[Senate Hearing 110-123]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-123
 
                       IOWA AND NEBRASKA VIEWS ON 
                     FEDERAL AGRICULTURE AND RURAL 
                      POLICIES: THE 2007 FARM BILL 

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

                             FIELD HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION


                               __________

                             APRIL 14, 2007

                               __________

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


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

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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                       TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont            SAXBY CHAMBLISS, Georgia
KENT CONRAD, North Dakota            RICHARD G. LUGAR, Indiana
MAX BAUCUS, Montana                  THAD COCHRAN, Mississippi
BLANCHE L. LINCOLN, Arkansas         MITCH McCONNELL, Kentucky
DEBBIE A. STABENOW, Michigan         PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska         LINDSEY GRAHAM, South Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
SHERROD BROWN, Ohio                  MICHEAL D. CRAPO, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota             CHARLES E. GRASSLEY, Iowa

                Mark Halverson, Majority Staff Director

                      Robert E. Sturm, Chief Clerk

            Martha Scott Poindexter, Minority Staff Director

                Vernie Hubert, Minority General Counsel

                                  (ii)

  






















                            C O N T E N T S

                              ----------                              
                                                                   Page

Field Hearing(s):

Iowa and Nebraska Views on Federal Agriculture and Rural 
  Policies: The 2007 Farm Bill...................................     1

                              ----------                              

                        Saturday, April 14, 2007
                    STATEMENTS PRESENTED BY SENATORS

Harkin, Hon. Tom, a U.S. Senator from Iowa, Chairman, Committee 
  on Agriculture, Nutrition and Forestry.........................     2
Nelson, Hon. E. Benjamin, a U.S. Senator from Nebraska...........     4

                                Panel I

Bailey, Varel, American Farmland Trust, Anita, Iowa..............     6
Houghtaling, Debra, Executive Director, Grow Iowa Foundation, 
  Greenfield, Iowa...............................................     8
Killpack, Steve, Neola, Iowa.....................................    10
Petersen, Chris, Clear Lake, Iowa, on behalf of the Iowa Farmers 
  Union..........................................................    12
Schuitteman, Matt, Sioux Center, Iowa on behalf of the Iowa Farm 
  Bureau Federation..............................................    13

                                Panel II

Crabtree, John, Center for Rural Affairs, Lyons, Nebraska........    28
Sand, Duane, Iowa Natural Heritage Foundation, Des Moines, Iowa..    24
Schwarz, Tom, Bertrand, Nebraska.................................    26
Stroburg, Jeffrey, CEO and Chairman, Renewable Energy Group, 
  Inc., Ralston, Iowa............................................    30
Wintersteen, Wendy, Dean, College of Agriculture, Director, Iowa 
  Agriculture and Home Economics Experiment Station, Iowa State 
  University, Ames Iowa..........................................    23
                              ----------                              

                                APPENDIX

Prepared Statements:
    Bailey, Varel................................................    44
    Crabtree, John...............................................    49
    Houghtaling, Debra...........................................    54
    Killpack, Steve..............................................    58
    Petersen, Chris..............................................    61
    Sand, Duane..................................................    65
    Schuitteman, Matt............................................    67
    Schwarz, Tom.................................................    72
    Stroburg, Jeffrey............................................    75
    Wintersteen, Wendy...........................................    79
Document(s) Submitted for the Record:
Nelson, Hon. Benjamin E.:
    ``Federal Crop Insurance--An Indispensable Program Executive 
      Summary''..................................................    84
American Wildlife Conservation Partners, prepared statement......    90
Association of Fish and Wildlife Agencies, prepared statement....    93
``Iowa Department of Natural Resources 2007 Farm Bill 
  Recommendations''..............................................   102
``Background for Proposal to Simply CSP and Address Wildlife 
  Resources Consistently Between States''........................   109



                       IOWA AND NEBRASKA VIEWS ON

                     FEDERAL AGRICULTURE AND RURAL

                      POLICIES: THE 2007 FARM BILL

                              ----------                              


                        Saturday, April 14, 2007

                                       U.S. Senate,
                                  Committee on Agriculture,
                                   Nutrition, and Forestry,
                                               Council Bluffs, Iowa
    The Committee met, pursuant to notice, at 9:30 a.m., in the 
Art Center Auditorium, Iowa Western Community College, Hon. Tom 
Harkin, Chairman of the Committee, presiding.
    Present or submitting a statement: Senators Harkin and 
Nelson
    Chairman Harkin. The Senate on Agriculture and Nutrition 
and Forestry Committee will come to order. And I just want to 
thank Mr. Dan Kinney, the president of Iowa Western Community 
College for having us here, and I will yield to him the floor.
    Mr. Kinney. Welcome to our campus. Again, it is not the 
first time. We are proud to have you back here this morning. 
And we are pleased to have all of you here this morning, and we 
are pleased to hold this hearing in the art center. It has a 
lot of great capabilities for lighting and sound, and so it 
should really facilitate the hearing this morning.
    We are very proud of this building. This building was free. 
This building was built entirely by contributions from 
individuals, corporations and foundations. In fact, when you 
are out in the lobby, if you look at that stone wall, all of 
those names on the wall are donors that provided the funding to 
build this building. And certainly for an institution it is 
always a lot easier to acquire a building in that manner and 
certainly helpful to the institution.
    We are pleased to have you here on a great Saturday 
morning, and I am sure you will have a great hearing. And so 
thank you for coming. And, senator, thank you.
    Chairman Harkin. Thank you very much for having us. I 
recognize a few people that are here in the audience, our 
mayor, Tom Hanifan. I did not say hi to Tom earlier. Our mayor, 
thank you very much, of Council Bluffs is here. Mel Housers is 
one of our Pottawattamie County supervisors, again, I did not 
get a chance to see anybody here. Mel is here. Sarah Brown of 
Senator Chuck Hagel's office is here, Sarah Brown. And also 
Donna Barry in the Council Bluffs office of Senator Grassley is 
here. Any other elected officials that I missed? Anybody want 
to run for office that----
    Thank you all for being here. We will get right into our 
hearing. I have a small opening statement, and I will yield to 
my friend and colleague, Senator Nelson, and then we will have 
our panels.

    STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM IOWA, 
  CHAIRMAN, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

    Chairman Harkin. At the outset I just want to say to all of 
you that I have read every single one of the testimonies 
thoroughly. And I am going to ask that you kind of keep your 
comments to five or 7 minutes. Just highlight the points you 
want highlighted so we can get into a discussion on that. Your 
statements will be made a part of the record in their entirety. 
I am hopeful we can move this along well enough so that after 
our two panels, one of the things I always like to do before 
when I was chair and am chair again is to have an open mic 
session. So if any of you have things you want to say or 
questions you want to ask for the record, we will have an open 
mic after this so you can have your opportunity to do so within 
whatever time constraints we have coming up to the noon hour.
    With that, I just again say it is a real honor to be here 
to hold this field hearing of the Senate Committee. Again, I 
want to thank our good friend and neighbor and very valuable 
member of our committee, Senator Ben Nelson for being here with 
us today.
    Let me just say on this new Farm Bill--farm bills are 
broad, very broad because they encompass a lot of things. 
People think of a farm bill as only pertaining to farms. 
Obviously that is a big part of it. Now we are thinking about 
food, fiber, energy, rural development, conservation, trade, 
food assistance, nutrition programs. Covers--just covers the 
gamut of everything, and now with our new mission in 
agriculture, providing energy and renewable energy for America, 
this is a whole new era--new area for agriculture that started 
in the last farm bill in 2002.
    I would always like to say that our core mission is to 
promote profitability and income and economic opportunities in 
agriculture and rural communities. If we do not have 
profitability, if we do not have income, not much else matters 
very much. So we have to have that as sort of our core mission. 
But in doing that, we have to ask the question, is the best way 
to do this in the future to continue to do what we have done in 
the past, is that the best way or do we need to change?
    Agriculture is changing rapidly.
    Some of the testimonies that I have read of some of you 
emphasize how rapidly the face of agriculture is changing in 
America. That is why we have periodic farm bills, every 5 
years, six or seven, usually five or 6-year farm bills. That is 
because agriculture changes, and we have to change our 
policies, programs and things to look ahead, not so much back, 
but to look ahead.
    Tom Schwarz who is on our panel, I do not know Mr. Schwarz, 
but he raised the issue in his testimony, I will hear from him, 
he wondered if it was time for a fundamental shift in farm 
programs. He asked the question, is it time not to have farm 
programs based on what you produce and how much you produce, 
but on how you produce it. Interesting concept. For example, 
take direct payments, direct payments have gotten a lot of 
notoriety of late based on base acres. Sometimes those base 
acres are not even being used to produce anything. They are to 
produce what was produced in the past, and yet the direct 
payments continue to go out. Is it wise to continue this policy 
of direct payments that you get a payment--a government check 
no matter how much you make? No matter how much money you make, 
you still get a government check. Is that--can we still afford 
to do that, or should we take some, most or all of the $26 
billion that we will be spending over the next 5 years in 
direct payments and shift some, most, all, however much, to 
things like conservation or wild life habitat, rural 
development or incentives, incentives for farmers to start 
growing bioenergy crops and biomass crops and things like that 
for the future of biomass and energy production. So these are 
questions that we need to ask.
    We need to help younger, beginning farmers find and develop 
new marketing avenues, new income opportunities. We have twice 
as many farmers over the age of 60 as we have under the age of 
35. Well, something has got to happen here. With land prices 
and rentals what they are, it is pretty tough. So how do we 
provide these new economic opportunities for younger people? 
Maybe part of that is rural development, new economic growth 
and entrepreneurship and maybe off farm jobs to allow them to 
get started. So again, we need to start thinking ahead how we 
do that.
    And last, we need a sound safety net. We all recognize, all 
of us who are engaged in agriculture, I think even our urban 
cousins recognize that agriculture is not like any other 
business because the vagaries of wind, weather, pestilence and 
trade and all kinds of things, agriculture is just not like any 
other business. And there has always been, and there continues 
to be today, a strong national base of support for some form of 
a safety net for agriculture. It is the people want to have 
that safety net there, and it is strong. So we just have to 
think about how we do that safety net and how we fashion it.
    Last, I just want to say about conservation, again, tying 
into income base, but also think about conserving our water and 
our water resources in this country, cleaning up our streams 
and waterways, providing some benefits to the rest of society 
on how we--on how we farm. Conservation Security Program and 
EQIP, I will be asking questions about how those operate, 
should they be combined for example. A green revolution, bio 
based crops, more and more are going to be asking our farmers 
to produce crops that can be used for bio based materials. 
Everything from hydraulic fluid to clothing as a matter of 
fact. Companies making socks out of cornstarch right now, 
different things like that. All these plastic bottles can be 
made now from biodegradable material now. So more and more we 
will be moving in that direction.
    Last, nutrition programs we cannot forget are the pride, I 
think, of America. And that is that we have provided our people 
with the most abundant, best, cheapest food anywhere in the 
world. We have school-based breakfast and lunch programs so no 
child should go hungry in America today. We have food stamp 
programs. I do not know what it is in Nebraska, but in Iowa 
every year the food stamp programs bring about $244 million a 
year into the State. So on the one hand, it helps make sure the 
people of low income get nutrition. On the other hand, it helps 
make sure our agribusiness entities also are able to get a part 
of that action. So the whole thing works together. We just got 
to keep focused on nutrition, how we provide better nutrition 
to our kids in school, how do we expand the food stamp program 
to get better nutrition to people who use food stamps, getting 
them into farmers markets, for example and beginning to buy 
fresh fruits and vegetables and meats and things like that that 
some of our farmers are using in our farmers markets.
    So again, we have tried some experiments in that, and they 
worked well. And we are going to be looking at perhaps 
expanding those kinds of things in the present farm bill. So 
that is just sort of an overview of all the different facets 
that we have to wrestle with in the next few months. And we 
need your input, we need your suggestions, your advice. That is 
why we are having these hearings. You are out here, you see 
what is happening, and we need the kind of input that you are 
giving us so we can try to do our best and fashion a Farm Bill 
that looks ahead five, 10 years down the pipe and makes 
whatever changes need to be done to do so.
    With that, I again will turn to my very good friend, and I 
mean that most sincerely, except that he is a better shot than 
I am. He gets better things than I do when we hunt together, 
but a great friend, a great Midwestern leader in rural and 
agriculture matters, former Governor of the State of Nebraska, 
and I am proud that he is a member of our senate agriculture 
committee, Senator Ben Nelson.

   STATEMENT OF HON. E. BENJAMIN NELSON, A U.S. SENATOR FROM 
                            NEBRASKA

    Senator Nelson. Thank you very much, Chairman Harkin. That 
introduction was the kind my father would have enjoyed, but my 
mother would believe. So I appreciate it a great deal. And 
thank you for holding this hearing here today so we can hear 
from Iowans and Nebraskans about their views about the Federal 
agricultural and rural policies that we will be meeting to 
understand as we craft the 2007 Farm Bill.
    Senator Harkin has heard me say this so many times, so many 
times he may be tired of hearing it, but I am going to say it 
one more time. I would like to rename the farm bill the Food 
and Fuel Security Act of 2007.
    What I am talking about is more than just a name change, it 
is one of those changes in thinking that you address. And that 
is that our agricultural economy is no longer just about food 
production, it is also about fuel security as well as we look 
at the opportunities that are there, particularly since the 
last farm bill was drafted. And most importantly, the title 
change reflects the need for policies that balance the two so 
that our efforts for one do not jeopardize our goals for the 
other. The livestock industry is more than slightly nervous 
about the use of--the amount of corn being used and potentially 
what it could be in terms of volume for biofuels.
    So I start with food security because it is long been the 
focus of our agriculture policy. We talk about it in terms of 
farm programs, but our goal has always been to be able to 
produce the food we need to eat because it is about being sure 
we are independent when it comes to our food needs. Being able 
to domestically produce the food Americans need is a vital 
national interest and it is a security interest as well, 
because if you love importing 65 percent of your oil, let me 
tell you, you will love importing 65 percent of your food. So 
that is why it is about being able to have food security and 
fuel security as well. And you mention other efforts, feed, 
fiber, that we need to keep in mind as well. And that is why we 
need to ensure that our food security is taken care of as we go 
into new areas.
    I agree with you on the need of a safety net. We need an 
effective safety net for our farmers and ranchers so that they 
can make a living from farming. So it is not just a good way of 
life, it is a way to earn a living as well.
    And conservation, we need smart and effective conservation 
policies, which I think you were so instrumental in creating in 
the last farm bill and working with others to see that it will 
be in this bill and we are going to have to continue to spend 
time on that.
    When it comes to natural disasters and drought, which are 
words that Midwestern farmers are all familiar with, not only 
do we need to protect and preserve the resources nature has 
provided, but we also need to make sure we help producers 
survive the problems and disasters that nature throws their 
way.
    In Nebraska this mostly means drought, Drought David, as I 
call it. I found if you give a drought a name, maybe it will 
have the same status as a hurricane. Because otherwise it is 
hard for people to focus on what a drought is. But 
unfortunately, the southwestern part of Nebraska and parts of 
the western part of the State as well, Drought David is 
celebrating an eighth birthday. That continued drought 
situation is not something the Federal Crop Insurance Program 
has been able to deal with effectively, and so we need to have 
some effective way of putting aside some money for the 
inevitable. It is not always going to be in Nebraska or Iowa, 
it can be in the southeastern part of our country as well. We 
are going to have drought. We are going to have these 
conditions. Actuarially you can determine what it should be. 
Even though we cannot necessarily predict where it will occur, 
we can predict what the needs are.
    When it comes to competition, the trend toward 
consolidation in agriculture today is unsettling, particularly 
in the livestock sector, and it raises concerns about 
competition and the impact on producers. Nebraskans in 
particular are very concerned because our corporate farming 
ban, I-300, has been ruled unconstitutional by the Supreme 
Court. And I support the Chairman's efforts to include a 
competition title and want to work with him to get sound 
polices in there that will improve competition in a way that 
benefits everybody, producers, consumers and rural communities.
    Which leads me to the second component of the new farm 
bill, fuel security. There is a lot of interest these days, and 
this farm bill needs to include wise policies that continue to 
grow the industry so that we can substantially improve our 
energy security including:
    Diversification. Right now almost all of our ethanol comes 
from corn, which is great for corn growers in both Nebraska and 
Iowa, but it raises concerns for livestock producers as I 
mentioned, those that use corn to produce food products. In the 
long run diversification will include finding cellulosic 
ethanol produced from biomass, which every corner of the 
country can produce. But cellulosic is not here yet and may not 
be for a few years, so we need to encourage feedstock 
diversification now through crops like sorghum and sweet 
sorghums and others as well.
    The next generation of biofuels is upon us and we need to 
look at producing the next generation of biofuels from the ag 
perspective. In all the talk about cellulosic ethanol I am 
nervous that I do not hear anyone talking about how we produce 
the biomass we need for cellulosic. We need to figure out how 
to plant, grow, harvest, transport and store biomass, whether 
from field or forest wastes or dedicated energy crops.
    Finally, innovation. We also need to get creative about 
producing a wide range of biofuels. For example, I am working 
on a bill that will encourage the production of biogas, a 
natural gas substitute made from anaerobic digestion of animal 
wastes. I think there is great potential to turn wastes into 
energy sources, and we should creatively explore all of the 
possibilities.
    I want to mention rural development as well. There is great 
potential for rural development through biofuels, and we all 
know that food and feed production has long been a staple and a 
rural economic driver. We need to make sure we take advantage 
of the potential that biofuel production presents to many of 
our rural communities right now while ensuring that farmers, 
ranchers and rural businesses continue to benefit from our farm 
policies.
    I believe that our witnesses here today will provide great 
insight into the issues facing our producers and rural 
communities, and I hope we can incorporate their concerns and 
ideas as much as possible.
    So that is what we are here to discuss. And I am anxious to 
hear from our friends from Iowa and Nebraska.
    Once again, Chairman Harkin, I want to thank you for 
scheduling and chairing this hearing and for all your work on 
agriculture all the years you have been involved.
    Chairman Harkin. Thank you very much, Senator Nelson. Now 
we will turn to our panels. And as I said if you keep--we have 
got a light system here. And then we will try to keep it within 
some limits here. But first I will just introduce Mr. Bailey, 
Varel Bailey, American Farmland Trust. Mr. Bailey and his son 
operate corn, soybean, grass, beef, cattle, hog and sheep 
operation in Anita, Iowa. He has been an agricultural policy 
consultant for American Farmland Trust. He has been involved in 
agricultural policymaking and Farm Bill debate since the 
1970's. I can vouch for that. This is my 32nd year on the ag 
committee. And since 1975 I have had the benefit of Varel's 
input into all of our farm bills. So it is good to see you 
again, Varel. Please proceed, and I will just go on down the 
line.

STATEMENT OF VAREL BAILEY, AMERICAN FARMLAND TRUST, ANITA, IOWA

    Mr. Bailey. Senator Harkin, Senator Nelson, thank you for 
having me appear today. Let me just hit the high points. I 
actually appear today with four hats on. One is that of a 
farmer that you mentioned. The second as an ag policy 
consultant for American Farmland Trust. The third is a policy 
work being involved in policy for almost 35 years. And fourth 
is a taxpayer. And from all of those points of view, when I 
look at the opportunities here, I maintain that this Farm Bill 
should create pivotal change. We only have this opportunity it 
seems once every 20, 25 years to actually make significant 
change in farm policy. And it seems to me the stars are lined 
up right now with the budget restrictions and the prices and 
everything else, it is time to make that change.
    Now I am only going to read a couple sentences out of my 
testimony, but there is a couple of them that I think are 
really important. In this dynamic environment, and I am talking 
about the changes you referred to, Senator Harkin, for Congress 
to set commodity loans, target prices in the Farm Bill really 
ignores reality. We have no idea what those prices are going to 
be in the next few years. Further, based on our experience to 
date on the suits filed against the U.S. cotton program, the 
corn program and others, government warehousing schemes, 
marketing loans, loan deficiency payments and cyclical payments 
are going to be eliminated.
    To perpetuate these programs under the guise of increasing 
bargaining leverage in the WTO instead holds these negotiations 
hostage and ignores the opportunities to significantly improve 
taxpayers' investment in the food, fiber and fuel industry.
    To me those are really critical things and really strong 
drivers for change. The rest of my testimony has to do with 
conservation and the commodity title.
    I would put the conservation program part of the title 
first, not because it is necessarily more important, but I 
think that both of them need to be further integrated. Back in 
1985, Senator, we started the integration with the CRP and 
conservation compliance and those kinds of things. It is time 
to take another look at how we integrate the conservation 
program with the rest of the Farm Bill.
    In my testimony I talk about how important this is on 
working lands because most of the lands that are sensitive to 
erosion and other degradation are actually working farm and 
ranch lands. We need to improve the effectiveness of these 
programs with cooperative efforts.
    We have something like this in Anita, Iowa. We have Lake 
Anita State Park, with pristine water. Why is it that way? 
Really it was not because we had a government program. We 
farmers banded together and decided we were going to protect 
that lake and protect that park. And so what we need to do is 
kind of take what we did there and integrate programs together 
with block grants and mechanisms where various agencies and 
various entities can work together to solve these conservation 
problems.
    We need to actually start a new program I think, and that 
is a loan guarantee program. This would be an interest rate buy 
down program. Three out of four farmers that have applied for 
conservation assistance in the last few years have been turned 
down because of insufficient money. In those cases we need to 
figure out a way for government to take a few dollars and 
leverage it into a lot of program. I think a loan guarantee 
program would go a long way to do this.
    The second change we need to do better targeting. Now, USDA 
in the CRP program has really worked on the environmental 
benefits index and those kinds of rating systems. We need to 
take another look at those mechanisms. Again, sharpen the money 
we are investing in conservation to solve really serious and 
critical problems.
    One of the things that really came out with the CSP program 
is that we need to improve technical assistance. NRCS is 
overworked. We really have not in the time that we have been 
working on this, been effective in fully implementing the 
technical service provided program. We need to take another 
look at that.
    The commodity program--I see my red light is on, and so I 
will just simply say we recommend as part of this, the hole in 
the safety net is that we need to move to a revenue assurance 
program. The one AFT is recommending was developed by Ohio 
State University. This is modeled right after crop insurance. 
It is transparent. Farmers understand it. It is easy. It would 
be easy to administer and implement. And it integrates with 
crop insurance as well. It does not pay twice if there is a 
loss. It just pays once. When I put on my taxpayer hat there is 
a savings since it provides an opportunity to lift systemic 
risk off the crop insurance industry. I do not know how many 
billion dollars would be saved, but we are thinking there is 
probably $2 billion or $3 billion there that could actually be 
brought into the Farm Bill budget by lifting that 
responsibility of systemic risk off crop insurance.
    With those things let me wrap up and simply say that we 
hear what you have mentioned about direct payments. My job as 
a--working in Farmland Trust is to build coalitions between 
farm organizations and environmental organizations. When I 
start talking about direct payments and the environment, 
believe me, it is very sensitive. And so all I can say today is 
we would really like to continue to work with you and the 
committee on mechanisms that make sense in transitioning the 
direct payment mechanism into other mechanisms in the Farm 
Bill. Thank you.
    [The prepared statement of Mr. Bailey can be found on page 
44 in the appendix.]
    Chairman Harkin. Thanks very much for a very precise and 
concise statement. Lot of things we will follow up in the 
question period.
    Next is Debra Houghtaling, executive director of the Grow 
Iowa Foundation. Grow Iowa was established by the Southwest 
Iowa Coalition, that covers about 185,000 rural people in 
Southwest Iowa. It operates a wide variety of loan approvals 
from various sources, including USDA. The Southwest Iowa 
Coalition is one of the first economic development groups that 
really started to work on a regional basis. My notes says it 
was started by Austin Turner; is that right? I knew Austin very 
well. Thank you very much. Debra, thanks for being here. And 
again, your statement is made part of the record, and, please, 
proceed.

 STATEMENT OF DEBRA HOUGHTALING, EXECUTIVE DIRECTOR, GROW IOWA 
                  FOUNDATION, GREENFIELD, IOWA

    Ms. Houghtaling. Thank you, Senator Harkin, Senator Nelson, 
for this opportunity to address ways in which the rural 
development portion of the farm bill can help create vibrant 
rural communities.
    As you said, I am the director of Grow Iowa Foundation, 
which over the past 11 years has invested over $5.4 million 
back into rural southwest Iowa.
    My comments today are going to focus really on three areas 
in which I believe will help create these vibrant rural 
communities. The first one is fostering regional collaboration, 
the second is promoting entrepreneurship, and then the last one 
is sparking private investment.
    Regarding fostering regional collaboration, as you 
mentioned, the Southwest Iowa Coalition really figured regional 
collaboration out before it was more of a buzz word, and that 
was out of necessity. Small isolated rural communities really 
individually do not have a lot of power and access to 
resources, but if they band together through an organization 
like Southwest Iowa Coalition a constituency of almost 200,000 
has a much larger voice.
    I would like to talk about the proposed rural collaborative 
investment program for the new Farm Bill. I think it is an 
important step in fostering regional collaboration. A couple of 
the most important parts about that proposal is that it allows 
regions to define themselves, define the greatest needs that 
they have, and also help define their own solutions. It is not 
a cookie cutter, one-size-fits-all across the United States. I 
would like to recommend that--that it be--that the regional 
organizations be open and collaborative. I think that is one of 
the things that has allowed the Southwest Iowa Coalition to 
really succeed over the last 16 years is that everyone can have 
a voice.
    I think there is a danger in picking winners in a program 
like this that grant too much power to a single purpose entity.
    The second area I would like to talk about is promoting 
entrepreneurship. Rural people have always been 
entrepreneurial. But economic develop strategies have spent way 
too much focus on recruiting big industry and manufacturing 
into rural communities. And it is time to really focus on home-
grown companies that have more of a commitment to the local 
community.
    The opportunities have never been better for rural 
entrepreneurship. Technological advances and e-commerce 
industry allows somebody who lives in Greenfield, Iowa to 
access global markets and employment opportunities that used to 
be only available to them in major urban markets.
    Because of the need for rural entrepreneurship, Grow Iowa 
has joined forces with the Southwest Iowa Coalition, the 
Wallace Foundation, Iowa State University Extension and 
Southwestern Community College to form the Rural Development 
Resource Center, which is going to provide entrepreneurial 
technical assistance and market avenues for people within a 22-
county region in Southwest Iowa.
    Also speaking about entrepreneurship, it is important to 
talk about access to capital. Rural development has been a huge 
provider of access to capital through it is rural development 
programs. Grow Iowa has accessed over $2 million involving loan 
fund money through rural development. The area that is missing, 
however, is loans to very small businesses, which is why I 
would like to propose a micro-enterprise program. It focuses on 
small capital and it also has a component that allows for 
technical assistance and capacity building grants, which are 
critical to help small businesses succeed.
    The last area is sparking private investments. Government 
sources cannot be the only financial lifelines for rural 
communities, which is why we need to look at different ways of 
private investment. That could be rural philanthropy, equity 
venture capital, financial leverage. My two asks in the area 
are the first to really encourage through rural development 
programs the creation of community foundations and endowments 
that focus on entrepreneurial and economic development 
programs. My second ask is Grow Iowa is a certified community 
development financial institution. Across the United States 
they have an incredible record of leveraging $27 for every 
dollar investment. So my ask is really to specifically add 
CDFIs as an eligible applicant for rural development programs.
    So I thank you for letting me talk about rural development.
    [The prepared statement of Ms. Houghtaling can be found on 
page 54 in the appendix.]
    Chairman Harkin. Thank you very much, Debra. When you were 
talking about entrepreneurship and micro-enterprise, you are 
talking to this guy right here. So I am sure he will have more 
to say about that. He is our leader in that area.
    Next we will turn to Steve Killpack. Mr. Killpack farms 700 
acres of corn and soybeans with his father on their family farm 
near Neola, Iowa. Recent graduate of Western Iowa Community 
College. Thanks for being here. Please proceed.

            STATEMENT OF STEVE KILLPACK, NEOLA, IOWA

    Mr. Killpack. Thank you, Senator Harkin, Senator Nelson, 
for letting me speak today. Kind of as I go down here today I 
looked out across the landscape, and I kind of realized that 
our farming operations today, although they are economically 
viable, their sustainability is very limited. And kind of my 
hope and my goal is that through certain programs, such as the 
Conservation Security Program, that we will be able to protect 
our air, our soil and our water. I believe that farmers and 
ranchers who actively practice conservation should be supported 
to continue promoting conservation. And I think the CSP program 
was an important step in that direction to show that as a 
nation we care about our resources and that we want our farmers 
to care about them also.
    In my viewpoint it is always difficult to look and to see 
that as farmers we should be stewards of the land. And we have 
this great gift and this opportunity to farm and to make a 
living, but that we do not always strive to take care of our 
resources. The soil is really one of these resources that 
cannot be built up or, you know, it is been altered a lot over 
the last 100, 150 years that we have been farming.
    My hope is that through the CSP program we can divert 
funding to focus on sustainable farming practices to support 
clean air, clean water and profitable soil systems.
    I think that direct payments and counter cyclical payments 
as well as loan deficiency payments do not always promote the 
best conservation minded practices. Direct payments often 
support farming, you know, like you said in your opening, about 
as many base acres as possible. And I think that if we could 
divert some of that funding, all of that funding into the--a 
program similar to the CSP program that we could really promote 
the real idea of conservation and what that means. And I really 
truly believe that if you fund the CSP program and continue to 
support that that farmers are going to benefit from it. They 
are going to have added income, and the public is going to 
benefit from it from increased water quality, air quality and 
soil quality as well as increased wildlife habitat.
    One of the main problems I see with the CSP program right 
now is that there is very little information available to 
producers on what they need to do to be enrolled. And I would 
hope that the goal of the CSP program is that all producers 
potentially have the ability to enroll in that program. I do 
not feel right now at this time that there is enough education 
and enough information put forth into developing that 
programming.
    So that is kind of one of my hopes is that through the CSP 
program, the support of our government, we will be able to 
secure a future for many more generations of farmers.
    And I would also like to stress the importance of 
maintaining wildlife habitat, promoting habitat restoration 
programs. The CRP program has always been a beneficial one to 
the habitat. I do not always feel the way the CRP has been 
implemented it was more soil conservation as compared to 
habitat preservation. Not all of those systems are sustainable 
ecosystems. They are just there to fill the need of soil 
conservation.
    And my last point that I would like to make is that as a 
small family farm I look to see that we are going to have to 
change our operation drastically to maintain our economic 
viability. And I believe that is fine, that business is 
changed, and we are a business. And I would hope that in the 
new Farm Bill there potentially would be some support for small 
business niche agricultural markets, specialty crops, and not 
through direct subsidy payments, but through market assistance 
programs in developing local markets in the area. And I think 
there is opportunity to continue growing with organic and 
locally grown food type industries. And I feel that we should 
continue to improve our economy by supporting these changes.
    I think there is a lot of opportunity to make a difference 
right now. We do not have a--we do not always have the 
opportunity to make changes, but I think with this Farm Bill we 
can potentially make a big impact on the future of farmers. So 
thank you.
    [The prepared statement of Mr. Killpack can be found on 
page 58 in the appendix.]
    Chairman Harkin. Thank you very much. I really appreciate 
your testimony, and we will have more questions for you I am 
sure.
    Next we will go to Chris Peterson, president of Iowa 
Farmers Union and a family farm operation from Clear Lake, 
Iowa.

STATEMENT OF CHRIS PETERSEN, CLEAR LAKE, IOWA, ON BEHALF OF THE 
                       IOWA FARMERS UNION

    Mr. Petersen. Thank you, Senator Harkin and Senator Nelson. 
I hope I measure up to what the other participants have said so 
far. Lot of good testimony.
    I am a small independent family farmer and I am a firm 
believer in the independent localized family farm structure. I 
believe hands down we can raise a better, safer, higher quality 
product than anybody else in this country. And I think farm 
bills should be centered around that.
    And somebody mentioned I-300, I think it was you, Senator, 
and you know, the packer ban was struck down in Iowa, I-300, 
struck down in South Dakota. I think there is lots of bad 
things going on in agriculture and there is a bunch of things 
we need to do if we are serious about revitalizing rural 
America. One of the top things on my list is a full competition 
title. It is time, we need this. Farmers are being compromised, 
transparency in the market place.
    I was one of the guys that paid the price and lost hogs 3 
years ago, 3,000 head failed to finish. I suffered severe 
financial consequences out of that deal. And there is a few 
thousand--a lot of thousands of our independent pork producers 
went through the same thing. And also because of that and the 
monopoly, even the contract growers now are, you know, their 
contracts are not the best in the world due to lack of 
oversight and reform. They have been marginalized. The guy 
wants to contract to rise livestock, fine, but I believe they 
should get a decent price and return for their labor. And 
mandatory price reporting is another very interesting thing 
that needs to be redone.
    Also I would hope that anti-trust and USDA and them start 
enforcing anti-trust laws and packer and stockyard laws. They 
are not working, revamp them and address the 21st century 
standards. Again, anti-trust and competition titles is one of 
my main things. We need to revitalize capitalism out here. It 
is not being done.
    And conservation, setting here looking at this water 
quality. Clean water is an amazing thing. We need a lot more of 
it on the countryside. And how you do that, number of ways. I 
believe the commodity title and the conservation title need to 
be tied together.
    Farmers are good stewards, stewards of the land. They needs 
credits and incentives to participate in conservation programs. 
I believe it is critical that conservation and tillage 
practices need to be tied into what commodity payments come out 
here.
    And moving right into the commodity program, I am a firm 
believer in price payments and price caps. It is about time 
that the taxpayers were--the issues of taxpayers were 
addressed.
    Also in the commodity title I look at three entity 
loopholes in the generic certificates. I look at that as a 
farmer as legitimate bank robbery. These loopholes need to be 
closed, and these certificates need to be done away with.
    Also we need a Farm Bill that will put a floor on the 
grain. It seemed like over the years the processors and the 
industrial livestock factories are getting lots of cheap grain. 
They were saying--a Tufts University paper just released 
entitled ``Industrial Livestock Factory Gains from Low Cost 
Feed Prices 1997 to 2005,'' documents how commercialized hog 
operations have saved $8.5 billion in feed costs. The boiler 
industry saved $11.25 billion. Smithfield alone saved $2.6 
billion in feed costs over this period of time.
    We need common sense in these farms bills. We need to 
quit--and the intent is well, keeping the family farmers on the 
land, but we need to quit subsidizing agribusiness to the 
extreme of this example. And a lot of--with Smithfield and the 
other integrators, what this does is give them an edge to 
compete against the independent family farmers raising 
livestock or cattle or whatever.
    Energy, very important. And I emphasize throughout this 
Farm Bill, we got to get back to localized ownership in the 
energy and all that.
    Also rural economic development, we need--we need rural 
economic development out here that--which is managed localized 
foods, getting small businesses revitalized. This is all very, 
very important to the survival of family farms in rural America 
and the return of the benefit to the consumers and the 
taxpayers of this country. Thank you.
    [The prepared statement of Mr. Petersen can be found on 
page 61 in the appendix.]
    Chairman Harkin. Thank you, Mr. Petersen.
    Next we will turn to Matt Schuitteman. I think I pronounced 
that right. Fifth generation farmer from Sioux Center, Iowa 
where he grows corn, soybeans and hogs with his father and 
grandfather. Mr. Schuitteman will provide some thoughts on the 
Farm Bill from the perspective of the Iowa Farm Bureau 
Federation; is that correct?
    Mr. Schuitteman. That is correct.
    Chairman Harkin. Thank you very much, Mr. Schuitteman.

STATEMENT OF MATT SCHUITTEMAN, SIOUX CENTER, IOWA ON BEHALF OF 
                THE IOWA FARM BUREAU FEDERATION

    Mr. Schuitteman. Thank you, Senator Harkin and Senator 
Nelson, it is an honor to be here. And I am from Sioux County, 
Iowa.
    And as my grandpa is 81 years old we are living through the 
issue of farm succession and turning over a fairly large family 
business. So this discussion has always been pretty helpful for 
me during this time. There has been several good points made.
    I do want to touch a little bit to start with on safety 
net. I would say regardless of what you think about where the 
direct payments and the counter-cyclicals and the loan program 
fit in, they have done a good job at least in our situation of 
smoothing out our ebbs and flows of our farm income.
    What I would also say from the standpoint of a young farmer 
is for the young farmer, access to capital is, aside from 
access to land, is probably our biggest issue. What this 
program has done is provided a nice source of capital at the 
beginning of the year and cash-flow for the young farmer so he 
can go out and build a viable operation. Because of that I 
would ask that the majority of 2002 commodity title be 
preserved and that those concepts be maintained that were set 
forth by that 2002 bill.
    There is also been quite a bit of discussion here about 
conservation programs. And Senator Harkin, you introduced the 
CSP program in 2002, and that was a program that those of us in 
Iowa were looking forward to utilizing. Unfortunately the 
funding, excuse me, the funding fell a little short of what we 
were hoping for. I think it was Mr. Bailey that mentioned that 
demand for those conservation programs has exceeded the supply 
of funds every year. And so we would like for efficiencies to 
be obtained in those programs so that more people could have 
access to those dollars.
    I think a good example of that type of efficiency could be 
regarding CRP. We have seen in general that farm CRP signup, in 
particular in southern Iowa, has been damaging to rural 
economy. I think the debate here is not necessarily about the 
ability to grow row crops on those acres as much as it is the 
ability to generate economic activity from those acres. Whether 
that economic activity be a cow/calf grazing operation or 
whether it be a cellulosic ethanol from switch grass 
production, I think there is a tremendous amount of opportunity 
there, and it does not necessarily have to come from row crops.
    What we could really--we have seen how livestock dollars 
can turn over several times in a community. But receiving a 
government check does not necessarily turn over that much in 
the community. So it could have a major impact on our rural 
economics.
    Our farmers need those opportunities. Anytime we can 
increase the lands available for our young farmer, young 
farmers will position themselves to take over that opportunity. 
In particular we are talking about a cow/calf operation, very 
much a position for a young farmer to get a start. And by 
diverting some of those CRP dollars, maybe even taking some of 
the CRP dollars and diverting them toward say a buffer strip 
program, I have got some figures here that says if we took one-
half of the funding from current general CRP signup we could 
install 33-foot buffer strips of Iowa's creeks and streams. I 
think that would be a major environmental impact, and I think 
it would be a good thing.
    I talked a little bit about the energy title. Obviously 
ethanol, especially corn-based ethanol, has had a big impact. I 
myself am an investor in a local plant and have reaped the 
benefits of that investment and have appreciated the 
opportunity that it provided. Biofuels have had a major impact. 
And Senator Nelson, I was happy to hear your thoughts on 
biogas. Sioux County is the proposed home of a biogas facility. 
So we are looking forward to see if that can come along and 
look forward to your thoughts on that as well.
    The energy efficiency grant programs have been utilized 
well. I know of several farmers in Iowa who have gotten those 
grants to update vent systems, dryer systems and have saved 
significant energy while doing them.
    One thing I would ask with this Farm Bill is that any 
issues regarding animal husbandry be left out of this Farm 
Bill. I do not feel like it is an appropriate avenue to address 
those issues. Farmers are the best judge of a healthy happy 
animal and we would like those decisions to stay with the 
farmer.
    With that, I see the yellow light is on. I want to thank 
you again for the opportunity. I was thinking on the way down, 
the good book says to whom much has been given, much will be 
expected. I think in this part of the country we have been 
given much as far as natural resources. And I would hope that 
government can be a partner in helping us fulfill our potential 
and not a restrictor. So I thank you and look forward to your 
questions.
    [The prepared statement of Mr. Schuitteman can be found on 
page 67 in the appendix.]
    Chairman Harkin. Thank you very, very much. We will start a 
round of questioning. I will try to just limit myself to 5 
minutes or so, something like that.
    Mr. Schuitteman, I will start with you since you were last 
and work back. In your testimony, I read your testimony last 
evening, about--talked about taking funds from commodities. 
Heard you mention that now about weakening the safety net.
    I really think we need to follow-up on this because I think 
it is kind of fundamental to our Farm Bill discussion and how 
we do this. Is there maybe--again, because of WTO, we are going 
to have to reduce our counter-cyclical program. We know that. 
So maybe a smaller counter-cyclical program, but in conjunction 
with crop insurance and conservation payments and rural 
development initiatives and energy incentives for growing 
cellulosic crops that you mentioned, maybe if you put all of 
those in a package it could be a part of an overall safety net 
for farmers. In other words, shifting it out of just--out of 
the direct payment and the counter-cyclical, which is what we 
have now, but broadening it out and putting that in this kind 
of package of things that would be--would provide a safety net.
    So I guess my question is, if we were able, I want to make 
it very clear because I think some people misunderstood some of 
the things we said in the past, I am not saying that we are 
going to take $26 billion out of direct payments and give it to 
the Department of Justice or Commerce or something like that. I 
am just saying we are going to leave that in agriculture, but 
is there a better way of allocating that money. So if we were 
able to shift funds away from things like direct payments and 
into these other areas like counter-cyclical supports, which we 
have enough room for under WTO, conservation payments, again 
with all the things I have heard here, got to have better 
technical assistance.
    Mr. Bailey came with this new concept that I had not 
thought about before, some kind of loan guarantee-type 
programs, may leverage more than what he have. Again, renewable 
energy incentive payments to farmers to be growing cellulosic 
crops on some of this CRP ground that contracts are going to 
come up anyway. Again, would that be a more balanced kind of a 
farm policy, again, putting that money out there in that way? 
Just asking for your thoughts on that.
    Mr. Schuitteman. I think like you said there is a variety 
of ways to go about this. And a couple points I would bring up, 
I talked about the capital needs of the young farmer and how 
this Farm Bill, you know, was able to provide some cash up 
front. Your thoughts on the safety net are good. For instance, 
on our farm in 1998 it cost us about $280 an acre to grow a 
crop of corn. This year it is going to cost us about $454.
    Chairman Harkin. Energy price increases and stuff.
    Mr. Schuitteman. Anything tied to energy and land are the 
two drivers and some other technology costs, so you know, our 
safety net of the 2002 bill has kind of fallen behind a little 
bit. There are ways to make that up, like you say, in crop 
insurance. But it is good to hear you say that we are not going 
to weaken that. Just so we do not weaken that safety net. And 
you know, from the young farmer perspective, as long as they 
have access to capital.
    Chairman Harkin. I am just asking questions, is there a 
better way of doing it than what we have done in the past? I do 
not know. For example, Mr. Killpack here mentioned in his 
testimony, he did not quite say it, but I read it in your 
testimony, in that direct payments get allocated to land prices 
and get allocated to the land so rental rates reflect that so a 
young farmer wanting to rent that land pays higher rental 
rates, if that is put into other things, it might east the 
ever-increasing rental rates that young people have to pay to 
get a foothold. I do not know if you had any thoughts on that, 
Mr. Killpack, or not. You mentioned that in your testimony.
    Mr. Killpack. I think that at least from my perspective 
that the direct payment typically is a guarantee that you can 
put that much toward a rental rate of land. And I kind of felt 
that if you could divert some of those funds into a program 
that would be more of an incentive based, you are going to 
guarantee some type of income for doing or promoting your 
stewardship of the land that would benefit both the farmer and 
the public in terms of, you know, improving conservation, water 
quality, things like that. And I just think that the funds can 
just be channeled in different ways. Not to eliminate any of 
that funding, but to channel it down a different route to 
promote conservation as well as the farmers' viability through 
that.
    Chairman Harkin. Mr. Bailey, did you have something you 
wanted to--any of you just jump in, just raise your hand.
    Mr. Bailey. My comment is this, and obviously you know I 
worked with wheat growers, barley growers, sorghum growers like 
that. And part of the sensitivity of messing around with the 
direct payments, and I will kind of represent Senator Nelson's 
Western Nebraska wheat guys, with declining yields and droughts 
and everything, the direct payment is the only thing that these 
guys have seen. And so if you start out by saying we are going 
to start changing direct payments, I need to tell you the red 
flags go up all over the place in wheat country, parts of 
cotton country and those areas. So you are on the right track, 
Senator, that the direct payment thing long term is not 
politically sustainable.
    Ken Cook and the environmental working group and all these 
people are building a case that long term we are going to lose 
direct payments one way or the other, OK. So what needs to be 
done now is that a package you are talking about needs to be 
developed so that the wheat guys that are getting nailed all 
the time because of the environment and everything do not lose 
everything. The package is rebuilt in a way that plugs the hole 
in the safety net and the package basically becomes a better 
investment by the taxpayers and America.
    I cannot--I cannot lay out the package right now other than 
to assure you we are working on it. But if you lead off too 
early by saying we are going to mess around with direct 
payments, the lobbyists on K Street just come unglued that 
represent agricultural interest. So we need to really 
concentrate on that package.
    Chairman Harkin. They have been hearing me say that for 
some time. So I know where--get a little unglued and stuff, but 
I still submit whatever benefits, and there have been benefits 
to direct payments in the past. I have no doubt about that. I 
look back, so I have seen it. But with what we are seeing now, 
what is happening now, something--we have got to change some of 
this stuff. With that--I thought I used up my time, but my 
green light does not seem to go off or something like that.
    I just wanted to say, Mr. Petersen, we will have a 
competition title again. As you know I put one in the last farm 
bill when I was chairman and it did not succeed. I think there 
is more support for it now. I think there is broader support 
for that. And we will have something in there akin to a bill 
that is got strong bipartisan support now, and that, of course, 
we will have to work on, but it is there.
    Debra Houghtaling, the one question I have about it is 
what--just tell me what made it possible for the Southwest Iowa 
Coalition and the Grow Iowa Foundation to work to get a large 
number of communities together? This is--that is touchy work 
when you do that, you know, to get different communities, they 
all have their wants and things. How did you put them all 
together?
    Ms. Houghtaling. Well, the most important is self-interest, 
is that they understand that a community of 2,000 cannot 
accomplish nearly as much as bringing together a larger group. 
There is multiple examples, enterprise, zone legislation, a 
State prison in Clarinda where it might have only affected one 
of the communities, or might have only affected half of the 
communities within Southwest Iowa, but the larger group of 
counties and communities all supported, you know, the 
different--doing lobbying and what have you for different ideas 
that benefited someone else. And that is a completely--that 
kind of turns the normal economic paradigm on its head. Where 
you are six miles away and I am going to compete with you for 
absolutely everything, where you are 100 miles away from 
something bigger, let's work together so we can access more for 
not just me but all of us.
    Chairman Harkin. Thank you very much. And now my light is 
on. I will turn to my colleague, Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman, I hope I do not 
get a fast count.
    Ms. Houghtaling, it is Houghtaling where I am from in 
Nebraska, you made reference to the importance of rural 
entrepreneurship programs, and the program we have had in 
Nebraska has been very successful. I will just give a few of 
the numbers to provide a base. We began by providing micro-
enterprise developments and were able to lend almost $7 million 
to provide training and technical assistance to 15,000 
businesses. And this is over a 10-year period. And in 2006, the 
last year that we have got, each dollar of State funding for 
this program leveraged over 12 from other sources, and it 
helped us create or save 7,500 jobs at a cost of $43.30 per 
job, which in terms of investment is a pretty small number 
comparatively speaking.
    You mentioned that the kind of assistance that you are 
looking for would come from two sources, one is from private 
sources, foundations and private groups, and the other from the 
government. Do you have any idea of what it might take in terms 
of dollars over, let's say, a 5-year period of the Farm Bill to 
be able to have this kind of program be viable throughout the 
rural parts of our country? We think about it in terms of 
Nebraska and Iowa with the particular bills here, but if we are 
going to do it on a nationwide basis, do you have any thoughts 
about what it might take?
    Ms. Houghtaling. You know, any number I would throw out 
would just be a wild guess. I mean, I think the thing that is 
interesting is that Nebraska is one of the very few rural 
places that has really been able to do micro-enterprise well. I 
am on an Iowa statewide group that is looking at the Nebraska 
model and trying to figure out what can we import into Iowa to 
make that successful. I would probably start to--to get that 
number I would probably start to take a look at the money that 
is gone into Nebraska and aggregate from there, you know, 
because there is a lot of more populated rural states certainly 
than Nebraska or Iowa. But I think that needs to be a starting 
block to take a look at where it is been successful, and there 
are not a lot of places where it is been as successful as 
Nebraska.
    Senator Nelson. Mr. Chairman, since we are in a business 
where virtue cannot be its only reward, I have to point out 
that that was a program we put in place while I was Governor. I 
do not want to take full credit, I just want the record to 
reflect that happened. So I think the point is well made.
    If you can take a best practice approach and try to model 
that which is what we have done in our bill, then other States 
could begin to look at what they could do and try to replicate 
it as best they can or take the best pieces of it for their 
State and then expand it, because obviously, you are right, 
when you said earlier that one size does not fit all. And we 
have to be able to have a pattern, but to become creative as 
well.
    Mr. Killpack, you mentioned in your testimony that you 
think that CSP should be the focus--a focus of the farm bill. 
And, of course, we are facing some pretty tight budgetary 
issues. If you were going to make CSP a greater focus, maybe 
you could help me understand what you would--if it is going to 
be the major focus and we have a limited amount of money, can 
you be specific as to the kind of programs it might crowd out? 
You do not have to make winners and losers here. I just wonder 
what you think what program is less effective than CSP if we 
are going to make that a bigger focus.
    Mr. Killpack. Well, in terms of making farmers profitable I 
do not really know if you could cut out one program. But in 
terms of maintaining our natural resources, I think that should 
be the top priority, and funds can be allocated from, you know, 
direct payment, loan deficiency payments, counter-cyclical 
payments into the CSP program to make it a viable program. 
Because I think that--when that came out I was really excited. 
The potential that was there to kind of allow the producers to 
be conservation minded because it is hard to--you know, me as a 
young farmer do you allocate this land to conservation 
practice, or do you farm it? And in my viewpoint I always think 
in terms of the spoiler first. That is just my belief. I would 
rather have the soil be here for the next generation for my 
kids to be able to farm, and I think that is where our focus 
needs to be.
    Where the funds come from I, you know, I have a few ideas, 
but I hope that that is something that you can figure out and 
know that the priority needs to be at sustaining our natural 
resources, because once they are gone, it does not really 
matter if we have got any other commodity programs or anything 
like that. I mean, hands down that is the one thing that should 
have priority is maintaining our natural resources.
    Senator Nelson. I certainly agree with you, Mr. 
Schuitteman. Do you have any further thoughts about what is 
less valuable as part of it, what is most valuable, more 
valuable, sort of a prioritization because that is what we are 
going to be faced with.
    Mr. Schuitteman. I would say generally CRP signup would be 
something to look at, and more targeted CRP rather than the 
whole farm. Just to give you an example, as Mr. Killpack was 
talking about how we might use some of those funds. On our farm 
we have begun using strip tillage for our row crops. It is a 
system that is more efficient in fertilizer use, and it is a 
system that is great for the soil. The equipment is specialized 
and can be expensive. So any funding we could get through a CSP 
or EQIP would help us get over the hump. And I think there is 
probably dollars better spent there versus some of our general 
CRP signups.
    Senator Nelson. The CRP program was the forerunner of where 
we may be heading and now we are more targeted in a more 
effective use of CRP, which means there may be fewer acres 
ultimately in CRP or more, but just make sure at the point of 
deciding if this will qualify that if there is a better higher 
use for switch grass or for other such strips as you are saying 
so that we do not--we do not put all of our resources into one 
program, it may be--give us the best return; is that fair to 
say?
    Mr. Schuitteman. When you look at conservation it is not 
just a terrace or buffer strip. You got to look at it as a 
production system. And any way we can produce our production 
systems is going to have a bigger impact than, like you said, 
the forerunners that we have had in place to date.
    Senator Nelson. Going to have to be careful because all CRP 
levels are going to be mad at me for even suggesting something 
like that. We are really not talking about necessarily 
shrinking it. What we are talking about is making sure we got 
the best use. And I would imagine those in production 
agriculture are interested in a better use as well, 
particularly if they can get a rate of return for switch grass 
or for other purposes. Perhaps they have not even thought of 
the aspect of grazing, I do not know.
    Mr. Bailey. I think we need to approach the CSP issue from 
both sides. One side is maybe we ought to take a look at 
restructuring CSP and cutting it maybe into two pieces. CSP 
when it was outlined was to reward good stewardship at one 
level and also provide an incentive on the other level. When 
you write the regulations, write the rules, administer it and 
apply it out, it is difficult to put a program together that 
does both. So one way to think about that would be to take the 
CSP and split it into a stewardship program. Really talking 
about a green payments program here that is pretty universally 
available to everyone in production agriculture. The other 
piece, this is my word, so do not give it to anyone else, but 
the other one is to build a super EQIP where it is an 
application--program application thing where you can let 
multiple producers come in and everything, but take EQIP and 
retarget it and really apply money back effectively that way.
    Now the other side of the question, where are you going to 
get the money to do this. It is really kind of only three pots 
of money that I can see right now. Reduce payments might pick 
you up half a million dollars, whatever. The second one has to 
do with--by going to a revenue assurance there is probably $2 
billion to $3 billion that can be pulled in from the crop 
insurance subsidy and no loss to the safety net when the thing 
is integrated properly.
    The other one is the one Senator Harkin is talking about is 
direct payments. Is there a way to make the sale to make the 
program such that people understand that any money coming out 
of direct payments going into the land stewardship program is a 
good deal for producers and a good deal for taxpayers? That is 
the part of the crafting that I think is going to be difficult, 
but those to me are kind of the three opportunities we have 
got.
    Chairman Harkin. Thank you, Mr. Bailey. If I might just 
pick up on that, Varel. I think you may have a good suggestion 
there. And that is to somehow take--we have got to change CSP 
because--we have not had the funding and, of course, they took 
the money out for disaster payments. I just want to assure all 
of you that is not going to happen again.
    In 2003 the first time ever in the history of our 
agricultural legislation, first time ever, we took money out of 
agriculture to pay for disaster, never happened before. Well, I 
raised a fit about it, and then in early 2004 I got the money 
put back. Then in late 2004 they took it back out again. So 
lost two, won one. We are still one behind. But I think we just 
got to have a understanding of those in Congress and in the 
White House, no matter who it is, that a disaster is a 
disaster. It is paid for by everyone. We did not go to the 
people in New Orleans who suffered from Katrina, and said, OK, 
we are going to put billions of dollars in it, but we are 
taking out of it your highway money, we are going to take it 
out of your education money and your foods stamps and all that. 
We do not say those kind of things, or when a tornado hits and 
wrecks a town, we do not say, now we are going to take it out 
of this. No, we treat disasters as such, and we provide for 
that out of general revenue.
    I think it was a terrible mistake to do in 2003 and 2004 
and it has really put us somewhat behind. Whether we can get 
that money back or not, I do not know. I am still trying, $2.8 
billion. $2.8 billion stretched out is a good sum of money. 
Anyway, that is just one thing.
    I am just saying that the CSP has been damaged, and then 
they put in all this--I will say this, Secretary Johanns ran 
around the country having these hearings all last year and came 
back, and we met with him on numerous occasions, and one of the 
things we heard all over the country, whether it is Idaho, 
Montana or Nebraska or Iowa or Missouri, he heard about CSP. 
Farmers got it. They understood it. As he said to me, he said 
they were both happy and mad. They liked the concept of the 
program and mad it is not working.
    So we are trying to--we are going to get off that watershed 
program. That watershed basis was never, ever intended in our 
legislation. We are going to make it a national program. In his 
proposal Secretary Johanns has asked for about five times more 
money than what we have been spending on it. So I think 
generally now we are going to make this thing work better.
    Now what you have proposed, Mr. Bailey, is something that I 
think deserves further elaboration and looking at. And that is 
to, as you say, two kinds of things, green payment, a super 
EQIP, maybe folding EQIP into this, making it sort of a 
seamless kind of a program where you could come for your one 
time thing on EQIP, which would be a waterway or whatever it 
might be, and then while you are there doing that you could 
just be forwarded right into an analyzed CSP-type payment. So I 
think that merits a lot of consideration.
    But the second thing is then, getting back to the CRP 
thing. Again, I am going to ask you to comment on what I am 
about to say. Seems that CRP, you have got like three general 
pots. On one side you have got the gullies and the ravines and 
the really bad places that are CRP that should not be farmed, 
and we can bid those back in.
    Senator Nelson. Highly erodible.
    Chairman Harkin. Highly erodible, and not productive at all 
really. So you could probably get those back in. Then on the 
other end of the spectrum some of the land that is as about as 
flat as this table, and that land is going to come out. As you 
know, some farmers wanted to get out early and Secretary 
Johanns recently announced he was not going to permit that 
because of the additional corn acreage coming in. But that land 
is going to come out. I mean, when the contracts are up there 
is no way we have enough money to bid that back in. So that--in 
between that, in between that you got the land that is 
erodible, it is hilly, it can be row cropped, it is not very 
productive, but if you have got $3.50, $4 corn you do not have 
to be really very productive to make money on that. But it is 
very erodible.
    So what do you do with those contracts when they come up in 
the next three, four, 5 years? Well, perhaps here is where we 
blend this kind of thing. Maybe you can say to a farmer, OK, 
you are coming out, I know because of crop prices you are 
thinking about taking it out of CRP and farming it. But what if 
we were to give you a 10-year contract and we reduce your CRP 
payment down a third of what it was, but then we will give you 
a CSP payment and EQIP, fold you into EQIP and CSP, and then 
you can grow certain specified crops that are conserving in 
nature, like switch grass, alfalfa for hay, or even do grazing 
or something like that in which you could get an economic 
benefit. You can go ahead and market this as long as do you it 
in a conserving manner, and that is what the CSP payment is 
for. Make sure you do conserve soil and water and you have 
wildlife habitat. Then it might induce them to come in because, 
you know, crop prices are variable. But if you can see ahead 10 
years, I got the CRP, I get CSP, I get the EQIP payment, and I 
can grow something that I can market, that might then keep that 
CRP land in some kind of conservation use, but still an 
economic benefit so we are not hurting rural communities by 
just keeping it out of production. Any comments on that kind of 
thing? Chris?
    Mr. Petersen. Yeah, I think that idea would be very worth 
pursuing because we want to grow energy crops or a small 
independent family with some farmer with some cattle or a 
little bit of hay ground, whatever. I see lots of opportunities 
there.
    Chairman Harkin. We know we can doing rotational grazing 
without destroying the land. We know that. Anything else, 
observations on that at all?
    Mr. Bailey. Just a comment, Senator. I have been working 
with Congressman Cane over the last couple of years talking 
about CRP, like kind of a mechanism something like you are 
talking about here. I think the key point of all of these 
things is the details, and farmers are quick. You ticked off on 
your fingers the different things we are going to do.
    And a farmer in a matter of minutes will figure out which 
is the best option for him. So the key here is that as you make 
up the smorgasbord that, again it makes sense environmentally, 
it makes sense economically for the producer and makes sense 
for the taxpayers. So, yeah, I think we are on the right track 
here. Increased flexibility, and in a lot of ways empowers the 
producer to come to the agency and say, these are the things I 
want to do, and I have already done an environmental index on 
it, because I have got it on my PC or whatever, so this is the 
way it lays out. And at that point then it is kind of almost a 
bidding process the producer applies on that land rather than 
just going to the agency and the agency goes down through the 
checklist and says, well, this is now its source, you know. So 
I think you are on right track.
    Chairman Harkin. If you have got any more thoughts, 
suggestions on this super EQIP, I would sure like to know them. 
I think that I would like to explore this some more. I do not 
know enough about it, but I would like to explore it some more.
    Senator Nelson. I think my questions are pretty well 
answered.
    Chairman Harkin. I want to thank you all very much and we 
will have our second panel come up. We will take a short 5-
minute break here before we have our second panel, and I also 
wanted to introduce Eric Steiner. I did not mention Eric.
    [Recess.]
    Chairman Harkin. The meeting will resume its sitting and 
now we have our second panel.
    The same pertains here, that your statements will be made a 
part of the record in their entirety. I can assure you I read 
every one of them yesterday, last evening and this morning, and 
will be made a part of the record in their entirety, and ask if 
you just sum it up in five, 7 minutes, something like that so 
we can get into a discussion with you.
    First we want to welcome Dr. Wendy Wintersteen, the Dean of 
the College of Agriculture at my alma mater, Iowa State. Also 
serves as a director of Iowa Agriculture and Home Economics 
Experiment Station at Iowa State. An entomologist by training, 
and as a faculty member her research interest focuses on the 
development assessment of pest management strategies, and a 
great job of leading the best ag school anywhere in the nation. 
Dr. Wintersteen, welcome. Please proceed.

 STATEMENT OF WENDY WINTERSTEEN, DEAN, COLLEGE OF AGRICULTURE, 
   DIRECTOR, IOWA AGRICULTURE AND HOME ECONOMICS EXPERIMENT 
           STATION, IOWA STATE UNIVERSITY, AMES IOWA

    Ms. Wintersteen. Thank you so much. I really appreciate 
those remarks, especially given that we are so close to 
Nebraska. We have a great partnership with all of the land 
grant universities in the Nation and it really is that 
partnership that has allowed agricultural research and 
extension to serve the Nation and all the needs that 
agriculture provides.
    Recently one of our distinguished professors, Dr. Wally 
Huffman, did a study with some of his colleagues at Yale 
University, not a land grant university, but nonetheless, a 
good university. I think back over the last 30 years the rate 
of return to agricultural research investment was a 50 percent 
annual return. I promise you there has been nothing else that 
has returned that kind of investment, except maybe the 
investment in some of our biofuel plants this past year.
    So I am here today to speak, to strongly urge Congress to 
increase its investment in research to support agriculture and 
to increase support for extension programs that go hand-in-hand 
with those research programs.
    The USDA is the primary spending agency for agricultural 
research. It spends about $2.6 billion a year in research and 
its extension. Unfortunately over the last 30 years that 
investment has been flat. At the same time the National 
Institute of Health has received a 882 percent increase in 
funding. And we have literally been flat lined, which becomes 
an issue of the health of agriculture in this nation.
    At the same time that our numbers have declined in terms of 
research dollars, our faculty has expanded their portfolio, and 
they are doing more and more to do the research on the 
relationship between food and disease in humans, to look at 
obesity, to use animals as models to solve critical issues in 
muscle and bone health in humans.
    So I would argue for an increased level of funding to 
support this important program and an increased amount of 
coordination between the USDA agencies that worked together 
with their land grant university partners and with the private 
sector in our commodity wars and various farmer organization to 
really serve agriculture.
    We would ask the question, is it possible to think 
differently about establishing some national research centers 
of excellence that would address our primary commodity issues 
and also address key issue facing agriculture or opportunities. 
Could we do something where we would have a center for 
excellence in soybean research and extension programs? Could we 
have a national center of research and extension excellence 
related to advanced renewable fuels and biobased products? 
Could we really finally establish an upper Mississippi basin 
nutrient management environment center that would coordinate 
research and extension information across the States that are 
truly faced with a critical issue on water quality? Can we take 
the enormous knowledge that we are gaining from genomics and 
put together translational and functional genomic centers to 
allow agriculture to take advantage of what we have learned 
both for livestock and crop production?
    There is a need for this increased partnership and a need 
to support it with increased funding. And at the same time it 
is critically important that our land grant university programs 
through Hatch and the Smith-Lever Acts retain their support for 
formula funds. It is the heart of how the system works. It is 
what brings our ability to address local problems and federally 
critical issues. And we do it because we have the 
infrastructure in place. Without those formula funds we would 
not be able to do it. And I would think it is that 
infrastructure through research and extension that allows us to 
address, again, local issues, rural issues, issues relating to 
economic and rural development.
    And I just want to mention one program today that is about 
communities, about extension, a little separate from ag 
research, but that is our New Horizons program that is working 
with community leaders in rural Iowa to really address problems 
related to poverty. That is what can be done with the 
infrastructure of formula funds and that is how we can leverage 
additional State dollars in that partnership.
    So clearly the opportunity is tremendous. Agriculture right 
now is faced with a--really a revolution of rapid change. And 
it is time that we begin to address that through this increased 
funding opportunity. Thank you.
    [The prepared statement of Ms. Wintersteen can be found on 
page 79 in the appendix.]
    Chairman Harkin. Thank you very much, Dean Wintersteen. I 
will want to follow up on this idea of centers of excellence 
with you and see how many--what the university--how many we are 
thinking about, or are some existing now.
    Now we turn to Duane Sand with the Iowa Heritage 
Foundation, and the environmental consultant for Norwalk, Iowa, 
my neighborhood. Most of his work for the Iowa National 
Heritage Foundation coordinates work on the state 
appropriations Federal farm policy and model watershed 
projects. I can tell you Mr. Sand has many years of experience 
working with clean water and sustainable ag coalitions at both 
the State and national levels. Mr. Sand, welcome.

STATEMENT OF DUANE SAND, IOWA NATURAL HERITAGE FOUNDATION, DES 
                          MOINES, IOWA

    Mr. Sand. Thank you, Senator. I am honored to be called 
your neighbor, thank you. Thank you for the chance to share our 
priorities and ideas that as you take on the very tough 
challenges of writing a Farm Bill with the budget constraints 
you have.
    I will start off by saying our top priority is with the 
Conservation Security Program. As the Nation rapidly moves 
forward implementing a renewable fuels policy we are seeing 
additional challenges to soil and water and wildlife 
conservation that come along with that, and we need a 
comprehensive program like CSP for working lands as the means 
to deal with these additional challenges. This year I think is 
the time to start looking at transitioning direct payments into 
green payments if for no other reason than the inflationary 
impact on land values that direct payments have in the 
currently economy.
    We also encourage the use of commodity payment limits as a 
means to come up with some additional money for conservation. 
And as you look to the future I think it is important to see 
the Conservation Security Program as a key infrastructure as 
the Nation takes on its challenges on climate change and global 
warming.
    Eventually I think the Nation will get to a point of using 
carbon taxes or trading of carbon credits. And it is that 
infrastructure Conservation Security Program that can make a 
billion acres of private lands the key to solving a good part 
of our climate change issues and mitigating those problems.
    A big concern of ours right now is the conservation reserve 
program and it being priced out of the land market in the corn 
belt. The tremendous success of the corn belt with ethanol is 
affecting land values and the baseline increase for CRP will 
not come close to keeping acres in the corn belt. Iowa is the 
No. 1 among the States in using CRP. Nebraska has been No. 10. 
And I see nothing but a migration of those acres in contract to 
other regions unless we make some changes.
    A few ideas we have, one is that since contracts are likely 
to be written at below market values would be good to have a 
uniform discount for all regions, so all farmers and all 
regions compete equitably on the general signups and the 
partial field enrollments.
    We believe that the conservation reserve enhancement 
program is a major asset on a highlighted CRP, and that piece 
should have 100 percent reimbursement because that is the one 
piece that is highly targeted based on a professional natural 
resource plans' priority of the States and so we urge more 
support for the enhancement program.
    Along that line we would hope that you could direct the 
Secretary of Agriculture to put additional emphasis on very 
flexible conservation enhancement programs into the corn belt 
states that are going to be missing out because we have been so 
successful at renewable fuels, to give us sort of a baseline 
based on the historic use so there is a flexible way to get 
more revenue back into the States to keep CRP active and not 
have that be an inadvertent victim of our renewable fuel 
successes.
    We also think there is a potential under the PAYGO approach 
that if USDA were to start targeting those economically 
marginal lands that were costing the taxpayers money to keep in 
production and to offer a transitional contract that converts 
them to an economic use, such as grazing, forestry, biofuels, 
biomass, that--and then takes the full credit for the savings, 
the savings on the disaster payments, crop insurance subsidies, 
commodity subsidies and that gets attributed as part of CRP 
under PAYGO, then we would have some for actually expanding the 
operation authorization for CRP. But that obviously takes a 
targeted effort in our agency at USDA.
    A final point is the shortfall in technical assistance and 
conservation incentives is going to be real problematic as 
cellulosic ethanol becomes commercially viable and spreads 
across the nation. We believe that there should be a 
conservation compliance requirement that if an ethanol plant is 
getting a subsidy that she should take on the responsibility of 
updating conservation plans and in creating a market incentive 
at their plant through price or procurement purposes so that 
the farmers that follow the conservation plans get a reward as 
these new biomass markets are created. An example, just in Iowa 
in Emmetsburg, with that first plant we need to be updating 
300,000 to 500,000 acres of conservation plans to be ready when 
that market opens. That would take five additional staff at 
NRCS, and they are losing 45 staff this year. That is why we 
need a compliance requirement to shift that to the private 
sector.
    Thank you.
    [The prepared statement of Mr. Sand can be found on page 65 
in the appendix.]
    Chairman Harkin. Thank you very much. I do not know that I 
understand that. I hope we get into that question.
    I will yield to my friend for purposes of introduction of 
our next witness.
    Senator Nelson. First, I want to thank Tom Schwarz from 
Bertrand, Nebraska for coming here. We have worked together on 
water issues over a lot of years. Tom is an alfalfa, corn, 
wheat and soybean farmer from Bertrand who has a lot of 
experience dealing with water issues in Nebraska. He will be 
talking about water issues and the conservation title from a 
producer's perspective. Tom has a great perspective on both 
farming and water issues. He is a graduate of University of 
Nebraska-Lincoln with a degree in general agriculture. And he 
is also a graduate of University of Nebraska Lied Program. He 
has been on the Nebraska State Water Policy Task Force since 
its inception, and he is a former director of the Central 
Nebraska Public Power and Irrigation District.
    Additionally, Tom was one of the founders of Nebraska Water 
Users, a statewide organization that supports water users and 
advocates on their behalf. Finally, Tom is the author of ``A 
Farmers' Guide to Water Rights''. So some great expertise in 
water and farming issues. I look forward to hearing his 
testimony here today.
    It is my understanding that Tom is joined by his wife Linda 
and his daughter Becky who is a student at the University of 
Nebraska in political science and that she worked with him to 
help shorten his comments so that we could get done in time to 
go see the Nebraska spring game in Lincoln. Tom, thank you and 
welcome.

          STATEMENT OF TOM SCHWARZ, BERTRAND, NEBRASKA

    Mr. Schwarz. Thank you, Senator Nelson, and thank you, 
Senator Harkin, for the invitation to be here. As the Senator 
said, I have closely followed water issues in Nebraska over the 
last 27 years. Senator Nelson and I worked together on the FERC 
re licensing of the Lake McConahagy projects of Nebraska Public 
Power District and Central Nebraska Public Power. That Nebraska 
plan that then Governor Nelson developed eventually became the 
three-state cooperative agreement which led to the settling of 
that re-licensing.
    Current programs in the farm bill have proven remarkably 
flexible in dealing with water quantity issues. CREP, EQIP and 
CSP all are proving to be valuable tools in helping develop 
water quality, water quantity and in habitat. In Nebraska, the 
USDA in partnership with farmers and the State are saving large 
volumes of water in the Platte, Blue and Republican basins. 
These have been really glowing examples of how to bring 
Federal, State and local money together to achieve a common 
goal. These programs continue to face new challenges, but they 
also provide a platform to achieve far more in the future.
    One of the biggest issues facing CREP, EQIP and CSP is 
payment limitation. I have personally favored lowering the 
payment limit, realizing that if we do this, large operations 
may have little incentive to participate. If large operations 
are to continue receiving large payments, perhaps we should 
develop a two-tier limit where there would be far lower 
production payments but much higher limit for conservations 
payments.
    Senator Harkin said, I feel it may be time to make a 
fundamental shift in our farm programs. We have a window of 
opportunity today with high cash grain prices to stop paying 
operators based on the volume of grain produced and start 
paying on production methods. If farmers' payments were tied to 
their ability to reduce consumptive use of water, they would 
likely make that a goal. Breaking out highly erodible land 
could be discouraged and payments could be reduced or 
eliminated as a penalty for this practice. Both of those 
examples would at the same time save water and benefit the 
natural environment. An investment of this kind in farm 
programs might be widely supported by both rural and urban 
America.
    Conservation can also be a double-edge sword. One man's 
conservation can take another's water supply. When doing an 
analysis of a conservation project we need to quantify the 
impact of the conservation practice to stream flow and require 
an offset if the practice depletes the flow of the stream. If 
such an offset were too costly in a certain area, then perhaps 
this conservation measure should not be done in this particular 
location. At this time we do not have the capability to do 
this. Additional research to allow this type of analysis would 
be very helpful.
    Cropping patterns can also impact consumptive use in a 
river basin. We cannot tell farmers what to plant, but it might 
be appropriate to provide incentives to those who chose to 
plant crops that will lower the consumptive use of water.
    I would highly encourage you to support research into crops 
that save water and other potential conservation practices that 
may lower consumptive uses of water.
    Among conservations programs EQIP has proven to be the most 
useful in dealing with water quantity issues. One suggestion 
for this program would be to allow longer contracts similar to 
CREP. By lengthening contracts we could accomplish greater 
water savings and reduce the administrative workload on NRCS.
    The CREP program has also been used to reduce water use in 
Nebraska. One problem we encountered with CREP was the acreage 
cap for counties. I would suggest that we consider allowing 
NRCS to exceed the cap in counties where the hydrologic system 
is over appropriated. By definition we cannot sustain current 
levels of development in those areas, so a cap really serves no 
purpose.
    CSP has the potential to be the most powerful conservation 
program of all, but it lacks the funding necessary to make it 
successful and due to its complicated nature, farmers are 
reluctant to pursue it.
    Speaking as a farm operator, if it takes days off work for 
me to understand a program and to comply with its requirements, 
I am going to be reluctant to participate. It appears to me 
that the administrative requirements of this program are great 
enough that I am not going to be able to comply without doing 
some harm to other parts of my operation.
    If I look at CSP with regard to water quantity issues, I 
see a number of possibilities. Riparian management could be 
used to benefit water quality, water quantity and restoring 
habitat to a more natural State. Invasive vegetation is a 
nationwide problem in our rivers, and CSP could be used to 
assist in this area. Native vegetation can also cause water 
problems if it occurs in river beds and causes flooding. These 
kinds of issues could all be addressed in CSP.
    Thank you for the opportunity to be here and share my 
thoughts with you.
    [The prepared statement of Mr. Schwarz can be found on page 
72 in the appendix.]
    Chairman Harkin. Now we turn to you John Crabtree, 
development and outreach officer for the center for Rural 
Affairs in Lyons, Nebraska. He is involved with his family's 
corn and soybean farm near Dougherty, Iowa. Welcome.

 STATEMENT OF JOHN CRABTREE, CENTER FOR RURAL AFFAIRS, LYONS, 
                            NEBRASKA

    Mr. Crabtree. Thank you, Chairman and Senator Nelson. I 
just wanted to say I really appreciate testifying in this part 
of the committee. I was born in Iowa, grew up in Iowa, lived 
there for 35 years. The only thing that got me to leave was a 
job in Nebraska at the center for Rural Affairs. So this is 
really a great panel to speak to. I must confess particularly 
Dr. Wintersteen here, I was a University of Iowa grad, though, 
sorry.
    Chairman Harkin. Cannot win them all.
    Mr. Crabtree. The 2007 Farm Bill presents an opportunity, 
and certainly this is true of all farm bills. However, the 
continued consolidation and concentration in agriculture, both 
at the level of production and in processing, calls for a farm 
bill debate that closely examines and ultimately addresses 
fundamental structural issues and long-term investments in 
rural America.
    Today you heard and as we go forward in this debate you 
will hear a lot of stories about the chronic economic problems 
that we face in many rural communities. And it is important to 
consider chronic economic challenges in the drafting and debate 
of the Farm Bill. But we should, however, recognize there is 
hope and there are solutions to some of the challenges we face.
    Senator Nelson and others testifying mentioned small scale 
entrepreneurship as a proven strategy to revitalize rural 
communities. It can create genuine opportunities across rural 
American with the support of a modest investment by the Federal 
Government.
    The importance of small entrepreneurship is particularly 
profound in the most rural areas. The Center for Rural Affairs' 
analysis of economic conditions in farm and ranch counties of 
Iowa, Kansas, Minnesota, Nebraska, North Dakota and South 
Dakota found that nearly 60 percent of job growth in the 1990's 
in farm and ranch counties in those States came from people 
creating their own job by starting a small non-farm business. 
The small entrepreneurship is the one development strategy that 
consistently works in these communities.
    We strongly support Senator Nelson's proposed rural 
entrepreneur and micro-enterprise assistance program because it 
would tap into the rural development potential of small 
entrepreneurship. The program was modeled after a provision in 
the Senate version of the 2002 Farm Bill, which was not in the 
conference report, and also a program initiated by Senator 
Nelson in his previous job as Governor of Nebraska. As the 
Senator pointed out, it works. Nearly $7 million lent. Nearly 
$7 millions lent over the last then years. 15,000 businesses 
assisted in rural Nebraska, $12 leverage to each dollar spent. 
And at $330 per job I must point out that the center for Rural 
Affairs does not support micro-enterprise development and 
entrepreneurship because we are nostalgic for a mainstream of 
yesteryear.
    This is in truth the heaviest hitter in rural economic 
development. This is where jobs are created. And at that cost 
and at 50 to 70 percent depending on where you go across the 
country, that level of job creation, this is where rubber meets 
the road in rural economic development.
    In talking about entrepreneurship I think we also must come 
to recognize that beginning farmers and ranchers are 
entrepreneurs as well. The future of agriculture, indeed much 
of the future of our rural communities, depends on the ability 
of new family farmers and ranchers to get started. And if 
beginning farmers cannot get started, if there is no future in 
farming, then the current policy is not working. The cost of 
land, either renting or purchasing land is the most significant 
barrier to entry for beginning farmers and ranchers. And land 
costs weigh heavily on the success of or failure of many 
established small and mid-sized operations as well.
    There was not the original intent of the Federal farm 
programs to become the driving force behind consolidation. 
Virtually unlimited farm program payments are used by mega-
farms to drive their smaller neighbors out of business.
    Now although securing payment limits may be the most 
difficult thing we try to do in this farm bill, it is also the 
most important. In fact, without real limits farm programs work 
against us.
    Just a couple things quickly to point out that while it may 
be difficult, the solutions are elegant. It is simple. First 
and foremost, close the loopholes and make current paper limits 
real. Limits should be limits regardless of how farms are 
organized. With direct attribution of farm payments to a real 
person and a definition for actively engaged that involves dirt 
under the fingernails farm programs can work.
    We urge you to say no to any Farm Bill that lacks 
meaningful and effective payment limits because rural American 
cannot afford another Farm Bill that undermines family farming.
    Last, I just want to touch on livestock competition issues 
because in many rural areas the livestock that are raised there 
are only a few or even one packer or processor for a given 
livestock species that buys from the farmers and ranchers. At 
the same time there is been a dramatic increase in the use of 
production marketing contracts. Currently fully 89 percent of 
hogs are either owned outright or tightly controlled through 
various contracting devices. Many farmers and ranchers face 
price discrimination and severely limited market access as a 
result. Congress should not let another farm bill go by without 
making changes in the Packers and Stockyard Act and the Fair 
Practices Act that are necessary to breathe some life and 
competition back into livestock markets.
    Just a couple of things real quick. Prohibit packers from 
owning livestock, define undue preferences and establish that 
producers need not prove anti-competitive injury to an entire 
sector relating to packers and stockyard cases.
    I want to end with this: It really does come down to a 
question of--in a nation if packers and processors own the 
control over livestock, what need is there for farmers and 
ranchers? And I think if we are going to hold up the farm as 
being a solution to some of the challenges of rural America, 
then we need to do some of the things that you and Senator 
Harkin and others have tried to do in the Competitive Fair 
Agricultural Market Act, with S. 305, the prohibition of 
packers owning livestock. Need to make these things into a 
competition title in the Farm Bill and make it part of our 
future. Thank you.
    [The prepared statement of Mr. Crabtree can be found on 
page 49 in the appendix.]
    Chairman Harkin. Thank you very much, Mr. Crabtree.
    Now we will tour to Mr. Stroburg, CEO and president of the 
Renewable Energy Group in Ralston, Iowa. REG owns three 
biodisel refineries located in Ralston and Wall Lake, Iowa and 
Glenville, Minnesota with a total production capacity of 72 
million gallons per year. Current biodisel production capacity 
in Iowa is about 140 million gallons per year. So Mr. Stroburg, 
welcome. Please proceed.

  STATEMENT OF JEFFREY STROBURG, CEO AND CHAIRMAN, RENEWABLE 
               ENERGY GROUP, INC., RALSTON, IOWA

    Mr. Stroburg. Thank you, Senator Harkin, and thank you, 
Senator Nelson. Really appreciate the opportunity to come talk 
to you about biodiesel and the biodiesel industry. Renewable 
Energy Group is a roll up of all the biodiesel activities that 
West Central Cooperative have been involved in since 1996. And 
we build bodies of plants and build them for third parties as 
well as for ourselves. And we also market the biodiesel coming 
out of those plants.
    The number of people that have invested in REG biodiesel 
plants in Iowa exceeds 3,000. So there is more than 3,000 
individual investors. Matt Schuitteman, who has talked about 
investing in an ethanol plant, there are 3,000 mostly rural 
farming investors who invested in these plants.
    The biodiesel industry provides opportunities for rural 
development. It also provides opportunities for jobs in rural 
communities. These are skilled jobs. These are skilled jobs 
that quite often require a 4-year degree or even an advanced 
degree, so it is--biodiesel is a great rural development 
opportunity.
    One of the threats that we have for the growth and 
development of biodiesel as an enhancement to our overall 
national energy complex is an item called renewable diesel, and 
this is a non-ester renewable fuel where an existing petroleum 
refinery can take animal fat or vegetable fat and run it 
through the existing refinery and call it renewable diesel. It 
is not biodiesel by definition. It is a non-ester diesel, and 
yet the department treasury has determined that they can get 
all the benefits of that legislation has--provides for 
biodiesel.
    This is a real threat to the growth of the biodiesel 
industry. It is not what was intended by the legislators when 
they passed the incentives for biodiesel. It does nothing for 
rural communities. It does nothing for rural development. And 
maybe most important, it does nothing to expand our ability to 
produce more diesel fuel in the United States.
    When we build a biodiesel plant we expand the production 
capacity of diesel fuel in the United States. It is been 
decades since a petroleum refinery has been built. So when we 
run vegetable oil through the existing refinery we do nothing 
to expand our ability to produce more diesel fuel in the United 
States.
    Recently, I credit this first to Boston, they announced 
they believed their analysis--believe that there would be a 
diesel crunch about midsummer. And the reason is not because 
there is not enough crude oil. The reason is there is not going 
to be enough refining capacity. We need a policy that 
encourages the growth of refining capacity in the United 
States.
    So we do believe that we need to deal with this issue of 
renewable diesel, and we need to make sure the definition of 
biodiesel tracks with what was the intent of the legislation.
    We have had a lot discussion about ethanol today. And so 
I--a great honor to be able to talk about biodiesel. There are 
differences in ethanol and biodiesel. Biodiesel is a much 
younger industry. We have not had the opportunity to get this 
far along in the development curve as ethanol. Biodiesel is 
also not as well understood by its users as ethanol is now. And 
because of that we think we need--we need to make a distinction 
between the consumer awareness and the policy that is going to 
be required to promote biodiesel. We are in a different stage 
than ethanol. We do--we do believe that we need to increase the 
support for programs that target biodiesel and biodiesel 
awareness among consumers as well as handlers.
    The handling of biodiesel is an extremely important issue 
if we are going to maintain the quality of fuel in the overall 
fuel system.
    Renewable Energy Group also supports the research title 
outlined in Title VIII of the Farm Bill. This provides for $500 
million of mandatory funding over the next 10 years. And we 
think this is going to be extremely important so that we have a 
collaboration between Federal and university scientific experts 
which will ultimately make bioenergy most cost effective.
    Feed stock supply is also an important issue for our 
industry. Senator Nelson talked about feed stock 
diversification. And we believe and experts believe that 
biodiesel can be made from many different feed stocks.
    Senator Nelson, just think about the drought area that 
Drought David is causing in Southwest Nebraska and think about 
maybe putting algae ponds in Southwest Nebraska. They need 
sunlight. They do not need high quality water. It can even be 
brackish water to grow algae. Algae in the future we believe 
will be a great source of oil for biodiesel.
    There are other plants that we believe could grow in more 
areas where traditional feed oil plants cannot be grown. 
Colorado is looking at mustard, and we think there is many yet-
to-be-discovered seeds that were not useful in the food chain 
but might be very useful in the biodiesel area.
    So we do appreciate the opportunity to talk about 
biodiesel.
    One other item I would like to touch on is just the support 
to increase the transport of biodiesel in pipelines. It is been 
done in Europe, and we need to have incentives that help us 
encourage the pipeline industry in the United States to move 
biodiesel through pipelines.
    Thank you.
    [The prepared statement of Mr. Stroburg can be found on 
page 75 in the appendix.]
    Chairman Harkin. Thank you very much, Jeff. Thought I would 
just switch it here since I went first, I will try to give my 
colleague, Senator Nelson, the opening line for questions.
    Senator Nelson. Mr. Stroburg, let me just begin with you. 
Clearly going to a crop that does not have any food value but 
does have value for alternative energy is, I think, probably 
consistent with what we have been saying, instead of taking 
land out of production where it could be used for other 
purposes, as Senator Harkin said, with perhaps a lower payment 
from the government but with the expectation that if you get 
into this business of producing this crop, algae, or moving 
from corn to sweet sorghum, making some change that will simply 
add to our fuel capacity is very important. I do not know about 
algae, but I suspect since we have--we can raise salmon in 
Nebraska, we might find a way to grow algae as well.
    But what are your thoughts about what you could do to 
create the incentive, encouragement and get reality of having 
these alternative crops develop to go to creating more 
biodiesel fuel.
    Mr. Stroburg. One of the first steps is to have the land 
grant universities of the United States, particularly the two 
greatest ones, Iowa State University and University of 
Nebraska, do basic research on that. There are--there are plant 
species out there that have not been commercialized that our 
farming community is not used to raising that move through the 
university system and eventually become commercialized. That 
will happen as long as we continue to support the research and 
support on the other hand, the biodiesel use, because there is 
nothing greater than consumer demand. And if we have consumer 
demand it will get pulled through clear from the university 
clear to the end users' tank.
    Senator Nelson. I agree with that.
    Mr. Schwarz, because of your interest in water you have 
looked at a lot of different ways of conserving consumptive 
use. And I still get--we grew up in the same particular area. 
Bertrand is not that far from McCook where I grew up, probably 
what, about 65 miles. And with all the salt cedar and other 
kinds of weeds and growth that is coming up in the Republican 
River Valley right along the river bed, it is changed the whole 
structure, and there is a great water demand for those non-crop 
weeds and growth.
    I saw that there is--there was a pilot program of using 
goats. I cannot make this up, I am sure. But using goats down 
in certain areas that will eat those plants but would not touch 
the grass for grazing cattle and other livestock. I am not 
going to ask you how many goats it is going take to clear that, 
but I imagine Becky could figure it out pretty soon with her 
background.
    What are your thoughts about what we do in the Farm Bill to 
eliminate that kind of growth that, for water purposes, that 
would help increase water availability going down the 
Republican River, going into Kansas, to take some of the 
pressure off Southwest Nebraska where otherwise, if it isn't 
Drought David that will so negatively impact the economy, then 
the lack of having--or having crop land taken out of production 
or turn to dry land will otherwise adversely affect it? Do you 
have any thoughts about that.
    Mr. Schwarz. We are working in the legislature right now to 
pass a bill that will begin to depress invasive species issues 
and over vegetation of our rivers. Nebraska has kind of a 
unique situation right now where a lot of the country is really 
concerned about maintaining and growing stands of trees. We 
have, because of an endangered species issue, a need to remove 
a lot of vegetation from our rivers to benefit those endangered 
species. Of course, salt cedar is a major water user and also 
is counter to our ability to protect those endangered species. 
So this bill, the idea is to eliminate these species to the 
greatest extent practical on these river beds.
    There are different ways to deal with these species, and of 
course, one is to use chemical application and then mechanical 
or non-traditional goats. Central Public Power did an 
experiment on Jeffrey Island near Lexington and that area as I 
recall is about 1,000 acres, and I believe they brought in 
about 1,000 goats. And it was quite a sight to see. These goats 
will literally climb up the salt cedar bushes, they are really 
not a tree to look at them, and they will eat the vegetation 
off and they prefer eating weeds. They prefer eating salt cedar 
rather than the grass. They literally will leave the grass to 
the last to eat. But there is not that quite much demand for 
goats in the market.
    So if we are going to control the salt cedar problems we 
have in Nebraska, it is questionable if we could put enough 
goats out there to get the job done, so probably with some kind 
of a mix.
    So we are going to use traditional controls. We need, and 
it takes a lot of money no matter how you do this, and what we 
are trying to do is utilize the EQIP program to leverage State 
money to get the job done and the EQIP program right now works 
perfectly for this. So that is another case where we have got a 
product out there that is working and we can utilize it to do a 
better job.
    Senator Nelson. Congressman Osman and I at the end of the 
year get some more CREP money and EQIP money to be able to do 
that.
    And Dr. Wintersteen, as we get better with our conservation 
practices to--with strips and other grass growth might protect 
the erodible acres, the good news is we do that. The bad news 
is then there is less water necessarily flowing into rivers, 
streams and other sources to go into the State of Kansas, which 
puts us in--the better we get on conservation sometimes the 
harder it is for us to make those compliance requirements.
    But I appreciate very much your comments, Tom, and 
continued to work. If there is something we can do, obviously 
let us know. Thank you.
    Chairman Harkin. Goats, have you ever tried to buy goat 
cheese, it is expensive. Not kidding you. Went to the store, to 
Safeway in Virginia to buy some cheese. All the goat cheese 
from France, you have to look hard to find any from the United 
States. Maybe there is a market there. I do not know. I am just 
kidding you.
    I want to talk to Dr. Wintersteen about formula funds. Now 
formula funds I understand what they do. I understand how they 
operate. Questions have been raised that some of the formulas 
have been relayed down into 1800's, and we continue to operate 
on that basis. Some have said that we should take a look at 
these formulas. Formulas were laid down at the time when a land 
grant college served a defined area. The land grant college in 
Iowa served the needs of the Iowa agriculture. The land grant 
college in Georgia served Georgia. The land grant college in 
Texas served--that is how they were developed. And there was 
good reason for it at the time. But it seems to me now, Iowa 
State is doing research on things that are applicable to 
Georgia or Texas and they are doing research that is applicable 
on us. I am just wondering, is there a need to re-examine how 
those formula funds are allocated?
    Ms. Wintersteen. I like the formula funds. I like the way 
they are now. We benefit greatly. And I just--I think this is 
my opportunity. I think it is critically important to 
understand that if you look at the formula, the States that are 
big in agriculture, Senator Harkin, are the ones that benefit 
the most from those formula funds. And they are marked clearly 
in the infrastructure, in the budget of the College of Ag at 
Iowa State, at the University of Nebraska. If our formula funds 
would go away, if the Federal Government, which are about $5 
million, the number of faculty that I would not have the 
salaries to pay them would be pretty significant. So we have it 
embedded in our budget, they are operationalized. It would be 
extraordinarily difficult to move away.
    Chairman Harkin. I am talking--I am talking about the 
review process that goes into the application for formula 
funds.
    Ms. Wintersteen. We would certainly be happy to participate 
in the review, but again, we like the number we have right now.
    Chairman Harkin. I mean, I understand that, of course. It 
is the same thing about a lot of things, is it time to look at 
them and think about a different kind of review process. I just 
say, questions are being asked about it. I think they are 
legitimate questions. If something has been operating the same 
way since the 1800's you have to ask the question, is it really 
meeting the needs of today or what we are looking at down the 
pipe or is it just a system there.
    Ms. Wintersteen. And I would argue we can document for you 
the outcomes of these formula funds that we would be able to 
share that demonstrated impact, and again, Wally Huffman's 
research that is shown that 50 percent annualized return on 
formula funds is an extraordinary response.
    Chairman Harkin. Again, the essence of my question is 
should these funds, could these funds, these formula funds 
benefit from an additional review process to insure they go to 
areas of study where they are most needed, looking ahead at 
what we are trying to do in agriculture in the future.
    Ms. Wintersteen. And I would state that within certainly 
the College of Agriculture at Iowa State University we work 
with our State holder groups. We ask them for their priority 
needs and we focus on those using the dollars to address the 
local needs. So to me, the review, if it is done, Senator 
Harkin, is a review that should be done at a local level 
because this again is a partnership between the State and the 
Federal Government. The formula funds and Iowa that come in at 
the $5 million level approximately leverages the States' 
investment to the experiment station of $31 million.
    Chairman Harkin. I hate to interrupt, but maybe a change in 
the review process to think about more of this money ought to 
be going to biomass research or biodiesel research or to the 
kind of thing Senator Nelson just brought up, maybe Iowa State 
would do better under that kind of a review process. I do not 
know necessarily it would do worse. Might be it might do 
better. So I just ask that and I ask you because you are so 
involved in this because we do want to do more money in 
research. We do have to do more in research. It is a shame what 
is happened to ag research in this country. And--but we also 
have a reality to face, and that is we have a really limited 
budget. So the question then becomes--gets to be, well, is 
there a better reallocation or better way of reallocating the 
moneys that we have to look at the needs of agriculture in the 
future. That is really the essence. And we will be doing that. 
So I welcome, you know, your input into that as we move ahead. 
Of course, we will be hearing from land grant schools from 
around the country of course on that issue.
    Mr. Sand, I do not know if you heard what Mr. Bailey said, 
he raised an interesting point about a super EQIP and maybe--I 
am going to get more information from you on that, but how 
would you see transitioning the CSP into the role of being the 
primary working land program, which you talked about, and how 
would it work with the existing EQIP program? Is there some way 
of melding those two?
    Mr. Sand. I really appreciated your concept that you 
explained in terms of using EQIP as getting the primary 
practices on the land to make people eligible for CSP and to 
turn that into a seamless process from making land eligible and 
then actually moving people into the full one tier at a time 
kind of improvement. So we have a continuous improvement 
process.
    I think one of the weaknesses of EQIP is the you have been 
able to access it one practice by one practice, which has been 
more of a Band-Aid approach. CSP is--its advantage is hopefully 
engaging more people in the conservation process, which is 
critical. But it is engaging them in a continuous improvement 
process, which is where we really have to be for environmental 
protection. And obviously the big question is money because 
farmers have been readily available to signup for CSP and been 
favorable about participating.
    Chairman Harkin. I think there is a lot of support if we 
get off this watershed basis we have been on and make it 
broader based. Also, as you know, most of the money in CSP has 
been going for tier three. Well, that was never our intention. 
Our intention was to reward the best obviously as an example, 
but to start getting other people in at tier one and then 
moving them up the ladder. And so we will be looking at that 
and how we modify that in the next Farm Bill also. So I am--Mr. 
Schwarz and others are interested in that area, any suggestions 
and advice you have on that, I am open for too. How do we get--
focus more on tier one, getting more people into tier one? Tier 
one, obviously that is cheapest. And you get more people 
involved then you graduate them up to two or three, that type 
of thing. But the idea of using EQIP as the basis for getting 
them in and getting them the initial, you know, practice and 
then moving them on through CSP. Anything you have got on that 
I would sure appreciate that in the future.
    I need more information, and I think maybe I will have to 
lean on Senator Nelson for this, on what you said, Mr. Schwarz, 
about tying payments to reducing consumptive use of water. I am 
not certain how that would work.
    Mr. Schwarz. Well, there are practices we can use that will 
reduce the consumptive use of water. Anytime we can lower the 
evaporation losses that we take on a piece of ground or through 
approved crop genetics, we can lower the transpiration losses 
we take on that ground. You know, we have got high hopes today 
that with research that is also underway and nearing fruition 
that we are going to have corn varieties that will use maybe as 
much as a third less water in the process of growing it. You 
know, if we can make conversions to those kinds of crops I 
think it is going to benefit us all in the long run.
    Chairman Harkin. Thank you very much. Last one I have, Mr. 
Stroburg, moving biodiesel through pipelines. By the way, 
Senator Nelson just showed me the ruling that came out of the 
IRS just the other day I guess, right, on this? So obviously 
this is something we are going to have to look at, this 
renewable diesel thing. But question, biodiesel through 
pipelines does not have the same problem as ethanol; is that 
right?
    Mr. Stroburg. That is right, they are moving biodiesel in 
pipelines in Europe and have for years.
    Chairman Harkin. Just want to make that clear.
    I want to thank the panel very much, unless somebody has 
one last thing they wanted to add or point to me before I move 
on.
    Mr. Schwarz. I guess one comment I would like to make is it 
is important in our farm program, we have got to be able to 
develop a farm program obviously that is acceptable to farmers, 
but it is just as important that we have the ability to go to 
that cab driver in Chicago and explain why we are taking X 
dollars of his Federal tax money to go into these farm 
programs. We have to show him that we are benefiting the 
environment with that investment that he is making. We are 
helping to lower his energy costs through the development of 
these energy sources we have talked about here today, and that 
we are providing some security that his food supply is going to 
be there in the long term, it is going to be safe and he is not 
going be dependent on outside countries for that food supply.
    Chairman Harkin. Very good summation. I want to thank the 
second panel.
    Now we have some time, I am going to open it up for an open 
mic. Panel, you do not have to sit there if you do not want. 
You can leave if you would like. But I would like to open it up 
for at last a few minutes here. We have some time for open mic.
    This is an official hearing of the Agriculture Committee, 
so I ask that you mention your name, where you are from and if 
your name is not Nelson or Smith, you might want to spell it 
out for the benefit of the recorder who is here.
    Mr. Sturm has the mic and if you will just come down there 
and make a concise statement, I would sure appreciate it.
    Mr. Campbell. John Campbell, AGP, Omaha. Senator Nelson 
came all the way across the river, and I am going to be brief 
because as soon as I leave here I am going to be headed up to 
Valentine for spring turkey hunting.
    Senator Harkin, my written testimony, which I hope you will 
put in the record, is really aimed at trying to help you head 
the direction you are trying to go. And having my first Farm 
Bill in 1980 I can tell you I never thought I would have said 
that, but there is a huge convergence of thinking out here in 
the country, which you are not going to hear from inside the 
beltway. But out here there is a lot of convergence. And the 
direction you are trying to take us involves changing the 
momentum. In order to do that, in order to keep from just doing 
the status quo, you have to burst some myths. There is a lot of 
myths out there where there is factual research that can help 
you along this path.
    What my comments focus on today are primarily the CRP, but 
all of these things weave together. So very briefly right now 
today there is this debate about food versus fuel. We are using 
about 15 million acres for bioenergy. At the turn of the 
century we used 90 million acres. That is a DOE figure. That is 
because we used hay and grain to power horses and mules and 
oxen and those life machines that did our work. Well, so there 
really is not much of a conflict here. But the real conflict is 
not between food and fuel, but it is wildlife.
    As you said, CRP is going to fall victim to the market 
place if we do not do something different. And the key is 
getting people inside the beltway to think about what we can do 
different. And in order to do that we have to explode some 
myths.
    One of the myths is that CRP has been really beneficial for 
erosion. It has not been. The facts are that most of the ground 
is western high plains ground that was enrolled because of wind 
erosion. That is not the most damaging erosion. Heat and real 
erosion from water is the most damaging.
    If you look at the facts, farmers through conservation 
compliance and farming practices have brought more acres into 
tolerance, the T level, on their own outside of the CRP than 
have ever been accomplished by CRP. And it is even more 
striking if you figure, as you know, out in western Nebraska 
one person's soil erosion is another person's top soil. It is 
totally different. We were trying to get the most ground in the 
CRP for the cheapest dollars so we enrolled as quickly as 
possible. So that has not been great.
    Chairman Harkin. Can you sum up, please? We have got a lot 
of people and I have to move on.
    Mr. Campbell. Two other things, pheasant hunting, which I 
know is dear to your heart, Senator Nelson, is on the decline, 
hunting is on the decline. Pheasant counts are down from the 
time when the CRP was established. The CRP has not been good 
for pheasant and it has not been good for hunting, and you know 
the reasons why. We need to redistribute that in the kind of 
programs that are more widespread and less concentrated. Duck 
populations, the same is true of duck populations, has not been 
helpful, actually we are back to 1955 levels.
    Chairman Harkin. Mr. Campbell, thank you. I have got your 
thing, I am going to read it, believe me.
    Mr. Andrews. David Andrews from the National Conference in 
Des Moines. My question concerns the relationship between the 
WTO or international trade. There is a trade section in the 
Farm Bill and rural development. If--I think the WT0 is not 
frozen in stone, that there are openings in terms of the 
development agenda to special differential treatment developing 
the country's products to geographic indicators, to special 
products, there is an opening to the potential for global 
agriculture that respects a greater diversity than the current 
WTO seems to do.
    And in the United States, the Farm Bill can assist in 
further diversifying and localizing by removing road blocks to 
local food procurement, to enabling meat inspection to go 
forward that will allow State inspection that goes across State 
borders. Why shouldn't Council Bluffs have the opportunity to 
have meat produced here in Iowa go over to Omaha and satisfy 
those markets? And there is some question at the USDA level on 
food procurement rules. Why cannot we have the Department of 
Defense purchase local foods where this is a opportunity? Can 
we remove some of the obstacles to local and regional food 
systems and also move the WTO to appreciate that phenomenon 
too? Thank you.
    Senator Nelson. I sit on the Armed Services Committee, and 
we have from time to time inquired as to why the Department of 
Defense or Pentagon does not take domestic products for food, 
and we do not have a satisfactory answer yet. But we are going 
to persist at it. And I do not know the WTO implications, but 
obviously have to be considered once we are there, but you are 
absolutely right. There ought to be--we do put requirements on 
the Pentagon to have U.S. made products that they buy, creates 
big problem because some of the internal working parts come 
from other parts of the country, but it is the problem you have 
with food grown here and we ought to have a priority. We have 
not given up on it. It is just the Pentagon is a very difficult 
place to change the culture.
    Mr. Swanson. Harold Swanson, professor of the College of 
Ag, started the ag department in 1970, ran it for 25 years, got 
about 5,600 farmers out there that carry our brand and know how 
to farm. And that picks up on what was said, that we have got 
two times as many farmers over 60 than they have under 35. And 
the problem, if you are going to farm, get some training, that 
is what I always told my people. And we--our graduates are 
very, very successful. And if we are going to--the problem is 
there is no requirement, educational requirement to get into 
farming. And when you look at--I remember the statistics back 
then, only 10 percent of people who started farming back in the 
1970's and 1980's had any training for their work. And I do not 
know that it is any better than now. So the thing that I would 
like to see directly for in the Farm Bill would maybe with FMHA 
loans or PCA or even the credit, private credit to offer those 
few years in farming some very substantial discounts on the 
interest rates being a way of helping. And another thing is any 
way that we can encourage people to get some training for 
farming, because if once you get into a community college 
program like ours here at the universities, it changes the 
whole attitude of what it takes to get started farming. And it 
requires just one tremendous amount of information and risk 
taking. And so any way that could be put in there to help that, 
that would be very appreciated. Thank you.
    Chairman Harkin. Thank you.
    Mr. Barry. Morning. My name is Tim Barry. I am from Council 
Bluffs. Thank you for coming here today and hearing issues 
about the Farm Bill. I was born and raised in a little town 
north of here, Pisgah, Iowa, and my brother still farms the 
family farm up there. I have been in the seed industry about 30 
years. I am also on the Iowa Seed Association Board. And 
agriculture is not only my business, but it is also my passion. 
I also work with the Chamber here at our Ag Committee, and I am 
on the extension council here in Pott County. That is what I 
wanted to speak with you about today as far as support of 
extension.
    Dr. Wintersteen talked about from the Iowa State view, and 
I am talking about from the grass roots. Extension does so many 
things for communities. It brings youth 4-H and some of the 
youth programs, and this is so important to our communities. 
Also it is a network that is already set and up and is in 
practice as far as what they do. We have experts as far as 
regional experts that talk about and support some of the bases 
of agriculture around our States. And it is also a system that 
is across the Nation too, through the land grant colleges. So I 
guess from my standpoint as an extension council member, a 
grass roots type of person, I guess I hope when you go to the 
farm plan and you look at funds for extension and some of the 
issues in that regard, no matter how you do it, I think it is 
something that helps our whole rural community and should be 
part of the farm plan and do appreciate your time here today, 
gentlemen. Thank you.
    Chairman Harkin. I can assure you that extension service is 
alive and will continue to be under this Farm Bill. I can 
assure you of that.
    Mr. Luckey. Bill Luckey from Columbus, Nebraska, Pork 
producer in Platte County. We have hogs, my son has a cow/calf 
operation. We have a small feed lot also. And we built a 2,000-
head finisher to bring one of our sons back into the operation. 
So as far as entrepreneurship that is one of the things we did, 
we took advantage of an opportunity and brought one of our sons 
back. However, we have two more sons that might want to come 
back, so I do not know what we are going to go to in order to 
get them back.
    I am speaking today on behalf of pork producers. And we 
just want to emphasize how some of the structural changes are 
always occurring in agriculture. It is particularly in the hog 
industry. You know, we are not the same as what we were 20, 30, 
50 years ago. There is definitely a change. As a Farm Bill 
goes, we are going to have to change also.
    But you stated that we are going to have a competitive 
title in the Farm Bill. We want you to be extremely careful in 
implementing that portion of the Farm Bill because it seems 
like in so many situations we try to legislate to certain 
issues, and we end up hurting some of the people that we want 
to protect in the long run. So we just want to make sure that 
you look at the consequences of all the legislature front to 
back so you make sure you are helping the ones you really want 
to help and not harming them. Thank you for having us.
    Chairman Harkin. Thank you very much. Appreciate that.
    Mr. Zylstra. Good morning. My name is Roger Zylstra, and I 
am a grain and livestock farmer from Lynnville, Iowa. I am also 
a director with the Iowa Corn Growers Association and I thank 
you for this opportunity.
    The Iowa Corn Growers has been working for a couple years 
to identify some of the challenges with the Farm Bill and there 
is four improvements that we would like to see.
    We would like to see a revenue based commodity title, an 
option for part of the direct payment targeted to farm and 
family investments, a stronger conservation title and rural 
trade organization friendly.
    And you might ask why change the Farm Bill? The Farm Bill 
is an investment in strengthening our economy. Congress must 
make investments in programs that will enable the U.S. to keep 
its edge in productivity, innovation, food security and 
renewable fuels. This investment will increase the value of 
farm programs, market orientation and tax dollar efficiency. 
Thank you.
    Chairman Harkin. You said four things, revenue issue based, 
and then I got the stronger conservation. What was No. 2?
    Mr. Zylstra. No. 2 is an option for part of the direct 
payment targeted to farm and family investments.
    Chairman Harkin. OK.
    Mr. Zylstra. Part of that money maybe could be used to 
invest in biodiesel, renewable fuels or conservation, just any 
of those things.
    Chairman Harkin. What was No. 4?
    Mr. Zylstra. No. 4, we think it needs to be World Trade 
Organization friendly.
    Chairman Harkin. Well, we have to do that. People say to 
me, do not pay any attention to WTO. Sometimes I would like not 
to, but the fact is the Constitution of the United States 
explicitly says that all treaties are the supreme law of the 
land. So once we sign a treaty, it is the supreme law of the 
land. And we did it, for better or worse, sign the WTO, so we 
are part of that. So we have to be cognizant of it. It is the 
supreme law of the land, and we have to operate under its 
purview. So we have to be cognizant of it when we do develop 
our Farm Bill, absolutely. Thank you.
    Ms. Brahms. My name is Donna Brahms and I am representing 
the bee keepers of the United States. I am the president of 
Iowa Honey Producers, and I am also a member of the American 
Honey Producers and American Bee Federation.
    As you are no doubt aware there is a new and unexplained 
condition known as Colony Collapse Disorder and it is wreaking 
havoc in the nation's bee colonies. We are losing alarming 
rates of bee colonies in the United States. Some bee keepers 
have lost upwards of 90 percent of their colonies. And 
America's bee keepers and their bees are an indispensable 
pillar of the United States agriculture. Without honey bees we 
would lose one-third of the food that we are used to eating. 
Every third bite is attributable to a honey bee. If we do not 
have honey bees, we are not going to be able to continue with 
food as we have it now.
    I am--Iowa State does no research on honey bees. There is 
no school in the State of Iowa that is helping bee keepers. Not 
just--I am here mainly to make sure that the research is 
continued for the ARS, honey bee research labs, there is four 
of them in the United States. We need to make sure that they 
continue getting their research, and we would also like to ask 
that implementation of the crop insurance program for bee 
keepers that Congress authorized in 2002 is put in place. And I 
would like to thank you for signing the letter that Senator 
Baucus from Montana formed to send to the Secretary of 
Agriculture. So, thank you.
    Chairman Harkin. I am sure glad you are here. I am aware of 
this, so is Senator Nelson. I do not know if you wanted to 
respond at all, Senator Nelson.
    Senator Nelson. Obviously the honey bee industry is an 
important part of agriculture and the USDA needs to focus on 
this right away. I mean it is critical, the problem is more 
than imminent, it is upon us, and we have to react to it. And 
we would like to obviously get some research, private or 
public, to know what to do to stem the problem.
    Chairman Harkin. I can assure you, we have--we are aware of 
this, and we are pushing USDA to find the solutions through the 
different centers that you mentioned, the four ARS stations--
ARS stations that are doing research on this. And it is--it 
could be a devastating problem. I do not know if Dean 
Wintersteen, if you have anything to add to that.
    Ms. Wintersteen. I would agree that it is a crisis in 
agriculture nationwide, and it is an unexplained issue, and 
clearly ARS leads the way in addressing this issue through 
their established program.
    Chairman Harkin. I am really glad you brought that up. I am 
remiss in not mentioning it. Because it is a very important 
factor in agriculture. It is hit us hard just in the last few 
months. Thank you.
    Mr. Beckman. I am Doug Beckman from Mills County. I am an 
ex-teacher and farmer from that area for a long time. I am just 
glad to hear that there seems to be a lot of interest in rural 
development, maintaining a part in the ag program. And I think 
Iowa, the Midwest in general, is on the verge of a huge 
undertaking and it is coming up in the near future if policies 
and legislation allow it to happen with development of biomass 
and biofuels and bioproducts that could be developed. And I 
think they could get something done in our smaller rural 
communities.
    One of the things that is concerning me a little bit, I 
know you mentioned that you think ag research money should be 
increased and I would like to see our universities stay 
involved in that research, especially along these new 
technologies. If private business takes over that, I am sure 
they are going to end up owning a lot of intellectual 
properties that are not going to be available if the university 
had no part in developing it. So it is a way of keeping the 
public involved using our tax moneys I believe, that they can 
all benefit rather than a few private individuals maybe 
benefiting in the long run. Thank you.
    Chairman Harkin. Very interesting concept I thought. Thank 
you.
    This is the time for us to move on. I have another hearing 
in Sioux City this afternoon. Again, I want to thank all of our 
panelists for your testimony, for coming a great distance, and 
thank all of those who just added their comments here at the 
end here.
    As you can see, ag policy is very complex, interwoven with 
so many aspects of our daily lives. We have a tremendous job 
ahead of us. We have a tight budget situation confronting us. I 
only wish I had--I wish we had the baseline money to operate on 
this year as we did in 2002, and we do not. We are fighting to 
get more. And I could not ask for a stronger ally and stronger 
friend for rural America and agriculture than we have got it 
Senator Ben Nelson, and I want to thank you for again being 
here today and being such a great member of our Ag Committee.
    Senator Nelson. Thank you, Mr. Chairman. It is been a 
pleasure and a very enlightening experience to be here today. 
And I appreciate your scheduling this and calling it here in 
Council Bluffs.
    Chairman Harkin. Thank you very much, Ben. And we will keep 
the record open to receive statements, et cetera, 5 days. If 
anybody has statements and stuff, they can submit it to us, we 
will keep it open for 5 days. Again, we thank you all and have 
a safe travel home, and the Senate Agriculture Committee will 
stand adjourned.
    [Whereupon, at 12:17 p.m., the Committee was adjourned.]
      
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