[Senate Hearing 110-44]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 110-44
 
                    2007 FARM BILL OPPORTUNITIES FOR
                       VERMONT AND THE NORTHEAST

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

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION


                               __________

                             MARCH 12, 2007

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


  Available via the World Wide Web: http://www.agriculture.senate.gov



                      U.S. GOVERNMENT PRINTING OFFICE
35-044 PDF                    WASHINGTON  :  2007
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government
Printing Office Internet:  bookstore.gpo.gov Phone:  toll free (866)
512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,
Washington, DC 20402-0001 



           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

                              ----------                              
                                                                   Page

Hearing(s):

2007 Farm Bill Opportunities for Vermont and the Northeast.......     1

                              ----------                              

                         Monday, March 12, 2007
                    STATEMENTS PRESENTED BY SENATORS

Leahy, Hon. Patrick J., a U.S. Senator from Vermont..............     2
Sanders, Hon. Bernard, a U.S. Senator from Vermont...............     3
Welch, Hon. Peter, a U.S. Congressman from Vermont...............     4

                                Panel I

Douglas, Hon. James, Governor, Vermont...........................     6

                                Panel II

Folsom, Jacklyn, President, Vermont Farm Bureau, Cabot, Vermont..    15
Magnan, Mark, Dairy Farmer, Fairfield, Vermont...................    13
Roberts, John, Butterwick Farms, West Cornwall, Vermont..........    18

                               Panel III

Daley, James, Campaign Director, Northern Forest Alliance, Stowe, 
  Vermont........................................................    27
Hall, Richard, East Montpelier, Vermont..........................    24
Wonnacott, Enid, Executive Director, Northeast Organic Farmers of 
  Vermont, Richmond, Vermont.....................................    25

                                Panel IV

Berlin, Linda, Ph.D., University of Vermont, Department of 
  Nutrition and Food Sciences, Burlington, Vermont...............    38
Meyer, Andrew, Vermont Soy, Hardwick, Vermont....................    35
Rowell, Willard Jr., Highgate Center, Vermont....................    37
                              ----------                              

                                APPENDIX

Prepared Statements:
    Berlin, Linda................................................    48
    Daley, James.................................................    52
    Douglas, Hon. James..........................................    65
    Folsom, Jacklyn..............................................    72
    Hall, Richard................................................    75
    Magnan, Mark.................................................    77
    Meyer, Andrew................................................    83
    Roberts, John................................................    88
    Rowell, Willard Jr...........................................    91
    Wonnacott, Enid..............................................    94
Document(s) Submitted for the Record:
Burlington Schools Food Service, prepared statement..............   100
``2007 Lake Champlain Action Plan''..............................   102
200 signatures from Food Service, Custodial Staff, Farmers, 
  Teachers and Other Members of the Community to Hon. Patrick 
  Leahy, Hon. Bernard Sanders and Hon. Peter Welch...............   110
Various letters from citizens and organizations in response to 
  the testimony provided by the Committee........................   182



                    2007 FARM BILL OPPORTUNITIES FOR



                       VERMONT AND THE NORTHEAST

                              ----------                              


                         Monday, March 12, 2007

                                       U.S. Senate,
                                  Committee on Agriculture,
                                   Nutrition, and Forestry,
                                                Montpelier, Vermont
    The Committee met, pursuant to notice, at 10 a.m., Vermont 
State House, Hon. Patrick Leahy presiding.
    Present or submitting a statement: Senators Leahy and 
Sanders, Representative Welch.
    Senator Leahy. Good morning. Welcome to the Senate 
Agriculture Committee's first field hearing this year examining 
the 2007 Farm Bill.
    Just so people understand, we are going to have a series of 
these hearings around the country. Other senators will be doing 
different parts of the country. One of the reasons we are doing 
this one is that we wanted to make sure that people who might 
not otherwise be able to go to Washington could do this. There 
will be hearings in other States, the people who might not be 
able to appear in Washington at our other hearings can appear 
here; it will all be part of the record.
    We have Susan Keith here, who is Chairman Harkin's deputy 
chief counsel, and Eric Steiner, who is here to represent 
Senator Chambliss. Senator Harkin is the chairman; Senator 
Chambliss is the ranking Republican member on the Committee.
    And so the rules will be those rules of the Senate. We will 
also hold the record open for 5 days to make sure that anybody 
that wants to add something to it, they can, and in your 
statements we the people who come to testify have prepared 
statements. We will put the statement in the record, and if you 
could keep your comments to just a few minutes. Your whole 
statement will be made part of the record, and after the record 
comes out, if you find things that you wish you had added to 
it, we will keep it open for that.
    I do want to welcome Senator Bernie Sanders and Congressman 
Peter Welch to the Senate Agriculture Committee. I am a former 
chairman of this committee, and as acting chairman today, I 
have invited them to come. Senator Sanders will be--because of 
some of his committees, be actively involved as we go through 
the Farm Bill.
    Speaker Pelosi and Majority Leader Hoyer had asked if we 
could have Congressman Welch here because he will be able to 
report back to his caucus what is going on, and so I ask 
unanimous consent to the Committee on its rules to allow them 
participate.
    I hear no objection. It is nice being chairman again. And 
Governor Douglas, of course, was kind enough to accept my 
invitation to appear and will testify in just a couple moments.

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM VERMONT

    Senator Leahy. We all know how important agriculture is to 
our State's future. Farming in our State of Vermont is more 
than a job or an industry. It is a way of life. Our landscape 
is defined by our farms, our fields, our forests. And they 
define much of our economy. In particular our agriculture 
economy depends on the hundreds of millions of dollars the 
dairy farmers bring to the State every year, so we have to make 
sure that remains a vital part of Vermont life.
    But our dairy farmers are not going to be able to survive 
unless they can receive a fair price for the milk our farmers 
produce, and with the current depression in milk prices, 
coupled with the ever-increasing fuel costs, near-record feed 
costs, it is almost a perfect storm operating against the dairy 
farmers, and we need help in making sure they get a fair price 
from the marketplace.
    I think everybody in the room would agree that the 
Northeast Dairy Compact was the single best tool for getting a 
fair price for milk out of the market and not from the 
government. But the current administration did kill the Compact 
in 2001. They had the votes to block it and, of course, the 
president's veto pen to make sure it does not come up.
    In 2002 the Vermont Congressional Delegation led the effort 
to create the Milk Income Loss Contract, the so-called MILC 
program. This was modeled on the benefits of the Northeast 
Dairy Compact. The MILC program has delivered nearly $60 
million to Vermont dairy farmers since 2002. Now, it is not 
perfect, but it has been an essential safety net for many of 
our farmers. Unlike the--many of the large commodity programs 
run by the Federal Government, the MILC program is targeted to 
small family run--generally family run farms, and it only kicks 
in when the milk market price plummets, so it really is 
targeted for small farms.
    But it expires in the coming month before the new Farm Bill 
will take effect, so we start with a baseline which is very 
little funding available for dairy programs in the next Farm 
Bill. It is a difficult challenge, but it is imperative, and I 
have spoken in the full committee, full Agriculture Committee, 
that the program must be extended for a short time to assure 
that dairy programs will have an adequate level of funding 
during the consideration of the Farm Bill. And actually, a lot 
of what you are going to say or hear here today will be part of 
the ammunition I will be able to use in that debate.
    There are a lot of other things. There are the important 
conservation programs like the Environmental Quality Incentives 
Program, to rural development assistance for our communities, 
funding to help working forestlands. We will hear how the Farm 
Bill can help that.
    And in case anybody thinks it is just commodities, 
remember, this legislation has one of the largest anti-hunger 
initiatives Congress will consider. Far too many people in our 
communities lack the ability to put food on their tables. In 
fact, the most recent survey of food security by the Census 
Bureau and the U.S. Department of Agriculture says that 35 
million people in the United States live in households that 
face a constant struggle against hunger, 35 million in the 
wealthiest, most powerful Nation on Earth.
    I know that the Administration stated recently they had 
stopped using the word hunger. They call it food security 
instead. A hungry person knows what hunger is. It is almost 
like calling ketchup a vegetable. Hunger is hunger. And that is 
what we are going to call it in the 2007 Farm Bill.
    And finally, there are going to be new opportunities in the 
next Farm Bill to expand the agriculture economy in Vermont, on 
energy production. Vermont is home to many emerging 
technologies like taking waste products to produce energy. We 
lead the Nation on a per-capita basis--now, this is 
interesting. We lead the Nation on a per-capita basis on 
organically certified farms. I take a certain amount of joy in 
that since, as I authored the 1990 Organic Farm Bill. So we 
want to find ways to expand that.
    Organics is the fastest growing sector in American 
agriculture, roughly about $14 million nationwide. We also want 
to talk about broadband coverage in Vermont. This also comes 
under Farm Bill. It is interesting what is in here, all the 
rural development, nutrition matters, organic, broadband. And 
so I will put the rest of my statement on the record.

 STATEMENT OF HON. BERNARD SANDERS, A U.S. SENATOR FROM VERMONT

    Senator Sanders. Senator Leahy, thank you very much for 
chairing this meeting, and thank you very much for your 
leadership on agricultural issues for so many years. The 
Vermont Delegation historically has taken saving family farms 
very seriously, and I'm proud of the leadership role that we 
have played with Senator Jeffords, and I know that Congressman 
Welch is going to be active in playing a leadership role in the 
House, as well.
    As Senator Leahy indicated, this Delegation is aware of the 
crisis in dairy. We know that the prices farmers are receiving 
today in real dollars are perhaps 50 percent of what it was 20 
or 30 years ago. We are aware that every month another farmer--
more farmers are going out of business, and we are all aware 
that if we lose family based agriculture here in the State of 
Vermont, it will be an horrendous disaster for this State for 
so many reasons.
    It will be a disaster economically in its impact on our 
rural way of life; it will impact what Vermont is all about. It 
will be an environmental disaster. It will be a disaster in 
terms of tourism.
    We are, in my view, the most beautiful State in the United 
States of America, and you know why we are the most beautiful 
State? Because you keep the land open. And if we lose that, we 
lose so much. So I think I can speak for all three of us in 
that we are pledged to do everything that we can do to preserve 
family based farming here in the State of Vermont.
    The bad news is that prices are historically low, but the 
point that I want to make this morning is I want everybody to 
understand that if you think it is just Vermont dairy farmers 
who are up against the wall, you are wrong. The crisis facing 
family based agriculture exists throughout the United States of 
America, in dairy and in other commodities.
    According to the USDA's July 2006 Backgrounder, since 1980 
the number of dairy operations in the United States is down by 
75 percent. We have lost three-quarters of our dairy operations 
in this country since 1980, and it is not just dairy. We are 
losing family based agriculture in every commodity, and what is 
also happening, as the people in this room know, that while the 
small farmers are going out of business, the big guys are 
becoming bigger. Farmers in all commodities are being squeezed 
by the continued consolidation at the processor and the 
retailer level. And I know this is an issue that Senator Leahy 
has looked at not only in Agriculture but on the Judiciary 
Committee, as well. A single dairy processor, Dean Foods, now 
controls 30 percent or more of U.S. fluid milk, and Dean Foods 
has regional control in our area, which is as high as 70 
percent.
    The University of Missouri reported recently that in 
commodity after commodity, a small number of commodities 
dominate, and that is true whether it is beef packing; it is 
true whether it is pork packing; it is true whether it is flour 
milling; it is true whether it is ethanol production. Almost 
every commodity, fewer and fewer large corporate interests 
control production and distribution. The consolidation of 
agriculture puts family farmers, the people who actually raise 
and grow our food, at the mercy of fewer and fewer large 
buyers, and that is an issue that we are going to have to 
address.
    In my view, and I have been meeting with farmers all around 
the State, I know that there is a lot of support for the 
Northeast Dairy Compact concept. My hope is that we can move 
forward with a regional approach, have regional compacts around 
the country which will bring us national support. I think we 
are in agreement that we would rather get help for our farmers 
from the marketplace rather than from the government.
    As Senator Leahy indicated, we have made real progress with 
the MILC program. It is going to be a very, very tough fight, 
but we hope to perhaps do even better.
    My one request of everybody as I conclude is please reach 
out to your friends and your organizations in the Midwest, in 
the South, all over this country. The opposition to us as we go 
forward trying to protect family based agriculture will be 
very, very strong. We need a strong grassroots effort to 
counteract that opposition, so let us work together, and at the 
end of the day let us preserve family based farming in this 
State, and let us expand it and strengthen it.
    Thank you very much.
    Senator Leahy. Congressman Welch.

 STATEMENT OF HON. PETER WELCH, A U.S. CONGRESSMAN FROM VERMONT

    Mr. Welch. Thank you. Senator Leahy, I want to thank you 
for holding this hearing and inviting me as a Member of 
Congress to participate, and I want to thank you on behalf of 
Vermonters, too. You have been doing this since 1974, a member 
of the Agriculture Committee, serving as chair at various 
times, and really being a leader that has held us together, and 
we are going to need that leadership again more than ever this 
year.
    The Vermont farm community must be heard as Congress 
prepares to write the 2007 Farm Bill. I want to thank Senator 
Sanders, also, for your unwavering commitment that you are 
taking with you to the Senate and certainly that you had as a 
member of the House, and I am going to try to carry on that 
tradition that you just described. And I have never, ever been 
more impressed with our extended farm community as I have been 
in the past 2 months as a new Member of Congress.
    So many Vermont farmers, suppliers, innovators, and members 
of our community have taken the time to talk with me, meet with 
my staff, invite me to your farms, and even come to Washington 
to talk about the challenges we face. These are tough times, 
but everyone is certain that they are going to do what they can 
to give us a bright future.
    We are here today to give the Vermont agricultural 
community the opportunity to be on the record, express your 
needs, and work together toward a better agricultural policy 
for all Vermonters, and I am committed to working as a strong 
and united delegation with Senator Leahy; with Senator Sanders; 
and of course with our Governor, who is here today; and the 
General Assembly, who has been taking leadership efforts on 
behalf of Vermont agriculture.
    And I will fight hard for dairy, for our organics, for 
conservation programs, forestry, and our innovative energy 
programs and our nutrition programs. We have got to build 
coalitions of like-minded members from the Northeast for a 
regional approach, and I will work, too, to be successful in 
that effort.
    I understand, as Senator Leahy and Senator Sanders and all 
of you know, that a local agricultural economy is critical to 
Vermont. It is critical to our Nation. It produces jobs and 
value-added products. Our farmers are the stewards of the land 
and keep our land open. It is what makes Vermont what it is.
    Our dairy farmers need a stable price, and they need a fair 
price. It is that simple. Our organic farms must be protected 
from weakened standards lobbied for by corporate giants. And we 
should be pursuing energy-saving initiatives and nutrition 
programs that also help to strengthen our family farms. There 
are going to be obstacles along the way. We know that. There 
always are. But a one-size-fits-all dairy policy for our 
country is as good as no policy at all.
    And I tell you what I hope many of you already know: We are 
committed to bringing home the strongest possible Farm Bill for 
Vermont, and we hope for your help, and we appreciate your 
advocacy. This is important for you, but it is extremely 
important for all Vermonters. Make no mistake. Every Vermonter 
has a stake in a good Farm Bill.
    Thank you.
    Senator Leahy. Thank you very much.
    We find when we have these field hearings in other States 
we get one advantage we rarely get in Washington. We usually 
have the Governor of the State testify, and I am delighted that 
my friend, Governor Jim Douglas, is here this morning.
    Governor, you know your way around here well.
    I might mention as the Governor's coming up here to take 
his place, I also want to thank the Legislature for letting us 
use this room and Francis Brooks, the new Sergeant-At-Arms, for 
making so many things available to us.
    I could not help but think sitting here, Governor, I 
remember as a little boy sitting here in a parent's lap and 
kind of wondering what this awesome place was. It was just 
huge. You know, two, three, 4 years old, this huge place. It 
shrunk a little bit. It seems to be the same place. I never 
thought I would be sitting here like this.
    Governor, thank you for being here. Please proceed.

       STATEMENT OF HON. JAMES DOUGLAS, GOVERNOR, VERMONT

    Governor Douglas. Mr. Chairman, thank you very much. You 
are still a youngster, so we are glad you are here with your 
colleagues and do want to welcome you to our Statehouse, to 
your Statehouse.
    As you noted in your introductory remarks, not everybody 
can conveniently get to the national capital, so it means a 
great deal to have you here and give Vermonters an opportunity 
to talk about a very important matter for the future of our 
State and indeed our Nation.
    It is meaningful that you have given us the chance to help 
as you formulate the new Farm Bill and support this. All three 
of you gentlemen have noted that we work together. We are all 
in this together. We are of a common mind when it comes to 
preserving the family farm and ensuring the success of 
agricultural enterprises in our State and others, so you have 
the full support and cooperation of my administration as you 
work to formulate the Farm Bill and develop legislation that 
helps our farmers and forest owners across Vermont and our 
region.
    Reauthorization of the Farm Bill, as you noted, Mr. 
Chairman, has far-reaching impact on a variety of areas, 
including forestry, commodities, conservation, energy, 
research, trade, food stamps, and rural development with a vast 
majority of the budget allocated to fund food assistance 
programs.
    The Food Stamp Program is a vital nutrition assistance 
program serving primarily children and elders. It gives Vermont 
families the buying power they need to make good nutritional 
choices. I would urge the committee to strengthen the Food 
Stamp Program by increasing the minimum benefit of $10, which 
has not changed in over 20 years, and increasing the amount of 
savings a family can have and still qualify for food stamps and 
streamlining the application process in order to reduce 
barriers to participation.
    This makes it even more important to work together to 
ensure that we are utilizing the funds available to assist our 
agricultural community in the most effective manner possible. 
Agriculture and forestry are the cornerstones of Vermont's 
economy. Farmers produce $3 billion worth of agricultural 
products every year, and the forest-based economy contributes a 
billion dollars annually. It is our second largest 
manufacturing sector.
    As you are aware, this past year has been extremely 
challenging for farmers in Vermont. Inclement weather has 
resulted in very poor crop conditions. As a result of these 
conditions, my administration, in cooperation with our 
Legislature, has provided $11.6 million in direct assistance to 
dairy farmers over the past year. While this aid was necessary, 
this type of support, especially from a small state, is not 
sustainable. Other approaches are required.
    An income safety net is needed for our dairy farmers due to 
the extreme fluctuations in price and market. The best way to 
provide an income safety net would be a regional pricing 
initiative, similar to the Northeast Dairy Compact, that would 
help stabilize the marketplace. At the very least, as you have 
noted in your introductory remarks, we must improve the current 
support available to farmers through the MILC program.
    The Vermont dairy industry would also benefit from a 
reliable method of price discovery for dairy commodities. A 
more transparent and audited price reporting system would 
ensure a viable dairy commodities market that would allow dairy 
producers to better manage milk price risk.
    We support revenue insurance for dairy farms as developed 
by the Pennsylvania Department of Agriculture. I think the 
priority is to work together to garner support for these 
options that contribute the most to farm gate prices for our 
dairy farmers.
    The key title of the Farm Bill will deal with energy. The 
Renewable Energy Grants Program, as administered by USDA Rural 
Development, has been important to many of our dairy farms. 
Today there are six farms using or planning to build digesters 
funded in part by these grants. Renewable energy systems have 
tremendous public benefits to help farmers address high energy 
costs; reduce methane emissions, odor, and pathogens; while 
allowing for better management of the manure resource to better 
protect our public waters.
    There are many opportunities, I think, for Vermont to be a 
leader in energy, both on the farm and in the forest. Vermont 
has joined a national initiative and formed a 25 by 1925 
committee that intends to address these needs.
    I have asked the committee to develop specific 
recommendations that you and your colleagues can consider for 
the energy portion of the Farm Bill. They include allowing a 
greater percentage of total project costs to be grant-funded, 
allow for a lower non-Federal match so that farmers can utilize 
USDA-NRCS EQIP dollars and 9006 dollars in the same project, 
raise the threshold of total project costs before requiring an 
independent feasibility study, streamlining the required 
paperwork, and eliminate the need for an independent qualified 
consultant on projects over $1.2 million.
    One of the objectives of my administration has been the 
Clean and Clear initiative for the environmental improvement of 
Lake Champlain. Programs such as the Conservation Reserve 
Enhancement Program, or CREP; the Environmental Quality 
Incentive Program, or EQIP; the Wildlife Habitat Incentives 
Program, or WHIP--you folks are good with acronyms down there 
in Washington, I think. The Farmland and Ranchlands Protection
    Senator Leahy. We still call it hunger, though, not food 
security.
    Governor Douglas. The Farm and Ranchlands Protection 
Program--it is all consonants, so that does not work. These 
have been major benefits to our farmers in the environment. It 
is imperative, though, that regional conservation equity 
remains in place for these programs to have continued success.
    Farmers cannot afford mandates associated with 
environmental issues. Our goal is to provide the resources and 
financial assistance needed to help farmers comply with 
environmental laws. Vermont should be recognized as one of the 
few states that have made significant contributions to programs 
dedicated to conservation.
    My Commission on Climate Change was established to examine 
the growing scientific consensus that increasing emissions of 
greenhouse gases to the atmosphere are affecting the 
temperature and variability of the Earth's climate. I know that 
agriculture, state and across the Nation, can play a 
significant role in reducing greenhouse gases. Stable and 
managed forests are significant carbon sinks and contribute to 
clean air and water. By working together, the State and Federal 
Government can more effectively develop programs to implement 
practices that will reduce greenhouse gas emissions and 
increase soil and biomass carbon sequestration.
    Removing the prohibition of interstate shipment of state-
inspected meat products will level the economic playing field 
for our small businesses and help small meat processors grow 
and expand into new markets. Foreign produced meat and poultry 
products can be freely shipped and sold anywhere in the Nation, 
which allows them to have greater market access than state-
inspected processors.
    Without change, the growing concentration of the slaughter 
industry will continue to leave smaller farmers and ranchers 
with fewer buyers for their livestock and poultry, further 
depressing their financial situation.
    Our diversified farmers, as well as the rural economy, can 
benefit from several other Farm Bill policies, specifically 
continuation and increased funding for the Specialty Crop Block 
Grant Program. This program allows for innovative initiatives 
that improves the competitiveness of emerging and expanding 
diversified farms.
    In order to realize lasting economic success, it is 
imperative that farm owners have access to the best business 
assistance possible to improve their profitability. Vermont 
began its Farm Viability Program 4 years ago and has received 
Federal assistance through NRCS. The consideration of a Farm 
and Ranch Profitability Grant Program to improve the 
profitability of farms through technical assistance for 
business planning would further support the effort.
    For farmers to compete in today's market, it is necessary 
to have access to the most up-to-date technology. That is why I 
proposed that Vermont offer universal access to broadband and 
wireless technology anywhere in our State by 2010. There are 
provisions in the Farm Bill that can assist Vermont in this 
endeavor and help connect our rural areas, making all aspects 
of business easier and faster for farmers.
    In addition to all of these provisions, our farmers can 
benefit from several other Farm Bill policies, including farm 
credit policies that better address the needs of new and 
startup farmers and financing opportunities for processing and 
marketing, regional food security and food safety policies, 
changes to organic standards as proposed and endorsed by 
Vermont NOFA, adequate funding for research and extension 
initiatives, and food nutrition guidelines.
    So, Mr. Chairman, I thank you for this opportunity to 
address some of the issues the agriculture community faces in 
regard to the Farm Bill. Our Secretary of Agriculture, Roger 
Albee, and his team and I look forward to working with you to 
develop a Farm Bill that addresses the economic needs of the 
farmers of this great State.
    [The prepared statement of Hon. James Douglas can be found 
on page 65 in the appendix.]
    Senator Leahy. Thank you, Governor. I know that you have 
this active dairy task force here in Vermont looking at ways to 
support the dairy industry, and the State, you and the 
Legislature, made a significant financial commitment to dairy 
farmers last year. It came at a particularly difficult time and 
an important time. You add to that the $60 million we brought 
in from the MILC program since 2002. It is a pretty strong 
partnership here in Vermont. I think--I do not know of many 
States where the Legislature, Governor, and the Congress have 
tried to work so hard at some of these things.
    What about efforts collaboratively with other states? New 
York is a significant dairy State. Pennsylvania is a 
significant dairy State. I mean, like everybody here, I would 
love to get back to a regional dairy program, a Northeast, 
Southwest, Southeast, Midwest. I guess California would be one 
by itself. But what about collaborative efforts?
    Governor Douglas. That is a very good point, Mr. Chairman. 
Vermont's obviously a small State, all by itself, although we 
are the largest dairy State in New England, and through the New 
England Governors' Conference, which I have the honor of 
chairing this year, we will continue to adopt resolutions, send 
them to you for your consideration to highlight the importance 
of a strong dairy industry regionally. Although other States do 
not have that many dairy farms, in New England they consume a 
lot of milk, including most of ours, so it is very important 
that we work together as a six-state region.
    Beyond that, you are exactly right. The State of New York 
is a big dairy State. The State of Pennsylvania is, and the 
three States together, New York, Vermont, and Pennsylvania, 
produce about a sixth of the Nation's milk, and we are very 
close, as you know, to the population concentration of the 
Northeast, so it is important that we maintain that strength.
    Last year our agriculture agency joined with its 
counterparts in those two States to form a Northeast Dairy 
Leadership Team, and they adopted a memorandum of 
understanding. They are pursuing regional strategies, not just 
on pricing but on promotion, on raising the knowledge and 
understanding of the public about the dairy industry to improve 
collaboration with universities, with extension systems around 
the region. So that kind of regional cooperation strengthens 
our hand, obviously because we are such a small State, and also 
provides some real leadership on a regional basis.
    So we are pursuing that, and we are even reaching out to 
our friends in the upper Midwest where our interests have not 
always converged, but Secretary Albee is a good personal friend 
of the Wisconsin commissioner and his deputy, and we hope that 
we will be able to establish some good relationships.
    Just one other note, if I could, following up on your 
initial comment, I really believe that the State has done a 
good job, and I should have noted in my introductory remarks 
that Congressman Welch was the Senate President Pro Tem in this 
building and played an important role in fashioning the farm 
relief effort that we put together last summer.
    I had the chance to meet with Secretary Johannes during the 
recent National Governors' Association meeting, and he was 
impressed favorably with the fact that the State had stepped up 
to the plate, that we were not only----
    Senator Leahy. He has told me the same thing. I think it is 
important.
    Governor Douglas. Well, thanks. So we are not only asking 
for your help; we are willing to do our part.
    Senator Leahy. I see Senator Kittell and the 
representatives are here, too, of the chairs of the Senate and 
House Agriculture Committee, which is helpful. We were worried 
about Peter when he came up here. He was looking kind of 
wistfully at that other chamber. I had to bring him back--I had 
to guarantee to the Speaker I would bring him back.
    Senator Sanders?
    Senator Sanders. Thank you.
    And, Governor, thanks for being here. Governor, the 
opposition to strong legislation to help family based dairy is 
going to be strong. You indicated correctly we will have 
regional problems. Although we are making some progress in 
bringing the regions together.
    Could you talk a little bit about, in your judgment, how 
the State of Vermont can deal with processors who would much 
prefer the government to help family farmers rather than it 
coming out of their profits, and maybe the White House as to 
how we can get them on board the idea of regional compacts and 
what kind of pressure or help we can solicit from them.
    Governor Douglas. I do not know if I can answer the latter 
question, Senator, but I am certainly happy to continue to 
voice my views to the executive branch in Washington as I have 
done for a number of years now.
    Senator Sanders. Do you see any movement on their part in 
supporting a compact type approach?
    Governor Douglas. I guess I would say I was pleased to see 
the Secretary include the milk subsidy program in the budget 
for the first time, admittedly at a level that we might not 
find satisfactorily--satisfactory, but at least it is there, so 
that is a small step, I think, in the right direction. I know 
the Secretary grew up on a dairy farm in the Midwest and 
understands the challenge of this part of the industry, so 
maybe we will have some more support, but I certainly agree 
with your observation about the processing, and we have had 
some real challenges in Vermont for the adequacy, as I 
mentioned in my remarks, of adequate slaughterhouses, for 
example, and so in the budget I presented to the Legislature, 
there is support for a couple of mobile processing facilities 
that many of the farmers suggested, both for animals and 
vegetables, would be very, very helpful.
    We have got a new dairy processing facility in Hardwick; we 
have got a cheese plant in Swanton that has taken over a 
facility that went out of business; we have got the new cheese 
cave in Greensboro form artisan cheeses. We helped the Water 
Buffalo operation in Woodstock and Addison County expand over 
the last couple of years, so there are some new processing 
initiatives. We are still working on a yogurt plant. We want 
one for Vermont, and we are working with our co-ops and others 
to help----
    Senator Sanders. Jim, let me switch gears for a minute. Tom 
Harkin of Iowa has a representative here, and what they will 
tell you is in the Midwest they are moving very aggressively in 
terms of biofuels. Far more aggressively than we are in Vermont 
or New England. Do you have any thought about how farmers can 
pick up some additional income as we struggle with global 
warming and break our dependence on fossil fuels and produce 
locally grown biofuels?
    Governor Douglas. I think that is a very important point, 
and I hope that the energy portion of the Farm Bill will 
consider that and make it even more successful. As I noted, we 
have a number of methane digesters in Vermont now. I know you 
are aware of that. Congressman Welch visited at least one 
recently to see its operation, and we appreciate the USDA Rural 
Development grants that have helped facilitate them.
    But there are other possibilities, too. We have a farm in 
southwestern Vermont that is growing canola seed and milling it 
into biodiesel. We have research at Shelburne Farms under way 
now with wood pellet production developing----
    Senator Sanders. Switchgrass, as well, I heard.
    Senator Leahy. Cellulosity.
    Governor Douglas. Yeah. And it is a product that is less--
has less moisture and is more fuel efficient than wood chips, 
which we have some, of course, in operation in Vermont, as 
well. I think algae is a real possibility for the future, and 
our agriculture agency is looking at that potential.
    But the basic point that you have raised, Senator, is an 
important one. We have, we estimate, about 100,000 acres of 
farmland in Vermont that is unused, and what better way given 
the challenges of the financing of a dairy operation to use it 
than for energy crops? That will help us with our commitment to 
the 25 by 1925 initiative, and I hope and believe that it will 
be an important part of Vermont's agricultural future.
    Senator Sanders. Thank you.
    Thank you.
    Senator Leahy. Thank you, Senator.
    Congressman welcome back to the Statehouse.
    Mr. Welch. Oh, good to be back. Thank you.
    Governor, it was terrific the work that the Legislature 
did, really unique in the country, to provide some help when 
the Federal Government did not do its job.
    I just want to ask you a few things about energy. I mean, 
there are two issues for our farmers. One is a better price for 
their milk, and two is lower expenses, and anything that we can 
do to help on the stable and fair price side or on the cost 
side is going to add to the bottom line, and it is that simple.
    One of the big issues that you have been talking about 
already is energy, and I am wondering if you could expand on 
ways that you would see Vermont, your administration, and the 
General Assembly partnering with us in the Federal Government 
to address energy costs for our Vermont farmers. What, you 
know, specific improvements do you see that could be made to 
Section 9006 to make it easier for farmers that is in the Farm 
Bill to take advantage of renewable energy opportunities?
    Governor Douglas. Well, I suppose more money in this 
section would obviously be useful, but I am indeed grateful for 
the support that Congress through the USDA has provided for 
energy grants in the past.
    We need to contain energy costs, you are absolutely right, 
Congressman, because of the heavy dependence on the use of 
energy on the farm, whether it is in equipment or electricity 
running machinery or--running equipment and lighting the 
buildings. That is why I believe that the possibility of 
generating energy or producing energy on the farm is a key 
strategy.
    Mr. Williamson, the farmer I alluded to with the canola 
crop in southwestern Vermont, now makes enough biodiesel on his 
farm to power all of his machinery and equipment, plus some, so 
reducing energy costs could be--could be achieved by growing 
the energy crop right on the farm.
    Second, this is a bigger issue than the subject of this 
hearing. We are looking at our energy future in a broader 
context. Our major sources of electricity have been very cost 
effective in recent years. They are emission free, as you know: 
A nuclear plant and the hydro facilities in Quebec. But we need 
to plan for our future and continue to find some ways to keep 
the cost of electricity competitive. So that will be an 
important part of what we accomplish.
    I believe that the Climate Change Commission that I 
appointed will come up with some ideas that will help our 
reduced consumption and thereby the cost of operation across 
our State, as well, so I think a combination of looking at 
costs and producing on the farm itself are really where we need 
to be.
    And I want to renew my thanks to you for your help here 
last year and over the last couple of years. We had some other 
important strategies a couple of years ago to reduce borrowing 
costs for farmers, to enhance the property tax exemption for 
farm buildings in our current use program, and it was a 
tremendous cooperative bipartisan effort that I enjoyed working 
with you on, Peter, and I look forward to continuing to work 
with you and your new colleagues in Washington.
    Mr. Welch. Thank you, Governor.
    Senator Leahy. Thank you, Governor. You know, you would be 
interested in knowing a group of us from the Senate Agriculture 
Committee were just meeting informally the other evening and we 
were talking about alternative fuels and realized there is a 
lot more than ethanol. There is methane, there is cellulosity, 
and this will be a significant part of the--of the Farm Bill. 
We will do our best to do that. I would like to--a number of 
things I will talk about later I would like to see.
    Governor, I know you have a million other things to do, and 
I notice you have several members of your staff who I 
understand will be staying here through the hearing. Thank you 
very much. Obviously when you see the final record, if there is 
anything else you would like to add to it, the record will stay 
open for at least 5 days so you can do that.
    Governor Douglas. Thank you. In fact, I am going to submit 
a statement that is a little longer than what I offered this 
morning.
    Senator Leahy. I saw the statement, and I appreciate that, 
and that of course will be part of the formal record. Thank 
you.
    Governor Douglas. Thank you for being here, Mr. Chairman.
    Senator Leahy. The next panel will be Mark Magnan. Many of 
you know Mark. He operates Magnan Brothers, a 600-cow dairy off 
the Chester Arthur Road in Fairfield, and he's a member of the 
St. Albans Co-op; Jackie Folsom is president of Vermont Farm 
Bureau and operates a small--I understand a 55-cow dairy?
    Ms. Folsom. That is right.
    Chairman Leahy. About right?--farm with her husband, Roy, 
in Cabot and Agri-Mark members. They are Agri-Mark members. 
John Roberts operates a 200-cow dairy farm in Cornwall and is 
an Agri-Mark director.
    Mr. Roberts and his wife and my wife and I were going to 
plan more about this hearing on Saturday evening, but we were 
distracted by the birthday party for Judge Sessions and spent 
more time roasting the judge than we might have on this.
    But you are all people I know I have consulted with and my 
staff has consulted with over the years, and I appreciate you 
being here. And please, we will start in the order I called 
you.
    Mr. Magnan, please start with your statement. And again, 
understanding your full statement will be made part of the 
record. Any questions that are asked afterward, if you on the 
way home think, ``What I should have said was,'' you get a 5-
day, catch-up, do-over time to change for the record. And I 
mention that again, and I realize I have said it several times, 
but these hearings are going to be held around the country for 
people who might not be able to come to Washington, or the 
expense of coming to Washington for a hearing, and this is 
going to be integral and a very important part of the Senate 
Agriculture Committee's records.
    Mr. Magnan, please go ahead, sir.

   STATEMENT OF MARK MAGNAN, DAIRY FARMER, FAIRFIELD, VERMONT

    Mr. Magnan. Thank you, Senator. I want to thank you for 
coming to Vermont to bring this hearing so farmers can be heard 
and for your leadership on ag issues over the years. I also 
want to thank Senator Sanders and Congressman Welch for being 
here for their time.
    As was said, I represent Magnan Farm. I am a lifelong 
farmer. I farm with three brothers, my parents. There are also 
11 nieces and nephews that take a keen interest in the farm. We 
do milk 600 cows and have another 600 head of young stock. We 
crop roughly 1100 acres.
    I think this Farm Bill presents an important opportunity. 
It only comes once every 5 years, and it is more than just 
about dairy farmers. It is about consumers, communities, 
agribusinesses, the dairy infrastructure, and the State 
economies. Dairy farms are the backbones of our community. And 
with a strong dairy farm policy, you have a stronger community, 
a stronger economy, and a more vibrant future.
    A couple things I would like to share with you this morning 
are the challenges that we are currently experiencing and our 
recommendations for the committee to consider. One of the 
challenges is obviously the milk price. Our farm's average milk 
price based on components for this year was $13 a 
hundredweight, far below the cost of production.
    Another challenge would be the volatility, the roller 
coaster the milk price takes either month to month or year to 
year. Very hard to plan a business plan on that roller coaster 
pricing. As an example, in 2004 we hit a high of $16.46 per 
hundredweight, and this year, as I said, $13.
    Another big problem this year we have had is cost of 
production. We have a much higher cost of feed due to the craze 
in ethanol. Farmers are on the tail wind of that--of that 
issue. We have much higher costs of sawdust, fuel, fertilizer, 
many insurances, and the problem is all these costs are 
escalating much higher and at a faster rate than the cost--the 
price of milk.
    Another area of concern would deal with MILC. This 
countercyclical program is essential and is very needed. The 
area of concern I have, though, is with the definition of a 
family farm. I do not think it results in equitable treatment 
of our entity where many family farm--many family members work 
together. As I said, it is very needed, but it should be--only 
be a safety net. We truly want to get the bulk of our milk 
payments from the marketplace. To support our farms, more 
dollars need to come from the marketplace, and today--in 1980 
the farmers dairy--the dairy farm's share of the retail dollar 
has eroded from 52 percent in 1980 down to 27 percent in 2006.
    A few recommendations I have for you this morning. One 
would be to establish a national dairy policy that supports 
regional production in milk. This is very important to dairy 
farmers in the region, the consumers, the communities, and the 
States they are in. This is essential to minimize the effect or 
impact that a natural disaster in any one region or the 
contamination of food, agriterrorism, might have on out 
Nation's food supply.
    Second recommendation would be a dairy policy which would 
account for regional differences in the cost of production. The 
Northeast Interstate Dairy Compact had essential elements that 
had the ability to address regional differences in the cost of 
production. The current pricing system does not incorporate the 
cost of production. However, the system does incorporate cost 
of production for processors or manufacturers.
    Beginning with the last month, our farm has been assessed a 
new milk allowance for Class III and IV milk that was produced 
on our farm. This new adjustment is going to be approximately 
23 cents a hundredweight for every hundred pounds of milk that 
we produce, or roughly this is going to cost us over a hundred 
dollars a day on our farm alone.
    I support programs such as MILC to stabilize our price, but 
as I said, the multifamily farm should become eligible to 
receive multiple payments which would exceed the current annual 
production cap. I have no problem with the cap; just make it so 
every farm entity can be eligible for it.
    I also believe that the countercyclical program should 
consider the increase in cost of production and change the base 
from 16.94, which was set when the Northeast Dairy Compact was 
established in 1996, because if you took that 16.94 and 
initiated the Consumer Price Index, today that number should be 
$21, over $21.
    The fourth recommendation would be to assist in stabilizing 
our milk price. A floor price for a Class I mover is needed, or 
another discovery method for Class I should be initiated. In 
our region 46 to 48 percent of our milk is used for Class I 
purposes. To create the Class I price, we should have a 
different pricing mechanism for stability.
    I also believe--I do not believe that Class I has to be 
established based on the price of milk for manufacturing; in 
other words, decouple Class I from Class III and IV. If we 
could work on establishing this Class I price, instead of 
relooking at it every 10 or 11 years for that price that we are 
using to establish Class I, look at it every three to 6 years--
months to reflect the cost of production, retail prices, and 
other market factors.
    I am a proponent of establishing regions in our country and 
mandating a supply control mechanism to manage milk supplies 
within the established regions. We recognize that our prices 
reflect the law of supply and demand, and we as dairymen can 
control the supply. There is more discussion now than ever to 
adopt a controlled supply mechanism.
    I believe Congress should mandate the USDA establish milk 
production regions and establish levels of milk production for 
each region. Regions should be responsible for oversupply of 
milk production in their region.
    The dairy industry has established the CWT program 
identifying five regions in establishing regional safeguards as 
it affects the milk supply for each region. That is a dairy 
farmer-run program, and it is a great model to follow.
    I also feel that the Federal Milk Marketing Orders should 
continue. They continue to support Federal Marketing Orders, 
but make them more responsive to changes in the milk 
marketplace and to dairy farmers' needs. Senator Leahy. Thank 
you. And, Mr. Magnan, we will put the rest of your statement in 
the record, because I do want to give Ms. Folsom and Mr. 
Roberts a chance. We have to keep within the time limits 
available both in the chamber. You stay there, though. I have 
some questions.
    Mr. Magnan. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Magnan can be found on page 
77 in the appendix.]
    Senator Leahy. Ms. Folsom.

 STATEMENT OF JACKLYN FOLSOM, PRESIDENT, VERMONT FARM BUREAU, 
                         CABOT, VERMONT

    Senator Leahy. Ms. Folsom.
    Ms. Folsom. Good morning, and welcome home.
    Senator Leahy. I cannot tell you how good it felt to be 
home the last couple mornings to wake up in Middlesex looking 
out over the fields and all. It is----
    Ms. Folsom. It is a nice feeling, isn't it?
    Senator Leahy. You will have to bring me kicking and 
screaming back on the airplane afterwards.
    Ms. Folsom. Except it is warmer down there, I think.
    Senator Leahy. It is nicer here.
    Ms. Folsom. Oh, that is true.
    My name is Jackie Folsom, and I am president of the Vermont 
Farm Bureau, and as mentioned earlier, my husband and I are 
partners on a 100-acre, 55-cow dairy farm in the little town of 
East Cabot, and we do ship to Agri-Mark. Our milk travels over 
the mountain three miles and ends in up in Cabot Creamery, so I 
know all of you know when you enjoy our good products, you can 
put my face as well as others' on that product.
    On behalf of Vermont Farm Bureau and the 4,200 members 
represented here today, I would like to welcome you to our 
Statehouse and thank you for the opportunity to address the 
committee and guests.
    While Vermont enjoys a reputation as a strong dairy State, 
I would be remiss in not mentioning that the Farm Bureau 
represents all types of farms as well as foresters and many of 
the industries that support our businesses. We are an 
independent, nongovernmental voluntary organization of the 
families of farmers and foresters as well as consumers united 
for the purpose of improving the net income of its members and 
preserving Vermont's rural quality of life. We are proud to 
represent our members in the local, county, State, and national 
arenas.
    Vermont Farm Bureau is the voice of agricultural producers 
of all kinds, sizes, and levels, and our focus for our national 
farm program affecting dairy and other types of farming 
includes the following: We believe the Farm Bill should replace 
the short-term fix of farm subsidies with long-term measures to 
restore a healthy rural economic infrastructure across the 
country, including competitive markets; a national food 
security program that is market driven; and support of a 
diversified agricultural economy complete with local marketing 
programs.
    We support increased funding to improve nutrition-assisted 
programs at schools and other institutions with the purchase of 
more fruits, vegetables, and especially dairy choices that 
would include whole milk. We also continue our support of 
programs such as the Women, Infants, and Children program.
    We urge the full funding of the Perkins Bill to provide 
student loan relief incentive for veterinary students entering 
large animal practice and that these funds be earmarked for 
these students only. It is imperative to not only maintain 
current veterinary practices in rural areas but to ensure the 
development of the next generation of large animal vets.
    We request that Congress clarify and affirm that 
agriculture is not subject to the Comprehensive Environmental 
and Liability Act, CERCLA, nor to the Environmental Planning 
and Community Right to Know Act, EPCRA.
    On the more specific issue of dairy, the Vermont Farm 
Bureau has been a leader on many issues at the State and local 
levels. We have been involved with the Governor's Vermont Dairy 
Task Force, and I also serve on the Northeast Dairy Leadership 
Team which was mentioned previously, a partnership developed 
between Pennsylvania, New York, and Vermont to address regional 
dairy issues.
    There are challenges inherent in the current Farm Bill that 
we in Vermont are asking to be resolved in the 2007 proposal: 
Retention of the Federal Milk Market Order System with orderly 
restructuring to include consolidations and expansions where 
appropriate; permanent reauthorization of the Northeast 
Interstate Dairy Compact and the extension of this concept to 
other areas of the United States to maintain regional supplies 
of fresh milk in the interest of consumers and national 
security; creation of a dairy industry board to work with the 
Secretary of Agriculture to market dairy surpluses, and a 
redefinition of the term surplus dairy products to exclude 
needed Defense Department purchases and government-mandated 
dairy programs; maintaining the Milk Income Loss Contract or 
its equivalent as a safety net, with fair and equal treatment 
in the implementation for all producers. This would include 
reconsideration of the cap to allow equity and equality for 
multifamily businesses. We request this program be included in 
the baseline for dairy.
    We would support returning the payment of the MILC to 45 
percent of the Class I Boston price, remembering that the 
current base of $16.94 is a figure that is 10 years old.
    Adoption and funding of a nationwide Johne's disease 
program to protect the health of farm animals; initiation of a 
study of the benefits and drawbacks of the current producer 
pricing series by the National Agriculture Statistics Service 
and the Chicago Mercantile Exchange used for the price 
determination of milk and examples of how these programs can be 
streamlined for effectiveness.
    Currently, 1 percent of milk traded on the CME can set 100 
percent of the price of milk. We advocate for a better system 
to send price signals to the market.
    Recognize the need to modernize and expand Farm Credit's 
ability to serve agriculture in our rural communities; 
aggressive and immediate action to improve the availability of 
foreign guest workers for dairy and other year-round 
agricultural operations. And although we do recognize that this 
may not be a Farm Bill issue, finding labor continues to be one 
of the greatest economic challenges for farmers in Vermont. We 
urge Congress to create a year-round guest worker category for 
dairy farm workers that will not include any provisions to 
deport all current immigrants.
    Support research that would develop small alternative 
energy and energy efficiency projects on farms that would not 
only lower our own energy costs but provide us with new 
solutions to water quality issues on the farm; continued strong 
presence of USDA offices currently in our rural communities as 
well as an adequate number of well-trained staff to serve our 
industry and guide our farmers in conservation programs and 
disaster assistance.
    On behalf of the 4,200 members of the Vermont Farm Bureau, 
I would like to thank you again for listening to us today. I 
know you will take our concerns back to Washington and work for 
all of your farmers and foresters to make the 2007 Farm Bill an 
opportunity to keep our industry strong into the future. Thank 
you.
    [The prepared statement of Ms. Folsom can be found on page 
72 in the appendix.]
    Senator Leahy. Thank you very much, Ms. Folsom.
    Mr. Roberts.

  STATEMENT OF JOHN ROBERTS, BUTTERWICK FARMS, WEST CORNWALL, 
                            VERMONT

    Mr. Roberts. Senator Leahy, Senator Sanders, Congressman 
Welch, thank you for being here.
    My name is John Roberts, and for the past 30 years my wife, 
family, and I have dairy-farmed in Cornwall, Vermont. We ship 
our milk to Agri-Mark/Cabot, and we're proud of the award-
winning cheese and other dairy products that we produce. We 
started with 32 cows and now milk 200, most of them Brown 
Swiss.
    In addition to being a dairy farmer, I must unwittingly be 
a lover of rollers coasters, because financially that is what 
life on the farm is like, where the rapid downward sweeps are 
longer and deeper than the exhilarating, invigorating upward 
climbs, and we gamble with a financial crash into the ground.
    Having said that, I am basically an optimist. I hope that 
we have reached a unique confluence of events that is going to 
mark a turning point in the pricing structure for milk. And the 
hope that a niche market like organic milk might be the savior 
of the industry is complicated by the low ceiling based on 
evidence in other developed countries for demand.
    Dairy farmers need the opportunity to make a profit, not a 
guarantee. We need to be able to make financial plans that, 
with good management and fiscal responsibility, are not 
derailed by events beyond our control, whether those events 
include adverse weather or sudden change in the demand/supply 
balance.
    Many years' efforts, financed by dairy farmers through 
their promotion activities and the CWT, have helped to increase 
and impact the supply balance. But the present pricing system 
does not reflect current costs of production and thwarts these 
positive efforts. In this day of instant communication, we must 
devise a system that clearly responds to costs of production 
changes, whether it is the price of corn or the price of 
diesel. The simple fact is that farmers need a greater share of 
the retail dollar. Where it used to be that nearly 50 percent 
of the retail dollar came back to the farm, that number is now 
less than 30 percent.
    The ability to recover costs of production is almost 
nonexistent in any meaningful way. Processors and retailers 
being that bit closer to the consumer can recapture their costs 
of production more easily than the producer. The producer is 
left with slim pickings to make ends meet before worrying about 
paying suppliers and maintaining cows, farms, and equipment. 
And all of that money comes back into the local community.
    Linked to the profit opportunity is treating milk 
production and pricing on a regional basis. This would have 
great benefits to America in ensuring food security by 
maintaining regional, economically viable production, close to 
the centers of population. The Northeast Dairy Compact had a 4-
year run of success, returning over $145 million to farmers. 
The Northeast Dairy Compact was supported by farmers, 
consumers, and legislators, and the money came from the 
marketplace to the farmer, not from the taxpayer.
    Although largely political concerns sunk the NDC, the 
process does provide a route map as to how a successful program 
to gain a larger share of the retail dollar back to the dairy 
producer on a regional basis could be done.
    As a foundation of economics, the demand/supply balance has 
an important impact on the price paid for milk to the dairy 
industry. However, with a perishable product, expensive to 
transport in liquid form, small changes in either direction can 
have a devastating impact. This adds up to a need for an 
effective safety net that will catch us all before we hit the 
ground and not on the rebound.
    The MILC program, widely supported by dairy farmers, is a 
helpful program; however, it needs restoration to its 45 
percent level and provisions to take into account the 
multifamily farm operations and their need for an expanded cap 
over 2.4 million pounds of milk.
    Another point is the increasing realization among farmers 
that a positive milk supply adjustment scheme needs to be 
formulated, one that does not rely on a devastating, below-
cost-of-production price to drive the point home. An 
appropriate way to signal dairy farmers when and how to limit 
production needs to be found, with a positive signal, an 
effective signal.
    Another area that has great impact on dairy farmers is the 
environment, both assisting us to ensure that we are compliant 
in the area of reducing our environmental footprint, reducing 
non and point source pollution in particular. Clearly there is 
also the desire amongst farmers, dairy farmers, to be positive 
stewards of the land and the environment. In addition to this 
is the increasingly important role that farmers may play in the 
generation of energy, whether it is wind, manure, or--or 
biomass generation.
    In summation, like Charles Dickens said in the ``Tale of 
Two Cities,'' ``We live in the best of times; we live in the 
worst of times.'' The last few years of rapidly gyrating milk 
prices, adverse weather impacts, and supply/demand imbalance 
have laid bare the inadequacies of the present pricing formula 
for milk. In some ways it is exciting to think we have an 
opportunity here to establish a timely and effective pricing 
mechanism, probably including a supply management component 
that will offer the dairy farmer an opportunity, but not a 
guarantee, to make a profit and establish an effective long-
term economic planning for farms, both for farms and for the 
families.
    Thank you for the opportunity to testify today.
    [The prepared statement of Mr. Roberts can be found on page 
88 in the appendix.]
    Senator Leahy. And thank you very much.
    I think I will start with Mr. Magnan. You touched on one 
thing, and I think it should be emphasized. Even if your milk 
prices go up in the next couple of months, you are not going to 
see--and correct me if I am wrong on this, you are not going to 
see corn and feed prices come down at all with the demand for 
ethanol. Would it be safe to say that at least in the 
foreseeable future those prices are going to stay high, perhaps 
even go higher, as the increased demand for corn and for 
ethanol?
    Mr. Magnan. That is what the market looks like.
    Senator Leahy. And that I do not mean to put words in your 
mouth, but does that limit your ability to grow your business?
    Mr. Magnan. Absolutely. To grow and sustain.
    Senator Leahy. You also mentioned your family operation, 
and it is very typical of what I remember as a child growing up 
here, but somewhat disappearing: You have your family, your 
three brothers, your parents, and so on. As you know when we 
first wrote the MILC program back in 2002, I tried to expand 
the cap to allow operations for multiple families. We won some 
of the milk battles and lost some of them.
    We also know the MILC program is designed for family farms, 
but talk to me just a little bit: How do we set a definition 
that takes care of a situation like yours, which is not 
untypical at all?
    Mr. Magnan. No. Well, in order to answer that, I guess I 
will have to tell you why we have the industry that we have. It 
was pure economics that we all decided to work together. It 
just made sense then to have one milking unit, one line of 
equipment, to save costs. So that cost, that price of milk, is 
what drew us together other than the fact that we do enjoy each 
other's company and----
    Senator Leahy. You never have any family arguments? 
Careful. You are on the record.
    Mr. Magnan. Well, I will say I hope that continues. I think 
that is what our milk price should breed. I think it should 
encourage families to work together. My wife and I currently 
have a 2-1/2-year-old son, and he would just as soon fall 
asleep in the pickup drawing cows than he would in his crib, so 
we want that opportunity.
    Senator Leahy. Well, Mr. Magnan, I can assure you that I 
will continue to work in the----
    Mr. Magnan. Thank you.
    Senator Leahy.--Agriculture Committee to try do not need to 
give the MILC program to huge corporate farming, but----
    Mr. Magnan. No.
    Senator Leahy [continuing]. It is designed to help family 
farms, and you and I both know what family is.
    Mr. Magnan. Absolutely.
    Senator Leahy. We have to define that a lot better.
    And, Mr. Roberts, other than having quoted from one of my 
favorite Dickens books about the best of times and the worst of 
times, you also referred to the roller coaster in milk prices.
    How do you do away with this peak and valley? I mean, you 
must have some nights that you wake up about 2 o'clock in the 
morning and realize you are not only in the valley, but the 
valley's going deeper. How do you do that nationally on a 
program to eliminate that?
    Mr. Roberts. I mean, I think it is going to be very 
difficult. I mean, there is a lot of history here. I mean, my 
sense of where we are with the way the Federal order system and 
the way price is milked is priced is that we have kept adding 
little details each time without effectively going back and 
saying, you know, what is changing? We have gone a long way 
from calling up 40 cheese plants in the M&W system years ago 
and figuring out that is what the price of milk is. We know 
pretty well what the supply and what the demand is going to be. 
So we need a system that reflects.
    As Jackie mentioned, you know, right now on some of the 
commodity exchanges, there are forces that impact very small 
changes in the supply and the demand and have a tremendous 
impact on the price, so we need to have some way of reflecting 
that. There is, of course, a consolidation in the processing 
industry around this country. There is one company in 
particular that dominates the processing industry in the 
Nation. I think they are headquartered in Texas, for some 
reason. And--but, you know--and I think we need to have a good 
look at that, whether this is an effective way to regionally 
price milk.
    And I have been a skeptic of supply management for many 
years. I have looked--you know, at one time years ago we talked 
about supply management and quotas as being a way to save the 
family farm. If you look at what has happened in Europe and 
what has happened in Canada, I believe that they actually had 
an accelerated loss of family farms under a quota system.
    However, having said that, we have got to figure out a 
supply management system, and I am game to do that. I am game 
to have a system that maybe does not include--or does not 
impart a huge financial burden in buying quota to a farmer and 
therefore can inhibit young people getting into farming, dairy 
farming, or something like that. So I do not have a formula for 
an answer for you at this point, Senator.
    Senator Leahy. Mr. Roberts, I think I am going to have my 
staff continue conversations with you as we go into this, and I 
do want in the meantime to ask Mrs. Folsom, who is representing 
the Farm Bureau but also is a dairy farmer herself, as I 
mentioned, you meet a lot with the Farm Bureau. You know that 
there are many around the country who do not like the idea of a 
Dairy Compact.
    Ms. Folsom. Yes.
    Senator Leahy. Would I be safe in saying that you would 
prefer a Dairy Compact if we could do it?
    Ms. Folsom. That is in our Vermont Farm Bureau policy right 
now, yes.
    Senator Leahy. Unfortunately, it is not in the national----
    Ms. Folsom. I know that.
    Senator Leahy.--Farm Bureau policy.
    Ms. Folsom. Actually, this was the first year at American 
Farm Bureau in Salt Lake City that they did not make an attempt 
to delete the words Northeast Dairy Compact, so that is in the 
American Farm Bureau policy currently. You will find their 
lobbyists are not excited about it.
    Senator Leahy. No. I can tell you they are able to contain 
their excitement----
    Ms. Folsom. I am sure.
    Senator Leahy [continuing]. When they come before the 
Senate Agriculture Committee.
    Ms. Folsom. That does not reflect Vermont Farm Bureau.
    Senator Leahy. When I start to raise it, you can see their 
shoulders hunch.
    But we did have the MILC program. If the MILC program had 
not been in place since 2002, would you be missing a lot of 
your members today?
    Ms. Folsom. Oh, I am sure. I am sure. We share the concerns 
that both the gentlemen here have expressed in regards to the 
cap, because that does make a difference, and I think that 
although the Governor stated earlier that the help that the 
State was available--made available to us last year, it is 
certainly nothing that we are looking to continue. That is not 
sustainable, and we would rather have the help with the MILC 
program.
    Senator Leahy. I suspect in a small State like Vermont, you 
have to assume that cannot be sustainable.
    Ms. Folsom. We certainly did appreciate the support of 
Senator--when he was senator, Senator Welch here and the 
Legislature and the Administration in Vermont, but we recognize 
that it is not sustainable, and that is why we are really 
trying to speak with one voice as to what we need, and the MILC 
program currently is--is pretty much the best bet what we have 
got.
    Senator Leahy. Thank you.
    Ms. Folsom. Although as you can hear, we would like the 
Compact back.
    Senator Leahy. So would I.
    Ms. Folsom. I know.
    Senator Leahy. So would I, I can assure you.
    Senator Sanders.
    Senator Sanders. Thank you.
    The number of $16.94, price of $16.94, came from the 
Northeast Dairy Compact a number of years ago. As Mark 
indicated, costs have soared since then. If you had your wish 
fulfilled, what do you think would be a reasonable number in 
the year 2007? Mark?
    Mr. Magnan. Well, I think the Consumer Price Index which 
right now--as I stated right now would be $21.79.
    Senator Sanders. That to you would be a reasonable number.
    Jackie?
    Ms. Folsom. As a dairy farmer, I would not argue with that 
price. I think Bob Wellington, who is an economist, as you well 
know, is looking at a little above $17, $17.20 or something 
like that, but certainly 21 would be wonderful.
    Senator Sanders. All right. But--John?
    Mr. Roberts. I would support that, too. Definitely.
    Senator Sanders. All right. So we have got to recognize 
that costs have soared since that number was determined.
    Some of us have long believed in supply management. We're 
hearing more and more of that now from farmers, and I know it 
is a long and complicated issue. Very briefly, who wants to 
take a shot at kind of describing what you think briefly, what 
kind of supply management system makes sense?
    Mark, do you want to--yeah.
    Mr. Magnan. I would not like to see it on a per-farm basis. 
I would like to see it on a regional basis.
    Senator Sanders. Regional basis. Yeah.
    Mr. Magnan. That would take the pressure off any individual 
farm. It also would enhance ag in any region, and I think every 
region, especially the Northeast, would have the ability to 
control its own supply.
    Senator Sanders. OK.
    Ms. Folsom. I do not think Vermont Farm Bureau has a 
specific policy to supply management, but we certainly are 
looking at a more regional basis. That is one of the reasons we 
are working with the Northeast Dairy Leadership Team and the 
Pennsylvania-New York pieces, but it certainly makes more sense 
to do it regionally than farm by farm.
    Senator Sanders. John?
    Mr. Roberts. Again, I would support a regional basis. I 
think--but we also must need to make sure that it is nationwide 
at any one time so we do not have situations where some of 
these large dairies out West who can add cows very rapidly, and 
I mean in excess of 5,000 cows operations, of which there are 
many, but none in Vermont, and, you know, can add cows very 
rapidly and have an impact on the supply.
    Senator Sanders. All right. One last question. Jackie, you 
and I have worked on agritourism. Do you see that as a 
potential mechanism for bringing revenue income to farmers' 
pockets in the State?
    Ms. Folsom. We have worked on agritourism, and I continue 
to do that at the national level with the ag census. This year 
we will be having a question about the economic benefits of 
agritourism on farms, so we are very excited about that. I 
think it is an option. I think it is not for everybody, as you 
well know, but it certainly is picking up speed all over the 
country. As I talk to other Farm Bureau members, they are 
talking about that type of diversification. It enables farmers 
to stay on the farm, but also more importantly to educate 
consumers about who we are and what we do, which is a huge 
piece that sometimes is missing. So I think it has its place. I 
think it is another choice that farmers can make, and as I 
said, it is not for everybody, but for those that make it work, 
it is great.
    Senator Sanders. Good. OK. Mr. Chairman, thank you.
    Senator Leahy. Thank you.
    Congressman Welch.
    Mr. Welch. Yeah, we will be brief. You have been very 
helpful.
    Mark, let me just ask you, what are some of the specific 
things that we could get out of the Dairy Compact and try to 
get them into--if it is called the MILC program, that would 
make it better and incorporate the benefits that we enjoyed 
when Senator Leahy was successful in getting that Dairy Compact 
Bill passed?
    Mr. Magnan. If you could get the Class I price moved up 
for----
    Mr. Welch. All right. John, how about you?
    Mr. Roberts. I think that is the same--same point of view, 
yes. We can have an effect and impact that.
    Mr. Welch. Jackie, you have a smaller farm. Would that be 
the same for you?
    Ms. Folsom. Definitely. We have a smaller farm, but 
actually, our cows were being sold. We are in transition to 
selling to a young man right now, so that is an exciting thing. 
That, but also getting the cap redirected or redefined I think 
would find would help our farmers here in Vermont.
    Mr. Welch. All right. Well, thank you very much.
    Senator Leahy. What we are going to do is take a 5-minute 
break. We are going to come back because we are running 
somewhat behind, partly because all this is so important. I am 
going to have to be arbitrary and run the gavel, something I 
would not do if I was closer to election time, but I will be 
very arbitrary on the 5-minute rule when we come back.
    Thank you all very much.
    [Recess.]
    Senator Leahy. As part of the next panel, we will have 
Richard Hall. He operates in East Montpelier. It is a 600-, 
700-cow dairy, which has participated in several USDA 
Conservation Cost Share programs, tried a number of 
conservation innovations; Jad Daley--James Daley of the 
Northern Forest Alliance, which is currently working in local 
management of town-owned forestland; and is Enid Wonnacott 
here?
    Ms. Wonnacott. Yeah.
    Senator Leahy. I thought I saw you here earlier. Come on 
down, please.
    Ms. Wonnacott is the executive director of the Northeast 
Organic Farmers of Vermont, NOFA. It is based in Richmond. She 
actually testified, I recall, at one of these field hearings 
back in 1989.
    Ms. Wonnacott. That would be me.
    Senator Leahy. Time, time goes by.
    So we will start, Mr. Hall, with you, sir.

      STATEMENT OF RICHARD HALL, EAST MONTPELIER, VERMONT

    Mr. Hall. OK. I would like to thank you for giving me the 
opportunity to come and testify.
    I am Richard Hall, and I am the president of Fairmont 
Farms. We--presently, actually, we have about 1100 mature 
milking cows, we are milking in two different facilities, and 
about 850 young stock. We have recently gone--over the last 3 
years gone through some generational transfers on our farm and 
bought out my mom and dad and also a neighbor, Austin Cleaves, 
that was part of our farm and brought in my wife's nephew, 
Tucker Purchase, and--and that is our current ownership right 
now.
    And we have a background that goes back; Austin and my dad 
have been working closely with NRCS. We incorporated in 1993, 
built a new facility. We had some difficulty getting cost share 
assistance because we had a new facility, and we sought out 
other funds.
    We actually secured a community development grant through 
the town of East Montpelier which we paid back, and that is how 
we built our first manure storage. And as the herd grew, we--
and we needed to comply with large farm permits, we tried for 
EQIP funding. It is highly competitive. We actually tried three 
times and finally were granted a contract in 1904.
    Some of the positive experiences we have had with EQIP, we 
did receive excellent assistance as we went through the 
planning process. We had a lot of people working with us, and 
they were able to work closely with the manufacturers to make 
adjustments and changes in some of the designs that we made in 
our manure storage. Also, the overall farm evaluation that was 
done in other areas that needed work I thought was very 
complete, but yet it was--it was also practical.
    The actual engineering of the manure storage, like I said 
prior, was real cutting edge. We kind of changed our ideas as 
we went. They were able to adapt to our changes. We were using 
a lot of sand, and we were dealing with sand-laden manure and 
wanted a structure that we could drive into and remove solids 
off the bottom, and they were able to come up with a real good 
design that fit our needs. It was also--we were under a fair 
amount of pressure to get this done in terms of our large farm 
permit, and the staff was able to work fairly quickly to make 
sure we got it done within that construction season so we met 
the needs of our permit.
    Some of the challenges that we did have as we did it, we 
secured a line of credit to cover the expense of the project 
ahead of time, figuring at completion the payments would be 
made. The payments were very slow. It was probably about 6 
months after completion that we finally did get reimbursed on 
that. It was probably about $6,000 worth of extra interest 
costs that cost the farm.
    I think there is, once we are kind of going through the 
process, a little bit of lack of flexibility once these designs 
are all made previously and then as--during construction there 
is a lot of advice given and things need to change, and we need 
to be able to make those changes, and that can be difficult at 
times.
    Also, there is a couple of years ahead of time that you 
start planning for this EQIP project. Then the EQIP is--is 
only--it is a 5-year--it is a 5-year program, and to me it is 
really a long period of time, and ideas on the farm would 
change during that period of time, and we need to be able to 
change that. I thought that we could also use some more 
technical assistance and not have to hire as much outside help.
    Future plans, we are going to go through the grant 
application process this coming spring for a methane digester, 
and we definitely will not proceed unless we can receive grant 
money for that and are looking forward to a lot of the benefits 
that the digester could bring to us and certainly are hoping 
that will continue to get funded at a high level. And we--on 
our second farm we are going through permitting on that, and 
there is going to be continued need to be--money to take care 
of environmental issues there.
    And that is all I had. I just briefly wanted to say that 
the--although this is very important to us, all these 
environmental programs--or these programs that help us pay for 
these environmental fixes on the farm, the milk price really is 
primary to this, and if we had the money and were more 
profitable, a lot of these things would take care of themselves 
and we would not need as much outside money.
    [The prepared statement of Mr. Hall can be found on page 75 
in the appendix.]
    Senator Leahy. You probably would not be surprised to know 
you are not the only person who has told me that. And you are 
so right.
    Ms. Wonnacott.

  STATEMENT OF ENID WONNACOTT, EXECUTIVE DIRECTOR, NORTHEAST 
         ORGANIC FARMERS OF VERMONT, RICHMOND, VERMONT

    Ms. Wonnacott. Thank you very much for allowing me to be 
here.
    My name is Enid Wonnacott. I am the executive director of 
the Northeast Organic Farming Association of Vermont. I have 
been at NOFA for 20 years, and I have witnessed several farm 
bills. They have not historically promoted policies that favor 
small farms, nor local food systems. Rather, they have been 
directed to the production and export of commodity crops.
    Michael Pollan recently wrote that most Americans are not 
engaged in the process of creating the Farm Bill, that many 
people do not know a farmer nor care about agriculture. But we 
all eat. And he recommended that this time around let us call 
it the Food Bill. Of course, Vermont's different in that most 
Vermonters know farmers. Most Vermonters care about 
agriculture, but it begs the question: How would our 
agricultural system be different if our country created a food 
bill or a farm and food bill every 5 years?
    Many people question why the national market for organic 
food increases more than 20 percent a year or why organic 
farming is the fastest growing agricultural sector in Vermont. 
There are currently 394 organic producers in Vermont growing 
food on 66,000 acres, over $60 million in gross sales, and by 
the end of 2007 18 percent of the dairy farms in Vermont will 
be organic.
    The growth may be based on science or fear or taste, but 
more than these factors, I think consumers want to know where 
their food comes from. They want a food experience. They want 
the opportunity to buy food directly from the farmers of 
Vermont and from their neighbors.
    NOFA-Vermont supports a Farm and Food Bill that focuses 
less on the development of export markets and more on the 
development of local and regional markets. With relocalization 
as the screen, some of the highlights of a 2007 Farm and Food 
Bill would include support for organic programs that will help 
bridge the gap between demand for organic food products and 
supply, including reauthorization of the Organic Certification 
Cost Share--it has made a big difference for a lot of farmers; 
an organic conversion program that is rooted in on-farm 
technical assistance; a credible and respected national organic 
program that works to maintain the integrity of the organic 
label.
    Senator Leahy. Yes.
    Ms. Wonnacott. And the removal of Federal regulatory 
barriers that impede the development of local and regional 
markets, especially for meat. It would include a nutrition 
title that meets the mutual goals of market development and 
food access creating a new Child and Youth Nutrition Program 
modeled after the Senior Farmers Market Nutrition Program that 
supports local food purchasing contracts to low-income child-
care centers, summer feeding programs, and school food 
programs; that enables food stamps to be used at farmers' 
markets, farm stands, and CSAs, which is supported in USDA's 
new proposed WIC rules. Currently $4 million a month is being 
spent in Vermont in food stamps, none of which are being 
captured by farmers in Vermont. And that is because local 
markets do not have the capacity to accept electronic benefits.
    A nutrition title that supports the components of the child 
nutrition and WIC Reauthorization Act, specifically Section 
122; access to local food and school gardens, which was 
authorized but not funded by Congress; and a title that would 
strengthen the Food Stamp Program by increasing the minimum 
benefit.
    This Farm and Food Bill would support a research title that 
mandates a risk assessment on emerging agricultural 
technologies, like genetically modified organisms. This 
analysis needs to take place at the Federal level to provide 
clarity for the States. That levels the playing field with 
research on organic and sustainable agriculture. Despite the 
growth in organic, funding for organic research has remained 
stagnant at a half of 1 percent of all research dollars.
    A research title that prioritizes classical plant and 
animal breeding within the National Research Initiatives' 
germplasm program to maintain genetic diversity and seed and 
breed stock that is adapted to changing environmental and 
climactic conditions; and an energy title that supports energy 
efficiency for small farms and support for on-farm energy 
production. Currently most of the funding support has been for 
larger farms and not necessarily appropriate to scale for small 
farms, and by small in Vermont I mean less than 80 cows. The 
support has been for farms of larger than 80 cows.
    There are many current programs that support these 
priorities that NOFA-Vermont has taken advantage of and 
appreciate, including the value-added producer grants, 
community food projects, competitive grants program, Farmers' 
Market Promotion Program, Senior Farmers Market Nutrition 
Program, and SARE. NOFA-Vermont currently receives or has 
received Federal support for our program work from these 
important programs.
    In closing, now that we are beeping, I would like to 
advocate for the work of the Commission on Small Farms in their 
1998 report entitled ``A Time to Act.'' Many of the 
recommendations of NOFA-Vermont and complementary national 
organizations are embodied in the Commission's report. The 
Commission, for instance, recommended the creation of a new 
title from the 2002 Farm Bill----
    Senator Leahy. Thank you.
    Ms. Wonnacott [continuing]. The small farm title. Thanks.
    [The prepared statement of Ms. Wonnacott can be found on 
page 94 in the appendix.]
    Senator Leahy. Thank you very much.
    Mr. Daley.

 STATEMENT OF JAMES DALEY, CAMPAIGN DIRECTOR, NORTHERN FOREST 
                    ALLIANCE, STOWE, VERMONT

    Mr. Daley. Chairman Leahy, I would like to ask for 
permission to offer an amendment to my colleague's suggestion 
of a Farms and Foods Bill and make it Farms, Foods, and Forests 
Bill.
    Ms. Wonnacott. Good. I like that.
    Mr. Daley. The headlines----
    Ms. Wonnacott. I support that.
    Senator Leahy. As you know when I became chairman of the 
Committee, I changed the name to Agriculture, Nutrition, and 
Forestry, so----
    Mr. Daley. And in fact, I wanted to start by noting, in 
case Vermonters are not aware, that you have been I think the 
single greatest champion for U.S. Forest Service state and 
private forestry programs of any member of the Congress, at 
least in the time I have been doing this work.
    Senator Leahy. Thank you.
    Mr. Daley. And in fact, if you only take away one theme 
from my comments today, it is that our Department of Forests, 
Parks, and Recreation is doing a tremendous job of working with 
landowners and communities on forest conservation and 
stewardship, and if we can fund the programs that they use, 
that would be, you know, a great assistance that the Farm Bill 
could provide to the future of our forests here in Vermont and 
across the country.
    One bit of context that I want to offer before diving into 
some policy recommendations, if you are not familiar with the 
``Forests on the Edge'' study that was just completed by the 
U.S. Forest Service, I commend it to your attention, and what 
the Forest Service found is that 44 million acres of private 
forestland across the country will be developed in the next 25 
years, and when you look at the State of Vermont, almost the 
entire State is projected to see medium or high rate of change 
from forest development.
    The Connecticut River watershed, of course, close to 
Congressman Welch's heart, is ranked in the top 20 watersheds 
in the Nation for projected future development. So we are 
looking at suburbanization of Vermont's forests by subdivision 
and development on a massive scale, and I would suggest to you 
that puts the Vermont way of life at risk.
    The good news is that this has really unified the forest 
community in ways never seen before. We kind of figured out in 
the great words of Benjamin Franklin that we will either hang 
together or we will hang separately, and so we have--we have 
come together to develop a comprehensive forest policy package 
for the next Farm Bill that is supported at the State level, at 
the regional level, and actually we have now got a new national 
Forests in the Farm Bill Coalition that includes the hardwood 
lumber manufacturers on one side of the table and the 
wilderness society on the other.
    And so I just want to give you four areas of policy 
recommendation that are focuses for us and then close with a 
couple of words from the next generation of Vermont forest 
landowners.
    My four areas of policy recommendation. The first is to 
fund existing programs that work. You, Senator, have led a 
letter for many years asking for annual appropriations for 
State and private forestry programs, and we need that promise 
to be kept. We established these programs in the Farm Bill. We 
need as many of them to have mandatory funding as possible, but 
as we have learned with some programs, even mandatory does not 
seem to be enough to actually deliver that funding, so we need 
to fund the programs that work, like forest stewardship, forest 
legacy, forest utilization and marketing, and others.
    Two, the forest community has come together behind a new 
State forest planning process that would mirror the recent 
State wildlife plans that have been completed across the 
country, and this would give us under the leadership of our own 
great State forester here, Steve Sinclair, and others like him 
across the country a comprehensive and coordinated approach to 
how we apply these programs. And I think that would help in 
getting annual appropriations if we could show that they are 
performance based and are truly efficient.
    Third, we need to deliver reliable cost share and incentive 
funding for forest landowners. One of the great reasons why 
these forests are being sold across the country and across 
Vermont is that the gap between forestland's value for 
development has risen 117 percent in Vermont since 2001, but 
the costs associated with forestland ownership and the returns 
associated with forestland ownership have not kept pace. So if 
we can find cost share and incentive funding to help compensate 
private landowners for the values that they are delivering to 
the public, that will help close that gap between the value 
they are able to derive from owning forests as forests as 
opposed to feeling compelled to sell land for development to 
get a reasonable rate of return.
    Two concerns on that front. The national momentum is 
clearly to push that cost share and incentive funding into 
conservation title programs. And if that happens here in 
Vermont, two things would be required for that to work here and 
in States like New York that, as you know, Senator Leahy, are 
also dairy--heavy dairy States. If, for example, EQIP is going 
to provide cost share funding for landowners, No. 1, we still 
want the state foresters and not NRCS to be the entity that 
works with landowners and directs that funding; and second, the 
forest funding should be separate from the ag funding so that 
forestlanders do actually eventually get to the head of the 
line.
    The last thing I want to talk about is community forest 
programs. You noted, Senator Leahy, that my organization, the 
Northern Forest Alliance, has been leading something called the 
Vermont Town Forest Project here helping communities around the 
State take leadership for forest ownership, conservation, and 
management statewide, and so we have two proposals.
    One is a new Community Forest and Open Space Program that 
would deliver funding directly to communities for acquisition 
of forestland. When private landowners can no longer afford to 
hold those lands, we think communities are a great new 
landowner that can continue to deliver those benefits to the 
State of--people of Vermont.
    And second, a community wood energy program. Senator 
Sanders, this goes directly to something that you said earlier: 
How can we find sustainable energy solutions here at home? We 
have a vision for how we can use town forests to help feed 
local wood energy heating systems in our schools and in our 
public buildings so we can create a closed-loop system of 
sustainable carbon-neutral energy from our forests here in the 
State of Vermont. And we would love a little bit of assistance 
through a new community wood energy program to help create that 
new looped energy system using our own forests.
    Thank you very much for your time.
    [The prepared statement of Mr. Daley can be found on page 
52 in the appendix.]
    Senator Leahy. Thank you. And thank you all for keeping 
within time. I am just going to just go to one question. I may 
do--send you follow-ups afterwards, but----
    Mr. Hall, you've talked about EQIP and FRPP, these working 
lands conservation programs. As you know, in the last bill we 
put in this regional equity requirement that guarantees small 
States a small State minimum, get at least $12 million per year 
in conservation funding, but I was struck by what you said 
about sometimes how long it takes getting through the 
bureaucracy. The money might be there, but getting through the 
bureaucracy, which can be overwhelming to a small farmer.
    And you spoke to some of the things that can be done. If we 
took away from this, what would be the No. 1 thing that could 
be done to speed up during these kind of conservation grants 
for people like yourself who want to use them?
    Mr. Hall. You mean as far as getting payments out, you are 
talking about?
    Senator Leahy. You talked about how long it can take in 
your planning and all that--you are paying interest charges 
and----
    Mr. Hall. Right.
    Senator Leahy. What do you do to speed that up?
    Mr. Hall. Well, I think to simplify the contracts is 
probably a good idea, and I have no idea what happens on the 
other end with how much paperwork has to be done, but I assume 
it is just immense, and I did not really understand sometimes 
what the delay was all about, but there is a tremendous delay 
to get this money.
    Senator Sanders. A delay in a Federal program? We are 
shocked.
    Senator Leahy. That is right.
    Mr. Hall. So I cannot really speak to exactly what should 
be done, but----
    Senator Leahy. But certainly the delay----
    Mr. Hall. It is too cumbersome.
    Senator Leahy. We certainly should find a way to speed this 
up is what you're saying.
    Mr. Hall. Yes. And then the other part I was just speaking 
about is----
    Senator Leahy. I am thinking of the huge backlog there is 
right now. It just makes no sense.
    Mr. Hall. Is the length of the contract, I think is just a 
little bit long, and you are trying to look out too many years 
ahead, and things change on the farm in the meantime, so----
    Senator Leahy. And, Ms. Wonnacott, I know that you seem 
discouraged about some of these farm bills, but I think you 
would admit that the Organic Foods Production Act was part of a 
Farm Bill.
    Ms. Wonnacott. Right.
    Senator Leahy. And that has had some positive effects.
    Ms. Wonnacott. Yes.
    Senator Leahy. We had to fight every single major lobbyist 
for 12 years to get it through.
    Ms. Wonnacott. Yes.
    Senator Leahy. Had to change the chairmanship with the 
Agriculture Committee, but we did it, and it is something that 
so many of those that lobbied against it said it would be a 
colossal failure. We now have a $15 billion industry and 
growing. We have the most certified organic farms in the 
country on a per-capita basis here in Vermont, so there has 
been some positive.
    Ms. Wonnacott. Absolutely.
    Senator Leahy. And I have seen some of the food stamp usage 
at farm market--farmers' markets. I do in Montpelier when I go 
to the farmers' market there on weekends when I am home here in 
the summertime.
    Ms. Wonnacott. That is the Farm to Family Coupon Program.
    Senator Leahy. I see that, too. Which was another program 
we started in the Farm Bill.
    What is the most significant threat to the strong standards 
of the current organic labeling law and regulations?
    Ms. Wonnacott. The pasture standard.
    Senator Leahy. The which?
    Ms. Wonnacott. The pasture standard.
    Senator Leahy. Yes. I think that I would hear that same 
answer in a number of other parts of the country; would I not?
    Ms. Wonnacott. Yes, you would.
    Senator Leahy. I also found as one big threat was remember 
back a couple years ago when one producer of organic chickens 
in another part of the country tried to change----
    Ms. Wonnacott. Outdoor access.
    Senator Leahy [continuing]. In a midnight rider and what 
was organic feed for it.
    Ms. Wonnacott. Yes. And the outdoor access requirement, 
too.
    Senator Leahy. Yes. Mr. Daley, you want to close the gap 
between the returns private forest landowners can realize from 
their act as far as--versus the development costs. If you could 
write one thing into the Farm Bill, into the forestry title, 
and there will be a forestry title, to narrow that gap, what 
would it be?
    Mr. Daley. Well, we are very excited about the prospect of
    Senator Leahy. Why don't you pull that microphone a little 
closer.
    Ms. Wonnacott. I'm sorry.
    Mr. Daley. We are very interested in the potential of using 
the conservation security program to reward forest landowners 
for outstanding forest stewardship. CSP has been a very 
successful program in rewarding agricultural producers 
watershed by watershed to reward them for stewardship that 
conserves public values like water quality, and we think that 
especially in this part of the country where most watersheds 
are either predominantly forested or at least equal parts 
forested and agricultural, that we ought to similarly reward 
forest landowners for outstanding stewardship that protects 
water quality and other public values.
    And that is the kind of financial compensation that I think 
private landowners deserve for the environmental benefits that 
they are delivering to the public, and that would, again, 
provide some financial returns that would close that gap 
between the value they can derive from holding forests as 
forests as opposed to converting it for development.
    Senator Leahy. Some of us who live nearby with forestland 
listen to this a great deal.
    Senator Sanders.
    Senator Sanders. Thank you. I will try to be brief.
    Enid, let me start off with you. By the way, 
congratulations on the growth of NOFA. I remember going to your 
meetings a few decades ago, and I was just there a couple weeks 
ago. You had 800 people.
    Ms. Wonnacott. 950.
    Senator Sanders. Who is counting?
    Senator Leahy. And growing.
    Senator Sanders. And young. And a lot of young farmers were 
there, family farmers.
    Enid, you indicated correctly that there has been an 
explosion in the number of people in Vermont and America that 
are now gravitating toward organic foods. The transition, 
whether it is dairy or vegetables or whatever it may be going 
from conventional to organic, costs a bit of money. In your 
judgment, what kind of direct Federal assistance to farmers in 
fact would make sense covering that transition cost?
    Ms. Wonnacott. I think the most helpful is an on-farm 
technical assistance program.
    Senator Sanders. I am sorry?
    Ms. Wonnacott. Is an on-farm technical assistance program. 
It is not necessarily a conversion payment. The market 
processors are actually supplying some conversion payment. What 
the farmers in Vermont have found the most helpful is on-farm 
technical assistance. We have been able to supply that from a 
grant from the Vermont Agency of Agriculture and also through 
the Farm Viability Enhancement Program with cash-flow analysis 
and business----
    Senator Sanders. And NOFA is supplying that?
    Ms. Wonnacott. Yeah. We are a service provider for the Farm 
Viability Program, so we have five technical assistance staff 
right now working with farmers, and it really comes down to an 
individual farm-by-farm decision and process, and it is hard 
without on-farm technical assistance to make a successful 
transition.
    Senator Sanders. Thank you.
    Mr. Daley, some years back when I was Mayor of Burlington, 
we started the first wood chip burning plant in the State, 
which is still going very strongly, and one of the things that 
a lot of people are not aware of is that to the best of my 
knowledge, Vermont leads the whole country in the number of 
schools that are now heating with wood chips. I think, what, we 
are over 40 schools now?
    Mr. Daley. It is a significant number; I know that.
    Senator Sanders. And it is a growing number, and that is a 
good step forward, because it saves school districts money, it 
provides local jobs, and it is friendlier to the environment.
    As we talk about biofuels in general and try to deal with 
the potential disasters of global warming, talk a little bit 
about the role that you see our forests playing in providing 
biofuels to heat our State and so forth.
    Mr. Daley. Absolutely. And, you know, there--of course, 
things are happening at two different scales. As you mentioned, 
you have got, you know, the McNeil Generating Station in 
Burlington and larger scale use of biomass and then community-
scale biomass, as you talked about with the Fuels For Schools 
Program and other smaller scale efforts, and we have been 
focusing most of our attention in this proposal on the 
community scale side of things. We think that that is where 
just a little bit of additional technical assistance and 
funding would make the greatest impact, and we think at that 
Vermont scale we really have an opportunity to create a model 
that will lead the Nation.
    So I do think that there is a wonderful opportunity for us 
to find a carbon-neutral energy source where it is not only a 
beneficial model environmentally but we are sort of becoming 
forest and energy locavores, if you will, and so that is what 
we are trying to establish through this idea of a community 
wood energy program where we would be using, you know, town 
forests to actually supply town energy needs so that people can 
actually see the costs and the impacts of where their energy is 
coming from.
    Senator Sanders. And you save a lot of money on 
transportation, as well.
    Mr. Daley. Exactly. Which of course we know that when you 
truck something from one place to another, that has an energy 
cost. And we think there is a way to rewire the system pretty 
dramatically that here in Vermont we can create something that 
would be a model for the Nation.
    Senator Sanders. I agree with you.
    OK. Thank you very much, Mr. Chairman.
    Senator Leahy. That is an exciting concept.
    And incidentally, the grants for transitioning to organic, 
that is one of the things I raised in the last Senate 
Agriculture hearing. It is one of the things that is going to 
be looked at in the next Farm Bill.
    Ms. Wonnacott. Great. Thank you.
    Senator Leahy. Congressman Welch?
    Mr. Welch. Thank you.
    Mr. Hall, I know you have done a lot of work on nutrient 
management, and I am wondering for your recommendations on how 
the USDA can best support local nutrient management efforts.
    Mr. Hall. We have gotten a lot of support on the nutrient 
management piece of the puzzle. We did on our large farm permit 
on the East Montpelier dairy and we have----
    Mr. Welch. You want to get that microphone a little bit?
    Mr. Hall. And we have recently at our other farm in East 
Craftsbury with the MFO. We are getting financial assistance 
through the State to help develop those plans, and there are 
some really good planners, and we have some choices of who we 
can--who we can have, so that has worked quite well for us.
    Mr. Welch. Thank you.
    And, Enid, I want to thank you for NOFA's great work.
    Ms. Wonnacott. Thank you.
    Mr. Welch. When I first came to the Legislature in 1981, I 
was on the Agriculture Committee. I remember the NOFA folks 
coming in, and I think all five members were in the committee 
room.
    But--you have touched on this a bit, but what are the 
specific recommendations that you would make for the 2007 Farm 
Bill to help farmers who want to make the transition to 
organic?
    Ms. Wonnacott. You know, as I said, I think that largely it 
is a technical assistance issue.
    Mr. Welch. Yes.
    Ms. Wonnacott. There is--and specifically for dairy is 
where the greatest technical assistance is needed. Organic 
vegetable production is a much older industry. There are a lot 
of farmer mentors. There is research that has already been 
done, and there is much more university expertise and support.
    On the dairy and livestock, there are--it is a much younger 
industry largely because until the National Organic Program, 
you could not legally certify organic meat or label it as 
certified organic. So it is a much younger industry. There are 
fewer farmer mentors, and there is very little research that 
has been accomplished, and there are existing regulatory 
barriers. So I think there are certainly policy initiatives 
that could help that transition, but on a day-to-day----
    Mr. Welch. Technical assistance.
    Ms. Wonnacott [continuing]. What is going to help success 
is on-farm technical assistance.
    Mr. Welch. Great. All right. Thank you.
    And, Jad, you are doing great things in West Fairlee with 
the forest there, and you have described that very well. It is 
quite exciting to get that the regionalization, which is the 
theme we are hearing over and over again: Intensify what we 
have; take advantage of it; keep it local.
    What are some of the other specific things that we can do 
in the Farm Bill to help foster sustainability in forestry, in 
local value-added production?
    Mr. Daley. Well, you touched on the West Fairlee town 
forest and the acquisition of that town forest, and I think 
that is actually one of the most exciting opportunities that we 
have for fostering a sustained timber economy in our State and 
sustainable use of our forests. You know, we have got towns 
like West Fairlee, which is a small town of less than a 
thousand people, that is looking to purchase 1800 acres of 
forestland that will be managed for a host of forest products 
as well as public benefits.
    On the other side of the State you have got the town of 
Goshen, which is a town of 250 some residents, that has 
generated about $250,000 of logging revenue from its town 
forest, both feeding local timber supplies and helping, you 
know, balance the local budget for that very small community. 
And they have even used some of the wood for local concerns 
like rebuilding historic structures in the town.
    So to me I think that the idea of community forests is sort 
of a shining example of how we can create a sustainable forest 
economy and culture moving forward in our State.
    Mr. Welch. OK. Thank you.
    Thank you, Mr. Chairman.
    Senator Leahy. I want to thank all three of you for being 
here, Jad, Enid, and Richard, and do not be surprised if you 
get some calls from either me or my staff as we are going 
forward in this Farm Bill. You are going to hear yourself 
quoted a lot in Washington as we get in that debate.
    Thank you very much.
    Our next panel will have Bill Rowell. Bill and his brother 
operate the Green Mountain Dairy in Highgate. That is a well-
run, 900-milker operation. He is a member of St. Albans 
Cooperative. And the Rowells have participated in the USDA 
Rural Development Renewable Energy Grant Program that is 
included in the 2002 Farm Bill.
    Your farm survived a few years ago when the Grateful Dead 
had a major concert, which I read about, in Highgate.
    Andrew Meyer is well known to all of us. He has been very 
active in rural development initiatives. Of course, I used to 
see him on almost a daily basis when he was working for my 
colleague Jim Jeffords in Washington. He's at the center of a 
number of ventures in the Hardwick-Greensboro area. The USDA 
Rural Development just awarded NVDA a grant to fund a 
feasibility study for an agriculture incubator building. He and 
his brothers have an organic dairy operation and continue to 
get high-quality milk--or milk quality awards. He has 
established the Vermont Soy Company. It is an alternative crop 
for farmers.
    Linda Berlin is also very well known to all of us. She is a 
food nutrition specialist with the UVM Extension. She is a 
board member of the Campaign to End Childhood Hunger.
    And if I can just mention personally, thank you. Thank you 
for that.
    And she has an extensive knowledge of the whole range of 
USDA food and agricultural programs.
    And going from my right to left as we have been, Mr. Meyer, 
we will start with you.

   STATEMENT OF ANDREW MEYER, VERMONT SOY, HARDWICK, VERMONT

    Mr. Meyer. Thank you, Mr. Chairman. I greatly appreciate 
this opportunity to discuss the importance of the USDA's Rural 
Development programs and am pleased to address the entire 
Vermont Delegation today. My name is Andrew Meyer, and I am 
from Hardwick.
    As you began the discussions and debate over the 2007 Farm 
Bill, your continued support and understanding of the 
importance of how rural development programs impact the 
economic viability of Vermont and other rural States is 
critical.
    Mr. Chairman, I grew up on a small dairy farm in rural 
Vermont and believe strongly in the significance that farming 
has on Vermont's rural character and economic viability. I 
share my time now on our family's organic dairy farm along with 
two new ventures that I have started: Vermont Soy and Vermont 
Natural Coatings. Both new companies seek to convert raw 
agricultural materials from local producers into value-added 
products.
    Vermont Soy, a new food processing venture, is launching a 
new line of soy products, as well as other organic products. 
Our goal at Vermont Soy is to source high-quality soybeans from 
local farmers. To assist area farmers, we are conducting 
soybean variety trials and developing technical and 
infrastructure support necessary to enable farmers to grow for 
us. As more Vermont dairy farmers seek additional profit-making 
opportunities, growing soybeans along with other specialty 
crops may prove beneficial.
    Vermont Natural Coatings, another Hardwick business that we 
have engaged in, produces whey-protein-based, environmentally 
safe wood finishes. Our new patented formulations, invented 
through research at the University of Vermont, converts a 
cheese by-product into a high-performance, safe wood finish. 
Similar to Vermont Soy, our goal is to convert local raw 
materials into value-added products for farmers.
    Both companies have been supported by rural development 
programs, including staff support, financing, marketing and 
technical assistance. Farmers and small businesses alike can 
benefit from continued support from programs, such as the 9006 
Renewable Energy Program, the Producer Value-Added Program, 
rural enterprise development grants, and increased marketing 
and technical assistance.
    Although functional and useful, some programs require a 
streamlined application process, small project set-asides, and 
a greater percentage of total costs covered.
    Another area of importance that deserves review and 
attention is the need for rural Vermont's telecommunications 
infrastructure. For Vermont's rural businesses to be 
competitive in today's markets, they will need to have access 
to a high-speed regional network system.
    Supporting agricultural-based businesses and ventures in 
rural America is critical. To be successful, programs in the 
2007 Farm Bill need to sustain and enhance infrastructure that 
supports new innovations in food- and agricultural-based 
products. For example, the Northeast Kingdom of Vermont has a 
vast resource of agriculture and forest raw materials; however, 
because the region lacks the necessary infrastructure to 
convert those raw materials into processed goods, the 
communities and producers in that area do not benefit from 
those value-added markets.
    The town of Hardwick, recognizing the market opportunities 
in this area, is quickly becoming the agricultural center of 
Vermont, where agricultural-based businesses are building 
partnerships with local agricultural producers to create and 
produce high-quality value-added products. Currently the 
Industrial Park, which is named the Agricultural Food Park, is 
home to our two new companies and also Vermont Milk Company, 
which is now processing Vermont milk, and the Sugarman, 
processing and producing--packaging Vermont maple syrup.
    Recently the town, as the chairman described, received a 
Rural Business Enterprise Grant to conduct a feasibility study 
on the expansion of our Agricultural Food Park with the 
creation of a new food incubator building. In addition to the 
food business incubator, the creation of a Functional Food 
Technology Initiative as part of the 2007 Farm Bill would 
create opportunities that build and strengthen on the region's 
ability to add value to new products.
    The Rural Development title of the Farm Bill has great 
potential for stimulating Vermont's economic foundation. One of 
the areas that should be addressed is the enhancement of 
biobased products. Recently a nonprofit was started in Hardwick 
called The Center for a Biobased Economy where we are trying to 
educate the public about the importance of supporting an 
economy in which profitability and equity are created, 
maintained, and enhanced through practices that promote 
stewardship, environmental health, and social responsibility.
    Expanding and strengthening agriculture businesses so vital 
to Vermont and other rural States involves the coordination and 
support of many different interests. As Congress discusses and 
debates the Farm Bill, it will be important for the Vermont 
Delegation to recognize the issues that impact the ability of 
new agriculture sectors to flourish.
    Thank you for your time, and I will answer any questions.
    [The prepared statement of Mr. Meyer can be found on page 
83 in the appendix.]
    Senator Leahy. Thank you. And I intend to ask you some 
questions about the broadband.
    Mr. Rowell.

   STATEMENT OF WILLARD ROWELL, JR., HIGHGATE CENTER, VERMONT

    Senator Leahy. Mr. Rowell.
    Mr. Rowell. Gentlemen, it is nice to see you home working 
in the field. I think the first time I came to the Capitol 
Robert Stafford was lieutenant Governor. I was just a boy.
    Senator Leahy. Thank you.
    Mr. Rowell. It is always a pleasure to come to the 
Statehouse. They have good----
    Senator Leahy. I delivered newspapers to him.
    Mr. Rowell. They have good soup here.
    Senator Leahy. They do.
    Mr. Rowell. We have over a thousand cows. We produce 22 
million pounds of milk annually. Our cropland consists of 1200 
acres in three towns: Sheldon, Highgate, and Swanton. Our 
manure waste stream is a 10 million-gallon-a year affair. We 
are located in the Missisquoi Bay watershed.
    Green Mountain Dairy operates as a large farm under Vermont 
ag rules, and we are in the process of implementing an 
anaerobic digester system. We hope to improve our economics; 
manage the waste stream; produce electricity, nearly 2 million 
kilowatts a year. We expect tremendous benefits to the farm. We 
expect tremendous benefits for society and the environment. We 
are quite excited, and expect to be on-line this week.
    Section 9006 encourages development of renewable energy by 
providing money to accomplish the goal. The program falls short 
of the mark. Intended money arrives too late in the process to 
maximize its value to the farm, and it actually creates a 
heightened burden on the farmer.
    Feasibility studies told us without the USDA grant, the 
project was not possible. Lenders were otherwise unwilling to 
commit. We received a grant, $335,000. One of only eight in the 
country awarded. Twenty-nine digester projects applied; eight 
were awarded. A $500,000 cap on the grant means we spent $4 
million or less nationally to reclassify a waste stream as a 
resource. Our project cost us $2 million, and to date we have 
not received one dime. We expect to be on-line this week, and 
the money would have been useful.
    Pleasant Valley farms of Berkshire has been on-line for 
three and a half months. They have not received any money. 
Montagne Farms of St. Albans Bay, still under construction, 
probably better than halfway through the process; they have not 
seen any money. And Walter Gladstone from Bradford, I think he 
is trying to decide whether it is worth the risk. He was the 
fourth project.
    The money is very difficult to qualify. The process is 
simply too complicated if you are a farmer. It turns out the 
money is paid at the end, after the project is up and running, 
with receipted proof of payment.
    This grant proposal took me four and a half months to pull 
all the information together.
    Senator Sanders. But think of all the paper you can now use 
for fuel.
    Mr. Rowell. Well, it is kind of like a Sears catalog.
    Senator Leahy. They have other use. I'm sorry. Go ahead. 
That's for the older members here.
    Mr. Rowell. It took four and a half months to write, and it 
was quite an education. It contains all of the reference 
material for any information the government might require.
    I think we are spending too much time on redundant 
information. You have a dedicated staff here in Vermont that is 
short of time because they are spending too much time producing 
information that you already have. Our budgets, all three farms 
mentioned, were contingent on and included the grant money. So 
as it turns out, we are jumping through hoops waiting for 
eventual reimbursement while the farm pays interest on a $2 
million project. I am sure this does not work as the founders 
originally intended.
    If we want to see more of these projects which the country 
embraces, renewable energy, that has to change. Also, the level 
of funding has to increase, and for the many benefits these 
digesters provide, the number of digester projects need to 
increase.
    Last year we planted 80 million acres of corn. This year we 
will increase that by 10 million acres, and, weather 
permitting, we will produce 13 billion bushels of corn. A 
bushel of corn will produce 2.8 gallons of ethanol, which I 
believe the government subsidizes at 51 cents a gallon. Corn is 
a valuable resource. It has already doubled in price. Some of 
us are concerned we have created a gold rush. The land grab has 
already started.
    As this unfolds, we may see disastrous results with a sharp 
rise in food prices and everything else. We have animals to 
feed and a human population to sustain. We need to protect our 
resources by investing in infrastructure that will maximize the 
benefits to society.
    [The prepared statement of Mr. Rowell can be found on page 
91 in the appendix.]
    Senator Leahy. Thank you. Thank you. And I want to go back 
to a couple of the points you made.
    Ms. Berlin, somebody asked when we were going to see milk 
around here. I want you to know, I am drinking Vermont Pure 
water, but I see the milk is here.

   STATEMENT OF LINDA BERLIN, Ph.D., UNIVERSITY OF VERMONT, 
 DEPARTMENT OF NUTRITION AND FOOD SCIENCES, BURLINGTON, VERMONT

    Ms. Berlin. I brought the milk, but not the milk mustache.
    Linda Berlin, University of Vermont Extension. I first wish 
to extend my thanks to you, Senator Leahy, for chairing these 
hearings and for your ongoing and deep commitment to food and 
farming issues, and to Senator Sanders and Congressman Welch as 
well for being here today.
    My focus today will be on nutrition and hunger issues and 
how important it is for the Farm Bill to prioritize national 
health and nutrition goals along with other critical goals. 
While most people think primarily about the impact of the Farm 
Bill on farmers and rural communities, U.S. agriculture policy 
has a major impact on us all. Simply stated, the Farm Bill 
influences not just what food is grown but also what food is 
eaten.
    The U.S. dietary guidelines, based in sound science, advise 
that we increase our consumption of fruit, vegetables, whole 
grains, low-fat dairy products, along with other 
recommendations. In contrast, the current food environment 
encourages consumption of high-fat, high-salt, high-sugar foods 
which are low in essential vitamins, minerals, and fiber, 
because they are most affordable.
    The obesity and diabetes crises are national consequences 
of this situation. Additionally, rates of hunger and inadequate 
nutrition are growing despite the country's abundant food 
supply. It is my deeply held belief that the Farm Bill needs to 
and can simultaneously promote public health and meet the needs 
of all farmers by setting Federal policy that seeks balance 
between our Nation's priorities of a sound agricultural system 
and healthful, affordable food.
    In the Northeast approximately 4 million people rely on 
agriculture for their livelihoods, and nearly 69 million people 
consume food. We all have a stake in the 2007 Farm Bill.
    I will now expand on three priorities. First, build food 
security through the Food Stamp Program. While many people in 
the Northeast struggle with an excess of calories, nearly 1 
million households, about 13 percent, with over 5 million 
individuals in these 12 States, live in food-insecure 
households. Ironically, obesity and hunger coexist in some 
households because cheap, calorie-dense foods with inadequate 
nutrition appease hunger pains.
    Over 80 percent of food stamp benefits go to households 
with children. Although research demonstrates that food stamp 
recipients receive more nutrients in their diets than their 
low-income counterparts who are not participating in the Food 
Stamp Program, benefits remain inadequate. When money is tight, 
caring parents resort to buying this, Kool-Aid, instead of 
this, milk. To save the difference in equal amounts of these is 
$2.60 for a gallon of Kool-Aid versus milk. Parents in this 
great dairy State of Vermont are faced with similar dilemmas 
every time they shop. Additionally, the Food Stamp Program 
currently fails to reach approximately 40 percent of eligibles.
    The second priority is to promote access to fresh local and 
culturally appropriate foods. The Community Food--Food Projects 
Grants Program is just completing its tenth year of providing 
money to innovative projects that promote comprehensive 
responses to food, farm, and nutrition issues. Senator Leahy, I 
know that you have been a staunch supporter of Community Food 
Projects since their inception.
    Here in Vermont we have used these grant dollars in various 
ways, including to get food grown on small local farms to older 
adults at congregate meal sites; to teach children the joy of 
growing and consuming fresh vegetables; and to build interest 
among diverse community members in providing more healthful 
food choices at schools. These projects are critical because 
they help to support the expansion of community-based food 
systems that are environmentally sound, promote health, and 
strengthen the local economy. These types of impacts reflect 
the core values of Vermonters. In order to further this 
important work, these grants need to be authorized--
reauthorized at a much higher level.
    The third priority is to encourage and promote programs 
that reflect national health goals and nutrition guidelines. 
According to a recent report by the USDA Economic Research 
Service, for Americans to meet the fruit, vegetable, and whole 
grain recommendations, domestic crop acreage would need to 
increase by an estimated 7.4 million harvested acres. Although 
the limited supply may be a consequence of consumer demand, it 
is also true that current agricultural subsidies do not promote 
this increase.
    While some farmers are advantaged by agricultural 
subsidies, Northeast farmers do not win overall. Here, because 
farmers produce relatively small quantities of the program 
crops that now receive commodity program subsidies, much of our 
region receives just 2 cents or less from USDA for every dollar 
in farm sales, compared to some other regions that receive up 
to 15 cents. The Northeast would see a 200 percent increase in 
support levels if allocations were based on the value of 
agricultural production. By expanding the list of commodity 
crops to include specialty crops such as fruits and vegetables 
for human consumption, we could simultaneously address public 
health goals while helping some Northeast farmers.
    Ialso want to speak to improving awareness about what 
constitutes a healthful diet and how to obtain it, and I think 
nutrition education is very important in that regard, and so 
supporting nutrition education is important.
    Thank you very much.
    [The prepared statement of Ms. Berlin can be found on page 
52 in the appendix.]
    Senator Leahy. No, I--I agree. You mentioned the problem of 
both obesity and diabetes, and the question is, we can pay up 
front or pay later.
    Ms. Berlin. Exactly.
    Senator Leahy. Mr. Rowell, I am going to begin with you, 
because we speak about the 9006----
    Mr. Rowell. Yes.
    Senator Leahy [continuing]. Program funds. There has been a 
lot of testimony in the Agriculture Committee that we--we need 
to expand energy production both on and off the farms. We are 
talking about solar, mini windmills, things like this. But what 
I hear from you is a lot of these projects can be good, but the 
process is really bad.
    Mr. Rowell. Yes, sir.
    Senator Leahy. Did you get any impression that anybody read 
all this stuff that you prepared?
    Mr. Rowell. Well----
    Senator Leahy. Did you get feedback to indicate that 
somebody was actually reading this?
    Mr. Rowell. I did not, but I got the impression that if--if 
we did not produce that document, we were not going to get the 
money. And now I am getting the impression----
    Senator Leahy. Did you ever read Catch-22?
    Mr. Rowell. Yes, sir. These--these provide a good 
management tool for a farm, and we have enough nutrients going 
into the lake, and I know you are a big Champ supporter, and we 
are trying to do something to do our part for the lake, for the 
environment, for our neighbors.
    Senator Leahy. But what you are trying to do is do both, 
save the lake and keeping the nutrients out of there, but also 
create energy.
    Mr. Rowell. Well, Senator, we use on our farm each day 
about 50,000 gallons of water. We count that the quality will 
be good. In the event that it was not, I think we would be done 
farming with that number of animals.
    Senator Leahy. And the percentages might vary in different 
farms around the State, but the answer would be the same; would 
it not?
    Mr. Rowell. Yes, sir, it would.
    Senator Leahy. Thank you.
    Mr. Meyer, good to see you again. Let me just ask one--one 
question. You raised the issue of broadband access, and there 
was a broadband program in the 2002 Farm Bill. Frankly, I think 
it has been a disaster. I think it has been poorly handled. You 
know, USDA was told to get this out to rural communities, like 
yours. Even Members of the Congressional Delegation, at least 
some of them live in these rural communities. But instead this 
has gone out into areas, larger communities, where it is 
already available. There is competition, whether it is cable or 
high-speed telephone lines or anything else, where it is not as 
necessary.
    The program--and this you would get the same answer from 
both Republicans and Democrats who have worked on this program. 
It was designed to get it into small areas. Frankly, this is 
going to be a major focus on the farm bills, how we get USDA to 
get on the stick and get it done right. They do many, many 
things right, but, boy, this has not been.
    I mean, how would--you are a small business owner. How 
important is broadband to--to a business in Hardwick?
    Mr. Meyer. I think broadband overall generally is critical 
to the success of rural businesses. More and more programming, 
softwares, on-line sales, marketing are conducted through the 
Internet, and without the capacity or the ability to have high-
speed, it is going to be difficult to expand business 
opportunities.
    Senator Leahy. But how do you get that into the rural 
areas?
    Mr. Meyer. Well, I think there could be a number of things. 
One, the problem I think you face is that there are low-density 
populations in these rural areas and no infrastructure that 
businesses who want to make money on this venture are going to 
be able to do, so having a public-private partnership I think 
is critical, either creating revolving loan funds where a 
business can enter into an agreement with a public entity to--
to partner and make this happen.
    Senator Leahy. I remember my grandparents talking about how 
excited they were when electricity came to South Ryegate, 
Vermont, and they turned it on--that was a low-density area at 
that time, but we had programs through the Department of 
Agriculture, through Rural Electrification, and got it there. 
Think what would have happened if we had not done that.
    Mr. Meyer. Well, I do not know. It is--I live in Hardwick, 
so it is hard to say.
    Senator Leahy. OK.
    Senator Sanders. But you have electricity now in Hardwick, 
right?
    Mr. Meyer. Most of the time. But it is the most expensive 
electricity in the State of Vermont.
    Senator Leahy. You do not live in Middlesex, do you? I do 
not even want to get into that. I do not want to get into my 
total parochial issues, but let me show you my electric bill 
sometime.
    Let us see. Marcelle's smiling in the back. She knows.
    We have had--Ms. Berlin, we have had tremendous support for 
the Food Stamp Program. I have seen over a hundred, I think 
135, organizations that push for a strong nutrition title. You 
talked about improving expanded fresh fruit and vegetable 
programs to all 50 States. What is the biggest burden in doing 
that?
    Ms. Berlin. The biggest burden. That is an interesting 
question. The Fresh Fruit and Vegetable Program provides fresh 
produce to schools, and I think my understanding is that 
probably the biggest challenges for the school food service 
workers who have a lot of work to do just to get by even 
opening cans when they are faced with fresh produce, it takes 
additional time to prepare those foods, and time means money, 
and so in order to expand programs that provide more fresh, 
local produce, or not local but just fresh, we have to consider 
those labor costs and expenses, particularly in the public 
school system.
    Senator Leahy. Thank you. We may follow up more on that, 
because there is a growing urge among both sides of that in the 
Agriculture Committee to get more. The very same reasons you 
have spoken about.
    Senator Sanders.
    Senator Sanders. Thank you very much. And let me concur 
with what everybody has said on broadband. It is beyond 
comprehension that today in the State of Vermont in our rural 
areas we still have towns that do not have high-speed Internet 
access. We are behind much of the country, and in fact, as 
everyone should know, the United States is behind much of the 
world, and it is not clear to me how a small town in Vermont 
without high-speed Internet access is going to be competitive 
and attract businesses. It is incomprehensible. And we have got 
to make this a priority and move aggressively.
    What this panel is about is really focusing on a number of 
huge failings of our current Federal Government. The idea that 
in the United States today we have more and more people who are 
hungry is unacceptable. The idea that we are not dealing with 
good nutrition and obesity is becoming a problem leading to 
huge health-care costs through diabetes and heart disease is an 
issue that we have got to address, as well.
    We have other areas in that--I am on the Environmental and 
Energy Committees, and let me tell you there will be a change 
in Federal policy in terms of global warming, and the question 
I want you all three to touch on is what role does small, 
family based agriculture play in that? And, of course, tied 
into that is how can we use energy production, energy 
efficiency, on the farm in terms of saving the family farm?
    Let me start off with Linda. Linda, give us some radical 
and bold ideas in terms of nutrition, because if we do not get 
a handle on obesity and other health problems, we are going to 
be spending tens of billions of dollars treating people who are 
going to die earlier than they should. Give us some really bold 
ideas in terms of what the Federal Government should be doing.
    Ms. Berlin. Well, I guess the first place my mind goes--you 
asked--is not subsidize corn production, which translates into 
high-fructose corn syrup, which is everywhere in our food 
supply, which is contributing to, you know, our obesity and 
diabetes rates. So I know that that is not a very popular thing 
to say, but maybe in Vermont it is more acceptable.
    Senator Sanders. OK.
    Ms. Berlin. Certainly, you know, we need--part of the 
support of local food systems is about getting more fresh 
products to people that taste good, that reminds people of what 
food should taste like, and so if we are talking about trying 
to support small-scale local producers, if we support--in our 
policies if we support bringing the price down of things that 
are good for us like that, then I think ultimately that 
contributes to our health and diet.
    Senator Sanders. Should the Federal Government be playing 
an active role in voluntarily trying to move people to good 
nutrition?
    Ms. Berlin. Absolutely. I mean, if we think about it, I 
think right now we spend about annually $100 billion in 
Medicare and Medicare expenses because of these diet-related 
diseases that we have, and so the Federal Government plays a 
role no matter how you slice it. We just would like the Federal 
Government to play a role in helping to improve it.
    Senator Sanders. Good. Thank you.
    Bill, let me ask you a question.
    Mr. Rowell. Yes.
    Senator Sanders. There is a lot of excitement about methane 
digesters. We see potential there. One of the problems is, as I 
understand it, the technology now can be utilized by bigger 
farms, not smaller farms.
    Mr. Rowell. Yes.
    Senator Sanders. So I want you to touch on that, but also 
touch on--on this issue. In my view, and correct me if I am 
wrong, New England is far behind other regions of this country 
in terms of growing biofuel products on the farms. Do you sense 
in the State of Vermont that farmers believe that they can 
bring in additional revenue, not only by, in a sense, producing 
electricity as you are doing through manure to methane but by 
growing other biofuel crops?
    Mr. Rowell. Yes. I sense that they can. We have some farms 
up in Franklin County that are growing biofuels with the hopes 
of bringing in extra income. The biodigester for us will bring 
in extra income. We are interested in that. We have a good--we 
have a good system with our government in this country. We have 
a lot of good people working at all levels to make it better, 
and we thank you all for your efforts to do that.
    Darwin said it is not the most intelligent or the most fit 
who will survive but those who can adapt. So we have to adapt. 
The environment in Vermont is quite clean, exceptionally clean 
compared to other parts of the country. We enjoy a lot of 
things that probably people in the world would give quite a lot 
to have.
    I think we need to see more of these digesters. I think 
they will do something as far as in the event of a natural 
disaster, you could sustain life on a farm. You would have 
electricity, heat. We may be able to grow vegetables in large 
greenhouses with the heat. There are a number of things--we are 
not even sure what kind of a tool we have yet, it is so new, 
but it is going to expand, and it is going to provide some real 
tremendous benefits to the population.
    Senator Sanders. Andrew, let me just add--mention, 
congratulations--you know, we talk a lot about moving toward 
value-added products, a lot of talk. You are doing it, and 
congratulations on that.
    What role--or do you see a role in terms of public-private 
efforts helping Vermont farmers increase the capacity to 
produce value-added products?
    Mr. Meyer. I think that what is critical as we talk about 
energy and new market opportunities, is the conversion of that 
raw material to a product that meets a market call, and I think 
that the efforts that are going on in Hardwick now are looking 
to do such things public-private partnerships that create the 
infrastructure to allow a farmer to convert his or her products 
into cheese or a cannery that can produce meat products or 
other dairy products, and in our case a soy product and other 
diversified crops. I think there is tremendous potential for 
converting the raw materials into dollars in the farmer's 
pocket.
    Senator Sanders. OK. Thank you all very much.
    Senator Leahy. I could not help but think during John 
Hall's answers and now Bill Rowell's, this is the only 
agriculture hearing I have been in in 30 years where both 
Dickens and Darwin were quoted. And it did not start a major 
debate from the audience at the same time.
    Congressman Welch.
    Mr. Welch. Thank you. I--Senator Leahy, I just want to 
thank all of the witnesses, you folks and the people who 
preceded you, and time is growing late, and all my questions 
have really more or less been asked and answered, but I just 
want to make an observation, Senator Leahy. Every witness has 
focused on I think a central insight that we need 
regionalization, that in a time of globalization where there 
are these forces that are completely beyond the control of our 
local communities, our small State, or even our country, that 
if we are going to maintain communities, we have to respond 
with intensifying regional approaches to solving a myriad of 
problems.
    And it is based on that insight that if you produce locally 
and you distribute locally using local resources and you 
integrate that into the local economy, it has the prospect of 
creating jobs, preserving the environment, reducing global 
warming, and promoting communities that are integrated where 
people are dependent, one another, on their efforts in working 
together. And I have just found that this path-breaking work 
that was done on the regional compact, whether we call it that 
or not, that focus on regionalization is absolutely essential 
to underlie what it is we do, I think, in this Farm Bill.
    I want to thank you all.
    Mr. Rowell. Thank you.
    Senator Leahy. And I want to thank everybody for being 
here. I especially want to thank Senator Sanders and 
Congressman Welch for taking the time to do it. It has been an 
important hearing, but I could not help but feel it made me 
awfully proud to be a Vermonter and to see so many Vermonters 
here. I think over the years Vermonters' voices have been heard 
a great deal in the various farm bills. We just want to make 
sure that they are implemented the way we Vermonters say they 
should be. So I thank you all, and I especially thank my two 
colleagues I am privileged to serve with.
    We stand recessed.
    [Whereupon, at 12:31 p.m., the committee was adjourned.]
      
=======================================================================


                            A P P E N D I X

                             March 12, 2007



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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


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


                   DOCUMENTS SUBMITTED FOR THE RECORD

                             March 12, 2007



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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 
