[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                        SUBCOMMITTEE HEARING ON 
                        THE FUTURE OF SPECIALTY 
                     CROPS FOR SMALL FAMILY FARMERS 

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

                                HEARING

                               before the


                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                             JULY 30, 2009

                               __________

                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                               

            Small Business Committee Document Number 111-041
Available via the GPO Website: http://www.access.gpo.gov/congress/house

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

51-036 PDF                       WASHINGTON : 2009 

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























                   HOUSE COMMITTEE ON SMALL BUSINESS

                NYDIA M. VELAZQUEZ, New York, Chairwoman

                          DENNIS MOORE, Kansas

                      HEATH SHULER, North Carolina

                     KATHY DAHLKEMPER, Pennsylvania

                         KURT SCHRADER, Oregon

                        ANN KIRKPATRICK, Arizona

                          GLENN NYE, Virginia

                         MICHAEL MICHAUD, Maine

                         MELISSA BEAN, Illinois

                         DAN LIPINSKI, Illinois

                      JASON ALTMIRE, Pennsylvania

                        YVETTE CLARKE, New York

                        BRAD ELLSWORTH, Indiana

                        JOE SESTAK, Pennsylvania

                         BOBBY BRIGHT, Alabama

                        PARKER GRIFFITH, Alabama

                      DEBORAH HALVORSON, Illinois

                  SAM GRAVES, Missouri, Ranking Member

                      ROSCOE G. BARTLETT, Maryland

                         W. TODD AKIN, Missouri

                            STEVE KING, Iowa

                     LYNN A. WESTMORELAND, Georgia

                          LOUIE GOHMERT, Texas

                         MARY FALLIN, Oklahoma

                         VERN BUCHANAN, Florida

                      BLAINE LUETKEMEYER, Missouri

                         AARON SCHOCK, Illinois

                      GLENN THOMPSON, Pennsylvania

                         MIKE COFFMAN, Colorado

                  Michael Day, Majority Staff Director

                 Adam Minehardt, Deputy Staff Director

                      Tim Slattery, Chief Counsel

                  Karen Haas, Minority Staff Director

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

                                  (ii)

  
?

                         STANDING SUBCOMMITTEE

                                 ______

     Subcommittee on Rural Development, Entrepreneurship and Trade

                 HEATH SHULER, North Carolina, Chairman


MICHAEL MICHAUD, Maine               BLAINE LUETKEMEYER, Missouri, 
BOBBY BRIGHT, Alabama                Ranking
KATHY DAHLKEMPER, Pennsylvania       STEVE KING, Iowa
ANN KIRKPATRICK, Arizona             AARON SCHOCK, Illinois
YVETTE CLARKE, New York              GLENN THOMPSON, Pennsylvania

                                 (iii)

  














                            C O N T E N T S

                               __________

                           OPENING STATEMENTS

                                                                   Page

Velazquez, Hon. Nydia M..........................................     1
Graves, Hon. Sam.................................................     2

                               WITNESSES

Merrigan, Hon. Kathleen, Deputy Secretary Of Agriculture, U.S. 
  Department Of Agriculture......................................     4
Holbrook, Mr. Bill, Cold Mountain Farms, Waynesville, NC.........    18
Barnwell, Mr. Kenny, Kenny Barnwell Orchards, Edneyville, NC.....    20
Williams, Mr. Mark, CFO, Flavor 1st Growers & Packers, Horse 
  Shoe, NC. On behalf of United Fresh Produce Association........    22
Hudgins,Mr. Rich, President and CEO, California Canning Peach 
  Association, Sacramento, CA. On behalf of National Council of 
  Farmer Cooperatives............................................    23
Anderson, Mr. Jim, Executive Director, Missouri Wine and Grape 
  Board, Jefferson City, MO......................................    25

                                APPENDIX


Prepared Statements:
Velazquez, Hon. Nydia M..........................................    38
Merrigan, Hon. Kathleen, Deputy Secretary Of Agriculture, U.S. 
  Department Of Agriculture......................................    40
Holbrook, Mr. Bill, Cold Mountain Farms, Waynesville, NC.........    53
Barnwell, Mr. Kenny, Kenny Barnwell Orchards, Edneyville, NC.....    56
Williams, Mr. Mark, CFO, Flavor 1st Growers & Packers, Horse 
  Shoe, NC. On behalf of United Fresh Produce Association........    58
Hudgins,Mr. Rich, President and CEO, California Canning Peach 
  Association, Sacramento, CA. On behalf of National Council of 
  Farmer Cooperatives............................................    67
Anderson, Mr. Jim, Executive Director, Missouri Wine and Grape 
  Board, Jefferson City, MO......................................    74

Statements for the Record:
National Stone, Sand & Gravel Association........................    79
Community Food Security Coalition................................    84
Merrigan, Hon. Kathleen, Deputy Secretary Of Agriculture, U.S. 
  Department Of Agriculture......................................    87

                                  (v)

  


     SUBCOMMITTEE ON RURAL DEVELOPMENT, ENTREPRENEURSHIP AND TRADE
   HEARING ON THE FUTURE OF SPECIALTY CROPS FOR SMALL FAMILY FARMERS

                              ----------                              


                        Thursday, July 30, 2009

                     U.S. House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:00 a.m., in Room 
2360 Rayburn House Office Building, Hon. Heath Shuler [chairman 
of the Subcommittee] presiding.
    Present: Representatives Shuler, Bright, Dahlkemper, 
Luetkemeyer and Thompson.
    Chairman Shuler. Since the first establishment in 1973, the 
Farm Bill has bolstered countless family farms and sparked a 
boom in production in critical staples ranging from corn to 
cotton. Last year that bill was expanded. It now includes 
important provisions for crops such as fresh fruits, nuts and 
vegetables. These basics are more than just good sources of 
revenues for our farmers. They are the foundation for sound 
nutrition for all Americans.
    The 2008 Farm Bill recognizes that produce plays an 
important role in healthy diet. Importantly, it expands the 
USDA's fresh fruit, vegetable snack program. That initiative, 
designed to improve nutrition and decrease childhood obesity, 
now reaches over one million kids nationwide. It also opens up 
the world of opportunity for American farmers.
    When combined with the efforts to increase production and 
promote specialty crops, the snack program means new businesses 
for small farms.
    In today's hearing, we are going to examine specialty crop 
provisions within the 2008 Farm Bill. We will also evaluate 
process and its implementation. For thousands of small farms 
across the country, fresh fruits, nuts and vegetables are the 
primary source of income. In fact, the sales of these products, 
commonly known as specialty crops, comprise close to one-third 
of all crop cash receipts.
    But while the industry has seen growth in recent years, it 
is still plagued by numerous challenges. Despite the obvious 
benefits of buy fresh and buy local campaigns, domestic farmers 
are being crowded out by foreign competitors. Trade pressures 
have allowed farmers overseas to undercut producers here at 
home. While the U.S. was once a net exporter of fruits and 
vegetables, it is now a net importer. In fact, Americans pay 
$16 billion for foreign produce every year.
    For this reason, Farm Bill provisions that encourage 
exports are especially critical. Exporting is an important 
means for reaching new markets. It allows business to win new 
customers and improve net margins.
    But while it makes sense to court consumers abroad, farmers 
should equally focus on customers here at home. A series of new 
and expanded programs in the latest farm bill will help them do 
that.
    Meanwhile the legislation also contains incentives to 
encourage organic production, for an example, measures to 
defray the cost of organic certification.
    The Farm Bill aside, many small agricultural farms are 
struggling. Like all small businesses, they are facing 
challenges in everything from securing loans to accessing 
health care. In terms of capital, even lending to the USDA's 
Farm Service Agency, traditionally a lender of last resort, has 
been jeopardized.
    In the last year, applications for FSA loans have risen 
significantly. Even once we have addressed the small firms' 
financial challenges, other obstacles will remain. Pests, 
challenging weather patterns, and natural disasters are 
obstacles that family farms face day in and day out. These are 
obstacles that the Farm Bill seeks to address.
    But in order to do so, it will have to be properly 
implemented. We need to be sure its provisions are working not 
just for big ag., but for smaller producers, too. Small farms 
have long been the foundation for the agricultural community. 
Today that role has expanded.
    As Congress works to fix the broken health care system, for 
example, they will play a pivotal role. We have heard a lot of 
talk about the increase in obesity rates and the need for 
improved nutrition. Well, fresh fruits and vegetables offer 
healthy alternatives.
    Although the 2008 Farm Bill contains important nutrition 
measures, the family farmers will be on the front line of 
delivering those healthy options.
    I would like to thank the witnesses in advance for their 
testimony. I am pleased that they could join us here today, and 
I look forward to hearing from them.
    With that, I will yield to the Ranking Member, Mr. 
Luetkemeyer, for his opening remarks.
    Mr. Luetkemeyer. Thank you, Mr. Chairman, for holding this 
hearing on this very important topic today, one that is 
particularly pressing for folks back home in my district and 
many other parts of our country.
    In May 2008, Congress passed a new Farm Bill. Many folks 
throughout the country were calling for specialty crops to 
occupy a larger role in Farm Bill policy discussions than in 
the past. The 2008 Farm Bill contains provisions on marketing, 
crop insurance, and disaster assistance, protection against 
pests and diseases, export promotion, research and domestic 
food assistance, all of which are important to the 
competitiveness of U.S. specialty crops.
    And for the first time in the history of the Farm Bill, 
there is a separate title for fruit and vegetable production. 
The title provides substantial mandatory funding over the life 
of the Farm Bill and beyond for several major new and 
continuing programs. One provision provides $466 million over 
ten years to expand the specialty crop block grant program. 
These block grants are provided to states to support projects 
and research, marketing, education, pest and disease 
management, production and food safety.
    Another provision expands the current farmer's market 
promotion program to improve and increase farmer's markets, 
roadside stands, community-supported agricultural programs and 
other direct producer-to-consumer market opportunities. 
Congress recognized that direct sales by farmers to consumers 
in some 4,300 farmer's markets and 1,200 community supported 
agricultural enterprises offers substantial opportunities for 
producers to increase their returns by capturing profits that 
would otherwise be paid wholesalers and retailers.
    Agriculture is the largest economic sector in my state and 
my district and is of vital importance to our national economy 
as well. In the past, grant money from the Farm Bill has gone 
to projects to project statewide farmer's markets and to create 
a registry to help producers of pesticide sensitive crops, 
notifying applicators of their products' locations. The grants 
are meant to assist specialty crop producers and seem to at 
least somewhat achieve that goal.
    Like other crops, specialty crops are facing tough 
international competition. So any support that is given to 
promotion and research for specialty crops should make the 
industry stronger and more competitive. In Missouri, this means 
maintaining agricultural land and jobs that agriculture 
provides.
    To be sure, enactment of Title X of the 2008 Farm Bill did 
not eliminate all issues associated with increasing returns to 
producers of specialty crops. The marketplace for specialty 
crops requires high-quality product available fresh almost 
every day. The consumers expect consistency in this quality.
    If producers and packers of specialty crops can deliver 
consistently high-quality product to the market, they will 
likely maintain or increase market share. The question remains 
whether programs for specialty crop producers in the 2008 Farm 
Bill will enable them to provide this high quality product to 
their consumers.
    I know this House Small Business Committee and this 
Subcommittee recognize how critical fruits, vegetables, and 
other specialty crops are to the economic health of this 
country.
    Again, thank you, Mr. Chairman, for holding this hearing. I 
look forward to hearing the witnesses, and am pleased to see 
another opportunity that this hearing presents us: a chance to 
further raise awareness of the critical role fresh produce 
plays in our lives.
    With that I yield back.
    Chairman Shuler. Thank you, sir.
    We will now move to testimony. Each of you will have five 
minutes to deliver your prepared statement. The timer begins 
when the green light illuminates. When one minute remains, the 
light will turn yellow. The red will say that time is up.
    Sometimes we are a little more lenient on that depending, 
but we try to move through as quickly as we possibly can for 
the testimony because obviously the Q&A is some of the most 
important information that we can gather.
    At this time I would like to welcome our first witness, the 
Honorable Kathleen Merrigan. Dr. Merrigan is the Deputy 
Secretary of Agriculture at the USDA.
    Thank you for your attendance here today, and we look 
forward to hearing your testimony. You will be recognized for 
five minutes.

STATEMENT OF THE HONORABLE KATHLEEN MERRIGAN, DEPUTY SECRETARY 
         OF AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE

    Ms. Merrigan. Thank you, Mr. Chairman. Thank you to all of 
the Committee members here today for holding a hearing on a 
topic that is near and dear to my heart.
    I know it is a very, very busy time with August 
approaching. That you fit this into your schedules is really 
impressive, and I commend you for that.
    I appreciate the opportunity to testify today because of 
the importance of specialty crops and small family farmers to 
agriculture and our nation as a whole. These are exciting 
times, and this administration is moving forward on many fronts 
to revitalize rural America and improve the nation's access to 
healthy foods, and I want to provide a few highlights.
    Secretary Vilsack testified last week before the House 
Budget Committee on how our recovery funds are working. The 
Recovery Act is transitioning America from bad times to better 
times. These investments not only create jobs and economic 
stability, but also fund the technology and infrastructure that 
will lay the groundwork for future economic growth in rural 
America.
    Just yesterday the Secretary announced a $1.7 billion 
business and industry loan program, money that's there to 
support business opportunities in hard hit areas. These funds 
will be available until expended, and there is certainly a 
portion of that money that is going to be going to local and 
regional food system infrastructure, and I think that is 
exciting.
    Earlier this spring President Obama launched the Rural Tour 
with Secretary Vilsack accompanied by other cabinet members. 
They have been out in rural America leading a discussion about 
how best to rebuild and revitalize rural America through green 
jobs, bringing broadband access, and improving rural health 
care.
    President Obama, as you know, has made a safe, sustainable, 
and nutritious food supply a central goal for USDA. He is very 
concerned about the health and welfare of America's children. 
The First Lady has also been very prominent talking about this 
issue. The President wants to make sure that children have 
access to nutritious food and lead active life styles. We are 
working our way to best use our programs to meet these goals.
    You may have heard about the People's Garden at USDA, the 
First Lady's White House garden. They are raising awareness, 
setting examples for communities across the nation on healthy 
eating and reconnecting folks to agriculture.
    Secretary Vilsack has charged me with leading an 
interagency initiative to think creatively and dynamically 
about how USDA can answer the President's call to reinvigorate 
our local food systems. Through this initiative, I have 
involved all of the relevant agencies in an examination of our 
current activities, funding mechanisms, and authorities, as 
well as the opportunities and obstacles to the creation of a 
more vibrant regional and local food system.
    This administration's commitment to healthy eating and the 
importance of fresh, nutritious food is raising the profile of 
locally grown food and which can specifically help, I believe, 
specialty crops. So it is my belief that the future of 
specialty crops is clear and very bright indeed.
    My written testimony provides a fairly detailed description 
of the myriad of programs that can assist small and mid-size 
farms. I am not going to go through them in detail, but I want 
to bring your attention to some of the latest news on how USDA 
is working across agencies to increase coordination and bring 
targeted resources to critical issues facing young, small and 
mid-size farms.
    The Secretary and I are both very concerned about what has 
been described as the disappearing middle. We see from our 
census data small farms are actually thriving. We are getting 
some new farmers actually, some women farmers, which I find 
very interesting and exciting, and the larger enterprises seem 
to be doing okay, but there is this big swath in the middle of 
your small and moderate size family farms that are finding i 
hard to survive in this climate.
    And we believe taking a local and regional food system 
approach may help give them the tools they need to survive. 
Fred Kirschenmann of the Leopold Center, Iowa State, says, 
``Creating and expanding markets that value intrinsic qualities 
such as locally produce holds keys to saving the disappearing 
segment of agriculture.''
    Community supported agriculture and farmer's markets are an 
area that we are spending a lot of time thinking about. 
Farmer's markets, as the Chairman has said, has set the nation 
on a healthier course. CSAs, they're growing, and we think that 
is important.
    USDA is also promoting specialty crops through our 
purchases. We purchased about $650 million in specialty crops 
in 2008 for domestic nutrition assistance programs, as well as 
leverage a lot of purchases through the SNAP Program, formerly 
known as food stamps, the WIC Program, and our own purchases 
for the school lunch program. Overall we figure that USDA 
supports the purchase of about $11 billion in fruits and 
vegetables.
    We have a number of programs that we are trying to revamp 
and get on to the 2008 Farm Bill agenda. Some of those were 
reinvigorated, new language put in, new twists, and some 
absolutely brand new programs that we're moving very quickly to 
implement.
    I see my time has run out. Let me just conclude and then 
take your questions with a few thoughts on the National organic 
Program. As you may be aware, I have a bit of a history with 
this program, a bit of love for the program. It's the program 
that, you know, regulates how products that carry the organic 
label, what must be done.
    We have been doing a lot of very important things since in 
the very early months. I have been in the job for about three 
and a half months. In may we announced that the National 
Organic Program will be elevated to its own division with a new 
Senior Executive Service Director, a reform that recognizes the 
growth and importance of the organic industry.
    Second, the National Organic Program budget and staff 
dedicated to enforcement is increasing in size in this fiscal 
year and the next, insuring more robust oversight of the 
standards and aggressive prosecution of wrongdoers.
    And third, for the first time, the National Organic Program 
will be subjected to outside audit to insure rigor and 
consistency, three very important reforms that will make our 
program stronger and that will be a boost for small and 
moderate size farms.
    So as we make these improvements, we are going to also 
stress that the basic standards are well crafted and that the 
public process for establishing acceptable production materials 
is, will remain participatory and transparent and that 
consumers can continue to buy organic products with confidence.
    So in conclusion, Mr. Chairman and members of the 
Subcommittee, I am proud to be joining the team at USDA, to 
have an opportunity to work with you on these important issues, 
and I look forward to your questions.
    Thank you.
    [The prepared statement of Dr. Merrigan is included in the 
appendix.]

    Chairman Shuler. Thank you for your testimony.
    A few months ago I took what was called the Food Stamp 
Challenge that some local folks had asked me to try to live off 
of the same amount of money that people on food stamps would 
live on, and it ended up being about $1.10 per meal. So I 
thought that would be pretty easy, you know, live on $1.10.
    Well, I recognized pretty quickly outside of eating a box 
of Laura Lynn from Ingles food chain, a box of macaroni and 
cheese for three meals, that was about all I could afford, and 
everything that I looked at I realized that none of it was 
healthy. So if I wanted an entire meal, if I wanted to come 
down to the Cannon Carryout and buy an apple, it was a dollar. 
Well, that was my entire allotment for the meal for the entire 
day.
    What is being done from the USDA when it comes to the 
government programs to insure that our local growers, that 
their fruits and vegetables that we are getting from them are 
actually, you know, going to some of the subsidies programs, 
the WIC, food stamps, in order for us to buy their products and 
not these imported products? Is there anything within the Farm 
Bill that really specifically looks at looking at our farmers 
first as opposed to looking at especially in the government 
programs?
    Dr. Merrigan. Thank you, Mr. Chairman, a few thoughts. 
First, let me say in the Recovery Act that you all passed and 
provided extra money for these tough economic times, the SNAP 
recipient household, four person household is getting an 
average $80 more a month in SNAP benefits, which is equaling 
about $800 million a month. That is put out in the economy, and 
we find that for every $5 spent that provided SNAP benefits, it 
is a little over $9 that goes into the local economy, and we 
think that is good.
    But I understand. It is tough to always make the proper 
purchases, and one of the things that we are moving forward on 
very aggressively is promoting farmer's markets and then 
farmer's markets that have EBT abilities, electronic benefit 
transfer, and the ability to take SNAP benefits at farmer's 
markets.
    That is not nationwide yet, and we are trying to ramp that 
up as quickly as possible so that people, particularly in food 
deserts, areas where you may not have a grocery store or a 
place where you can buy much fresh product. We need to get 
farmer's markets into those communities, find ways to 
incentivize farmers to go into those communities and make sure 
the electronic benefit transferability is there.
    We also need to do more, I believe, in school lunch and 
breakfast feeding programs. Many children unfortunately, almost 
their entire nutrition comes from the school meals. That is, by 
the way, a problem in the summer. Only about ten percent of our 
schools have summer feeding programs in place, but during the 
school year we have a very good program. We want to do better 
in terms of the nutrition that we have in those programs, and 
farm to school is one important way. That is something that, 
for example, in your district if you had a bunch of little 
producers and they want to go into the school systems sitting 
from the school, that is hard to deal with all of these 
different vendors and a little of this and a little of that 
product.
    This new business industrial industry loan program that the 
Secretary announced yesterday, you could be a person who 
decides your business is going to aggregate all of the product 
from those local producers and then be the vendor to the 
school. So that is an economic opportunity for entrepreneurs 
out there that would like to serve this public need, I believe.
    Finally in our WIC program, you mentioned that we are doing 
more in terms of providing WIC beneficiaries with abilities to 
buy fruits and vegetables. That is in the early stages, and we 
are not exactly sure how much that is ultimately going to cost, 
but we think it is the right way to go.
    Chairman Shuler. Some of the biggest challenges to be able 
to implement the 2008 Farm Bill because of the new programs, 
and there were so many programs for the specialty crops. What 
were some of the biggest challenges? What are the things that 
we can do as Members of Congress to be able to help implement 
the program? Sometimes it looks very good on paper, and it 
looks great but the implementation may be so difficult or it 
may be the point that we as members of Congress need to help 
and assist with our extension offices in the Farm Bureau and 
other organizations to be able to get the message out and get 
the word out, very similar to what you've given me today of how 
our farmers can co-op together to be able to make sure that 
their fruits and vegetables are going on the plates and the 
tables at school as opposed to these imported products.
    Dr. Merrigan. And we really appreciate your help in getting 
out the word on some of the programs that we do have at USDA 
that could help in this arena. I think part of the problem 
comes from USDA. We have these programs and sometimes it is the 
same old people who apply for the money and we get very 
comfortable with relationships, and this is how we conceive of 
the programs, and what I am trying to do first and foremost is 
be a matchmaker, I suppose with the programs that USDA already 
has at its disposal and try to say to people who are interested 
in local and regional food systems, ``Hey, do you know about 
these programs in a real development mission area and have you 
thought about how they might apply so that we also have, for 
example, a community facilities program?'' It is a grant 
program, not a loan program where a group of producers could 
come together and apply for a refrigeration truck money to 
bring their product into the inner city where markets might 
exist, where they're not in such quantity out in through the 
real countryside where they may produce their product.
    Part of my job is to get those ideas into our staff in 
rural development because that may not be how those programs 
have been utilized in the past, but certainly it is within the 
statutory authority of these program that you all have given 
us, and then it is also about creating the demand side out 
there to sort of say here are these programs. Stand up and 
apply.
    So there are a number of them, and I would be very happy as 
I start this match making process later this week actually to 
share that information with the Subcommittee and for you all to 
use your networks and your district offices to help get that 
word out. I would be very grateful for that.
    Chairman Shuler. Well, that would be good, I think as all 
the members, especially in the rural areas that look at the 
small business. We are very diverse. We have urban and rural, 
but we want to make sure that we have an opportunity for 
everyone, both the inner city kids making sure they get a 
healthy, well balanced diet, but also help our growers in rural 
areas to insure that their products are being sold.
    So I think it would be very helpful to all of us.
    At this time I will yield to the Ranking Member, Mr. 
Luetkemeyer for his questions.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    This is a rather interesting time in Congress. We have had 
a lot of bills that have come through in the last several 
months here that have had an impact on our agricultural 
community, and we had one yesterday, as a matter of fact.
    You made the statement that you believe that specialty 
crops' future is quite bright. So I would like for you to 
address or if you are familiar with the food safety bill that 
was defeated yesterday and will probably come back up again 
today or tomorrow, with regard to the impact of the FDA 
overseeing the safety and soundness of some of our food process 
and food chains versus the USDA.
    Dr. Merrigan. I have not studied the latest version of the 
legislation. I do know that Secretary Vilsack has been working 
very closely with Secretary Sebelius at the request for the 
President to have this Food Safety Working Group where 
principles are laid out in terms of where we feel we need to go 
and make our food system stronger.
    USDA has actually some fine authorities under the Food 
Safety Inspection Service. We have recall authority. We have 
inspectors in all of our plants. I think we are trying to do 
more on the import side of the equation, but we have strong 
authorities, but there are still ways to improve. We still have 
too many people who get sick from Salmonella. We still have 
doubts that, you know, come from E. coli. We have listeriosis. 
So we are trying to improve our systems so that no parent needs 
to worry about the food that they feed their children and no 
senior, also another vulnerable population has to worry about 
the food they eat.
    Part of it is education, too. USDA has tools out there. 
Here is the pickle. Do you know what the wattage is on your 
microwave oven? I have no idea what the wattage is on my 
microwave oven.
    Mr. Luetkemeyer. I cannot use mine. So I would not know 
what the wattage would be. I just punch a ``go'' on it. It says 
``start.''
    Dr. Merrigan. I do not go there, but there are a lot of 
foods in the marketplace now where you purchase it, and you 
heat it up in your microwave oven. Well, what I found out is 
that microwave ovens have all different wattages, and if you 
read the very fine print, which I have never done, on frozen 
food, it will tell you based on the wattage how long that you 
have to heat it up for, and that is only the best packaging.
    So the frozen food industry, for example, comes to my 
office and says, ``Well, you know, we have a lot of healthy 
food that with the convenience lifestyles people are going more 
to a microwave environment, but we are really concerned about 
getting the message out, educating people about wattage, and 
also maybe we can work with the companies who produce microwave 
ovens to have more standardizations.''
    So these issues are very complex, and we have a whole slew 
of work to do in the next four years.
    Mr. Luetkemeyer. Well, you know, the reason for the 
question obviously is there is a concern. Food safety is at the 
heart of it, but initially the food safety bill had a lot of 
livestock and grain producers in it and they were eventually 
taken out. It is, you know, I think targeted toward the 
specialty crop folks.
    So as a result, you know, I have quite frankly much more 
strength and belief and support for what USDA does than what 
the FDA does, and so I would prefer that you be the oversight 
organization rather than the FDA with regards to food and at 
least getting it to the marketplace. At that point, if FDA 
wants to take over, but I think that the experience that you 
have in that field is much more important and much more broad 
and, therefore, I think that it is imperative that you do not 
relinquish that oversight. So that would be my concern.
    There are some comments and things in there as well about 
fees anyway for things like farmer's markets. I was wondering 
if you have an opinion on how that is going to affect specialty 
crop folks.
    Dr. Merrigan. I will have to look at that, sir. I am not 
familiar with those permit fees. So I will respond in writing 
by tomorrow on that.
    Mr. Luetkemeyer. One other question. I know the cap and 
trade bill has gone through the House. It is sitting in the 
Senate. I am just curious as to what your view would be on the 
effect on specialty crop folks.
    Dr. Merrigan. We feel very strongly that there is a role 
for agriculture in all of these various bills, that we really 
see that agriculture is a contributor to climate change, but it 
is also a great contributor to climate mitigation. And so we 
are very involved in trying to figure out the offset side, get 
the metrics, the methodology straight, and figuring out how to, 
for example, figure out how much carbon is sequestered on 
agricultural lands and how to articulate that and make sure 
that is a part of whatever package goes through.
    Mr. Luetkemeyer. How long do you think that will take?
    Dr. Merrigan. Well, it is complicated, but we have to do 
it. I mean, we have to do it and we may not get it perfect on 
the first iteration. I think that--
    Mr. Luetkemeyer. The reason I asked the question, I sit on 
the Ag. Committee, and I have asked this question of ag. folks 
for the last four months. At this point we still do not have an 
answer.
    Dr. Merrigan. I hear you, sir. I think it is also one of 
the challenges we have to make sure that USDA does not have 
their own metrics and Interior has their own metrics and EPA 
has their own metrics. So not only are we working within USDA, 
but we are trying to work with other departments of government 
to some to a common understanding of how we are going to move 
forward on this. So we are racing against the clock. We 
understand that.
    Mr. Luetkemeyer. Very good. One more quick question for 
you. I know as a former director of tourism, that in the State 
of Missouri agri-tourism is an important part of that and in 
fact, we will have a gentleman here this morning from the 
Missouri Wine and Grape Board.
    What efforts is USDA putting forth to promote agri-tourism 
here in the United States?
    Dr. Merrigan. We are not doing enough. I had the very tough 
hardship assignment last summer of being in Italy. I was 
working for the Food Agricultural Organization of the U.N. 
Italy is the foremost country in the world for agri-tourism. 
They have it down to a brilliant science. I mean, it is really 
remarkable how wonderful that system is, and I hope that we do 
find more ways to promote agri-tourism. I think your point is 
well taken.
    What we do message to small and moderate size farms is that 
one of your best risk management strategies is to have a 
diverse operation, diverse in terms of crops, but also 
activities, and agri-tourism can be a part of that, and that 
can be part of your safety net, but I take your point. I think 
we need to do more.
    Mr. Luetkemeyer. Well, I know there is an initiative to try 
and -- we are one of the few countries, if not the only 
country, in the world that does not have an agency or division 
that promotes tourism in their country, and there is an effort 
to do that, to establish that, to put some funds aside.
    Could we ask for your support in something like that to be 
able to promote it to the Congress to see if we cannot get 
something done along that line?
    Dr. Merrigan. I am happy to talk and work with you on that. 
I think agri-tourism is very important. The specifics I would 
have to see. I cannot commit the administration in an area I do 
not really know very well, but I think you are absolutely right 
that it has great opportunity for farmers, and for where I am 
from in western Massachusetts, you may not think that is a big 
ag. state, but we actually have a pretty healthy agriculture 
enterprise in my part of the world, and agri-tourism out there 
has proved quite successful, and it is a real income generator 
for farmers.
    It takes work, there are issues around liability and 
traffic and communities. I mean, it is not just, oh, added onto 
your farm without thinking about it. It is tough and we need to 
guide farmers, I agree.
    Mr. Luetkemeyer. Well, we will look forward to working with 
you on that issue. Thank you.
    Thank you, Mr. Chairman.
    Chairman Shuler. Thank you, sir.
    At this time we will yield to Mr. Bright from Alabama for 
his questions.
    Mr. Bright. Thank you, Mr. Chairman. I appreciate the 
hearing today, and, Madam Secretary, thank you very much for 
your time and your testimony here today. It has been very 
enlightening so far for this short period of time.
    Could you talk in detail about the specialty crops' block 
grant program and give your opinion regarding its effectiveness 
in enhancing the competitiveness of specialty crops?
    Dr. Merrigan. The block grant program that you refer to was 
authorized in 2004, and it is basically chunks of money--that 
is a technical term, I suppose--that goes out to the states to 
do a variety of things that help support specialty crops. We 
think it is a very important program.
    Mr. Bright. Has it been effective?
    Dr. Merrigan. I believe so. I should probably turn to my 
nifty Tab 15 or whatever it is in this briefing book to see if 
we sent any money to Alabama.
    Mr. Bright. I would like to know for sure whether you have.
    Dr. Merrigan. My staff immediate turned to--
    Mr. Bright. If you have not, I would like to see how we can 
make sure that happens.
    [Laughter.]
    Dr. Merrigan. It should happen. It is there for states to 
apply to, and I think it has been pretty successful. I think 
all told a little under 800 projects have been funded over the 
course of time, and let me see. Alabama, here it is, issued 
$125,779. That is very specific, to the Alabama Department of 
Agriculture and Industries, to expand efforts to target 
families in under served counties in Alabama in order to 
conduct workshops and teach parents how to incorporate fresh 
produce as a stable in the family's diet and to assist Alabama 
specialty crop producers with direct marketing, value added 
operations, consumer ed., agri-tourism, and general promotions.
    Then there was another grant of $118,000 and such to do a 
whole bunch of other things, and I will have the staff hand 
this document to you.
    Mr. Bright. Very impressive. Thank you very much. We just 
need to triple that or quadruple that if we can for the folks 
down in Alabama.
    Is there anything that the USDA could do to increase the 
awareness of this program that maybe we could help you with 
other than what you have already stated?
    Dr. Merrigan. I hope that states are familiar with this, 
but I hold a monthly phone call with all state Departments of 
Agriculture, in some cases the Commissioners, Secretaries, 
Directors. It would be easier for me if they all had the same 
title, and so I don't know in Alabama.
    Oh, well you have Ron Sparks.
    Mr. Bright. We sure do.
    Dr. Merrigan. Well, he is important. He is the Chairman for 
the National Association of Departments of Agriculture.
    Mr. Bright. That is right.
    Dr. Merrigan. So we have a monthly phone call, and we talk 
about issues, and on my next call I will raise this issue with 
them to see if they feel that they have enough information to 
be working effectively with us on this.
    Mr. Bright. Good. Thank you very much
    In your testimony you mentioned that farmer's markets are 
beginning to spring up in a number of areas, and particularly 
in under served areas. Could you talk generally about--and this 
gives you a little opportunity to expand your opening comments 
if you desire--on how the growth of farmer's markets and 
community gardens can affect rural areas as a whole.
    Dr. Merrigan. Certainly. Thank you for that question. 
Farmer's markets have proven to be so beneficial. We have, in 
fact, marked Friday Farmer's Market in our parking lot at USDA. 
it is very vibrant. Come down at any time. We would love to 
have you visit.
    Mr. Bright. You may see me.
    Dr. Merrigan. Okay, and we are challenging all federal 
facilities to think about putting farmer's markets on their 
properties because it's a win-win for everybody.
    The challenge is actually going into under served areas. I 
have been involved with this. It is hard because farmers go 
into areas where there is high crimes and not a lot of income, 
and so really I think we have to be more creative in figuring 
out ways to provide incentives for that to happen, but we do 
have the Farmer's Market Promotion Program. I hope to build 
that program over the next four years. That has been quite 
successful.
    We also have the FSMIP Program, the Federal-State Marketing 
Improvement Program where states and other kinds of entities 
can apply to get money to help with farmer's markets. I thought 
we also recently had an inquiry from the National Endowment for 
the Arts, staff there interested in trying to help farmer's 
markets by engaging in their enterprise to find ways with 
design and art to bring people into farmer's markets.
    So there is a lot of energy around those markets now. We 
count 4,900 nationally. I would like to come back in a couple 
of years, sir, and tell you we have many, many morel
    Mr. Bright. Good. Madam Secretary, thank you very much for 
your testimony.
    And, Mr. Chairman, I yield back my time.
    Chairman Shuler. Thank you, sir.
    And I would like to have a Small Business Committee turned 
into the Appropriations Committee, which would be really nice.
    [Laughter.]
    Chairman Shuler. I always wanted to chair the 
Appropriations Committee.
    Mr. Bright. I will volunteer.
    Chairman Shuler. At this time I would like to yield to Mr. 
Thompson from Pennsylvania.
    Mr. Thompson. Mr. Chairman, I will second that motion.
    I want to thank the Chairman and Ranking Member for this 
opportunity with this hearing. It is really important, and, 
Madam Secretary, thank you so much for being here and for your 
obvious passion in this area that we are talking about today.
    I want to revisit a little bit on food safety. Obviously 
that is incredibly important for consumers, and frankly it is 
important for producers as well. There is one isolated scare in 
some region of the country or even a false scare can devastate 
the producer, the whole market, and so we have an obligation to 
protect certainly consumers and also producers.
    Given the recent scares about food-borne illnesses, what 
steps is USDA taking to work with producers to reduce even 
minimal risk of food borne illness from consumption of 
specialty crops?
    Dr. Merrigan. In early June we received from the industry 
proposals for a leafy green marketing order. Some of you may be 
aware of that. It came from California where they do have such 
a plan in place. We have a whole marketing order program. We 
also have quality grade standards, maybe as many as 320 now for 
specialty crop where industry really proposes to us what they 
think those standards should be and we codify them and help 
them in the enforcement of those.
    The latest on the scene is this leafy green marketing order 
because of some of the concerns that came up around E. coli and 
spinach out in California a couple of years back now I guess it 
was.
    And when we receive a proposal like that from industry, it 
triggers a series of events that we do at USDA, and this would 
go to the agricultural marketing service. I used to be the 
Administrator there during the Clinton years. So I love this 
agency.
    Anyhow, so the agency will hold a series of public meetings 
around the country where people can give their input as we 
decide how to shape this marketing agreement and whether or not 
to put it in place. It is voluntary, but that said if enough of 
the big players actually are in it, then, while it is voluntary 
it become de facto the law of the land, and so as we have these 
hearings over the course of this next year, we are going to 
want to hear a lot about whether or not this marketing order is 
going to fit all sizes of operations.
    I mean, safety is not something that only big guys have to 
adhere to or, you know, there is no exception depending upon 
your size or your region. Everyone has to uphold high safety 
standards of course, but we want to make sure that these 
programs that we put out everyone in the agricultural 
enterprise are able to meet them, and if not, then we need to 
reconfigure them so that everybody is able to upgrade food 
safety and still remain competitive in the marketplace.
    Mr. Thompson. Great. I mean, with your testimony I hear you 
talking about things that USDA is doing with partnership with 
the industry and education and consumer input, and I have to 
tell you those are the types of things that give me a lot of 
confidence actually in the USDA related to food safety, and 
frankly, some of the concerns I have with some current 
legislation that was defeated yesterday and is coming back, I 
think, today in terms of specifically with specialty crop and 
food safety, shifting to the FDA versus USDA.
    What steps are underway, if any, at USDA to coordinate 
further improvements in food safety for specialty crops?
    Dr. Merrigan. Well, we have work that we are doing in 
microbiological testing. We have a program in place both for 
pesticides and for microbiological contaminants where we go out 
and we actually get produce from supermarkets.
    So we play the role of citizen and any Mom or Dad who goes 
into the supermarket and gets their food, and then we bring 
these back to the laboratory and then we test them, and we 
collect data on our Website that is publicly available to 
people of all shapes and sizes to analyze, and we use these 
programs to identify hot spots, emerging problems.
    I think these are very important programs that we will 
continue and grow in the next couple of years to help us make 
sound decisions.
    Mr. Thompson. Thank you.
    It seems to me that the USDA is well positioned to do that, 
too, because you have a presence in almost every county in the 
country.
    Dr. Merrigan. We have a few employees.
    Mr. Thompson. Yes, you know, and have been there for 
support of agriculture community from many different 
perspectives and obviously representing the consumers as well. 
So just another good reasons to make sure that we keep that 
food safety responsibility with USDA and strengthen what you're 
doing.
    Mr. Chairman, it looks like my time has expired, and thank 
you.
    Chairman Shuler. Thank you, sir.
    Maybe we can again defeat the bill again today and keep it 
with USDA.
    At this time it is really a privilege to have a member on 
the dias today who not only has been in the small business, but 
has been in the horticultural business herself, and so Ms. 
Dahlkemper from Pennsylvania probably has the most experience 
of all of us on the Small Business Committee, her own personal 
experience before she became a member of Congress.
    Ms. Dahlkemper.
    Ms. Dahlkemper. Thank you very much, Mr. Chairman. Thank 
you for holding this very important hearing.
    And Secretary Merrigan, thank you so much for joining us 
today.
    As the recession continues to take its toll and climate 
change continues to lead to even more unpredictable weather, it 
is increasingly important for family farmers to better cope 
with business risk by diversifying their operations. One way to 
do this is to grow and sell fresh fruits and vegetables. These 
fruits and vegetables are not only good for the economy, they 
are also healthy eating options.
    As a dietician for 25 years, I am very concerned with the 
obesity epidemic. With one in five four year olds now obese, we 
must find ways to provide our children with nutritious food 
options.
    In 2008, the medical cost of obesity rose to 147 billion 
dollars while the human suffering is even greater. The 
availability of fresh and affordable produce is one component 
in addressing this tremendous public health problem.
    The 2008 farm bill greatly expanded the USDA fresh fruit 
and vegetable Snack Program and now reaches more than one 
million children in 50 states. This program creates a new 
partnership between farmers and local schools. Thanks to this 
program, more schools can rely on locally grown products for 
their school lunch programs.
    At the same time, schools are providing healthier meals to 
their students. This is a win-win program, and I am pleased 
that we are discussing how it helps specialty farmers and 
assured good programs like this can continue.
    I come from a district in Pennsylvania where specialty 
crops along with dairy really are the main agriculture in my 
district. We have seen, for example, this year many of our 
farmers deal with loss in their fruits from a late year freeze. 
Now we are having unprecedented rain, and so our specialty crop 
farmers really deal with a lot of these issues.
    But I also have this obviously very strong interest in the 
nutrition side of your program, and in your testimony today you 
discuss a proliferation of farmer's markets and community 
gardens, particularly in under served areas, and you did 
mention the food desert, which is something that has been a 
concern of mine for many, many years. There are some food 
deserts in our schools, and I am so glad to see that we are 
finally addressing that.
    I know you talked a little bit about this refrigerator 
trucks and you talked about some other things. Is there 
anything else you can tell me that you are doing to try to deal 
with this particular issue? Because we have got to get these 
foods into the places where people most need them, and that is 
really into usually the urban areas, these food desert areas.
    Dr. Merrigan. Thank you for that question.
    Let me say first in terms of the schools I think that we 
are trying to do better with the help of the 2008 Farm Bill and 
getting fresh product into the school breakfast and lunch 
programs. For example, we just had a wonderful experience with 
sliced apples in small individual bags going to school 
children. They loved them. They were eaten up, and so I think 
we are going to expand that.
    And also on the horizon is to do the baby carrots in the 
school lunch program. So we are really looking at having an 
impact on what is served in those programs, and I appreciate 
what you are saying about obesity.
    I actually came from Tufts University, the Friedman School 
of Nutrition Science and Policy where I was the last eight 
years, and we spent a lot of time focused on the obesity 
crisis. It is really very compelling. We have childhood hunger 
and we have obesity, and paradoxically oftentimes the root of 
the problem is the same, lack of options, lack of access to a 
lot of the specialty crops that we are talking about today.
    In terms of getting into the inner cities, some of these 
good foods, I think we, again, have a whole slew of programs at 
USDA that we can reorient it to help here, and I will continue 
on that matchmaking process to try to help out, and if you know 
of communities that are particularly in need and you want to 
bring those to our attention, we will take a look at those and 
see what forces we may marshal to help out.
    Ms. Dahlkemper. Thank you.
    Another program that I have always thought was one of the 
better programs is WIC because versus food stamps which are 
very necessary obviously, but in WIC, the foods are targeted 
for the particular needs of the mother, infant and child.
    And you talked a little bit about adding fresh fruits and 
vegetables to that program. Are there any other suggestions you 
have for improving nutrition in that program to add to the 
Clinton administration initiatives?
    Dr. Merrigan. I think for our suite of programs that help 
with nutrition assistance, one of our challenges is to increase 
enrollment. We still don't serve all of the people who are 
eligible for these programs.
    So it is really on our shoulders to get the word out, 
particularly seniors do not apply for benefits that they are 
eligible for under the SNAP program. They think it is not worth 
the bother. There is a stigma associated to it, and we really 
do between WIC and SNAP. We have a whole lot of support for 
people out there, and we need to figure out ways to make sure 
that people are not locked in their homes hungry when there 
really is help.
    We also do provide a lot of help through food banks. For 
example, just last week we announced a $14 million buy of 
cultivated blueberries. That's one of these programs where we 
can relieve market access so that it helps producers. At the 
same time we are going to have fresh product. We are going to 
have product that we can put into our food banks and other 
nutrition programs. So it is a win-win, and we continue to do 
that and look for good product to buy to help out these various 
programs.
    Ms. Dahlkemper. All right. I see my time has expired. I 
have many other questions, but I do appreciate you coming today 
and look forward to continuing to work with you for good 
nutrition for this nation.
    Dr. Merrigan. Terrific.
    Chairman Shuler. Would any other member wish to be 
recognized again?
    [No response.]
    Chairman Shuler. At this time we would like to yield back 
to you again if you need more time.
    Ms. Dahlkemper. Thank you, Mr. Chairman.
    I did have a couple of other quick questions. In terms of 
the specialty block grant program, how much is appropriated for 
that?
    Dr. Merrigan. I do not know.
    Do you guys know the actual number?
    We will have to get back to you. Not off the top of our 
head.
    Ms. Dahlkemper. I appreciate that.
    My other question has to deal with SNAP. I probably am the 
only one on this panel, although I may not be, who actually was 
on food stamps once 30 years ago, and you did bring up the 
issue that I think is really probably at the height of why 
people do not apply for this program and it is a stigma.
    I used to go grocery shopping, and I have told this story 
before, at 11 o'clock at night so that no one would see me 
using them. As a single mom, it is a really difficult place to 
be for people. It takes a lot of pride to be able to go out and 
use that program, but it is a very necessary program.
    But I am trying to think of a way where we can actually 
incentivize better choices, and we cannot be big brother here, 
and we cannot, I think, limit it too much, but I do not know if 
there is any thought or talk going on about how we could 
actually incentivize people to buy more produce, for example, 
more dairy, more of the food we know are more nutritious for 
them when they are using this program.
    And I just throw that question out there because I have 
been asking that all over the place trying to find out what we 
can do here to improve the health of this nation, particularly 
if you look at this obesity issue. We are talking about health 
care, but you know, until we get a handle on the childhood 
obesity issue in this country, we are never going to get a 
handle on our health care costs.
    Dr. Merrigan. Well, you raise a perennial issue that for 
many, many years people have talked about whether you put some 
condition on SNAP benefits in terms of what can be purchased. I 
do know what we can do because we are working within a certain 
statutory regime. We need to do better on the education side.
    We have a billion plus hits on the food guide pyramid 
Website, and yet we know, well, we get the hits of people 
looking at our Websites going up at the same time the obesity 
epidemic is going up as well. So there is a disconnect there, 
and we definitely have an education challenge in terms of 
getting people to understand at least five a day, right?
    Ms. Dahlkemper. That is actually one of the benefits of the 
WIC program, the education component.
    Dr. Merrigan. That is right. We also have the FNEET program 
at USDA, which is within our research education and economics 
division. It is a program that has been around for many, many 
years where we have professionals out there doing nutrition 
education.
    I am very interested from my own work at Tufts University 
in garden base learning, bringing gardens into the schools and 
having children participate in gardens. We found it increases 
their scientific literacy, their environmental awareness, and 
it improves their willingness not only to try to actually 
consume fruits and vegetables.
    So some of our, I think, interventions need to be targeted 
at young people. So we have a lot of work to do. The farmer's 
market EBT benefits, again, I think is a really important place 
where if every farmer's market, you know, allows SNAP 
participants to redeem their benefits there at farmer's 
markets, that is going to be a win-win, terrific opportunity 
there.
    So some challenges, but I think we are making some headway, 
and one of the things I say to people is President Obama, I 
believe, when he was younger, his mom was a food stamp 
recipient. There is no shame in it. People need it, and what we 
are seeing in this hard time is that there are a lot of 
families who are coming into our offices for the first time, 
people who both spouses have lost their jobs. They never 
thought they would see themselves in this situation, and there 
are people out there who need help, and they need to come in, 
and there should be no shame to it.
    Ms. Dahlkemper. Thank you very much, and I yield back.
    Chairman Shuler. Thank you, Ms. Dahlkemper.
    Madam Secretary, thank you so much for your attendance here 
today and for your testimony, and we look forward to working 
with you, and if there is anything that we can do on behalf of 
the Committee and the members on the dias, we would love to be 
able to help and support anything that we can to be able to 
help our local growers and American workers in producing things 
here in the U.S.
    So thank you.
    Dr. Merrigan. One final word, Mr. Chairman, if I may.
    Chairman Shuler. Yes, ma'am.
    Dr. Merrigan. There were a number of comments about the 
food safety legislation. I just want to be clear that the 
administration is supportive of the bill that went through 
yesterday. I do not know what may be emerging today. I know 
this is a moving target, but as far as I understand, it does 
not really change our jurisdiction at USDA, but it makes some 
fine tuning of what we can do that we think we will make our 
program stronger. So it is not a shift from FDA to USDA as I 
understand it at this time.
    Chairman Shuler. Thank you.
    Dr. Merrigan. Thank you, sir.
    Chairman Shuler. If the second panel would come forward, 
please.
    Once again, I want to thank the gentlemen for being here, 
and we look forward to hearing your testimony. Our first 
witness is Bill Holbrook. Mr. Holbrook is the owner of Cold 
Mountain Farms in Waynesville, North Carolina. He grows 
specialty crops from peppers, tomatoes, cucumbers, burley 
tobacco on the 35 acres of his farmland.
    Mr. Holbrook, you will be recognized for five minutes.
    Thank you.

                   STATEMENT OF BILL HOLBROOK

    Mr. Holbrook. Chairman Shuler, Ranking Member Luetkemeyer, 
thank you for allowing me to testify today.
    My name is Bill Holbrook. I am a full-time farmer from 
Waynesville, North Carolina, which is in the Chairman's 
district. I grow specialty crops such as peppers, tomatoes, 
cucumber and burley tobacco on 35 acres. I am the sixth 
generation to farm my land.
    Running a small family farm is about survival. 
Unpredictable weather, disease pressure always makes raising a 
crop a challenge. The risk I have in my crop is concentrated, 
and the slightest disruption, whether draught or new 
regulations can seriously impact my operation. I am able to 
keep farming by being resourceful and creative. Farming is not 
easy, but I am passionate about it. And so I keep planting a 
crop each year with the help of god and my family.
    The 2008 Farm Bill contains the specialty crop title. This 
title would expand opportunities for direct producer to 
consumer marketing, improve farmer's market roadside stands, 
and help fruit and vegetable producers address food safety, 
pests, and disease management issues. These provisions should 
benefit me as a producer as well as the general consumer.
    In addition, the Farm Bill also provides states for funding 
for various programs through the specialty crop block grant 
initiative. I anticipate these grants will help expand markets 
for my crops by increasing marketing and promotional 
opportunities. I am hopeful Congress will fully fund the Farm 
Bill's pest and disease detection and control program because 
recent regulations issued by EPA restricting the use of 
fumigants by requiring larger setbacks are a serious threat to 
the future of my farm.
    The Farm Bill does contain risk management tools, such as 
crop insurance. I understand the value of crop insurance. In 
fact, I purchased multi-peril crop insurance for my crops for 
many years. The expense became too unbearable for me to bear.
    An alternative, I purchased NAP coverage, non-insured crop 
disaster assistance. At best, this covers less than one-third 
of the value of my crop. The NAP program is very inadequate as 
a risk management tool, especially for specialty crops.
    Overall the 2000 farm bill should help my farm if it 
survives other pending legislation in Congress. The first 
example is the food safety bill in the U.S. House of 
Representatives.
    My farm has just completed the USDA food safety audit. This 
audit showed me that most small farms do not have the moneys, 
personnel capabilities as do large corporate farms to pay for 
water testing equipment to develop standing operating procedure 
manuals. Some of these procedures required in the audit are 
just not practical and it will pit farmer against farmer.
    Also, my farm probably cannot survive the Clean Water 
Registration Act pending in the U.S. Senate. This act would 
require buffers along all waters. These buffer areas reduce the 
amount of crop in the fields adjacent to these waters. To farm 
you have to have land and water. If either of these are 
eliminated and/or reduced, this becomes a real threat to the 
survival of my farm.
    In closing, I believe that one of the greatest threats at 
this time to my farm or any small farm is regulations that 
increase cost and limit the use of any part of the farm. As a 
subcommittee, you can help me continue to farm by insuring that 
the voice of the small farmer is considered as important 
legislation is drafted.
    Thank you, Mr. Chairman, for allowing me to testify at this 
Committee today. I look forward to your questions.
    [The prepared statement of Mr. Holbrook is included in the 
appendix.]

    Chairman Shuler. Thank you, sir.
    Our next witness is Mr. Kenny Barnwell. Mr. Barnwell is the 
owner of Kenny Barnwell Orchards in Edneyville, North Carolina, 
and has been in the apple industry since 1980. He is involved 
in numerous boards and committees, including North Carolina 
Apple Growers Association Board of Directors and North Carolina 
Horticultural Council.
    Mr. Barnwell, you will be recognized for five minutes.

                  STATEMENT OF KENNY BARNWELL

    Mr. Barnwell. Thank you.
    Commissioner Shuler, Ranking Member Luetkemeyer, my name is 
Kenny Barnwell. I am an apple farmer from Henderson County, 
which is located in the Chairman's district.
    When I returned to the family operation after I graduated 
from Greensboro College in 1980, the apple industry in 
Henderson County was a thriving industry. At that time there 
were 33 packing operations and almost 10,000 acres of apple 
orchard. Today there are only four packing operations and about 
5,500 acres of apple orchards.
    These numbers, however, do not accurately reflect the 
present condition of the industry. In the late 1980s the apple 
market in Henderson County began to disappear. This change was 
brought about by the use of controlled atmosphere storage in 
Washington State. This change enabled the growers in Washington 
State to market apples year round, which removed the window 
when North Carolina had been marketing most of its apples, a 
time that occurred before other apples were available for the 
new crop.
    With the loss of this market advantage and the depressed 
prices of early apple production, many growers went out of 
business or reduced their acreage. Most of the rest of the 
growers then began to rely more heavily on processing great 
apple production. The processing apple market was a way for 
growers to balance their apple production mix. Growers produced 
less great apples, but made up the difference by producing more 
processing grapefruit.
    This business model worked until the juice processing plant 
in Mountain Home and the Berger processing plant in Ashville, 
North Carolina and the National Fruit Processing Plant in 
Lincolnton all closed within about a year and a half of each 
other.
    As a result, growing apples in Henderson County in the 
1990s was a very challenging undertaking. The loss of markets 
and the boom on real estate put a lot of pressure on many 
growers to make hard decisions about what they were going to do 
for the future.
    At this time many new varieties of apples were shown to 
work very well in the climate in Henderson County. Most of the 
other research was done at the Mountain Research Station in 
Fletcher, North Carolina. This research station is operated by 
N.C. State, A&T, and the North Carolina Department of 
Agriculture.
    This new production is now coming in full production and 
has opened many new markets for our apples. The local grown 
movement has been important in our area because we are very 
near large markets, Atlanta, Charlotte, and all of Florida.
    Also, a new processing plant to slice apples has been built 
in Henderson County by the Henderson family. This plant 
production and many of the fresh apples produced in Henderson 
County are now going into the school's nutrition program thanks 
to increased funding from the new Farm Bill.
    The Farm Bill also provided much needed funding for 
research and mechanical harvesting of apples. With new methods 
of harvest, we would be less dependent on migrant labor.
    My own route in the apple industry has followed a changing 
course. When I returned to the farm, I worked for my uncle for 
nine years in the 1980s and then went into business for myself. 
I bought an apple orchard in 1983, and then rented additional 
acreage in 1989 and became a full-time farmer. Since then I 
have purchased part of a packing house where we no longer pack 
apples. We have changed from older varieties and large trees to 
almost all new varieties and dwarf trees.
    In that time I also worked as a federal crop insurance 
adjuster and have served on most of the agricultural committees 
that you can serve on in Henderson County and in North 
Carolina. The apple industry in Henderson County is now strong 
and doing very well. However, the industry is still very 
fragile and faces many challenges. Some of these challenges are 
the increased cost of production, the new regulations in food 
safety, and the questions about availability of enough labor to 
harvest the crop.
    We as growers feel that we will be able to deal with this 
changing environment with the help of research and continued 
recognition that apples and other specialty crops are an 
important part of agriculture in the United States. Without the 
funding in the Farm Bill, we growers could not continue. We 
must have federal crop insurance to mitigate the inherent 
unpredictability of the weather as we experienced in 2007 when 
most of the crop was destroyed in an Easter freeze.
    Chairman Shuler came to our packing house and met with 
growers twice to give much needed support in Edneyville and in 
Washington. His hard work helped apples and other specialty 
crops be included in a crop disaster bill that provided much 
needed help in a very difficult time and is one of the reasons 
I would call the apple industry in Henderson County healthy.
    As we producers face many challenges, I feel that we need 
to be able to meet them all with the continued help and 
understanding from members of Congress like yourselves.
    [The prepared statement of Mr. Barnwell is included in the 
appendix.]

    Chairman Shuler. Thank you, Mr. Barnwell.
    Before I introduce our next witness, as you can tell three 
of these gentlemen are from the 11th District, which is just an 
honor to be able to represent. As we saw the Easter freeze and 
we saw the floods obviously come through Haywood county, we 
have seen devastation, and I just want everyone to know what an 
impact these three gentlemen have had in our communities in a 
day in and day out basis with the volunteerism, the things that 
they do, the work that they associated with, the committees 
that they are on. They truly are the backbone of our 
communities and what they are able to establish.
    And so before I introduce Mark I wanted to just tell how 
much I appreciate what they do in our communities, especially 
when it comes to our farmers and the workforce.
    Our next witness is Mark Williams. Mr. Williams is the 
Chief Financial Officer for Flavor 1st Growers & Packers in 
Horse Shoe, North Carolina. Mr. Williams is also Commissioner, 
Liaison of the Agricultural Advisory Board in Henderson County.
    Mr. Williams, you will be recognized for five minutes.

                   STATEMENT OF MARK WILLIAMS

    Mr. Williams. Thank you, Chairman Shuler, Ranking Member 
Luetkemeyer and other members of the Committee. Thank you for 
the opportunity to present today.
    As mentioned, I do serve as Chief Financial Officer for 
Flavor 1st Growers & Packers. Additionally, I serve currently 
as a County Commissioner in Harrison County, North Carolina.
    I also happen to be a part owner of a small family farm 
growing apples as well as some ornamental trees.
    If I may tell you a little bit about Flavor 1st, it is a 
grower, packer, shipper, and a repacker specializing in 
tomatoes, sweet corn, and other Southern vegetables. We source 
product year round and have operations from Florida all the way 
up to North Carolina with our primary facility being located 
there in the State of North Carolina.
    We also partner with and depend upon a number of small 
growers to serve our customers, and our customer base basically 
includes larger chain type stores, grocery stores as well as 
food service companies.
    We certainly appreciate the inclusion of specialty crops in 
the Farm Bill, and we hope to see continued support in the 
future. Today's topic, the future of specialty crops for small 
farmers, is a broad one. I want to briefly touch upon three 
different issues, good safety being one, risk management, and 
also credit access.
    In regard to food safety, the United States arguably has 
the safest source of food in the world. Over a billion servings 
of produce are consumed each day in the United States, and it 
happens with almost without a food safety incident. Of course, 
one is too many.
    At the same time, consumer confidence is probably at an all 
time low, which presents a threat to the industry. In the 
federal government I feel like can help protect public health 
and also help build consumer confidence when it comes to 
consumption of produce, but in doing so, it does have to be 
cautious so as not to devastate small family farms or entire 
commodity groups.
    Public policy principles should include commodity specific 
approach based on the best science available. I think it needs 
to be consistent throughout the U.S. and have the same 
standards for produce that is being imported into the country. 
I think that is critical. It needs to be federally mandated 
with reasonable oversight just to give the credibility.
    Additionally, we cannot afford to have multiple standards 
of food safety audits. Currently different customers require 
audit programs or standards which is inefficient and costly to 
produce or needs to be tiered levels of standards I feel like 
based on size and customer base. With too stringent regulation 
a small farmer simply may choose to quit or economically be 
forced out of business.
    Flavor 1st paid approximately $25,000 in this past year 
just to set up our current food safety plan that we have in 
place, and that is the initial requirement, plus the ongoing 
cost. Small farmers simply cannot afford that.
    A sound science based program is also imperative as once a 
recall is issued, there is immediate impact and even if there 
is no fault by producers of the product implicated, damaging 
effects can last for years. Flavor 1st lost an estimated 
$400,000 last year due to the Salmonella scare with tomatoes, 
and to my knowledge not a single tomato tested positive for the 
bacteria. After the event there was no government statement 
clearing tomatoes.
    On the issue of risk management, others have and probably 
we will talk about this particular topic, and I addressed it in 
my written testimony. I will simply say the federal crop 
insurance program does need work concerning specialty crops. We 
have some of the highest value products on a per acre basis, 
and there is a high level of cost associated in bringing those 
crops into production. Availability to cost effectively protect 
against loss is needed.
    Additionally, our growing seasons often do not coincide 
with USDA's crop years, and past programs have favored some 
areas over others and distorted markets.
    Finally, on the access to credit, it is essential for a 
successful business, particularly important to agriculture 
given their susceptibility to weather related events and other 
uncontrollable factors. The farm credit system is operated in a 
responsible, conservative manner for many years. They are not 
immune to the credit crisis. Their sources of funds have 
constricted along with the rest of the global banking system.
    In regard to commercial banks, we have experienced in this 
past year an increase, what we are looking at, of rates being 
offered of 250 basis points higher than what we saw last year 
even though the markets actually would indicate that the price 
should be cheaper. We also are seeing more stringent balloons.
    Loan guarantees have their place. Global interest rates 
have their place in terms of government help, but the 
underwriting process and application process tends to be 
burdensome, and there is little enticement for banks to use FSA 
guarantees.
    Most farmers that remain in operation today are good 
managers. Given the tremendous risks associated with their 
business, all they are asking for is a fair chance to continue 
to operate in this unusual economic circumstance that we 
currently face. Nobody is looking for handouts.
    So appreciate your time.
    [The prepared statement of Mr. Williams is included in the 
appendix.]

    Chairman Shuler. Thank you, Mr. Williams.
    Our next witness is Rich Hudgins. Mr. Hudgins is the 
president and CEO of California Canning Peach Association, 
Sacramento, California. He is also testifying on behalf of the 
National Council of Farmer Cooperatives.
    Mr. Hudgins, you will be recognized for five minutes.

                   STATEMENT OF RICH HUDGINS

    Mr. Hudgins. Chairman Shuler, Ranking Member Luetkemeyer 
and members of the Subcommittee, my name is rich Hudgins, and I 
am president and CEO of the California Canning Peach 
Association, a grower owned marketing and bargaining 
cooperative which represents nearly 500 growers who produce 80 
percent of the nation's canned peach supply.
    I am also a council member of the National Council of 
Farmer Cooperatives, or NCFC. On behalf of my California cling 
peach grower members and, more broadly, of the more than two 
million farmers and ranchers who belong to one or more farmer 
co-ops, I appreciate this opportunity to submit testimony 
regarding issues facing co-ops in the specialty crop industry.
    As you may know, farmer co-ops are businesses owned and 
controlled by farmers and ranchers and offer the best 
opportunity for our nation to realize the farmer focused ideal 
of an enduring, competitive agricultural industry. Farmer co-
ops supply just about any agricultural input imaginable, 
provide credit and related financial services, including export 
financing, and market a wide range of commodities and value 
added products.
    Earnings from these activities are returned to their farmer 
members on a patronage basis, helping to improve their income 
from the marketplace. These earnings are then recycled through 
rural communities as farmers and ranchers purchase goods and 
services from local businesses.
    Established in 1922, the California Canning Peach 
Association is the nation's oldest farm bargaining association. 
As a farm co-op, the CCPA is owned and directed by its grower 
members and dedicated to serving their needs with a variety of 
services. Our average member grows just 40 acres of peaches and 
typically farms other tree crops as well.
    Many of the issues before Congress have the potential to 
impact farmer co-ops, and especially the future of the 
specialty crop industry. Those issues include climate change, 
integration and labor, food safety, as well as water, 
international trade, tax issues, and Farm Bill implementation. 
And believe it or not, farmer co-ops also have a stake in 
pension issues, especially in light of the market crash last 
year.
    I will highlight just a few of these issues today, but urge 
the Committee to refer to my written statement for more 
details.
    While NCFC supports an energy policy that maximizes energy 
independence, farmer co-ops and their members are very 
concerned that current proposals will result in higher business 
costs, including those related to energy, fuel, and fertilizer.
    For specialty crop, there is very little data on the 
potential gain or the impacts that this diverse sector may face 
from a cap and trade program like the one recently passed by 
the House. Production of many fruits, vegetables and tree nuts 
is a resource intensive process involving considerable 
investment in inputs and energy. It is unclear if or how 
specialty crop producers will benefit from an agricultural 
offsets program.
    Furthermore, those agricultural products with the least 
opportunity to participate in an offset market, specialty crops 
for instance, will have the highest sensitivity to competition 
from international competitors, such as China and South 
America, who are not subject to the same emissions reduction 
standards.
    Another vital issue to the future of the specialty crop 
industry is immigration and labor. Farmer co-ops and their 
member owners must have access to an adequate, dependable, and 
flexible labor force in order to insure their continued 
competitiveness in the international marketplace.
    Thousands of U.S. family farmers provide this country with 
the lowest cost, safest, and most reliable food supply in the 
world, but in order to do so, they need an immigration policy 
which permits temporary guest workers to pick our fruits and 
vegetables, milk our cows, and perform all the other jobs that 
are being filled today by workers who lack legal status. Just 
as we cannot have a thriving Wall Street while Main Street 
suffers, we cannot having a thriving Main Street in rural 
America if more of our food production is forced to relocate 
outside the borders of the U.S.
    The question for members of Congress is whether the harvest 
will place in our country or in a foreign country.
    A cornerstone to President Obama's domestic policy agenda 
is the goal of energy independence. Wouldn't it be ironic if we 
developed a new strategy for energy independence only to find 
ourselves more reliant on something even more vital to our 
country than oil, the nation's food supply.
    The final issue I will mention is the Child Nutrition Act 
which must be reauthorized this year. Whether it is the 
National School Lunch Program, the School Breakfast Program, 
and the WIC Program, NCFC supports increasing the consumption 
of all fruits and vegetables without pitting one form of fruit 
or vegetable against another. Sound science and the USDA's 
dietary guidelines do not distinguish between fresh, canned, 
dried or frozen fruits and vegetables, and we encourage 
Congress not to make a distinction either.
    Our goal should be increased fruit and vegetable 
consumption which will lead to a healthier future for all 
sectors of the society and reduce future health care costs for 
our nation.
    In closing, let me thank you for the opportunity to testify 
today. We appreciate your attention to these issues, and I 
would be happy to respond to any questions.
    [The prepared statement of Mr. Hudgins is included in the 
appendix.]

    Chairman Shuler. Thank you, sir.
    At this time I would like to yield to the Ranking Member 
for introduction of our next witness.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    It is my pleasure and honor to introduce today Mr. 
Anderson. Jim Anderson is Executive Director of the Wine and 
Grape Board for the Missouri Department of Agriculture. As 
Director, his duties are to coordinate with wholesalers, 
restaurants, retailers, and the general public on Missouri 
wines and juices.
    As stated earlier, as the former Director of Tourism, I 
have worked with the Wine and Grape Board. It is exciting to 
have them here today, and I look forward to your testimony, Mr. 
Anderson.
    Thank you.

                   STATEMENT OF JIM ANDERSON

    Mr. Anderson. Thank you, Ranking Member Luetkemeyer.
    Chairman Shuler, thank you very much and also the 
Committee. I want to thank you for the opportunity to be here.
    My name is Jim Anderson. I am the Executive Director for 
the Missouri Wine and Grape Board in Jefferson City, Missouri.
    The Missouri Wine and Grape Board is responsible for 
researching, developing and promoting the selling and marketing 
of grapes and grape products grown in Missouri. Missouri now 
has 90 wineries and 1,500 acres of grapes planted presently. 
Made of mostly small and mid-size wineries in the state. Right 
now the state contributes about $701 million to the state's 
economy.
    As an emerging and growing specialty crop industry that is 
populated by small and family farms, we are pleased to see the 
mandatory funding for specialty crop programs is included in 
the Farm Bill, considering Mr. Anderson. s now that make up 50 
percent of the current farm gate value for the United States, 
providing money for research, marketing, quality improvement 
and good investment for agriculture and the future of small 
farms.
    We are particularly pleased to see the inclusion of the 
specialty crop block grant program, in addition to clean plant 
network as permanent programs in the Farm Bill. These two 
programs that the Missouri wine and grape industry will 
directly benefit from.
    The specialty crop block grant program was initially 
established as a stand-alone program in 2001. But since that 
time these grants have been used by the industry nationwide for 
marketing research and wine trails, establishing wine and 
cuisine partnerships, developing online educational manuals for 
new and existing wineries and growers, procurement for a more 
efficient wine processing equipment and other projects to help 
the industry producers.
    Missouri began using specialty crop block grants in 2004 by 
funding a multi-year project with a goal of reducing the 
shortage of adequately educated young people entering the wine 
and grape industry. A network of grower based demonstration 
vineyards stretching across Missouri. The Missouri River Hills 
region, west central part of the state allows local FFA 
chapters, vocational ag. classes in high school, and producers 
to participate in these on-farm demonstration programs which 
gives the tools to start their own vineyards in the state.
    In fiscal year 2008, Missouri Department of Agriculture 
started a specialty crop grant program calling for projects to 
enhance Missouri specialty crops. One special project is a 
voluntary online registration database for farmers such as 
grape growers, organic growers, special farmers and other 
producers or pesticide sensitive specialty crops to alert 
applicators of crop locations. This will help prevent damage, 
and danger to crops by legal applicators and co-ops that 
commercially spray.
    Presently fiscal year 2009 grant applications are being 
collected at this time for the state specialty crop block grant 
program. The National Clean Plant Network is a new program with 
mandatory Farm Bill funding and will be involved in decisions 
that are about importing and clearing new varieties and 
developing plans to insure that plants available commercially 
are disease free.
    Plant centers will be used for diagnosis, packaging 
elimination services and the effort to produce clean plant 
material, including vines for propagation, and maintain blocks 
of pathogen tested plant material. The clean plant material 
will be made available to states for certified plant programs 
as well as private nurseries and growers.
    Missouri is one of the states that will be in the loop, in 
the network through the University of Missouri at Columbia and 
the Missouri State University in Springfield, Missouri.
    Healthy plant stock is a key to cost effective production 
of horticulture crops, such as fruit trees, nuts, and 
grapevines. Healthy plant stock is used to propagate, requires 
fewer chemical inputs and produces higher crop yields and 
better crop quality than common plant stock.
    Healthy planting stock is necessary for U.S. agriculture to 
remain internationally competitive and economically viable. The 
most effective approach to producing healthy plant stock is 
through programs that screen viable plant selections for 
viruses and other diseases that can spread contaminated plant 
stock.
    Quarantined services provided by clean stock programs 
reduce the chance of introduction of exotic pests that also can 
be difficult and costly to control. For example, the cost 
planting a vineyard is $10,000 to $15,000 per acre in Missouri, 
and these vines do not bear fully mature until the fifth year.
    A grower generally plans to have the vines producing for 
about 30 years. Therefore, if a disease shows up and destroys 
part of their crop in, say, eight growing years, the grower has 
not only lost production years, but also stays with tremendous 
cost of replanting. Having a clean plant stock generally 
reduces or eliminates the risk of such a loss.
    The grape and wine industry's economic impact is 
significant in areas not affected in most other agricultural 
industries. When wineries are built, bed and breakfasts are 
also put in, restaurants, hotels, gift shops, artisans and 
other tourist attractions soon follow.
    As the industry matures, the clusters of tourism are 
developing statewide.
    The industry also benefits other businesses, such as oak 
barrel businesses in Missouri, stainless steel tank 
manufacturers, chemical and equipment dealers, wine 
wholesalers, and retailers in the state. This rural economic 
development is common and can be seen in other States, such as 
California, New York, and Oregon.
    Presently, about a million people hit Missouri wineries 
every year as far as tourism. As a tourism cluster develops in 
these rural areas, small producers and businesses can grow, and 
it helps benefit the area.
    In 2007, the Missouri wine industry paid about 39 million 
in state taxes and 28 million federal taxes and provide over 
6,000 full-time jobs. Missouri's 1,500 acres of vineyards and 
90 acres or 90 wineries are made up of small farms with an 
average of less than 15 acres of grapes and family wineries of 
about 10,000 gallons, what they produce.
    Data indicates that grape and wine production in Missouri 
offers sustainable growth in jobs, income, and tax revenue to 
the state. With eight percent of the wine market share 
currently being served by Missouri wineries, the opportunity 
for growth is excellent.
    In conclusion, the Missouri Wine and Grape Board strongly 
supports the Farm Bill and specialty crop industry in the 
United States.
    Thank you for my testimony.
    [The prepared statement of Mr. Anderson is included in the 
appendix.]

    Chairman Shuler. Thank you, Mr. Anderson.
    Mr. Williams, as you look at the possible expenses that 
could come forward from new legislation from Congress based 
upon what was voted on yesterday and defeated in the House on 
food safety, obviously I think we are all in agreement that 
food safety is very, very important. No one would deny that.
    But what added expense would that place upon you as a small 
growers? What added expenses are you looking at that it will 
cost you, and what impact will it have to your bottom line?
    Mr. Williams. There is a great deal. Initially, the initial 
costs are bringing facilities up to standards, and that can be 
rather expensive, particularly for family owned farms. 
Oftentimes, that will be older facilities that may never be 
capable of being brought up to standard at a reasonable cost. 
That is the initial cost.
    I think the bigger cost is the ongoing cost, the 
administrative cost. The record keeping is enormous, and that 
is just basically right now to meet some of the standards that 
have been set in place, the common practice particularly that 
the chain stores are already requiring. This is not a 
government requirement, but requirement by the customer base.
    It is very extensive. So you are actually looking in many 
cases having to employ additional labor just to keep up and to 
administer the programs. Those are things which are 
astronomically expensive and could be devastating from my 
viewpoint to the small farmer.
    Chairman Shuler. Mr. Anderson, how about you, I mean, in 
the wine industry?
    Mr. Anderson. Well, we see that in similar ways that it 
does affect us, and it is a growing concern.
    Thank you.
    Chairman Shuler. Mr. Barnwell, when we are talking about 
the different markets that the 2008 Farm Bill has expanded, 
what part has the USDA played in helping you expand those 
markets?
    Mr. Barnwell. Well, particularly in Henderson County, one 
is being into the schools. It has been very, very hard for a 
long time to get local produce in there. It has made it more 
accessible. It also is buying all of those sliced apples that 
are working very well in the nutrition part for Mr. Henderson, 
and also the local farm markets and some things like that it is 
supporting.
    There is a really good market in Ashville. The state 
farmer's market is there. We have got the Curb Market in 
Harrisonville, a Tail Gate Market that is actually done in the 
Commissioner's parking lot in Hendersonville. Those are some 
things that it has specifically done and helped to support for 
us.
    And the new money for some of the grants on the export 
markets is also there, but we had not seen that direct effect 
yet in our area, but we see the direct effect of the nutrition 
part of the bill.
    Chairman Shuler. And correct me if I am wrong, and maybe 
Mr. Williams has more detail being a Commissioner, but I think 
Henderson County is number two in the state of a state that is 
second in the country of being diversified in cash crops.
    Mr. Williams. That is correct. Total crop production, it 
does rank second in the State of North Carolina. We are quite 
proud of that.
    Chairman Shuler. Absolutely. Maybe Mr. Luetkemeyer will ask 
about tourism. That may be a really good one to ask.
    [Laughter.]
    Chairman Shuler. It is really good. I will not give it 
away, but they do a great job in Henderson County, especially 
with their apples.
    Mr. Holbrook, talk to me about crop insurance. I know in 
your testimony you talked about how difficult it has become, 
the added expense. You know, what added pressure does that put 
on your farm? What added pressure does it put on you 
personally?
    And obviously with loans, if there are outstanding loans, 
they are not necessarily looking at you, but maybe from your 
neighbor farmers. How difficult is it? They do not have the 
crop insurance to get the loans and how that plays an 
important, vital role within the bottom line, but obviously the 
financial structure of the company.
    Mr. Holbrook. The crop insurance, I have taken multi-peril 
crop insurance every year since I have been farming. In 2004, 
when Ivan and Frances came through and flooded my fields, I got 
up one morning and what am I going to do now? Well, I have got 
crop insurance. I did not get a dime out of it.
    So that expense, some farmers did not have the insurance, 
could not afford to guy it. So the cost kept going up, and 
eventually I just dropped it. I have NAP insurance now, which 
would cover very little of it if there is a loss.
    Raising tomatoes and peppers, they are high capital crops. 
The average prices is around $9,900 dollars an acre just to get 
a crop in and harvest it. We need some type insurance back-up 
for that much expenditure. It is a very important part of our 
farm, insurance, but it has to be able to be manageable and 
workable for us when we do need it and in disasters like we had 
in '04.
    Chairman Shuler. Why wasn't it covered under the insurance? 
I mean that was a devastating flood. I remember seeing your 
peppers floating down the river through the middle of Canton.
    Mr. Holbrook. Yes, I gave them all to Canton.
    Chairman Shuler. Every single one of them.
    [Laughter.]
    Chairman Shuler. You guys would not believe it, but I mean 
there were peppers everywhere.
    Mr. Holbrook. It was eight foot deep in my field.
    The reason it did not help me primarily I insured for a 65 
percent coverage. In other words, if I harvested over 65 
percent of the crop, then there is no coverage. And on 
September 8th when it came, I had already harvested 70 percent 
of the crop. It does not matter that the price that I had 
already harvested the crop at 70 percent of it. I did not 
matter what the price was, but I had harvested over the 
allowable 65 percent coverage I had. That is the reason it did 
not cover it.
    Mr. Hudgins, before I yield to the Ranking Member, in 
canned peaches, are there competitors in the import market in 
canned peaches? Are there competitors out there from other 
countries that you are having to compete with?
    And if you are, then what are some advantages they have 
that you may not have?
    Mr. Hudgins. We face significant international competition. 
Today the largest player internationally in terms of imported 
product into this country is China. The advantages there would 
be very apparent: low labor cost. So when it comes to our 
ability to compete internationally, we cannot touch the 
Chinese, and no one else can either.
    Our argument would go back to more of the quality issues, 
the reliability of the product, the fact that we have a 
domestically produced product that is available in a timely 
manner, but when we look at the Chinese today, the Chinese are 
counting for more than 70 percent of the imported product 
coming into this country today. It is a real challenge.
    Chairman Shuler. And that is really a shame. I mean, if you 
look at it, legislation from Congress, you know, regardless of 
the administration, Democrats, Republicans, you look at more 
added pressures and restraints on our local farmers, which 
makes it more difficult for them to produce.
    We went from 35,000 acres of producing apples in Henderson 
County now to 5,500 acres, but the outside world does not have 
to abide by those same requirements and regulations that we are 
having to push our farmers to do.
    I certainly think if we were to require those same 
requirements and level the playing field, that we would be what 
I have been talking about earlier, net import and net export. I 
think we would be then exporting and have a much stronger 
exportation of our fruits and vegetables and allow the backbone 
of all of our communities in the rural area, which is our 
farmers, to be able to support their families.
    I mean, I remember 20, 30 years ago--I am only 37--but all 
of the communities, when you looked at the people who were on 
the bank boards, who are financially very strong in the 
community, it was all of our farmers, and now our farmers are 
struggling day in and day out, and we have got to put our 
farmers back on the top of the economic structure in our 
communities.
    That is one of the things that I know the Ranking Member 
and I have had a couple of hearings already based upon trade, 
and if there is one area that we can really focus on, textiles 
would be obviously great for North Carolina, but our farmers 
particularly would be a very good place for us to start and 
look at leveling that playing field if we are going to have any 
type of continuation of small farmers and small ag. in our 
country.
    So at this time I will yield to the Ranking Member, Mr. 
Luetkemeyer, for his questions.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    Some of the themes that we have seen so far have been crop 
insurance. We need to find a new way to revamp the program. 
Obviously it is not working. It is not effective. It is not 
something that can really bring some relief in situations that 
you all are engaged in. I think that is one thing that we need 
to take a look at here.
    Import standards the Chairman just mentioned. I think it is 
another thing that we need to take a look at as well, and 
perhaps, Mr. Chairman, we need to take a look at maybe doing a 
report of our findings here today to submit to the different 
other folks who would be involved in these things or have 
further hearings that we can develop some of these things.
    So I think these gentlemen here today have really pointed 
out some problems with specialty crops that I think need to be 
addressed.
    The Clean Water Act was brought up by Mr. Holbrook. We had 
a hearing on that, I think, last week in our full Committee, 
and it is a huge issue in my district from the standpoint they 
have a lot of crop, a lot of livestock production in my 
district, and it just caused all kinds of problems.
    So what are your concerns with that, sir? I know you 
mentioned it in your testimony. I would like to see you follow 
up with some information on that.
    Mr. Holbrook. Thank you.
    My concerns with the Clean Water Act is it requires certain 
buffer areas. In Western North Carolina, my average field is 
like four acres. You know, I have got eight different fields, 
and all of them join waterways, and if they take a buffer area 
and some of the buffer areas require we take the whole field 
because they are narrow and long running with the field. It 
would take the whole production area out of my farm. That is 
one of the reasons that I resent it.
    Mr. Luetkemeyer. Do you have any problems with runoff into 
your water areas, for instance, the herbicides or pesticides or 
fertilizers that you use? Is there a problem with that?
    Mr. Holbrook. No, sir. I am glad you asked that question. I 
am a member of the Haywood Waterway Association, which is a 
nonprofit organization in our county that watches the water 
quality, and the Pigeon River that runs through my farm runs 
through developments, residents, farms, 100 acres of tomato and 
pepper farms, and the water quality was ranked higher than it 
is coming out of the Smoky Mountain National Park there at 
Chattaloochee Creek. So we are doing a good job.
    And most of our land is flat. It does not erode, and we 
have to be along waterways, and therefore it is in bottomland.
    Mr. Luetkemeyer. Very good. Mr. Barnwell, what about you? 
Are you experiencing any problems with the Clean Water Act 
herbicide and pesticide runoff, anything like that?
    I know with orchards I am sure you spray.
    Mr. Barnwell. Oh, yes, a lot. We had the Mudd Creek 
Watershed Project came in and tested specifically the Lewis 
Creek watershed, which two of my biggest orchards sit right on, 
and the reason is it has got the most apple acreage of any 
watershed in Henderson County, and I cooperated with them. I 
told them what I was spraying with and let them test below my 
orchard.
    That went on for about a year and a half, and they stopped 
the thing before they wrote their conclusion because they 
couldn't find anything.
    Then they came back another year later with their findings, 
and unfortunately they did not use good scientific methods. 
They had formed their conclusion and did not have the details 
to work it up, and they were funded by the Clean Water Trust in 
North Carolina.
    And when the Assistant Commissioner of Agriculture 
presented the results to the head of the Clean Water Trust, as 
we presented them from the agriculture community, they pulled 
the money from that research project. They left.
    We deal with it a lot. We are good stewards of the land. We 
have reduced the amount of pesticides, herbicides that we put 
out. We have scouts that travel orchards. So we only spray with 
what we need to. I use a computerized spray that uses sonar, 
reads the shape of the tree and turns it off where there are 
spaces in the orchard or spaces where there are no limbs. And 
we work very hard to be very good stewards of the land.
    There is trout in the stream between two of my orchards. 
There is a culvert there, and I have seen trout swimming in 
that stream. So we have worked very hard to be very good 
stewards, and I want to leave that land to my grandkids just 
like my grandfather did to me, and I want to make sure it is as 
good or better when they get it than it was when I got it.
    Mr. Luetkemeyer. I think that is one of the problems that 
we have with the Clean Water people. They do not understand 
that farmers are probably better stewards of their property 
than they would be themselves. I appreciate your testimony.
    Mr. Hudgins, you made the comments with regard to climate 
change about costs. Can you expand on that just a little bit?
    Mr. Hudgins. Well, certainly, With regard to--
    Mr. Luetkemeyer. Well, you made the comment that said with 
the impending climate change, I guess cap and trade, you are 
looking at the increased cost of production. Apparently you 
looked at the bill, and you represent 80 percent of the peach 
production. You are going to be impacted significantly, I would 
assume.
    Mr. Hudgins. Yes, to the extent that our fertilizer costs 
increase and our fuel costs increase, as I referenced in my 
remarks earlier, our world today is under severe pressure from 
imports coming in from China and from Greece and from South 
Africa, Chile, and to the extent that we find ourselves less 
competitive with the global producers of our canned peach 
products, we will lose more of our domestic market to lower 
cost imported product entering this country.
    At this point it appears very doubtful that we have the 
ability to pass on higher farm gate costs back through the food 
chain, and there is a real concern that we are already at the 
lowest bearing acreage position that our industry has been at 
in the last 50 years, and so there is real concern about our 
ability to sustain the industry if we have another layer of 
cost imposed on peach growers that we cannot pass on into the 
marketplace.
    Mr. Luetkemeyer. I know I am about out of time here, but 
Mr. Anderson, just very quickly, I know that you made comment 
about the research dollars in the Farm Bill. I know it is a 
really, really big deal to the wine and grape folks. Would you 
expand on it just a second?
    Mr. Anderson. Sure. The research dollars coming in 
especially on clean plant is very important to us, and I would 
say for the grape industry in the United States it is very 
costly to get started in the business and then five, eight to 
ten years down the road having a disease that wipes it out, 
going back to the cost of that production loss and the start of 
the grapes again, starting back in the field, so very 
important.
    The Clean Plant Network, having clean plants start out, and 
I think if you are in the fruit industry or nut industry, it is 
very important, too, because of the loss of time and the cost 
per acre. So this is a very important piece to us, having a 
clean plant, having nurseries with clean stock before it goes 
to the farmer's fields and being planted out in the vineyards.
    Mr. Luetkemeyer. Thank you.
    Thank you, Mr. Chairman.
    Chairman Shuler. Mr. Thompson.
    Mr. Thompson. Thank you, Mr. Chairman.
    Mr. Anderson, coming back to the role of tourism with its 
contributions as a result of the wine and grape industry 
playing a vital role, I understand you had a bit of a decline 
last year with weather and high energy costs. Can you provide 
us an update on how the business has been this spring and into 
the summer?
    Mr. Anderson. It has been interesting this year, too. As 
other parts of the United States, Missouri has been awful wet, 
too, and we will catch a lot of rain again this year. Fuel 
prices have gone down some, but input costs, such as 
fertilizers and sprays still continue to stay high.
    And so with the weather conditions, we are out there 
spraying quite often, more than we would like to to keep our 
crop.
    In Missouri, we are about two weeks out before harvest, and 
we will continue harvest through the end of October. The 
challenge is, of course, agri-tourism wise is that it is 
weather related. Having fuel prices down and then having good 
weather to get people out, we get close to about a million 
people hit Missouri wineries every year. So activities are 
bringing them out to that region, and also trying to get the 
consumer confidence back to come out there and spend an extra 
day or two just so that money stays at the community, those tax 
dollars and that stuff stays in that community and recycles 
back.
    So it is very important to us, but again, a lot of it is 
weather based, and we are hopeful that in the next few weeks it 
will have some sunshine and we can start harvesting grapes.
    Mr. Thompson. I hope so, too. You have not much of a 
presence of that in my very rural district, but I wish we could 
replicate that agri-tourism with milkshakes and dairy farmers 
right now. That would be a blessing if we could figure out how 
to do it. I love milkshakes so I don't see why it would not 
work.
    [Laughter.]
    Mr. Thompson. I throw this just open to all the members of 
the panel. Have any of your farms or products ever been 
subjected to a recall as a result of food-borne illnesses? 
Anyone?
    Mr. Williams. We have had threat of it from the standpoint 
that it is very simple for a consumer to catch wind of someone 
getting sick from a particular product, and all of a sudden you 
know, the mind plays tricks on you and you begin to think, 
well, maybe I am sick as well.
    We have had folks to call in and to indicate, well, they 
had some of our product and now they are not feeling well. 
Fortunately, we have got a system in place where we can trace 
back and be able to clear ourselves of such indications.
    The problem comes in from my perspective we can take every 
step, every measure possible to protect and provide safe food 
supply. Once that product ends up on the shelves on the grocery 
store or in a school system, it is easy enough for anyone to 
come through as a consumer, to pick up an item maybe not having 
washed their hands, maybe sneezed on it, a mother that has 
changed the diaper of a young child and not washing hands, and 
contamination can occur. And yet that falls back so much with 
the liability and responsibility, falls back on the producer, 
and there is just that point of contamination that can occur in 
so many other areas.
    But there is always a threat looming, and you always have a 
little bit of an element of fear of what is going to happen in 
the event of a recall, and I do know of several folks that have 
and experiences they have gone through.
    Mr. Thompson. Just following up on that, I would be curious 
to see what the opinion of the panel is. Do you have an opinion 
on the effectiveness that USDA has had in terms of food safety 
and their oversight of that?
    Mr. Holbrook. I think it was mentioned earlier about the 
fiasco that happened on tomatoes last year that was falsely 
blamed. We lost a lot of money last year just on a rumor or 
false Salmonella being on tomatoes, and it really has not 
recovered yet.
    Mr. Thompson. Any others?
    Mr. Anderson. Congressman, for us in the wine industry, we 
are a little bit unique. We do work with USDA, but we are 
pretty much overseen by the Trade and Tax Bureau, TTB. So we 
have another agency involved that oversees us. So it is kind of 
interesting that there is FDA, there is TTB, and the USDA, and 
for us we have had a pretty good working relationship, speaking 
for the wine industry in the United States, with the Trade and 
Tax Bureau that oversees our labeling, our inspection process 
in the United States.
    Mr. Thompson. Let's see. Just real quick because I know my 
time is going, have any of you or your members utilized the 
Small Business Administration or the USDA's guaranteed loan 
program to expand your operations?
    And if so, what was your experience with those programs?
    Mr. Williams. I'll speak from the banker's side. I have 
worked for 18 years with the farm credit system, and although I 
never obtained a loan myself, I did do a number of loans that 
had FSA guarantees.
    The experience that I think most at that time our customer 
base went through was that burdensome application process. It 
did take some time to go through that.
    Also, the fact that every bit of property was secured or 
the loan was secured by every bit of property. I am talking 
real estate, equipment, crops, the whole nine years. That 
becomes very cumbersome.
    Then the process of providing annual records in support. It 
is a difficult process not only for the applicant, but also for 
the lender that is assisting in those programs as well. It does 
become cumbersome to the point that there is some reluctancy to 
want to go through that process, and so I would say anything 
that could be done to help simplify that would certainly be 
beneficial to those that are in need of those type programs.
    Mr. Thompson. Well, I thank the panel and, again, thank the 
Chairman and Ranking Member for this opportunity.
    Chairman Shuler. Thank you, Mr. Thompson.
    I am going to yield back to the Ranking Member, Mr. 
Luetkemeyer, for a follow-up question.
    Mr. Luetkemeyer. Because the food safety situation is on 
our minds and we have got a bill in front of us, and we are 
very concerned about the overreach of the bill with regard to 
what its impacts may be and whether we really have a problem, 
let me just ask the question this way.
    Has there been a problem in the past that this bill is 
going to solve or are we just creating more levels of 
bureaucracy, more intrusion into your business? Is it going to 
have a real effect on the quality of food safety?
    And it is concerning to me from the standpoint that all of 
you are going to go out of business if you have a problem. So 
you have a vested interest in making sure you have something 
and you do it right to begin with. I do not know why you need 
anymore oversight.
    Tell me what the problem is and if it is being addressed 
correctly.
    Mr. Barnwell. We store apples for Gerber Foods for baby 
food. We already had a trace back policy in place. If something 
is not right with those apples, they do not get shipped, you 
know. Apples we have had very little problem. The only thing 
was a little bit of fresh cider a few years ago in an organic 
orchard. Apples have been very safe even though they have got 
some bad raps about specifically alar, which the science never 
do come close to supporting the claims that were made.
    But you know, we work very, very hard. When we packed 
apples we sold to Kroger Food Stores. Now we are dealing with 
Nestle Foods. We deal with large places, and it is just another 
level of regulation by and large. There is a lot of it in that 
that makes a lot of sense, but everything that is in that that 
we are going through right now getting certified, it is going 
to cost us about $4,000 just in our small operation to get 
certified. It is things that we are already doing. We just do 
not write down. That is basically the biggest thing. Testing 
the water, making sure your employees wash their hands, these 
are just common sense things that we do.
    Mr. Luetkemeyer. Basically what you are saying is that you 
already do a lot of these things already. It is just going to 
be put in law and you will be forced to do this now.
    Mr. Barnwell. And document that you do it. So now we have 
to have a food safety officer.
    Mr. Luetkemeyer. And, quite frankly, that is probably why 
we have the quality of food that we have, because you have 
these things already in place.
    Mr. Barnwell. I think that we have the safest food in the 
world. Talk like Mark was talking about. When I go in my 
orchard, we have got some plums, some peaches that are ready 
now. I pick them off the tree, wipe them off on my sleeve and 
eat them.
    If I go to the grocery store and buy that, I take it home 
and wash it because somebody else has handled it. I would a 
whole lot rather eat out of my orchard than out of a grocery 
store, and I mean I feel completely safe eating my food out of 
there. I know how we spray it.
    I mean, I do not take it home and wash it, and I did it to 
my three year old granddaughter the other day. If you ever saw 
anything any better, she was eating plums and the juice was 
running down the side of her face and she looked and said, 
``Kenny, I like plums.'' And you know that I am not going give 
somebody that precious something that is going to hurt them. I 
am absolutely going to make sure it is as close to perfect as 
we possibly can, and the vast majority of the farmers in the 
United States have exactly what. Well, all farmers, I think, 
have exactly that same feeling.
    A lot of times where this stuff has come through is being 
like the peanuts, was after it was into the farmer or like a 
lot of times in the meat. It is the processing plant, not what 
the farmer sent to them.
    The farmer gets a lot of bad rap, but you know, you were 
talking about being the head of the community. The perception I 
see in our county right now is the little old man and the 
little old lady in the picture with him holding the pitchfork. 
That is the way a farmer is supposed to be in western North 
Carolina right now. They are supposed to be dirt poor. They 
should not be able to have ever made any money.
    Mr. Luetkemeyer. Thank you.
    Mr. Williams.
    Mr. Williams. Yes, sir. Thank you, Ranking Member 
Luetkemeyer.
    I would say that food safety is really market driven. From 
the standpoint of us as a shipper and repacker for smaller 
farmers, we are meeting the demands of our customer base, 
largely the retail chain stores. Just as someone might meet the 
demands of a local farmer's market, there are going to be 
requirements, expectations of the consumer that is going to 
drive the market in a direction. I do not think that the 
government necessarily needs to try to do that and try to get 
involved. That will take care of itself.
    I think that where government can actually be of benefit, 
two areas. One is standardization. For instance, we have 
multiple metrics out there that may be required. One chain 
store may require this one. We go through a prime slabs. There 
are others. There is EuroGAP, GAP. I mean, the list goes on and 
on and on about the metrics.
    We could be required by one store to have this set and by 
another store to have this set. So when you get duplication, 
that in itself can create problems. So some standardization, 
you know, would be of great benefit to the industry.
    Another thing that food safety does and being able to 
document the process of which you have grown and processed 
fruit, it is beneficial whenever you do have scares to be able 
to basically show your innocence, that there is not a trace-
back to your farm or to your facility, and so that can be very 
beneficial.
    But the biggest thing still that concerns me is the way 
that that is done in terms of recall and not being science 
based because that is just hugely devastating to an industry. 
We have seen it time and time again. We go back to in the '80s 
apples with alar. We have seen the recent tomato deal, and we 
can go on and on and on and on, and generally speaking, 
whenever we have those recalls, it has not been very science 
based.
    Yes, people have gotten sick, and there have been reasons. 
More often than not, it comes imported product, not 
domestically grown product, and we just need to be very 
cautious in that area, and I think the government can help by 
exercising some science based data whenever this happens.
    Mr. Luetkemeyer. We will indulge the Chairman here for how 
long to go with this. How long do you want to allow the 
comments to continue?
    Chairman Shuler. Let's let Mr. Hudgins response.
    Mr. Luetkemeyer. Mr. Hudgins? Okay. Go ahead.
    Mr. Hudgins. Thank you.
    I would like to echo some of Mr. Barnwell's comments. As I 
speak right now, some of our California peaches are on their 
way to Gerber, and obviously, we have a very great awareness of 
the importance of food safety for product that is going into 
baby food use.
    I can also say that there has never been a single 
documented case of a food borne illness that has been 
attributed back to a canned fruit item in this country. So we 
look at the food safety legislation that is under consideration 
today and say that it certainly represents an improvement over 
where the discussion started, but clearly NCFC would have a 
concern with regard to facility fees which essentially would be 
a tax on our member producers with, again, very limited ability 
to pass along those costs in the marketplace.
    I would also echo Mr. Williams' comment that in our world, 
in the peach industry what we have seen is a dramatic increase 
in the imported product entering this country and would hope 
that the same scrutiny and the same level of certification 
would go into verifying the safety of those products because in 
the end if there is a problem with a consumer, no one is going 
to read the fine print to say where did that product come from. 
It is going to be there was a food safety problem relative to 
the canned peach, and no one will look at where that product 
originated form.
    Mr. Luetkemeyer. Very good. Thank you.
    Chairman Shuler. Thank you. I want to thank all of the 
witnesses for their testimony today, and I look forward to 
working with my colleagues to address any issues that may have 
arisen today.
    I ask unanimous consent that the record be open for five 
days for members to submit their statement. Hearing no 
objection, so ordered.
    This hearing is adjourned.
    [Whereupon, at 12:03 p.m., the Subcommittee meeting was 
adjourned.]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 
