus people. What we do
have is a pilot program working with States to try to find
innovative solutions to obesity problems. Something like that
could fit here.
Chairman Harkin. I hope we would look at that bonus
problem.
Senator Lincoln?
Senator Lincoln. Thank you, Mr. Chairman. I just have, I
think, three more questions and one comment, and I apologize
for taking up all your time.
Your comment in closing on the payment limitations, you
noted that it has a history, and certainly last year was
prevalent in the 2002 farm bill, or the last time, and that is
true, but it was there as a compromise. I will just make sure
that just to go one step further, if you noticed in that
compromise, it was stated that 75 percent or more of the
adjusted gross income had to be derived from farming. That has
been eliminated in what you have proposed. The problem with
that is when you look at AGIs, as indicated on the Federal tax
forms, that means it would all be farm income and non-farm
income.
The purpose of what we were trying to do in that compromise
was, as I remember, I think it was called the Scotty Pippin
rule, to make sure that people, not to harm the farmers that
were doing a good job in farming as they were supposed to, but
to make sure that it was not directed to people who were non-
farm income and non-farmers.
So I would say that I hope that we can look at coming about
at compromises and taking that into consideration and certainly
not just assuming that all large farmers are old and greedy.
The fact is, many of our large farmers are large because they
have to be and they have to farm an economy of scale to be
competitive in the global marketplace.
Senator Grassley mentioned keeping farmers young. Many of
our large farmers are young. They are the next generation. And
the reason they farm large farms is because of the crops they
grow in the areas that they live and those crops are what are
suited to be grown there. And if they do not grow that economy
of scale, they cannot be competitive.
So I just hope that we will take that into consideration. I
know there are a lot of greedy people, but I hope we do not
just assume that. There are greedy CEOs, there are greedy
people in all professions. But just assuming that they are
trying to circumvent laws or circumvent rules, I think is the
wrong approach. I hope that what we will do is look and see
that diversity exists in all areas and that this is one where
if we are looking particularly--and when I talk about
marketplaces, that is where I go to my next question.
Our own OMB Director Rob Portman has stated many times that
there is no economic sector more distorted than the world
agriculture market. The fact is that all of our farmers face
the lopsided playing field, be they big, small, or in between,
quite frankly. And I wonder oftentimes why our administration
continues to criticize the support that we provide our farmers
instead of focusing on foreign tariffs and subsidies that again
are far, far higher and greater than anything we provide our
producers.
So we look at our farm families producing crops, Mr.
Secretary, and I look through your proposal and note that there
is $11 billion in cuts to the farm safety net and that number
jumps to about $13.5 billion if we include the crop insurance
cuts. So if you offset it by adding back the direct payments,
which you indicate is a part of what you are trying to provide
in terms of relief, the direct payment increases and some of
the other items, we are still looking at nearly an $8 billion
cut to our farm families.
So I hope that--well, my question really is, in trying to
accomplish what you are trying to accomplish in the context of
this farm bill rewrite, I hope it is not to from a side door go
back to ``freedom to farm,'' meaning unilaterally trying to
disarm our farmers in an international global marketplace,
particularly in the midst of a trade negotiation in terms of
the WTO. I mean, I would like to see us encouraging our trading
partners to step up to the negotiating table to reduce their
tariffs and subsidies before giving away our farm, as it is
sometimes said, or just throwing away the farm, perhaps, in
those negotiations. I know you are not the trade man, but
nonetheless, I think it is an important part of this equation.
Secretary Johanns. I appreciate your comments. We do not
make an assessment about greed or anything like that. I believe
in all of agriculture. People sometimes ask me if we are for
the big guy, or if we are for the little guy. I say, look, I am
for farmers. I am for ranchers. I am for agriculture. You are
right, some are of a size that is required by the economic
circumstances that they are dealing with. Some are smaller. But
I believe in supporting agriculture.
I would also make the case, Senator, that if you really
look at the proposal, very respectfully, I believe we have
improved the safety net. Let me give you an example, and
farmers told us about this.
When Katrina hit, we had about a 2-month interruption of
transportation down the Mississippi that was significant. It
lasted longer than that, but it rippled across America and it
affected the corn and soybean price. The corn price dropped
from about $2 a bushel to $1.55, $1.60. At that point in time,
farmers locked in their LDP and they got 40 to 45 cents a
bushel to do that, and you can do the math, absolutely legal
and appropriate under the 2002 farm bill. But I do not think
that is what Congress intended. I think Congress intended a
true safety net where we would be there to help farmers when
they needed the help.
So when farmers are telling me this and then telling me,
look, it was when I needed you most you were not there because
the price went up and I did not get the countercyclical, I am
going, something is not working very well here. Again, what we
tried to do is keep the structure, try to figure out how to
operate this system better, try to recognize that it was safety
net that farmers were focused on, you know, and try to make
proposals to Congress that were based upon that good policy.
I was in Iowa--I was in Des Moines recently in the release
of this and I talked about that LDP phenomena with Hurricane
Katrina. You know what? Farmers were out in the audience
nodding, and again, it was entirely appropriate. I am not
suggesting anything other than I am not sure that in the end
that is what Congress headed out to do here. I think what
Congress headed out to do was provide a safety net.
And so I think we have provided a more secure safety net, a
more predictable safety net, a safety net that farmers can plan
on, and it is more in accordance with what I think Congress was
trying to do with the 2002 farm bill----
Senator Lincoln. Well, I think you kind of make the point,
too, here that there are variables that we deal with in
agriculture, much of which we have no control over----
Secretary Johanns. Yes.
Senator Lincoln [continuing]. And you point out Katrina and
the weather that existed. We suffered from that, but we did not
get the disaster because we were not in the area, but it still
comes up the river and it still comes across the--you know, the
weather patterns still come straight up and blow down our rice
and damage our cotton when it is getting ready to be harvested,
along with the fact that the input costs, the energy costs were
drastically high both starting then and through the following
year. So there is a lot of that that occurs.
I go back to something else Senator Grassley talked up. He
talked about images being portrayed, and it seems like the
Department of Agriculture is always concerned about the image
of whether or not what you are doing is going to be portrayed
in the press by certain groups as being something that it is
not, quite frankly.
But what I would say is that if you deeply cut the programs
that have helped farmers when they need it, when you talk about
the marketing loan rates, and then you increase the direct
payment slightly and temporarily, which pays the farmer
regardless of what happens, even when prices are good and
production is good, do you not think that that is going to
invite bad publicity? If prices and production turn out to be
good in the future, as they are predicted but certainly not
assured, or that absolute calamity comes about and you are
billions and billions of dollars in emergency relief that we
are all having to hassle about, if those predictions turn out
wrong, it is kind of what Senator Thune was saying. If price
and production are bad----
Secretary Johanns. Here is what I would say, Senator, and
again, very respectfully, but your question does misstate our
proposal and I just have to put it out there for you.
Senator Lincoln. Yes.
Secretary Johanns. If you look at the adjustment in the
loan rate for cotton and go over to the full life of the farm
bill, all 5 years, you will see that we increase their direct
payment by 65 percent, 66, and there it is. It is more
predictable for those cotton farmers. They know what they are
going to get. They are not going to get cut out on that payment
when their crop is short because they had dry conditions and
are not on irrigated land.
When you look at adjustment in the loan rates for the other
four major commodities, it is basically a wash. It does not
save any money. We are not getting those billions of dollars of
savings that you are suggesting, not at all.
But we went out there and we said, look, let us find a
billion dollars that we can put out there for them to increase
their direct payment. Again, they can take it to the bank
through the third, fourth, and fifth year. During the first
couple of years, we have got very high prices, very high
prices, and I will study the same thing that you will be
studying, because in the end, as I said to Senator Thune, you
are going to start exactly where we did. What is in the
baseline, what is out of the baseline? What does the 2002 bill
look like if we passed it for the next 5 years and what
baseline does that create? I will tell you it is not a
reduction. Run the baseline on the 2002 bill, compare our
proposals, we are $5 billion over.
So if you say, Mike, you really made a nice presentation
here but I like the 2002 bill, I am going to stick with it, I
am going to fight to get it passed, somewhere out there, $5
billion has just been taken away from people because our
proposal is $5 billion over the baseline.
Senator Lincoln. Well, I am not so stuck in the gumbo, as
we call mud in the Delta, to say that I have to have the 2002
bill, but I do think--and I hope that you will be willing to
work with us to come up with some compromises that may be more
reflective of the diversity that exists, and we thank you, Mr.
Secretary. Thank you, Mr. Chairman.
Chairman Harkin. I just have a few more, but I have to
respond to Senator Lincoln. You cited Rob Portman as saying
that the biggest distortions in trade were in agriculture, is
that what he said?
Senator Lincoln. World agricultural markets.
Chairman Harkin. Well, I like Rob Portman a lot. He is a
fine guy. I may have to call him up on that one. I happen to
think the biggest distortions are in manufacturing, where
people are paid basically slave wages, where they are provided
no kinds of retirement benefits or anything else, where they
use child labor in many cases. I think those provide some of
the biggest distortions in terms of our world trading
agreement. Where we at least try to pay our workers a living
wage and provide different benefits and things, they do not get
that same thing in other countries and they are just
undercutting us, a lot of times using child labor, too. So I
would say that that may be a bigger distortion than what we see
in agricultural trade.
Mr. Secretary, the fastest growing segment of the food
industry is organics, 20 percent per year going up right now.
In the 2002 farm bill, we started to address some of this in a
couple of ways. There is this sort of valley of death, as they
say. If somebody wants to do organics and they have got program
crops and program acres, to grow organics, you have to be
certified for 3 years. I mean, you have to do 3 years before
you get your USDA certification, but they cannot market it as
organics.
So we tried to provide some funds in that bill to get them
through that and then to do some more research, and what we
provided was $3 million a year for research and extension. Your
proposal has only $1 million a year. So the way I see it, that
is a two-thirds cut in the fastest growing area and an area
where, for a small amount of money, we can provide niche
markets for a lot of farmers all over this country and people
who want to grow organics.
So I am just wondering why there is this back-off in your
proposal.
Secretary Johanns. Our proposal is at page 166 of the book
we have submitted and it lists a whole bunch of initiatives
under the organic title. I will not--the hour is getting late
and I will not detail those, but these basically were built on
suggestions that the organic industry had been touting or
proposing. So I think we hit everything.
The other thing I would mention is that if you look at our
proposals, we have mandatory funding there, also. Again,
because there is this issue, you can put a lot of discretionary
money out there. It does not tend to get funded, and you look
back 5 years later and say, well, that was a nice idea. It did
not go anywhere because the money was not there.
If you look at our proposals, I think they are
comprehensive. I think it is along the lines of what the
organic industry wanted plus there is mandatory money there
that will help.
Chairman Harkin. I think the mandatory is just in the
Market Access Program. That is the way I see it.
Secretary Johanns. I would have to study that a little
more.
Chairman Harkin. Well, we will have to get into this----
Secretary Johanns. Yes.
Chairman Harkin [continuing]. Because in your budget, in
the budget, it is $18 million over 10 years--no, that is not
right----
Secretary Johanns. Yes, it is 69----
Chairman Harkin. It is $10 million over 10 years.
Mr. Conner. It is $61 million, Senator Harkin, I think,
over 10 years, and that is all mandatory funding in our bill, I
believe.
Secretary Johanns. I think the organic industry--I am not
aware of whether they have weighed in on our proposal, but I am
thinking this is pretty close, plus it is mandatory money and
that, as you know, is always hard to come by.
Chairman Harkin. I will look at it. I thought it looked
like you were cutting it from the $3 million, which I thought
was a paltry sum anyway.
I had a big meeting this weekend with a number of organic
farmers in Iowa. We had a big gathering there. Their need is
for regional processing facilities. They need small regional
processing facilities to be able to take their goods there and
have them regionally processed, packaged, whatever, and then
put out. So I look forward to discussing that with you.
But I have got to clear up the amount of money on organics.
We have got to do more on organics. We have got to provide more
money--Mark tells me that the organic research, what I am
talking about, and extension is cut, but the overall organic
does go up, so we will take a look at that. We will work on
that.
One last thing, and it is late and I appreciate your
staying here so long. We will work on the Food and Nutrition
Program, on the technical problems regarding how we give a
bonus to food stamp recipients. We will work on that.
My last question, again looping back to where I started, my
favorite subject, CSP.
Secretary Johanns. OK.
Chairman Harkin. Again, one more time, as I understand your
plan to provide the increase of $500 million over the 10 years,
we spread the baseline back. I understand all that. It is going
in the right direction. But here is what I do not understand,
Chuck. The President's budget released Monday would reduce
spending for the Conservation Security Program in 2008 by $135
million and reduce the cap on CSP by $80 million between now
and 2015. So it seems to me there is an inconsistency here, and
if you can clear it up a little bit now or provide a more
detailed analysis later on, I would appreciate it. Or Mr.
Secretary--I just said Chuck because we have beentalking about
this.
Mr. Conner. Senator Harkin, I think to underscore what the
Secretary had said earlier, the budget that we submitted
earlier this week does reflect all of the current CSP contracts
that we have already awarded and also provides some additional
funding so that those same contract recipients can actually
upgrade their contract, if you will, and receive additional
assistance and exchange for additional conservation benefits.
We have not--so that is built into the President's budget,
current contracts plus opportunities to upgrade those contracts
with more conservation.
Chairman Harkin. OK.
Mr. Conner. Now, beyond that----
Chairman Harkin. No new contracts?
Mr. Conner. That is right. As the Secretary has noted, we
have in our book proposed, in addition to the additional
funding, we have proposed changes to some aspects of CSP. For
that reason, we do not believe that there is going to be new
contracts awarded in this fiscal year and therefore----
Chairman Harkin. Two-thousand-eight.
Mr. Conner. I am sorry, in fiscal year 2008, and for that
reason have not included any of the additional increases to
begin in that fiscal year. Obviously, they would begin then in
2009 and beyond with the adoption of a new farm bill proposal.
But again, I think the important point, Senator, is we have
covered the existing contracts plus their opportunity for
additional conservation dollars within those contracts.
Chairman Harkin. Well, again, as you can imagine, I do not
think that is acceptable. For 2 years, we are going to go 2
years without one new contract, and I just do not know why it
would take so long to come up with rules and regulations. We
have an existing program. We will get a good idea probably
soon, by early summer, the direction we are going on this. I
think when you did the EQIP funds after the 2002 farm bill,
that happened pretty rapidly. So I just think we just cannot
afford to have 2 years like that.
Again, one more time, how does the $80 million reduction,
the $80 million reduction in the President's budget through
2015 square with the purported $500 million additional over the
10 years?
Secretary Johanns. Chairman, if I might offer a thought, we
have our budget person here and maybe if he can caucus with
your folks to try to----
Chairman Harkin. OK.
Secretary Johanns. We can tie each other around the axle on
these numbers and I think we are successfully doing that.
Chairman Harkin. All right. But go ahead, Keith. Maybe
Keith can give us a----
Mr. Collins. I can try very quickly, Mr. Harkin. First of
all, we are not proposing a decrease in CSP funding in our
budget request for 2008. For 2007, our CSP funding is $259
million. Our budget request----
Chairman Harkin. That is right. I am aware of that.
Mr. Collins. Our budget request is $316 million. That is an
increase. That is to do exactly what Deputy Secretary Conner
said, to fund existing contracts plus enhancements. The $80
million you are talking about is a decrease from our baseline
level and that decrease in the baseline level simply results
from the fact that we are not holding additional enrollments in
2007 and 2008. So we are slightly below our baseline. But then
we would make up for that in our farm bill proposal by adding
the $500 million, pulling the out year funding forward, and
enrolling in the order of ten to 11 million acres a year and
going from 15.5 million acres today to 96.5 million acres in
2017.
Chairman Harkin. OK.
Mr. Collins. And if I might say, the question of----
Chairman Harkin. Then that seems to me, from where I have
been, it seems to me then that is $420 million. We will just
deduct the $80 million off of it.
[Laughter.]
Chairman Harkin. You are right. We can get around the axle
on this one. We will work it out. We will work it out. We will
work it out.
Let me see, did I have anything else here that I wanted to
bring up? No, I think that really does it. You are very
generous with your time, Mr. Secretary. Again, I thank you for
a very, as I said in the beginning, a very challenging and, I
think, forward-looking proposal. I hope we can get to work on
it soon. My goal along, I hope, with Congressman Peterson on
the House side is to get this thing put to bed and get it to
the President sometime hopefully by September. I look forward
to working with you on it.
Secretary Johanns. I look forward to working with you,
Chairman. We really appreciate your leadership in pulling this
hearing together. I think this is what farm bill policy is all
about. You get together and you start talking about the issues
and try to figure out where to go. We are excited about our
proposal. As you can tell, I probably answered longer than I
should have. I get fired up about the things that we have got
here, but we do appreciate the hearing and the opportunity to
visit with you and your committee.
Chairman Harkin. Thank you very much, Mr. Secretary.
The committee will stand adjourned subject to the call of
the chair.
[Whereupon, at 12:48 p.m., the committee was adjourned.]
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A P P E N D I X
February 7, 2007
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DOCUMENTS SUBMITTED FOR THE RECORD
February 7, 2007
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QUESTIONS AND ANSWERS
February 7, 2007
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