[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW U.S. AGRICULTURE POLICY
IN ADVANCE OF THE 2012 FARM
BILL
=======================================================================
HEARINGS
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
----------
APRIL 30, 2010, DES MOINES, IA
MAY 1, 2010, NAMPA, ID
MAY 3, 2010, FRESNO, CA
MAY 4, 2010, CHEYENNE, WY
MAY 14, 2010, MORROW, GA
MAY 15, 2010, TROY, AL
MAY 17, 2010, LUBBOCK, TX
MAY 18, 2010, SIOUX FALLS, SD
JUNE 28, 2010, FAYETTEVILLE, NC
----------
Serial No. 111-48
----------
Part 2 (Final)
----------
Printed for the use of the Committee on Agriculture
agriculture.house.gov
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
=======================================================================
HEARINGS
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
APRIL 30, 2010, DES MOINES, IA
MAY 1, 2010, NAMPA, ID
MAY 3, 2010, FRESNO, CA
MAY 4, 2010, CHEYENNE, WY
MAY 14, 2010, MORROW, GA
MAY 15, 2010, TROY, AL
MAY 17, 2010, LUBBOCK, TX
MAY 18, 2010, SIOUX FALLS, SD
JUNE 28, 2010, FAYETTEVILLE, NC
__________
Serial No. 111-48
__________
Part 2 (Final)
__________
Printed for the use of the Committee on Agriculture
agriculture.house.gov
----------
U.S. GOVERNMENT PRINTING OFFICE
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Washington, DC 20402-0001
APRIL 30-MAY 4
COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking
Vice Chairman Minority Member
MIKE McINTYRE, North Carolina BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California SAM GRAVES, Missouri
DAVID SCOTT, Georgia MIKE ROGERS, Alabama
JIM MARSHALL, Georgia STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas
Dakota K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
JIM COSTA, California JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota DAVID P. ROE, Tennessee
STEVE KAGEN, Wisconsin BLAINE LUETKEMEYER, Missouri
KURT SCHRADER, Oregon GLENN THOMPSON, Pennsylvania
DEBORAH L. HALVORSON, Illinois BILL CASSIDY, Louisiana
KATHLEEN A. DAHLKEMPER, CYNTHIA M. LUMMIS, Wyoming
Pennsylvania ------
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho
------
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
Nicole Scott, Minority Staff Director
(ii)
?
MAY 14-MAY 18
COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking
Vice Chairman Minority Member
MIKE McINTYRE, North Carolina BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California SAM GRAVES, Missouri
DAVID SCOTT, Georgia MIKE ROGERS, Alabama
JIM MARSHALL, Georgia STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas
Dakota K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
JIM COSTA, California JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota DAVID P. ROE, Tennessee
STEVE KAGEN, Wisconsin BLAINE LUETKEMEYER, Missouri
KURT SCHRADER, Oregon GLENN THOMPSON, Pennsylvania
DEBORAH L. HALVORSON, Illinois BILL CASSIDY, Louisiana
KATHLEEN A. DAHLKEMPER, CYNTHIA M. LUMMIS, Wyoming
Pennsylvania ------
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
Nicole Scott, Minority Staff Director
(iii)
?
JUNE 28
COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking
Vice Chairman Minority Member
MIKE McINTYRE, North Carolina BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California SAM GRAVES, Missouri
DAVID SCOTT, Georgia MIKE ROGERS, Alabama
JIM MARSHALL, Georgia STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas
Dakota K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
JIM COSTA, California JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota DAVID P. ROE, Tennessee
STEVE KAGEN, Wisconsin BLAINE LUETKEMEYER, Missouri
KURT SCHRADER, Oregon GLENN THOMPSON, Pennsylvania
DEBORAH L. HALVORSON, Illinois BILL CASSIDY, Louisiana
KATHLEEN A. DAHLKEMPER, CYNTHIA M. LUMMIS, Wyoming
Pennsylvania THOMAS J. ROONEY, Florida
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
Nicole Scott, Minority Staff Director
(iv)
C O N T E N T S
----------
Page
Friday, April 30, 2010
King, Hon. Steve, a Representative in Congress from Iowa, opening
statement...................................................... 289
Latham, Hon. Tom, a Representative in Congress from Iowa......... 290
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 288
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 287
Prepared statement........................................... 288
Witnesses
Bailey, Varel G., corn, soybean, grass, pork, cattle, and sheep
producer, Anita, IA............................................ 291
Prepared statement........................................... 293
.................................................................
Bayliss, Richard D., corn and soybean producer, Ottumwa, IA...... 296
Prepared statement........................................... 299
Lang, Dane M., dairy, corn, and soybean producer, Brooklyn, IA... 301
Prepared statement........................................... 302
Volz, Nick, corn, soybean, and pork producer, Elkhart, IA........ 306
Prepared statement........................................... 307
Weems, Darrell, cattle, corn, and soybean producer, Earlham, IA.. 307
Prepared statement........................................... 309
Erickson, Warren, dairy processor, Des Moines, IA................ 324
Prepared statement........................................... 326
Schaben, Jr., Jim W., livestock operator, Lamoni, IA............. 328
Prepared statement........................................... 329
Skow, Bob, crop insurance agent representative, West Des Moines,
IA............................................................. 330
Prepared statement........................................... 332
Stroburg, Jeff, grain and input cooperative operator, Ralston, IA 334
Prepared statement........................................... 336
Submitted Material
Freise, Brian, President, AgPerspective Inc., submitted letter... 353
Kubik, David, President, Iowa State Association of Assessors,
submitted letter............................................... 355
Shaw, Monte, Executive Director, Iowa Renewable Fuels
Association, submitted letter.................................. 355
Vierkandt, Kevin, farmer, Alden, IA, submitted statement......... 357
Saturday, May 1, 2010
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 369
Minnick, Hon. Walt, a Representative in Congress from Idaho,
opening statement.............................................. 366
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 365
Prepared statement........................................... 365
Simpson, Hon. Michael K., a Representative in Congress from Idaho 367
Witnesses
Brossy, Fred, organic wheat, bean, potato, and hay producer,
Shoshone, ID................................................... 370
Prepared statement........................................... 372
Brown, Scott W., wheat and barley producer, Soda Springs, ID..... 374
Prepared statement........................................... 376
Gross, Doug, potato producer, Wilder, ID......................... 379
Prepared statement........................................... 381
Henggeler, Kelly R., apple, plum, and peach producer and packer,
Fruitland, ID.................................................. 382
Prepared statement........................................... 384
Lee, Galen, sugarbeet, mint, asparagus, hay, grain, corn, and
cattle producer, New Plymouth, ID.............................. 386
Prepared statement........................................... 388
Kernohan, Brian J., forestry producer, Coeur d'Alene, ID......... 399
Prepared statement........................................... 401
Bitner, Ron M., winegrape producer and vintner, Caldwell, ID..... 418
Prepared statement........................................... 419
Lyons, Charles, cattle producer, Mountain Home, ID............... 420
Prepared statement........................................... 422
Boer, Adrian, dairy producer, Jerome, ID......................... 424
Prepared statement........................................... 426
Siddoway, Cindy, lamb producer, Terreton, ID..................... 430
Prepared statement........................................... 431
Submitted Material
Evans, Jim, Past Chairman, USA Dry Pea & Lentil Council,
submitted statement............................................ 445
Freeman, Sid, farmer, Caldwell, ID, submitted letter............. 446
Monday, May 3, 2010
Cardoza, Hon. Dennis A., a Representative in Congress from
California, opening statement.................................. 453
Costa, Hon. Jim, a Representative in Congress from California,
opening statement.............................................. 452
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 450
Nunes, Hon. Devin, a Representative in Congress from California.. 497
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 449
Prepared statement........................................... 450
Witnesses
Bledsoe, Walter James, dairy producer, Riverdale, CA............. 454
Prepared statement........................................... 457
Campos, Tony, almond producer, sheller and shipper, Caruthers, CA 462
Prepared statement........................................... 464
Diener, John E., almond, grape, wheat, alfalfa, sugarbeet,
tomato, and spinach producer, Five Points, CA.................. 465
Prepared statement........................................... 467
Kester, Kevin D., cattle and grape producer, Parkfield, CA....... 470
Prepared statement........................................... 471
Supplementary material....................................... 538
Reelhorn, Jon, nursery plant producer, wholesaler, and retailer,
Fresno, CA..................................................... 473
Prepared statement........................................... 474
Rehermann, Frank, rice producer, Live Oak, CA.................... 480
Prepared statement........................................... 482
Roberts, David, orange, lemon, and grapefruit producer, Visalia,
CA............................................................. 502
Prepared statement........................................... 504
Strachan, Jamie, vegetable producer and shipper, Salinas, CA..... 506
Prepared statement........................................... 508
Teixeira, John M., organic tomato, eggplant, bell pepper, melon,
and corn producer, Firebaugh, CA............................... 509
Prepared statement........................................... 512
Van Konynenburg, Paul J., peach, apple, cherry, apricot, almond,
and walnut producer, Modesto, CA............................... 514
Prepared statement........................................... 516
Parnagian, Justin, peach, nectarine, plum, grape, apricot, and
citrus producer, packer and shipper, Fresno, CA................ 518
Prepared statement........................................... 519
Submitted Material
Bengyel, Alan J., City Manager, City of Orange Cove, California,
submitted letter............................................... 531
Boyer, Paul, Community Development Manager, Self-Help
Enterprises, submitted statement............................... 531
Lane, Hon. Mike, Council Member, Visalia City Council, State of
California; Management Analyst, Self-Help Enterprises,
submitted statement............................................ 533
Kriebel, Barry F., President, Sun-Maid Growers of
California, submitted letter..................... 534
Marchini, Jeff, President, Merced County Farm Bureau, submitted
letter......................................................... 536
Mendes, Anthony R., Chairman of the Board, California Dairies,
Inc., submitted letter......................................... 536
Tuesday, May 4, 2010
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma,
opening statement.............................................. 542
Lummis, Hon. Cynthia M., a Representative in Congress from
Wyoming, opening statement..................................... 543
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 541
Prepared statement........................................... 542
Witnesses
Crapser, Bill, Forester, State of Wyoming, Cheyenne, WY.......... 544
Prepared statement........................................... 546
Cables, Rick, Regional Forester, Rocky Mountain Region, U.S.
Forest Service, U.S. Department of Agriculture, Golden, CO;
accompanied by Phil Cruz, Deputy Forest Supervisor, Medicine
Bow-Routt National Forest, U.S. Forest Service, USDA........... 548
Prepared statement........................................... 550
Submitted report............................................. 701
Fishering, Nancy M., forest products producer, Montrose, CO...... 584
Prepared statement........................................... 586
Cooksey, Jerry, wheat producer, Roggen, CO....................... 598
Prepared statement........................................... 600
Driskill, Ogden, cattle and buffalo producer, Devil's Tower, WY.. 602
Prepared statement........................................... 603
Hardesty, Les, dairy producer, Greeley, CO....................... 605
Prepared statement........................................... 606
Snyder, Jr., John W., sugarbeet producer, Worland, WY............ 608
Prepared statement........................................... 610
Sun, Dennis, cattle producer, Casper, WY......................... 620
Prepared statement........................................... 621
Submitted Material
Coose, Dick, Retired Forest Service Employee, Ketchikan, AK,
submitted statement............................................ 633
Cundall, Larry, rancher, Platte County, WY, submitted statement.. 636
Galey, Ph.D., Frank, Dean, UW College of Agriculture and Natural
Resources; and Chair, Consortium for the Advancement of
Brucellosis Science, submitted letter.......................... 636
Hamilton, Ken, Executive Vice President, Wyoming Farm Bureau
Federation, submitted letter................................... 637
Haynes M.D., Taylor H., President, Independent Cattlemen of
Wyoming; Board Member and Director Region II R-CALF--USA,
submitted letter............................................... 638
Hellyer, Martha N., Hellyer Limited Partnership, Lander, WY,
submitted e-mail............................................... 686
Larson, Carl A., sheep rancher, Summit County, UT, submitted
statement...................................................... 686
LeResche, Robert, Chair, Powder River Basin Resource Council,
submitted letter............................................... 687
Merrill, Alan, President, Montana Farmers Union, submitted
statement...................................................... 688
O'Toole, Patrick, President of the Board, Family Farm Alliance,
submitted statement............................................ 690
Paxton, Jerry D., Commissioner, Carbon County, WY; Member, Public
Lands Committee, Wyoming County Commission, submitted letter... 699
Friday, May 14, 2010
Bishop, Jr., Hon. Sanford D., a Representative in Congress from
Georgia........................................................ 747
Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
opening statement.............................................. 745
Marshall, Hon. Jim, a Representative in Congress from Georgia,
opening statement.............................................. 747
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 743
Prepared statement........................................... 743
Scott, Hon. David, a Representative in Congress from Georgia,
opening statement.............................................. 744
Witnesses
Angle, Ph.D., J. Scott, Dean and Director, College of
Agricultural and Environmental Sciences, University of Georgia,
Athens, GA..................................................... 749
Prepared statement........................................... 752
Latimore, Jr., Dr. Mark, Interim Dean, College of Agriculture,
Home Economics and Applied Programs, Fort Valley State
University, Fort Valley, GA.................................... 755
Prepared statement........................................... 757
McMurray, Gary, Chief, Food Processing Technology Division,
Georgia Tech Research Institute, Atlanta, GA................... 769
Prepared statement........................................... 771
Farris, Robert, Director, Georgia Forestry Commission, Dry
Branch, GA..................................................... 773
Prepared statement........................................... 775
Bell III, William A. ``Andy'', cotton, peanut, corn, and cattle
producer, Climax, GA........................................... 790
Prepared statement........................................... 791
Duval, Vincent ``Zippy'', cattle and poultry producer, Macon, GA. 792
Prepared statement........................................... 794
Lee, Ronnie, cotton producer, Bronwood, GA....................... 796
Prepared statement........................................... 797
Minor, Richard ``Dick'', fruit and vegetable producer,
Andersonville, GA.............................................. 800
Prepared statement........................................... 801
Morris, Armond, peanut producer, Ocilla, GA...................... 806
Prepared statement........................................... 808
Segler, Hilton R., pecan producer, Albany, GA.................... 812
Prepared statement........................................... 813
Williams, James ``Ricky'', dairy producer, Baxley, GA;
accompanied by Sam Stone....................................... 816
Prepared statement........................................... 816
Saturday, May 15, 2010
Bright, Hon. Bobby, a Representative in Congress from Alabama,
opening statement.............................................. 842
Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
opening statement.............................................. 844
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 841
Prepared statement........................................... 842
Rogers, Hon. Mike, a Representative in Congress from Alabama,
opening statement.............................................. 845
Witnesses
Bell, Andrew P., cotton, corn, soybean, cattle, and hay producer,
Tallassee, AL.................................................. 846
Prepared statement........................................... 847
Esposito, Edward D., specialty crop, corn, and potato producer,
Newville, AL................................................... 859
Prepared statement........................................... 860
Mencer, Joe, rice, cotton, corn, soybean, and wheat producer,
Lake Village, AR............................................... 861
Prepared statement........................................... 862
Sanders, Carl, peanut, corn, cotton, and cattle producer,
Brundidge, AL.................................................. 867
Prepared statement........................................... 869
Waide, David W., corn, soybean, and rice producer, Jackson, MI... 871
Prepared statement........................................... 873
Dewberry, Lamar, forestry producer, Lineville, AL................ 889
Prepared statement........................................... 891
Gibbs, Doug, beef producer, Ranburne, AL......................... 892
Prepared statement........................................... 895
Taylor, Ph.D., P.E., Steven, Professor and Head, Biosystems
Engineering Department, Auburn University, Auburn, AL.......... 897
Prepared statement........................................... 899
Wiggins, Ricky, cattle, cotton, and peanut producer, Andalusia,
AL............................................................. 901
Prepared statement........................................... 903
Submitted Material
Williams, Hal, farmer, Luverne, AL, submitted statement.......... 915
Monday, May 17, 2010
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 920
Cuellar, Hon. Henry, a Representative in Congress from Texas,
opening statement.............................................. 920
Neugebauer, Hon. Randy, a Representative in Congress from Texas,
opening statement.............................................. 918
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 917
Prepared statement........................................... 918
Submitted statement on behalf of Texas Sheep and Goat
Producers Association.................................. 1023
Witnesses
Bouma, Brad, dairy producer, Plainview, TX....................... 921
Prepared statement........................................... 923
Grissom, Jimmie ``Jimbo'', peanut producer, Seminole, TX......... 933
Prepared statement........................................... 934
Lackey, John, citrus producer, Weslaco, TX....................... 936
Prepared statement........................................... 937
Holt, Ronnie, cotton, corn, and sorghum producer and crop
insurance agent, Muleshoe, TX.................................. 939
Prepared statement........................................... 940
Parker, Jr., Joe, cattle producer, Byers, TX..................... 945
Prepared statement........................................... 947
Murden, Dale, sugarcane, citrus, vegetable, soybean, and sorghum
producer, Monte Alto, TX....................................... 949
Prepared statement........................................... 951
Brown, Billy Bob, irrigated and dryland wheat, sorghum, and beef
producer, Panhandle, TX........................................ 976
Prepared statement........................................... 977
Supplemetary material........................................ 1030
Heffington, Brad, cotton, corn, and sorghum producer,
Littlefield, TX................................................ 979
Prepared statement........................................... 981
Cleavinger, David, wheat, corn, cotton, and grain sorghum
producer, Wildorado, TX........................................ 985
Prepared statement........................................... 987
Raun, Jr., Lowell G., rice producer, El Campo, TX................ 990
Prepared statement........................................... 992
Schniers, Doyle, cotton producer, San Angelo, TX................. 997
Prepared statement........................................... 999
Smith, Dan, sorghum producer, Lockney, TX........................ 1000
Prepared statement........................................... 1002
Vaughan, Dee, corn, soybean, wheat, cotton, and sorghum producer,
Dumas, TX...................................................... 1004
Prepared statement........................................... 1007
Submitted Material
Darneille, Wallace L., President & CEO, Plains Cotton Cooperative
Association, submitted letter.................................. 1023
Fish, David, CEO, Breedlove Foods Inc., submitted statement...... 1025
King, Hon. Susan L., Representative, State of Texas, submitted
statement...................................................... 1025
McGarraugh, Scott, President, Texas Wheat Producers Association,
submitted statement............................................ 1026
Rapier, Joe, Chairman, Lubbock Chamber of Commerce, submitted
statement...................................................... 1029
Tuesday, May 18, 2010
Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
opening statement.............................................. 1035
Herseth Sandlin, Hon. Stephanie, a Representative in Congress
from South Dakota, opening statement........................... 1034
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 1033
Prepared statement........................................... 1033
Witnesses
Duffy, Gary, corn, soybean, wheat, alfalfa, hog, and beef
producer, Oldham, SD........................................... 1036
Prepared statement........................................... 1039
Gangwish, Rodney K., irrigated corn, and soybean producer,
Shelton, NE.................................................... 1040
Prepared statement........................................... 1042
Sombke, Doug, corn, wheat, soybean, and beef producer, Conde, SD. 1044
Prepared statement........................................... 1045
Masat, Steve, wheat, corn, soybean, hay, and livestock producer,
Redfield, SD................................................... 1047
Prepared statement........................................... 1048
Scott, Kevin, soybean, corn, and hog producer, Valley Springs, SD 1049
Prepared statement........................................... 1051
Wolle, Matthew J., corn, soybean, and livestock producer,
Madelia, MN.................................................... 1052
Prepared statement........................................... 1053
VanderWal, Scott, corn, soybean, small grain, and beef producer,
Volga, SD...................................................... 1054
Prepared statement........................................... 1056
Hallberg, David E., biofuels representative, Omaha, NE........... 1076
Prepared statement........................................... 1077
Weishaar, Scott, biofuels representative, Sioux Falls, SD........ 1083
Prepared statement........................................... 1085
Neiman, Jim D., forest product producer, Hulett, WY.............. 1089
Prepared statement........................................... 1090
Kephart, Ph.D., Kevin D., Vice President for Research, and Dean,
Graduate School, South Dakota State University, Brookings, SD.. 1103
Prepared statement........................................... 1104
Submitted Material
Kieffer, Paul, farmer, Sturgis, SD, submitted statement.......... 1119
Kieffer, Richard W., alfalfa producer, Sturgis, SD, submitted
statement...................................................... 1120
Kloucek, Hon. Frank J., Senator, State of South Dakota, submitted
statement...................................................... 1121
Naasz, Kraig R., President & CEO, American Frozen Food Institute,
submitted statement............................................ 1124
Renelt, Richard, pork and grain producer, South Dakota, submitted
statement...................................................... 1125
Nestle USA, submitted statement.................................. 1126
Trego, Keith, Northern Great Plains Working Group, submitted
letter......................................................... 1129
Monday, June 28, 2010
Etheridge, Hon. Bob, a Representative in Congress from North
Carolina....................................................... 1136
Kissell, Hon. Larry, a Representative in Congress from North
Carolina, opening statement.................................... 1135
McIntyre, Hon. Mike, a Representative in Congress from North
Carolina, opening statement.................................... 1133
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 1134
Witnesses
Allen, Ronald J., row crop, timber, pork, poultry, and beef
producer, Fayetteville, NC..................................... 1139
Prepared statement........................................... 1140
Burke, W. Steven, biofuels representative, Oxford, NC............ 1142
Prepared statement........................................... 1144
Lee, Frank, corn, cotton, wheat, soybean, and beef cattle
producer, Norwood, NC.......................................... 1147
Prepared statement........................................... 1149
McLaurin, Allen, cotton producer, Laurinburg, NC................. 1150
Prepared statement........................................... 1152
Woodie, Patrick, rural economic development representative,
Raleigh, NC; on behalf of Billy Ray Hall....................... 1163
Prepared statement of Billy Ray Hall, rural economic
development representative, Raleigh, NC.................... 1165
Jones, Randall, electric cooperative representative, Red Springs,
NC............................................................. 1170
Prepared statement........................................... 1172
Porter, Jr., Thomas ``Tommy'' E., pork, beef, and poultry
producer, Concord, NC.......................................... 1173
Prepared statement........................................... 1173
Ward, Dan, peanut producer, Clarkton, NC......................... 1175
Prepared statement........................................... 1176
Submitted Material
Johnson-Langdon, Sue, Executive Director, North Carolina
SweetPotato Commission, Inc., submitted statement.............. 1191
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
----------
FRIDAY, APRIL 30, 2010
House of Representatives,
Committee on Agriculture,
Des Moines, IA
The Committee met, pursuant to call, at 1:00 p.m., at the
Iowa State Fair Grounds, Penningroth Sale Center, Des Moines,
Iowa, Hon. Collin C. Peterson [Chairman of the Committee]
presiding.
Members present: Representatives Peterson, Boswell, Herseth
Sandlin, Costa, Lucas, and King.
Staff present: Nicole Scott, Pelham Straughn, John Konya,
Keith Jones, Anne Simmons, Robert L. Larew, Lisa Shelton, and
Jamie Mitchell.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
The Chairman. Well, thank you, Chairman Boswell for
inviting us to your city and we appreciate your leadership on
the Committee. Chairman Boswell is Chairman of our General Farm
Commodities and Risk Management Subcommittee. He does a great
job for us and we appreciate his work, we appreciate being here
in his district.
This hearing of the Committee on Agriculture to review U.S.
Agriculture policy in advance of the 2012 Farm Bill will come
to order. And good afternoon to everybody. I thank you for
joining us today.
We're glad to be here, as I said, in Des Moines to hear
from area farmers and ranchers about the issues facing
agricultural and rural communities. As we demonstrated in 2008,
the farm bill is about much more than just farms. We continued
the safety net that protects farmers and ranchers and provides
the certainty that they rely on to stay in business. We also
made historic investments in nutrition, conservation, and
renewable energy, we began to research rural development,
fruits and vegetables and organic agriculture.
While traditional farm programs have a relatively small
portion of the funding, these programs are essential for the
continuing success of U.S. agriculture. We have a system of
independent farmers and ranchers working the land, and without
the certainty the farm bill programs provide, these farmers
would not be able to get the financing that they would need to
put the crops in the ground.
I want to welcome our witnesses here today and thank them
for taking the time out of their busy time of year, to talk to
us today. The farm bill hearings are the first step in the
process of writing the next farm bill. A bill this large that
covers so many important issues, takes a lot of time and effort
to get it right. So, I am committed to the process as I was
last time that it be open, transparent, and bipartisan. So, for
all those that are joining us here in the audience today, I
hope that you will also participate by sharing your thoughts on
the farm bill with us.
We have a survey posted on our Committee website, and I
think we have some cards around that have the web address on
there and so forth. So, anybody can have a chance to tell the
Committee about what's working with the farm bill and what
isn't working, any new ideas that they'd like us to consider
for the next farm bill, and we are also web-casting this
hearing. I think that's the first time that that's been done at
a field hearing. So people around the country that are
interested will be able to join us today over the Internet and
follow this hearing.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon, and thank you for joining us for today's House
Agriculture Committee hearing. We are glad to be here in Nampa to hear
from area farmers and ranchers about the issues facing agriculture and
rural communities.
As we demonstrated in 2008, the farm bill is about much more than
just farms. We continued the safety net that protects farmers and
ranchers and provides the certainty they rely on to stay in business.
But we also made historic investments in nutrition, conservation,
renewable energy, research, rural development, fruit and vegetable
products, and organic agriculture.
While traditional farm programs have a relatively small proportion
of funding, these programs are essential to the continuing success of
U.S. agriculture. We have a system of independent farmers and ranchers
working the land, and without the certainty that farm programs provide,
these farmers would not be able to get the financing that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking time out
of this busy time of year to talk to us today. These farm bill hearings
are the first step in the process of writing the next farm bill. A bill
this large and that covers so many important issues takes a lot of time
and effort to get it right, and I am committed to a process that is
open, transparent, and bipartisan.
For all those joining us today in the audience, I hope that you
will also participate in this process by sharing your thoughts on the
farm bill with us. We have a survey posted on our Committee website,
and we have cards available today with that web address so that
everyone has a chance to tell the Committee about what is working and
what new ideas we should consider for the next farm bill.
We have a lot of ground to cover, so let's get started.
The Chairman. We have a lot of ground to cover, so let's
get started with the Ranking Member, Mr. Lucas, we'd appreciate
a statement from you.
OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA
Mr. Lucas. Thank you, Mr. Chairman. I want to thank you for
calling these hearings and being so proactive in preparation
for the debate that we will have on future farm policy in the
2012 Farm Bill.
We have an extremely difficult road ahead of us, but one
thing I do look forward to is listening to our producers. I get
to hear from my own producers every time I step in the coffee
shop or the feed store back home, or conduct my town hall
meetings across the third district of Oklahoma. I think it's
vitally important to hear from producers from a broad range of
places that grow and raise a broad range of products.
My goal for the next farm bill is simple. I want to give
producers the tools to help them do what they do best, and that
is produce the safest, most abundant, most affordable food
supply in the history of the world. I think it's extremely
important to hear from them about what is working, what is not
working, what changes we can make to the farm bill to allow it
to work in a more efficient fashion.
The 2008 Farm Bill was another investment in the future of
rural America, not only did we provide a viable safety net for
producers, but we also made substantial investments in
conservation and nutrition programs during a time of need for
many Americans. A lot of people do not realize, and some even
forget, we should all remember that 75 percent of the farm bill
spending goes to nutrition programs.
In addition to those investments, this Committee led by
Chairman Peterson accomplished substantial reforms, especially
in the realm of payment limits. This is a fact that should not
be forgotten by those who always seem ready to attack our
programs.
Last week during a hearing in Washington, I was concerned
the Administration's priorities seemed to differ so greatly
from my producers' priorities. There was barely a mention of
the safety net, conservation program, or any of the programs I
hear about from my producers. I think it's imperative that
Congress work together with the Administration to come up with
a workable solution for the many problems our rural communities
face, but first this Administration must prove its commitment
to production ag. I also want to hear today about some
impediments that you face when you bring your crops to market,
and see if we can help alleviate some of those impediments.
I have serious concerns about the effect of an overreaching
EPA and what it will have on you. It seems every day the EPA is
coming out with a new regulation that makes it harder for
producers to make a living. Can we do something about those
impediments, or at least give you the tools that help mitigate
some of the adverse effects to these regulations?
With that said, I look forward to hearing from all of our
witnesses today and again, thank you, Mr. Chairman, for taking
this to the country.
The Chairman. We have--we normally have other Members
submit their statements for the record, but today since we have
other distinguished Members from Iowa, we'll recognize them for
a brief statement. Mr. King is a Member of the Committee. Did
want to welcome your constituents?
OPENING STATEMENT OF HON. STEVE KING, A REPRESENTATIVE IN
CONGRESS FROM IOWA
Mr. King. Thank you, Mr. Chairman.
I appreciate the opportunity to be recognized, and I thank
you for bringing this hearing to Iowa. You and Mr. Boswell
teamed up with my colleague to my left Tom Latham to help bring
this hearing here to Iowa. And I'm proud to show off who we are
here in Iowa to the balance of the Committee.
I'm looking forward to the testimony from all the
witnesses. I think we've come a long way in the last twenty or
twenty-five years in agriculture, and I've been able to be part
of and witness a lot of that, and I'm looking forward to the
testimony of the witnesses.
And when I looked out of the plane coming in here, I had to
look down and it would seem odd not to see a lot of snow from
the sky, but it was nice to see fresh green grass, so thanks,
Mr. Chairman, and I will yield back the rest of my time.
The Chairman. Well, thank you very much, Mr. King, we
appreciate that.
We're also joined today, and I have some paperwork I have
to take care of here, Tom. The gentleman from Iowa, Mr. Latham,
is not a Member of this Committee, but is joining us today. I
have consulted with the Ranking Member, and we are pleased to
welcome him to joining us in this hearing. Mr. Latham is not a
Member of our Committee, but we work with him on a regular
basis because of his position on the Appropriations Committee;
how that interacts with a lot of what we do on the Agriculture
Committee.
He's, like I said, a good friend of mine and we work
together on a lot of things on a bipartisan basis. I think Mr.
Lucas would say the same.
Mr. Latham, we appreciate you being here. We would like to
give you an opportunity to say a few words, and I understand
you have some other commitments so you may not be able to be
here the whole time, but we really appreciate you making the
effort to be with us for a while.
STATEMENT OF HON. TOM LATHAM, A REPRESENTATIVE IN CONGRESS FROM
IOWA
Mr. Latham. Well, thank you very much, Chairman Peterson,
it's strange to call you that. Thank you for allowing a lowly
appropriator to come and join the esteemed authorizing
committee, and I thank Mr. Lucas for also allowing me to be
here. I wish he would take that Oklahoma State jacket off, but
anyway, we are very good friends. Okay. Ken up there is an Okie
guy.
Anyway, I really appreciate all the Committee Members being
here in Iowa. It is important to know, for Mr. Costa from
California, and for others, to understand what Iowa's about. We
are very modest people here, generally speaking. I think it's
somewhat of our northern European ancestry, Lutheran like
myself, we just don't brag much, but the fact that we're
blessed with abundance here. We have 25 percent of the Grade A
farmland in the world. We're number one as far as corn,
soybeans, pork, and egg production here. We are leaders
obviously in beef, renewable energy with ethanol, and used to
make biodiesel. We have a remarkable place here with the
abundance like no other place in the world.
The reason I think it's so important to have this type of
hearing this early is that we're going to have tremendous
challenges. As Mr. Lucas said, they really shouldn't call it a
farm bill, they should call it a food bill or a feeding bill
because that's where almost all the money goes in a farm bill.
We have a lot of challenges, obviously, with the new farm bill.
The fact of the matter is the implementation hasn't occurred
yet on the last farm bill in a lot of different areas, which is
very frustrating for a lot of folks.
And there are some people, in the Administration, that want
to reopen the previous farm bill before it's fully implemented,
as far as different aspects and payment limitations, things
like that. We're going to have a lot of challenges with climate
change, the idea of indirect land use, all of those things, the
challenges we have today with EPA and how they want to take
over a lot more control in agriculture. And that's why this is
a 900 pound gorilla, with the budget deficit and what funds are
going to be available for us to write into the next farm bill.
The farm bill before the last one I thought was upside down
because the whole discussion was on how much money was going to
be available, and then we found that out and tried to insert
policy. The last farm bill and the Chairman's--I'm very
grateful that the way he did it was to put policy in place and
have the money follow it. That is the way this should be done,
and that's why this hearing is so important today to start to
get a grasp on what the real policy things in varied type of
budgets in the future.
So with that, thank you very much for the opportunity, and
I apologize I'm going to have to leave a little bit early, but
thank you very much, Mr. Chairman.
The Chairman. I thank the gentleman, for the statement and
thank you for being with us today.
So we'd like to welcome our first panel of witnesses.
You've been very patient coming up with us here, being part of
the process, I think you all have been through it before: Mr.
Varel Bailey, corn, soybean, grass, pork, cattle, and sheep
producer from Anita, Iowa; Mr. Richard Bayliss, corn and
soybean producer from Ottumwa, Iowa; Mr. Dane Lange, dairy
farm, and soybean producer from Brooklyn, Iowa; Mr. Nick Volz,
corn, soybean, and pork producer from Elkhart, Iowa; and Mr.
Darrell Weems, cattle, corn, and soybean producer from Earlham,
Iowa.
Mr. Bailey, welcome to the Committee and your statement
will be made part of the record, and we're going to try to keep
the statements to 5 minutes if we can. We don't have a timer
here, I guess. Oh, we do. Okay. Good.
I want to announce we had a hearing here, the first hearing
we had on the farm bill with the Secretary, some of the Members
figured out something, so they started asking--this is not
aimed at you guys at all, but they started asking three
questions at the beginning of their time and then the answers
took 10 minutes. So we're going to have a new rule that you can
ask one question at a time, and when the light is yellow you
can't ask another question. So we'll try to hold everybody to
the time frame if we can.
Mr. Lucas, I think we can agree, so that everybody gets a
chance to say their piece and have time for questions.
Mr. Bailey, thanks, for being here.
STATEMENT OF VAREL G. BAILEY, CORN, SOYBEAN, GRASS, PORK,
CATTLE, AND SHEEP PRODUCER, ANITA, IA
Mr. Bailey. Mr. Chairman, thank you very much.
The Chairman. You have to talk right into the microphone in
order for it to work. There you go.
Mr. Bailey. Mr. Chairman, Members of the Committee, first
of all I want to congratulate you for starting these hearings
at this time, and part of the reason is that things are
changing very rapidly out here. Keeping Washington informed as
to what's really going on out here is continuously a challenge.
So, again, we appreciate it.
I ask that my written testimony be included in the record,
and I'd like to speak just off the record, here on the record,
but informally.
First of all, I'd like to say, that the farm bill as you
folks have mentioned is more than loan rates and food stamps.
Most of us don't realize that the farm bill is actually a
contract. It's a contract between agriculture and the rest of
society. If you go back in history, you'll find that all
societies, all cultures have a contract, and that is a level of
trust. It's actually a covenant between the people that produce
the food, feed, fiber, and fuel for the general public and the
rest of that culture. If that erodes, if that trust breaks down
between the farmers, the agriculture, and the rest of the
culture, governments are overthrown and cultures die.
Jared Diamond has written a series of books on that, and we
are lucky here in the United States in that we have a farm
bill, and it's continuously renewed and that actually
formalizes that contract between society and agriculture. Now,
it's really critical because no society in the history of the
world has ever had the extreme situation of two percent of the
people supplying 98 percent of the people and exports in excess
of that. So our challenge here, our job here is really a lot
greater than what we realize when we look at it from that
perspective.
Now in my testimony I mention about six things and many of
them are not in the farm bill, but I think are very important,
and I listed land. I listed site-specific research. I listed
risk mitigation, rural infrastructure, food fads, and nutrition
and agricultural structure and market fairness.
In covering land, I listed the issue and said that we have
a loss of agricultural land. We have a need for technology for
land reclamation and improvement. We have 30 million acres,
over 30 million acres in the CRP and other government land
programs. I'm not sure that we're fully utilizing, from a
public policy perspective, what we could be doing with that
land and improving it and--because it appears in the future
that we'll probably need to bring that land back into
production with site-specific research. With globalization and
everything else, every farm is in direct competition with every
other farm around the world, and the point is that our long-
term survival as a farmer hinges on a steady stream of site-
specific research.
Agriculture and politics are similar in the fact that we're
both local and the research done in other places in the world
don't necessarily always do good for me on my farm.
I'm not sure that we did the right thing with the National
Institute of Food and Agriculture because we pulled the
decision-making from agricultural research to Washington D.C.,
and pulled it away from the land here at universities. And so
this is an issue that I think we need to take a look at.
Risk Mitigation: We have an aggressive program with crop
insurance. We need to continue to review that. The Center for
Agriculture and Rural Development at Iowa State University has
done an extensive study on the subsidized crop insurance, and
we need to take a good hard look at it. I would suggest we pull
money, some of the subsidy out of that and rework the ACRE
program and make it more workable.
Rural infrastructure, and I'll tick off some things that we
need to take a look at. One is a problem in broadband. We have
a problem in electricity transmission. The fact that we farmers
have problems getting our electricity onto the national grid,
and that's a bureaucratic problem, really not a physical
problem.
We have a pending problem of the global positioning system,
and many of us rely on that system for our planting and
spraying and other kinds of site identification. A number of
farmers are now actually buying Russian equipment, so we have a
backup system because there's a question as how reliable the
U.S. GPS system is going to remain.
We've got another problem with the cellular system. If you
go to Europe and you get a European cell phone, it will work
anywhere instead of near three towers along the interstate.
There is only one because they have a completely unified
cellular system, and we need a universal cellular system here
in the United States.
And foods, fads, and nutrition, I mentioned here the fact
that we have through the food stamp system the world's largest
nutritional data center. I'm not sure that we're working with
that data set, especially with the healthcare bill and
everything. USDA needs to take a look at what we're doing with
all that information coming off of the scanners and everything
with the food situation. We have the data there if we simply
use it.
An agricultural structure, oligopoly and market forces, I'd
just simply say that I really encourage this Committee to
reinforce USDA's effort with the Department of Justice to take
a good hard look at the changes taking place in agricultural
structure and those things.
So thank you very much for your time, and I would answer
any questions.
[The prepared statement of Mr. Bailey follows:]
Prepared Statement of Varel G. Bailey, Corn, Soybean, Grass, Pork,
Cattle, and Sheep Producer, Anita, IA
Testifying as an individual farmer; farming since 1966.
Observation: farm bills are like military strategy; they are
designed for the last war, not the next war.
When considering the future, I have these areas for
recommendations:
Land.
Site specific research.
Risk mitigation.
Rural infrastructure.
Foods, fads and nutrition.
Agriculture structure and market fairness.
Land
Issue: loss of agricultural land; need for technology for land
reclamation and improvement.
Land is the basic building block of agriculture. Adequate area,
quality and ecology of land are vital to the production of food, feed,
fuel and fiber and are critical to the survival of humanity. The U.S.
Government has a vital role in insuring that high quality agricultural
land is not converted to non-agricultural use. Increased emphasis on
farmland protection, more emphasis on new soil conservation
technologies and programs and new initiatives on agricultural land
reclamation around urban areas are needed.
Site Specific Research
Issue: loss of site specific research capacity while the need
becomes greater.
New emphasis on site specific research is needed to insure the
necessary increases in agricultural production to feed a hungry world.
Politics and agriculture are similar in that both are ``local.''
Globalization has changed the goals of agriculture research.
Instead of the local Land-Grant University working to perfect
technology and management systems that are unique to their area, they
and the private sector work for the ``home run'' invention that can be
sold universally. At the same time Federal funding for Land-Grant
support for Research Stations has been reduced 35% in the last decade
and Cooperative Extension support has been reduced 42%. Globalization
means every place is in direct competition with everywhere else.
Economic survival is determined by a continuous stream of site-specific
research. The last farm bill moved away from local research by
establishing the National Institute of Food and Agriculture. This
program uses large multi-state grants, with the goals set in Washington
to develop ubiquitous technology. This may seem useful from a national
perspective but it is counter to the need for local prioritized
research. The private sector cannot provide this R&D because typically
the unique market is too small. For the farmer, the private sector
``consultant'' cannot be trusted to provide unbiased information since
many times he is furnished by an input supplier. If this situation
continues, U.S. agriculture will lose its competitiveness with the rest
of the world. Creation of a site specific research system is essential
for the future of American agriculture.
Risk mitigation
Issue: need for redesign of government subsidized crop insurance
program.
Government programs provide an important role in buffering the
risks from weather disasters, market aberrations and political
irrationalities. Government must maintain the role as an insurer (for a
fee) of uncertainty and not be a driver of change. Past government
programs have enticed production into marginal areas (the corn belt
almost to Winnipeg) (milk to the desert). This is a result of a
combination of commodity programs, subsidized insurance programs and
other supports that in some areas reduce the farm risk to near zero.
Reconciliation of the programs so they provide adequate mitigation and
not a guarantee of profit are needed.
Further revisions of the agreement between RMA and the crop
insurance companies are needed. Even with the changes pending in the
negotiation, the program is a rip-off for taxpayers and transfer of
wealth from productive areas to marginal areas. That money will be
better spent in other areas.
One of the areas in need of added support is in the ACRE program.
This could simplify the program and make it workable for many more
farmers.
Rural Infrastructure
Issue: new infrastructure areas need policy development and Federal
support.
Typically when we think of infrastructure we think roads, bridges,
railroads, phone lines, locks-and-dams, USDA offices, and the Rural
Electric Co-ops. Those are all still vital but for rural America to
provide for the demands of the rest of the country and the world, we
are in a new era. World competitive Broadband communications, a
modernized electric transmission network, a quality Global Position
System signal, a unified, comprehensive cellular phone system, and a
modernized USDA computer system are some of the things rural America
needs.
Broadband: A dynamic, last-mile, high speed, high capacity
Broadband is essential for a vibrant future. ``Net neutrality'' is key
to success. Without net neutrality, the consolidating communications
industry will become gate keepers, milking profits from past
investments rather than building for the future. If government fails to
protect net neutrality it will be endorsing oligopoly or a cartel. We
went through this with land-lines in the past. We can avoid the problem
with the correct policy now.
Electric transmission network: We don't need to start with the
political battles in crossing state lines and who makes the investment.
We can start with changing the rules between REC's, their transmission
line companies and the electric generation companies. Right now it is
impossible for a farmer to build a wind turbine, generate electricity
for his local REC in excess of the need of the local substation, and
then send power back through the transmission line company to another
substation in the same REC. This is not a technical problem; it is a
bureaucratic problem. Furthermore, if a group of farmers and local
investors wish to build a wind turbine farm, they must get in the same
bureaucratic waiting line as those trying to build coal, natural gas or
nuclear power plants. Updating the rules for electric generation at the
local and regional level will greatly increase the creation of
alternative energy.
Global Positioning System: GPS has become a necessary service for
agriculture and rural America. That signal has become the meta-data
standard for farming, construction, transportation, recreation,
emergency services and many other industries. For long time users, the
signal seems to be less accurate and reliable. After the signal was
unscrambled by the military there was a period of very high precision.
Now many users are adopting RTK and CORE precision correcting systems
that correct for the lower quality service, but even these programs may
fail if the number of satellites drops too low or their signal is
corroded. USDA does not run this system but agriculture needs to
register a concern if the GPS system should fail.
Cellular telephone system: Traveling the Interstate highway in the
U.S. and then the Autobahns in Europe, there is a significant
difference in cell phone towers. In the U.S. there are normally three
or four towers clustered together. In Europe there is only one. A U.S.
based cell phone will not work in Europe. The reason is Europe has a
unified cell phone transmission system. The splinted system in the U.S.
means all the investment is in the high volume areas, leaving major
rural area with little cell phone service. This is the same story as
years ago when the land-line telephone system and the electric service
system was developed. Government must step in when the private sector
fails in delivering new technology that is essential to the economy and
society.
USDA computer system: This is long overdue.
Foods, Fads and Nutrition
Issue: massive, long term support for nutrition programs need a new
strategy.
The majority of the money spent in the farm bill is for food and
nutrition. The media is constantly full of news of obesity, hunger,
nutrition driven medical problems, fad diets, and theories about
eating. I get the opinion that the computer balanced rations I feed my
cattle, hogs and sheep provide a better level of nutrition than what
the American public eats each day. This begs a question: with the huge
level of government funds invested, the electronic Food Stamp recording
program, the demographic studies ongoing, and the massive research
effort, why is human nutrition so confusing?
My fear is that a fringe group with a secondary agenda will attempt
to use the USDA nutrition program to implement their goals. Without
sound science based information on which to base public policy, serious
damage can be caused on human health, and agriculture. The food policy
system now in place could not stop the damage done by one BSE cow,
miss-named H1N1 (swine) flu or sick poultry. It is time to allocate
funds to research what we really eat and find ways for better nutrition
to create a better life.
Agriculture Structure, Oligopoly and Market Fairness
Issue: the need for greater effort in the USDA & DOJ investigation.
Public policy changes in the past decades have radically changed
agriculture and rural America. Globalization has created a world market
and world competition. Micro-electronics, communications and the
Internet have created a world network. A world financial system moves
unlimited money around the world with a click. An imperfect
intellectual property system makes many inventions ubiquitous almost
overnight. Consolidation and vertical integration in the livestock
industry have collapsed the profit margins in livestock production. The
patenting of DNA was legalized. New methods of retailing with worldwide
supply chains have been developed. We currently have an unbalance
market place. It is unbalanced at the farm level. It is unbalanced at
the processing level and unbalanced at the retail level. Examples are:
livestock grower contracts, processor supply ownership, unbalanced
market information and artificial segmentation to stifle competition.
Machinery is designed with proprietary software to capture maintenance
business and trade territories are established to reduce market
competition. Broad intellectual property patents provide a legal
platform to shape segments of the industry and actually reduce
innovation instead of stimulating it. In pharmaceuticals, FDA
regulations are used as a weapon to stop generic products based on
inert ingredients present due to the production process. Failure of
Federal regulations to consider market balance when evaluating business
consolidation has created an agricultural structure that is very
fragile and tenuous. Rebalancing of the market is needed.
Some will say that it is impossible to put the genie back in the
bottle, but they said that about the ``trust busting'' business
conditions in 1900.
The Chairman. Thank you, Mr. Bailey, we appreciate that.
Mr. Bayliss, welcome to the Committee.
STATEMENT OF RICHARD D. BAYLISS, CORN AND SOYBEAN PRODUCER,
OTTUMWA, IA
Mr. Bayliss. First to the Committee I'd like to thank you--
--
The Chairman. You have to get a little closer, like a rock
and roll singer.
Mr. Bayliss. First to the Committee, I'd like to thank you
for this opportunity to appear before you and share with you my
thoughts on the farm bill, and its effects on our farming
operation and those in my area that I am familiar with.
My name is Richard Bayliss. Our family, my wife and I, our
two sons and their families, farm about 2,000 acres of row
crops in Wapello and Keokuk Counties in southeast Iowa. Our
farms are split just about evenly between corn and soybean
production each year, and we rotate those crops annually. We
have a combination of owned, rented, and custom farmed ground.
Our landlords include people who are elderly, but very
involved with their farms, and those who do not live near their
farm, but still take an active role in management decisions.
I also retired in 2008 after almost forty-two years in the
Iowa Army National Guard and spent calendar year 2005 in Al
Anbar Province, Iraq.
Production agriculture has become a very risky, high input,
and high-tech industry. We face many challenges daily with
changing weather, volatile markets, rapidly advancing
technology, and rising costs of production. While United States
farmers continue to feed the world, we see many young and
beginning farmers who want to enter this challenging and very
rewarding profession. Investing in farmland and machinery,
maintenance costs on both of these, and insurance to protect
against loss presents a major obstacle to established farmers.
For those just beginning, those things can be more than
daunting, they can stop a young person in his tracks. Some form
of revenue or price support or protection for them is
essential. We will not stay and farm forever. We need that
younger generation to be in the position to take over from us
as seamlessly and painlessly as possible.
As for our own operation, we remained with the traditional
DCP program that was enacted in 2002 and available with the
2008 farm program. It is an uncomplicated and straightforward
commodity price support program that is generated by number of
acres price = support level. The DCP Program coupled with a
revenue assurance option from the Multi-Peril Crop Insurance
provides a reasonable safety net that provides stability in our
operation.
The optional revenue-based-program, ACRE, was new in the
2008 Farm Bill. It may become simpler and easier to use and
understand as time goes on, but we found it to be very
difficult to apply to our operation and challenging to
accurately determine its usefulness. The major issues with ACRE
in my opinion are: Yield base is set on a statewide basis.
Variables such as soil types, average yields, and weather
conditions across the entire state put the southern tiers of
counties at a significant disadvantage, and, conversely, puts
other areas of the state at an unfair competitive advantage.
ACRE is a corn-only program; no provision for rotating
crops of soybeans, so coverage is drastically reduced for
anyone who rotates crops, which are a majority of operations.
If a producer has a significant crop loss in 1 year, the yield
base is reduced reflecting the loss, which in turn reduces
coverage for the subsequent year. Two crop failure years back-
to-back and a producer has no coverage at all.
Annual submission of proven yields, total revenue, and full
Federal income tax returns is not only difficult to comply
with, but is invasive and confidentiality can be an issue. This
requirement is also extremely difficult to explain and justify
to elderly or distant landlords.
ACRE payments are discounted below the DCP Program by 20
percent, which is a significant reduction that's difficult to
explain to elderly landlords, those who do not live on a farm,
and even tenants who are affected in some lease arrangements.
Available funds through the commodity loan program are
discounted 30 percent when a producer is enrolled in ACRE. If I
were able to borrow $10,000 using about 5,200 bushels of my
corn as collateral while enrolled under the DCP Program, I
could only obtain $7,000 against the same 5,200 bushels if I
were enrolled in ACRE. ACRE requires a 4 year commitment with
no opt-out provision. This constraint significantly prevents an
operation from reacting to changes in life situations, new
marketing opportunities, et cetera, and can have a very
negative impact on estate planning.
These are the reasons that kept our operation and many
others, to whom I've personally spoken, out of the ACRE Program
and will continue to do so until modifications can be made so
that it is more equitable and user friendly. In comparison, DCP
helps a producer to stay in compliance with the program,
instead of manufacturing roadblocks to compliance, which is due
in large part to its simplicity and its straightforward
language.
The fixes I would propose for the farm program to help
young and beginning farmers to be able to gain a foothold in
this business and provide the next generation of agriculture
producers would be: Raise the loan price. Raise the loan price
on corn to a realistic level. The current loan price of $1.90 a
bushel is no incentive for a producer to seal grain/put corn
under loan when the loan rate is half of market value. The loan
program could be a very valuable financial tool if it were
restructured to reflect a realistic loan price.
Gaining support for a loan program as opposed to a direct
payment program should be easier to manage. Design a
straightforward, streamlined price support program that the
producer can sell to his lender. It has to be realistic, and it
has to provide some form of protection, for both the producers
and the lenders, to encourage the lender to make funds
available for production.
It's extremely difficult to convince a lender to provide
thousands in operating capital with no safety net beneath the
production he is financing. Crop insurance, revenue assurance
needs to be available for every producer to support the
producer/lender relationship.
I support payment limits as set out in our current farm
bill. I do not feel that the significant cuts President Obama
suggested are acceptable in our current financial structure.
There are many young and beginning farmers who can exceed the
$250,000 income limit, but have such large debt service needs
that their income is stretched very thin. Yet they will be
ineligible for the program. Preventing these younger, newer
farmers from participating in the farm program can effectively
cripple them from being able to compete in the marketplace,
both from a commodity sales standpoint and in the ability to
purchase real estate on which to expand their operations. I
believe that there is a certain unfairness associated with the
proposed cuts.
I also support the Federal crop revenue assurance program.
It is the safety net that farmers and small, rural banks and
other ag lenders must have to stay in business and remain
viable in these challenging times.
In my opinion, the new farm bill must evolve from where we
are now, and not be a complete 180 turn. Please endeavor to
look 10 or more years into the future with respect to input
costs, markets, technology, global perspective, and our
children's children. The program must fit the future, not what
we are doing this week or this year. They can fit the rural,
production landscape and the ecological development of larger
farm operations. Farms will not get smaller. The new farm
program needs to be flexible enough to allow for the growth and
evolution of the business of farming. We have to be able to
help our next generation get started and become quickly viable
to maintain the level of production that will be necessary to
continue to feed the population of the world in the coming
years.
The best opportunity for production agriculture is to
operate in a free market system that allows for profitability
and innovation. However, when the commodity markets are
significantly affected by issues completely unrelated to
agriculture and so very out of our control, there needs to be
some from of safety net in place to help deal with this
situation.
I believe that agriculture has many exciting opportunities
available for success in every community. Mother Nature seems
to regulate the size of that success in most cases. The
business of agriculture needs a support base with revenue
assurance in place to compensate for the things the farmer
cannot control: Weather and market volatility.
Again, I would like to thank the Members of this Committee
for providing this hearing and for allowing me the opportunity
to share my thoughts and opinions with you. It's very difficult
for many of us in production agriculture to imagine doing
anything else in life. Farming in a situation where a farm
program wasn't necessary for us to economically produce the
commodities that fuel our world would be ideal. But until we
reach that point, I hope that we will work towards creating a
simply-structured and straightforward framework that can help
the next generation in production agriculture move toward a
robust free market system. Thank you.
[The prepared statement of Mr. Bayliss follows:]
Prepared Statement of Richard D. Bayliss, Corn and Soybean Producer,
Ottumwa, IA
First, to the Committee, I'd like to thank each of you for this
opportunity to appear before you and share with you my thoughts on the
farm bill and its effects on our farming operation and those in my area
that I am familiar with.
My name is Richard Bayliss. Our family--my wife and I, our two sons
and their families--farm about 2,000 acres of row crops in Wapello and
Keokuk Counties in Southeast Iowa. Our acres are split just about
evenly between corn and soybeans each year, and we rotate those crops
annually. We have a combination of owned, rented, and custom farmed
ground. Our landlords include people who are elderly but very involved
with their farms, and those who do not live near their farm but take a
very active role in management decisions. Also, I retired in 2008 after
almost 42 years in the Iowa Army National Guard and spent calendar year
2005 in Al Anbar Province, Iraq. While I was deployed, our farm
operation went along pretty much as normal because each of those
remaining at home carried the extra load to make it happen.
Production agriculture has become a very risky, high input, high-
tech industry. We face many challenges daily with changing weather,
volatile markets, rapidly advancing technology and rising costs of
production.
While United States farmers continue to feed the world, we see many
young and beginning farmers who want to enter this challenging and very
rewarding profession. Investing in farm land and machinery, maintenance
costs on both of those, and insurance to protect against loss presents
a major obstacle to established farmers; for those just beginning,
those things can be more than daunting . . . they can stop a young
person in his tracks. Some form of revenue or price support or
protection for them is essential. We old guys can't farm forever . . .
we need that younger generation to be in a position to take over from
us as seamlessly and painlessly as possible.
As for our own operation, we remained with the traditional DCP
program that was enacted in 2002 and available with the 2008 farm
program. It is an uncomplicated and straightforward commodity price
support program that is generated by ``number of acres price =
support level.'' The DCP Program, coupled with Revenue Assurance option
from Multi-Peril Crop Insurance provides a reasonable safety net that
provides stability in our operation.
The optional revenue-based program--ACRE--was new in the 2008 Farm
Bill. It may become simpler and easier to use and to understand as time
goes on, but we found it to be very difficult to apply to our operation
and challenging to accurately determine its usefulness. The major
issues with ACRE in my opinion are:
(a) Yield base is set on a statewide basis, not by county.
Variables such as soil types, average yields, and weather
conditions across the entire state put the southern tiers of
counties at a significant disadvantage and conversely puts
other areas of the state at an unfair comparative advantage.
(b) ACRE is a corn-only program; no provision for rotating crops of
soybeans, so coverage is drastically reduced for anyone who
rotates crops, which is a majority of operations.
(c) If a producer has a significant crop loss in 1 year, the yield
base is reduced reflecting the loss, which in turn reduces
coverage for the subsequent year. Two crop failure years back-
to-back and a producer has no coverage at all.
(d) Annual submission of proven yields, total revenue, and full
Federal income tax returns is not only difficult to comply
with, but is invasive and confidentiality can be an issue. This
requirement is also extremely difficult to explain and justify
to elderly or distant landlords.
(e) ACRE payments are discounted below the DCP program by 20%,
which is a significant reduction that is difficult to explain
to elderly landlords, those who do not live on the farm, and
even to tenants who are affected in some lease arrangements.
(f) Available funds through the Commodity Loan program are
discounted 30% when a producer is enrolled in ACRE. (If I were
able to borrow $10,000 using about 5,200 bushels of my corn as
collateral while enrolled under the DCP program, I could only
obtain $7,000 against the same 5,200 bushels if I were enrolled
in ACRE.)
(g) ACRE requires a 4 year commitment with no opt-out provision.
This constraint significantly prevents an operation from
reacting to changes in life situations, new marketing
opportunities, etc. and can have a very negative impact on
estate planning.
These are the reasons that kept our operation and many others to
whom I've personally spoken, out of the ACRE program and will continue
to do so until potential modifications can be made so that it is more
equitable and user friendly.
In comparison, the DCP program helps a producer to stay in
compliance with the program, instead of manufacturing roadblocks to
compliance, which is due in large part to its simplicity and its
straight-forward language.
The ``fixes'' I would propose for the farm program to help young
and beginning farmers to be able to gain a foothold in this business
and provide the next generation of agriculture producers would be:
(a) Raise the loan price on corn to a realistic level. Current loan
price of $1.90/bu is no incentive for a producer to seal grain/
put corn under loan when the loan rate is half of market value.
The loan program could be a very valuable financial tool if it
were restructured to reflect a realistic loan price. Gaining
support for a loan program as opposed to a direct payment
program should be easier to manage.
(b) Design a straight-forward, streamlined price support program
that the producer can sell to his lender. It has to be
realistic, and it has to provide some form of protection for
both the producer and the lender to encourage the lender to
make funds available for production. It's extremely difficult
to convince a lender to provide thousands in operating capital
with no safety net beneath the production he is financing.
(c) Crop Insurance/Revenue Assurance needs to be available for
every producer to support the producer/lender relationship.
I support payment limits as set out in the current farm bill. I do
not feel that the significant cuts that President Obama has suggested
are acceptable in our current financial structure. There are many young
and beginning farmers who can exceed the $250,000 income limit but have
such large debt service needs that their income is stretched very thin.
Yet they will be ineligible for the program. Preventing these younger
newer farmers from participating in the farm program can effectively
cripple them from being able to compete in the marketplace, both from a
commodity sales standpoint and in the ability to purchase real estate
on which to expand their operations. I believe that there is a certain
unfairness associated with the proposed cuts. Every operation has made
significant financial decisions based on the rules set forth in the
last farm bill; the rules shouldn't be changed in the middle of the
game.
I also support the Federal Crop Revenue Assurance Program. It is
the safety net that farmers and small, rural banks and other ag lenders
must have to stay in business and remain viable in these challenging
times.
In my opinion the new farm bill must evolve from where we are now,
not be a complete 180 turn. Please endeavor to look 10 or more years
into the future with respect to input costs, markets, technology,
global perspective, and our children's children. The program should fit
the future, not what we are doing this week or this year. Make it fit
the rural, production landscape and the ecological development of
larger farm operations. Farms will not get smaller. We won't be going
back to 80 or 120 acre operations where corn, soybeans, oats, clover/
hay were rotated each year and hogs and cattle are pastured on the
fallow ground while chickens peck in the yard. Farm operations will get
larger. There are fewer farmers on the horizon to produce and manage
the commodities. Machinery will only get larger and more powerful. And
more expensive. The new farm program needs to be flexible enough to
allow for the growth and evolution of the business of farming. We have
to be able to help our next generation get started and become quickly
viable to maintain the level of production that will be necessary to
continue to feed the population of the world in the coming years.
The best opportunity for production agriculture is to operate in a
free market system that allows for profitability and innovation.
However, when the commodity markets are significantly affected by
issues completely unrelated to agriculture and so very out of our
control, there needs to be some form of safety net in place to help
deal with this situation.
I believe that agriculture has many exciting opportunities
available for success in every community. Mother Nature seems to
regulate the size of that success in most cases. The business of
agriculture needs a support base with revenue assurance in place to
compensate for the things the farmer cannot control: weather and market
volatility.
Again, I would like to thank the Members of the Committee for
providing this hearing and for allowing me the opportunity to share my
thoughts and opinions with you. It's very difficult for many of us in
production agriculture to imagine doing anything else in life. Farming
in a situation where a farm program wasn't necessary for us to
economically produce the commodities that fuel our world would be
ideal. But until we reach that point, I hope that you will work toward
creating a simply-structured and straight-forward framework that can
help the next generation in production agriculture move toward a robust
free market system.
The Chairman. Thank you. Mr. Lang, welcome to the
Committee.
STATEMENT OF DANE M. LANG, DAIRY, CORN, AND SOYBEAN PRODUCER,
BROOKLYN, IA
Mr. Lang. Mr. Chairman, Congressmen Boswell, distinguished
Members of the Committee, I would like to thank you for the
opportunity to testify before you today. My name is Dane Lange,
and I am a sixth generation farmer from Brooklyn, Iowa. Every
day I have the opportunity to work alongside three generations
of my family: My grandfather, my dad, my uncle, and my younger
brother. We are dairymen, it's not just what we do; it's who we
are.
For the past calendar year, dairymen around the country
have weathered the largest collapse in milk prices. We have
seen our fair share of distressed milk prices in the past, but
this collapse was and is different. It has affected every dairy
farm regardless of size, debt, or economy of scale. If you milk
cows, you are losing money.
Strangely enough, if we went back just a few years, we
would see a strikingly different dairy industry. Milk cow
numbers in Iowa had stopped a decades-long slide and started
growing 190,000 head in January of 2005 to 215,000 head just 3
years later. This resurgence in milk cow numbers coincided with
growing domestic demand and a booming market. Milk cow numbers
increased, milk price increased, the price of corn and soybeans
that we feed our cows increased. The price of fuel that we use
to operate our equipment increased, and that was all fine
because the milk check reflected the cost of producing the
milk.
Then in 2008 things went south. The recession just didn't
hit the dairy industry, it hit the world. Milk price tanked,
exports dropped from $4 billion in 2008, to just over $2
billion today, and strangely enough the price of milk from the
store did not change. The price of a bushel of corn or soy
beans did not change. The seed and fertilizers that we use to
grow the crops to feed our cows did not change, and while the
State of Iowa did not raise our taxes in the crisis, our local
school boards did it for them.
The days when milk can be produced for $9 or $10 are over
and they are not coming back. A recent drop in grain prices has
helped to stabilize the cost for producing milk; somewhere
between $15 and $17 a hundredweight, which unfortunately means
that dairy farms are still losing money and Iowa is losing
dairies.
I would like to thank the Committee for recognizing the
crisis dairy farmers are facing, but unfortunately the next
farm bill won't help any dairymen today. And to be quite
honest, we aren't worried about the Farm Bill of 2012; we're
worried about next month.
Farmers are entrepreneurs who believe the dairy policy
should be market oriented and consistent with the world wide
crisis. It is likely that no one in this room believes that
every producer who wants to should stay in business. That said
everyone in this room believes that America and the world is a
safe and reliable source of food.
With that in mind, I would like Congress to consider the
following: The Federal Order structure used to compute milk
price needs to be modified to better respond to current market
conditions and provide greater transparency to interested
parties.
The world no longer cares about cheddar cheese. Government
policies need to reflect changing world demand and encourage
domestic production of milk protein concentrates.
No farm in the country can make milk for $10. Milk payments
need to reflect today's break-even levels for the producer.
The California standards for solids/non-fat in fluid milk,
should be implemented at a national level. This would enhance
product quality and improve promotion of the product.
I am lucky. I've also known that if I wanted to farm, our
family would make the adjustments and sacrifices necessary to
make that happen. Most young farmers are not so fortunate. It
is critical that we provide adequate incentives to secure a
viable future for dairymen and women. Starting a new dairy
takes tremendous amounts of capital, and if you don't have a
family to support you, it is not possible. That is why it's
important to provide incentives and programs for beginning
farmers to access capital, as well as tax incentives for
persons willing to lease, sell, or lend assets to beginning
farmers.
The United States must hold our trading partners
accountable to negotiated trade agreements. It's recently been
announced that China plans to block imports of U.S. dairy
products unless the U.S. agrees to change an export
certificate, which has been in place since 2007.
In closing, dairymen don't want a hand out or bail out.
What we want is a reliable safety net to catch us when the
market drops out beneath our feet. Dairymen need tools to deal
with an increasingly volatile milk market.
Government policies need to be brought up to date to
reflect current costs of production. I would encourage Congress
to look into implementing some type of loss income insurance
that producers could buy into. Thank you.
[The prepared statement of Mr. Lang follows:]
Prepared Statement of Dane M. Lang, Dairy, Corn, and Soybean Producer,
Brooklyn, IA
Good morning, my name is Dane Lang and I am a sixth generation
dairy farmer along with my father, uncle, brother and also my
grandfather in Brooklyn, Iowa.
It is a pleasure to offer testimony today based upon my experience
as a dairy farmer and a partner in the Lang dairy farm.
To give you a little background about our farm, in addition to the
five family members we also have seven employees. The farm includes
1,300 acres of forage, corn, and soybeans, yet we also purchase much of
our alfalfa from local farmers and corn gluten from a local ethanol
facility. We are proud of our farming operation as we have strived to
remain modern over the past six generations with modern genetics and
facilities as well as utilize risk management tools to minimize our
financial risk.
As you have heard in previous hearings dairy farmers have been
challenged with one of the worst periods in lack of profitability.
While we've seen some improvement in recent months--milk prices rose
above break-even levels in January 2010 after 20 months of historic
losses--it appears that the volatility of the market continues into the
near future. Economists are projecting another dip in prices in the
near future. In the past few weeks, milk futures prices have dropped
nearly $2 per hundredweight. Forward futures prices for milk are now
substantially below the prices USDA projected just a few weeks ago at
the USDA Outlook Conference. In late 2008 and throughout 2009 reduced
demand for exports, excess milk and dairy product supply, and high feed
and energy costs created a perfect storm within the dairy industry,
driving prices so low that the very survival of dairy farmers was--and
still is--threatened. In the turbulent seas of the dairy market,
dairymen got their heads above water just long enough to catch a
breath, but now it seems were headed back under water.
To give you a perspective of the condition of the dairy industry
over last few years, fellow dairymen and women have been tested. In
March 2006 our milk prices took a negative swing taking profitability
below break-even costs for nearly a year. Difficult decisions were made
by many dairy farmers in Iowa and across the U.S. in order to remain
viable. Herds were liquidated; costs were cut to the bone. Fortunately,
our milk prices bounced back in 2007 which created an opportunity to
get caught up and make necessary improvements to the farm. But that
bounce did not last long. By early 2008 prices were falling again and
this was also about the same time fuel skyrocketed, grain prices
increased and virtually all other inputs followed suit, and our
profitability was once again eroded.
As dairy prices plummeted again--and this time beyond the levels
seen in 2006--dairy farmers did every cost-cutting measure to stay in
business. However, the red ink for many was beyond their control. To
complicate the issue even more, our herd efficiency improved creating a
7-8% increase in milk/cow over the last 5 years. When you think it
can't get any worse, it does. Our exports also declined substantially.
In 2008, the value of U.S. dairy exports were nearly $4 billion, and
today, U.S. dairy exports are just over $2 billion.
My father began his career in our dairy operation in 1973 and he
has said that this past year was the most challenging in his 37 years
of farming.
If we step back a few years, the picture for the Iowa dairy
industry was looking up. Milk cow numbers in Iowa stopped a multi-
decade long slide in 2005 and there was optimism and hope as dairy cow
numbers in Iowa grew from 190,000 head in January 2005 to more than
215,000 head by January 2008. This resurgence in milk cow numbers in
Iowa coincided with the growth of the ethanol industry and the
availability of new feed sources like dried distillers grains.
Nationally, the prospects for the dairy industry were looking good in
2007. Production was increasing, domestic demand was growing and
exports were booming. But the depth of the downturn experienced in
2008-2009 and now resuming again is more than dairymen can endure. Iowa
is losing dairy farms.
Iowa is an important dairy state. Iowa ranks 7th in the nation in
the number of dairy herds; 12th in milk cow numbers; 9th in fluid milk
bottling; 7th in cheese production and 4th in ice cream production. The
dairy industry provides more than 26,000 jobs with a significant number
of those jobs adding to the vitality of our rural areas. The dairy
industry contributes more than $1.5 billion to the Iowa economy. But
all that is at risk and in peril if the economic conditions facing the
dairy industry don't improve.
A weakening in grain prices has helped stabilize the cost of
production for most dairy producers. The current cost of production for
many Iowa dairy farms including ours is in the area of about $15-$16
per hundredweight. While this is helping the dairy side of the
business, it has taken away from the ability of the rest of the farm to
help support the dairy enterprise through tough times. Without
significant declines in crop input prices, Iowa's dairy farms are now
facing shrinking (or even negative) margins on both the crop and milk
enterprises. I wish I could be more optimistic, but the milk futures
market holds out little hope of prices moving back above break-even
levels in the next year or 2. The reality is that costs have shifted
higher and that shift appears to be permanent. It is likely that the
days of producing milk for $9 or $10 per hundredweight are over.
I appreciate the House Agriculture Committee examining this issue
as a starting point for the next farm bill debate, and I also recognize
that dairy policy is largely complex, divisive and regionally charged.
There has been much discussion regarding what should be done to help
dairy farmers weather this economic downturn. Some people have joked
that if there are two dairy farmers in the same room, you'll hear three
different opinions on national dairy policy.
While discussing the critical issues of milk price volatility and
dairy farmer profitability, I would encourage the Congress to consider
the following:
The Federal Order structure, formulas and price classes used
to compute milk prices must be modified so that they respond
better to current market conditions and enhance transparency,
as well as taking into account the regional differences in the
cost of milk production.
Changes are needed to ensure the long-term market
development of value-added products, and encourage the domestic
production of milk protein concentrates (MPCs)--mitigating
concerns arising from the importation of these products.
The development of a price discovery method that utilizes
data from more milk production and expands mandatory reporting
and auditing of prices and inventories, including penalties for
inaccurate reporting. However, while seeking changes to the
Federal Order system to reduce price volatility, Congress must
also ensure that producer safeguards remain in place.
Continuation of a countercyclical program like MILC, should be
a key component to any future farm bill discussion.
The California standards for solids-non-fat in fluid milk
should be implemented at a national level. This would enhance
product quality and improve promotion of the product.
Current promotion mechanisms--such as the industry funded
``Got Milk'' campaign--should continue, and be complemented by
an expanded national dairy product promotion program.
It is also critical that we are providing adequate
incentives to secure a reliable future of dairymen and women.
Starting a new dairy farming operation takes tremendous
resources and if an individual does not have a family member or
mentor to provide financial and/or assistance with assets, the
chances of starting a dairy to support a family is virtually
impossible. That is why it is important that adequate basket of
incentives and programs should be available for beginning
farmers to access capital. There should be tax incentives for
persons who sell or lease land, machinery, or other assets to
beginning farmers.
Farmers are entrepreneurs who believe that dairy policy should be
market oriented and consistent with expanded worldwide trade--global
demand and exports contributed to the strength seen in 2008 prices. In
order to see better prices ahead, American dairy farmers and processors
need to be able to move dairy products around the globe and into the
expanding array of new markets. We can no longer afford to have dairy
policy be confined to the dairy farm--agriculture operates within a
global economy and our dairy farms need to be a part of the effort to
feed the world.
Current self-help programs for dairy producers show promise, but
also have their limitations. The Cooperative Working Together (CWT)
program is an industry driven (privately-funded) program that culls
cows when the supply-demand imbalance needs to be corrected. CWT has
done a tremendous job in reducing the national herd size; however, it
is limited in resources as it has about 67% of milk production
participating in the program. The program would be more effective if
more producers were part of the program. However, I don't believe that
the dairy industry is at a point to ask for--or even welcome--
government intervention in the CWT program.
At the same time we have other tools such as forward pricing and
milk futures. The availability of forward pricing is very dependent on
the milk processor that purchases your milk. Not all processors offer
this option. At times it can be very helpful in locking in an adequate
price for a short-term period of time.
Additionally some dairymen can use the milk futures market.
However, milk futures are fixed contract, which can be ``lumpy'' in
size and the basis has been somewhat variable in recent months. This
variability makes futures markets inappropriate for some producers.
While neither of these options are a guarantee to dairy operations they
can at times offer some relief.
In closing, dairy farmers are asking for market stabilization.
Dairymen and women do a fantastic job at providing safe, healthy and
quality dairy products and we will continue to do so. In return we need
a market system that sends accurate market signals that tells us to
reduce supply when it exceeds demand and provides us the opportunity to
capture profitability when demand rises.
Thank you again for the opportunity to testify today. I would
welcome any questions.
Attachment
U.S. Milk Prices and Costs of Production, 2006-2009 (f)
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Sources: USDA/NASS & USDA/ERS through Jan. 2009. From Feb. 2009
NMPF & CME Group futures as of 02/02/09.
The Chairman. Thank you, Mr. Lang, we appreciate your
testimony. Mr. Volz.
STATEMENT OF NICK VOLZ, CORN, SOYBEAN, AND PORK PRODUCER,
ELKHART, IA
Mr. Volz. It's a pleasure to offer testimony today based
upon my experience as a grain farmer. Good afternoon, my name
is Nick Volz, and I am a fifth generation farmer and have been
farming for thirty-seven years in Elkhart, Iowa, and the
surrounding areas.
Where my wife and I live today is a century farm. I am
currently raising corn and soybeans, and in the past have
raised specialty corn and parent seed corn. We have also
produced seed soybeans for nearly twenty years and specialty
soybeans for DuPont for 5 years. We no longer produce these
specialty crops because the premiums have declined, so it is
not worth the extra expense in producing it. In addition, my
dad gave me 12 sows when I was twelve years old and after
graduating, I farrowed up to 80 sows and continued this until
1998.
My son, Todd, after graduating from Iowa State University,
started farming in 1996. With limited row crop acreage
available to him, he found a niche in the production and
selling of hay. He currently has 300 acres. He has also needed
to do non-farm businesses to meet his cash flow. These include
landscaping and snow removal.
In 2002, my son and I started finishing 3,200 head of
feeder pigs a year and continued that for 5 years. It was not
profitable, and we stopped producing pigs in 2007. With the
high cost of grain and protein, it was no longer feasible. As a
smaller producer, we were unable to get contracts because of
size, and were no longer able to market the hogs because it
would often take 3 to 4 weeks to get a delivery date.
We have always participated in the farm programs; however,
we decided not to enroll in the ACRE Program. Reason being,
with the lack of price protection and smaller DCP payments and
loan payments, we didn't believe there were any benefits for
our operations. Instead of decreasing prices in the ACRE
Program, the support prices should be raised to offset the high
cost of production.
We have always believed in soil conservation and have
installed at least 12,000 feet of designed grass waterways.
Some of these waterways are close to thirty years old and still
serve their purpose in conserving the soil. When the
Conservation Security Program was announced, we thought it
would fit the program well; however, it was never funded to the
extent of where the money would have been placed where needed.
Programs like this are needed to help conserve the soil to
ensure that lifelong productivity continues. Payment limits are
important and the money saved should be put into conservation
programs to help protect our soils.
We belong to a number of organizations including corn and
soybean associations, but we're not here to represent these
organizations. I am honored to participate in this testimony. I
do believe that all of this is important to enhance the 2012
Farm Bill and would like to see future meetings like this be
held during January and February so that our short window of
opportunities to plant will not be affected.
Thank you again for the opportunity to present this
testimony before you today. I would welcome any questions or
discussion about what I have spoken about today.
[The prepared statement of Mr. Volz follows:]
Prepared Statement of Nick Volz, Corn, Soybean, and Pork Producer,
Elkhart, IA
It is a pleasure to offer testimony today based upon my experiences
as a grain farmer.
Good afternoon, my name is Nick Volz and I am a fifth generation
farmer and have been farming for 37 years in Elkhart, IA and the
surrounding areas. Where my wife and I live today, is a century farm.
I am currently raising corn and soybeans, and in the past have
raised specialty corn and parent seed corn. Also, have produced seed
soybeans for 20 years and specialty soybeans for DuPont for 5 years. We
no longer produce specialty crops because the premiums have declined so
it is not worth the extra expense in producing it.
In addition, my dad gave me 12 sows when I was 12 years old and
after graduating, I farrowed up to 80 sows and continued this until
1998.
My son, Todd, after graduating from Iowa State University, started
farming in 1996. With limited row crop acreage available to him, he
found a niche in the production and selling of hay. He currently has
300 acres. He has also needed to do non-farm businesses to meet his
cash flow. These included, landscaping and snow removal.
In 2002, my son and I started finishing 3,200 head of feeder pigs a
year and continued that for 5 years. It was not profitable and we
stopped producing pigs in 2007. With the high cost of grain and
protein, it was no longer feasible. Also, as a small producer, we were
unable to get contracts because of size and were no longer be able to
market the hogs. It would often take 3 to 4 weeks to get a delivery
date.
We have always participated in the farm programs. However, we
decided not too enroll in the ACRE PROGRAM. Reason being, with the lack
of price protection and smaller DCP payments, we didn't believe there
were any benefits for our operations. Instead of decreasing prices in
the ACRE PROGRAM, the support prices should be raised to offset the
high production costs.
We have always believed in soil conservation and have installed at
least 12,000 feet of designed grass waterways. Some of these waterways
are close to 30 years old and have served their purpose in conserving
the soil. When the Conservation Security Program was announced, I
thought we fit the program well, however, it was never funded to the
extent of where the money would have been placed where needed. Programs
like this are needed to help conserve the soil to ensure that life long
productivity continues.
Payment limits are important and the money saved should be put into
conservation programs to help enhance and protect our soils.
We belong to a number of organizations including corn and soybean
associations, but I am not here to represent these organizations.
I am honored to participate in this testimony. I do believe that
all of this is important to enhance the 2012 Farm Bill. And would like
to see future meeting like this be held during January and February so
that our short window of opportunities to plant will not effected.
Thank you again for the opportunity to testify before you today. I
would welcome any questions or discussions about what I have spoke
about today.
The Chairman. Thank you, Mr. Volz, I appreciate it. Mr.
Weems.
STATEMENT OF DARRELL WEEMS, CATTLE, CORN, AND SOYBEAN PRODUCER,
EARLHAM, IA
Mr. Weems. I'm here today to discuss the conservation title
of the farm bill. My name is Darrell Weems. I'm a lifelong
farmer, conservationist and I represent today, in the capacity
as Executive Director on a part-time basis, the Conservation
Districts of Iowa and to represent the soil and water
conservation districts in the state. For sixty years it's been
our task to put conservation on the land. We've done that with
the local conservation districts and the five electric
commissioners and the 500 strong that are about putting
conservation on the land.
I'm going to talk about the strengths we have, and that is
in the strength in partnerships through the Iowa Department of
Agriculture and NRCS, Iowa DNR, the State Soil Conservation
Committee, and other private groups like, Farm Bureau commodity
groups, we all came together to put conservation on the land
and to conserve our resources.
The other strength that we have is conservation districts
and CDI is directly in the middle. The funding starts at one
end, the programs and the law and regulations that come down
and the districts at the other end, we are in the middle to
deliver those programs and that's what we do. Today we bring
forth a couple thoughts relative to conservation programs that
we have.
We want to talk a little bit about technical assistance. We
believe technical assistance should be enhanced. We need to
find and train technicians so that we can design and lay out
the structures and processes by which we can deliver
conservation. Our farmers today can put conservation on the
land. Farmers by nature love to move dirt. They build things.
They grow things. We need to give them the opportunity with all
of their equipment, the technology and the size to deliver, and
I think we can save some money in that process.
We can put conservation on our own lands if we have enough
expertise and enough guidance to get it done. We need to be
smart conservationists and smart with how we spend our money
and our resources. We must target funds. We must get the most
bang for our buck. In many cases we'll do this through a total
watershed approach. Again, we have programs that work. I'll
save the long title, as it takes too long, but we have CREP, we
have EQIP, targeted CRP, wetlands, some with contracts to get
the work done.
One thing I would caution is we would warn you we do this
on a voluntary and local basis. That's how it will work best.
The next thing we want to talk a little bit about is
conservation compliance findings. We believe that all land and
production, whether HEL or non-HEL should be required to have a
conservation plan to be eligible for USDA benefits. You work
the plan and you get the benefits. We need more teeth in
enforcement.
Successes: we have successes in the area of conservation.
Forty-three percent reduction in soil erosion over the last
thirty or forty years. In the last twenty years, the Iowa rural
water survey shows that we have low detections of nitrates and
herbicides in well water. Several species of wildlife are
thriving and repopulating in Iowa. One DNR official recently
said we have the best fishing we've ever seen in Iowa. I
haven't been able to enjoy that yet this spring, but I hope to.
We use conservation tillage and wetlands preservation to
mantain working wetlands to improve water quality and keep our
roots on the ground. We do a better job using nitrogen and
phosphorus today.
We still have problems, you bet we do, we haven't solved.
We still have too many pesticides leaving the soil, leaving the
earth and going into our waterways. We have too many producers
and citizens who just plain don't get it and don't do enough to
conserve resources. In some cases conservation gains are
moderated. We have to be careful about that. In some cases we
are ill-equipped to deal with the biggest rain events. Last
year and years before that have taught us that. Funds are
always short and we always have more people who want to do the
work than we have funds and technology and resources to provide
them.
So in the end--and I've got another point I'm going to get
into in a second--but in the end we must remember we didn't
inherit this Earth from our parents, we borrow from our
children. We must always try to polish and adopt the
conservation, the future depends on it.
Sometimes when I am riding a tractor, or in this case last
night riding the lawn mower, it occurred to me that I would go
off script a little bit. It won't take long here, but there's a
line in my testimony that I'd like to refer to that I didn't
highlight enough, but needs attention. It's on the third to
last paragraph. Sometimes other events and priorities rob us of
the conservation focus.
I'm getting older. I've got grand kids. I'm beginning to
think about things other than making a daily living now, and my
kids and grand kids are important to me. It occurs to me today
that other events and priorities are robbing us of the
conservation focus. We have programs like Medicare or Medicaid,
the interest on the national debt. When I borrow money, I have
to pay back the interest. At sometime back in the 1980s the
highest was 21 percent.
This country will have to deal with those issues. I think
what that says in this scenario is that the status quo is not
going to work anymore. We don't have enough money to do what
we've always done, or what we want to do, and we asked for some
of the trouble we got in.
So off script, I just wanted to mention that we have to use
our head. We have to think. We've got to deliver and do things
in ways that we haven't done, probably without the money that
we've had before. And so I guess it's with this I'd love to
answer questions and it's with this I conclude and thank the
Committee for hearing me.
[The prepared statement of Mr. Weems follows:]
Prepared Statement of Darrell Weems, Cattle, Corn, and Soybean
Producer, Earlham, IA
My name is Darrell Weems. I am here today as interim Executive
Director of CDI and as a lifelong farmer and agriculturist.
Conservation Districts of Iowa--CDI--is a nonprofit 501(c)(3)
organization focused on the conservation of soil, water, and other
natural resources.
CDI was founded in 1947 to provide a unified voice for the
individual country-based soil and water conservation districts. Since
that time, CDI was been working with the 100 soil and water
conservation districts in Iowa and their 500 elected soil and water
commissioners and staff to promote sustainable agricultural practices
for the protection of soil and water resources. Today, work is also
being done in urban settings, promoting conservation practices for
homeowners, developers, and communities.
While each soil and water conservation district maintains its own
programs, CDI helps districts combine efforts to address regional,
state, and national issues. CDI teams with public and private partner
organizations, such as Iowa Department of Agriculture and Land
Stewardship, Natural Resource Conservation Service, Iowa Department of
Natural Resources, State Soil Conservation Committee, Pheasants
Forever, and others, to implement conservation practices on working
lands.
CDI and the 100 Soil and Water Districts (SWCD) represent a key
delivery mechanism for conservation practice. We are the middle
organization between our partners and land owner/operators. Most
conservation programming goes through the local SWDC office and its
body of elected commissioners. We deliver conservation education and
promotion. We allocate and deliver funds, local, state, and Federal. We
match people, process, and programs. CDI and SWCDs facilitate the
placement of conservation practices on working lands.
To build on the significant conservation provisions of prior farm
program legislation, especially those of 1985 and 2002, we would offer
these comments in advance of the 2012 Farm Bill:
Technical Assistance
Technical assistance must be enhanced. Funding and training for
technicians should be increased so that we are able to design and lay
out more conservation practices and structures. Farmers and/or their
contractors own and operate large, sophisticated, technology-equipped
machinery capable of placing conservation improvements on their land.
Farmers, by nature, love to move dirt and build things. We should
supply them with the technical guidance and planning necessary to do
conservation work on their farms. In this time of tight funding, we
believe there is considerable potential to put more conservation on
working lands with less money.
Effects of Increasing Row Crop Intensity
Many factors, including but not limited to economic returns,
technology, energy use, and food needs, have resulted in an increase in
crop acres and a reduction in pasture/forage acres. Perhaps it is time
to offer better farm program incentives for pasture/forage/small grain
production than for row crop productivity. The farm bill should
encourage protective seeding in sensitive areas.
Be Smart About Conservation and Water Quality
We must target funds and resources to the most sensitive areas
first, where we can have the most impact and get the biggest ``bang for
our buck.'' In many cases that will be with a total watershed approach.
We must use and enhance programs that work, such as the Conservation
Reserve Enhancement Program (CREP, run by IDALS), prioritization of
watersheds, EQIP, targeted CRP, working wetlands, and summer
construction incentives. It is important to keep water quality
improvement programs local and voluntary rather than mandated.
Voluntary incentives work better than regulated directives.
Conservation Compliance Plans
All land in production, HEL and non-HEL, should be required to have
a conservation plan to be eligible for USDA benefits. This would
strongly encourage producers to create and follow that plan.
Successes
The nation's farmers and private land owners have made significant
progress in recent years in protecting the nation's soil and water
resources. From 1982 to 2007, soil erosion in the U.S. has been reduced
43%, according to the USDA National Resources Inventory Report. The
Iowa rural well water survey of 1988-1989 and 2006-2008 show lower
detection of nitrates and herbicides in well water. A recent U.S.
Geological Service study reports declining levels of eleven herbicides
and pesticides in Cornbelt waterways in 1996-2006. Several species of
wildlife are thriving and repopulating in Iowa, and one DNR official
reports the best fishing ever in Iowa. The use of conservation tillage
and wetland reversion/construction is up. The use of better ag
management practices and technology improvements like GPS systems and
strategic placement have resulted in better use of fertilizer,
nitrogen, and phosphorous.
But We Have More Work to Do
We still have too many nutrients and pesticides moving with the
water and soil. We have too many producers and citizens who do not
practice conservation methods and best management practices. In some
cases, conservation gains are moderating. We are ill-equipped to deal
with the biggest rain events. And funds are always short and we always
have people who want to do more but are limited by resource
availability. Sometimes other events and priorities rob us of
conservation focus. We must guard against that. All groups, government
and private, must rededicate themselves to working together and
coordinating their conservation efforts.
And we must remember, ``We didn't inherit this earth from our
parents, we borrow it from our children.'' We must always strive to
polish and adopt the conservation ethic. Our future depends on it.
On behalf of the Conservation Districts of Iowa and the 100 Iowa
County Soil and Water Conservation Districts, thank you for the
opportunity to comment.
Sincerely,
Darrell Weems,
Interim Executive Director,
Conservation Districts of Iowa.
The Chairman. Thank you very much.
I thank all of the panel for your excellent testimony. We
appreciate it.
I think that last comment kind of ties into something I
want to say, and that is that we are not going to have any
extra money for this farm bill. We'll be lucky to hold on to
what we got. I saw on some of the testimony people wanting to
raise loan rates because they are ridiculously low. If we get
down to loan rates, we're out of business. It isn't going to
happen. We can't--the money it costs to raise the loan rates,
it's not realistic.
So one of the reasons we're starting this hearing process
early is to see if there's a more efficient and better way to
provide the risk management tools, safety net, and conservation
that we all want to do.
Mr. Bailey, I see that you mentioned in your testimony
about profit sharing. Do you think that there need to be
changes? Are you familiar with the SRA negotiation that's going
on?
Mr. Bailey. Yes, sir.
The Chairman. What's your take on it? It has caused quite a
commotion, with crop insurance companies and crop insurance
agents coming to my office and telling me the world is coming
to the end. So what's your take on where that's going?
Mr. Bailey. Well, first of all, yes, I am familiar with the
negotiations.
I'm not exactly up to date with the last minutes.
The Chairman. They're ongoing.
Mr. Bailey. Ongoing, yes. Just refer back, I worked for
Congressman Gansky in southwest Iowa for a number of years, and
the crop insurance guys were in my office all the time as well.
Here, in this case, I think we've got to do what's right
for the taxpayers, as well as what's right for the agricultural
industry. One of the dilemmas we have is the way the subsidies
are designed and everything right now, is that they provide an
incentive to move crop production into marginal areas. And that
is a dilemma because with that incentive and everything, you
really increase the potential for disaster problems as well. So
I don't have any specific numbers to put out or anything like
that, what I'm saying is that we need to do a lot of analysis
on it.
We have some competent people at the university, economists
and ergonomists and everything, and I'm not sure that we're
utilizing those people adequately here as we work on this
problem. We need to give the farmers the risk mitigation and
everything they need, and at the same time, we need to mantain
the proper level of investment by the taxpayers.
The Chairman. Thank you.
Mr. Bayliss, you talked about, in your testimony at one
point, here let's see if I can find it, you say the loan
program can be very valuable tool if restructured to reflect a
realistic loan price. Then you say gaining support for a loan
program as opposed to a direct payment program should be
easier.
So are you saying that you think the direct payments should
be moved into the loan program situation, or is that what
you're saying?
Mr. Bayliss. Well, what my point was on that there, and you
just told me that that was not a possibility, but if there was
a higher loan rate on grain then you would not need so much of
a support program under it, that would help offset it. You
could take a look around and use that as operating captial and
not have the risk involved through your normal lender or
whatever to help put in the cost of production. So it was just
a tool I could see where we could utilize a higher loan rate
and offset the need for a some kind of a support program under
it.
The Chairman. You think the revenue program can be fixed?
Mr. Bayliss. Yes, I do. It's not going to be easy.
The Chairman. It's partly our fault that it got so
complicated, and that's a long story. But, we're going to look
at this and look at county prices instead of statewide prices,
and try to design it so you can actually take it to the bank,
so the bank can borrow money on it. I think there's a potential
here with the revenue program and it's got to be reworked quite
a bit.
Mr. Bayliss. I totally agree. It has to make sense to your
lender. If it's something he's going to buy off on, you're good
to go, just so it has a support base.
The Chairman. Mr. Lang, you didn't mention anything about
the support price program, and are you familiar with the work
that's going on with the National Milk Producers Federation
right now in terms of the new policy they're looking at for
dairy?
Mr. Lang. Are you referring to the insurance, the income
insurance? I guess I'm not sure what you're referring to.
The Chairman. Well, the National Milk Producers Federation
have been on a 9 month effort to redesign the dairy program and
some of the elements that you listed are in there. They're also
talking about some other things like eliminating the dairy
price support program altogether, getting rid of the $9.90
price support and going to a what they're calling marginal
insurance program. They're going more towards crop insurance
type program.
Are you familiar with that?
Mr. Lang. Slightly.
The Chairman. You don't know enough about it to know if----
Mr. Lang. No, I know a lot of people in this room know
about it, but I do not. I'd like to point out that the co-op
I'm a part of signed up for the Cooperatives Working Together,
which use a private loan to remove cows from production, and
that's over.
It is done. It's not coming back because as milk prices
fail to improve from that, people thought well I'm tired of
paying for all the free riders who are also benefiting from
this. So I would hope that any new policy makes everyone pay so
that everyone can reap the benefits.
The Chairman. What's being looked at is to see if there's
any kind of a system to try to rein in production. It would
apply to all areas including unregulated areas and California,
equally. So whatever we end up doing, I'd like to guarantee you
it will be across the board with everybody.
Mr. Lang. If the government would like to do something very
cheap to improve milk prices, I would suggest that the
California standards for solids, fat, and milk be immediately
made nationwide. It's a fair basis for our milk, and it will
immediately remove cows from production.
The Chairman. I think there's support for that from some
Members of the Committee, but there is also interest out there
that's very much opposed to it.
So anyway, I've run out of time, so I'll yield to Mr.
Lucas.
Mr. Lucas. Thank you, Mr. Chairman, and I should admit
without any hesitation to the crowd here that coming from
western Oklahoma, I'm a little envious that you get twice as
much rain as I get at home. You, generally, measure your
rainfall in feet in this state, which we generally measure ours
in inches in Oklahoma. Western Oklahoma is a little
traumatizing for me.
But with that said, it is a pleasure to be here, and first
being a farmer from Oklahoma, let me ask the panels to compare
the price of farmland in your area that trade in public
auctions or public exchanges where the market reflects supply
and demand accurately, describe for me what land prices have
done in this year or in comparison in the last year or so to,
say, 5 years ago. Up, down, sideways, no sales, up.
Mr. Bayliss. Up, up, sky high.
Mr. Lucas. Fascinating, fascinating.
The Chairman mentioned the budget situation we find
ourselves in. In 2002 we had $79 billion, $17 billion of it
went to conservation. In 2008 we had $7 million, and I can say
this in a bipartisan way. The Chairman was exactly right with a
$4 trillion deficit projected if you add the last 2 years and
next 2 years together, we're going to be under incredible
budget pressure when it comes time to write that 2012 Farm
Bill.
So let me ask the group this: In the spirit of that kind of
situation we may find ourselves in, looking at the conservation
title, what's the most important thing to you? EQIP CRP, WRP?
If anyone would dare or be willing to offer a response. What
does you the most good? What does your community most good?
Mr. Bailey. One of the things that maybe we ought to take a
look at is a reverse auction for conservation projects, instead
of using a flat 75 percent or 50 percent or whatever. Look at
some of the ways the CRP has bid to try and get the maximum
impact for the minimum amount of tax dollars that goes into it.
Don't get me wrong, I don't have all the details worked out,
but I'm just looking at a different way that you could
interface with the producer to stimulate as much conservation
effort as you possibly can.
Mr. Lucas. Let's add the rest of the crowd in. I'd like to
touch on that, Mr. Bayliss.
Mr. Bayliss. I know in some areas the CRP program put more
money back in the community and stabilized more things in the
marginal ground areas than what it did in the high production.
The CRP program was definitely a blessing in some of the areas,
and especially for some farms and so on. In my area, it's right
where we farm, it's not a big issue because we don't have CRP
production, but I know that was a major thing.
Mr. Lucas. Mr. Lang?
Mr. Lang. I milk cows. My brother handles all the farming
aspects, but I know that we feed things we grow to our cows and
without crop insurance, if we had a disaster, no crop
insurance, we wouldn't have food for our cows and we couldn't
afford to buy it.
Mr. Lucas. But within the conservation program and your
business with all the people coming at you with water standards
and environmental standards, are any of those EQIP resources
potentially useful to help meet your nutrient water issues and
all of these things? I was getting at in the conservation title
itself, I'm just asking. There's no right answer.
Mr. Lang. No.
Mr. Lucas. Mr. Volz.
Mr. Volz. I feel the CRP, not so much the wetlands program,
but the filter strips that protect our creeks and waterways, I
feel most of these creeks, small rivers water----
Mr. Lucas. My grandmother's pronunciation, crick to ditch.
Mr. Volz.--should be there because we put those on a couple
of farms that we have, and it has stopped a majority of runoff,
and a 100 year rain from going into the water waste. Now, I
feel it's very important and it holds the soil back a little
bit, and it cleans up the water.
Mr. Lucas. Mr. Weems.
Mr. Weems. I am a fan, and I think most of the
conservationists are a fan of the EQIP Program in some of those
wetlands that approach, working wetlands. That's a concept in
Iowa that's pretty intriguing, and we'll see how that works
within the community to clean things up and take--get some
infiltration there that will help.
Mr. Lucas. At the risk of stirring up my appropriator
friend in the front row here in the dam rehab program we have
an allocation system where the money is targeted to rehab the
upstream flood control dams based on the greatest need. Yet,
new construction program is based on earmarks, not on a
guaranteed thought-out flow. Do you have an opinion about
moving new upstream flood control dams to a priority system
instead of a targeted system? He hasn't thrown anything yet
from the front row.
Mr. Weems. Does my face look blank? I think it might. I'm a
big believer that the best place to stop soil erosion nutrient
loss is, if you go to the source, high, do it right, put the
right commitment to it. I guess that would be the answer from
my perspective.
Mr. Lucas. Thank you.
The Chairman. I thank the gentleman. The gentleman from
Iowa, Chairmen Boswell.
Mr. Boswell. Thank you.
I go back a few years. We talked about a lot of things back
in the farm crisis, and one of them we talked about, I'm sure
we did, was capital intensity to putting a crop out, and they
close to the vest that the bankers came then, and now cash flow
is kind of hard to work out. And we've all talked about safety
net, safety net, safety net.
So I'd like to address this to all of you. Some have
mentioned that the ACRE Program did not offer enough. What
would make a revenue program work better? What would you do to
change ACRE? All of you, in fact, I'd like for you to all
address that, if you will. I'll start with you, Mr. Weems.
Mr. Weems. I'm not a big enough practicing farmer to have
looked at that. I'm going to pass on that question. It's a
bigger scope than I'm working with currently in my agricultural
experience.
Mr. Boswell. I understand.
Mr. Volz. Yes, my opinion on the ACRE Program, when they
decided to decrease the DCP payment by 20 percent and your
ceiling price by 30, that limited my end of income or
prosperity, whatever you want to call it, and if they raise
that up because we need to offset the cost of production. If
I'm only going to get a $1.20 for my corn, plus if we do run
into really hard times, if we don't keep our exports up, and we
get into a situation where we have a 3 billion bushel
carryover, we're going to be into that $2 corn range, in my
opinion. When we do that, we've also eliminated another 30
percent of the LDP on my side, which was a guarantee, so in my
opinion they should raise that up, just to improve the cash
flow, I guess.
Mr. Boswell. Mr. Lang.
Mr. Lang. Because we feed what we grow to our cows and it
doesn't run through a combine, we have no idea how much our
land produces. And to fill out the paperwork for the past 5
years, we run into this problem as we have no idea. So the--we
have an actual problem with ACRE because we don't know what
numbers to put on the paperwork.
Mr. Boswell. Mr. Bayliss?
Mr. Bayliss. Yes, that's--all of that is true. The first
problem we had was is trying to sell the ACRE Program to
landlords that are not familiar with that.
They're used to the old DCP Program where you're going to
get payment right off the bat. Now you're trying to sell them,
but you're going to take a 20 percent reduction right off the
bat. Sell this to me, give me something to chew on here, and
it's like, nope, that's the way it is. Why would I take a
definite guarantee, established price on my acres and get a
payment and now you want me to take a 20 percent reduction?
So it's hard to sell to someone that doesn't understand the
program all the way through. I don't understand that program
all the way through, to be honest with you, but that's a first
thing.
Mr. Boswell. Do you have a suggestion?
Mr. Bayliss. What's that?
Mr. Boswell. Do you have a suggestion of what you'd like to
see happen?
Mr. Bayliss. I think that that needs to be minimized
somehow. It needs to be a payment right off the bat, not a 20
percent reduction. The second thing is that it needs to be
based off countywide yield other than statewide yield because
there are so many variables across our state. You can have a
good program there, but not be eligible just because of
difference in yields across the state.
Mr. Boswell. Thank you. Mr. Bailey?
Mr. Bailey. I think as a general mechanism, the things that
we can do with the ACRE Program to bring the triggers as close
to the farm as possible will improve it. The statewide trigger
maybe, move that to a crop reporting or even better yet the
county triggers on it.
And I know everyone complains that ACRE Program is ultra
complicated, but you have to remember we have computers now.
The fact is that farmers can typically really figure out if a
farm program, as they say, in a New York minute and figure out
whether it's good for them or not.
So, basically, try and tailor the ACRE Program as much as
we can to fit the individual farm would, I think, move forward.
The dilemma that we really have in changing the ACRE
Program is the money problem right now, to make it work even
better to bring it closer as my two colleagues have said, bring
it closer to comparing with the countercyclical. But I mean,
throw one in and the negotiations with Brazil on cotton,
everything means that there's a lot more in play than what we
think here. We may have to move some other things that make it
more WTO compliant, and in that event I would look at any
revenue that we can work on to enhance the ACRE Program long
term would be a beneficial for farm programs here in the United
States.
Mr. Boswell. Well, thank you.
The Chairman. I just commented that probably the only
reason it got in the farm bill, is it saved a billion dollars
at the end of the day, and the truth is we don't know yet what
it's going to cost. I had one county signed up 80 percent, and
they're going to get 2\1/2\ times more money out of the ACRE
Program than they got out of the traditional program.
I think once people figure out, see these numbers, you
might see things change, but your suggestions are well taken.
The gentlelady from South Dakota.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. I thank our
witnesses for their testimony.
Tim Walz is from Minnesota's southern district along with
the border here with Iowa, Mr. Walz and I worked on the last
farm bill on the beginning farmers and ranchers provisions. And
Mr. Bayliss and Mr. Lang, you both mentioned some of the
challenges we clearly face.
In South Dakota at the state level they recently put
together some sort of a linked program, some retiring producers
with younger producers as it relates to the transition there.
I'd like to just go over a couple of the things that we did in
the last farm bill and get your thoughts on what more we need
to do to help beginning farmers and ranchers.
We increased the amount of direct farm ownership loans. We
guaranteed farm ownership loans. We increased direct farm
ownership loans reserved for down payment, as well as direct
operating loans for beginning farmers and ranchers. We provided
$75 million in mandatory funding for technical assistance,
training, education, outreach.
Do you know of any beginning farmers in your area that are
taking advantage of some of what was in the conference report
in the 2008 Farm Bill? Are they running into some obstacles on
accessing these programs to gain some credit, to gain the
capital that you both mentioned is necessary to get them more
firmly established?
Mr. Bayliss. I know in our county the programs are
available, some of the young farmers are using them to get
going.
The main point I was making on the young farmers is that
they're limited on what they can do with operating a sizable
farming operation. For them to go to a lender to get the input
costs it's going to take on it, then you don't help, and it's
not only to get the initial money, but it's also about
operating year to year on it, machinery and rent, inputs.
Ms. Herseth Sandlin. Okay.
Mr. Lang.
Mr. Lang. I don't know anyone in my county that uses the
beginning farmer loan or program, but my brother and I looked
into buying a farm several months ago. We went to the bank and
had it all worked out with the banker, and we looked into what
government programs would be helpful to us. It turned out that
no government program was going to make land that 3 years ago
was $6,000 an acre, affordable. So we gave up. The programs are
there and I know about them, but it wasn't going to make a
difference at all.
Ms. Herseth Sandlin. They're just not sufficient in light
of the increase in land prices, primarily. At least for those
that are looking to eventually own the land rather than the
cash rents are being paid out in addition to the leased
equipment.
Let me ask you, then, a question about a different program
and see if this is working any better for anyone in your areas.
Are you familiar with the REAP Program? Jeff Fortenberry and I
worked on that in the last farm bill. Jeff's from Nebraska. The
Rural Energy for America Program. Again, the Department just
recently released rules on some of this, but do any--this is,
again, to sort of provide a way to work with the local lender
for rural businesses, farmers and ranchers to pursue energy
efficiency projects. Any of you thinking of applying for any
REAP grants?
Mr. Bayliss. I'm not familiar with that grant.
Ms. Herseth Sandlin. Okay. Anyone else familiar with the
program? Oh, that's a disappointment.
Mr. Volz. We looked at the machinery show this last winter,
we looked into it and really haven't pursued it any farther. I
think there's a benefit there, but the cost--we looked--10
years ago we looked into putting up a windmill, and we ran into
all sorts of blockages to get it done----
Ms. Herseth Sandlin. Yes, our certified electric co-op.
Mr. Volz. Our REC would not hook up to it, and so that kind
of put a wrench in that machinery and now that--and the cost of
that, I think at that time, was about $75,000 to put up. Well,
assuming the same size would be three times that today, so what
it's done is the profits seem to have gone in.
What you can help us with is go right to the guys producing
the windmills, does that make sense?
Ms. Herseth Sandlin. Yes, it does.
Any there any other comments on the REAP Program?
I think my time got started a little bit late, but a quick
question, Mr. Volz, the Department of Justice and USDA are
hosting competition workshops, as you know, around the country.
You described your family's experience in the pork industry.
Given that poultry and pork are essentially vertically
integrated now, do you feel that that was one of the reasons
you had to get out of the business in, what did you say, 2007?
Mr. Volz. Yes, we quit in 2007, we--well, we really quit my
operation in 1998 when hogs got down to 10 cents or 12 cents.
My son got back into farming, and was doing his thing. We
thought on our place we have the buildings, the buildings are
paid for, so we thought we'll just buy pigs, so we bought
feeder pigs. The price was a little on the high side, and then
the cost of all the input, just went sky high and we ended up
losing about $75 a head on 3,500 head. So that's kind of why we
quit because we just got a lot of equipment and we just
couldn't afford to lose anymore money, like the dairy business,
just--not a bottomless pit.
Ms. Herseth Sandlin. Well, I think we'd appreciate any
supplemental testimony you could provide us as it relates to
the livestock title in the last farm bill and what more we
might be doing. I've worked with Mr. Boswell on some provisions
as it related to fairness of competitive markets. I think some
of what we're hearing at the workshops will also provide us
some insights and what more we can do, and additional changes
we can make, so, again, with that, I appreciate your testimony
and responses today.
Mr. Boswell [presiding.] Thank you.
Before we go to Congressman King, I would like all of us to
know that we appreciated working with the Iowa State Fair to
work out the use of these facilities, and if you see some of
the board members of the Administration, tell them we
appreciate it. They opened up the restaurant, if you get hungry
or something, feel free to go out there and patronize them.
They're here for us. They're normally not open except during
the fair or occasions going on here.
At this time I'd like to recognize my colleague from Iowa,
Congressman King.
Mr. King. Thank you, Mr. Chairman. I thank the witnesses.
Mr. Boswell. Can you get your microphone up there, Steve?
Mr. King. You might be able to hear that. I'd like to first
make an observation. It's interesting to me at the beginning
before the testimony began, I was having a discussion with Mr.
Bailey about how you get your best thinking done from the seat
of a tractor or a machine. Mr. Weems testified that he does the
same thing. I imagine that's true for all of you. I think
that's one of the reasons why we have so many clear thinkers
out here in this part of the country, we could use more of you
in Washington.
But it's also interesting that Mr. Bailey and Mr. Weems
both talked about site-specific research in your case, and
watershed-specific approach to conservation in your case, Mr.
Weems, and I don't think that's a coincidence either. I think
that some of those things you thought about from the seat of a
machine. And so I just reflect us sitting here in this setting
here in this city with a Ph.D. in environmental engineering to
explain to me that there was a high amount of nitrates in the
water in the Raccoon River and that it had gone up 60 percent
in forty years. He had the tests to prove it, and I asked him
where did you take those tests, and he said right out here in
the river. And I know they come from the feedlots and the farms
near the Raccoon River.
I'll tell you that's not site-specific and to point the
finger for high nitrates at whomever you decide you might want
to put the blame on isn't good enough for me. And I have long
argued that we needed far more site-specific research done, and
we had the debate in Iowa about credible data. There were many
that arguably should not let people introduce data that didn't
have their proper certification to do so. I argued that we
should plug all that data and results from the spreadsheet,
you'll know who's cheating and who's not and we'll have a lot
of data. Well, now we have the Iowa soybean producers working
in conjunction with others to do some real credible data
research that is site-specific and watershed-specific. I want
to ask Mr. Weems if you're familiar with that program and what
you might have to tell this panel about it.
Mr. Weems. There are lots of projects in the state
currently that are site-specific relative to banding watershed,
people who live in a watershed together using resources, using
technology, using our experts at hand that know about those
things.
We're doing a lot of that and that refers back to my
comment that we have to go after the worst first, or we have to
identify the very sensitive areas, the most sensitive areas. We
have to get the biggest bang for the buck. We have to go and
take care of those areas first, and I think that happens
through watershed-specific projects where everybody bands
together. I think the end product is bigger than the individual
pieces. The more people you put into it, the bigger the
project, the bigger good you get out of it.
Mr. King. Thank you, Mr. Weems.
I know there's a clock here, so I would like to ask the
panel if they acknowledge or nod to me I'm going to go through
a list of some of the programs, and if I leave some out, please
remind me of what I missed. But has anybody in the last 2 years
qualified for LDPs, or countercyclicals, or ACRE, or EQIP, or
CRP, or CSP? How am I doing?
First one would have been CRP, probably, that's what I saw
the nod for, and I expect that's the case. That program has
been going on for more than 2 decades.
CSP?
So I've gone through the list. What about direct payments?
Has anybody on the panel that's an active ag producer not
qualified for direct payments? Let the record show that
everybody has qualified--does qualify for direct payments.
So I set this up for this reason. Now I would ask the
panel, I'll start with Mr. Bailey, what do the taxpayers get
for the direct payments? What's the purpose of them, and what
do the taxpayers get in return?
Mr. Bailey. Well, the taxpayer gets a payment into the
contract that I talked about at the beginning between
agriculture and the rest of society. It is a bottom-line
payment for participation for being involved in programs, and
as far as I'm concerned, that is the general parameter of it,
and I won't go further by evaluating whether that's a good sale
for the taxpayers or not.
Mr. King. Mr. Bailey, would that mean also that what it is
is part of the contract with the consumers, with the broader
society, but in exchange, would it be specifically the only
thing that any--likely that any of the people who are ag
producers that didn't qualify for any other benefits--would
that be the only thing that is a government incentive to be
conservation compliant?
Mr. Bailey. It would be a dominant one, yes.
Mr. King. Perhaps EQIP or something else of that nature?
Mr. Bailey. Yes.
Mr. King. That is the general dominant, and so its
conservation compliance would be the purpose of direct
payments.
Mr. Bailey. One of them, yes, is critical.
Mr. King. Well, I appreciate that.
Does anybody have any comment on that particular conclusion
that we've reached, and if not, rather than open up another
subject matter, I make the comment that I--I think Mr. Bailey
also is the only active pork producer.
Mr. Bailey. Not anymore.
Mr. King. Not anymore. Mr. Volz is not anymore, so we don't
have an active pork producer on the panel, nor in the next
section of witnesses, which I regret that we left that out,
that's probably partly my fault, unless Mr. Volz had a brief
comment.
Mr. Volz. We have facilities out--we rent our facilities
out to a neighbor that improves his hog flow because we get the
tail enders so we can clean his building out quicker so he can
get another turn a year. We end up getting a couple hundred
head of pigs out of each of his facilities, and then finish
finishing the rest, I would say, 190 to 240 or 50 or whatever
they want them at, and we get paid a fee per head that's about
all we have to do. There are still a few hogs on the place, but
nothing like it was.
Mr. King. Thank you, Mr. Volz, I appreciate it.
I thank all the witnesses.
Mr. Chairman, I yield back the balance of my time.
The Chairman [presiding.] I thank the gentleman, the
gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman, for beginning
this effort to set the dialogue for the 2012 Farm Bill on this
first swing. I want to thank Congressman Boswell for hosting us
here in this beautiful State of Iowa and my Iowa colleagues. I
hear a lot about Midwest farming and it's always good to come
out here and be able to see it.
Let me ask you first with the panel: Do any of you hedge
your crops with future contracts? How effective of a risk
management tool is it? I don't know, Mr. Bayliss, or the head
nodding that's going on over here, Mr. Bailey?
Mr. Bailey. Well, these are basically complicated marketing
decisions, and----
Mr. Costa. I know.
Mr. Bailey.--the success you have depends on the skill by
which you can evaluate the market and take those positions.
Basically, whenever you enter into a futures market or an
options market, you either triple or quadruple your marketing
decisions because if you deal only in cash you only have to
make one decision when you sell it. If you go the futures, you
have to go into the future to get out of the future and you
still have to sell the cash. One of the----
Mr. Costa. What's your rule of thumb?
Mr. Bailey. My rule of thumb is an evaluation of a general
marketplace to determine, in my mind, whether there's going to
be a major swing in prices. If there's going to be a major
swing in prices in order to protect your cost of production and
so forth, you probably better go ahead and take the position on
the futures market. I will not do it 100 percent of the time,
but that's just my marketing plan and part of the problem I've
got----
Mr. Costa. What's your business plan?
Mr. Bailey. Just the business. Part of my problem is that
for the first forty some years of farming I was like Mr. Lang
and I fed every kernel of corn and every silage and every bit
of hay that I grew, and you didn't worry too much about the
futures market at that time. So my son and I are still in
transition of gradually moving towards a cash/grain operation
and the use of those tools are different than when you were----
Mr. Costa. But you're saying it's an effective risk
management tool and a lot of your farmers surrounding you use
it?
Mr. Bailey. It can be, yes, with proper marketing skills it
can be an effective tool.
Mr. Costa. Mr. Lang, you talked about three generations of
your family farming. How many dairy cows are you milking?
Mr. Lang. We milk about 500.
Mr. Costa. Well, like you my family has been in the dairy
business for three generations, so I could get a job elsewhere
if I didn't have this one. I do have some redeemable skills.
You spoke about the California standards. I'm obviously
familiar with them since we've been in that place for a long
time. Would you go into more detail? I tried to get the
California standards in the last farm bill, unsuccessfully.
What benefits would there be, to not only producers, but also
from a nutrition standpoint if these standards were adopted
nationwide?
Mr. Lang. When they process milk, the first thing they do
is take out every part that's good for you.
Mr. Costa. Right.
Mr. Lang. And then they put some of it back in.
Mr. Costa. That's why we always like the raw milk.
Mr. Lang. When they sell skim milk, it's had all the fat
removed, and it's also had the protein removed. I believe the
California standard makes us put protein, they can still sell
nonfat milk, but the protein that's good for you has been put
back into the milk.
It also changes how they pay you for the milk because all
the important things they take out of the milk, well, they
don't have to pay you for all of those important things that
they take out of the milk. So it accurately pays people for the
quality and components of the milk they produce, and it dropped
down the price, not pricing, but the somatic cell count
process. Somatic cell is the indicator of the quality and the
healthiness of the milk.
Mr. Costa. Before my time expires, you're saying it's good
for the consumers?
Mr. Lang. It's good for the consumers. It's healthy.
Mr. Costa. And good for the producers because more of that
product is put back in the milk?
Mr. Lang. Yes.
Mr. Costa. You also testified on the boom and bust cycles.
You know, it started in California, the milk, in 2008 and we're
trying to--the Chairman mentioned an alternative milk proposal
with the National Holstein Association that's more market price
sensitive. I think dairymen have to, at some point in time,
have to get control of some level of the supply of milk if
they're going to have any ability to have impact on their
price. What's your thought?
Mr. Lang. Well, as milk price drops, it's a tendency of the
producer to----
Mr. Costa. If the prices are down, you produce more milk;
if the prices are up, you produce more milk, that's not a joke
anymore; it's this boom and bust cycle.
Mr. Lang. I think if someone was serious about taking care
of the supply, oversupply, problem we have in the country, we
make people sell better milk and that immediately removes cows
from the market. If you have a cow that's not producing healthy
milk, I can milk her, I can sell her milk, but we shouldn't do
that. If you want to reduce the supply of milk, improve the
quality of the milk.
Mr. Costa. Well, my time has expired, but I want to thank,
again, all of you, the witnesses here and look forward to
reading all of your testimony.
Thank you very much, Mr. Chairman.
The Chairman. I thank the gentleman. The gentleman from
Iowa, Mr. Latham. We'll ask him at the beginning of the
statement to explain to the audience about CHIMPS. I'm just
kidding.
Mr. Latham. About what?
The Chairman. CHIMPS. Changes in mandatory programs, what
you guys do over in Appropriations. I'm kidding.
Mr. Latham. We're trying to help you out, Mr. Chairman,
that's all.
This maybe is kind of a different kind of question, not
specifically about the farm bill itself, but family farm
operations, and I think each and every one of you. What do you
see today as the biggest threat to, I think generationally,
maintaining a family operation? And it doesn't have to be
pertaining to the farm bill, whether it be the death tax maybe
not being fixed.
We have some environmentalists today that--the same lawyer
that brought up the idea of indirect land use is also
advocating now that the larger the farmers are, the better
because then the government can better regulate farms. They can
have more control, you have taxes, EPA. What do you see as the
biggest threat to your operations, long term, to a family farm
operation? Start----
Mr. Bailey. Congressman Latham, short term it's that
agricultural policy and basically policy of this country is
going to be hijacked by special interest groups. I won't go any
further and name any names. I think that we all understand that
the forces of money behind the special interest groups to try
and warp and use public policy for their end, is a real hazard.
The second one right behind it is the structure of
agriculture. The fact that we've already talked about the
culture being vertically integrated. You know what happened to
the pork producers on this panel. We're not very far from the
beef industry from being vertically integrated, and let's face
it, with the patenting of DNA, it is now possible to vertically
integrate the crop industry.
So to me those are the big hazards to family farms because
basically when that happens, we become minimum-wage barn
cleaners and tractor drivers.
Mr. Latham. Mr. Bayliss.
Mr. Bayliss. I see one of the challenges is just with the
high-tech industries going to get to compete in agriculture.
It's getting the younger farmers the financing because, just
like it was mentioned, I think we're going to be down basically
to corn and soybeans in our area unless we want to get into
putting up huge buildings and closing operations, but just be
able to financially keep the young farmers going and our
children going. Looking into the future, we need to have
something in the farm bill that's going to be structured for
way out, more than just next week, next month, next year,
twenty years, thirty years down the road because they're well-
educated, our young kids. They went to college and are well-
educated kids, just keeping up financially to be able to
operate in that structure, machine costs, cost of production
that's my big concern to keep the family farms in the family.
Mr. Latham. Thank you. Mr. Lang.
Mr. Lang. The largest challenge for dairy farmers today and
particularly young people who want to farm, particularly dairy,
is the lack of return on your invested time and labor. I can do
lots of things that pay a lot better than what I do now, and I
wouldn't have to work nearly as hard. I do what I do because I
love my cows, and I don't expect to get rich, and that's a
sacrifice I make. I like what I do, but I don't make very much
money doing it.
Mr. Latham. Thank you. Mr. Volz, do you have----
Mr. Volz. Well, the biggest one for us is the death tax.
We're looking at the future, when your day comes, but when that
happens especially when land is valued in our area $5,000 to
$10,000 an acre. I would hate to see what we worked hard and
what my grandparents did, my dad did, and what I'm doing, be
gone because we can't afford to pay 50 percent in death taxes.
Like the high cost of machinery inputs. It's everything going
out of alignment. I don't know how it did it, but, well,
ethanol started it there wasn't going to be enough corn, I
guess that's that there.
Mr. Latham. Mr. Weems, very briefly, if you can.
Mr. Weems. Something along a little bit different line that
I worry about is for people outside of agriculture to
understand us and know us. As we get more efficient, as there
are fewer and fewer of us, and it's generations two and three
maybe even four generations from the farm, there are lots of
people who like to have the impact on what we do or part of the
impact is is that there isn't. They don't know how to make an
impact, and that's a challenge for us, just to get the general
population to understand what we do and why we do what we do,
and how we have to do it, and that's my concern.
Mr. Latham. Thank you very much, Mr. Chairman. Thank you,
panel.
The Chairman. Thank you, panel, and I thank all the
witnesses for taking your time today and being with us today
and providing your testimony and for answering questions. We
appreciate that.
I'd like to recognize we have some people here from USDA,
the Iowa State FSA Director John Whitaker. John stand up. Iowa
State Rural Development Director Bill Menner. Iowa State
Conservationist, Richard Sims. So give them a hand; they do a
great job.
And I'd also like to recognize our friends from United Food
and Commercial Workers who are with us today. They are an
important part of agriculture and process our products, and so
we appreciate you being with us today.
And so the panel is dismissed.
We'll call the next panel up, and Members, I'm going to
give you a 5 minute break to stretch your legs a little bit.
[Recess.]
The Chairman. We'll welcome the second panel to the table,
and Mr. Warren Erickson who's a dairy processor from Des
Moines, and Jim Schaben from Dunlap, Iowa. Bob Skow, crop
insurance representative from West Des Moines, and Jeff
Stroburg, cooperative operator from Ralston, Iowa.
So, we welcome all of you to the Committee, and Mr.
Erickson, you can begin when you're ready.
STATEMENT OF WARREN ERICKSON, DAIRY PROCESSOR, DES MOINES, IA
Mr. Erickson. Mr. Chairman, welcome to Iowa.
The Chairman. Get up close. I have seen it a couple times.
Mr. Erickson. Thanks for the opportunity to be here today.
My name is Warren Erickson. As you know, I'm the Chief
Operating Officer of Anderson Erickson Dairy. We're located
just down the street here in Des Moines. This year AE is
celebrating our 80th anniversary as a family owned and operated
business. And I'm part of the third generation at AE and help
run the company with my sister and my father.
AE is one of the few remaining independent dairy processors
in the country and Congressman Boswell knows our company well,
and I'd like to thank him on behalf of the entire dairy
industry for his leadership.
Today we're at a crossroads regarding U.S. dairy policy.
For more than a year, this Committee has heard from hundreds,
if not thousands, of dairy farmers who have been ill-prepared
to deal with the volatility and tumultuous downturn in 2009
milk prices. That's coming off a period of record high prices
in 2007 and 2008. This dairy price volatility has driven some
out of business, and it creates difficulties for all dairy-
related businesses in their planning processes; however, we
compete in a food marketplace where others have just as much,
if not more, volatility with their agricultural commodities.
What's different for them? Well, to begin with, they don't
have milk as a primary ingredient, and so they're not subject
to the vagaries of the USDA's milk price regulations and their
intervention in the marketplace in the dairy price support
program. In addition, they have better marketplace financial
tools to mitigate their risks. As a result, their entire supply
chain can, and usually does, use those tools to plan their
business activities despite that greater volatility. And from
what I can tell after observing some of the proposals from
dairy industry groups and the hearings this Committee has held
in the past year, I'm encouraged that the dairy industry seems
to be agreeing that we need significantly better risk
management tools.
But before talking about risk management, I did want to
spend a moment to talk about the notion that price volatility
can be controlled by regulating this U.S. milk supply. This
concept hasn't worked for other agricultural products, and I
don't think it will work for dairy either.
In the past decade, the milk supply in Iowa has grown about
11 percent. Today at AE we use 100 percent Iowa farm milk.
That's compared to 65 percent just 3 years ago. This growth in
Iowa milk production has been good for our state. It's created
investments in jobs that would not have been possible if the
supply management policies being proposed by some had been in
place.
That's not saying it's been easy with the dairy producers
in Iowa. They've struggled just like everybody else, but the
point I'm making is the solution to manage price volatility is
not to have the government manage the milk supply. They tried
that in Canada and that supply management hasn't worked. Now,
in Canada, they are stuck in stagnant production, stagnant
consumption and Canadian dairy investment is moving to the U.S.
because of some supply concerns. We should encourage growth as
it leads to increased investments and jobs.
I want to get back to the discussion of risk management
because I think that's where the Members of this Committee can
really be helpful in leading the dairy industry toward new,
better policies. USDA spent $5.4 billion on crop insurance
premium subsidies in 2009, but none of that was spent on dairy
revenue subsidies. Proposals, including one they mentioned
earlier by the National Milk Producers Federation, that focus
on margin protection, make a lot of sense to me. This approach
makes sense because it allows the producers to protect the
margin between the milk prices and the feed prices and other
costs. That's the same thing you have to do at AE. We have to
protect our margin and sale price and our milk price. And this
fundamental business model should be the same for the farmers.
As I told this Committee 3 years ago, I'm not a big fan of
the Federal Milk Marketing Order system. It constrains our
ability to innovate and price milk according to the highest
value in the marketplace. I recognize this Committee is not
likely to throw the whole system out. So I ask that you would
significantly simplify it and support efforts and discussions
within the dairy industry on what details of such a
simplification would look like.
I feel optimistic about the future for dairy producers and
processors in Iowa and across the country. I'm proud to help
supply AE's customers with nutrient rich dairy products. We
keep all that good stuff in there when we process it. We were a
little bit set back earlier, but our industry has great
potential to prosper if our policies and regulations encourage
rather than discourage creating new and innovative dairy
products customers are looking for, as well as not limit in any
way our milk supply to grow and meet market demand both
domestic and abroad.
I respectfully ask this Committee to focus on putting in
place appropriate dairy farm safety nets and encourage great
use of financial tools to mitigate risks, while getting rid of
the current dairy policies that aren't working and to simplify
the Federal milk pricing system. Supply management in all its
shapes and forms is a threat to the future of AE and to the
entire U.S. dairy industry. Thanks again for the invitation.
[The prepared statement of Mr. Erickson follows:]
Prepared Statement of Warren Erickson, Dairy Processor, Des Moines, IA
Thank you for the opportunity to be here today. I'm Warren
Erickson, Chief Operating Officer of Anderson Erickson Dairy Company in
Des Moines, Iowa. This year AE is celebrating 80 years as a family
owned and operated business. I am a third generation dairy operator and
run the company with my sister and father. AE is one of the few
remaining, large independently-owned dairies in the country.
Congressman Boswell knows our company well, and I would like to thank
him for his leadership as our Congressman on behalf of the Iowa dairy
industry.
I don't need to tell any of you that today we are at a crossroads
on U.S. dairy policy. For more than a year, this Committee has heard
from hundreds, if not thousands of dairy producers who have been ill-
prepared to deal with the tumultuous down turn in 2009 milk prices
following the period of record high prices in 2007 and 2008. This dairy
price volatility has driven some out of business. It creates
difficulties for all dairy related businesses, from input suppliers to
grocery stores and restaurants, in planning their business activities.
However, we compete in a food marketplace where others have just as
much if not more agricultural commodity price volatility. What is
different for them? To begin with, they do not have milk as their
primary ingredient and therefore are not subject to the vagaries of
USDA's milk price regulations and interventions in the marketplace
under the dairy price support program. In addition, they have much
better marketplace financial tools to mitigate risk. As a result their
entire supply chain can, and usually does, use these tools to plan
their business activities despite greater price volatility than seen in
the dairy industry in recent years.
From what I can tell, after observing some of the proposals from
dairy industry groups and the hearings this Committee has held in the
past year--I'm encouraged that the dairy industry seems to be agreeing
that we need significantly better risk management tools. But before I
talk more about risk management--I want to address the ill conceived
notion that price volatility can be controlled, or avoided, by
regulating the U.S. milk supply.
Can you imagine if today corn or soybean growers came in and asked
you to write a law that would take us back to acreage set asides in an
attempt to control production and limit their ability to meet growing
domestic and export demand? Basically, that is exactly what some dairy
producers and their organizations are asking for. Corn and soybean
prices both experience more price volatility than dairy--in fact most
commodity markets have more volatility than dairy--but these other
commodity markets have two things the dairy industry does not.
First of all, government policy for other agricultural commodities
focuses on providing subsidized insurance programs and direct payments
as a farm safety net. In addition, there are not government programs
that dictate prices that must be paid to farmers each month.
Second, they have market based risk management tools that allow
them to manage price volatility. These other commodity industries
understand the very negative market consequences of trying to control
price volatility through government intervention; that is a key reason
there are no longer acreage set asides. For these commodities, the last
thing they would want Congress to do is limit their potential to meet
growing demand, both domestic and abroad, with a mandatory, government
run supply management policy.
In the past decade, the milk supply in Iowa has grown by over 11%.
Today AE uses 100% Iowa farm milk--compared to just 65% 3 years ago
when we imported farm milk from other states. This growth in Iowa milk
production, investment and job creation would not have been possible if
the supply management policies being proposed by pockets of producers
in a few states had been in place. That's not to say that it's been
easy for dairy producers in Iowa--far from it, our dairy farmers both
large and small have struggled like those everywhere. But the point I'm
making is that the solution to managing price volatility is not to have
the government manage the milk supply.
I get really nervous when I look north to Canada and see what has
happened to their dairy industry since they implemented supply
management in the 1970s:
u Canadian farm milk production is lower today than then; U.S. farm
milk production has grown by over 60% during that time.
u Per capita dairy consumption in Canada has been flat over the past
30 years; U.S. per capita dairy consumption has grown by 11%
during that period.
u The total value of Canadian dairy exports is down in recent years;
meanwhile, U.S. dairy exports have nearly doubled in recent
years--in 2002, U.S. dairy exports accounted for about 5% of
U.S. milk production only due to significant use of government
export subsidies (DEIP), while dairy exports have accounted for
about 10% of U.S. farm milk production since 2007 with very
little use of export subsidies.
u Canadian dairy processors are expanding here in the United States,
through acquisitions and new investments because their milk
supply at home is constrained.
Government supply management in the U.S. dairy industry would take
us in this same direction. If you restrict growth, no matter how
cleverly designed a policy might be, or the rhetoric behind it, the
U.S. dairy industry loses--it would lead to job reduction and reduce
incentives for this industry to reinvest in its infrastructure and
cultivate new investment to meet growing dairy demand both here and
abroad.
Now I want to get back to the discussion of risk management--
because I think that is where Members of this Committee can be most
helpful in leading the dairy industry towards new and better policies.
USDA spent $5.4 billion on crop insurance premium subsidies in
2009, but none of that was spent on dairy revenue insurance premium
subsidies. The one dairy-oriented program in existence today--the
Livestock Gross Margin insurance program (or LGM-Dairy) started in late
2008, but is hardly used by dairy farmers even though it is designed to
protect against unexpected declines in gross margin (market value of
milk minus feed costs) on a target quantity of marketed milk. This
program certainly needs to be more affordable for producers, and USDA
needs to focus on education and outreach to get more farmers protected.
There are also other proposals, including one that the National Milk
Producers Federation is proposing that focuses on margin protection,
and we think that is an idea that looks promising.
This type of approach makes sense because it would allow producers
to protect the margin between milk prices and feed and input costs. At
AE, we have to protect the margin between what we receive for our
packaged dairy products and the regulated minimum prices we pay our
farmers. This fundamental agribusiness model should be the same for
farmers. When milk prices are high and feed costs are also high, a
price based farm safety net is completed outdated. There have been
times when farm milk prices were higher than they are today, but feed
costs were even higher and farmers still needed help then. There are
other times when milk prices are lower, but feed costs are also low,
and farmers may not need as much assistance during those periods. For
this reason, I believe the concept of a farm safety net program that is
designed around protecting a farmer's margin between their milk price
and feed costs should be the central focus of this Committee, and the
resources currently used for other programs, such as the dairy price
support program, should be redirected.
I would also likely to briefly address the Federal Milk Marketing
Order (FMMO) system and the current mandatory price reporting we have
in the dairy industry.
As I told this Committee 3 years ago, I am not a fan of the FMMO
system. It constrains our ability to innovate and price milk according
to the highest value it has in the marketplace. But I recognize that
this Committee is not likely to throw the system out entirely. So I ask
that you significantly simplify it and support efforts and discussions
within the dairy industry on what the details of such a simplification
would look like.
Recently a number of dairy groups asked USDA to consider requiring
more frequent price reporting on a greater number of dairy products.
I'm certainly all for better access to market price information, but
frankly, over 70% of the milk in the U.S. is priced off monthly
announcements from USDA, using weekly average mandatory price reports.
Until the marketplace is allowed to determine milk prices, and that
would only come through significant changes to the Federal order milk
price regulations, changing USDA's frequency and volume of price
reporting requirements would only be window dressing.
The current weekly reporting is based on each day's sales, and is
still only used to change Federal order farm milk prices once a month.
What good would reporting and publishing that data more frequently do
if the industry cannot use that information to change farm milk and
other prices more often as desired by both buyers and sellers? The
current system does not allow for tailoring procurement and sales price
changes more often than once per month, so what good is having daily
price information if we can't use it.
I am also concerned that, rather than simplify the Federal order
price regulations, others would call for this newly reported data to be
used to make the price formulas more complex or increase the number of
classes of milk. More regulation and reporting will not help Iowa dairy
farmers and Iowa dairy processors like my company stay competitive.
I feel optimistic about the future for dairy producers and
processors in Iowa and across the country. I am proud to help supply
AE's customers with nutrient-rich dairy products. Our industry has
great potential to prosper if our policies and regulations encourage
rather than discourage creating new and innovative dairy products
consumers are looking for, as well as not limit in any way our milk
supply to grow and meet market demand both domestic and abroad. I
respectfully ask that this Committee focus on putting in place
appropriate dairy farm safety net and encourage greater use of
financial tools to mitigate risk while getting rid of current dairy
policies that aren't working, and to simplify the Federal order milk
pricing system. Supply management, in all its shapes and forms, is a
threat to the future of AE and the entire U.S. dairy industry.
Thank you again for the invitation to speak today.
The Chairman. Thank you, Mr. Erickson for your testimony.
Mr. Schaben, welcome to the Committee.
STATEMENT OF JIM W. SCHABEN, Jr., LIVESTOCK OPERATOR, LAMONI,
IA
Mr. Schaben. Chairman Peterson, Congressman Boswell,
Agriculture Committee Members, staff and guests, I want to
thank all of the Members of the Agriculture Committee and staff
for the invitation to give testimony here today and allowing
each of us the opportunity to express our feelings and
concerns, apprehensions and enthusiasm about agriculture both
here and all across the United States.
My name is Jim Schaben. I reside in Dunlap, Iowa, a town of
less than a thousand people in western Iowa. Like most towns
the size of Dunlap in the Midwest, our community is heavily
dependent on the health and well-being of agriculture.
I'm a part owner in the Dunlap Livestock Auction, a now
third-generation family business that was started in 1950 by my
parents. Most recently we've expanded our business to include a
livestock auction in eastern Nebraska in the town of West
Point. Between the two markets, we are currently selling
between 175,000 and 190,000 cattle annually. Our business is
made up of all facets of the cattle industry including selling
finished weight steers and heifers ready for harvest to packers
across the Midwest, selling locally raised feeder cattle for
feed yards both large and small in a mostly seven-state region,
and selling replacement females to help populate the pastures
in the upper Midwest.
Having a cattle auction nearly every week, every day of the
week has its ups and downs, but it does allow me to conduct
business on a day-to-day basis with some of the best people
this country has to offer. I'm excited to tell folks that most
recently my son has joined our business with the hope of being
able to raise one more generation in the heartland serving
America's cattle producers.
Some of the events of the recent past that are a cause of
concern, I want to address today. In the last 5 years, I have
watched a huge change in the cow/calf business in the Midwest.
There's been a flight out of the cow business at paces I've
never witnessed in my thirty years at the livestock auction.
Those huge numbers of cow dispersals have been caused by an
economic disparity when you compare profitability with the cow
business, with other aspects of agriculture, most notably
farming. With the recent rally in grain prices and the advances
in yield technology, we have watched the demand for pasture
increase from the pressure of crop farmers to the point it is
either driving the cow men off the land, or turns the pasture
into grain crops because of the higher dollar acre return.
I do understand economics and the forces of supply and
demand, but the field of play has not always been level in the
livestock industry. In order to keep the livestock producer on
the land, and ensure that his way of life is kept intact for
generations to come, something is going to have to change and
hopefully change quick.
In the writing of the 2012 Farm Bill, I would ask Members
and staff to explore a greater length and depth for the
possibility of furthering the idea of a partnership of sorts
that could bring cow producers, conservationists, and grain
farmers to the table allowing a more aggressive set aside
program that would give more consideration to the cowmen.
Partial grazing of CRP acres is a great start, but the programs
need to be enhanced and allow the cowmen more access to those
acres. Being able to graze the CRP acres for only a few months
in already a short season poses all sorts of problems.
Allocating the cost of fencing for short grazing period is just
not cost effective. What happens with the cows during those
months you cannot graze the CRP. There are serious extra
trucking costs, moving costs in bringing animals back and forth
from the CRPs in the short period of time. These expenses add
to an already thin profit margin making the decision to
disperse a cow herd a disappointing realty.
If marginal farmland could be set aside with the program
that puts the emphasis on encouraging cow/calf production along
with conservation, I believe it could be a good situation for
all involved. We need to encourage participation from young
cattle producers, landowners or landlords and the Federal
Government. All the while the primary concern should be a level
playing field and enhancing economic vitality in the cow
industry in this country. We've had a good start with the last
farm bill, but the program needs to be improved. Anything that
can be done to ensure the survivability of our young
agricultural producers has proven to yield all kinds of
positive results in our community both economic and societal. I
hope you'll keep the economic well-being and survivability of
the livestock producers as a high priority in the 2012 Farm
Bill.
Again, I want to thank all the Members of the Agriculture
Committee for your time and commitment to this country and all
of agriculture.
Thank you.
[The prepared statement of Mr. Schaben follows:]
Prepared Statement of Jim W. Schaben, Jr., Livestock Operator, Lamoni,
IA
I want to thank all the Members of the Agricultural Committee and
staff for the invitation to give testimony here today and allowing each
of us the opportunity to express our feelings, concerns, apprehensions
and enthusiasm about agriculture both here in Iowa and all across the
United States.
My name is Jim Schaben and I reside in Dunlap, Iowa, a town of less
than 1,000 people located in western Iowa. Like most towns the size of
Dunlap in the Midwest our community is heavily dependent on the health
and well being of agriculture.
I am a part owner in the Dunlap Livestock Auction, a now third
generation family business that was started in 1950 by my parents. Most
recently we have expanded our business to include a livestock auction
in Eastern Nebraska in the town of West Point. Between the two markets
we are currently selling between 175,000 and 190,000 cattle annually.
Our business is made up of all facets of the cattle industry including
selling finished weight steers and heifers ready for harvest being sold
to packers across the Midwest. Selling locally raised feeder cattle
bound for feed yards both large and small in a mostly seven state
region and selling replacement females to help populate the pastures in
the upper Midwest. Having a cattle action nearly every day of the week
has its ups and downs but it does allow me to conduct business on a day
to day basis with some of the best people that this country has to
offer. I am excited to tell folks that most recently my son has joined
our business with the hope of being able to raise one more generation
in the heartland serving America's cattle producers.
It is some of the events of the recent past that are a cause of
concern that I want to address today. In the last 5 years I have
watched a huge change in the cow/calf business in the Midwest. There
has been a flight out of the cow business at a pace that I have never
witnessed in my 30 years at the livestock auction. Those huge numbers
of cow dispersals have been caused by a economic disparity when you
compare profitability of the cow business with other aspects of
agriculture most notably grain farming. With the recent rally in grain
prices and the advances in yield due to technology we have watched the
demand for pasture increase from the pressure of crop farmers to the
point it is either driving the cow man off the land or he himself turns
the pasture into grain crops because of the higher dollar per acre
return. I do understand economics and the forces of supply and demand
but the field of play has not always been level when the livestock
industry is involved. In order to keep the livestock producer on the
land and ensure that his way of life is kept intact for generations to
come something is going to have to change and change quick.
In the writing of the 2012 Farm Bill I would ask that Members and
staff explore at a greater length and depth the possibility of
furthering the idea of a partnership of sorts that could bring cattle
producers, conservationists and grain farmers to the table allowing for
a more aggressive ``set-aside'' program that would give more
consideration to the cow man. Partial grazing of CRP acres is a great
start but the program needs to be enhanced and allow the cowman more
access to those acres. Being able to graze CRP acres for only a few
months during an already short season poses all sorts of problems.
Allocating cost of fencing for a short grazing period is not cost
effective. What happens with the cows during the months that you cannot
graze the CRP. There are extra trucking costs moving animals back and
forth from CRP. These expenses add to an already thin profit margin
making the decision to disperse a cow heard a disappointing reality.
If marginal farmland could be ``set aside'' with a program that put
the emphasis on encouraging cow calf production along with conservation
I believe it could be a good situation for all involved. Encourage
participation from young cattle producers, land owners and/or landlords
and the Federal Government. All the while the primary concern should be
to level the playing field and enhance the economic vitality of the cow
industry in this country. We've had a good start with the last farm
bill but the program needs to be improved. Anything that can be done to
ensure the survivability of our young agricultural producers has proven
to yield all kinds of positive results in our communities both economic
and societal.
I hope you will keep the economic well-being and survivability of
the livestock producers as a high priority in the 2012 Farm Bill.
Thank you again to all the Members of the Agriculture Committee for
your time and commitment to this country and all of agriculture.
The Chairman. Thank you very much for that testimony. Mr.
Skow.
STATEMENT OF BOB SKOW, CROP INSURANCE AGENT REPRESENTATIVE,
WEST DES MOINES, IA
Mr. Skow. Thank you. I'm here on behalf of the Independent
Insurance Agents of Iowa who represent the business interests
of every Iowa independent insurance agency. We represent over
720 agencies in the state and have about 291 branch offices, so
we have over a thousand door fronts located in virtually every
community in this state. We appreciate the opportunity to
provide our perspective today on what role the independent
insurance agent plays in the delivery of the Federal Crop
Insurance Program.
Independent agents offer all lines of insurance: Property,
casualty, life, health, employee benefit plan, and retirement
products. Our agents live in their communities and serve the
needs of their communities not only offering insurance
products, but we serve typically as key leaders, for example
serving as volunteer firefighters, youth leaders, school board
members, city council members, et cetera.
The typical agency employs support staff who helps service
the product in addition to the writing agent. They have
considerable overhead; computers with downloadable fast
Internet connections to the companies, office space,
advertising, auto, payroll, and they have insurance taxes, and
other expenses, which need to be paid out of their commission
dollars that they collect for selling insurance.
From 1938 to 1981, the United States Department of
Agriculture was solely responsible for delivering the Federal
crop insurance program. Beginning in 1981 continuing until the
late 1980s, Congress began a transition period when the Federal
crop insurance program was delivered by both the USDA, through
the structure known as master marketers, as well as private
sector companies, through a structure known as the standard
reinsurance agreement. In mandating the transition, Congress
recognized that the sales talents and experience of the private
sector commissioned agents are essential to fulfilling the goal
of nationwide, generally accepted all-risk insurance
protection. As a result, Congress placed the large burden of
the program delivery on the agents' shoulders and required them
to provide full service to the client including, but not
limited to, the sales.
Crop insurance agents have proven instrumental in achieving
the program's goal of helping farmers make well-informed risk
assessments and choices about the coverage that they purchase.
These agents are knowledgeable about the technicalities of the
crop insurance program and are skilled at assisting farmers
with the concerns that directly impact their coverage, such as
unit structures and yield guarantee weakness. They also have
the training and experience necessary to encourage
participation of small, limited resource, and minority
producers such as required under the SRA.
Statistics for the 2008 crop year, as reported by the Risk
Management Agency, show how widely the program is accepted and
utilized by farmers, and how effectively and efficiently it
serves their risk management and cash flow needs of American
farmers. The 2008 crop year, the program provided coverage on
more than 272 million acres in all 50 states, which is more
than 80 percent of the insurable acres with liability
protection exceeding $90 billion. Today an agent does more work
per policy than ever before. They do all the data entry. They
keep the yield records per unit, not per policy. The reality is
that there's more work and expertise required of an agent in
servicing this product per acre.
Crop insurance agents are proud to have been a partner in
the successful transition and expansion of the invaluable
program to farmers. Unlike property-casualty insurance
industry, a crop insurance agent's responsibility requires a
more hands-on approach, which increases the threshold for
errors and omissions exposure.
On average with advanced meeting preparation, travel, and
meeting time, an agent spends 7 hours on a policy during the
sales window alone. A transaction typically begins when the
agent quotes the wide variety of different plans of insurance
available. There can be as many as 247 in some states like
Iowa, and they go on explaining the production reports and
supporting record requirements for the farmers. The agent
explains different date requirements by crop insurance for
application and actual production history. The agent reports
the farmer's options and claims.
The agent, in addition, is responsible for implementing
procedures for prevention planning, yield adjustment, unit
division, power of attorney, and I think you probably
understand there's a lot of work.
As we move forward, the Federal Crop Insurance Program is
an indispensable tool. Without crop insurance, many farmers
would be unable to obtain financing. Crop insurance makes the
process for farmers to obtain annual operating loans much
easier and more efficient. In the case of farmers who purchase
crop insurance, banks require less collateral because they
consider these farmers to be better protected.
I would like to thank you all for your leadership during
this difficult time in agriculture, and I'd like to take this
opportunity to express our concerns, as Iowans, regarding the
components of the current 2011 SRA negotiations as outlined in
the second draft release. I know our Congressmen, and those at
the table, have all signed a letter expressing some of their
concerns, and I will go to my conclusion because of the limited
amount of time. I do suggest that we all take a hard look at
that and the impact it will have as we move forward.
We thank the Committee for allowing us to present our
written testimony at today's hearing. We'd be happy to work
with the Committee at any time to further explain the vital
role that crop insurance agents play. Thank you.
[The prepared statement of Mr. Skow follows:]
Prepared Statement of Bob Skow, Crop Insurance Agent Representative,
West Des Moines, IA
The Independent Insurance Agents of Iowa (IIAI) represents the
business interests of almost every Iowa independent insurance agency.
We are proud to report 720 member agencies, who serve the citizens of
Iowa with another 291 branch offices, more than a thousand door fronts
located in virtual every town in the state, we represent over 8,000
licensed Iowa agents. We also have 97 companies who give IIAI support
by being Affiliate members. We appreciate the opportunity to provide
our perspective today on the important role independent agents play in
the delivery of the Federal Crop Insurance Program (FCIP). Independent
agents offer all lines of insurance--property, casualty, life, health,
employee benefit plans, and retirement products. Our agents live in
their communities and serve the needs of the communities not only
offering of insurance products but also typically serve as key leaders,
for example serving as volunteer firefighters, youth leaders, school
board and City Council members. The typical agency employs licensed
support-staff who help in servicing of the products, in addition to the
writing agent. They have considerable overhead; computers with
downloadable fast Internet connections to the companies, office space,
advertising, auto, payroll, insurance (Liability, Workers'
Compensation, Health) taxes and other expenses which must be paid out
of the commission they collect from selling insurance products.
Private Delivery of the Federal Crop Insurance Program
From 1938 until 1981, the United States Department of Agriculture
(USDA) was solely responsible for delivering the Federal crop insurance
program. Beginning in 1981 and continuing until the late 1980s,
Congress began a transition period when the Federal crop insurance
program was delivered by both the USDA, through a structure known as
``master marketers,'' as well as private sector companies, through a
structure known as the ``standard reinsurance agreement'' (SRA).
In mandating this transition, Congress recognized that ``the sales
talents and experience of the private sector commissioned agents . . .
are essential to fulfilling the goal of nationwide, generally accepted
all-risk insurance protection.'' As a result, Congress placed the
``large burden of program delivery'' on agents' shoulders and required
them to provide ``full service to the client'' including, but not
limited to, sales.
Crop insurance agents have proved instrumental in achieving the
program's goal of helping farmers make well-informed risk assessments
and choices about the coverage that they purchase. These agents are
knowledgeable about the technicalities of the crop insurance program
and skilled at assisting farmers with concerns that directly impact
their coverage, such as unit structures and yield guarantee weaknesses.
They also have the training and experience necessary to encourage
participation of small, limited resource and minority producers, as
required under the SRA.
Statistics for the 2008 crop year, as reported by the Risk
Management Agency (RMA), show how widely the program is accepted and
utilized by farmers and how effectively and efficiently it serves their
risk management and cash flow needs. For the 2008 crop year, the
program provided coverage on more than 272 million acres across all 50
states, which is more than 80 percent of the insurable acreage, with
liability protection totaling almost $90 billion.
Today an agent does more work per policy than ever before. They do
all the data entry, they keep the yield records per unit--not per
policy. Reality is there is more work and expertise required of an
agent in servicing this product per acre. Crop insurance agents are
proud to have been a partner in the successful expansion of this
invaluable program for farmers.
Agent Workload and Program Complexity
Unlike the property-casualty insurance industry, a crop agent's
responsibilities require a much more hands-on approach, which
invariably increases the threshold for errors and omissions (E&O)
exposure (Professional liability). On average, with advance meeting
preparation, travel, and meeting time, an agent spends approximately 7
hours on a policy during the sales window alone. A transaction
typically begins with the agent quoting the wide variety of different
plans of insurance available (as many as 247 in some states) then
explaining production reporting and supporting record requirements to
the farmer. The agent explains different date requirements by crop and
coverage for application, the actual production history (APH), the
acreage report, and the farmer's options and claims. He completes APH-
related forms for the farmer, calculates preliminary yields, reviews
production early to determine if there is a revenue loss, reviews the
APH form for completeness and accuracy, and forwards the signed form
and any applicable worksheets to the company. The agent must also
review approved APH from the company to ensure accuracy, explain
approved APH yields to the farmer, and provide him with a copy.
Additionally, the agent is responsible for implementing procedures
for Preventive Planting, Yield Adjustment, Unit Division changes, Power
of Attorney requirements, or any of the other technical policy
provisions. All of preceding goes into writing the policy--and does not
even factor in the consequences of a potential loss, which occurs more
often than any other line of insurance.
Compared to the sale of life, farmowners, homeowner's, or auto
insurance, the sale of crop insurance is indeed extremely complex and
challenging. Life, auto, farmowners and homeowner's insurance each only
require one form (application) to fill out and file, and the claims
made on those products are relatively rare in comparisons to crop
insurance.
Crop Insurance_an Indispensable Financing Tool
The Federal Crop Insurance Program is an indispensable financing
tool. Without crop insurance, many farmers would be unable to obtain
financing. Crop insurance makes the process of farmers obtaining annual
operating loans much easier and more efficient. In the case of farmers
who have purchased crop insurance, banks usually require less
collateral because they consider these farmers to be better protected.
Many younger farmers with less collateral would be unable to obtain
financing without crop insurance.
Farmers understand more and more that crop insurance is another
cost of doing business. However, the purchasing cost of crop insurance
provides certain benefits for the farming operation, including greater
ability to finance land purchases, enter into land rental contracts,
and arrange production input purchases. Protection provided by the
program gives a lender much more confidence in extending credit.
Standard Reinsurance Agreement
I would like to thank you for your leadership during this difficult
time in agriculture, and I would like to take this opportunity to
express our concern, as Iowans, regarding components of the 2011 SRA
renegotiation as outlined in the second draft released on February 23,
2010. The current draft, which fundamentally changes the delivery of
the crop program, concerns us because the proposals would impact Iowa
disproportionately compared to the rest of the country. As a leader in
crop insurance participation, the proposal to create reference prices
for two staple crops in Iowa corn and soybeans would result in price
cuts close to 30%. In 2009, insurance for these two crops represented
$735 million out of $744 million (nearly 99 percent) in premiums
written in Iowa. Additionally, Iowa will not receive the five percent
delivery adjustment increase proposed for all other states because it
falls into the State Group 1 category.
The reinsurance terms for State Group 1 also appear to reduce the
potential underwriting gain of companies by nearly 30 percent, while
increasing overall risk on the loss side. Clearly, this type of risk/
reward change will force companies to consider changes to their
participation in the crop program in Iowa, relative to other parts of
the country. These proposed changes to the delivery cost system concern
Iowans because of the disproportionate effect the changes have on our
state. Our large agriculture economy employs thousands of workers and
creates thousands of sustainable jobs. The number of agents and
companies writing in Iowa make this program highly competitive.
Jeopardizing the solid structure of the FCIP may have far reaching and
unintended consequences for a state like Iowa whose economy depends so
heavily on agriculture.
Conclusion
The IIAI thanks the Committee for allowing us to present this
written testimony at today's hearing, and we would be happy to work
with this Committee at any time to further explain the vital role that
crop insurance agents play in the FCIP.
As this Committee and Congress begin to consider the 2012 Farm
Bill, it is imperative that any and all proposals keep in mind the
strength and security that the FCIP has brought to American farmers,
and the role that independent insurance agents have had in the success
of the FCIP. In particular, we ask that the Committee take into account
the increased efficiency of the private delivery of the FCIP over
direct government sales, the small business jobs produced in rural
America through the crop program, and the extraordinary workload crop
insurance agents face as compared to other property and casualty
insurance lines. The strength of the FCIP rests upon the partnership
that exists between the government, insurance providers, agents, and
farmers. We commend this Committee for continuing to examine ways to
improve both these partnerships and the program, and we look forward to
continuing to work with the Committee in this effort.
The Chairman. Thank you, Mr. Skow, we appreciate your
testimony.
Mr. Stroburg, welcome to the Committee.
STATEMENT OF JEFF STROBURG, GRAIN AND INPUT COOPERATIVE
OPERATOR, RALSTON, IA
Mr. Stroburg. Thank you, Chairman Peterson, and thank you
to the Members of the Committee for the opportunity to testify
today regarding the 2012 Farm Bill. I'm Jeff Stroburg, and I
serve as President and CEO in West Central Cooperative in
Ralston. I also serve as Chairman and CEO of Renewable Energy
Group.
In the mid 1990s West Central began using soybeans to
manufacture biodiesel as a way to add value to local producers.
Since that time, Renewable Energy Group as emerged from West
Central to become the largest biodiesel manufacturing and
marketing business in North America.
The Farm Bills of 2002 and 2008 energy titles have
increased value for agriculture commodities and co-products by
promoting biodiesel use. According to the Untied Soybean Board,
25 cents has been added to every bushel of soybeans as a result
of the growth of the biodiesel industry.
In 2009 the Iowa Cattlemen's Association stated that Iowa
livestock producers earn more than $9 per head as a result of
the demand for animal-based biodiesel.
In October of 2009, the National Biodiesel Industry used
more than 50 million pounds of inedible fats from our partners
in the livestock slaughter and render industries. REG also been
purchasing inedible corn oil from the DDG Coke product stream
for use as biodiesel feed stock. A pound of inedible corn oil
averages 25 cents per pound. A new value returned to ethanol
producers and in turn corn growers through the use of inedible
corn oil and biodiesel.
These successes from the 2002 and 2008 energy titles lead
me to Renewable Energy Group's comments and recommendations
regarding the 2012 Farm Bill. The foundation of my remarks stem
from the serious economic uncertainty of financial
institutions. Today, banks are simply not willing to partner
with commercial-ready bioenergy projects. I'll address three
areas of the energy title sections 9003, 9005, and 9007, and
I'll make a recommendation for a new program concept utilizing
countercyclical payments.
First, each of the loan guarantee programs in the section
9003 and the Biorefinery Assistance Program and in section
9007, Rural Energy for America Program, that was referenced
earlier, allow for grants, but what was not allowed is a
package where a loan guarantee and a grant together would form
the 80 percent government threshold. We recommend packaging
loan guarantees and grants together at the 80 percent threshold
regardless of the total project loan. Having a grant package
with a loan guarantee, a lender reduces his risk of exposure.
We recommend that USDA is allowed to determine what portion is
a loan guarantee and what portion is a grant, in order to
encourage lenders to partner with projects more easily.
We believe a package of loan guarantees and grants promote
more banks and lending institutions to step forward, more
projects to be awarded, and more competition as a result. For
example, REG currently has two commercial ready biodiesel
plants in construction on hold. One in New Orleans and on in
Emporia, Kansas. These facilities are strategically located to
add value to midwestern agriculture, and to quickly integrate
biodiesel into the petroleum infrastructure of the southern
U.S. However, due to a lack of debt financing, these plants are
more than 18 months overdue. Being able to package loan
guarantees with grants would entice our lending partners to
approve the financing and finalize construction, and then of
course begin manufacturing biodiesel.
Next under section 9005, the Bioenergy Program for Advanced
Biofuels we would like to introduce a new concept for your
consideration. This program is designed to assist the
industry's transformation to assist the next generation of feed
stocks and next generation of biorefinery technology. As
currently written, the incentive payments are based on
production capacity and actual gallons produced. Our
recommendation is to create a countercyclical payment or safety
net directed to biodiesel producers to manage risk during high
commodity price trends.
Agricultural co-products and by-products as feedstocks
account for 85 percent of the cost of the gallon of biodiesel.
As the cost of soybean oil increases as it did in 2008, up to
75 cents a pound, soybean farmers receive additional value per
bushel, which is great for farmers, but it adds to the cost of
soybean oil feedstocks. In response to soybean oil price
pressures, the biodiesel industry looks to alternative
agricultural feedstocks, so in turn animal fats, inedible corn
oil, and other feedstocks increase in value. As the cost of all
biodiesel feed stocks increase, agricultural producers are
rewarded, but biodiesel producer's margins tighten or
disappear. A countercyclical program for biodiesel producers
would create a safety net when the cost of feedstock prices
biodiesel out of the market, and as feedstock prices go down,
the safety net would recede.
Our final suggestion for section 9005 is remove the cap of
150 million gallons. This limitation has a chilling impact on
future growth. Mr. Chairman, I've heard it said that Congress
should not decide how big a farm should be. Likewise Congress
should not decide how big a biodiesel producer should be.
Thank you for your time this afternoon, and we stand ready
to work with you regarding these recommendations at your
convenience.
[The prepared statement of Mr. Stroburg follows:]
Prepared Statement of Jeff Stroburg, Grain and Input Cooperative
Operator, Ralston, IA
Comments Regarding Bioenergy Titles of the Farm Bill
The results of the previous Bioenergy Titles (2002 and 2008) Farm
Bill have helped transform farm producers and agribusinesses to not
only feed the world, but feed and fuel the world. The forward thinking
work this Committee has pioneered has forever changed rural America.
The U.S. biodiesel industry stands in support with you in achieving
our national priorities for increasing energy independence, reducing
greenhouse gas emissions, supporting green collar jobs and advancing
American agriculture. The 2012 Farm Bill offers tremendous
opportunities to advance current Bioenergy Title programs and further
promote biodiesel utilization.
Here is a brief summary of the tremendous results our industry has
achieved as a direct result of previous energy titles.
Biodiesel Promotes National Energy Independence and Reduces
Greenhouse Gas Emissions
Today, the U.S. has the capacity to produce more than 2 billion
gallons of biodiesel which can be integrated into existing
petroleum industry infrastructure. Our feedstocks are
renewable; we use the fat Americans don't want in their burgers
and the oil left over from cooking their French fries.
Biodiesel is today's only commercially-available renewable fuel
which qualifies as an advanced biofuel. Biodiesel significantly
reduces harmful greenhouse gas emissions as compared to
petroleum diesel. With an energy ration of 4.5:1, we intend to
continue improving fuel production efficiency while continuing
to produce clean burning fuel.
Becoming an advanced biofuel is not our final goal as an industry;
we have already achieved status as an advanced biofuel which
can be produced from hundreds of fats and oils. On the horizon,
integrated biorefineries will produce high value specialty
chemicals and jet fuel from current renewable oils and fats.
Biorefineries will continue to displace industrial and consumer
petroleum-based products and in turn reducing dependency on
foreign oil while supporting American agriculture.
Biodiesel Supports Green Collar Jobs
Many of our staff grew up on family farms, surrounded by production
agriculture. I concur with Secretary Vilsack's comment that
more and more farm families need off-farm income to make ends
meet. REG and our partners offer full-time, highly skilled
employment in rural areas like Wall Lake, Ralston, Farley and
Washington, Iowa. Several of our employees or their spouses are
involved in production agriculture today and sought out
positions at our biodiesel plants in order to be able to
continue their commitment to agriculture. I believe maintaining
these green collar positions and creating new jobs in these
rural areas is a valuable piece of the USDA's role in biofuels
and bioenergy for the next farm bill.
Biodiesel Advances American Agriculture
In the 1940s in rural Iowa, West Central cooperative built a
soybean crush facility to add value to local farmers' grain,
producing soybean meal and its co-product, soybean oil. In the
early 1990s, West Central partnered with Iowa State University
to determine the feasibility of using excess soybean oil to
manufacture biodiesel. This feasibility study was funded in
part by the USDA.
Today, our REG network of commercial scale biodiesel plants utilize
a multiple feedstock strategy that currently includes soybean
oil, choice white grease, beef tallow, poultry fats, canola
oil, corn oil from ethanol production, used cooking oil from
restaurants and other virgin fats and oils. These fats and oils
are the co-products or by-products of the U.S. agricultural
industry.
Value to soybean producers:
$0.25 of value added to every bushel of soybeans
produced in Iowa, accord-
ing to the United Soybean Board.
In 2009, almost 60% of all biodiesel produced in
Iowa was produced from
soybean oil.
$121.5 million in additional value for 2009 alone
for Iowa soybean pro-
ducers.
Value to livestock producers:
In October 2009, the national biodiesel industry
used more than 50 million
pounds of inedible fats.
$9.00 per head earned by Iowa cattlemen due to value
of beef tallow-based
biodiesel production.
Value to corn and ethanol producers:
Inedible corn oil from ethanol production utilized
in Iowa biodiesel plants.
$0.25 per pound of value returned back to ethanol
producers and in turn,
corn growers.
2012 Farm Bill Considerations
Considering the Energy Title programs currently underway and the
results that I just outlined; these recommendations are designed to
build on a few key programs that will ensure that the previous
investments are indeed--the solid foundation for the next generation of
bioenergy technologies.
However, given the serious economic difficulties of the financial
industry, banks and lending institutions are hesitant to partner with
commercial-ready bioenergy projects. Financing options should be kept
open to keep this critical industry moving forward. Therefore, we
recommend the following adjustments in order to remain within your
priorities and restore confidence in the marketplace.
Under section 9003, Biorefinery Assistance
Currently the USDA proposed rules allow for loan guarantees and
grants to be awarded, but right now only loan guarantees are
offered. Our recommendation is to package grants and loan
guarantees together, more banks and lending institutions would
be willing to step forward, more projects would be awarded, and
more competition would result. Under this scenario, the total
coverage from the government would remain at 80%, but that
coverage could be split between a grant and a guarantee at the
discretion of the USDA. By combining grants with loan
guarantees; more banks would step forward and more projects
would compete and commercialization would occur at a faster
rate.
Under section 9005, Bioenergy Program for Advanced Biofuels
This program has particularly been one of the most helpful to our
industry at this time in history. We would encourage you to
continue funding these incentive payments. The biodiesel
industry has the capacity and is poised to meet the volume
requirements of RFS2. However, the goal for the industry is to
not only meet the reduced green house gas emissions levels, but
to exceed these reduction levels. The incentives in this
program will assist the current infrastructure's transformation
to the next generation of feedstock and next generation of
biorefinery technology that will exceed reduced green house gas
emissions levels. If your goal is to transform the biodiesel
companies of today to the next generation of biorefinery
production of tomorrow, this program will keep the pace moving
forward. That said, removing the 150 million gallon cap will
help accelerate this progress.
Under section 9007, the Rural Energy for America Program
(REAP)
A combination of grant and loan guarantees are allowed for REAP,
but at only 75% of project costs. A penalty is allotted if a
grant and loan guarantee is packaged. Our recommendation is to
remove the penalty and the total coverage from the government
would remain at 80%, but that coverage could be split between a
grant and a guarantee at the discretion of the USDA. This
adjustment will encourage more banks and lending institutions
to fund more projects and commercialization would occur at a
faster rate.
New consideration for countercyclical payments for biodiesel
feedstock risk management
The Renewable Fuels Standard, created by the Energy Independence
and Security Act of 2007, contains the nation's first carve-out
for biodiesel utilization. While this program, in combination
with the reinstatement of the biodiesel blenders tax credit,
are major milestones for our industry, we would like the USDA
to consider an additional option for promoting the growth of
the biodiesel industry.
Agricultural co-products and by-products account for more than 85
percent of the cost of a gallon of biodiesel. For example, as
the cost of soybean oil increases, soybean producers are
rewarded and the biodiesel industry looks to alternative ag
feedstocks. In turn, animal fats and inedible corn oil increase
in value. As the cost for soybean oil and other biodiesel
feedstocks increase, soybean producers and other agricultural
producers are rewarded, while biodiesel producers margins'
tighten significantly.
Our recommendation is a countercyclical payment directed to
biodiesel producers, which would offer a risk management
opportunity when soybean, corn and livestock producers receive
value from high commodity prices and the biodiesel industry is
exposed to squeezed margins. In turn, when soybean, corn and
livestock producers are struggling with low commodity values,
our current risk management strategies offer sufficient support
for our business progress.
Renewable Energy Group believes our nation's energy security needs
are more sensitive and costly than ever and will only get more acute in
the future if investments in biofuel production, with these program
adjustments, are not put into operation. We stand ready to work with
you and any of these recommendations at your convenience.
Comments Regarding Impact of the Loss of the Federal Biodiesel Blenders
Tax Credit
Failure to extend the tax credit for biodiesel produced in the U.S.
would have a substantial negative impact on biodiesel production and
the consequent economic and environmental benefits made by the
biodiesel industry.
The original biodiesel tax credit was passed in 2004 and has been
extended twice, most recently as part of the Emergency Economic
Stabilization Act of 2008 (P.L. 110-343), signed into law in October
2008. Biodiesel produced from both virgin feedstocks (such as soybean
oil) and non-virgin feedstocks such as yellow grease and animal fats
qualifies for the $1.00 per gallon excise tax credit. An incentive such
as the biodiesel tax credit is necessary to offset the higher cost of
producing biodiesel compared to petroleum diesel.
The biodiesel blenders' tax credit lapsed on Jan. 1, 2010.
Currently, demand for biodiesel is extremely limited because our
customers are no longer taking the risk of purchasing biodiesel without
the tax credit. Manufacturing plants have idled. This dire situation is
occurring not only in Iowa, but all over the country.
According to a December 2009 study by John M. Urbanchuk, Director,
LECG LLC, ``without the tax credit the price of biodiesel would be
insufficient to provide a positive return over variable costs and the
biodiesel industry could be expected to collapse.'' This would have
several notable adverse economic impacts including:
a loss of jobs and income.
increased demand for petroleum diesel and a degradation of
energy security.
lower demand for soybean oil and soybeans for crushing
leading to lower soybean prices and a negative impact on farm
income.
stranded investment as biodiesel capacity is idled.
lost tax revenue for states and local governments.
The biodiesel industry will spend about $1.3 billion on raw
materials, goods and services to produce 475 million gallons of
biodiesel this year. In doing so the biodiesel industry will add $4.1
billion to GDP this year, increase household income by nearly $1
billion, and support nearly 23,000 jobs in all sectors of the economy.
In addition the biodiesel industry will provide $445 million of tax
revenue to the Federal treasury and $383 million to state and local
governments.
Take-Away Attachment
Located in the heart of United States agriculture, West Central is
a leading grain, agronomy, and value-added processing entity. With
headquarters in Ralston, Iowa, this member-owned cooperative boasts a
national and international agricultural presence. The policies within
the 2008 Farm Bill provides a positive, sound foundation for the future
of our industry and our business.
Comments Regarding the 2012 Farm Bill
We would recommend consideration of the following:
Reduced complexity and increased flexibility to plant in
response to market demand;
Maintenance of a farm income safety net that includes
consideration of an energy escalator clause that addresses high
fuel and fertilizer prices;
Compliance with WTO agreements;
Reduce trade-distorting domestic support (amber box)
in exchange for a proportionate increase in agricultural
market access, elimination of export subsidies and fully
funded ``green and blue box'' eligible programs.
This could be accomplished through working lands
conservation programs, risk management, the Market Access
Program, enhanced crop insurance, the concept of a revenue
based safety net program, or government programs that
increase producer profitability that may include direct
payments and/or tax credits; and
Inclusion of a commodity loan program.
In considering the new farm bill policies, we oppose:
Mandatory government supply management programs and
acreage reduction programs, (excluding Conservation Reserve
Program and conservation easements, for marketing loan
commodities under the current farm program);
A farmer-owned reserve or any federally controlled grain
reserve with the exception of the existing, capped emergency
commodity reserve;
Income means testing;
Payment limitations; and
Targeting of benefits being applied to farm program
payment eligibility.
Regarding the USDA proposed cuts to the Standard Reinsurance
Agreement (Crop Insurance Program), by almost 30%--
Iowa would be hit harder by the proposed cuts to than
anywhere. Iowa producers buy more crop insurance than most
other states, and Iowa has more crop insurance agents than most
other states. There were $735 million in premiums written in
Iowa last year alone for just two crops--corn and soybeans.
Let Congress decide how to best handle crop insurance during
its farm bill process.
The Chairman. I thank all of the panelists for their
testimony, and, Mr. Erickson, I too am encouraged by what is
going on within the dairy industry.
I think it is a sea change from anything I've ever seen
before, but there does seem to be--seems to me if they're going
to get this together at the end of the day, they're going to
have to find some kind of way to manage their excess production
in order for them to come together on something. And one thing
that's being looked at is, something I proposed 10 years ago,
is some way to have like an assessment on all producers when
they over-produce and use that to try to increase to market
through feeding programs or exports or whatever. I think
Congressman Costa is working on a bill that I think has some
elements of that as well. Is that not true, Mr. Costa? Yes.
I don't know how much has been discussed about what they're
considering, but are you and your industry completely opposed
to any kind of--you know, the problem is, the price goes up,
dairy farmers produce more, the price goes down, they produce
more. And that's just causing all the volatilities, so there
has to be some way to try to even this out. I think insurance
helps, but people are not convinced that's going to be the
complete answer. So what's your reaction?
Mr. Erickson. Mr. Chairman, thank you for the question. I
get nervous when we talk about supply management because----
The Chairman. I'm not talking about supply management.
Mr. Erickson. I work on the demand side. Milk is a
wonderful product, nutrient rich, gives you nine essential
nutrients, and I think we ought do all we can to espouse the
benefits of milk. I've been a benefactor of the growing milk
supply in Iowa, and when you try to freeze something in time--
--
The Chairman. We're not talking about freezing anything in
time. I don't think anybody's talking about that.
Mr. Erickson. Okay. I apologize
The Chairman. We're talking about some rules to try to
increase the demand, to try to get things back into balance. I
would just encourage you guys to work with us so we can get, at
the end of the day, with something we can all support.
I think we can do that because we don't disagree, but I
would say, when I had the Canadian Agriculture Committee people
in to see me, they were complaining about all kinds of
different things. We had an hour meeting, but dairy never came
up, and I said, ``What about our dairy farmers?'' Oh, we don't
hear a word out of them; they're happy. So, it's a little
extreme what they're doing and they are driving people to the
U.S. and so forth. But, it also has maintained a situation for
dairy guys that are in business, and so there's maybe some
balance here that we can work on, so we look forward to working
with you on that.
The Chairman. Mr. Schaben, one thing we're looking at is
crop insurance, obviously there is the SRA going on, but there
has also been a lot of discussion, a lot of GAO reports and a
lot of work we've been doing on the Committee. One of the
things we're looking at is seeing if there's someway we can
develop crop insurance so it covers everything on the farm, not
just your traditional crops. We've moved in that direction to
some extent on capital but not to the extent we've done on the
crops and so forth. Would that be something that people in your
industry would be--find helpful if we could expand crop
insurance to make it risk management?
Mr. Schaben. You're referring to some sort of risk
management program?
The Chairman. Yes.
Mr. Schaben. I think in this day and age anybody in
agriculture would embrace any sort of risk management tool as
long as it's especially in the cattle industry, I guess, is
what I'm going to speak to, but if it was done on a voluntary
basis.
The Chairman. Yes.
Mr. Schaben. But the problem seems to be that we are losing
a generation of cow/calf producers, the grass roots part of the
cattle industry, and like all of this agriculture, it's a
generational thing.
And when you lose a generation, you don't get them back.
Once they're gone, it's kind of over with, it's extinguished,
and that's my concern. I've watched it happen in our area, so I
think some sort of--any time that there's some sort of a risk
management program, I think would be pretty inspiring, but I
think it would limit the problem.
The Chairman. My time has expired, but I have to say, Mr.
Skow, we are also looking at simplifying crop insurance
significantly, so your people won't be spending as much time as
they are and they won't be--if we're to get more successful,
there won't be 400 different policies and so forth, so get
ready to work with us. I don't know how successful we'll be,
but I think there is some potential here to simplify the
program. We think we need to get rid of CAT coverage and NAP.
They have outlived their usefulness. There are just some
fundamental things we need to look at it, and we look forward
to working with you as we go forward with the farm bill. We
don't have all the answers, but we have some of the questions,
and we're trying to figure out in these areas what the answers
are.
Mr. Stroburg, we'll work with your industry. We understand
the problems. We don't control all of that in our Committee,
but we'll do what we can from our end, and your people from
Iowa have been at the forefront of this, as you know, so----
Mr. Stroburg. Thank you, Mr. Chairman.
The Chairman. The gentleman from Oklahoma.
Mr. Lucas. Thank you, Mr. Chairman.
Mr. Skow, would you expand a little bit more on what the
effects on the delivery system of crop insurance would be with
the second draft of the SRA, as proposed, is implemented.
Mr. Skow. It specifically here in Iowa, we think it would
be very problematic, the reality of the situation is that there
would be significant cuts to the delivery system--what I refer
to the ice stage or the one stage, and I have some reference to
it in my testimony. I would also refer you to a letter that our
Congressional delegation wrote to the department on that, and
we think that there would be price cuts close to 30 percent.
Mr. Lucas. So quite literally products might be available
everywhere in Iowa and there might not be any one to deliver
those products even in the second round implements.
Mr. Skow. I think the issue is is that there are probably
some people who deliver crop insurance, both insurance
companies that service it, as well as insurance agents would be
forced out of the marketplace. I think that, based on the
delivery system, some would simply say it's not worth noting
the recourses any longer, so farmers would have to go further
to find somebody willing to serve them. I think you would see a
compression or a contraction of companies willing to offer, and
I think that has been spoken in a number of documents to RMA.
Mr. Lucas. Mr. Schaben, you mentioned in your testimony
about how we need to focus on some kind of a program that would
emphasize production along with conservation, potential
conservation. I just note for the record in 2002 when I wasn't
a part of the Minority political party, as Subcommittee
Chairman, we tried to create something called GRP; the goal of
which is to provide perhaps not only a transition for some of
the CRP acres, which should be rolled over time, but to provide
a way for those acres to stay in grass, and perhaps not go back
to the plow or additional acres to come in and enable producers
to fully utilize the equipment. Unfortunately, from the time we
write bills we pass them on the floors of the United States
Congress, persuade Presidents to sign them or override the
veto, whatever the case might be, and they're implemented and
things might change.
That program essentially became a Green Zone Program around
urban areas. And I'm perfectly supportive of those kinds of
efforts. The GRP started as a way for real producers to be able
to access the conservation dollars, utilize every potential
from soil and water, air, wildlife conservation, so I'm
frustrated along with you on those issues.
A similar question to what I asked the earlier panel:
What's the price of land in your part of the state compared to
5 years ago, trade publicly, public auctions, whatever?
Mr. Schaben. Sure, actually, I sell land at auction. We do
quite a bit of that. We don't--the inherent problem in our part
in western Iowa in regards--this is a long answer to a short
question, but in regards to the grassland, we don't have much
left, it's gone, it's plowed, that's the problem. Now, I will
tell you that the average price, whether it's a sheep, but if I
found grassland in our area now that's strictly grassland and
that means it's timbered, it's probably in the $400, $500,
$600, $700 range. That is a large part to do with our location,
which is we're 60 miles from Omaha, when I sell that piece of
timber land, it doesn't usually go through a farmer. Obviously
it's not economically feasible. So we lose that cow/calf man.
He goes to permanent grassing in Oklahoma or Kansas or
Nebraska. That's part of the problem.
Mr. Lucas. That truly is a challenge. There's no doubt
about it.
Speaking of the farmer and ranchers and the topic that
we've touched on numerous times today about the death tax it's
not a section of statute that the Agriculture Committee has
direct jurisdiction over, nonetheless capital gains rate,
income tax rate, have very dramatic effect on processors,
producers, and everyone in between. From your perspective, if
we don't do something before the end of this year, what will
the effect be on your people when the death tax goes back to
the 2001 level, capital gains go back up to 15 to 20, and those
kind of things, what's the impact? Not just in the pocket book,
but the decision making.
Mr. Schaben. I think that's where the impact is. I think it
causes people that make decisions that probably aren't first
and foremost the best for their business or their industry. I
guess that briefly is the answer because as people made some of
the decisions or try to out-think what the next move may be
and, of course, in agriculture it obviously causes a big
problem with taxes.
Mr. Lucas. Thank you, Mr. Chairman.
The Chairman. Thank you.
The gentleman from Iowa, Mr. Boswell.
Mr. Boswell. Thank you, Mr. Chairman.
I'll just stick with you for a minute, Jim, and I'll move
on. You're doing pretty well. I'm still concerned about animal
ID. We went through quite a discussion on this and we didn't
get too far, and now it's back to the states. You deal with
livestock every day, and I continue to worry about the rural
economy and rural market if something would happen that we
couldn't put the face on it, then what does that do to us? Do
you have any comments about that.
Mr. Schaben. I certainly do. As you well know within your
office and we've met with the Chairman and staff different
times in Washington about animal ID, and I guess when I speak
about animal ID, I only speak about it from a cattle
perspective, not understanding the rest of the industry's to
that degree. The cattle industry is so inherently different
than the hog industry, the sheep industry in the way that it
moves, in the way that it travels, the interstate commerce
that's involved and the small load lots. I have been convinced.
I started out thinking that animal ID was wrong. I became a
believer, and now I'm going back.
So I've run the gamut, and I've been going to these
meetings for over twelve or thirteen years, and I think what we
need to do, Congressman Boswell, I think we need to work on
enhancing the programs and again speaking about the cattle
industry, but enhancing the programs that we have out there
today, and that is through veterinaries ID, through interstate
commerce, through traceability, through identifying all of the
females, if they all had an ID tag, that maybe doesn't give us
24 hour traceability, but it could easily give us 48 or 72 hour
traceability.
So I think we need to enhance the programs that are
currently out there in the Federal programs and state programs,
and enhance those as it deals with the cattle industry, rather
than the ID tag.
Mr. Boswell. Thank you. I will just divert here just a
moment. Yesterday, this had nothing to do with this meeting,
Mr. Chairman, but I was with Senator Harkin in the Rose Garden
when the national teacher of year was awarded to a teacher from
Johnston, and Senator Harkin said to give you his greetings.
I see John is here, so I wanted to recognize he's in the
crowd as well in case someone needs to visit with him. But, I
appreciate that.
Mr. Erickson, the who dairy industry has been whacked all
over the place the last couple years. We know that, and I feel
like the USDA has been pretty responsive to us to do the
different things they've done. What, for the most, in those
conditions was helpful? All of the above?
Mr. Erickson. We're all a big fan of Secretary Vilsack here
in Iowa, so I think he's done an admirable job in a tough
environment. He has put some extra money toward dairy
producers, which I think is warranted given the current
situation. I wish he'd take a look at the Federal Milk
Marketing Order system and give us a break and simply it a
little bit and maybe we can get to that too.
Mr. Boswell. Thank you.
Mr. Stroburg, the concern about the biodiesel industry is
something that's carried heavy on you, as we talked about it
quite a bit. How do you think this--is there going to be a
recovery period when we get the tax extension back in and so
on? Are you going to be able to find the people out there to do
what you need to do? Tell us about your situation is in that
respect.
Mr. Stroburg. Congressman Boswell, the longer we go without
a blender's tax credit, the more difficult it's going to be to
bring workers back that have been laid off. We've laid off
about 45 percent of our workforce since the blender's tax
credit has expired. So the longer it goes, the harder it will
be to attract good people back to these plants, to run the
plants.
I think more critical than that is the investment that
almost 10,000 Iowans have made in biodiesel plants within Iowa.
And these are all what I would call retail investors, they're
farmers, they're people that own the local hardware store, they
run their local dentist, or have other businesses in small
towns. These are rural jobs that have been created by rural
investors, and once those investors get wiped out, and their
equity is eroding daily as we go without a blender's tax
credit, once those investors are wiped out, there's no coming
back. Those plants may get sold for pennies on the dollar to
other companies, and hopefully the jobs will come back, but
those investors are gone.
Mr. Boswell. Thank you.
Mr. Chairman, on that issue, we've talked about it. That's
something for--we've all, in agriculture, as farmers,
producers, say we would like to be part of the value-added, and
this was a chance, and so we share a deep concern. I know you
do, too. We've talked about it. But, I guess, we did respond on
our side of the rotunda, we've just got to figure this out. And
I'm very concerned about this, and I appreciate the fact that
you are, too. I yield back.
The Chairman. Well, I'm being told we're going to get this
resolved by May 31, so we'll keep our fingers crossed. The
gentleman from Iowa, Mr. King.
Mr. King. Thank you, Mr. Chairman. Again, I thank the
witnesses and enjoyed listening to all of the testimony.
And I came in a little late, Mr. Erickson, but I've read
your testimony and appreciate that as well and the generation
impact you had each year.
It's interesting to me, Mr. Schaben, to hear where you've
been on livestock ID, back and forth two ways, and hopefully I
can pick up that conversation another time in more depth. But,
I do want to ask you more specifically that sometime back,
coming in actually in the last farm bill, I worked with a
number of people across the state, and we put together a
proposal to try and preserve some of this grassland and enhance
the grazing in Iowa. That was a combination of CRP, CSP, EQIP.
There's another one, CP29 or something that I forget, grazing,
water, those things that you have to do in order to manage
pastures and be able to reach some of the goals of CRP, and
work in conjunction with conservation groups across the state.
The answer I got back from our producers was we don't want
unfair competition; we're in the cow businesses, and we don't
need our competition subsidized.
Would you speak to that particular conflict that exists
within the cattle industry with regard to anything we might do
to encourage more pasture land?
Mr. Schaben. Well, I certainly agree that the cattle
producers is--has been an awful independent animal, to say the
least, and I guess that's part of their makeup and part of
their style. But I think--I really truly believe, Congressman
King, I think the situation is grave enough in this loss of the
industry in most of the upper Midwest, I would say, that I
think it needs to be addressed. It's not necessarily a question
of direct income for those producers as much as it might be for
the area as a whole because I had some CRP land that came out.
I'm in the cattle business. I had a cow pasture. I rented it to
my brother for $200 an acre. It only made good sense. It only
made good economic sense. That's my point.
I didn't miss any money by doing what I did. I benefited by
doing it, but in my area I miss quite a bit because I don't
have cows anymore. We don't have, basically, don't have the
feed store in Dunlap anymore, but, those dollars, and I don't
have the figures. I'm sure that you do or staff does, about the
turn over in the animal agriculture versus some other types of
agriculture, and I think that's where we see it more
indirectly. It isn't so much that we can't find something to do
with that track of land, because we can, but I think that we
need to try to promote for the sake of animal agriculture,
specifically, I should say cattle industry, we need to promote
that in some fashion.
Mr. King. Mr. Schaben, let's do this: Let's come back to
this subject and have those conversations to see if we can put
together a plan again, at least propose as we go forward to the
farm bill, 2\1/2\ years, that's a worthy discussion. I'm glad
you brought it up. Seems to me that if we're going to spend
money for CRP to take land out of production so that we can do
a Conservation Reserve Program, well, we should also be able to
look at how we keep things in grass, which also is a
Conservation Reserve Program and has some of the same results.
But I think the important point that I want to make sure
that gets made here today, and I'm going to turn it over to Mr.
Stroburg, just a question first and then a follow-up question
on that. Is anybody in Iowa right now, today, producing
biodiesel, or are they all mothballed, all 14 or all 15 plants
that we have in this state?
Mr. Stroburg. Congressman King, I don't know about all the
production. I can tell you that the plants that are associated
with Renewable Energy Group are running at--take all the
capacity maybe running at 10, 15 percent capacity, so it's
practically shut down, but there are a few sales still being
made.
Mr. King. Then I'd ask you to just to take this where you
need to go with it, but a couple of things have happened here
with renewable energy altogether with ethanol and biodiesel. Do
you find those as first generation renewable fuels; the
industry was initiated by our friends north of us in Minnesota,
but we've picked up on that pretty well and developed an
industry and an infrastructure here. So with the 6 cents
reduction and formally 51 cents blender's credit for ethanol
and for the failure to extend the blender's tax credit for
biodiesel, now we're looking at--it was essentially zero new
capital coming into the industry. We understand the urgency to
renew the blender's credit for biodiesel, but can you imagine a
second generation ethanol say cellulosic, if we can't be
viable? How would we possibly attract capital if we can't get
our money back out of what's already invested in ethanol and
biodiesel?
Mr. Stroburg. Yes, I think that second generation is very
much dependent on what we do be right now because most of the
second generation feed stocks will actually be produced in
first generation manufacturing plants, whether it's ethanol or
biodiesel. There may be additions to the front end or the back
end to accommodate second generation feed stocks, but if we
kill the industry now, second generation feed stocks will be
years before they come on.
Mr. King. Thank you, Mr. Stroburg.
I thank all the witnesses, and Mr. Chairman, I yield back.
The Chairman. I thank the gentleman. The gentlelady from
South Dakota.
Ms. Herseth Sandlin. Thank you, Mr. Chairman.
Well, Mr. Stroburg, I appreciate your thoughts on combining
the loan guarantee programs and grants and packaging those
together. We look forward to working with you to see the
evidence of how the other sections are working to determine
whether or not that makes sense for us going into the next farm
bill and making that change. The only thing we have to be
vigilant about is, in light of the Chairman's initial remarks
about the money available, is that we wouldn't want that to
result in less being available to leverage by USDA to help in
biorefinery assistance or other renewable energy project
assistance. We just have to be vigilant about how we package
them together and how far that would go for how many projects.
I appreciate the insight and the other project that you put on
the table, a program with countercyclicals to our biorefineries
in times of high commodity prices.
And then, Mr. Skow, we'll keep working with you. As you
know, Mr. Conaway and I led the ``Dear Colleague letter'' in
January to the Administrator of RMA expressing our concerns.
Those concerns remain with the second draft. The third draft is
due any time here in early May, but in light of what's
happening to many in the northeastern part of South Dakota, the
concerns are great in terms of the impact, particularly, on the
importance of the crop insurance program. It is the most
important part of the safety net right now for many of these
producers who are facing flooding conditions, as well as in the
central part of the state.
But I did want to focus my time and we'll keep working with
the both of you, and perhaps get a chance after the hearing to
talk in greater detail. I wanted to focus my questions to you,
Mr. Schaben, because in the last farm bill the Chairman came to
South Dakota, to western South Dakota, as did some of my
colleagues here and others on the Committee, because of the
concern given that we still have virgin prairie and grasslands
in South Dakota of the conversion that was going on and what
that meant for livestock producers and availability of pasture.
And I just wanted to explore with you maybe a couple of other
factors that are driving this rapid and disconcerting
development in the cattle industry, and I think some of the
independant streak within our producers comes from the nature,
but also learning lessons from pork and poultry and wanting to
avoid the same kind of integration and what that means for
smaller and mid-size operations.
What is your--from your perspective, what do you think is
the state of competition in the cattle industry today?
And the other issue is about crop insurance; should we look
at modifying a crop insurance program so you give livestock
producers a risk management tool where you're covering all on-
farm activities including livestock production?
Mr. Schaben. Well, the--to address the first question, the
relative health, I guess, is that what you're asking, the
competition involved in our industry within our industry, the
competition?
Ms. Herseth Sandlin. You think there's healthy competition,
do you see any signs of market manipulation?
Mr. Schaben. I believe there's healthy competition on my
level, which is the running of a livestock auction. Ours is
transparent and open, obviously there's good reason to keep
some other aspects of the industry under close watch, some of
those things that maybe are done behind closed doors. Again, my
segment of the industry, which is livestock auction and it's
done out in a room like this, everybody is invited in to
participate, so it's pretty transparent.
I know the packing industry, there has been some concern
over time, and, thereby, the livestock administration was
started. So I don't worry about that as much, and I know I have
some things in South Dakota that caused a heated debate over
the last 10 or fifteen years in the packing industry, Herman
Schumacher being one of them.
Ms. Herseth Sandlin. Well all know her.
Mr. Schaben. Everybody knows Herman Schumacher. He's a dear
friend. But--so I don't worry about it as much. I don't think,
I don't believe that I worry about it quite as much in my
facet. In the packing industry it's obviously a cause for
concern.
The second question you had dealt with risk management, and
I firmly believe in any risk management tool that is offered to
a cattle producer is a good tool in agriculture in general,
probably is a good tool. I've stated earlier that I don't think
it's anything that anybody wants in our industry to see as
mandatory. If it's out there, there have been some programs in
the past, safety net, other things, and I think that's great if
it's an option.
Ms. Herseth Sandlin. Thank you, Mr. Chairman.
The Chairman. I thank the gentlelady. The gentleman from
California.
Mr. Costa. Thank you very, Mr. Chairman.
Mr. Stroburg, you talked in a lot of detail with regards to
the biodiesel industry and the impacts. And would I be left
with the wrong impression that if the Federal support for this
biodiesel program is no longer available, then it's going to be
very difficult to sustain at all?
Mr. Stroburg. I think at this stage in the industry, if we
do not have the blender's tax credit, the biodiesel industry as
we know it will go away.
Mr. Costa. I mean, that's the sense I got from your
comments. I just wanted to be clear. Mr. Erickson, you talked
about simplifying the Federal Milk Marketing Order; is that
correct?
Mr. Erickson. That is correct.
Mr. Costa. You think bringing in California, that produces
23 percent of milk products of the country, would make it
simpler or more complicated?
Mr. Erickson. It depends on the implementation. I think it
has the--it can have the benefit of putting everybody on an
even playing field, including the whole country. I don't think
would be a bad thing.
Mr. Costa. I think I know the answer to this question, but
what do you think about implementing, as I tried to,
California's standards?
Mr. Erickson. Well, I'd let the customer decide. There has
been some product out there with fortified skim, and it's not
popular.
Mr. Costa. Well, it's popular in California, but, I mean, I
think we're talking about healthy proteins. We're talking about
trying to ensure that we have healthy diets.
Let me move on. Did I hear you correctly as I was walking
back that any efforts to provide some supply side management
tools for producers would be a disaster?
Mr. Erickson. I'm not a fan of supply side because I've
been the benefactor.
Mr. Costa. Why would it be a disaster?
Mr. Erickson. I've been the benefactor of the growth of
dairy in Iowa, where I think that dairy should be responsive to
the marketplace.
Mr. Costa. I agree with you, but I'm not talking about
limiting supply. What we're trying to do is to help dairymen,
who are the most prolific producers probably anywhere in the
world, a third generation dairy family--I know how effective we
are in producing, but having some ability to have some tool to
determine whether or not they want to grow or stay the size
they are, and that's different than putting limits on it.
I mean, I think if--certainly I hear good things about the
processing work you do, but, I think there's a different level
of interest if you're a processor than if you're a producer.
Obviously over-supply of milk has a different impact on
producing to processors.
Mr. Erickson. That's correct.
Mr. Costa. I just want to acknowledge that. I mean----
Mr. Erickson. That would be true, but to the extent I need
producers----
Mr. Costa. That's true.
Mr. Erickson. Producers need processors. We need to work
together.
Mr. Costa. And that's correct. The Chairman said that
earlier, and I concur with him wholeheartedly and to do that,
but there are different interests. I think it's important that
we acknowledge those different interests to producers and
processors, but you need each other.
Mr. Erickson. We do desperately need each other.
Mr. Costa. There you go. We agree on that point.
You talked about the insurance program that the National
Milk Producers Federation is proposing and they're measuring.
I'm concerned about it, and I think you also said something
about less government influence, but we lost an estimated
between $11 and $12 billion in equity in the last 2 years in
the U.S. milk program. Some say it's even higher, maybe $20
billion.
How do you insure those kinds of losses? How do you create
an insurance program that would insure some of the devastation
that we've had nationwide?
Mr. Erickson. Well, I think some of the point is is that
price supports aren't indicative of the cost of production. If
you have a high price----
Mr. Costa. I concur.
Mr. Erickson.--high input costs, they're not aligned. I
think the point is the current system is somewhat flawed.
Mr. Costa. No, I think many of us have felt that way for
years, but I think it's taken $9 per hundredweight milk to
finally get the industry willing to--as the Chairman and I have
spoken, there's nothing like $9 per hundredweight to make folks
wake up and figure out maybe we need to change things.
Mr. Erickson. Yes, Congressman, and I think----
Mr. Costa. When you have $15, $16 per hundredweight input
cost.
Mr. Erickson. That's where we need to look at margin
protection as opposed to price supports.
Mr. Costa. Well, but you didn't answer my question. How
would you create an insurance program for over $11 or $12
billion of the losses and maybe higher losses in the last 2
years?
Mr. Erickson. I'm not an insurance genius; I'm a small
processor in Iowa, but I think it's----
Mr. Costa. You're a very good processor, Mr. Boswell tells
me.
Mr. Erickson. I appreciate that.
Mr. Costa. My other Iowa colleagues tell me.
Mr. Erickson. I do think it's important to think about how
to create margin insurance. The implementation, Congressman,
I'm unsure of, but I think it would be a better approach than
price support.
Mr. Costa. I think we need to look at all of that, and
obviously price supports have limits and certainly curtail more
production of milk where we have stored powder and cheese, I
don't think it's good food policy.
My time has expired.
Mr. Chairman, I'll look forward to continuing this
conversation. Once again, thank you very much.
The Chairman. I thank the gentleman.
I thank all the witnesses for being with us for your
excellent testimony and answers to the questions, and if the
Members have more questions, they can get them to you, you'll
answer them, like I said.
So the panel is dismissed.
I wanted to tell people again that we are very much
interested in getting comments from anybody that has good
ideas. I find that sometimes folks that don't necessarily get
on these panels for what--have some pretty good ideas, and so
you can go on our website, www.agriculture.house.gov, and log
on there and tell us what you think about what's going on, if
you have new ideas, what we should consider, very much would
appreciate that input. And those of you that have been watching
on this web-cast, we'd like comments about how that all works
and what you think about it. More feedback is better.
I'm going to yield the rest of my time for closing
statements. Thank you Mr. Boswell, the host of this event.
Mr. Boswell. Thank you, Mr. Chairman, Ranking Member Lucas,
both of you, I appreciate you coming to our state, our
district, sharing in this.
I want to thank the Iowa State Fair Board and
Administration for providing this facility, especially wanted
to thank the witnesses; some of them had to drive a long ways,
and took you away from business today, and I appreciate that
very, very much. As we discussed in the full Committee and
other times when we talk together, we have one thing in mind
what we want to do; we want to make agriculture as strong as we
can make it, and do the best we can with the resources we have,
and so that's what this is all about.
So thank you for participating, and it's a challenging
time. We all know that. I'd be singing to the choir, and we
were talking about the challenging time as a country and as a
world community, and we know that too. And I appreciate John,
Bill, and you for coming today to sit in with us, appreciate
all of that, and I think that we've had a good meeting and look
forward to proceeding on to the process.
Mr. Costa. Would the Chairman yield for a moment?
The Chairman. The gentleman from Iowa? Oh, Mr. Costa.
Mr. Costa. The gentleman from California.
The Chairman. Can't see you down there, I'm sorry. I figure
you'd be out here further so I can see you.
Mr. Costa. I understand.
I just wanted to thank, again, Congressman Boswell for
hosting all of us. Though I do have somewhat of a question. All
of us who represent ag country around the country have had the
pleasure to be in auction pavilions in our districts and
around, and they always can be a lot of fun. I just was
wondering Leonard, what this meant when you put those of us
down in the pit, I was a little concerned that the witnesses,
and those in the lower part of the panel in the pit, you might
have some ulterior motives. Usually when we're in the pit,
we're selling someone or selling something or being sold, so
hopefully we weren't getting sold anything here today, but just
good information.
Mr. King. This isn't how we mark up the farm bill, is it,
Mr. Chairman?
The Chairman. I thank the gentlemen for their comments and
for the people watching, this is the first of eight hearings;
we're doing seven more of these in the next couple weeks, so
we're going to hear a lot. The gentleman from Oklahoma, Mr.
Lucas, do you have a closing statement?
Mr. Lucas. Just simply, Mr. Chairman, that thank you and
our Iowa friends, Mr. Boswell, Mr. King, and Mr. Latham for
being such good hosts and cooperative and our witnesses today.
It's always worth noting that in the nature of Committee
process, which is critically important to Congress, that the
House Agriculture Committee is bipartisan, non-partisan
committees. We may disagree occasionally on particular parts,
agriculture economic philosophy, we might have slightly
different perspective on commodity groups, but when we team up
in that every 5 year process to write a farm bill, we work
together for the good of the country as a whole. Sometimes we
work with Administrations, and sometimes we educate
Administrations, but the bottom line is we're going to try to
write you a good farm bill.
Thank you, Mr. Chairman.
The Chairman. I thank all of the Members for being here
today. So under the rules of the Committee, the record of
today's hearing will be left open for 30 calendar days, to
receive additional materials supplementary, written responses
to witnesses and any questions posed by a Member. This hearing
of the Committee on Agriculture is adjourned.
[Whereupon, at 3:59 p.m. (CDT), the Committee was
adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Brian Freise, President, AgPerspective Inc.
April 29, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture,
Washington, D.C.
Representative Collin C. Peterson,
My name is Brian Freise and I am the owner of AgPerspective Inc, a
risk management and insurance firm in Dixon, Illinois. I have recently
read that the Administration, as well as the Congressional Agriculture
Committee, has begun discussion on the 2012 Farm Bill. I am writing
today to express my opinions on how the 2008 Farm Bill can be improved
upon in 2012. Specifically, I would like to address the farm safety net
and the ACRE (Average Crop Revenue Election) program.
I believe that the ACRE program was designed to improve upon the
countercyclical program and attempt to make payments more specific to
where actual farm losses occur. To better understand the program and
explain it to our client base, I created the spreadsheet enclosed with
this letter. It walks the client through the program step by step.
Clients found this spreadsheet to be a tremendous resource when
deciding whether to enroll in the program or not. I also created a
PowerPoint presentation to explain all of the other details. I enlisted
the help of Dr. Carl Zulaf from Ohio State University to help insure my
details were accurate. As I created these materials, I noticed one
major flaw in the program.
This has to do with the requirement for the individual FSA farm
number to have a revenue loss. I can appreciate why this component was
added. I suspect it was included so that farmers who have windfall
revenue cannot collect through the ACRE program on top of their already
stellar year. However, the practicality of this component is very
questionable. For example, using the attached spreadsheet, I have
determined that if the State of Illinois has a $40.47 per acre ACRE
corn payment, the average producer would need to have a yield in excess
of 35 bushel over his Farm Benchmark Yield to NOT qualify for the state
level payment. Obviously, the larger the state level ACRE payment the
higher the farmer's yield would be to be to not qualify for payment.
That being said, if ACRE triggers a substantial payment it will be very
difficult for the farmer not to qualify. Again, I understand why this
component was added, but it is my opinion that this feature adds far
more complexity and administration cost than it is worth.
I believe this feature has much to do with why less than 15% of
producers across the Midwest enrolled in the program. Very few Farm
Service Agency (FSA) employees truly understood the program, and in
many cases farmers were convinced not to sign up because of this lack
of knowledge, and the paperwork burden of reporting all of their
yields. The reporting of yields to the FSA is also redundant as many
producers already report yields to their crop insurance agent. Not only
does this feature not accomplish the goal of not paying farmers when
they have windfall years, but it creates an administrative nightmare
that adds substantial cost to the implementation of the program.
Farm policy is something that I take a very active interest in and
feel that I have many excellent ideas to share. I am by no means an
expert on all levels of farm policy, but I believe I can offer great
insight into programs that are designed to serve as a safety net for
row-crop producers. I would welcome the opportunity to discuss the ACRE
program or other areas of farm policy with you. Thank you for your
attention to this letter.
Regards,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Brian Freise,
President, AgPerspective Inc.
attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
Submitted Letter by David Kubik, President, Iowa State Association of
Assessors
June 1, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture,
Washington, D.C.
Re: Farm bill field hearings
Dear Congressman Peterson:
County assessors in Iowa have the specialized task of assigning an
assessed value to each agricultural parcel for property tax purposes.
We gather as many pieces of information as we can, at the lowest cost,
to estimate the most accurate productivity value possible.
One of the pieces of information that would aid us in this process
is a Geographic Information System (GIS) crop field shape layer that
was created by each local FSA office, and was reviewed for accuracy by
each landowner. Unfortunately, the 2008 Farm Bill declared the bulk of
this GIS layer confidential and will not release it to other
governmental entities, including county assessor offices. I am unsure
as to why it was declared confidential as it contains no personal
information, no ownership information or actual crop production
information. The FSA office will release a GIS layer with the shape,
but all details regard crop or non-crop designations have been purged
from the file, rendering it virtually useless. This information could
be recreated from aerial photos and inspections, but the cost to
taxpayers would be substantial.
The Iowa State Association of Assessors respectfully requests that
the next farm bill require that the unmodified GIS field layer be
available to county government officials, thereby saving substantial
tax dollars and receiving a more accurate layer than could be
reconstructed locally.
We realize that this is a relatively insignificant request when
considering the magnitude of the entire farm bill, but making this
information available to local government would produce more accurate
assessments with no added cost to the local taxpayer.
I thank you for allowing our concerns to be heard and would welcome
any questions you or other Committee Members may have regarding this
issue.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
David Kubik,
President,
Iowa State Association of Assessors.
______
Submitted Letter from Monte Shaw, Executive Director, Iowa Renewable
Fuels Association
April 29, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture;
Hon. Leonard Boswell,
Chairman,
Subcommittee on General Farm Commodities and Risk Management, House
Committee on Agriculture,
Washington, D.C.
Dear Chairman Peterson and Congressman Boswell:
As the largest trade association representing Iowa's ethanol and
biodiesel producers, the Iowa Renewable Fuels Association (IRFA)
welcomes the House Agriculture Committee to Iowa and thanks both
Chairman Peterson and Congressman Boswell for their leadership in
convening this important meeting in the epicenter of renewable fuels
production.
Without question, the Energy Title of the 2008 Farm Bill made
important strides for both Iowa farmers and the Iowa renewable fuels
industry. IRFA strongly encourages the Committee to include an Energy
Title in the 2012 Farm Bill in order that the full potential of
renewable fuels advancements and improvements can be realized. While
not a comprehensive list, we appreciate the opportunity to highlight a
few issues that IRFA would like to see addressed in the upcoming bill's
Energy Title.
Before addressing specific issues in the farm bill, we would like
to generally state that IRFA sees significant room for improvement in
near and medium term programs that can assist with the eventual success
of cellulosic feedstocks for biofuels production. First, we feel that
current biorefineries and the residues of traditional crops will play a
huge role in the future production of cellulosic biofuels. In Iowa,
these feedstocks and biorefineries will likely be the first commercial
cellulosic success stories and in all likelihood will dominate the
foreseeable cellulosic future. We understand there will be an important
role for dedicated energy crops as well, but crop residue feedstocks
are expected to be preeminent in the Midwest.
Current renewable fuels plants have the infrastructure in place
(rail, storage, admin.) to make them the most attractive places for the
adoption of cellulosic ethanol production. Congress needs to keep in
mind that once the cellulose is broken down into simple sugars, the
``back'' \2/3\ of a cellulosic biorefinery can be the same as a corn
starch ethanol plant.
Even as public and private research perfects the cellulosic
conversion process and determines the proper harvest/storage/
transportation system for the cellulosic feedstocks, one of the most
significant practical hurdles to overcome is the cautious nature of
most farmers. Given the challenges of turning a profit in farming, it
is to be expected that most farmers aren't going to risk their entire
operation on the equipment and other costs associated with cellulosic
feedstock collection and storage until the system has been proven both
to work efficiently and profitably.
This presents a major challenge for cellulosic biofuel production.
When a cellulosic biorefinery is built, the area around the plant
likely had no demand for cellulosic material one year, but then, as the
plant begins operations, there is a massive demand for cellulosic
material literally overnight. If that scenario is allowed to play out,
it is difficult to see a smooth transition. Resulting financial
pressures on the new cellulosic plants could pose problems. However,
there is a model that allows for the rapid but phased-in adoption of
cellulosic residue harvesting by farmers while at the same time
providing meaningful carbon and energy security benefits to
biorefineries.
Repowering Assistance Payments to Eligible Biorefineries
IRFA believes the synergies between existing biorefineries and
future cellulosic conversion hold the key. As current plants look to
lower costs and reduce their carbon footprints, there is growing
interest in ``repowering'' plants with biomass instead of, or in
addition to, natural gas or coal. Initiatives such as the Repowering
Assistance Payments to Eligible Biorefineries program have great
potential because technology does not require that a plant go ``cold
turkey'' in transitioning to biomass for heat and steam. Several
promising technologies allow biomass to work into the equation even as
natural gas and coal are still partially utilized. This key fact would
allow area farmers to get into the biomass business over time and not
require hundreds of farmers to take the plunge at once.
As ``repowering'' spreads to more plants and biomass replaces a
greater percentage of fossil fuels, harvest/storage/transportation (and
possibly even on-farm pretreatment) systems can be improved and proven.
This will lead to more rapid adoption of the processes by additional
farmers. Later, as cellulosic biofuels production is commercially
adopted throughout the industry, we will have solved these hurdles
instead of the hurdles posing yet another uncertainty for the infant
next generation biofuels industry.
For these reasons, IRFA supports the continuation of the Repowering
Assistance Payments to Eligible Biorefineries program in the 2012 Farm
Bill. In order to be successful, the payments from this program must be
robust enough to provide necessary incentives for renewable fuels
producers to move forward with biomass repowering projects. However,
IRFA believes the rural location and domestic ownership requirements of
the program are unnecessary and should be eliminated. Regardless of
whether or not a renewable fuels facility is located in an area that
meets USDA's definition of ``rural,'' the facility will still be
creating demand for agricultural products and services by operating on
feedstocks produced by Iowa farmers. Therefore, an ``urban'' facility's
participation in the program will positively impact Iowa agriculture
and rural development nearly as much as the participation of a
``rural'' facility.
Biomass Crop Assistance Program (BCAP)
Further, demand created by repowering must be matched with supply.
In order to attract early adopters of cellulosic harvesting, IRFA
strongly supports the continuation and enhancement of the Biomass Crop
Assistance Program (BCAP) in the 2012 Farm Bill.
IRFA supports the matching payment option for eligible material
owners delivering to a biomass conversion facility as proposed in the
Notice of Funds Availability, which would provide cost-share payments
for collection, harvesting, storage, and transportation costs at a rate
to match the biomass sale price, up to $45 per dry ton. IRFA also
supports the continued eligibility of Title I crop residue such as corn
stover and corn cobs for the matching payment component of the BCAP
program. Similarly, IRFA encourages Congress to follow the example of
the proposed rule issued by the USDA Commodity Credit Corporation by
eliminating the 20 percent payment cap for corn stover, corn cobs, and
other Title I crop residue. Finally, we believe the payment period
should be extended beyond the two year limitation to a duration long
enough to ensure these fragile ventures are able to take firm root. We
are hopeful that Iowa farmers will be able to utilize this program in
the near future as demand for cellulosic biomass increases.
Advanced Biofuel Payment Program
The 2012 Farm Bill must also encourage the continued production of
advanced renewable fuels. For this reason, IRFA supports the extension
of the Advanced Biofuel Payment Program, which is crucial to Iowa's
biodiesel producers. IRFA encourages Congress to once again follow the
example of USDA's proposed rule by removing the rural location
requirement for this program (for the same reasons stated above in the
section covering the Repowering Assistance program).
We also encourage Congress to adopt an approach that makes program
payments based on total gallons produced rather than the ``base
production'' versus ``incremental production'' payment approach
currently recommended in USDA's proposed rule. As we are still in the
infant stages of the advanced biofuels industry, it will be just as
important for this program to help ensure the continued operation of
existing facilities as it will be to encourage expanded production or
new facilities.
Finally, we believe that the domestic ownership requirements
included in the proposed rule should be eliminated. While we certainly
agree that locally-owned plants provide additional benefits, even
foreign-owned plants who participate in this program will have a
significant positive impact on Iowa agriculture and the rural Iowa
economy.
Chairman Peterson and Congressman Boswell, IRFA thanks you once
again for coming to Iowa to hold this important Committee hearing. We
certainly appreciate your passionate leadership and your personal
commitment to issues that affect the renewable fuels industry, and we
hope we have identified some areas to be addressed in the 2012 Farm
Bill that are vital in moving the clean energy economy ahead in the
next decade. We stand ready to work with you going forward. Please do
not hesitate to ask for any additional information or assistance that
we can provide from the Iowa Renewable Fuels Association.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Monte Shaw,
Executive Director.
______
Submitted Statement by Kevin Vierkandt, Farmer, Alden, IA
To whom it may concern:
Back Ground: The current farm bill has a disaster component that
provides Supplemental Revenue Coverage or SURE. This program uses
Federal Crop Insurance as a component to calculate an additional
payment to producers who meet certain criteria. This program was
designed to stabilize farmers' incomes in disaster situations.
Situation: In 2008 many Iowa and other state counties were declared
US Secretary of Agriculture disaster counties. Depending on the type
and coverage level of crop insurance a producer purchased for Spring
Crops in Iowa prior to 3-15-2008, this selection will greatly influence
the dollar amount of SURE payment a producer will receive. The other
component is the producer's own production or crop yields. Many
producers in these counties and other counties experienced low yields
due to excessive moisture and cool temperatures in 2008.
The Problem: It appears there are some unintended consequences in
the 2008 Farm Bill involving the SURE program using Federal Crop
Insurance as a component in the formula to establish a revenue
threshold to trigger SURE payments, based on a producer's proven yield
or county expected yield, and 2008's marketing year price and finally
the producer's actual yields. In 2008 due to excessive price volatility
during the 2008 Crop Insurance selling season from around 12-1-2007 to
3-15-2008 different spring prices were established for various Federal
Crop Insurance products. Looking only at Corn (however Soybeans are in
a similar situation) for GRP crop insurance spring price was
established at $3.75/bu. for MPCI $4.75/bu. and for all revenue based
products a price of $5.40/bu. In past and subsequent years from 2008
this level of price variation between insurance products has not
existed.
One particular group of producers who purchased 90/100 GRP Federal
Crop have been adversely affected due the use of the $3.75/bu Spring
price in establishing their SURE revenue trigger guarantees. Producers
choose this type of product due to high coverage levels (90%) and were
aware of the spring price, but knew if there were low yields in their
county they would be paid at a price of $6.25/bu for every bushel the
county was short below the guarantee or trigger county yield level.
This is all due to GRP products having a 150% multiplier which a
producer may take advantage of if they choose a 100% on their price
selection. There are many producers in counties in Iowa and other
states, that selected 90% coverage and 100% price that were paid $6.25
on every bushel the county was short in 2008 from the established
trigger yield. A producer who chooses the 90/60 GRP product would have
received a payment of $3.75/bu. for every bushel the county was below
its trigger yields.
Some producers who purchased very inexpensive lower levels (exp.
75% RA or CRC revenue products or 75% MPCI federal crop are fairing
much better in SURE payments than a producer who purchase the mush
higher coverage product GRP 90/100 product. This probably was not
intended by the 2008 Farm Bill and the knowledge of exactly what the
rules were to establish how the FSA was going administer and pay
producers for the 2008 disaster SURE program were not known until the
spring of 2010. About 2 years after the 2008 crop insurance buying
decision had been made.
The Result: Producers who choose MPCI insurance policy such as a
75% coverage level are being rewarded with higher SURE payments
resulting in higher overall farm income versus producers who purchased
GRP 90% Coverage/100% Price selection Federal Crop Insurance and who
experienced the same disaster conditions.
Solution: To Perhaps bring the producer who choose 90/100 GRP up to
spring price of $6.25 equaling what they actually were paid by Federal
Crop Insurance for the resulting county yield losses below a certain
county trigger yield.
Other Solutions: To provide some level of fairness and payment to
affected producers who had disaster level revenues in their operations
for 2008. Perhaps the RMA and FSA should consider using a harmonized
price on all bushel guarantee Federal Crop Insurance products in 2008.
Perhaps the spring price of $4.75 could be used on GRP policies as is
being used on MPCI Federal Crop Insurance products.
By Kevin Vierkandt: For the good of all affected producers who
purchased GRP Federal Crop Insurance in 2008 and who have been
negatively impacted by the 2008 Farm Bill's SURE program.
attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
----------
SATURDAY, MAY 1, 2010
House of Representatives,
Committee on Agriculture,
Nampa, ID.
The Committee met, pursuant to call, at 1:00 p.m., at the
Northwest Nazarene University, Old Science Lecture Hall, Nampa,
Idaho, Hon. Collin C. Peterson [Chairman of the Committee]
presiding.
Members present: Representatives Peterson, Minnick, Costa,
Herseth Sandlin, and Lucas.
Staff present: Nicole Scott, Pelham Straughn, Robert L.
Larew, John Konya, Keith Jones, Lisa Shelton, and Jamie W.
Mitchell.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
The Chairman. This hearing of the Committee on Agriculture
to review the U.S. agricultural policy of the 2012 Farm Bill
will come to order.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon, and thank you for joining us for today's House
Agriculture Committee hearing. We are glad to be here in Nampa to hear
from area farmers and ranchers about the issues facing agriculture and
rural communities.
As we demonstrated in 2008, the farm bill is about much more than
just farms. We continued the safety net that protects farmers and
ranchers and provides the certainty they rely on to stay in business.
But we also made historic investments in nutrition, conservation,
renewable energy, research, rural development, fruit and vegetable
products, and organic agriculture.
While traditional farm programs have a relatively small proportion
of funding, these programs are essential to the continuing success of
U.S. agriculture. We have a system of independent farmers and ranchers
working the land, and without the certainty that farm programs provide,
these farmers would not be able to get the financing that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking time out
of this busy time of year to talk to us today. These farm bill hearings
are the first step in the process of writing the next farm bill. A bill
this large and that covers so many important issues takes a lot of time
and effort to get it right, and I am committed to a process that is
open, transparent, and bipartisan.
For all those joining us today in the audience, I hope that you
will also participate in this process by sharing your thoughts on the
farm bill with us. We have a survey posted on our Committee website,
and we have cards available today with that web address so that
everyone has a chance to tell the Committee about what is working and
what new ideas we should consider for the next farm bill.
We have a lot of ground to cover, so let's get started.
The Chairman. First, I want to recognize Mr. Minnick for a
welcoming and opening remarks.
OPENING STATEMENT OF HON. WALT MINNICK, A REPRESENTATIVE IN
CONGRESS FROM IDAHO
Mr. Minnick. Thank you very much, Chairman Peterson.
I would like to thank you, and Ranking Member Lucas for
coming here, and joining us in Nampa. And thank you for
recognizing that Idaho needs to be an important voice as we put
together our next 5 year farm program.
It's most appropriate that this Committee choose to have a
field hearing in Idaho. As I think everyone in this room
recognizes, Idaho is the number one state in the nation in the
production of potatoes. I know that's self-evident, because
really there is no other state in the nation that produces real
potatoes. We hope to----
The Chairman. Now wait a minute.
Mr. Minnick. We're also just a little--I think a little
less well known, the number three state in the production of
dairy products. We're number three in barley. We're in the top
five in beef, number seven in wheat. And in a number of smaller
specialty crops, particularly, those grown in the lower
Treasure Valley. We are a leader--or the leader--among the
leaders in the nation.
I want to commend the witnesses who have joined us today,
taking time out of a weekend to offer their testimony. It's
thoughtful. It's well reasoned. And it's important that we
listen carefully to it as we put together the next Federal farm
program.
What I hear in talking with farmers and agricultural
interests generally, and I think we will hear again today, is a
number of recurring themes with respect to Federal farm policy.
One is, that unintentionally, but to a significant extent,
Federal farm programs punish efficient producers. And that has
deleterious consequences, not just for the producers, but for
the country, and its international competitiveness.
Existing farm programs, to a significant extent, also favor
certain geographic areas, and disadvantage others, sometimes
Idaho, sometimes other places. Existing Federal farm programs
also tend to discriminate against large producers, particularly
the commodity programs, and certain specialty producers, such
as our emerging organic industry. Existing Federal farm
programs don't fit these emerging industries very well.
I think you will also hear consistently, I certainly do
when I talk to farmers anywhere, that compliance with existing
Federal farm programs is far too paper intensive and
bureaucratic. And that we need to come up with a farm program,
which will allow our efficient producers to spend less time
fighting the government, and more time farming their land.
Also, it's evident in this era of runaway record budget
deficits, the farm programs on balance are extremely expensive.
Some will say, too expensive, and do a relatively poor job of
protecting the income of various producers during times of
stress. And here in Idaho, we're talking this year about the
dairy industry, and more recently about the potato industry,
both of which are suffering from low prices.
In addition, we need a couple of things that are beyond the
scope of the Agriculture Committee, the Department of
Agriculture, but need to be done on a national level in order
to make agriculture more successful, more productive.
One is, we must have immigration reform in this country.
And it's critically important to a number of the industries
we're going to hear from today, who simply do not have access
to the labor that they require to put in, process, and manage
their production.
The dairy industry, grape industry, apple industry, and
various specialties crops, all are suffering, in my belief,
from the absent skilled workers that would be available under a
more enlightened immigration program.
And finally, the United States is an efficient producer. We
need access to foreign markets. If we have a level playing
field, we compete very, very well globally with respect to
almost every agricultural commodity. So, we need help from the
U.S. Government in opening foreign markets, and on leveling the
playing field.
Well, these themes are ones that we in the community are
sensitive to; we want to hear your views. And as we spend the
next couple of hours listening to your testimony, I think there
is nothing that we could be doing this afternoon that is more
important, not just for agriculture in the country, but for my
State of Idaho.
The Chairman. I thank the gentleman.
And Mr. Minnick is one of the outstanding new Members of
our Committee. We're pleased to have him on the Committee. He's
made a lot of great contributions already in this short time.
And we're pleased to be here in his district.
And we also have with us, Mr. Simpson, who is not a Member
of the Committee. And we may have some magic words that I have
to read about him, since he's here.
Mr. Simpson is on the Appropriations Committee. And a lot
of what we do outside the farm bill and in the farm bill is
authorize programs that need appropriations. And Mike has been
great to work with us. He and I are good friends. And we work
together. And he and Walt are good friends, and work together.
And that's important for Idaho.
And those of us in agricultural generally tend not to be
partisan. We try to work on a bipartisan basis. Please take
some time to make some comments.
STATEMENT OF THE HON. MICHAEL K. SIMPSON, A REPRESENTATIVE IN
CONGRESS FROM IDAHO
Mr. Simpson. Thank you, Mr. Chairman. I just want to thank
you, and Ranking Member Lucas, for being here, and coming to
Idaho to hold this hearing.
As you mentioned--this may be the only time you have in
whatever state you go to, the entire delegation at the hearing.
You are bookended by Idaho's First District down there, and
Second District down here. I thank the other Members for coming
to Idaho, too. The last time I did this was in the year 2000, I
think it was. We went around the country before we wrote the
2002 Farm Bill. And then I went to the Appropriations Committee
later on when we wrote the 2008 Farm Bill.
I can tell you how important agriculture is to Idaho. When
I was first elected to the Idaho Legislature, and when we would
do our revenue projections at the very first of the year, we
would just have the price of potatoes, the price of wheat, and
the price of silver. And you knew what your revenue was going
to be the next year.
Now, Idaho has changed a lot. And the economies have
diversified a lot, but agriculture is still the most important
industry in this state. So I thank you for coming here today,
and look forward to the testimony. I'm mostly here to learn
from all the witnesses about what they think needs to be done
in the rewrite of the next farm bill.
Thank you, Mr. Chairman.
The Chairman. And thank you.
And the gentlemen from Idaho, Mr. Simpson, is not a Member
of the Committee, but has joined us today. And I've consulted
with the Ranking Member, and we are pleased to welcome him in
joining the questioning of the witnesses. Those are the magic
words.
We're also web-casting. This is the first time that the
Committee has web-cast field hearings. And so we have people
watching us on the Internet around the country. And we have
cards for those of you that aren't able to testify today. It
has the address of our website, which is
www.agriculture.house.gov.
And so anybody that's watching or in the audience can log
on to the website, provide your input, suggestions, questions,
whatever you have in mind. And that will become part of the
record as well. So we encourage everybody that has ideas to get
involved, and that's what we're trying to do here.
So, I welcome everybody to this hearing. And as I said,
we're glad to be here. We demonstrated in the 2008 Farm Bill,
that it's much more than just about the farms. We continue the
safety net that protects farmers and ranchers, and provides
some certainty that they rely on to stay in business, and to
manage their risks.
But we also made historic investments in nutrition,
conservation, renewable energy research, fruits and vegetable
products and organic agriculture.
While traditional farm programs have a relatively small
proportion of the funding, these programs are essential to the
continuing success of U.S. agriculture. We have a system of
independent farmers and ranchers working the land. And without
the certainty that the farm programs provide, these farmers
would not be able to get the financing in a lot of cases that
they need to put the crop in the ground.
I want to welcome our witnesses. And thank them for taking
time today out of their busy time of the year to talk to us.
The farm bill hearings are the first step of the process to
arriving at that farm bill. A bill this large covers so many
important issues. It takes a lot of time, and a lot of effort
to get it right.
And I'm committed to taking the time, and having a process
that's open, transparent, and bipartisan, like we did in
writing the 2008 Farm Bill, and I have no doubt that we will
accomplish that.
As I said, for those in the audience, we hope that you will
participate in the process by going on our website. And we have
cards available to you today. So we want to welcome input.
And a lot of times, we get some great ideas from folks that
don't necessarily get identified, so we appreciate that.
So we have a lot of ground to cover. Let's get started. I
recognize the Ranking Member, my good friend and gentleman from
Oklahoma, Mr. Lucas, who will make an opening statement.
OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA
Mr. Lucas. Thank you, Mr. Chairman. I want to thank you for
calling the hearing, and being so proactive in preparation
through the debate we're going to have on future farm policy in
the 2012 Farm Bill.
I realize we have an extremely difficult road ahead of us.
One thing I do look forward to is listening to our producers.
While I get to listen to my folks back home, my producers every
time I go to the coffee shop, the feed store, when I do my town
meetings across the Third District of Oklahoma, I think it's
vitally important to hear from producers from a broad range of
places, who grow a broad range of products.
My goal for the next farm bill is quite simple. I want to
give producers the tools to help them do what they do best, and
that is produce the safest, most abundant food supply in the
history of the world.
I think it will be extremely important to hear from you
about what's working, and what's not working, and what changes
we can make to the farm bill to allow you as producers to work
more efficiently.
The 2008 Farm Bill was another investment in the future of
rural America. Not only did we provide a safety net for our
producers, but we also made substantial investments in
conservation and nutrition programs, which are very important
during any time of great need for Americans.
But I would say this, and we should always remember, a lot
of people fail to remember that 75 percent of the present farm
bill spending goes to nutrition programs. That's \3/4\ of every
dollar to the nutrition programs.
In addition to those investments, this Committee, led by
Chairman Peterson, accomplished substantial reforms, especially
in the realm of payment.
And this is a fact that should not be forgotten by those
who seem ready to attack the programs. It is very, very likely
that 2012 will be the year the Administration's priorities seem
to differ greatly from what I believe my producers priorities
are.
There was very little mention by the Administration, in a
recent hearing, about safety net conservation programs, and
many of the things that my producers consider to be so
important. I believe it is imperative that Congress work
together with the Administration to come up with workable
solutions to the many problems our rural communities face.
But first, this Administration must provide its commitment
to production ag. I also want to hear from you today about the
impediments that you face when you bring a crop to market. And
how we can help alleviate some of those impediments. I have
serious concerns of the effects of an overreaching EPA, and
what that's going to do to you in rural America in production
of agriculture.
Hopefully, with your guidance and input, this Committee can
help to reduce some of those impediments.
The Chairman. All right.
I thank the gentleman, very much. I would also like to
recognize that we have the leadership of the USDA of Idaho with
us today.
The FSA Director, Mr. Richard Rush. Are you here? There he
is.
Mr. Rush. Yes.
The Chairman. And the Idaho Wildlife Director, Wally
Hedrick. And the Idaho State Conservation, Mr. Jeffrey Brewen.
I want to give them a hand at the great job they do.
[Applause.]
Mr. Simpson. Mr. Chairman, I would like to recognize the
Director of the Idaho Department of Agriculture, Celia Gould is
here today.
[Applause.]
The Chairman. Thank you. So we'll call our first panel
officially to the table. They are lined up and ready to go.
Mr. Fred Brossy, organic wheat, bean, potato and hay
producer from Shoshone, Idaho.
Mr. Scott Brown, wheat and barley producer from Soda
Springs, Idaho.
Mr. Doug Gross, potato producer, Wilder, Idaho.
Mr. Kelly Henggeler?
Mr. Henggeler. Hang-ler.
The Chairman. Henggeler, okay, apple, plum, and peach
producer and packer from Fruitland, Idaho.
Mr. Galen Lee, sugarbeet, mint, asparagus, hay, grain, corn
and cattle producer, from New Plymouth, Idaho.
And Mr. Brian Kernohan, a forester from Coeur d'Alene,
Idaho.
So, gentlemen, welcome to the Committee.
And, Mr. Brossy, you are on. We have a 5 minute rule. I
think there is a screen there that will tell you that. It will
go to yellow at 1 minute. And so your full testimony will be
part of the record. So if you could summarize, and try to stay
within the 5 minutes, we would appreciate it.
Mr. Brossy.
STATEMENT OF FRED BROSSY, ORGANIC WHEAT, BEAN, POTATO, AND HAY
PRODUCER, SHOSHONE, ID
Mr. Brossy. Thank you. My name is Fred Brossy. My wife and
I farm 300 irrigated acres around the Little Wood River west of
Shoshone, on the Snake River Plain east of here. We began
managing our farm in 1983 for an absentee owner. And in 2005,
thanks in part to the Federal Farm and Ranchland Protection
Program, through which we placed a conservation easement on the
farm, we were able to purchase it.
And I want to put a plug in here for that program, because
I think it is one of the great farm bill programs that helps
preserve farmland. And it sure helped us.
As you mentioned, I am an organic farmer. I've been
certified for 15 years producing hay, wheat, barley, potatoes,
dry beans, garden beans, seed, and other vegetable seed crops.
I really appreciate the invitation to address the Committee
today. I would like to thank, Chairman Peterson, the Committee
Members, and staff for the opportunity to do so.
For those of us in the Intermountain West, farm bill
programs often appear focused primarily on the Midwest. And we
are pleased, very pleased that you are here in Idaho to hear
our concerns.
And I'm also particularly honored to be, as far as I know,
the first organic farmer from Idaho to be invited to address
the Committee. Thank you very much, Congressman Minnick, for
this opportunity.
The 2008 Farm Bill was notable in its recognition of
organic agriculture as a viable contributor to the food
production in this country. And we appreciate that Congress
chose to provide financial assistance to organic farmers and
those transitioning towards organic, as well as funding
increased enforcement of the USDA organic standards through the
NOP.
As well, we are very appreciative of the expanding crop
insurance protections that recognize organic. And this is
another plus for the 2008 Farm Bill from our perspective. This
financial assistance provided a start towards leveling the
playing field for those of us who choose to farm organically.
But there is obviously more to do.
Another important part of the 2008 Farm Bill were the
research budgets that recognized organic. And we feel this is
very important for the future of our organic farming methods.
Particularly because organic is really a systems approach to
farming. And there is plenty more scientific research that we
need to be more effective in managing agroecological ecosystems
without all the outside influence that traditional agriculture
relies on.
As far as the 2012 Farm Bill goes, the EQIP program is
something I participated in. And I would like to recognize the
organic initiative for the EQIP program. And what I would like
to suggest for improvements there, is that we would like to see
more of a systems approach to EQIP. Right now, it's a piecemeal
approach to addressing specific resource problems. And often in
an organic system, really what we would like to see, is a
holistic approach to conservation.
And that pertains to the CSP, as well, which I also
participated in last fall. That's been an extremely arduous
process to get involved in CSP. And yet, I really think it's a
great program. And I'm hoping that it will be continued in the
new farm bill.
Again, it probably needs to be a little bit less tied to
the heartland, and a little bit more tied to smaller farmers
with unique crops, other than corn, soybeans, cotton and rice.
I think there are some funding concerns about a program like
that, and I have a suggestion for that, as far as funding CSP.
It's probably a little bit radical. But those of you who
were on the Committee back in the 1980s probably recall in the
1985 Farm Bill, that commodity program payments were linked to
highly erodible lands and wetlands qualifications. So lands
that didn't meet the criteria for those, were not eligible for
Federal farm program funds.
I would suggest that commodity payments be linked to
conservation stewardship through some modification to the CSP
program. And I think that would go a long way towards improving
conservation across our nation, as well as funding commodities
produced in a more conservation approach. This would really
link food production to conservation stewardship. And it is an
appropriate national policy and worthy purpose for a farm bill.
A couple other concerns that I have about the 2012 Farm
Bill, is that we need to see more focused on small farm,
especially crop farmers. We're being faced with the GAP
regulations. And some of those are going to require
infrastructure. And I think it would be very helpful if we were
to have more access to specialty crop grains. Maybe--I'm not
sure exactly how to do that, but that's another thing that we
would like to see funded.
And in summation, I would just like to say, organic
agriculture provides important benefits to our country besides
healthy, nutritious food. If it receives a fair share of
research and development resources and conservation funding,
organic farming will lead the way towards a much lighter impact
on the nation's soils, waters, and wildlife from agriculture.
This is a worthwhile goal for national agricultural policy. And
we look forward to further cooperation with Congress in this
direction.
Thank you very much again for the opportunity to address
these important issues.
[The prepared statement of Mr. Brossy follows:]
Prepared Statement of Fred Brossy, Organic Wheat, Bean, Potato, and Hay
Producer, Shoshone, ID
My name is Fred Brossy. My wife and I farm 300 irrigated acres
along the Little Wood River just west of Shoshone, which lies on the
Snake River Plain in South Central Idaho. We began managing our farm in
1983 for an absentee owner, and in 2005, thanks in part to the Federal
Farm and Ranchland Protection Program (FRPP), through which we placed a
conservation easement on the farm; we were able to purchase the
operation. The farm has been certified organic for fifteen years, and
produces alfalfa and grass hay, wheat, barley, potatoes, dry beans,
garden bean seed, and other vegetable seed crops. I have served two
terms on the Wood River Soil and Water Conservation District Board in
the past, and am presently Chairman of the Water District 37M Board and
a member of the Wood River Land Trust Advisory Board.
I really appreciate the invitation to address the Committee today,
and would like to thank Chairman Peterson, Committee Members, and staff
for the opportunity to do so. To those of us in the Intermountain West,
farm bill programs often appear focused primarily on the midwestern
region of the country, and we are pleased that you are here today in
Idaho to listen to our concerns. I am particularly honored to be, as
far as I know, the first organic farmer from Idaho to be invited to
address the Committee. Thank you, Congressman Minnick for this
opportunity.
The 2008 Farm Bill was notable in its recognition of organic
agriculture as a viable contributor to food production in this country.
We appreciate that Congress chose to provide financial assistance to
organic farmers and those transitioning towards organic, as well as
funding increased enforcement of USDA Organic Standards through the
National Organic Program (NOP). This financial assistance provided a
start toward leveling the playing field for those of us who choose to
farm organically, but there is more to do. Organic agriculture in this
country today is not a reversion to past ways of farming, but a melding
of modern scientific knowledge of ecological systems and contemporary
agronomy, and as such is continuing to evolve as new information comes
to light. This approach includes growing, as much as possible, needed
fertility on-farm, and maintaining and enhancing natural habitat for
pollinator species as well as beneficial insects to help keep crop
pests in check. Because agroecological farming systems, unlike those in
conventional agriculture, do not rely on a multitude of external
inputs, there is not a great deal of incentive for privately funded
research for organic agriculture. The 2008 Farm Bill provided USDA
funds for this, but due to the inherent long-term nature of this work,
continued and increased levels of funding are needed. Ultimately, out-
comes of research on agroecological farming systems will move all of
agriculture towards greater sustainability. The organic farming
community is grateful for the support Congress initiated in 2008, and
looks forward to further the process with you in drafting the 2012 Farm
Bill.
2012 Farm Bill
Having participated in both the Organic EQIP Program and the
Conservation Security Program (CSP) this past year, I have some
suggestions that I believe would improve them. To begin with, EQIP is
designed to focus on resource concerns, i.e., treating symptoms of
apparent problems with soil, water, air, plants, and animals. However,
like many similar programs which have preceded it, EQIP ends up being a
piecemeal approach rather than holistically addressing agroecosystems.
In the years I served on the local Soil and Water Conservation District
Board, I came to the conclusion that many NRCS Conservation Practices
were mechanical attempts to solve biological problems, i.e., soil
erosion is caused more often by lack of biologically active organic
matter and living vegetation than tillage. The Organic EQIP Program
would better serve organic farmers if it were redesigned to enhance
whole systems instead of focus on specific ``problems'' (this will
require not only more scientific research, but a change in culture and
attitude within NRCS). It would also help if it were geared toward
smaller farmers who may measure their production in square feet rather
than acres. This particular situation may be exacerbated by the
variation between states (differences between what they cost-share on
and how much they pay per practice). Here in Idaho, we are working with
the State NRCS Office to make Organic EQIP more available to smaller
acreage farmers, but in the 2012 Farm Bill, we would like to see
Congress emphasize the value and importance of small-acreage farmers by
insuring that they receive financial assistance proportionate to that
provided to larger producers.
When the CSP was revised in the 2008 Farm Bill, it was advertised
as rewarding stewardship, as well as recognizing the conservation
benefits of organic systems. In actual practice, that recognition only
opened the door to the program, and in order to receive payment, new
conservation practices had to be applied. In some ways this makes
sense, but for example, on our farm we already have a Resource
Conserving Crop Rotation in place that works well, and so are not
eligible for payment for that practice without making modifications
that do not really make sense, where another farm would qualify merely
by adding another crop to an existing two-crop rotation. While this
rewards increasing diversity on the landscape which is good, it also
overlooks the conservation benefits of existing systems which was the
purported intent of the new CSP. Despite its shortcomings, CSP is a
good program and should be continued with some fine tuning in the 2012
Farm Bill. It could and should be made more user-friendly for organic
farmers if Congress is serious about rewarding good conservation
stewardship. I am aware that funding this type of program is a concern
given the current deficit situation, and one possible approach would be
to make eligibility for commodity program payments (DCP) tied to CSP
qualifiers, similar to the Highly Erodible Lands (HEL) and Wetlands
limitations in the 1985 Farm Bill. This would really link food
production to conservation stewardship, an appropriate national policy
and worthy purpose for a farm bill.
Smaller organic farmers often do not have the same access to
capital needed for necessary infrastructure that larger growers do. In
past farm bills, Congress has funded Specialty Crop Grants which small-
scale growers have been eligible to apply for. As food safety concerns
continue to grow, and more and more companies require Good Agricultural
Practices (GAP) from their growers, the need for on-farm facilities
increases regardless of farm size. USDA Grants and low-interest loans
are an important source of financing to help smaller producers meet
this requirement, and should be more accessible and better funded.
As an organic seed grower, I see a real need for developing plant
varieties specifically for organic production systems. One way to
facilitate this is to provide funding support to public plant breeding
programs, which are fast disappearing in part because their releases
are public and not patentable, so do not attract private dollars.
Organic growers do not need and cannot use varieties that contain GMO's
for herbicide resistance or built-in pesticides. We do need cultivars
that are bred with broad-based genetic diversity for increased
resilience in a variety of agroecosystems. This will become even more
important in the future as all farmers learn to adapt to using less
fossil fuel. As the seed industry continues to consolidate with fewer
and ever-larger players, public support for classical breeding programs
is more important than ever, and should be recognized by Congress with
policy and financial help.
Organic agriculture provides important benefits to our country
besides healthy nutritious food. If it receives a fair share of
research and development resources and conservation funding, organic
farming will lead the way toward a much lighter impact on the nation's
soil, waters and wildlife from agriculture. This is a worthwhile goal
for national agricultural policy, and we look forward to further
cooperation with Congress in this direction.
Thank you again for the opportunity to address these important
issues.
The Chairman. Thank you very much for that testimony.
And, Mr. Brown, welcome to the Committee. Just to remind
Members and witnesses, apparently you have to get these
microphones pretty close to make sure that everybody can hear
you.
STATEMENT OF SCOTT W. BROWN, WHEAT AND BARLEY PRODUCER, SODA
SPRINGS, ID
Mr. Brown. Mr. Chairman, Ranking Member Lucas, and Members
of the Committee, welcome to the great State of Idaho.
On behalf of the association I represent, thank you for
allowing me the opportunity to come today and discuss and
express my views regarding the 2012 Farm Bill and the future of
U.S. ag policy.
Idaho has a long and proud history of grain production.
Idaho's wheat farmers harvest an average of 99 million bushels
spread all over six classes of wheat. Idaho ranks seventh in
the top seven states in wheat production.
Although our state is normally recognized for our famous
potatoes, Idaho's barley producers are a top supplier to the
world's brewing industry. Seventy-five percent of our 48
million bushels of barley is malted by brewers from Mexico to
Canada and beyond. Currently Idaho ranks second in production
only to the State of North Dakota in the United States.
As a fourth generation farmer, my father, my son, my son-
in-law, and I, farm over 8,000 acres of wheat and barley in
southeastern Idaho.
Mr. Chairman, and Members of the Committee, as President of
the Idaho's Grain Producers Association, I will speak briefly
to specific policy and program areas identified as priorities
by our growers.
One concern we have is the farm bill baseline. IGPA is well
aware and concerned with the real possibility of a severely
constrained budget baseline within which to develop a new farm
bill.
Like you, we believe that innovation, creativity,
cooperation, and commonsense will overcome this trying
obstacle. As the picture becomes clear with the baseline
challenge, we ask that this Committee and your staff work
closely with those of us on the ground, who will ultimately
bear the brunt of the funding issue.
And as far as Federal farm programs go, the Direct and
Counter-Cyclical Payment program, and the marketing loan
programs are widely used by our producers.
And in particular, the direct payment program is very
popular with Idaho grain farmers. In many cases, the direct
payment program has meant the difference between producers
abandoning their farm, or giving producers another chance with
their bankers to stay in business.
Direct payments serve as a stimulus program for Idaho's
many rural families and communities. The direct payment
translates into farmers purchasing equipment, seed, chemicals,
parts, and fuel from local suppliers and dealers. Ultimately,
this means jobs for our rural communities.
The IGPA is aware that the Direct Payment has a big red
target painted on it by the global community, and by others who
are concerned with trade distortion, and waste, fraud, and
abuse of the Federal taxpayer dollar.
As the Committee moves forward with crafting new farm bill
legislation, IGPA asks that careful consideration be given to
the impact the direct payment has on farmers, their families,
and their communities. Your decisions could have a profound
ripple effect on the rural fabric of our country.
The ACRE and SURE programs, although relatively new, are
catching on in our state, and show some real promise. While the
majority of the Idaho grain farmers opted for the traditional
support program over the ACRE program in 2008, we have heard
very favorable reports from farmers who did sign up for ACRE.
We look forward to working with the Committee on more
revenue options and improvements to the disaster program like
SURE. We currently have a situation in north central Idaho
where significant SURE dollars might be--they're within reach,
but they might be not obtainable due to an administrative
oversight. Problems like this need to be worked out.
IGPA also supports the continuation of an improvement to
Federal crop insurance programs. As a dryland farmer growing
wheat and barley at an elevation of over 6,000 feet, I can
attest to how critical and effective the crop insurance program
is.
In 2009, 78 percent of all of our wheat acres were insured
at an estimated value of $400 million; 63 percent of our barley
acres were insured in 2009.
We are excited about the new COMBO insurance product, and
the new insurance for specialty types of barley. Both of these
will help provide our producers with the diversity in their
production operations. And they will be able to remain viable.
Our growers would like to see crop insurance coverage be
more robust, specifically, crop insurance should be offered at
higher levels, and they should include indemnities for quality
loss issues. We ask that the Committee continue its diligence
for these proceedings, and carefully consider the impact on the
growers.
Conservation: IGPA recognizes the popularity and increased
focus on agriculture conservation practices and programs, since
the passage of the 2002 Farm Bill. IGPA supports the wide use
of CRP as the natural resource tool on environmentally
sensitive lands.
Although the CSP has proven as a significant addition, it's
fairly new for Idaho growers. We support the CSP program, and
producers seem excited to join that program.
Mr. Chairman, and Members of the Committee, there are many
more critical areas affecting Idaho's wheat and barley
producers. Estate tax policy, rail transportation, immigration,
renewable energy production, and the need to ratify pending
free trade agreements are among these critical issues.
We look forward to engaging our Idaho Delegation in the
future and this Committee on these issues. But today we're
grateful for the opportunity to gather here to discuss how
Congress, the Administration, and stakeholders can craft a
Federal farm policy that is innovative, responsible, and
sustains a vibrant farm sector to ensure that production
agriculture can continue to provide a safe, abundant, and
affordable supply of food for U.S. consumers.
Thank you.
[The prepared statement of Mr. Brown follows:]
Prepared Statement of Scott W. Brown, Wheat and Barley Producer, Soda
Springs, ID
Mr. Chairman, Rep. Minnick and other Members of the Committee,
welcome to the great State of Idaho. On behalf of the association I
represent, thank you for allowing me the opportunity to appear before
you today to discuss and express my views regarding the 2012 Farm Bill
and the future of U.S. farm policy.
The Idaho Grain Producers Association is proudly celebrating fifty-
three years of service advocating for Idaho's wheat and barley
producers. The IGPA currently represents over 700 farm families across
the state, with formal grassroots leaders in twenty-five of Idaho's
forty-four counties.
Idaho has a long and proud history of grain production which has
now earned us a second-place and top seven ranking in the production of
our nation's barley and wheat crops respectively.
Idaho's wheat producers harvest an average of nearly 99 million
bushels spread over all six different classes. Although our state is
globally recognized for our famous potatoes, Idaho barley producers are
a top supplier to the world's brewing industry. Seventy-five percent of
our 48 million bushels of barley is malted by brewers from Mexico to
Canada and beyond. Currently, Idaho barley production is second only to
North Dakota.
As a fourth generation producer, I, my father, my son, and other
family members farm over eight thousand acres of primarily wheat and
barley in southeastern Idaho. In my spare time I ``moonlight'' as a
Certified Public Accountant which I believe gives me a unique
perspective on crop production and the impact of Federal farm policy on
my farm operation.
Federal farm policy and its impact on rural American is the focus
of the Committee's field hearing today. Mr. Chairman and Members of the
Committee, as President of the Idaho Grain Producers Association I will
briefly speak to specific policy and program areas identified as
priorities by our grower-members.
Farm Support Programs
Farm Bill Baseline
The IGPA is well aware and concerned with the real possibility of a
severely constrained budget baseline for future Federal farm programs.
The case could be made that agriculture is a victim of its own success.
Our country's farm bill policy coupled with our efficient and
innovative farmers has minimized safety net expenditures thus chipped
away at the baseline for these programs.
However, now more than ever, agriculture producers face
unprecedented challenges both in the volatile global marketplace and in
the regulatory arena. If it is not a priority that the U.S. sustain a
domestic agriculture industry that provides a safe, abundant, and cheap
supply of food, then so be it.
I submit that American's do enjoy cheap and domestically produced
food--but the majority of our consumers are disconnected and uneducated
about how food gets to the store shelf. We in agriculture are partly to
blame for this situation. If agriculture told their story more
effectively, we might have more support for Federal farm programs which
ensure over 300 million American citizens never miss a meal.
Federal Farm Programs
Thanks to the excellent management, service and expertise of our
local Farm Service Agency, and others, Idaho's grain producers
participate widely in Federal farm support programs.
The Direct and Counter-Cyclical Payment (DCP) program and marketing
loan programs are widely utilized by our producers. Newer farm programs
like ACRE and SURE are catching on and showing some real promise in our
state. However, the majority of producers have taken a cautious
approach to these new programs. The IGPA supported both programs as
options in the 2008 Farm Bill, and we have heard positive comments from
producers who did sign up.
During the 2008 Farm Bill debate, farm support programs faced
unprecedented pressure to be reformed, reduced, or completed
eliminated. The IGPA and its national affiliates were primarily focused
on, and thanks to the Committee's fantastic efforts, successful in
maintaining the Direct Payment.
The DP has been and is very popular with Idaho's grain farmers. In
many cases, the DP has meant the difference between producers
abandoning the farm or giving producers another chance with their banks
to stay in business.
Aside from its crucial benefit to grain producers, the DP has
served as a ``stimulus program'' for Idaho's many rural families and
communities. DP's translate into farmers purchasing equipment, seed,
chemicals, parts, and fuel from local dealers and suppliers.
Ultimately, that means jobs which rural areas desperately need to
exist.
I farm in Caribou County in southeastern Idaho. There are roughly
seven, 300 citizens in our county and the vast majority are directly or
indirectly involved in agriculture. Our county FSA director told me
that our county receives $3 million annually in Direct Payments. There
is no doubt in my mind that farm programs are integral to keeping the
communities in our county from making Idaho's list of ghost towns.
The IGPA is aware that the Direct Payment has a big red target
painted on it by the global community and others concerned with trade
distortion and waste, fraud, and abuse of Federal taxpayer dollars.
As the Committee moves ahead with crafting new farm bill
legislation, the IGPA asks that careful consideration be given to the
Direct Payment program. It is a simple, minimally trade-distorting
mechanism that has a profound ripple effect on the rural fabric of our
country.
We are also aware of the Chairman's efforts to look at revenue
programs, like ACRE and SURE and others, as an innovative and effective
approach to farm support. While the majority of Idaho grain farmers
opted for the traditional support program over ACRE, we have heard very
favorable reports from farmers who signed up for ACRE.
Program Administration
The IGPA plans to monitor and receive input from producers on these
new programs. One common theme our Association continues to sense from
rank-and-file Idaho farmers is strong frustration with the process and
requirements of participation in Federal farm programs.
Farmers tell us they are overwhelmed with the paperwork they must
sign. They are frustrated with the ever-changing rules and regulations
associated with the programs they do participate in. In addition, many
are simply confused by what they perceive as duplicity in several
program areas.
We know of several producers who have followed through, and won,
appeals through the National Appeals Division (NAD) as a result of the
issues I outlined. While these farm programs are meant to assist
producers, the process provides a strong disincentive to participate. I
would urge this Committee to explore these issues to its fullest
extent.
Crop Insurance
The Idaho Grain Producers Association supports the continuation and
improvements of Federal risk management programs including crop
insurance. We feel fortunate for the fantastic relationship we enjoy
with our regional Risk Management Agency office based in Spokane,
Washington. The technical and consultative support we receive from
these folks is something we greatly appreciate.
Idaho, with its varied climatic and production-specific regions,
maintains robust participation in grain crop insurance programs. As a
dryland grain producer farming 8,500 acres of grain at an elevation of
6,000 feet above sea level, I can attest to how crucial an effective
crop insurance program is.
In 2009, nearly a million acres (or 78 percent) of all wheat-
planted acres were insured at a 74 percent coverage level. Wheat
insured in 2009 carried an estimated value over $400 million: 63
percent, or over 335,000 acres, planted to barley were insured in 2009.
Idaho wheat and barley production is found on dryland and irrigated
acres. The consistency and quality of irrigated Idaho barley is a big
reason why the world's biggest brewers have a strong presence in our
state. Although irrigation helps alleviate some plant stress, crop
insurance is still vital to production.
The IGPA and the Idaho Barley Commission have lead a national
effort to bolster malt barley crop insurance to more accurately reflect
the higher value and unique quality of the crop. Thanks to the work of
many, the RMA recently unveiled a new insurance product for specialty
types of barley. We hope this will diversify and increase Idaho's
barley production.
Another significant improvement to the Federal crop insurance
program is the work being done, called the COMBO project, which
combines several existing crop insurance programs and streamlines the
information and paperwork related to the program. The IGPA is excited
for the roll-out in this program in Crop Year 2011.
In recent years, Idaho wheat farmers were subject to weather events
that caused severe quality problems across the state. Upon further
investigation, we found that crop insurance indemnities for wheat
quality problems were extremely inadequate. After raising this issue to
RMA, FSA, and in collaboration with the National Association of Wheat
Growers, we are close to providing producers with coverage for quality
losses.
Looking to the future of crop insurance, we can build on these
successes. But our first step must not be backwards. The ongoing
Standard Renegotiation Agreement (SRA) negotiations are a cause for
concern for our growers.
We understand and agree with the Administration's desire to find
budget savings whenever and wherever possible. However, the USDA's
draft SRA proposal seeking $8 billion in cuts over 10 years to Federal
crop insurance programs has the IGPA very concerned.
A reduction of this magnitude could significantly reduce the
accessibility, competitiveness, and quality of crop insurance and thus
negatively impact grain producers. Needless to say, the impact to the
farm bill baseline by such a reduction would be another major hurdle in
crafting effective and innovative farm policy legislation.
The IGPA understands that negotiations between insurance providers
and the RMA are ongoing. We certainly support a mutually agreeable and
expedient outcome. We ask that the Committee continue its vigilance of
these proceedings and carefully consider the impact on producers.
Conservation
Idaho's unique topography has allowed grain farmers to lead in
direct seeding technology, implementing practices that reduce soil and
wind erosion, and methods to maintain water quality.
The IGPA recognizes the popularity and increased focus on
agriculture conservation practices and programs since the passage of
the 2002 Farm Bill. Three programs, the Conservation Reserve Program
(CRP), Conservation Stewardship Program (CSP), and the Environmental
Quality Incentives Program (EQIP) are the most prominent in the grain
farming areas of Idaho.
Conservation Reserve Program
The IGPA supports the wise use of the CRP as natural resource tools
on environmentally sensitive land. Our growers support the ability to
employ Best Management Practices on CRP lands to control pests, weeds,
and soil quality.
While we recognize the concerns of the environmental community
regarding emergency use of CRP lands for haying and grazing, we support
a more reasonable policy to allow early haying and grazing of CRP land
in a responsible manner.
A high volume of CRP acres in Idaho will be due for re-enrollment,
termination, or extension by September 2010. The decisions made and the
ultimate outcome could significantly change the environment and culture
of certain areas in Idaho. The IGPA would request that the Committee
work closely with the USDA-FSA and NRCS and local leaders as this
deadline approaches.
Conservation Stewardship Program
The CSP has proven a significant addition to the management
practices of Idaho's grain farmers. For example, in Idaho's northern
region grain production occurs on rolling hills in volatile weather
conditions. Farm land in this region is particularly susceptible to the
threat of soil and water erosion.
With the support from the CSP, producers have adopted or continued
management practices and technologies that mitigate or eliminate
erosion threats. The evolution since 2002 of the CSP is welcomed by the
IGPA.
The change from a watershed-by-watershed approach to a competitive
application process for the CSP has made the program more accessible to
all growers and thus more equitable. In addition, the IGPA supports the
CSP as a voluntary, consistent, and fully funded stand alone program.
The IGPA continues to hear concerns and complaints from grain
producers regarding administration of the CSP by the NRCS. Growers have
experienced delays in timely contract delivery and payment which has
caused disruption in farm budgeting.
The IGPA recognizes the NRCS's traditional role as a technical
provider of conservation practices. We respectfully request that any
new Federal farm policy consider shifting the administrative functions
of the CSP to the USDA FSA, which has expertise in this area.
Environmental Quality Incentives Program
The EQIP program is very popular in Idaho, particularly on
irrigated ground in southern Idaho. Producers in this region have
utilized this cost-share program to install irrigation pivots and other
technologies to conserve water.
Idaho is home to several endangered species and the program has
also assisted producers in establishing critical wildlife habitat while
maintaining their farming operation.
The IGPA supports the continuation of this program in future
Federal farm legislation. However, we are concerned about the recent
activity of the Senate Agriculture Committee to shift $2 billion in
EQIP funding away from the program to boost child nutrition programs.
As we understand, there currently exists a backlog of requests for
EQIP-related projects. Reducing this valuable program by $2 billion
seems incongruent with the call for more conservation practices in
production agriculture. We urge the Committee to find alternative areas
in which to assist the nutritional programs administered by the USDA.
Mr. Chairman and Members of the Committee, there are many more
critical areas affecting Idaho's wheat and barley farmers. Estate tax
policy, rail transportation, renewable energy production, environmental
regulation and the necessity of ratifying pending Free Trade Agreements
are among the many items.
The IGPA looks forward to engaging our Idaho Congressional
Delegation and the Committee on these issues at the next opportunity.
Today, we are all here to discuss how Congress, the Administration, and
stakeholders can craft a Federal farm policy that is innovative,
efficient, and maintains a vibrant farm sector.
As one of the nation's top producers of wheat and barley, the IGPA
is honored to represent 700 farm families before this Committee. We
look forward to working with you, your staff, and the rest of our Idaho
Congressional Delegates to ensure that production agriculture can
continue to provide a safe, abundant, and affordable supply of food for
U.S. consumers.
I would be happy to respond to any questions that Members of the
Committee might have.
Thank you.
The Chairman. Thank you, Mr. Brown, for that testimony.
Mr. Gross, welcome to the Committee.
STATEMENT OF DOUG GROSS, POTATO PRODUCER, WILDER, ID
Mr. Gross. Thank you, Mr. Chairman. Thank you for the
opportunity to provide input on the key issues for the 2012
Farm Bill from the perspective of a specialty crop producer and
potato grower. My name is Doug Gross. I grow fresh market and
processing potatoes, and small grains on a 1,300 acre family
farm in Wilder, Idaho. I've been actively involved in the
potato industry for 35 years.
The 2008 Farm Bill included historic changes in Federal
farm policy as it relates to specialty crops. For the first
time, our nation's farm policy included programs that
acknowledged the need of specialty crop growers. Such a change
was long overdue, since it is now commonly recognized that
specialty crops represent nearly 50 percent of the total farm
gate revenue of all ag products produced in the United States.
During the consideration of the 2008 Farm Bill, potato
growers were directly involved in developing the policy options
that became part of the legislation. As active members of the
Specialty Crop Alliance, potato growers worked actively to
support policies that maintain market based decision making for
specialty crops, and provided Federal support for increasing
the competitiveness of specialty crop producers.
Members of the SCFBA support Federal farm policy for
specialty crops that is not based on any direct income support
for individual farmers, but that provides support for the
industry's efforts to manage pests of concern, conduct research
relevant to growers, expand export markets, and increase the
consumption of fruits and vegetables. The Federal commitment to
those goals has made a very positive difference during the
tenure of the 2008 Farm Bill.
At this time, I would like to provide the Committee with a
broad overview of some of my thoughts on key items that are
being watched most closely by potato growers in the 2008 bill.
Number one is planting flexibility restrictions. It's clear
from the price debacle that we're facing today in Idaho, and in
the nation in potatoes, that small increases in supply can have
devastating impacts on grower returns.
It continues to be clear that it is disruptive to markets
when acres that receive direct or other Federal payments are
allowed to be planted in non-subsidized crops. The allowance
made for individual states to plant fruits and vegetables on
program crop acres, provided ample opportunity for growers to
meet the demand for processing fruits and vegetables.
I believe that the potato industry would strongly oppose
any additional relaxation of the current planting restrictions.
It simply sends the wrong market signals to the producer.
Specialty Crop Block Grants: The enhanced funding for the
Specialty Crop Block Grants has been positively utilized by
growers at the state level. As a result of the local decision-
making on these grants, it offers state departments of
agriculture the opportunity to address the needs of local
growers. While in some states, there are undoubtedly ways to
improve the operation of the granting process to ensure that
the funding goes to new, innovative grower requested and
developed programs. It appears that the block grant program is
meeting the goals intended by Congress.
The introduction of exotic pests and disease can have
devastating effects on grower's ability to produce and sell a
crop. The funding provided to APHIS in the 2008 Farm Bill to
take a more comprehensive approach to pest exclusion and
management provides the opportunity to develop a more effective
approach to address, quarantine, and eliminate pests.
The program encourages a more effective partnership between
APHIS and the state departments of agriculture on pests and
disease issues. I think the time has come to look at developing
some type of an insurance program, similar to what exists in
the livestock industry, to help when federally quarantined
pests are discovered on the farms.
Research continues to be the key to both crop production
and consumer preference related issues. The Specialty Crop
Research Initiative provides the opportunity for specialty crop
researchers to access significant multi-year funding for multi-
disciplinary, multi-institutional research projects.
The potato industry has worked to encourage the multi-state
collaborations envisioned by this program. Competition for the
grants is intense. Grower input prior to proposal submission is
a critical component of identifying the relevant projects.
Potential exports of specialty crops are impacted by both
phytosanitary and structural barriers to trade. The current
farm bill provides funding to address phytosanitary barriers
through the Technical Assistance for Specialty Crop program.
The TASC program has a successful track record in providing
funding for projects to remove phytosanitary barriers to trade.
The increased funding provided by the 2008 Farm Bill for TASC
is important. Additional education is necessary to familiarize
the industry with the type of projects that can be completed
with the help of the TASC monies.
The potato industry has successfully used MAP funds to
develop new markets for fresh and processed potatoes. The 2008
Farm Bill provided $200 million in funding for MAP. The potato
industry continues to support this level of funding.
In short, the 2008 Farm Bill provides a solid foundation
upon which further progress can be made. We thank the Chairman
and Committee for past efforts, and look forward to developing
the 2012 Farm Bill together.
[The prepared statement of Mr. Gross follows:]
Prepared Statement of Doug Gross, Potato Producer, Wilder, ID
Thank you for the opportunity to provide input on the key issues
for the 2012 Farm Bill from the perspective of a specialty crop
producer and potato grower. My name is Doug Gross and I grow fresh
market and processing potatoes and small grains on a 1,300 acre family
farm near Wilder, Idaho. I have been actively involved in the potato
industry for more than 35 years.
The 2008 Farm Bill included historic changes in Federal farm policy
as it relates to specialty crops. For the first time our nation's farm
policy included programs that acknowledged the needs of specialty crop
growers. Such a change was long overdue since it now commonly
recognized that specialty crops represent nearly 50 percent of the
total farm gate value of all agricultural products produced in the
United States.
During the consideration of the 2008 Farm Bill potato growers were
directly involved in developing the policy options that became part of
the legislation. As active members of the Specialty Crop Farm Bill
Alliance (SCFBA) potato growers worked actively to support policies
that maintained market based decision making for specialty crops and
provided Federal support for increasing the competitiveness of
specialty crop producers.
Members of the SCFBA support Federal farm policy for specialty
crops that is not based on any direct income support for individual
farmers but that provides support for the industry's efforts to exclude
and manage pests of concern, conduct research relevant to growers,
expand export markets and increase the consumption of fruits and
vegetables. The Federal commitment to those goals has made a very
positive difference during the tenure of the 2008 Farm Bill.
Currently the SCFBA is reviewing the existing programs relevant to
specialty crops in the 2008 Farm Bill to document those successes and
to identify possible avenues for improvement. The potato industry will
be actively involved in this effort. We look forward to the opportunity
to provide the results of that work to the House Agriculture Committee
to assist in their deliberations.
At this time I would like to provide the Committee with a broad
overview of my thoughts on a few of the key items that are being
watched most closely by potato growers in the 2008 Farm Bill:
Planting Flexibility Restrictions
It is clearly evident from the price debacle facing potato
growers this year that small increases in supply can have
devastating impacts on grower returns. It continues to be clear
that it is disruptive to markets when acres that receive direct
or other Federal payments are allowed to plant non subsidized
crops. The allowances made for individual states to plant
fruits and vegetables on program crop acres provided ample
opportunity for growers to meet the demand for processing
fruits and vegetables. I believe that the potato industry would
strongly oppose any additional relaxation of the current
planting restrictions.
Specialty Crop Block Grants
The enhanced funding for the Specialty Crop Block Grants has been
positively utilized by growers at the state level. As a result
of the local decision making on these grants it offers state
departments of agriculture the opportunity to more directly
address the needs of local grower groups. While in some states
there are undoubtedly ways to improve the operation of the
granting process to ensure that funding goes to new, innovative
grower requested and developed programs it appears that the
block grant program is meeting the goals established by
Congress.
Pest and Disease Management
The introduction of an exotic pest or disease can have
devastating effects on a grower's ability to produce and sell
his crop. The funding provided to APHIS in the 2008 Farm Bill
to take a more comprehensive approach to pest exclusion and
management provides the opportunity to develop a more effective
approach to address quarantine and other pests. The program
encourages a more effective partnership between APHIS and the
state departments of agriculture on pest and disease issues.
The time has come to look at developing an insurance program
for growers, similar to what exists in the livestock industry,
to help when federally quarantined pests are discovered on
their farms.
Specialty Crop Research Initiative
Research continues to be the key to both crop production and
consumer preference related issues. The Specialty Crop Research
Initiative (SCRI) provides the opportunity for specialty crop
researchers to access significant multiyear funding for
multidisciplinary, multi-institutional research projects. The
potato industry has worked to encourage the multi-state
collaborations envisioned by the program. Competition for the
grants is intense. Grower input prior to proposal submission is
a critical component of identifying relevant projects.
Over Coming Phytosanitary Barriers to Trade
Potential exports of specialty crops are impacted by both
phytosanitary and structural barriers to trade. The current
farm bill provides funding to address the phytosanitary
barriers through the Technical Assistance for Specialty Crop
(TASC) program. The TASC program has a successful track record
in providing funding for projects to remove phytosanitary
barriers to trade. The increased funding provided by the 2008
Farm Bill for TASC is important. Additional education is
necessary to familiarize the industry with the type of projects
that can be completed with this funding.
Market Access Funding
The potato industry has successfully used Market Access Program
(MAP) Funds to develop new markets for fresh and processed
potatoes. The 2008 Farm Bill provides $200 million in funding
for MAP. The potato industry continues to support this level of
funding for MAP. There are many more positive aspects of the
2008 Farm Bill. In short, it provides a solid foundation upon
which further progress can be made. We thank the Chairman and
Committee for their past efforts and look forward to working
together in developing the 2012 Farm Bill.
The Chairman. Thank you, Mr. Gross, for that testimony.
Mr. Henggeler, welcome to the Committee.
STATEMENT OF KELLY R. HENGGELER, APPLE, PLUM, AND PEACH
PRODUCER AND PACKER, FRUITLAND, ID
Mr. Henggeler. Thank you. Good afternoon, Chairman
Peterson, Ranking Member Lucas, my Congressman Minnick, Idaho
Congressman Simpson, and distinguished Members of the
Committee. My name is Kelly Henggeler, and I am a fourth-
generation grower from Fruitland, Idaho.
Together with my family, I own and manage a fresh fruit
company in which we store, package, and market apples, plums,
peaches, and prunes. We also operate approximately 700 acres of
orchards growing apples, plums, peaches, and cherries.
Thank you, Chairman Peterson, for holding this hearing, and
coming to Idaho to hear about what the farm bill means to us.
As past Chairman of the U.S. Apple Association, and a current
board member of that organization, I keep in close contact with
apple industry leaders from coast to coast. I know firsthand
that the challenges and opportunities facing the Idaho industry
are not unlike those experienced by growers in the other 35
apple producing states.
I want to thank you for your support of specialty crops in
the 2008 Farm Bill. Specialty crops in Idaho represent 23 out
of the top 26 commodities in terms of farm gate receipts.
Nationally specialty crops compose nearly 50 percent of the
farm gate value of U.S. agriculture, and should remain a
significant part of the next farm bill.
Historically, apples and the produce industry have never
relied upon direct payment programs. Like a majority of these
growers, I don't believe that would be in the best interest of
my business for our industry. Instead we strongly advocate for
programs to help grow demand and consumption of our products,
and build long-term competitiveness and sustainability for our
industry.
Thank you for recognizing this need in the current farm
bill. And I strongly urge you to continue its important
specialty crop programs.
I would like to highlight some specific provisions within
the current farm bill that are important to me as an apple
grower and packer.
The Specialty Crop Block Grant Program focuses on regional
and local priorities for specialty crop producers. These block
grants fund important projects, such as improved food safety,
enhanced market opportunities, and research aimed at specific
local industry needs.
One example is the Idaho Preferred Program that was
established with the initial Specialty Crop Block Grant funds,
and provides an opportunity for local producers to collaborate
with retail partners in providing Idaho products in Idaho
stores.
Export programs are extremely important for the apple
industry, with about 25 percent of our crops sold overseas. The
Market Access Program, referred to as MAP, provides critical
funding, more than matched by industry contributions, to
operate programs which promote American apple consumption
around the world.
The New Specialty Crop Research Initiative is enabling the
apple industry across the country to strategically focus on
critical research needs. One example of this is the development
of new integrated pests management practices that enhance
workplace safety and reduce environmental impact.
Now, more children are enjoying nutritious fruits and
vegetables, including apples in a snack program being expanded
to all 50 states. Apples have been an extremely popular item in
this program, which promotes lifelong healthy eating habits.
Funding should be maintained and expanded from this program.
These specialty crop programs are important, because they
improve our short and long term competitiveness and strengthen
market opportunities. They can only play the role Congress
intended if our apples and other specialty crops are reliably
picked each fall.
The American Apple Industry faces a chronic labor
uncertainty as our borders continue to tighten and internal
immigration enforcement increases. The 2010 apple harvest is
quickly approaching, and though the crop appears outstanding in
many areas of the country, most growers are uncertain if they
will have enough workers to pick it.
Securing legal and reliable labor is a critical component
to our future. We lack sufficient legal labor to prune, pick,
pack, and process our crop. Without it, we could see the
decline in the outsourcing of the domestic apple industry.
Despite our best recruitment efforts, it is difficult, if not
often impossible, to find local workers.
For these reasons, I strongly encourage you to enact the
AgJOBS bill to reform the antiquated H-2A guest worker program.
Without it, I feel there will be fewer and fewer American
produced apples, and increased imports. Failure to act means
giving away our industry and our markets to foreign
competitors.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Henggeler follows:]
Prepared Statement of Kelly R. Henggeler, Apple, Plum, and Peach
Producer and Packer, Fruitland, ID
Good afternoon, Chairman Peterson, Ranking Member Lucas, my
Congressman Minnick and distinguished Members of the Committee. My name
is Kelly Henggeler, and I am a third-generation fruit packer and fourth
generation grower in Fruitland, Idaho.
Together with my family, I own and operate a fresh fruit packing
operation in which we store, package and market apples, plums, peaches
and prunes. Henggeler Packing Company, Inc. was started in 1943 and we
employee over 75 people during the packing season. We also operate
approximately 700 acres of orchards and employ another 100 people
during labor intensive times of the year including harvest. Besides
packaging and marketing our own fruit, we pack for over 20 growers
located in three adjacent counties.
Thank you, Chairman Peterson for holding this hearing and coming to
Idaho to hear about what the farm bill means to us. Rewriting the bill
in 2012 provides a real opportunity to assess the current needs of ALL
of American agriculture, and look ahead. As past Chairman of the U.S.
Apple Association and a current board member of that organization, I
keep in close contact with apple industry leaders from coast to coast.
I know firsthand that the challenges and opportunities facing the Idaho
industry are not unlike those experienced by growers in Michigan, New
York, California, Washington, New England and Virginia, to name but a
few examples.
First, I want to thank you for your support of specialty crops in
the 2008 Farm Bill. As members of the Specialty Crop Farm Bill
Alliance, apple growers and packers worked hard in support of programs
included in the bill which are enhancing the competitiveness and
efficiency of our industry and the opportunity for a fair return to the
land. In Idaho, specialty crops represent 23 out of the top 26
commodities in terms of farm gate receipts. Nationally, specialty crops
compose nearly 50 percent of the farm gate value of U.S. agriculture
and should remain a significant part of the next farm bill.
It's an exciting time to be in the apple business. Demand is
growing, especially in the export arena. At home, Americans are seeking
fruits, such as apples, which represent good value, good nutrition, and
on-the-go convenience in this time of recession. USDA's Dietary
Guidelines call on Americans to double their servings of fruits and
vegetables. Unfortunately, obesity is an even bigger problem today
among Americans than it was when the current farm bill was written. I
believe apples are part of the solution for a healthier nation.
A number of exciting new health research studies have found
possible links between the consumption of apples and apple products
with a lower risk of breast cancer, heart disease, asthma, Alzheimer's
disease and other serious health issues. New great-tasting varieties
and new products, like convenient, bagged fresh-sliced apples, are
leading the way to expanding consumer demand and apple consumption.
At the same time, an unsure labor supply, high energy costs, world-
wide competition, serious pressure from insect and plant diseases, and
ever-increasing regulations present unprecedented challenges for our
industry.
Historically, apples and the produce industry have never relied
upon direct payment programs to support grower income or market prices.
Like a majority of these growers, I don't believe that would be in the
best interest of my business or our industry. Instead, we strongly
advocate programs to help grow demand and consumption of our products,
and build long-term competitiveness and sustainability for our
industry. Thank you for recognizing this need in the current farm bill
and I strongly urge you to continue its important specialty crop
programs.
Currently specialty crop producers, including apple growers, are
reviewing the successes of the 2008 Farm Bill and developing
recommendations for further improvements. The Specialty Crop Farm Bill
Alliance will look forward to sharing them with you, as will I, an
Alliance member.
I would like to highlight some specific provisions within the
current farm bill that are important to me as an apple grower and
packer.
Specialty Crop Block Grants
The Specialty Crop Block Grant Program focuses on regional and
local priorities for specialty crop producers. These are being used by
growers at the state level and are tailored to meet specific local
needs. While there may be ways to continue to streamline and improve
the grant process, these block grants fund important projects such as
improved food safety, enhanced market opportunities and research aimed
at specific local industry needs. One example is the Idaho Preferred
Program that was established with the initial specialty crop block
grant funds and provides an opportunity for local producers to
collaborate with retail partners in providing Idaho products in Idaho
stores. Also, through Idaho Preferred, producers provide school
districts in Idaho with local product that has been incorporated into
fund raising opportunities. This program has been a huge success with
significant increases in the purchase of Idaho products and increased
revenue for schools.
Export Programs
Exports are extremely important for the apple industry, with about
25 percent of our crop sold overseas. Important, exports offer
excellent potential for further growth. Apple growers use two
programs--the Market Access Program and the Technical Assistance for
Specialty Crops Program--to help grow exports. MAP provides critical
funding, more than matched by industry contributions, to operate
programs which promote American apple consumption around the world. MAP
funding should be maintained and where possible, expanded. TASC funding
is also helping our industry reduce foreign phytosanitary barriers to
apple exports. For example, TASC funding is being used to overcome
technical barriers to trade in order to increase exports to Mexico and
Taiwan.
Specialty Crop Research Initiative
The new Specialty Crop Research Initiative (SCRI) is enabling the
apple industry across the country to strategically focus on critical
research needs. Positive results so far will enable apples and other
specialty growers to produce and process their crops more efficiently
and sustainably. Specific projects include:
Developing new Integrated Pest Management practices to
enhance workplace safety and reduce environmental impact.
Applying modern genomics and genetic technologies to create
apple cultivars with consumer-preferred traits.
Adapting engineering and automation technologies to improve
the safety, efficiency, and sustainability of apple and peach
orchards.
The SCRI's focus on multidisciplinary, multi-institutional research
collaboration has led to close work by the tree fruit industry with
USDA, and notable academic institutions across the country.
The National Clean Plant Network (NCPN) is another important
program in the current farm bill. Tree fruit and grape producers, and
nurseries, rely on the NCPN as the single nationally-certified source
of plant material free of devastating virus diseases. The nursery
industry is vital to apple growers since it supplies essential
rootstocks upon which different varieties are grafted to produce the
wide range of colors, tastes and textures enjoyed by apple consumers.
The SCRI and the NCPN are critical tools to help our industry
strengthen its foundation and assure we improve our genetic and
technological edge, which is essential to maintaining a competitive
position in the global marketplace.
Apples in Schools & USDA Purchases
Now more children are enjoying nutritious fresh fruits and
vegetables, including apples, in a ``snack'' program being expanded to
all 50 states. Apples have been an extremely popular item in this
program which promotes life-long healthy eating habits. Also, at the
urging of apple growers, USDA has purchased over $18 million worth of
apples, apple sauce and apple juice this year as part of the increased
minimum specialty crop purchases by USDA established under the current
farm bill. Given our sizeable crop last year, these buys provided
healthy apples to consumers and helped our growers. Funding should be
maintained for these programs.
Pest and Disease Prevention
A foreign pest or disease can easily devastate our orchards. The
farm bill created and funded a new USDA program to combat invasive
insects and plant diseases. This program provides for a more thorough
and coordinated approach to management of quarantine pests and disease.
It is a joint effort between USDA and state departments of agriculture.
This increased effort to combat a serious problem should be a priority
to continue and fund in the next farm bill.
A Strong Farm Bill--But Who Will Pick The Crop?
These specialty crop programs are important because they improve
our short and long term competitiveness and strengthen market
opportunities. They can only play the role Congress intended if our
apples and other specialty crops are reliably picked each fall.
The American apple industry faces a chronic labor uncertainty as
our borders continue to tighten and internal immigration enforcement
increases. The 2010 apple harvest is quickly approaching and though the
crop appears outstanding in many areas of the country, most growers are
uncertain if they will have enough workers to pick it.
Securing legal and reliable labor is critical to our future. We
lack sufficient legal labor to prune, pick, pack and process our crop.
Without it, we could see the decline and outsourcing of the domestic
apple industry. Despite our best recruitment efforts, it is difficult
(if not often impossible) to find local workers.
I strongly urge Congress to fix this problem. I can't, but you can.
I want the opportunity to pass along my farm and packing house to the
next generation. They are the future. But without solving the labor
crisis facing labor-intensive agriculture, I am deeply concerned about
future of my family operation.
For these reasons, I strongly encourage you to enact the AgJOBS
bill to reform the antiquated H-2A guest worker program. Without it, I
fear there will be fewer and fewer American-produced apples and
increased imports. Failure to act means giving away our industry and
our markets to foreign competitors.
Thank you for the opportunity to testify today. I would be pleased
to answer any questions you may have.
The Chairman. Thank you, Mr. Henggeler. We appreciate your
testimony.
Mr. Lee, welcome to the Committee.
STATEMENT OF GALEN LEE, SUGARBEET, MINT, ASPARAGUS, HAY, GRAIN,
CORN, AND CATTLE PRODUCER, NEW
PLYMOUTH, ID
Mr. Lee. Thank you, Mr. Chairman, Members of the Committee,
for bringing this important hearing to Idaho. My name is Galen
Lee, and I appreciate this opportunity to speak on behalf of
more than 1,100 sugarbeet growers in Idaho, Oregon, and
Washington regarding the 2012 Farm Bill.
And I especially want to express my gratitude to
Congressman Minnick, who stands with a strong voice for Idaho
agriculture on your Committee. We are proud that he, and
Congressman Simpson, who is co-chair of the House Sugar Caucus,
will work to maintain a strong sugar policy in the next farm
bill. I also want to welcome Congressman Schrader, in whose
district all the U.S. sugarbeet seed is grown. We look forward
to working with all of you in the months ahead.
I farm in New Plymouth, Idaho, which is about 35 miles
northwest of here. My family and I grow sugarbeets, asparagus,
peppermint, alfalfa, and corn. We are also dairy farmers and
have a beef herd. My family has been farming for more than 100
years, and growing beets since 1970 for Amalgamated Sugar
Company. I am President of the Nyssa-Nampa Beet Growers
Association, and a member of the Board of Directors of the
Snake River Sugar Company.
Sugarbeets have been grown in Idaho for 107 years. They are
an important cash crop in irrigated areas along the Snake
River. In 1996, the 1,134 beet growers of Amalgamated purchased
the company, and formed the Snake River Sugar Company, a
grower-owned cooperative of growers in Idaho, Oregon, and
Washington. Three factories, one in Mini-Cassia, one in Twin
Falls, and one here in Nampa, typically produce more than 13
percent of U.S. beet sugar production.
Our grower-owned cooperative headquartered in Boise is a
key supplier of sugar in the northwestern United States and
other critically important markets.
In Idaho, sugarbeets are a $1 billion industry that
supports about 7,000 direct and indirect jobs. The loss of this
industry would shift 180,000 acres of sugarbeets into other
crops and depress prices, especially for potatoes and onions.
Ultimately, our future depends on good farm and trade
policy.
The United States is the world's fifth-largest sugar
producer. We are also the world's fifth-largest sugar consumer,
and the world's second-largest net importer. We are good at
what we do.
Our sugar farmers are among the lowest cost producers in
the world. We are doubly proud of this distinction, because we
have achieved it while being fair to our workers and
responsible stewards of the land.
The U.S. has one of the most open sugar markets, and
provides guaranteed access to 41 countries, as it is required
to do under trade laws.
Trade agreements, such as with the WTO and NAFTA force the
U.S. to provide duty-free access for 1.4 million short tons of
sugar each year, whether the country needs the sugar or not.
In addition, under the NAFTA, Mexico now enjoys unlimited
access to the U.S. sugar market. The Doha Round of the WTO
could result in additional market access concessions, and the
recently launched Trans-Pacific Partnership, or TPP, trade
negotiations could result in even more concessions.
These important concessions could reduce U.S. sugar
producers' access to our own market even further, and reduce
prices, and make it impossible for many of us to survive.
Congress, in its wisdom, designed a sugar policy in the
2008 Farm Bill that is working to the considerable benefit of
consumers at zero cost to taxpayers; thus giving sugar farmers
a chance to survive, plus it fully complies with the rules of
the WTO.
Under this market balancing approach, the USDA has retained
its authority to limit domestic sales of the sugar. Producers
who exceed their allotments must store the excess at their own
expense, not the government's expense.
If imports exceed the difference between domestic market
allotments and consumption, USDA will divert surplus sugar into
fuel ethanol production and restore balance to the sugar market
for food. This production has not been needed as yet, and
government forecasters expect it will not be over the course of
the farm bill.
The current farm bill's benefits to American sugar
consumers and American taxpayers are clear. American food
manufacturers and consumers can count on reliable supplies of
sugar is being produced responsibly, is reasonably priced, high
in quality, and safe to consume.
U.S. wholesale and retail prices are below the average of
the rest of the developed world. In real terms, corrected for
inflation, U.S. wholesale and retail prices have declined
substantially over the past 3 decades.
Sugar producers receive no government payments. Sugar is
the only major commodity program that operates at no cost to
taxpayers, and government projections through 2020, say it will
remain at no cost over all these years.
American sugar farmers are grateful to the Congress for
crafting a sugar policy that is balancing supply and demand,
ensures consumers a dependable, high-quality supplies, and is
improving market prospects for sugar producers. The policy
achieves all these goals at zero cost to American taxpayers.
With some prospect of continued market stability, producers
should be able to reinvest in their operations, further reduce
their costs of production, and survive. We strongly urge the
continuation of the successful, no-cost policy in the next farm
bill.
Thank you, Mr. Chairman, for holding this important
hearing, and for all that you and the Committee do for American
agriculture. We look forward to working with you in the future.
[The prepared statement of Mr. Lee follows:]
Prepared Statement of Galen Lee, Sugarbeet, Mint, Asparagus, Hay,
Grain, Corn, and Cattle Producer, New Plymouth, ID
Thank you, Mr. Chairman and Members of the Committee, for bringing
this important field hearing to Idaho. My name is Galen Lee, and I
appreciate this opportunity to speak on behalf of more than 1,100
sugarbeet growers in Idaho, Oregon and Washington regarding the 2012
Farm Bill.
I especially want to express my gratitude to Congressman Minnick,
who stands as a strong voice for Idaho agriculture on your Committee.
We are proud that he, and Congressman Simpson--who is co-chair of the
House Sugar Caucus--will work to maintain a strong sugar policy in the
next farm bill. I also want to welcome Congressman Schrader, in whose
district all the U.S. sugarbeet seed is grown. We look forward to
working with you in the months ahead.
I farm in New Plymouth, Idaho, which is about thirty-five miles
northwest of here. My family and I grow sugarbeets, asparagus,
peppermint, alfalfa and corn; we are also dairy farmers and have a beef
herd. My family has been farming for more than 100 years and growing
beets since 1970 for the Amalgamated Sugar Company. I am President of
the Nyssa-Nampa Beet Growers Association and a member of the Board of
Directors of the Snake River Sugar Company.
Sugarbeets have been grown in Idaho for 107 years. They are an
important cash crop in irrigated areas along the Snake River. In 1996,
the 1,134 beet growers of the Snake River Sugar Company--a grower-owned
cooperative of growers in Idaho, Oregon and Washington--purchased the
Amalgamated Sugar Company, now located in Boise. Three factories--in
Mini-Cassia, Nampa and Twin Falls--typically produce more than 13% of
U.S. beet sugar production. Our grower-owned cooperative is the key
supplier of sugar to the northwestern United States and other
critically-important markets.
In Idaho, sugarbeets are a $1 billion industry that supports about
7,000 direct and indirect jobs. The loss of this industry would shift
180,000 acres of sugarbeets into other crops and depress prices,
especially for potatoes and onions.
Ultimately, our future depends on good farm and trade policy.
Food Security
Sugar is an essential ingredient in our nation's food supply. As an
all-natural sweetener, bulking agent and preservative, it plays an
important role in about 70% of processed food products and is called
for in a multitude of favorite home recipes. Dependence on unreliable
and unstable foreign suppliers is a threat to our food security, which
is why a strong, diversified and reliable domestic industry has long
been recognized as important to the nation.
U.S. sugar producers are globally competitive, but for decades we
have been threatened by unfair competition. Roughly 120 countries
produce sugar and all their governments intervene in their sugar
markets in some way. Many countries subsidize their producers and dump
their surpluses on the world market for whatever price it will bring.
This depressed, so-called ``world price'' has averaged below actual
global costs of producing sugar for many years. American producers are
competitive, but cannot be expected to compete against these foreign
treasuries and unfair predatory trade practices.
Importance, Size, Efficiency
In addition to the critical role it plays in local economies, sugar
is a significant job producer and revenue-generator nationally. The
U.S. sugar producing industry, with sugarbeets and sugarcane grown or
processed in 18 states, generates over 146,000 jobs and more than $10
billion per year in economic activity. These jobs range from the cane
fields of Hawaii and the beet fields of Idaho to the cane sugar
refineries in New Orleans, New York City, and other cities.
The United States is the world's fifth-largest sugar producer. We
are also the fifth-largest sugar consumer and the world's second-
largest net importer. And, we are good at what we do. Our sugar farmers
are among the lowest cost producers in the world. We are doubly proud
of this distinction because we have achieved it while being fair to our
workers and responsible stewards of the land. Farmers in the developing
world, who dominate the world sugar market, generally operate with
little or no enforced requirements for worker safety and benefits, or
for air, water, and soil protection. Our standards, and compliance
costs, are among the highest in the world.
Restructuring
Despite our efficiency, we are an industry that has been under
enormous stress. From 1985 until 2009, we did not receive any increase
in our price support level. Over this long period of essentially flat
nominal prices, the real price we received for our sugar dropped
sharply because of inflation. (Figures 1-2)
Only the producers who could match the declining real price with
efficiency gains and lower production costs were able to survive. More
than half could not. From 1985 to 2009, 54 of America's 102 cane mills,
beet factories, and cane sugar refineries shut down, with terrible
consequences for the local families and communities. Just since 1996,
35 mills, factories, and refineries have closed. (Figures 3-4)
Trade Challenges
The U.S. is one of the most open sugar markets and one of the
world's largest sugar importers. The U.S. provides access to its market
to 41 countries, as it is required to do under trade laws. Virtually
all are developing countries, and most are highly supportive of U.S.
sugar policy because it provides an import price at which many can
recover their costs of production.
In addition to coping with the problems of rising costs, pests,
disease, and natural disasters, American sugar farmers have had to deal
with another threat: trade agreements that have ceded more and more of
the American sugar market to foreign producers--even if the foreign
producers are subsidized and inefficient. And more such concessions are
being contemplated.
Trade agreements force the U.S. to provide duty-free access for 1.4
million short tons of sugar each year, whether the country needs the
sugar or not. This amounts to about 15% of domestic sugar consumption.
In addition, under the NAFTA, Mexico now enjoys unlimited access to
the U.S. sugar market. It is difficult to predict how much sugar Mexico
might send north each year. Key variables include Mexican sugar
production, government decisions (\1/4\ of the sugar mills are owned
and operated by the Mexican government), and the pace at which corn
sweetener, mostly from the U.S., replaces sugar in the massive Mexican
beverage industry. Mexican sugar exports to the U.S. have varied widely
in the past, and could in the future--over 1.4 million short tons last
year, but only about 0.5 million forecast for this year. (Figure 5)
Furthermore, the U.S. is negotiating a Doha Round of the WTO that
would result in additional market access concessions. The TPP (Trans-
Pacific Partnership) trade negotiations, recently launched by the Obama
Administration, could also eventually result in substantial market
commitments for sugar to the many countries lining the Pacific Rim.
Such trade concessions threaten to reduce U.S. sugar producers' access
to our own market even further, and reduce prices as well, making it
impossible for those of us who are struggling to survive. (Figure 6)
Previous Farm Bill
In the 2002 Farm Bill, USDA had only two tools to balance U.S.
sugar supplies with consumer demand.
1. It could limit foreign supplies to minimum import levels
required by the World Trade Organization (WTO) and other trade
agreements.
2. It could limit domestic sugar sales through marketing
allotments. Each year, USDA would forecast domestic sugar
consumption, subtract required imports, and allow U.S.
producers to supply the balance.
If U.S. production was insufficient to fill demand, USDA
could increase imports by expanding the tariff-rate quota
(TRQ).
If U.S. production exceeded the allotment quantity,
American producers had to store the excess at their own
expense, not the government's.
This market-balancing system worked reasonably well until 2008,
although misjudgments in setting the TRQ in 2006 seriously depressed
the U.S. sugar market. That's when Mexico gained unlimited access to
our market under the NAFTA, and USDA effectively lost control of the
market.
The 2008 Farm Bill
Congress, in its wisdom, designed a sugar policy that is working to
the considerable benefit of consumers and at zero cost to taxpayers,
and is giving the remaining American sugar farmers a chance to survive.
And, it fully complies with the rules of the WTO.
While retaining the basic-market-balancing tools described above,
Congress made a number of important improvements in 2008. The farm bill
minimizes the erosion of American sugar farmers' share of their own
market by limiting reductions in their marketing allotments to not less
than 85% of consumption. It's worth noting that in many years, imports
amount to much more than 15% of the U.S. market.
If imports exceed the difference between domestic market allotments
and consumption, USDA will divert surplus sugar into fuel ethanol
production and restore balance to the sugar market for food. The added
ethanol production would be consistent with national goals to reduce
American dependence on foreign oil and improve air quality.
In addition to the use of ethanol as a market balancing mechanism,
two other farm bill measures are helping to stabilize the market and
improve producer prospects:
1. The first increase in the sugar support price since 1985. The
raw cane sugar loan rate rose by \1/4\ cents per pound this
year, and will rise the same amount in Fiscal Years 2011 and
2012. Refined beet sugar rates will rise by a commensurate
amount. In Fiscal Year 2012, the raw cane loan rate will be
18.75 cents per pound and the refined beet sugar rate will be
24.09 cents.
2. USDA may not announce a TRQ above the minimum required by trade
agreements until halfway through the crop year (April 1),
unless there is a supply emergency. By April, much more is
known about actual U.S. sugar production and consumption and
the volume of imports from Mexico. This will prevent a
recurrence of situations such as that in the summer of 2006,
when USDA announced an excessive TRQ for the coming year, the
market was badly oversupplied, and producer prices languished
for almost 2 years.
Consumer Benefits
American food manufacturers and consumers continue to benefit from
reliable supplies of sugar that has been produced responsibly and is
reasonably priced, high in quality, and safe to consume. In real terms,
corrected for inflation, U.S. wholesale and retail prices have declined
substantially over the past 3 decades. Food manufactures and consumers
in the rest of the developed world pay about 10% more for sugar than
Americans do. Taking per capita income levels into account, sugar is
more affordable in America than in virtually every other country in the
world--rich or poor. (Figures 7-12)
Taxpayer Benefits
Sugar is the only major commodity program that operates at no cost
to taxpayers, and government projections through 2020 say it will
remain no cost over all these years. Projections prior to the enactment
of the 2008 Farm Bill suggested significant costs because of excessive
imports from Mexico, low prices, and government loan forfeitures. But
thanks to steady consumption growth, stable domestic production,
manageable import levels from Mexico, and sound program management by
USDA, costly surpluses have not occurred. (Figures 13-14)
The 2012 Farm Bill
The U.S. sugar industry has endured a wrenching restructuring over
the past 2 decades. American sugar farmers remain are grateful to the
Congress for crafting a sugar policy that is balancing supply and
demand, ensures consumers of dependable, high-quality supplies, and is
improving market prospects for sugar producers. The policy achieves all
these goals at zero cost to American taxpayers.
With some prospect of continued market stability, producers should
be able to re-invest in their operations, further reduce their costs of
production, and survive. We strongly urge the continuation of this
successful, no-cost policy in the next farm bill.
Thank you again, Mr. Chairman, for holding this important hearing
and for all that you and the Committee do for American agriculture. We
look forward to working with you in the future.
Figures
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The Chairman. Thank you, Mr. Lee, for that testimony.
Mr. Kernohan.
STATEMENT OF BRIAN J. KERNOHAN, FORESTRY PRODUCER, COEUR
d'ALENE, ID
Mr. Kernohan. Thank you, Chairman Peterson, and Members of
the Committee, for this opportunity to speak to the group today
on the review of U.S. ag policy to prepare for the 2012 Farm
Bill.
The crop that I'm going to speak about is slightly
different than that of my colleagues to my right, but
nonetheless, is extremely important, and through your
leadership, has made its way into this farm bill, and we hope
to see that continue.
My name is Brian Kernohan. I am the Manager of Wildlife and
Forest Stewardship for Forest Capital Partners, with offices in
Coeur d'Alene, Saint Maries, and a large area of Idaho.
Forest Capital Partners really appreciates the Committee's
track records in supporting the private working forest. And for
recognizing the values of markets, not only in the farm bill,
but in other legislation.
My goal here today is then to encourage the Members of this
Committee to continue to support a private working forest
through market-based incentives, and through conservation
partnerships, public and private, as you begin rewriting the
farm bill.
If you will indulge me a moment, I would like to introduce
you to Forest Capital Partners. Forest Capital is a private
landowner, a financial manager and a steward of large-scale
working forests with 2.1 million acres across the United
States. We own and manage the second largest private forestland
in Idaho at about 280,000 acres in the northern six counties of
the state. The other distinction here is that we're at the far
end of the state from the Treasure Valley here, where most of
the working forests are in the state. Our lands are managed
sustainable, and are community based on long-term
sustainability.
Our ownership and management of these Idaho working forests
bolsters the local economy. And I would like to share a few
statistics to demonstrate the importance of that forest to
those north six counties, and the small rural communities in
which we operate.
We have 22 direct employees, about 40 local contractors,
including 150 contracting employees. It's very important in
today's economic environment to demonstrate the landscape,
generating around $3.2 million in payroll. Contractor payments
are on the order of $26 million annually.
And in addition each year, 60 to 100 million board feet of
timber are coming out of northern Idaho, supplying 20 local
mills, and paying about a million dollars in state and local
taxes. So the numbers of those 280,000 acres really expand in
the economies of Idaho. And as I'll demonstrate, that is
equally important across the world.
So there are three points: Private working forests are a
vital part of America's natural resources infrastructure. It's
green infrastructure. I think you all know that. Your
leadership has demonstrated it, and the farm bill supports it.
The second point, the most effective means of conserving
these private working forests is markets. It is about
economics, and including markets in new products, like forest
fiber.
Third is public-private investments in helping to meet the
public's goals and investments coming off of the working
forest.
So first, private working forests are a vital part of
America's natural resources infrastructure. We at Forest
Capital aspire to create and capture a full range of value from
our forests.
Another unique thing about forests, timber may be our
primary product. But the benefits and products that come off
those forests vary and are extensive. Not only is it 2x4s, and
the paper products that the timber produces, but the clean air,
clean water, wildlife habitat, recreation, and the economic
basis already described.
Forests are also offering the solutions to some of the
nation's most pressing issues. As you, I'm sure are all aware,
these issues include: domestic renewable energy, a natural
means of removing carbon from the atmosphere, and addressing
climate change, and of course, stable jobs.
The market that we need to incentivize is biomass energy.
We need such markets that benefit society and the environment.
Without these markets, these working forests may be forced to
be converted to non-forest uses, and we lose the values that we
have described already.
As this Committee develops the 2012 Farm Bill, we encourage
you to include an energy title that fully supports the use of
biomass energy. We encourage you to continue the current energy
title. It contains a broad definition of biomass to allow these
markets to operate and to function.
The 2008 Farm Bill recognized the value of sustainability
of energy from biomass by including that definition, and it
allows the infrastructure of our business to take off.
Finally, public-private investments: While viable markets
are critical, investments in public-private partnerships are
also important. In the State of Idaho, we have been working
with conservation partners, with the support, thank you, of
Representatives Minnick and Simpson, on securing forest legacy
funds to protect and conserve a very important migration
corridor for wildlife in northern Idaho.
So thank you for that support. And it's through provisions
like these in the farm bill that allow these public-private
partnerships to continue.
So again, Forest Capital appreciates the Committee's
support for private working forests, while recognizing the
value of markets. As you look ahead to the 2012 Farm Bill, and
other legislation and oversight, we look forward to working
with you to conserve working forests as a forest.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Kernohan follows:]
Prepared Statement of Brian J. Kernohan, Forestry Producer, Coeur
d'Alene, ID
I. Introduction
Mr. Chairman, thank you for this opportunity to appear before the
House Committee on Agriculture today and review U.S. agriculture policy
as you prepare for the 2012 Farm Bill.
I am pleased to appear before you today as a private lands manager.
I am the Manager of Wildlife and Forest Stewardship for Forest Capital
Partners. Forest Capital Partners owns and manages 2.1 million acres
across the United States and is the second largest private landowner in
Idaho, managing 280,000 acres in the northern six counties of Idaho.
Our lands are managed sustainably and are certified as such by the
Sustainable Forestry Initiative'. Our primary management
objectives on our lands are to (1) sustainably enhance forest
productivity and health while creating environmental benefits and (2)
provide economic benefits to the company, mills, and community based on
long-term sustainability.
While we have 22 direct employees in Idaho earning a total of $3.2
million per year, we contract with 40 contractors who employ over 150
people, generating contractor payments of approximately $26 million per
year. We pay $1 million a year in state and local taxes in Idaho. We
harvest between 60-100 million board feet of timber each year that
supplies 20 mills, and we complete site preparation and reforestation
on approximately 7,500 annually.
II. Working Forests
At Forest Capital Partners, we aspire to be a leader in creating
and capturing the full range of values from our forests. We recognize
that forests provide social and environmental values in addition to
economic. In fact, much like farms and ranches, private, working
forests are a vital part of America's natural resources infrastructure.
In addition to products that improve our quality of life, whether 2x4s
for homes, household paper products or furniture, they provide clean
air and water, wildlife habitat, open space, recreation opportunities,
and an economic base for rural communities. They also offer solutions
to some of our nation's most pressing issues: domestic, renewable
energy; a natural means of removing carbon from the atmosphere; and
stable jobs that support American families.
These benefits come primarily from America's private forests. The
United State has 755 million acres of forests--an amount that is
roughly the same today as it was 100 years ago--57 percent, or 427
million acres, is owned by over ten million private landowners.
America's private landowners are managing their land well and are
consistently growing more than we harvest. Over the past 50 years,
growing stock in our forests increased 49 percent.\1\
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\1\ State of America's Forests. Society of American Foresters.
2007.
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These healthy, productive forests support American families.
According to a recent study conducted by the National Alliance of
Forest Owners, private forests in the U.S. support 2.5 million direct,
indirect, and induced jobs and $87 billion in payroll in the 29 states
covered by the study. Here in Idaho, private, working forests support
30,412 jobs, $891 million in payroll, $9 million in state income taxes,
$2 billion in sales, and $847 million towards Idaho's GDP.\2\
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\2\ The Economic Impact of Privately-Owned Forests. Forest2Market
and the National Alliance of Forest Owners. 2009. Available online at
www.nafoalliance.org/economic-impact-report/.
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The contributions from private, working forests are noticed at the
national level. A diverse cross-section of interests recognizing the
value of working forests have come together to support policies to
promote working forests at the national level. The platform of this
group, which calls itself the ``Working Forests Coalition,'' state in
their platform that ``Sustaining and enhancing the value of private
working forests both to society and to forest owners is of vital
national importance and essential to meet some of our nation's most
pressing needs.'' I submit for the record the platform of the group as
presented to USDA Secretary, Tom Vilsack, and urge to Committee to
consider the elements of this platform when developing policies
affecting working landscapes.
III. Markets Conserve Forests
Central to this coalition's message--and my message today--is that
the most effective means to conserve private forests is to ensure
viable markets for forest products exist. Working forests depend on
strong and dependable existing and new markets for forest-derived
products and services. Such markets benefit society, the environment
and forest owners alike, because they put forest owners in an economic
position that supports continued investment in sound forest management
over the long term. Without these markets, economic pressures may force
private forestlands into other more economically competitive uses.
Markets supporting working forests change and evolve over time. We
see that here in the Northwest as pulp and paper facilities have
significantly declined in number. As the marketplace changes it is
important that we foster new opportunities that will provide the
markets of tomorrow. America now stands at the cusp of two such markets
that may play an important role in conserving working forests:
renewable energy and carbon.
IV. Energy from Renewable Forest Biomass is Beneficial and Sustainable
As the Committee develops the elements of the next farm bill, we
urge the inclusion of an energy title that further supports the use of
biomass energy from forests and croplands to produce new sources of
renewable energy and derivative bio-based products as an important
means of both meeting our nation's energy needs and conserving working
landscapes.
Renewable energy from wood is domestic, renewable, sustainable, and
does not increase carbon in the atmosphere. For decades, the forest
product industry has produced electricity and heat from biomass. In
fact, the forest products industry produces more energy from biomass
than all the energy produced from solar, wind, and geothermal sources
combined. Additionally, technology is being commercialized to produce
low-carbon liquid transportation fuels and ultra-low-carbon synthetic
natural gas that can be substituted for higher carbon sources of
electricity and fuels.
The 2008 Farm Bill recognized the value and sustainability of
energy from renewable forest biomass by enacting a broad definition for
what qualifies are renewable forest biomass for energy. We thank this
Committee for its strong leadership in supporting this approach in last
year's debates on the Waxman-Markey legislation. The U.S. Department of
Agriculture also supports a broad biomass definition and joins this
Committee as an advocate for this approach in future renewable energy
legislation. I would like to submit for the record an exchange of
letters between a large coalition supporting a broad biomass definition
and Secretary Vilsack from earlier this year. I would like to also
submit for the record an April 20, 2010 letter from 98 organizations to
Senators Kerry, Graham, and Lieberman supporting a broad renewable
biomass definition.
As Congress debates new renewable energy policy, we urge the
Committee to continue its leadership in providing new economic
opportunities for working lands within the parameters of existing
Federal, state and local laws, programs and partnerships that support
the sustainable management of working lands. Private forests operate
within a framework of Federal, state and local forest practices that
has been tailored over the course of decades to local conditions and
needs and has been central to helping the United States be a world
leader in sustainable forest practices. To help increase awareness of
this framework, I would like to provide the Committee a white paper on
environmental regulation of private forests in the U.S.
V. Supporting Working Forests can Help Address Concerns about Climate
Change
As the nation continues to wrestle with the issue of climate
change, we wish to remind the Committee of the important role of
working forests in addressing concerns about carbon in the atmosphere.
The trees we grow absorb and store carbon naturally and turn it into a
variety of public benefits. Currently our forests absorb 15 percent of
our nation's annual emissions.\3\ Through proper management, increasing
use of long-term wood products, and using wood for energy, U.S. forests
can do even more. Work done by the Consortium for Research on Renewable
Industrial Materials documented how managed forests can produce
sustained, overall net emissions reductions when carbon is stored in
wood products like fence posts and kitchen tables and when wood is
substituted for building products that require significantly more
energy to produce.\4\
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\3\ U.S. Environmental Protection Agency. 2009. Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2007.
\4\ See Bruce Lipke et al., CORRIM: Life-Cycle Environmental
Performance of Renewable Building Materials, 54 Forest Prod. J. 8
(2004).
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As the U.S. looks for ways to establish a balance approach to
reducing carbon emissions, domestic, working forests offer a natural,
sustainable, and economic solution that not only improves our carbon
footprint, but helps the rest of the environment as well while
providing jobs and greater security in rural communities.
VI. Private-Public Partnerships can Further Conservation Goals
President Teddy Roosevelt said, ``Conservation means development as
much as it does protection.'' He understood that while viable markets
are the most critical component to conserving private forests, public
and private investments can help meet public goals to maintain working
landscapes. These investments can include both direct investments in
forest management and conservation and investments in the
infrastructure that supports forest stewardship and market development.
Market-oriented private-public investments are frequently the most
effective.
As Forest Capital Partners seeks to create and capture the full
range of economic, social, and environmental values from forests, we
recognize that sustainably managed working forests provide important
wildlife habitat and support local communities with jobs and revenues
at the same time. The Forest Legacy program also recognizes this, and
it is an important source of funding to help conserve the economic,
social, and environmental values of forests. In fact, we are currently
working with the Nature Conservancy to utilize Forest Legacy funding to
conserve an important wildlife migration corridor in North Idaho.
Forest Legacy, the Healthy Forest Reserve Program, and other
private-public partnerships to conserve land are an important tool for
landowners and the public in their conservation efforts. We urge the
Committee to continue to support and strengthen these and other
private-public programs to help conserve working forests.
Conclusion
Forest Capital Partners appreciate the Committee's track record of
supporting private, working forests, recognizing the conservation value
of markets, and entrusting the existing framework of Federal, state,
local, and third-party laws, regulations, and agreements to sustain
private forestry operations.
As the Committee looks ahead to the 2012 Farm Bill and other forest
legislation and oversight, we look forward to working with you on how
best to conserve working forests as forests.
Attachment 1
Keep Working Forests Working
Private Forests, Public Benefits
Private working forests are a vital part of America's natural
resources infrastructure, contributing significantly to the quality of
life enjoyed by all Americans. In addition to open space and
aesthetics, private working forests provide important consumer
products, clean water and air, energy, wildlife habitat and recreation
opportunities, and strengthen rural economies, just to name a few of
their many public benefits. They are also key to addressing critical
issues facing our nation today: increasing our use of renewable energy,
offering solutions to address climate change, maintaining a healthy
natural environment, and providing a stable source of jobs that support
American families.
Because private forests are so fundamental to meeting the pressing
and future needs of our nation, tapping their potential as part of
America's critical infrastructure is a necessary component of the
nation's overall economic, social, and ecological health and
productivity. All Americans benefit from the fact that eighty percent
of renewable biomass energy comes from wood, ten percent of U.S. carbon
dioxide emissions is absorbed by forests, eighty-six percent of
forestland is available for recreation, fifty-three percent of all
freshwater in the U.S. originates on forestland, and 689 tree species
and 1,486 terrestrial animals species live in our forests.ii
It is through such abundance that America's forests sustainably account
for more than $200 billion a year in sales of consumer products and
services, employ more than one million people, and further the nation's
environmental and ecological goals.i
The public benefits of working forests are derived from over 755
million acres of forests in the United States--the fourth largest
acreage in the world and an amount that has remained relatively stable
over the past 100 years.ii Private forests account for more
than 427 million acres, owned by over ten million private
landowners.ii
Private forest acreage in the United States has remained relatively
stable over the past fifty years, and standing timber inventory on
these forestlands has increased.ii A primary reason for this
is viable markets for the goods and services private forests provide.
These markets provide the opportunity for an economic return to private
forest owners, which translates into long-term investments that promote
forest retention and expansion and thereby a continuation of
environmental, economic and social benefits to society.
But the success of the past does not secure the future. As existing
markets weaken or disappear, goods, services and uses associated with
working forests are becoming less competitive with other economic uses
of private forestland over time. While some conversion from forests to
other uses is acceptable to accommodate a growing population or to
optimize land use, it is critical to develop policies and programs that
help working forests remain competitive with other land uses and
thereby help sustain the many benefits they provide as part of our
nation's natural resources infrastructure. This is especially critical
as we advance our efforts to meet our nation's growing need for
renewable energy, climate change solutions, a healthier environment,
and family-waged jobs in rural communities.
A Call to Action. Sustaining and enhancing the value of private
working forests both to society and to forest owners is of vital
national importance and essential to meet some of our nation's most
pressing needs, including renewable energy, addressing greenhouse gas
emissions, a healthy environment, and jobs in rural communities. To
achieve this, the forestry community, consisting of forest owners,
conservation and wildlife groups, resource professionals, environmental
organizations and other interests call for the development of an
actionable national policy platform focusing on three areas:
I. Strengthen existing and emerging markets for goods and services
working forests can provide. Working forests depend on strong
and dependable existing and new markets for forest-derived
products and services. Such markets benefit society, the
environment and forest owners alike, because they put forest
owners in an economic position that incentivizes continued
investment in sound forest management over the long term. Areas
of focus should include:
Steps to maintain traditional markets that provide
sustainably produced consumer goods and services, such as
housing materials, recyclable products and recreation.
Support for emerging and potential markets such as
renewable energy and fuels, green building, and wood-based
technologies.
The promotion and development of markets for environmental
services, such as climate change mitigation and carbon
offsets, enhancement of water quality and quantity;
endangered species conservation and other services,
including the effective utilization of new authorities
provided under the 2008 Farm Bill.
II. Support and align public and private investments, partnerships
and policies to maintain working forest landscapes. Public and
private investments are an important means of maintaining key
economic, social and environmental benefits of working forests.
Investments can include both direct investments in forest
management and conservation and investments in the
infrastructure that supports forest stewardship and market
development. Market-oriented public-private partnerships are
frequently among the most effective forms of such investment.
Areas of focus should include:
Developing and improving tax provisions supporting forest
conservation that apply to all classes of forest ownership.
Strengthening investments in public-private conservation
partnerships that equitably benefit both forest owners and
the environment and that demonstrate results. Such
partnerships may include existing programs, such as Forest
Legacy and the Healthy Forests Reserve Program, or may
require the improvement of existing or the development of
new investment or partnership tools.
Supporting targeted and effective research and development
and strengthening the workforce engaged in private forest
management.
III. Align government policies to support the long-term viability
of working forests. Over time, Federal, state and local
governments have established policies affecting private forests
in a variety of contexts and for a variety of purposes. Such
policies should both align with one another and support the
long-term viability of working forests. A conscious effort to
promote and coordinate government policies to help sustain
working forests is essential to maintaining the benefits they
can provide over the long term. Areas of focus should include:
Identifying and reforming policies that discourage private
forest ownership or investment in private forest
stewardship.
Developing mechanisms to align new and existing policies
affecting private forests with the objective of sustaining
private working forests over the long term.
Developing a Plan of Action. The undersigned seek to work with
Congress, the Administration, and all interested parties who support
working forests to advance the concepts in this platform and identify
priority action items that will most effectively sustain and enhance
the value of private working forests across landscapes over time. This
approach contemplates utilizing the considerable body of research on
private forest management that has already been done, developing from
this information a set of specific recommendations for policy makers to
consider, and working with policy makers to put in place national
policies to reaffirm that our private forests are a vital part of our
nation's natural resources infrastructure for the long term.
References
i American Forest and Paper Association. ``Our Industry:
Economic Impact.''
http://afandpa.org/ourindustry.aspx?id=35 (accessed July 15, 2009).
ii Society of American Foresters. The State of America's
Forests. 2007.
Attachment 2
April 20, 2010
Hon. John F. Kerry, Hon. Joseph I. Lieberman,
U.S. Senate; U.S. Senate,
Washington, D.C.; Washington, D.C.Hon. Lindsey Graham,
U.S. Senate,
Washington, D.C.;
Dear Senators:
As the Senate considers energy and climate change legislation, we
urge you to fully support the use of biomass for energy as a means to
help our nation meet its renewable energy and climate change goals. We
strongly urge you to include a broad renewable biomass definition that
is consistent across all relevant Federal programs, similar to that of
the 2008 Farm Bill (plus mill residues and byproducts and excluding
commonly recycled paper), and to include the appropriate recognition of
the carbon benefits of biomass energy in any legislation developed for
Senate deliberations.
According to the U.S. Department of Agriculture, a broad definition
for renewable biomass, such as contained in the 2008 Farm Bill (which
is substantially similar to the Waxman-Markey bill language), is a
common sense and practical approach that enables biomass participation
in emerging markets and provides economic options to help preserve
working farms and forests on the landscape and the many public benefits
they provide. We strongly support this view and urge that the expert
opinion of USDA be reflected in national policy. We also urge that
biomass definitions not impose restrictions that would foreclose market
opportunities or introduce new Federal regulation of public and private
lands.
We also strongly urge that the full carbon benefits of renewable
energy from biomass be appropriately acknowledged in national policy.
Unlike fossil fuels, which emit carbon into the atmosphere from
geologic sources that are not renewable, carbon associated with the
combustion of biomass is part of a natural cycle that maintains a
carbon balance by removing carbon emissions from the atmosphere through
natural processes, like photosynthesis, and stores the carbon in
plants, trees and soil. This balance is reflected in contemporary and
widely-accepted science acknowledging that combustion of biomass for
energy in countries like the United States does not increase
atmospheric carbon as overall carbon growing stocks remain stable or
increasing. It is also embedded in the policies and analysis of the
Environmental Protection Agency, the Energy Information Agency and
other authoritative and credible government and non-government
organizations.
We look forward to engaging on the important task of helping our
nation increase its capability to produce domestic, renewable sources
of low carbon biomass energy. We are confident that, by working
together, we can achieve this goal in a manner that supports the
contributions of working farms and forests, appropriately recognizes
the full carbon benefits they provide, and maintains them as a viable
source of our renewable energy portfolio in the long term.
Sincerely,
25x'25; Mississippi Forestry Association;
ADAGE; Montana Logging Association;
Alabama Agribusiness Council; N.C. Association of Professional
Loggers, Inc.;
Alabama Forestry Association; National Alliance of Forest Owners;
American Forest and Paper National Association of
Association; Conservation Districts;
American Forest Foundation; National Association of Counties;
American Forest Resource Council; National Association of Forest
Service Retirees;
American Loggers Council; National Association of State
Foresters;
Arkansas Forestry Association; National Association of University
Forest Resources Programs;
Associated California Loggers; National Association of Wheat
Growers;
Associated Oregon Loggers, Inc.; National Farmers Union;
Association of Consulting Foresters National Forest Counties and
of America; Schools Coalition;
Association of Equipment National Woodland Owners
Manufacturers; Association;
Avista Corporation; New York Biomass Energy Alliance;
Biomass Coordinating Council, North American Bear Foundation;
American Council on Renewable
Energy;
Biomass Power Association; North Carolina Forestry
Association;
Biomass Thermal Energy Council; Northern Arizona Loggers
Association;
BlueFire Ethanol Fuels, Inc.; Oregon Forest Industries Council;
Boone & Crockett Club; Oregon Small Woodlands Association;
California Forestry Association; Pingree Associates;
Catch-A-Dream Foundation; Plum Creek;
Ceres, Inc.; Port Blakely Tree Farms, LP;
Congressional Sportsmen's Professional Logging Contractors of
Foundation; Maine;
Coskata; Quality Deer Management
Association;
Duke Energy; Range Fuels;
Entergy Corporation; Rayonier, Inc.;
Environmental Federation of Reiver Forest Products;
Oklahoma;
Family Forest Foundation; Resource Management Service, LLC;
FirstEnergy Corporation; RMK Timberland Group;
Florida Farm Bureau Federation; Rocky Mountain Elk Foundation;
Florida Forestry Association; Shull Timber Corporation;
Forest Landowners Association; Society of American Foresters;
Forest Landowners Tax Council; South Carolina Forestry
Association;
Forest Products Industry National Southeastern Lumber Manufacturers
Labor Management Committee; Association;
Forest Resources Association Inc.; Tennessee Forestry Association;
Frontier Renewable Resources; Texas Forestry Association;
Georgia Forestry Association; The Lyme Timber Company;
GMO Renewable Resources; The Molpus Woodlands Group;
Hancock Timber Resource Group; The Westervelt Company;
Hardwood Federation; Virginia Forest Products
Association;
Idaho Forest Group; Virginia Loggers Association;
John Deere; Washington Contract Loggers
Association, Inc.;
KL Energy Corporation; Washington Farm Forestry
Association;
Longview Timber; Washington Forest Protection
Association;
Louisiana Forestry Association; Wells Timberland;
Michigan Association of Timbermen; Weyerhaeuser Company;
Michigan Forest Products Council; Wildlife Mississippi;
Minnesota Forest Industries; Woodlands Carbon Company;
Mississippi Biomass and Renewable Xcel Energy.
Energy Council;
Attachment 3
January 26, 2010
David P. Tenny,
President and Chief Executive Officer,
National Alliance of Forest Owners,
Washington, D.C.
Dear Mr. Tenny:
Thank you for your October 13, 2009, letter on behalf of a range of
interest groups in which you express support for a broad definition of
renewable biomass as it relates to energy development.
There is wide national agreement on the need for more renewable
energy and biofuels, including cellulosic ethanol and other advanced
biofuels. As you may know, I have supported the 2008 Farm Bill
definition of renewable biomass as it is a common sense and practical
approach that enables market participation while simultaneously
considering the sustainability of our lands. I believe that this
definition can and will provide landowners with economic options that
will help keep forestlands forested.
I look forward to working with you in the future on this and other
forest issues. If you would kindly share this response with your
colleagues, I would be most appreciative.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Hon. Thomas J. Vilsack,
Secretary.
______
October 13, 2009
Hon. Thomas J. Vilsack,
Secretary,
U.S. Department of Agriculture,
Washington, D.C.
Dear Secretary Vilsack:
We are writing to thank you for your leadership in advancing a
sustainable renewable energy policy, responsible land management, and
rural America through a broad definition for renewable forest biomass
in energy and climate policy. We particularly appreciate your support
of a definition similar to that of the 2008 Farm Bill that would
provide full market participation for biomass from private and public
forestlands while including biomass from Federal lands that conforms to
Federal law and forest plans.
America's private and public forests are uniquely suited to help
meet our nation's renewable energy and climate needs. Renewable forest
biomass from these lands could provide a significant portion of the
energy needed to meet an RES and could make substantial contributions
to the production of next generation transportation fuels. Sound
management of our forests to provide biomass energy will also improve
the overall carbon footprint of domestic energy supplies while
contributing to the long-term forest health and vitality--improving
wildlife habitat, protecting water quality and reducing catastrophic
wildfires that emit millions of tons of carbon dioxide and other
greenhouse gases each year.
One of the goals of promoting renewable energy is to reduce our
dependence on foreign sources of energy and replace them with domestic
sources of clean, reliable energy. Critical to this objective is an
inclusive definition of qualifying biomass that maintains a level
playing field for market access across all feedstock sources and
encompasses the full range of wood biomass, including trees and other
plants, forest residuals and byproducts of manufacturing.
As Congress moves forward on energy and climate change legislation,
and the Administration participates in COP-15, we look forward to
working with you to promote a broad definition of renewable forest
biomass in Federal policy.
Sincerely,
25x'25; National Association of Counties;
ADAGE; National Association of Forest
Service Retirees;
Alabama Forestry Association; National Association of State
Foresters;
American Forest Foundation; National Association of University
Forest Resource Programs;
American Forest Resource Council; National Forest Counties and
Schools Coalition;
American Loggers Council; National Wild Turkey Federation;
Arkansas Forestry Association; North Carolina Forestry
Association;
Associated Logging Contractors of Northern Arizona Loggers
Idaho; Association;
Associated Oregon Loggers; NorthWestern Energy;
Association of Consulting Foresters Oregon Forest Industries Council;
of America;
Avista; Oregon Small Woodlands Association;
Biomass Coordinating Council, Otoka Energy;
American Council On Renewable
Energy;
Black Hills Forest Resource Quality Deer Management
Association; Association;
Boone & Crockett Club; Reaves Timber;
California Forestry Association; Rocky Mountain Elk Foundation;
Catch-A-Dream Foundation; Ruffed Grouse Society;
Colorado Timber Industry Shull Timber Corporation;
Association;
Deere & Company; Society of American Foresters;
Empire State Forest Products South Carolina Forestry
Association; Association;
Entergy Corporation; Sustainable Solutions Georgia;
Florida Forestry Association; Tennessee Forestry Association;
Forest Landowners Association; Texas Forestry Association;
Georgia Forestry Association; The Biomass Power Association;
Intermountain Forest Association; Virginia Forest Products
Association;
Louisiana Forestry Association; Virginia Loggers Association;
Michigan Association of Timbermen; Washington Contract Loggers
Association;
Michigan Forest Products Council; Washington Forest Protection
Association;
Mississippi Biomass and Renewable Washington Friends of Farms &
Energy Council; Forest;
Montana Logging Association; Woodlands Carbon Company;
National Alliance of Forest Owners; Xcel Energy.
The Chairman. Thank you, Mr. Kernohan. And thank you all
Members of the Committee for testimony.
I want to focus in on something, you guys kind of brought
up the direct payment issue in different ways. You brought out
the issues that have been before us regarding that part of the
farm safety net. And part of the reason we get into the payment
limitation debate all the time is because of direct payments.
Mr. Brown, you testified that your folks are pretty wedded
to direct payments. What I'm picking up, as I travel around the
country in my district, is that some of my folks are starting
to question whether it may be better to try to direct that
money towards crop insurance, or towards some kind of revenue
program, or something along those lines.
But because you are sitting next to people that are in
organic and specialty crops, one of the things we wrestled with
last time, over these direct payments, was the ability of
having enough land available to be able to grow some of those
specialty crops. And so because of that, we increased the
planting flexibility of 11 states to try to address that.
In my state in the southeastern part, I picked up a lot of
questions from people. We have Seneca Foods that produces a lot
of canned and frozen vegetables. But we also have a lot of
organic folks. And we're getting a lot of complaints from them,
that they cannot get enough land to be made available to them,
because of the direct payments in the farm programs.
So we've got people coming at us from all different
directions on this issue. Mr. Brown, are your folks at least
willing to enter into discussion to look at the system, and see
if there is a better way to do this, or a different way to do
this? Or are you just kind of locked into keeping the structure
the way it is?
Mr. Brown. Thank you, Mr. Chairman. No, our folks are very
willing to look at different alternatives in lieu of the direct
payment. We surveyed our board of directors, not formally, but
we surveyed them in our last board meeting. And the majority of
them expressed that the direct payment was important. But we
also talked about an increase in crop insurance benefits, and
things like that, would be equally as important.
We realize that the direct payment has a big red target on
it. And I think you challenged the National Association of
Wheat Growers to think outside the box. And say, what if the
farm bill didn't exist? What if this was the first farm bill?
What would it look like?
The international organizations are currently in the
process of surveying our members, asking them for creative and
innovative ideas.
The Chairman. Do you have any idea how long that process is
going to go on.
Mr. Brown. No. We realize that we have a time constraint.
And we're trying to get that information gathered as quickly as
we can.
The Chairman. Mr. Brossy, do you have any problems with
getting land for organic production here in Idaho, because of
the land being in a program, so it's not available.
Mr. Brossy. Thank you, Mr. Chairman. No, I personally don't
see that. I have a farm that's very contained, and so I'm not
looking to expand.
And I'm fortunate to have an adequate land base to do what
I can manage. I think partly what Mr. Brown is referring to
really has to do with the nature of grain production in Idaho,
which is totally different than irrigated ag down here in
southern Idaho, where we have much more crop choices available.
And, if you are farming thousands of acres, and literally,
most of it's grain, or grain, or peas and lentils as a
rotation, your direct payment is significant. For most of us in
southern Idaho, who farm smaller acreages, it's really kind of
a minor part of our whole program. And I actually would put in
a plug for improving crop insurance.
I'm actually looking forward to using AGR-Lite at some
point. You have to actually own your farm for so many years to
be eligible, and I'm not quite there. But I think for my
system, that makes more sense, because it----
The Chairman. We're looking at that. One of the things I
would like to see is--I don't know if we can get there in this
next farm bill. But I would like to see us get to a point where
we could cover all of the crops under crop insurance. That's
the goal that I have of trying to figure out a system where we
can cover your whole operation, whatever you are growing. And
that's where we need to get.
As to your CSP idea, I have a problem with that. The way I
see the safety net program--what I think we're trying to do is
to put a backstop there that your banker is comfortable with,
for whatever level of production you have. So that you've got
enough risk management, enough protection that if the weather
goes bad, or the markets collapse, or whatever, the banker
knows he's going to get repaid, or you are going to get your
money back out of your crop.
So I see that as what we're trying to do. And I'm reluctant
to turn that system over to somebody who has some other goal,
other than production. And if they were sensible, in terms of
some of the conservation stuff, that might be one thing.
But we've seen that when you set up those kinds of things,
you sometimes get ideologue. We've seen this in biofuels. Where
they basically almost shut down the industry, because of all
these crazy ideas they come up with, which are almost like a
religion on the international land use and so forth, that make
it almost impossible to do.
I'm all for conservation, but I'm not sure we want to mix
that up with what the purpose of a farm bill is, and that is to
get people who want to grow a farm the ability to manage their
risk. That's kind of where I'm coming from. But I've heard it
from other people, I should say.
Mr. Brossy. I realize it's a radical notion when you look
at the traditional farm bill programs. I guess I would just
offer that if crop insurance was broader based, and more
effective in more diversified operations, then it would be the
safety net that you are talking about.
And again, I think that any public money spent on
agriculture should be tied to good conservation. Because
ultimately, we're going to need that to continue to produce
food for our country into the future. We're going to be less
dependent on fossil fuels by necessity. We need to be
innovative, and conservation should be tied to all that. So
thank you.
The Chairman. Well, I agree. But, also, it doesn't make
economic sense for conservation. Some things that are happening
don't necessarily make much common sense.
Mr. Lucas. Now, if I could ask the panel first the question
that I always ask in these kind of discussions. What are land
prices doing in your state, in your areas, in your communities
in year 2010 now and 2005; up, down, sideways.
Mr. Simpson. [Indicating down.]
Mr. Lucas. Really? It actually did. Because generally when
the question is asked, and has been asked for a number of
years, which I think is a reflection of several good farm bills
in a row, I get an upwards signal.
So what's driving down your land prices, gentlemen, in the
areas where yours are going down? Is it the price of your
commodities you are selling? Is it the uncertainty of the EPA,
the Federal regulations? Is it difficulty of acquiring credit?
Whichever one of you brave gentleman would like to step up.
Mr. Gross. Mr. Lucas, we see the commodity prices dropping,
and that's the reflection of lower land values, land rents, and
lower values.
Mr. Lucas. Well, along with that, let's touch for a moment
on the topic that the Chairman brought up. And the Chairman and
I tend to agree on almost everything, but occasionally we have
a difference of opinion.
I share his perspective that if we create programs that
require certain standards to be met that are created by some
bureaucracy on the East Coast of CSP, or similar programs, you
run the danger that if the wrong people implement the programs,
you get the most bizarre requirements. That does concern me.
One area where the Chairman and I tend to disagree is when
we're talking about the direct payment programs. Neither the
Chairman or I voted to join the WTO. But we live in a WTO
world.
And in most commodities, we have to contend with our
friends in China, and in Brazil, and those trade cases they
bring against us. And having farm programs that give us the
best ability to defend the resources that we're putting into
agriculture is critically important. The direct payments are
the most compliant part of what we're doing right now.
So I, too, want to ask Mr. Brown about that question. How
relevant and how important are the direct payments? And have
they been since 1996, in your operation, the nature of the area
you are in?
Mr. Brown. Well, I think as I said, and I'll speak for
myself, and also on behalf of the board. But the board, when we
surveyed the board, the majority of them did say that the
direct payments were important in operation. And in our
operation, I think the direct payment is equally important.
But as I told the Chairman, we would be willing to look at
alternatives if those baseline dollars could be used in other
ways to benefit producers, and still provide that safety net
for the production of agriculture.
Mr. Lucas. Did I see in your background somewhere that you
are an accountant.
Mr. Brown. Yes.
Mr. Lucas. A CPA.
Mr. Brown. Yes.
Mr. Lucas. Could you visit with us for a moment, and of
course, any one else on the panel who would like to comment
too, what the effect, potentially, of the estate tax changes
that are coming to us could have on your business? What the
change this fall in the capital gains records, and income tax
rates could do to farmers in your part of the country.
Mr. Brown. Well, estate taxes are a very big concern in our
area--well, through all areas of the country should be a
concern. We've got a growing population of farmers. The estate
tax should be a vehicle to be able to pass on that family farm
to future generations.
In a way, that's our retirement plan, our 401(k) plan, if
you want to call it that. We make our investment in our land.
Our land payments are made every year. That is our retirement.
And for all that hard work and years of work that is put in by
a family farmer, he should be able to pass that farm on to his
children up to a certain level, without having to have the
heirs having to sell that farm in order to pay the tax.
And so it's a concern to us. Our resolution says we're in
favor of a $5 million exemption at a 35 percent rate. That
would be our ideal estate tax.
Mr. Lucas. Last question, Mr. Chairman, and the panel.
EQIP, how important is it to you in your industries in your
part of the state? There again, a show of hands up or down.
Does EQIP matter?
[Audience showing hands.]
Mr. Lucas. Enough said. Thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Lucas.
The gentlelady from South Dakota, Ms. Herseth Sandlin.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. And in
addition to having your complete Idaho Delegation to the House
represented today, the entire South Dakota Delegation to the
House is represented here today as well. And it's a pleasure to
be with all of you. And thank you for your testimony.
I don't have a question, Mr. Henggeler. I just wanted to
make you, and the folks that you represent here today, aware of
a bill that I and Joanne Emerson introduced called the Healthy
Start. You had mentioned in your testimony, the importance of
grappling with the obesity epidemic across the country,
particularly among young children. How it's expanding to all 50
states. How the SNAP program has created an additional market
for your producers.
And the Healthy Start Program has made, for the first time,
commodity assistance to be available for school breakfast, in
addition to school lunches. And I think that this is another
positive development.
I don't support undermining our farm safety net, and other
titles in the farm bill to find the resources. But I do think
that we can find the resources necessary to expand school
nutrition programs. We know how important the school breakfast
program is.
I'm a mother of a 16 month old baby. He's started every
breakfast since he was 6 months old with apples, or peaches, or
pears, or plums, and other fruits.
And I've sat down in some of the school breakfast programs,
and I like having my bowl of Cocoa Puffs and Frosted Flakes,
too. But I am disappointed that we don't have fresh fruits
integrated into the school breakfast programs. I think
commodity assistance would be very beneficial to them, and
certainly to apple producers and other fruit producers across
the country.
Eastern South Dakota is more like our neighbors in
Minnesota, Idaho, and the Midwest. Western South Dakota is more
like our neighbors in Wyoming, Montana, and Idaho, when we look
at cattle producers, and sheep producers, and forestry.
And so Mr. Kernohan, I have some questions for you. You
mentioned the energy title with the Chairman's leadership by
incorporating the energy title and expanding it in the 2008
Farm Bill.
As you know, we have the forest biomass for energy program.
We have the community wood energy program. We have been
authorized at $15 million and $5 million respectively and the
President's 2011 budget, does request the full amounts,
recognizing the importance of renewable biomass off our
forests, as one element among many of reducing our dependence
on foreign oil and other fossil fuels, and supporting rural
jobs.
You know, in the Black Hills of South Dakota, we have a lot
of national forestlands. But we have the state and private
forestlands, too.
And so if you could comment, has Forest Capital Partners
participated at all in the Biomass Crop Assistance Program?
Mr. Kernohan. We have not directly. We have spent a lot of
time looking at it, and have not participated directly.
Ms. Herseth Sandlin. Is there a reason that you haven't? I
mean, they have recently proposed some rules. Do you anticipate
that you might participate? And I know that we've got concerns
about disallowing national payments for wood wastes and mill
residues, typically used to produce products, such as particle
board.
But do you have any thoughts on how that program might be
useful to you or other private working forestlands?
Mr. Kernohan. Thank you for the question. Absolutely. The
program is very useful. And as an attempt in the farm bill to
look at producing the infrastructure for a new market, I might
go so far as to say, it's invaluable to private forestland
owners.
It's a program that is intended to jump start our market,
and that's good. And I think the regulations that are going
through, are hopefully going to lead to a better program so
that more companies can take advantage of it.
The importance of this is that forest biomass is a maturing
market. And where we struggle at Forest Capital is the question
that you first asked is, have we participated? No. Would we
like to? Absolutely.
And where we struggle to put forest biomass to market right
now is from the woods to the facility. And the intent, as we
understand it, is intended to take that nearest forest, and
bring it to market.
So that aspect of the supply chain is critical to us. We
own the supply. We're trying to get it to market. So any
program like BCAP that does that, we hope to see continue and
to persist.
We didn't have an opportunity not for lack of want. It was
just depending on your location, and production of our harvest,
we just couldn't make it work in terms of the timing for it.
The moratorium was set as the rules were revised. So that was
my answer to your first question, Ms. Herseth Sandlin.
Ms. Herseth Sandlin. I appreciate that. And just one final
comment. As you know, Mr. Minnick, and I, and other Members of
our region here in the interior West, have worked at strategies
to deal with the pine beetle infestations. They are threatening
not only our private forests, but certainly, the state and
national forests as well.
And we hope to get some feedback from the Secretary to
effectively resource and identify how we can have competence
and strategy to deal with this emergency.
Mr. Kernohan. Thank you.
Ms. Herseth Sandlin. Thank you, Mr. Chairman.
The Chairman. Thank you.
The gentleman from California, Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman, for holding
these hearings as we come across the country. And I want to
thank Congressman Minnick, he's doing a great job in
Washington.
Unlike my colleagues from Idaho, who comprise the whole
delegation, and my colleague from South Dakota, I'm \1/53\ of
the California delegation. And I'm not so sure you would like
the other portions of the delegation.
But I represent perhaps one of the richest agricultural
regions in the entire country. From Fresno to Bakersfield,
there are over 300 commodities grown, large dairy, and citrus
interests. And I represent the third generation of family
farmers. So I'm very aware of the hard work that all of you do
by farming west of the Fresno area.
Let me begin by asking panel members, in terms of your own
operation: What observations do you make with regards to the
volatility, the market volatility that you've witnessed in the
last 10 years in your areas, and how have you dealt with that
volatility?
Mr. Lee. Well, thank you, Mr. Costa. In the sugar industry,
the farm bill we're currently working under has been great for
stabilizing our sugar prices. We feel that the provisions work
really well. We would hope to have it maintained.
On my operation, this year sugar has out-subsidized the
dairy, which has been low for quite some time.
Mr. Costa. Yes. We have started to melt down the dairy
industry in California and clear across the country.
Mr. Lee. Yes, so the sugar has helped with that. It has
been very beneficial in that area.
Mr. Costa. Regarding sugarbeets, you mentioned taking over
the co-op and purchasing the existing three plants. We've seen
sugarbeet production, as you may know in our area, diminish
greatly in the last 2 decades. There have been some efforts to
try to salvage it and use the industry as part of an energy
source. Are you looking at that here in Idaho?
Mr. Lee. To use the sugar as an energy source?
Mr. Costa. Right.
Mr. Lee. We've looked into some states. Our Nyssa plant
that was closed in 2005, there were some studies done to look
at using that for ethanol. The feasibility just wasn't there at
this point in time. It was something that we could still look
at. But right now, it's not being studied.
Mr. Costa. But the problems that we've had, not just in the
dairy industry, but other sectors, the credit crisis has been
felt in American agriculture.
I don't know who of you might like to discuss any first or
secondhand knowledge of credit availability, and how you've
dealt with that within your various crops.
Does anyone want to tackle that? Traditional lenders, Farm
Credit, what has worked, what hasn't?
Mr. Brown. Congressman, I know that in our area in
southeastern Idaho, credit has tightened up significantly. And
a lot of it is because of industries, like the dairy industry,
having significant problems. That has scared the Farm Credit
Services. They are more conservative, I guess, in their
approach, and require better financial standards now to lend
money.
Mr. Costa. Do you prefer Farm Credit or traditional lending
community banks.
Mr. Brown. Mostly in my own operation, I've mostly dealt
with Farm Credit. They have normally been very easy to deal
with. They understand farm issues, ag issues. So they've been
the easiest to deal with.
Mr. Costa. Mr. Henggeler, I was pleased to hear your
comments with regards to the need to bring immigration reform.
I have been a proponent of that, along with AgJOBS. My
preference would be to see comprehensive immigration reform,
because it's badly needed throughout the country. I think a lot
of the reactions we've seen today are a result of long overdue
Federal policy that needs to be changed.
Having said that, would a 3 year, or a 5 year pilot program
that implemented AgJOBS, to kind of set the table for
comprehensive reform, work here in Idaho?
Mr. Henggeler. I believe it would. We do need some type of
vehicle where we can secure a legal workforce. It's been a
concern. I had an opportunity to be present at the introduction
of the AgJOBS, bill several years ago. It was critical then,
and it's even more critical now.
And if there is some type of pilot program where we can
work through, where all states are equally participating in
that program, it would be a positive.
Mr. Costa. Thank you. My time has expired. I did want to
get to the area of what applications were for the rural
broadband. I didn't hear any that were discussed that we're
trying to expand those efforts. I know it's needed in my area,
and other rural areas. And also the rural development program
that Secretary Vilsack is attempting to deal with. And rural
healthcare, but we'll have to save that for another time.
Thank you very much, Mr. Chairman, for your time.
The Chairman. The gentleman from Idaho, Mr. Minnick.
Mr. Minnick. Thank you, Mr. Chairman. I would like to
assure my colleague from California, Mr. Costa, that if
everyone from California thought the way you did, we would
welcome the whole delegation. In fact, we may even want you to
run for speaker.
I would like to pursue Congressman Costa's question with
you, Mr. Henggeler. What changes would we need, as part of a
comprehensive immigration reform, to the temporary worker
programs, H1 and H2, to make it work for the apple industry,
and other users of seasonal labor, in order that you can get
your crops in, and compete successfully both locally and
internationally?
Mr. Henggeler. Thank you, Congressman Minnick. What we
talked about, what I referred to as the H-2A system. And a lot
of folks out West do not participate in that program,
specifically in Idaho.
But our New York apple growers do. Our northeastern apple
growers do. And what they have found is that the process is
just so cumbersome. By the time that you put paperwork in, and
securing, or trying to procure labor to come, and pick the
crops because our items are so perishable, what usually happens
is, and what has happened in the past is, those apple pickers,
or fruit pickers that show up about a week after the crop
should have been harvested. Well, in our business, we can't
allow that to happen. That's when they start maturing past the
deadline. And we're not giving a quality piece of fruit to the
consumer at the supermarket level.
So, you know what we need is some type of better method to
identify workers that are eligible for the program. A more
flexible system that allows us to bring workers in and out, and
where we can track them thoroughly.
So the paperwork, even at the level of what H-2A is trying
to do with 150,000 workers, is onerous. But, we're talking
about maybe over a million-and-a-half workers in agriculture.
We're going to have to step up our efforts in order to develop
a system to handle that amount of workers.
Mr. Minnick. Thank you very much.
Mr. Kernohan, following up on my colleague's from South
Dakota's question. How do we provide incentives to your
industry, other sources of crop residue to incentivize biomass
energy, without discriminating against the other end-uses of
the same raw material?
I'm thinking in your case about discriminating against the
people who want to use essentially the same wood fiber, or
analogous wood fiber, for paper, for lumber, for landscape
materials? How do we create this new set of incentives without
making the mistakes we did to incentivize corn ethanol, with
the consequences it had for a whole host of consumers,
including our local dairy industry.
Mr. Kernohan. Thank you, Congressman Minnick. That is a
challenging level for us with the forest biomass. But let me
offer this as a thought.
I think first and foremost, we have to create policies that
actually allow a strong, vibrant infrastructure to be created.
And why I start there--and that includes full supply chain, and
openness of definitions of renewable biomass.
Because I think when you provide incentives at that level,
that the economics of forest management will sort those
principal concerns out in terms of valuation of products. So I
think forest biomass is honestly, the lowest value product. So
I think we have to allow those markets.
Mr. Minnick. So temporary subsidies to jump start, but not
permanent subsidies of money in use.
Mr. Kernohan. I think temporary subsidies are the right
place to start. And honestly, I haven't thought through the
downfalls of the pros and cons of permanent subsidies. But I
think in our business, we don't have a lot of subsidies. So I
would proffer that subsidies could start our market, and we'll
figure it out from there. And usually it will work.
Mr. Minnick. Thank you. I yield back, Mr. Chairman.
The Chairman. I thank the gentleman.
And the gentleman from Idaho, Mr. Simpson.
Mr. Simpson. Thank you, Mr. Chairman. I appreciate it.
First, I have to apologize when I said we have the whole
Idaho Delegation here. And I didn't think about it. But
whenever you hold a hearing, whenever Stephanie Herseth Sandlin
holds a hearing in South Dakota, the whole delegation is there.
Ms. Herseth Sandlin. That's right.
Mr. Simpson. So I apologize for that. And I also wanted to
say, that I appreciate the Cocoa Puffs, and the fruits and
vegetables in the breakfast. I think that's important, too. But
you can never forget the most important part of that breakfast;
the hash browns.
As was mentioned, I sit on the Appropriations Committee. I
am also the Appropriations representative on the Budget
Committee. And one of you mentioned that we would probably have
a baseline that might be substantially lower.
See, it won't stay up, just because I'm from the
Appropriations Committee.
We will probably have a baseline, I would suspect, given
the budget situation we're facing in Washington, that may be
substantially lower for the next farm bill, than we have for
this current farm bill.
If that is the case, what do you think of further efforts
to reduce the payment limitations as a means of trying to
reduce the overall costs of the farm bill?
Mr. Brown?
Mr. Brown. Well, I think speaking from IGPA's standpoint, I
think we're against any further reduction in payment
limitations.
Mr. Simpson. What would the impact be on Idaho producers?
Because it affects different producers in different parts of
the country differently.
Mr. Brown. Yes.
Mr. Simpson. And I understand the largest impacts on
payment limitations are on large western farms, and those in
the South, as opposed to those in the Northeast and other
states.
Mr. Brown. We have a lot of large family farms in Idaho,
who currently bump up against those payment limitations. And in
reality, when you are talking about large farming operations,
payment limitations, any further reduction, it just, you know--
--
Mr. Simpson. The other thing that will put, I guess, a
challenge to, is this question, as you saw between the Chairman
and Ranking Member, about direct payments, and increasing the
possibility of crop insurance, or enhancing the crop insurance
program. And, you mentioned the desire to increase that.
If the challenge is enhancing the crop insurance program
versus direct payments, rather than keeping the direct payments
as they are, and still enhancing the crop insurance, which
direction do you think you are going to go?
Mr. Brown. Well, I don't know. We don't have the survey
back from our membership. But, as I said, the direct payment is
important. But as an alternative, I think the producers would
be willing to look at enhancement to the crop insurance
program.
Mr. Simpson. You might know, Mr. Chairman, you'll probably
see a lot more of Mr. Brown in the upcoming year. He's going to
be the President of the National Barley Growers Association.
And another Idahoan, Wayne Hurst, is going to be President of
the National Association of Wheat Growers.
So we will have those representatives back in Washington
talking about this very issue when you hear from your
producers.
Mr. Gross, you mentioned during your testimony, that they
have some indemnity program that provides partial compensation
to livestock and poultry producers when flocks or herds are
repopulated due to pests or disease.
No such program exists for specialty crops. In your
experience, how has this lack of this aspect of the program
affected the potato industry, or other specialty crops?
Mr. Gross. I'm in the potato seed business, also. And I've
seen cases where bacterial ring rot may have been found on
individual operations, and they've tended not to report it, or
not look for it at the risk of a lot of other producers. They
tend to just push it under, since they know it's a death
sentence for their seed operation.
So I just think if there was some kind of safety net
available, they wouldn't lose their entire operation right
then, that they might be more forthcoming in looking and
reporting finds.
Mr. Simpson. Interesting. How has the Specialty Crop
Research Initiative Grants helped with the specialty crop
industry and the potato industry?
Mr. Gross. Well, specialty crop research initiatives have
allowed us to study some potato viruses in Idaho, and spreading
methods that we might better control our potato virus
situation.
Mr. Simpson. Thank you all for being here today. I
appreciate it very much.
The Chairman. I thank the gentleman, and thank you panel
very much for your testimony. It was very good. Good answers to
questions. We appreciate your making the effort to be with us
here today. So this panel is excused.
And we will call the next panel to the witness table. Mr.
Ron Bitner, winegrape producer and vintner from Caldwell,
Idaho; Mr. Charlie Lyons, cattle producer from Mountain Home,
Idaho; Mr. Adrian Boer, dairy producer from Jerome, Idaho; and
Ms. Cindy Siddoway, lamb producer from Terreton, Idaho.
We will take a brief recess.
[Recess.]
The Chairman. Mr. Bitner, we will start with you. And
welcome to Committee.
STATEMENT OF RON M. BITNER, WINEGRAPE PRODUCER AND VINTNER,
CALDWELL, ID
Mr. Bitner. Thank you, Mr. Chairman, Congressman Lucas, Ms.
Sandlin, Mr. Costa, and I notice two gentlemen are missing
right now, Congressman Simpson. And I want to thank Mr. Walt
Minnick for inviting me to participate today.
My name is Ron Bitner. I am a consulting entomologist here
in Canyon County, Idaho, about 10 miles west of here. I've been
growing winegrapes since 1980.
I'm representing the Idaho Grape Growers and Wine Producers
Commission today. And I'm currently the Chairman of the
National Wine Grape Growers Association, and I'm also
representing the National Wine Grape Growers.
Nestled between the Rocky Mountains and the Snake River,
the Idaho wine regions are growing steadily. Nurturing the
grapes with a moderate climate, limited precipitation, and a
consistent growing season, the Idaho wine regions add
complexity to our grapes. We need to do everything in our power
to see that this industry continues to succeed.
The Idaho wine industry has been steadily growing for the
last 30 years with remarkable growth in this past decade. With
11 wineries in 2002, Idaho is now home to over 40, with 1,600
acres of grapes planted. And nine of these wineries have opened
in the past year.
And Idaho, along with a lot of the other states, has seen a
resurgence in the small wineries, that have done a lot for
economic development in the small country towns across this
nation.
There is an economic impact study, conducted by Boise State
University and the Idaho Wine Commission, that concluded that
the Idaho wine industry had a $73 million impact in 2008, and
created nearly 625 jobs. This growth led to an increase in
visibility, more tourism, an enhanced reputation, and has
created tremendous opportunity for expansion.
The Idaho wine industry is just in its infancy, and is
expected to see remarkable growth in the next 15 years, and
just coming into its own. More and more people are buying Idaho
wine, and this is good news for our economy.
In order for us to continue to have success, we need to
determine what I think are three major issues, not only in
Idaho, but across the nation. Number one is immigration reform;
enhanced marketing; and continuing to enhance research dollars.
Concerning farm bill specifics, the Wine Grape Growers of
America, we just came back from meetings in March. And our
three top priorities with the farm bill concerned continued
funding of the National Clean Plant Network to provide us with
disease free plants.
The Specialty Crop Block Grant Program has been extremely
successful across this country for winegrape growers and small
wineries. And the Specialty Crop Research Initiative has also
been very successful. We want to see those programs continue.
One other aspect of the farm bill, and here I have to put
on my bee hat. I've been a consulting bee entomologist. I've
worked with non-Apis bees and native bees for 42 years now. And
I was really encouraged to see in the last farm bill, the
importance, and the rise and recognition of the importance of
pollinators to our crops across this nation, not only in
increased funding, but including those into our reserve
programs, set aside programs.
You know, it's the first time that has actually happened.
And as a bee biologist with 40+ years under my belt, I want to
see that continue.
With that, I'll stand for questions later. Thank you.
[The prepared statement of Mr. Bitner follows:]
Prepared Statement of Ron M. Bitner, Winegrape Producer and Vintner,
Caldwell, ID
Nestled between the Rocky Mountains and the Snake River, the Idaho
wine regions are growing steadily. Nurturing the grapes with a moderate
climate, limited precipitation, and a consistent growing season, the
Idaho wine regions add complexity to the grapes. We need to do
everything in our power to see that this industry continues to succeed.
The Idaho wine industry has been steadily growing for the last 30
years with remarkable growth in the past decade. With 11 wineries in
2002, Idaho is now home to over 40 with 1,600 acres of grapes planted.
Nine of these wineries have opened in the past year. That's a lot of
growth in a down economy.
In order to see the impact the Idaho wine industry is having, the
IWC worked with BSU to conduct an economic impact study. The results
were startling. It was concluded the Idaho Wine industry had a $73
million impact in 2008 and created nearly 625 jobs. This growth led to
an increase in visibility, more tourism, an enhanced reputation, and
has created tremendous opportunity for expansion.
You might be thinking how are the sales and are any Idaho wines
selling. The answer is good and yes. Idaho wines are at an affordable
price point between $10-30, encouraging consumers to try new,
undiscovered wines that are affordable in this economic downturn
instead of reaching for the $50 and $100 bottles. Media has also been
paying attention to Idaho, as they are looking at the next big thing
and that's Idaho. Countless articles have been written.
So the next question, where are we going? The truth is the industry
will continue to grow as national wine consumption increases, as well
as Idaho's grape growing potential. Idaho wines are discovered across
the country, ranking us 22nd in the nation.
The Idaho wine industry is just in its infancy and is expected to
see remarkable growth in the next 15 years. Just coming into its own,
and receiving a great deal of recognition, winemakers and growers are
learning as they go and making great wine in the process. More and more
people are buying Idaho wine and this is good news for our economy.
In order for us to continue to have success, we need to determine
what to do about immigration reform, enhancing marketing, and continue
with research.
Dealing with immigration is a sore subject for the wine industry.
The immigrant workers are a crucial part of the industry, without them
the work in the vineyards would not get done because it is very labor
intensive. They face cold winters when pruning takes place and hot
summers when training the vines. Many of these workers are probably
illegal, but all they have to do is show their Social Security card to
the vineyard owner and they are good to go. However, under new laws the
vineyard owner could face hefty fines and possible jail time if it
turns out any of their employees are illegal. If you halt illegal
immigration work, you halt the industry in return due to the lack of
potential work by these men and women in the vineyards.
Marketing is another area we in Idaho need to focus on. Consumers
know about California and Washington wine, but the need to learn more
about Idaho wine is crucial, and the only way we can succeed is to
spend more money to reach them. We can do this by participating in
events, giving samples, creating a better website and buying ads on the
radio, but all these take money. We need to concentrate on Marketing
for this industry to succeed; otherwise people simply won't know we
exist.
This past year we had substantial cuts to the University of Idaho's
budget, resulting in almost losing the Parma Research Center where
substantial research is conducted on grapes and wine. Without this
research center, we would be forced to see data and research out of
state, which would not be as applicable due to different climates for
growing. While we got lucky this time, as the center will stay open, we
do not know for how long, leaving the potential for losing the center
up to another budget cut in the future. As the industry grows,
tremendous research is needed to determine what we can grow best,
looking for new varietals along the way and determining what grows best
for Idaho.
Idaho truly has immense potential to be one of the leading wine
industries in the country, but we need to get a handle on these issues
before we can get there.
The Chairman. Thank you, Mr. Bitner. We appreciate it.
Mr. Lyons, welcome to Committee.
STATEMENT OF CHARLES LYONS, CATTLE PRODUCER, MOUNTAIN HOME, ID
Mr. Lyons. Hello, Mr. Chairman, and Members, thank you.
My name is Charles Lyons. I'm a rancher out of Mountain
Home, and I also am a representative of the Idaho Cattle
Association.
I'm a first generation cattle producer, and I would be
tickled to give you guys the credit, but I'm married to one.
But I'm sure in the future, your programs will help me out
tremendously.
But when I was dealt this hand, I was a little confused to
where I would end up. Today I thought I would be hanging out in
Walt Minnick's office, telling him how wonderful he is, and
kicking back, and then going and drinking beer, and telling
each other----
Mr. Minnick. There is still time.
Mr. Lyons.--and then going back, and hanging out and
telling each other how wonderful we are. But I learned a few
days ago that my job was a little different than what I
assumed.
So I hope to show no disrespect in my lack of preparedness
to deal with you here today. Karen, on our staff, has been
extremely willing to jump in and try to make me look better.
She prepared this opening statement for me.
So I thought I could just read it, and my wife told me, no.
No. She said listening to you read is like chewing tin foil. I
recommend you don't do any such thing. So if it would work, I
would just like to briefly go through them, and deal with some
of our top issues. And then I would certainly welcome your
questions.
The thing that's affecting us most here in the ranching
industry in Idaho are environmental regulations. They are
extremely burdensome. It comes from a lot of different sources,
either judges, or from the Federal Government, or even the
state, itself.
And the thing that has been able to help us a quite a
little bit and accomplish those goals and deal with those
regulations is EQIP. And from a personal standpoint, our ranch
has used EQIP, and cost sharing through NRCS. And they have an
excellent staff in Mountain Home and in the state.
And we've entered into a 10 year contract. And it went well
for about 6 years. And like a lot of things, the burdensome
part of it continued to grow, to where it became easier for me
to do it myself instead of dealing with the system. And it was
actually cheaper to do it by myself, even with the cost share
program.
So we went ahead and pulled out of the contract after about
6 years. And I went ahead and finished the work that we planned
on doing on the 10 year plan.
And that's certainly kind of the down side. And I know EQIP
has helped with a lot of guys dealing with the endangered
species, such as the bruneau snails, putting in pivots. You
know, things like that. The money wasn't there. So from that
perspective, it's been extremely helpful.
Another program that's been helpful for us through NRCS is
Wildlife Habitat Incentives Program. The guys are doing a good
job on the ground. They are making things proactive. They are
actually there helping wildlife. Within the program there are
incentives for you to continue those practices. And that's
extremely encouraging. And we hope those monies are available
to reward people who are doing good on the job, instead of
paying somebody that's maybe not doing the work.
Of the issues that pertain to the farm bill, one was
energy. It was pretty devastating to the cattle industry when
we started looking into ethanol, and dealing with farm
subsidies. From my standpoint, it jerked the guts out of the
feeder industry here in the State of Idaho.
And I understand the other side. You know, you need to give
incentives and subsidies to get a young program going, and get
it off the ground. But it always has repercussions for those
that were already using that commodity, and relying on our
bottom line for the price and structure that was there.
And when that subsidy came, it seemed that the price jumped
so far out of line, that it pretty much jerked the feet out
from under us for a couple of years there.
One of the things that Mr. Lucas asked about was the taxes,
and the estate tax. I can only give my own perspective.
Everything that I do is put back into land and cattle. That's
what I know. I don't deal in the stock market. I don't really
deal with--I try to stick with what I know.
So I try to buy land. And the guy always has to buy more
cows and more horses. And when it comes my time to purchase the
ranch from my uncle, I don't want his siblings to be left with
the only option that is to sell, where I can't even touch it.
You know, you were asking about land values. You know, not to
be too personal, but our place is probably now worth $4
million. Which is so far kind of out of the realm of trying to
ever purchase it for an animal unit.
But when it comes my time to purchase that--I kind of got
lost. But I don't have the ability to do it. There is no way I
can pay the taxes on that. There is no way the family members
can pay the taxes on that without selling it. So I think that's
going to be a huge--a huge problem that we're going to need to
deal with in the future.
And I'll just kind of leave it at that. What I found
interesting most was the back-and-forth questions. So I would
certainly appreciate your guys' questions on anything further.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Lyons follows:]
Prepared Statement of Charles Lyons, Cattle Producer, Mountain Home, ID
Mr. Chairman, Congressman Minnick, thank you for the opportunity to
present the Idaho cattle industry's perspective on the upcoming 2012
Farm Bill. My name is Charles Lyons, and I am a cattle producer from
Mountain Home, Idaho. I am currently President-Elect of the Idaho
Cattle Association.
As cattle producers, our livelihood is tied to many other
agricultural commodities. We are dependent upon this nation's
agricultural system and infrastructure to feed, transport, market our
cattle, and provide beef for America's table; and as such, we are
interested in seeing this segment remain healthy and viable.
Unlike other agricultural commodity groups, however, we tend to
take a different look at portions of U.S. agriculture policy. Ranchers
are an independent lot who want the opportunity to run their operations
as they see fit with minimal intrusion from the government. As the
nation's largest segment of agriculture, the cattle industry is focused
on continuing to work towards agricultural policy which minimizes
direct Federal involvement; achieves a reduction in Federal spending;
preserves the right of individual choice in the management of land,
water, and other resources; provides an opportunity to compete in
foreign markets; and does not favor one producer or commodity over
another.
The open and free market is powerful, and as beef producers, we
understand and embrace that fact. The cyclical ups and downs of the
market can be harsh, but the system works, and we remain steadfastly
committed to a free, private enterprise, competitive market system. It
is not in the nation's farmers or ranchers' best interest for the
government to implement policy that sets prices; underwrites
inefficient production; or manipulates domestic supply, demand, cost,
or price.
Conservation and the Environment
There are portions of Federal agriculture policy that we can work
on together to truly ensure the future of the cattle business in the
United States. Conservation and environmental issues are two such
areas. Some of the cattle industry's biggest challenges and threats
come from the loss of natural resources and burdensome environmental
regulations. Ranchers are a partner in conservation. Our livelihood is
made on the land, so being good stewards of the land not only makes
good environmental sense, it is fundamental for our industry to remain
strong. Our industry is threatened every day by urban encroachment,
natural disasters, and misinterpretation and misapplication of
environmental laws. We strive to operate as environmentally friendly as
possible, and it is here where we can see a partnership with the
government.
The goal of conservation and environmental programs is to achieve
the greatest environmental benefit with the resources available. One
such program that achieves this is the Environmental Quality Incentive
Program or EQIP. All producers should be afforded equal access to cost
share dollars under programs such as EQIP. Further, it is important for
ranchers in the west that EQIP monies are made available for
conservation work on the Federal lands that are an integral part of
their operations.
Second, many producers would like to enroll in various USDA
conservation programs such as CSP and CRP to reach environmental goals.
However, to enroll in these programs requires the producer to stop
productive economic activity on the land enrolled. We believe economic
activity and conservation can go hand in hand. As such, we support the
addition of provisions in the next farm bill that will further allow
managed grazing on land enrolled in CRP. This will have tangible
benefits on environmental quality, for example, helping to improve
lands threatened by invasive plant species.
Further, programs such as the Wildlife Habitat Incentives Program
can be helpful tools in assisting ranchers as they manage land to the
mutual benefit of wildlife and livestock. The Endangered Species Act
has often put a stranglehold on ranchers' ability to put land to
productive use, often to the detriment of the species in concern. To
the extent that WHIP and other NRCS programs can be improved to assist
ranchers in undertaking on-the-ground conservation efforts and
developing conservation plans, habitat, wildlife, and production
agriculture will all benefit.
Additionally, conservation dollars allocated through farm bill
programs must be distributed only to those involved in production
agriculture and not be able to be misused by environmental extremist
groups with the sole intent of locking up land.
USDA's conservation programs are a great asset to cattle producers.
We want to see them continued and refined to make them more producer-
friendly and more effective in protecting the environment in a sensible
way.
Environmental issues are also a huge challenge for our industry.
Proposed legislation regarding climate change and cap-and-trade could
prove devastating to American agriculture and put us at a distinct
disadvantage in the world's marketplace. Even if the bills move forward
with an ag exemption, the increase in costs of fuel, electricity,
fertilizer, feed, and equipment will be more than most livestock
producers can bear. These, combined with EPA's regulation of greenhouse
gases, makes us all concerned for our industry. Although these items
are not addressed directly in the farm bill, we ask that the Members of
the Committee step in and help ag producers in their fight to have
effective and sensible environmental regulations.
Trade
Outside of conservation and environmental issues, there are several
other issues that have the potential to impact the long-term health of
the beef industry. One such area is trade. U.S. cattlemen have been and
continue to be strong believers in international trade. We support
aggressive negotiating positions to open markets and to remove unfair
trade barriers to our product. We support government programs such as
the Market Access Program and the Foreign Market Development Program
which help expand opportunities for U.S. beef, and we urge sustained
funding for these long-term market development efforts. We also support
Congressional and regulatory action to address unfair international
trade barriers that hinder the exportation of U.S. beef.
Energy
Research is also needed to identify and develop alternative methods
of producing energy. Renewable energy is going to become an
increasingly important part of our country's energy supply and there
are many ways that cattle producers can contribute and benefit.
Research and development is needed to find cost-effective methods of
utilizing manure and animal waste as a fuel supply. When looking at
ethanol, however, we must be careful not to act in a way that is
detrimental to the livestock industry. Livestock consume the majority
of U.S. corn. As ethanol continues to grow, we must make sure it does
not do so at the detriment of the cattle feeding industry. We must take
all opportunities to look at ways to balance feed demand, price, and
the benefit of renewable fuels.
Taxes
Reducing the tax burden on ranchers has always been a top priority
for our industry. We continue to support permanent repeal of the Death
Tax. Regardless of how many or how few are effected, if even one
rancher has to sell off part of their operation to pay this tax, it is
unacceptable to us. Cattlemen pay their fair share of taxes, and resent
the fact that many will be penalized for wanting to pass their
operations on to future generations. Our priority is to keep families
in agriculture, and this tax works against that goal. We do not see
this as a tax cut for the rich. The rich can afford high priced
attorneys and accountants to protect their money now. Ranchers operate
in an asset rich but cash poor business environment. Ranchers must
spend money that would otherwise be reinvested in their businesses to
hire the resources necessary to protect their assets and pass their
operations on to their children. At the same time, however, they may
have several hundred acres of land whose value has been driven up by
urban sprawl and the unintended consequences of Federal crop supports.
We also support keeping the Capital Gains Tax at a lower rate and the
repeal of the Alternative Minimum tax.
Conclusion
America's cattlemen are proud and independent. We just want the
opportunity to run our ranches the best we can to provide a high
quality product to the American consumer, and even more importantly,
provide for our families and preserve our way of life. We are coming to
you in an effort to work together to find ways to use the extremely
limited funds available in the best way possible to conserve our
resources, build our industry, and provide for individual opportunity
at success. We ask for nothing more than Federal agriculture policy
that helps build and improve the business climate for cattlemen. We
look forward to working with you on the 2012 Farm Bill.
The Chairman. Thank you, Mr. Lyons, for your testimony.
Mr. Boer, welcome to the Committee.
STATEMENT OF ADRIAN BOER, DAIRY PRODUCER, JEROME, ID
Mr. Boer. Thank you, Chairman Peterson, Representative
Simpson, and House Agriculture Committee Members. Thank you for
allowing me to testify today about dairy policy on behalf of
the Idaho Dairymen's Association.
My name is Adrian Boer. I'm in partnership with my wife,
two sons, and daughters-in-law, and most recently grandson and
granddaughter-in-law. It's truly a family farm operation.
Collectively on our three dairy operations, we milk 5,000
cows. I'm active on the Idaho Dairymen's Association, serve on
the Board of Directors of the Northwest Dairy Association, and
for NDA, served on the Board of Directors of National Milk
Producers Federation. For NMPF, I serve on the Strategic
Planning Task Force, and currently serve on the Production
Managing Subcommittee.
The Idaho Dairymen's Association formed in 1944 is an
organization comprised of all of the dairy producers in Idaho.
It is funded by a .01 cents/cwt check-off and utilizes its
funds to promote the interest of the Idaho dairy industry to
individual citizens, state and national legislators,
governmental agencies, conservation organizations, community
groups and agricultural organizations to maximize the
understanding and appreciation of the Idaho dairy industry.
Northwest Dairy Association markets 7.5 billion pounds of
milk annually from 550 dairy producers located in Idaho,
northern California, Oregon, Utah and Washington under the
Darigold label. Darigold, which was established in 1918, is an
integrated milk marketing cooperative with 11 milk processing
facilities in the Northwest that make and distribute fluid
milk, butter, cottage cheese, skim milk powder and a variety of
cultured products.
Dairy farmers in Idaho and the United States experienced
their worst year financially in anyone's memory in 2009, and
the crisis continues today. It is critical to evaluate all of
the current dairy programs in order to identify solutions that
need to be implemented in the next farm bill.
As an end result, it is estimated that a minimum of 50
percent of the dairy animals in Idaho across all sizes of
operations are now in special assets with their banks. The
uncertainty for the dairy operators, their families, and the
other industries that rely on a healthy, robust dairy industry
are taking a toll.
Dairy has developed into one of the largest agriculture
segments of Idaho's various commodities, with over 36 percent
of all Idaho agricultural income coming in the form of a milk
check. Numerous smaller agriculture operations and small allied
businesses are at stake as our industry in Idaho tries to
recover.
Last year National Milk Producers Federation created a
strategic planning task force to seek consensus across the
dairy and producing community in creating a solid foundation
for the future. The goal has been to analyze and develop a
long-term strategic plan that will have a positive impact on
the various factors influencing both supply and demand for milk
and dairy products.
The current Dairy Product Price Support Program and the
MILC program are inadequate protections against the dairy
pricing crisis that we now face. Neither program was designed
to function in a more globalized market, where not just milk
prices, but also feed costs, and energy expenses are more
volatile and trending higher. We have also faced this past year
destructively low profit margins that occurred when input
costs, especially feed prices, shot up.
It is particularly disturbing when our input costs
increased dramatically, when other government programs, which
occurred with the implementation of ethanol subsidies, were put
into place.
The Idaho Dairy Association is an associate member of the
National Milk Producers Federation, and will be closely
monitoring the development and implications of the NMPF
proposal that we have tagged with the name, Foundation for the
Future.
I believe we will be able to strongly endorse, support, and
lobby for the proposed changes following the guidance
established by the legislative policies approved by the IDA
membership.
My written testimony contains detailed information about
the NMPF proposal. And I recognize that you have also had other
testimony at other hearings on our proposal. As a member of the
NMPF's strategic planning task force, we have spent numerous
hours in the development of other proposals. I will address any
questions you may have on the plan at the end of our testimony.
As I mentioned in my written testimony, there are other
issues that are very important to me and the dairy industry.
Comprehensive immigration reform is long overdue. Our dairies
employ 57 individuals, the majority of whom are of Hispanic
heritage. Our entire workforce has legal documents.
Some of our Hispanic employees have been with us over 20
years. According to a recent study conducted by Boise State
University, the Idaho dairy industry accounts for over 29,000
jobs. In Idaho, 8,200 of those are on the dairy. The majority
of those on the dairy are held by foreign-born laborers. IDA,
NDA, NMPF strongly support the type of broad immigration reform
for the agricultural perspective that AgJOBS proposes.
Dairy farmers share the concerns of all Americans about
securing our borders and protecting this country. And they are
not willing to sacrifice its security. However, failing to
provide for orderly flows of greatly needed workers has the
potential to create the enormous economic consequences for our
industry, and do very little to enhance our border protection.
It is time for Congress to debate about immigration and develop
solutions to allow our current employees to remain here.
The Trans-Pacific Partnership Free Trade Agreement also
raises concerns. Expanded dairy trade with New Zealand offers
an entirely one-way street since the FTA would open up no
effective new opportunity for the U.S. dairy industry in New
Zealand, and even the prospect of increasing access to other
markets within the TPP is limited. Because of this, producers
everywhere throughout the U.S., as well as many leading dairy
processors, are seeking the full exclusion of U.S.-New Zealand
dairy trade from the TPP.
I want to thank you for the opportunity to testify on the
issue of dairy policies here today. Through IDA, NDA and NMPF,
I am excited about moving forward to working with the Members
of this Committee on issues of critical importance to the
state, regional, and national dairy industry.
Mr. Chairman, I look forward to answering any questions
from the Committee pertaining to the dairy industry. Thank you.
[The prepared statement of Mr. Boer follows:]
Prepared Statement of Adrian Boer, Dairy Producer, Jerome, ID
Chairman Peterson and House Agriculture Committee Members; thank
you for allowing me to testify today about dairy policy on behalf of
Idaho Dairymen's Association.
My name is Adrian Boer; I'm in partnership with my wife, sons and
daughter-in-laws on three dairy operations in Jerome Idaho.
Collectively we milk 5,000 cows. I am active in the Idaho dairymen's
Association, serve on the Board of Directors of Northwest Dairy
Association (NDA) and for NDA serve on the Board of Directors of
National Milk Producers Federation (NMPF). For NMPF I serve on the
Cooperatives Working Together (CWT) Committee and currently serve on
the Production Management Subcommittee.
The Idaho Dairymen's Association (IDA) formed in 1944 and is an
organization comprised of all of the dairy producers in Idaho. It is
funded by a $0.01/cwt check-off and utilizes it funds to promote the
interest of the Idaho dairy industry to individual citizens, state and
national legislators, governmental agencies, conservation
organizations, community groups and agricultural organizations to
maximize the understanding and appreciation of the Idaho dairy
industry.
Northwest Dairy Association markets 7.5 billion pounds of milk
annually from 550 dairy producers located in Idaho, Northern
California, Oregon, Utah and Washington under the Darigold label.
Darigold, which established in 1918, is an integrated milk marketing
cooperative with11 milk processing facilities in the Northwest that
make and distribute fluid milk, butter, cottage cheese, skim milk
powder and a variety of cultured products.
You have heard in other testimony before this Committee, that since
early in 2009 the national dairy community has been facing an
unprecedented financial struggle. That is also true in Idaho and the
Pacific Northwest; in Idaho alone last year it is estimated that over
$550 million of producer equity was eroded away and currently there is
no relief in sight to stop the bleeding. We have literally lost
generations of equity. Financial recovery may likely prove impossible
for many, it is estimated that over 50% of the dairy cattle in Idaho
are in `unacceptable terms' with their lenders. Uncertainty hangs over
their banking relationship. Many producers are unsure if their lenders
are waiting for the value of dairy cows and the land, their main
sources of collateral, to recover only to proceed to liquidate them.
Numerous reasons can be listed for the collapse of the dairy
industry from a drop in exports, to a huge increase in our input cost,
to antiquated government programs. Clearly it is time to take a close
look at addressing our industry's situation and identifying solutions
as individuals, as dairy organizations, and as a country.
The purpose of these hearings is to receive input on what the
content of the next farm bill should be. Representing the West I want
to make sure we also cover what it should not be. It should not put one
commodity at risk while enhancing another commodity as was done in the
government ethanol subsidy programs that dramatically increased our
input cost and were devastating to Idaho's livestock operations. It
should not favor one region of the country over another region as was
demonstrated in the recent appointments to the USDA dairy advisory
committee, where the west with over 50% of the milk production received
on four (4) seats on the seventeen (17) member committee. Finally it
should not discriminate based on operation size, nor should it
camouflage market signals such as the MILC program currently does by
encouraging over production at times when the market is indicating a
reduction in production is needed.
That is what it should not be, so how would we propose we move
forward? Through my involvement with the different producer
organizations, what has become clear is that we need a combination of
approaches to deal with the current situation. To address the
underlying problems that caused this crisis and the many industry
factors that have contributed to its depth and protracted nature, we
need to focus on solutions that avoid recurrences of this situation in
the future.
Towards that end, last year NMPF created a Strategic Planning Task
Force to seek consensus across the dairy producer community and create
a solid ``Foundation for the Future.'' This past month I have been
involved with the IDA District meetings listening to concerns and
attempting to explain a potential pathway for the industry to unite
behind so we can move forward. It is extremely important to develop
workable and realistic solutions that will garner broad support from
dairy producers nationwide in order to unify behind an approach as this
Committee begins to consider the next farm bill.
The current dairy industry financial crises demonstrates that it is
time to drastically change many aspects of current policy, some of
which have existed for decades. Our existing dairy policies and
programs were designed in an earlier time to operate in a relatively
closed domestic market. However, today's market for U.S. dairy farmers'
milk is greatly influenced by global demand and supply, as the record
prices of 2008--followed by huge declines in exports that led to the
disastrous plunge in 2009 that we are still currently operating under.
The NMPF proposed Foundation for the Future program is multi-
faceted in principle and needs to be looked at seriously for the future
farm bill discussions. It seeks to refocus existing farm-level safety
nets; create a new program to protect farmers against low margins;
revamp the Federal Order milk pricing system; and establish a way to
better balance dairy supply and demand. Many of those testifying on
behalf of NMPF have already presented the following information but as
a Member of the Committee that was instrumental in the development I
believe it is important to reiterate them.
1. Refocusing Current Safety Nets
Both the Dairy Product Price Support Program and the MILC program
are inadequate protections against not just periodic low milk
prices, but also destructively low profit margins that occur
when input costs, especially feed prices, shoot up. The Price
Support Program, in particular, has outlived its usefulness and
hinders the ability of U.S. and world markets to adjust to
supply-demand signals.
Discontinuing the Dairy Product Price Support Program (DPPSP)
would allow greater flexibility to meet increased global demand
and shorten periods of low prices by reducing foreign
competition. Additionally, shifting resources from the DPPSP
toward a new income protection program would provide farmers a
more effective safety net.
As this Committee may recall, NMPF vigorously defended the
importance of the price support program, albeit modified to
make improvements in certain respects, in the 2008 Farm Bill
process. But at the end of the day, it is clear at this point
that the dairy product price support program is not the best
use of Federal resources to establish a safety net to help
farmers cope with periods of low prices and is not the most
effective way of achieving this goal.
The DPPSP reduces total demand for U.S. dairy products and
dampens our ability to export, while encouraging more
foreign imports into the U.S.
The price support program effectively reduces U.S. exports, by
diverting some of our milk flow into government warehouses,
rather than to commercial buyers in other nations. It
creates a dynamic where it's harder for the U.S. to be a
consistent supplier of many products, since sometimes we
have products to export, and at other times, we just sell
to the government.
The Program acts as a disincentive to product innovation.
It distorts what we produce, i.e., too much nonfat dry milk, and
not enough protein-standardized skim milk powder, as well
as specialty milk proteins such as milk protein
concentrate, that are in demand both domestically and
internationally. Because the price support program is a
blunt instrument that will buy only nonfat dry milk--and
because that's what some plants have been built to produce,
as opposed to other forms of milk powder--it puts the U.S.
at a competitive disadvantage to other global dairy
vendors.
DPPSP supports dairy farmers all around the world and
disadvantages U.S. dairy farmers.
Further aggravating measures, the current program helps balance
world supplies, by encouraging the periodic global surplus
of milk products to be purchased by U.S. taxpayers. Dairy
farmers in other countries, particularly the Oceania
region, enjoy as much price protection from the DPPSP as
our farmers. Without USDA's CCC buying up an occasional
surplus of dairy proteins in the form of nonfat dry milk, a
temporarily lower world price would affect our
competitors--all of whom would be forced to adjust their
production downward--and ultimately hasten a global
recovery in prices.
The DPPSP isn't effectively managed to fulfill its
objectives.
Although the DPPSP has a standing offer to purchase butter,
cheese and nonfat dry milk, during the past 12 years, only
the last of that trio has been sold to the USDA in any
significant quantity. In essence, the product that the
DPPSP really supports is nonfat dry milk. Even at times
when the cheese price has sagged well beneath the price
support target, cheese makers choose not to sell to the
government for a variety of logistical and marketing-
related reasons. We have tried to address these problems,
but USDA has to date been unwilling to account for the
additional costs required to sell to government
specifications. Once purchased, powder returning back to
the market from government storage also presents
challenges, and can dampen the recovery of prices as
government stocks are reduced.
The price levels it seeks to achieve aren't relevant to
farmers in 2010.
Even though the $9.90 per hundredweight milk price target was
eliminated in the last farm bill, the individual product
price support targets: $1.13/lb. for block cheese, $0.85
for powder, and $1.05 for butter--essentially will return
Class III and IV prices around $10/cwt. But in an era of
higher cost of production, that minimal price isn't
acceptable in any way, shape or form. The chart below
depicts the U.S. average cost of production and the
effective level of support the program provides for the
average price dairy farmers receive for milk in the U.S. As
is clear from this graph, this effective price support
level is far below today's cost of production.
We believe that with the current funding constraints facing
Congress, we are unlikely to see increased support prices.
Even if it did, however, we would likely face the same
barriers described in the prior point.
In summary, discontinuing the DPPSP would eventually result in
higher milk prices for U.S. dairy farmers. By focusing on
indemnifying against poor margins, rather than on a milk price
target that is clearly inadequate, we can create a more
relevant safety net that allows for quicker price adjustments,
reduced imports and greater exports. As a result of our DPPSP,
the U.S. has become the world's balancing plant. As time
marches on, so, too, must our approach to helping farmers. It
is because of this that NMPF is now focused upon a transitional
process that shifts the resources previously invested in the
dairy product price support program, to a new producer income
protection program.
2. Dairy Producer Income Protection Program.
As mentioned above, existing safety net programs (the price
support program, and the MILC program) were created in a
different era. Neither was designed to function in a more
globalized market, where not just milk prices, but also feed
costs and energy expenses, are more volatile and trending
higher. In the future, the solvency of dairy farms will depend
more on margins (the difference between input costs and milk
prices) than just the milk price alone. In order to address
this dilemma, NMPF is proposing a revolutionary new program
called the Dairy Producer Income Projection Program (DPIPP). It
will help insure against the type of margin squeeze farmers
experienced in 2009, and also at other points in the past when
milk prices dropped, feed costs rose--or both conditions
occurred in tandem.
In developing the Dairy Producer Income Protection Program, a few
important principles are being followed:
Losses caused by either low milk prices or high feed costs
need to be covered.
A farmer's cost for basic protection must be kept low or
nonexistent.
The level of protection available should be flexible, and
producers should be able to purchase a higher level of
protection if they choose.
The program should be voluntary, national in scope, and
open to all dairy farmers, regardless of size.
The program should not provide incentives to create
artificial over-production.
The program must be easy to access by all producers
through a simple application process or through the
assistance of their cooperative.
Essentially, the Dairy Producer Income Protection Program (DPIPP)
is intended to be a farm-level safety net program focused on
margins, rather than just on prices, in order to create a
better tool to deal with global price volatility. DPIPP would
offer a combination of a base level of insurance, coupled with
voluntary supplemental coverage, will allow farmers of all
sizes in all regions to protect themselves from periodic margin
squeezes caused both by high input costs and low milk prices.
As a substitute for the other two safety nets, DPIPP would
involve two levels of insurance against negative margins. The
first would be a base level of coverage, subsidized by the
government that covers a portion (but not 100%) of a farm's
historical annual milk production, and protects against a
modestly negative margin between milk prices and feed costs.
The second level would be optional, and allow a farmer to
purchase a greater level of coverage, with a portion of that
insurance subsidized by the government.
Key elements include:
Defining margin as the difference between the national
all-milk price and key feed inputs.
The all-milk price is the best proxy to define what an average
nationwide price is for milk each month. Feed costs are
represented by corn, soybean meal, and alfalfa hay, and the
cost of those is also tracked monthly by USDA. The
difference between the per hundredweight price of milk, and
the cost of feeding cows, will establish this program's
margin.
The government will invest to help defray the cost of a
basic level of margin insurance for all farmers.
A significant portion--but not 100%--of a farm's historic
production base will be eligible for coverage. Indemnifying
against part, but not all, of that farm's milk volume will
ensure that the program does not stimulate overproduction.
Once the numerical margin target is established, it will be
fixed for the life of the farm bill. USDA will calculate
actual margins on a monthly basis and make indemnity
payments quarterly, as market conditions dictate.
Producers will have the option of purchasing an additional
level of coverage.
For a fee, farmers who wish to insure a higher level of margin
protection will have that option, with the premium
partially subsidized by the government. The premium will be
calculated by the probability or frequency of payments of
the specific level of coverage selected. Producers will
have a year after implementation of the farm bill to sign
up for additional coverage.
The DPIPP will be equitable and national.
This program is designed to have no payment limitations, or
production caps, thus ensuring that dairy farms of all
sizes will be covered proportionately. The DPIPP will allow
for new entrants, i.e., new farming options, but only under
strict parameters so the system can't be gamed. The program
will be administered by the USDA through the Farm Service
Agency (FSA) or the Risk Management Agency (RMA).
3. Federal Milk Market Order Reform.
Since 2004 when Federal Order 135 was voted out both Idaho and
Utah became unregulated milk markets not falling under the
protection of either State Milk Marketing Orders, like you find
in California or Federal Milk Marketing Orders as is found in
Oregon and Washington and most of the country. However we
support the goal to develop a pricing system that establish a
competitive pay price for milk that doesn't depend on the
current milk pricing formulas that can distort signals sent
both to producers and processors. Revamping Federal Orders, we
can encourage the movement of milk to its highest-value uses.
The end result should compensate producers fairly, reduces
price volatility, and creates a more dynamic dairy industry.
4. Production Management.
For the past 7 years, NMPF's Cooperatives Working Together (CWT)
program has voluntarily helped to address the supply side of
the supply-demand equation that ultimately determines milk
prices. We need to both revitalize Cooperatives Working
Together, and evaluate other approaches that will address the
extremes in price volatility impacting producer profit margins.
The IDA's current policy position strongly supports voluntary
production management and allows us to support mandated
programs as long as a national referendum is part of the
process.
The dairy farmers I have met with this past month at the IDA
District meetings all recognize that something has to be done, the
current programs are no longer in the best interest of dairy producers
or consumers.
Two other concerns I would like to briefly discuss are Immigration
Reform and the Trans-Pacific Partnership FTA.
Now, more than ever, dairy producers urgently need Congress to act
on agricultural immigration reform. Immigrant labor plays a very
important role in contributing to the success of America's dairy
industry. A large percentage of the hired workers on dairy farms in the
west are foreign born labors. According to a recent study conducted by
Boise State University, the Idaho dairy industry accounts for over
29,000 jobs in Idaho 8,200 of those are on the dairy, the majority of
those on the dairy are held by foreign born labors. IDA, NDA and NMPF
strongly supports the type of broad immigration reform for the
agriculture sector that AgJOBS (H.R. 2414) contains and the visa
program proposed by H.R. 1660, the Dairy and Sheep H-2A Visa
Enhancement Act.
Dairy farmers share the concerns of all Americans about securing
our borders & protecting this country and they are not willing to
sacrifice its security. However, failing to provide for orderly flows
of greatly needed workers has the potential to create enormous economic
consequences for our industry and do very little to enhance our border
protection. We urge Members of Congress to join as cosponsors of H.R.
2414 and H.R. 1660 to once and for all address the endemic labor
shortage in the dairy farming sector and allow for dairy producers to
work within the agricultural visa system.
The Trans-Pacific Partnership FTA also raises concerns. Expanded
dairy trade with New Zealand offers an entirely one-way street since
the FTA would open up no effective new opportunity for the U.S. dairy
industry in New Zealand and even the prospect of increasing access to
other markets within the TPP is limited. Because of this, producers
everywhere throughout the U.S., as well as many leading dairy
processors, are seeking the full exclusion of U.S.-New Zealand dairy
trade from the TPP.
Thank you for the opportunity to testify on the issue of dairy
policies here today. Through IDA, NDA and NMPF I am excited about
moving forward to working with the Members of this Committee on issues
of critical importance to the state, regional and national dairy
industry. Mr. Chairmen would you like me to answer any questions from
the Committee.
The Chairman. Thank you very much, Mr. Boer, for that
testimony.
Ms. Siddoway, welcome to the Committee.
STATEMENT OF CINDY SIDDOWAY, LAMB PRODUCER, TERRETON, ID
Ms. Siddoway. Thank you, Mr. Chairman. And I welcome the
Committee as well.
My name is Cindy Siddoway, past President of the American
Sheep Industry Association. And on behalf of our nation's sheep
industry, and the Idaho Wool Association, I want to welcome you
to Idaho.
Our family owns and operates a five generation sheep ranch
in eastern Idaho with 20,000 head of ewes and lambs. We are
extremely proud of our rich heritage in Idaho and in the sheep
ranching industry.
We currently operate the ranch much the same as our
forefathers. Our experience on the land has led to some changes
in our management style. Having lived here for generations, we
have learned some valuable lessons about managing our ranch to
survive drought, predators, severe winters, and to benefit
rangelands, water, and wildlife.
Sheep ranching plays a vital role in Idaho's rural
communities, where sheep provide food and fiber, and are a key
use for grazing and pasture management.
I appreciate this opportunity to participate in discussions
on the next farm bill. And I want to thank the Committee for
the livestock programs included in the current farm bill. I am
especially pleased with the inclusion of coverages for losses
of confirmed wolf kills to livestock, included in the Emergency
Assistance for Livestock Program, or EALP.
For sheep producers, the 2008 legislation extended the loan
deficiency program for wool, and increased the base loan rate
from $1 per pound to $1.15 per pound that was recently
implemented. However, the loan rates have consistently been
less than market prices over the years, even though wool prices
have varied dramatically from the inception of the loan program
in 2002 to the present.
A review of the nine wool categories, the loan rate, and
the formula used at a comparison to other USDA fiber programs,
may be necessary to deliver a more workable safety net for
producers.
The National Sheep Industry Improvement Center is also
authorized under the current legislation. Their program is
designed to fund business ventures through grants, with much
needed capital, to strengthen the sheep industry
infrastructures. We request the National Sheep Industry
Improvement Center be continued in the next farm bill.
With the sixth generation in the Siddoway family now
learning the business of running a large range herd operation,
a plan to increase sheep inventory, production, market and
infrastructure is very important to me and to our industry.
However, several impediments stand in the way of achieving
this expansion; first, increased degradation, especially from
wool. Second, lack of dollars for scientific research and
possible disease transmissions between domestic sheep and Big
Horn sheep. Third, grazing allotments being phased out in the
national forests, even though allotments that were phased back
years ago due to perceived wildlife or recreational conflicts
are available, and should be brought back into production and
multiple use. And fourth, increased problems with the H-2A
worker program in maintaining an experienced, stable labor
force.
I applaud the National American Sheep Industry Association
for initiating a national plan to stabilize sheep production,
and rebuild inventory, and to prioritize the most critical
items needed to increase production.
The declining inventory of sheep since 2005 is of great
concern to our industry. And we are working hard to change this
trend. However, young people today are reluctant to enter an
industry when the Federal Government implements policies that
create hardships and negates any possibility of profitability.
A final issue for the sheep industry, is mandatory price
reporting. Accurate market information is critical to
producers, and provides needed transparency in making marketing
decisions. The sheep industry requests the Committee to
reauthorize the mandatory price reporting before it expires in
September.
Thank you, Mr. Chairman, and Members of the Committee.
[The prepared statement of Ms. Siddoway follows:]
Prepared Statement of Cindy Siddoway, Lamb Producer, Terreton, ID
On behalf of the 82,000 family farms and ranches that produce sheep
in America, of which 1,200 are right here in Idaho, I am very
appreciative of this opportunity to discuss our nation's agricultural
policy with the agriculture leadership of the U.S. House of
Representatives.
I am Cindy Siddoway, past President of the American Sheep Industry
Association (ASI), the national trade organization of the sheep
industry. My family and I own and manage a five generation sheep ranch
in eastern Idaho with 20,000 head of ewes and lambs. We are extremely
proud of our rich heritage in Idaho and in the sheep ranching industry.
A half a billion dollars in lamb, wool, sheep milk and breed stock
sales at the ranch level supports an additional $1.3 billion in
economic activity for a total contribution to the nation's economy of
$1.8 billion. The industry is a mainstay of many rural communities
including many in Idaho where sheep are a key use for grazing and
pasture land.
Our industry greatly appreciates the opportunity to participate in
the current farm bill as well as in this and future hearings with the
Committee as you prepare for the next farm bill.
Sheep producers were encouraged when the 2008 legislation extended
the loan deficiency program for wool with an increase in the base loan
rate from $1.00 per pound to a $1.15 per pound. That loan rate increase
was implemented January of 2010 and so far there is still only one of
the nine loan categories being used by producers.
Total wool payments nationally, since inception of the program in
2002, range from $6 million to $8 million annually. This is far under
the original CBO projection of $20 million per year. We believe this is
primarily due to the fact that participation has been in only one loan
category--a category that was intended as an opportunity for the
smallest farms to participate in the program even though their volume
of wool didn't justify the expense of quality testing.
The rest of the loan categories are geared to specific grades of
wool that match the actual trading in the international wool market and
are determined by yield and grade testing that producers conduct on
their wool. The loan rates have consistently been less than market
prices over the years even though wool prices have varied dramatically
between 2002 and 2010.
An increase in the base loan rate and a discussion of the loan rate
formats similar to those currently used by other USDA fiber programs
may be in order to deliver a ``workable'' safety net for producers.
The current legislation also authorized a Sheep Industry
Improvement Center under the U.S. Department of Agriculture. This
program, to be implemented and administered by the Agricultural
Marketing Service, is designed to fund business ventures that
strengthen the sheep business infrastructure from wool warehouses to
processing equipment to lamb slaughter companies.
The farm bill provided a million dollars in mandated spending and
authorized appropriations up to $10 million per year through 2012. We
anticipate the oversight board will be appointed by the Secretary and
the program will be operational before the Committee finalizes the new
farm bill. We believe the Center will provide much needed capital to
the industry and would request it be continued in the next farm bill.
A national plan to increase the sheep inventory of the United
States is being developed in 2010 by lamb and wool companies, sheep
producers and feeders to address the shortage of sheep production in
America. We anticipate that portions of the plan may fit the Committee
on Agriculture's goals in the 2012 Farm Bill.
The entire sheep industry and the lamb and wool business chains
from farm to processor have been working to build a plan that
prioritizes the most critical items needed to increase sheep
production. Producers and companies alike believe they must find ways
to replace retiring producers and attract new producers or the
infrastructure of the industry will be at risk. Fewer companies mean
less competition and less ability to market to American consumers and
to export markets. The lack of both lamb and wool volume continues to
squeeze the ability of businesses to buy and process our annual crops.
Declining inventory of sheep since 2005 has not been due to any
collapse in lamb prices at the farm gate nor extreme volatility of lamb
prices. In fact, lamb prices weathered the recession better than other
categories of livestock, yet we still lost production.
We look forward to sharing the plan to stabilize sheep production
and rebuild the inventory, which is positive for rural economies and
sheep farms and ranches.
Of interest to the Committee is a report issued this winter titled
Nontraditional Lamb Market in the United States: Characteristics and
Marketing Strategies. www.sheepusa.org. Fully \1/3\ of American lamb
production is now sold through smaller markets and nontraditional
markets from direct consumer sales of lambs to farmers markets and to
small processors serving local communities. The dramatic shift in lamb
marketing of the last 5 years is changing the sheep industry as it
strives to serve traditional retail and food service accounts as well
as the increasing nontraditional markets.
One issue that has not changed from the sheep industry perspective
since the 2008 Farm Bill is the international situation. The United
States has no barriers to lamb meat imports and as such has become the
market of choice for lamb exporters from around the world. However, we
have not had new markets opened up to our products, including China.
Similarly, the European Union continues to provide subsidies to
sheep producers estimated at $2 billion annually under their whole farm
payments. Additionally, the European Union maintains strict and
effective tariff rate quotas on lamb imports. Our industry looks to
both the Agriculture Committee's role in industry programs in the next
farm bill and the Committee's role in pushing for aggressive reform of
Europe's agriculture programs and barriers to assist the domestic sheep
business.
We greatly appreciate the opportunity to discuss the sheep industry
with the Committee and commit our support to the effort of drafting the
next farm bill
The Chairman. Thank you very much for that testimony, Ms.
Siddoway.
First of all, Mr. Bitner, are you using the cold weather
variety of grapes out of Minnesota at all in Idaho?
Mr. Bitner. Fortunately, we don't get that cold here.
The Chairman. It's kind of cold here today.
Mr. Bitner. You know, we're high altitude grape growing.
But most of our grapes are planted on the south-facing slopes
along the Snake River, so the cold air drifts away from us.
The Chairman. Mr. Lyons, on the estate tax, the current
system doesn't allow for a stepped up basis. Are you familiar
with that at all.
Mr. Lyons. Yes, I am.
The Chairman. And for my farmers, the stepped up basis is a
bigger issue than anything else in terms of the impact that
it's going to have. You know, we used to have that before we
got into this whole thing about getting rid of it. And we've
lost the stepped up basis.
So how does that affect your situation? My guys are telling
me that's more important than what the exemption or the rate
is.
Mr. Lyons. Okay. Let me clarify that I do actually know
what the stepped up basis is. It is you are taxed at a certain
level at more income; is that correct.
The Chairman. Yes.
Mr. Lyons. Okay. Not from the Association's standpoint, but
my own, I was never a big fan of taking what another man built
no matter if he was worth $30 million or $10, and giving it
back, and having the Federal Government dole it out as they see
fit. What I've seen on my own--and it's pretty well proved in
the third generation, they do that for you.
So not to me. I'm sorry. That was kind of a snippet.
But, yes, I was never in favor of that. I just thought what
a man builds, and pays taxes on to the end, should be his to
dole out as he sees fit.
The Chairman. Mr. Boer, I don't know if I have a question
for you. I just want to commend the work that you guys have
been doing with NMPF. I think you've really gotten ahead of
looking at the fact that your system was not working.
And if you had told me 2 years ago that NMPF would be where
they are at right now in the industry, I would have told you,
you are nuts.
So I want to commend you for the work that you are doing.
We, as the Committee, have been very much kept abreast of this,
and we've been meeting on a regular basis, and been updated on
your work.
So I guess I would say, keep it up. And we hope that you
will come to a successful conclusion here in the next few
months. It sounds like you are moving in that direction.
Mr. Boer. Yes.
The Chairman. I guess the only question might be, the
latest iteration that's happening here with the so-called
production management part of the equation. Are you involved in
that part of things at all.
Mr. Boer. Yes, I am. I'm part of that--what they call the
``production management committee.'' And we have come upon a
plan that we think we can bring to the full board, and come to
a conclusion, and get agreement.
The Chairman. So that's moving along in a positive manner?
Mr. Boer. Yes.
The Chairman. I think I know what that is. I think we were
briefed on that.
Mr. Boer. Okay.
The Chairman. I actually introduced a bill very similar to
that about 10 years ago. At that time, it didn't get a lot of
support. But anyway, you guys are doing a good job.
And I think you are showing the rest of agriculture what
needs to be done under this circumstance we're in. With the
budget being the way it is, and all these questions we have, I
think it's time for us to be looking at how we're doing things.
Mr. Boer. Agreed.
The Chairman. We need to make sure we have programs that
work given where things are in 2010. Thank you.
And, Ms. Siddoway, I was mostly responsible for raising the
loan rate in the last farm bill for wool. I guess I'm surprised
to hear that only one of the parts of it is working.
Can you explain that to me a little bit better, in a little
more detail?
Ms. Siddoway. Yes. The way that the market works, of
course, Australia is a big player in it. And we are fairly a
small player in the world market.
There is such a discrepancy in the price from the coarse
wool to the fine wool, and it fluctuates a great deal
throughout the year. So producers, they are finding it's easier
just to go with the ungraded.
The Chairman. And that's the $1.15.
Ms. Siddoway. Well, that's where it stands. Right now, it's
paying about 29 cents on the loan deficiency payment. But, yes,
initially when we brought this program forward, the request was
for $1.20 for the base rate, and it was at $1. And so I
appreciate your help in raising it. And hopefully, that
increase will help us a little.
The Chairman. There are nine different categories.
Ms. Siddoway. Nine different categories depending on the
finest of the wool. The extremely fine wool folks that are 18
and under, which are only probably ten percent of all the wool
in the U.S., greatly benefit from having that category, because
that's super fine wool. But, it's not in a lot of production
areas.
The Chairman. Right.
Ms. Siddoway. So the other categories are just not being
utilized. So we would like to look at it. We would like to sit
down and look at it.
The Chairman. We'll take a look at that. And that's one of
the reasons we're having these field hearings.
Ms. Siddoway. Thank you very much.
The Chairman. The gentleman from Oklahoma.
Mr. Lucas. Thank you, Mr. Chairman.
Mr. Lyons, your ranching operation, I don't have a lot of
experience in your neck of the woods; cow/calf stocker, which
way do you go?
Mr. Lyons. I'm a cow/calf. We sell our calves----
Mr. Lucas. When do you calve.
Mr. Lyons. We calve in the spring. This area is pretty much
dominant spring calves.
Mr. Lucas. In the typical ranching operation, how many
acres to a cow pair do you run.
Mr. Lyons. Well----
Mr. Lucas. And I know typical is a difficult thing to do.
Mr. Lyons. I'll talk about irrigated pasture and a guy who
has his own place. Most of us are based in the BLM, or Forest
Service, or state lands. And that, on the average, I believe,
is around 20 acres.
Mr. Lucas. It's not that much different from home.
Impressive. EQIP, you mentioned that after participating in
long-term contracts, you chose basically to get out of the
program. I assume that means that you, as indicated in your
testimony, what was required to get it done, and the way it was
set up, and what was determined, it just wasn't in your
schedule, your agenda.
Mr. Lyons. Yes, to reach the goals it was--I guess I could
give a simple example. We had a 10,000 gallon water tank we
were setting in the spring up on the hill, piping the water
into the tank. The tank was a quarter inch steel. And it was a
bear to get it up there. And they wanted us to paint it. Well,
it actually cost me more to paint the tank than it did to put
in the entire system myself. So I said, no thanks.
And that's kind of a simple thing. But I imagine somewhere,
somebody messed with the system, and put up some crappy tank
somewhere. So from then on, you need to paint the tanks. Well,
it was just cheaper for me to say, no. I hate to paint. So I
just--it will be there--it will be there a long time when I'm
gone.
Mr. Lucas. Understood.
On the tax issues, the stepped up basis system, and that's
an ongoing debate back East about how that should be handled.
Some folks view it as important that the stepped up basis be
allowed. So if you ever sold what you inherited, you wouldn't
be tagged with a huge, huge tax on the gain.
Others argue, if you are really going to keep the property
in the family for generation after generation, you are not
going to sell the stuff; therefore, it doesn't matter.
From your perspective, it sounds like you are one of those
more multi-generation looking kind of individuals. Is that a
fair assessment?
Mr. Lyons. Yes, it would be a fair assessment. Just looking
down the road, it's really tough to get into an operation. Here
in Idaho, your best opportunity is to buy small ground. And
hopefully, purchase AUMs, which are Federal grazing permits,
and state grazing permits. That's your best way.
To touch private property is almost nonexistent. It may be
due to the fact that lots of things are cyclical. You saw the
land try to balloon just in the last couple of years, and now
they are dropping. And they will probably drop to where they
become more feasible, and more realistic to what actually can
be produced on the ground.
Land is not made any more. So there are a lot more people
with different types of interests willing to purchase land.
That makes it competitive. As far as paying for it with cows,
it almost becomes nonexistent.
So in order to keep it in the family, and that would be my
passion, is for the family to hold on to it. So that
opportunity, be it a cousin, a nephew, whatever, that that
opportunity still be there if they want to work the land.
Mr. Lucas. Mr. Boer, Ms. Siddoway, does EQIP work for
either one of you in the present form of the program?
Mr. Boer. No.
Mr. Lucas. So you managed all your nutrient issues, you
handle your watering issues strictly out of your own operating
budget.
Mr. Boer. Yes, we do.
Ms. Siddoway. Our operation has not worked with EQIP. But I
was Chairman of the state FSA committee. And many farmers and
ranchers do benefit from it. So I do see some value in it,
although personally we have never used it.
Mr. Lucas. Thank you. Thank you, Mr. Chairman.
The Chairman. Ms. Herseth Sandlin from South Dakota.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. Thank you to
our witnesses.
And, Mr. Lyons, can you talk a little bit about your
thoughts on the state of competition in your respective
livestock industry. The Department of Justice and USDA are
holding competition workshops throughout the country.
You had mentioned, Ms. Siddoway, the importance of us to be
authorizing mandatory price reporting, it certainly is
important for transparency in the market, to ensure competitive
fair markets.
Do either of you have thoughts on these workshops, on the
state of competition within the beef cattle, or sheep, and land
industries? Anything more that we can do in the farm bill in
terms of the livestock title as it relates to the fairness of
the contracts and the transparency issues?
Ms. Siddoway. I guess I did talk about mandatory price
reporting. For the sheep industry, we're so much smaller, of
course, than the cattle industry. There are probably three
major packers in the U.S., and the transparency in marketing is
very important to us, as well as the price for the foreign
product.
The sheep industry, of course, has no tariff barriers here
in the U.S., so we are dealing with imports. And that is of
great concern to us. And knowing what's being paid for on those
imported products is very important.
Especially, when the value of our dollar was up. No matter
how good a manager you were, it was very hard to compete with a
foreign product, because so much of it was coming here to the
U.S. Thank you.
Mr. Lyons. Yes, thank you. If you want to start a fight
scene within cattlemen, you talk about competition within the
market. That's been an area that has been pretty contentious
within the industry. One is leaning more to protectionism; one
is leaning more to open markets.
I could talk about one of our biggest problems may be
within the packing industry. There are less and less packers.
And it almost seems to be a cyclical thing to me. But, in order
to be competitive within the market, you have to be so big. You
have to run some more cattle.
In order for a smaller plant to exist with the regulations
that are handed to it, or with the compliances that they need,
it truly is not profitable. So then your segments of your
industry keep combining.
And that's where I see a real problem--increased
regulation, and increased bureaucracy on the segments in the
industry. And it seems to make them consolidate.
An example would be the Holbrook case in California. Be
that what it may, take that all apart, that plant doesn't exist
any more. Those people don't work there. That market is not
available any more. Was it necessary? It was necessary to deal
with it, maybe the animal cruelty. But I don't know that it was
necessary to wipe out an entire part that was viable to a lot
of guys who slaughtered cull cows over that issue.
That's what it seems like, a lot of small issues turn into
huge issues; and therefore, consolidate the industry to where
it becomes a monopoly.
Ms. Herseth Sandlin. I appreciate both of your responses,
and how in terms of the consolidation of the packers, either
regionally or domestically, and the importance of knowing price
transparency on what's coming in from the foreign animals as
well.
I guess that segues into another question about animal ID.
And whether you are talking about a split opinion for the
industry, or the potential for additional regulations that can
cause unintended consequences.
As you know, USDA's current animal traceability initiative,
after listening sessions occurring, and now a new
Administration now puts the responsibilities on the states to
develop the animal identification traceability systems.
What are your respective personal opinions, and perhaps
association positions, on animal ID? Do you support the state
administered approach? Do you think at some point a Federal
animal ID traceability issue is needed?
Ms. Siddoway. In the sheep industry, it's fairly easy to
traceback to original owners, and to the original ranch. As far
as traceback to the individual ewe that had that lamb, it's
very difficult. That would not work in the sheep industry at
all.
We can tag, and we do, we put a straight B tag in to show
the ranch of origin. We also raise elk, and there is ID through
the State of Idaho on that. And it become very, very
complicated to keep track of all of those ID numbers.
So when I look at what we go through on the elk side of our
ranch, I see it would be very difficult to have that in the
sheep industry. Although we are complying with our straight B
tag.
Ms. Herseth Sandlin. Mr. Lyons.
Mr. Lyons. Yes, we were happy to see it come back to the
states. We've always been for volunteer ID. And we've felt from
the state's perspective, the fascinating thing about the cattle
industry is it is so diverse as you travel just from here to
Wyoming, to Nebraska, and what one individual does in one state
to identify their cattle.
And lots of states will have some unique opportunities that
will fit within the whole picture to give you a way to trace
cattle back without being a huge detriment to the cow/calf
producer. Because all things roll downhill.
I mean, you can go down to the meatpacking plant and tell
them all things need to be identified, and this is what it will
cost you. But it will come back to the cattle. That's just the
way it works.
So from my perspective, I was excited to hear that we would
be able to have an opportunity to identify through the State of
Idaho.
Ms. Herseth Sandlin. Thank you, Mr. Lyons. Thank you, Ms.
Siddoway.
The Chairman. The gentleman from California.
Mr. Costa. Mr. Bitner, I support your industry on a regular
basis. Have you participated in Market Access Program? I know
in California we used it, and we're trying to. I mean, it's
very difficult in exporting our wine products. But what's your
experience?
Mr. Bitner. As a small producer, a thousand case producer,
I haven't. And I depend upon 75 percent of my wines being sold
at retail from our little tasting room out in the country. Our
largest producer is St. Chapelle, at 180,000 cases,
participated in that. But most wineries here in Idaho are in
the 25,000 cases.
Mr. Costa. What kind.
Mr. Bitner. Cabernet, Merlot, Chardonnay.
Mr. Costa. I will have to try it. Do you have problems with
the glassy-winged sharp shooter, or some of the other invasive
pests that we've got in other parts.
Mr. Bitner. You know, we haven't. And like I said, I'm
Chairman of the National Grape Growers. So I spend a lot of
time with California growers encouraging them to come to Idaho,
because we don't have all the issues you have there. As far as
the glassy-winged sharp shooter, one of the vectors are
oranges. So we don't grow a lot of the warm climate things that
become a vector for it.
Our soils are different. So we don't have a lot of those
issues. Our rainfall is 7 inches. So we don't have a lot of
mildew problems. Water is cheap. Land is cheap.
Mr. Costa. Good. Good.
Mr. Lyons, I appreciate your Will Rogers sense of humor
added to this discussion. You've certainly told us how you feel
about animal ID. What's the size of your cow/calf operation?
Mr. Lyons. We're sketchy on repeating that in public. Is
that rude.
Mr. Costa. No. Where I was going with this, my cousin has a
cow/calf operation. And you answered Congressman Lucas'
question on your per acre per cow. But you have experience with
BLM, obviously, with the land that you and your uncle have
isn't sufficient to support your cow/calf operation.
Your relationship with the BLM is pretty good?
Mr. Lyons. I enjoy the people I work with day-to-day on the
ground.
Mr. Costa. What's your lease arrangement with BLM.
Mr. Lyons. Well, it works on a 10 year renewal rate. And
what happens is, is we set provisions within the lease permit.
It's actually a permit. So what we hope to accomplish, what----
Mr. Costa. Do you have a fee to pay on that.
Mr. Lyons. I pay, I believe, this year, $1.37. It
fluctuates.
Mr. Costa. Mr. Boer, my time is short, but, both the
Chairman and I have a lot of interest in dairy. I'm a third-
generation dairy family, but you milk a lot more cows than we
did.
The average size of a dairy in Idaho is?
Mr. Boer. Excuse me. I want to guess about 500 to 700,
somewhere in that area.
Mr. Costa. Among the elements of the program you talked
about with NMPF is the elimination of the Dairy Product Price
Support Program, and the Milk Income Loss Contract program,
with new income protection.
You know that we are aware of, in the last 2 years, we've
lost $11 to $12 million in equity in the dairy industry. And
across the country, some say it's higher.
Is an insurance component going to replace part of that?
How do you think that's going to be able to cover those kind of
losses?
I mean, obviously, we want to narrow the boom and bust
cycles that are more prevalent today. But I don't know how you
create an insurance program that is part of your proposal that
will cover those kind of losses.
Mr. Boer. It is. I haven't been a part of that committee,
but what I do know about it is--the proposal is for the initial
piece. The insurance would cover the catastrophic drop in milk
prices.
In fact, what was proposed from some of the graphs that I
have seen, the only time it would have come into play was in
2009.
Mr. Costa. No, I saw that. We had that at our last
presentation.
Mr. Boer. Okay.
Mr. Costa. I'm working on an alternative proposal. But
being able to control production with a mechanism that will
allow them to have some control over their price. Because when
I grew up, the joke was: when dairy prices are down, dairymen
produce more milk. And when the dairy prices are up, they
produce more milk. And it doesn't work any more.
So I applaud all of the--I mean, of course, as the Chairman
and I noted, $9 per hundredweight. You have $15, $16 per
hundredweight input cost will make believers out of a lot of
folks in terms of change in the paradigm.
I just think that, in terms of bringing the industry
together, notwithstanding the crisis, that we've got to give
you as producers, which is my family, and some of my family
some better control. I mean, so that the industry can grow. But
those who don't want to grow, aren't punished by
overproduction. What are your thoughts?
Mr. Boer. Well, exactly. I would agree totally. When milk
prices are up, we produce more milk. When prices are down, we
produce more milk. That's continuing to happen. We have a
voluntary program right now through National Milk Producers
Federation.
Mr. Costa. The herd production.
Mr. Boer. Yes, the herd production.
Mr. Costa. Yes, it won't work very well.
Mr. Boer. It's the only mechanism we have in place right
now. And it's voluntary. We have about \2/3\ participation.
That doesn't seem to be palatable any more.
The plan that we were trying to come together with is a
margin plan. So that when margins start shrinking, that there
would be an automatic trigger come into play that we would all
participate in.
We would all have to reduce production by a percentage
that's predetermined, one or two percent, so that no one is
really affected disproportionately. And when that margin
expands back to the predetermined margins for 2 consecutive
months, then the program will be eliminated. So it has
automatic triggers and automatic retractions of the program. So
that's the important part of what we say.
Mr. Costa. My time has expired. But I'll be happy to share
with you the proposal that we have been working on. I just
think that there have to be some supply side signals that
relate to the production.
Because from my experience, that old Einstein quote, ``One
definition of insanity is to continue to do things the way you
always have done, and expect to get different results.''
Mr. Boer. Yes, sir, agreed.
The Chairman. I thank the gentleman.
The gentleman from Idaho, Mr. Minnick.
Mr. Minnick. Mr. Boer, continuing the discussion of my
colleague from California about an alternative to the six
existing Federal milk support programs, dairy programs, which
cumulatively, if I listen to your testimony, have caused Idaho
producers, dairymen, very efficient dairymen, to lose about 15
percent of their entire net worth in this last down cycle.
I encourage you, and applaud you for wanting to try
something else. And I'm curious with respect to this new
proposed income protection insurance program.
Would this be a program that a participating dairyman would
pay a part of the premium, or would that be ultimately supplied
by the taxpayer.
Mr. Boer. The initial part as proposed would be supported
by the government. And any additional premium for a higher
level of return, the producer has that option whether to take
it or not take it.
Mr. Minnick. So a maintenance level would be paid for by
the participating dairyman.
Mr. Boer. Yes.
Mr. Minnick. And to extend you wanted a richer program----
Mr. Boer. Exactly.
Mr. Minnick.--you had to have more income in order to pay
your bank to maintain your operation, you would pay for that
increment in premium.
Mr. Boer. Yes.
Mr. Minnick. And would there be an upper limit as to how
much income you could insure as opposed to what you get in a
very good year.
Mr. Boer. I've not been that close to that program yet.
They have talked about an upper limit. I think it makes some
sense to have some limit. The thought is the higher it costs,
the higher you go, the more it is going to cost.
Mr. Minnick. And there would be production controls to the
extent that you paid for the richer program, so that you don't
essentially buy insurance on a program that's going to worsen
the----
Mr. Boer. If, in fact, we come to some conclusion and
agreement on another plan that's been proposed, right.
Mr. Minnick. According to your modeling, would the cost to
the taxpayer be more or less for this kind of program, as
opposed to the composite of the six programs that we currently
have.
Mr. Boer. I haven't seen that number either, but I would
say, much less.
Mr. Minnick. Well, certainly, I want to applaud you for
taking this initiative. Because it's clear to me at least, that
we've got to do something different to protect our most
efficient producers, which you represent. So thank you for
doing that.
Ms. Siddoway, can I ask you a question with respect to the
funding that's going to the National Sheep Industry Improvement
Center. And one of the priority projects that some of your
colleagues have talked to me about is research on Pasteurella.
And the problem that we may be facing if the Forest Service
and the biologists decide we have to separate domestic sheep
from habitat that is incidentally occupied by Big Horn wild
sheep.
If we get a decision by the Forest Service that enforces
separation, what priority would you give to funding for this
kind of program that might develop a vaccine, or in other
words, mitigation that would allow your industry to continue in
these areas that are now threatened?
Ms. Siddoway. Thank you. I appreciate the opportunity to
respond to that question. Research dollars are definitely
needed. Decisions are being based on nonscientific evidence on
the separation.
We need the firm scientific evidence to show that there
perhaps is transmission. We really don't know that yet. The
policy is being made on the fact that maybe that does happen,
which is totally unfair to the sheep industry. Plus it gets in
the way of finding what really is causing the problem.
Big Horns are dying off whether sheep are there or not. I
think all this other stuff is getting in the way to getting a
real answer to how to save the Big Horn Sheep. And the sheep
industry, the domestic sheep industry would really like to
pursue finding research dollars, both with the University of
Idaho, and with Pullman, and the sheep center there at Dubois.
Mr. Minnick. So I can tell my Chairman, and Ranking
Members, this is an extremely high priority for our industry?
Ms. Siddoway. Yes, it's very high. Especially, in light of
what perhaps will be coming off the Payette National Forest.
So, yes, it's very high priority.
Mr. Minnick. I'm told it might cost Idaho sheep industry
perhaps half of their existing grazing acreage if an adverse
decision were to come. And that it's not just an Idaho problem.
It occurs any place in the West, where you have Big Horn sheep
naturally inhabiting shared habitat.
Ms. Siddoway. Yes, that's correct. It's a huge issue.
Mr. Minnick. So it's a problem with a lot of states. It's
not just the ones we have here. Thank you very much.
Ms. Siddoway. Thank you.
Mr. Minnick. I appreciate it.
The Chairman. Message received.
The gentleman from Idaho, Mr. Simpson.
Mr. Simpson. Thank you, Mr. Chairman. And following up on
what my good friend, Mr. Minnick, was talking about. Those
decisions are going to come down. We also have decisions
relative to the experimental station in Dubois, and the Grizzly
bear habitat and those allotments over there.
For those Committee Members who might not know, Idaho is 64
percent Federal land, and add state land, we're getting to 70
percent that is government owned. So most ranchers, the cattle
ranchers, and sheep ranchers, and others, use public lands. And
I suspect all these issues we're talking about in the ag
program are minor compared to dealing with the Federal
Government in dealing with allotments, and how you graze, and
that type of thing.
What is the potential impact to the cattle industry, to the
sheep industry, to the sage grouse issues.
Ms. Siddoway. On the sage grouse issue? Oh, it would be
tremendous. Less so on our private ground. And if there is a
conflict with sheep, it's hard to understand why the leks are
on our private ground where we've raised sheep for 120 years.
Mr. Simpson. Maybe they don't know the sheep are there.
Ms. Siddoway. Maybe they don't. And nevertheless, there may
be some qualities that restrict the sheep being there. It
really makes no sense. The sheep man and the cattleman are out
there on the land day in and day out. They are good land
managers. They understand the land. They live on this land.
It's been beneficial to us, and we want to be beneficial back
to the land itself.
But, yes, the ramifications of the listing of sage grouse
would be very detrimental.
Mr. Simpson. Are there other allotments that have been
taken out of production that could be used if the Payette
National Forest decision on the Big Horn sheep comes down
adversely.
Ms. Siddoway. Yes, there are lands taken out 20, 30 years
ago as I said on perceived competition with wildlife or
recreation. Whether it is real or not, a lot of allotments with
the Grizzly bear habitat were retired. Those should be made
available if the sheep man is forced to leave allotments.
It makes it more difficult to convert to a new one, where
you don't understand it as well. It takes a few years to
understand each allotment, and know the best way to graze that
allotment. But they definitely should be made available.
Mr. Simpson. How are the degradation payments going to the
loss of the reintroduced wolves into Idaho? I've heard some
people say, the process is so complicated, it's just not worth
it.
Ms. Siddoway. Well, it does get a little complicated. We
use Wildlife Services, of course. Are you talking about the
Defender's of Wildlife compensation.
It's helpful. It won't be there, I don't think, much
longer. That's why I applaud the inclusion of the wolf
degradation in the Farm Service Agency EALP program.
You have to have Wildlife Services verifying. They have to
be there. On our operation last summer, we had losses out at
Sand Creek. At the same time, we were having losses in the
forest, which is 100 miles apart.
It really puts a strain on Wildlife Services to have enough
personnel to manage all of the conflicts. And it's going to get
worse, and worse, and worse. We lost probably 130 head last
summer alone.
Mr. Simpson. From wolves.
Ms. Siddoway. From only wolf kills. And they killed our
guard dogs right off the bat. We lost five guard dogs. You
know, we just can't keep up with it. And we're spread, the
sheep industry, as with cattle, is spread over hundreds and
hundreds of miles with different herds. So it's hard to be in
all places at all times.
Mr. Simpson. Mr. Boer, how were the banks handling your
loans and lines of credit given this downturn in the dairy
industry.
Mr. Boer. I'm familiar with two lending agencies. I'm most
familiar with two. And one was Wells Fargo Bank. And the other
one is the Farm Credit Association. I do my banking with the
Farm Credit System.
Wells has taken a position, and I think horribly so--as our
downturn progressed deeper into the situation, they took a
position that they reevaluated the cows. They demanded more
equity positions in your inventories. That, in itself, when
they lowered their inventories' values, they lowered their cow
values. They actually threw them in a deficit situation into a
non-compliant state.
Now, Farm Credit has taken the position that, we want to do
the same thing, but we're going to do this over about a year-
and-a-half. So we know what's coming down. So we have a year to
a year-and-a-half to try to get our financial positions back
into a number that we can live with.
But that's the two situations I'm familiar with. And it's
pretty hard on the producers that are banking with the banking
industry, other than the Farm Credit. It's a cooperative. So I
think they are cooperatively working together.
Mr. Simpson. Well, I would hope as you look at ways to
control the production, because ultimately you have to, it's a
supply-and-demand issue with milk. And when you do that, don't
screw up the cattle industry.
Mr. Boer. We'll try not to. That's never our intent. We're
part of that, too.
Mr. Costa. If the gentleman might yield. On the market to
market and the lending institutions, as you noted, are treating
them differently. I think they are coming to the conclusion, as
they are trying to carry this, they don't have enough sellers
to milk these cows.
Consequently, and we're handling a little bit differently a
lot of value to value in just liquidity is gone on your dairy
herd.
The Chairman. I thank the gentleman. And thank the panel
for answering some questions. And we appreciate it, and
appreciate your time, and being with us today.
Before we adjourn, I would advise the Ranking Member to
make any closing remarks if he has any.
Mr. Lucas. Just to simply note, that clearly there are
challenges all over the country. As our friends expressed in
Idaho today, we have our work cut out for us. As long as we
have a chance to survive, and maybe thrive in the next farm
bill.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman, and I think that's
pretty clear. I have no doubt that farmers can rise to the
challenge, and come up with new ideas.
I've always told everybody, that no matter what kind of
program we put together in Washington, the farmers will be way
ahead of us, because they sit out on the tractor, and they have
all day to sit there and think about this. And whatever we come
up with, they will figure it out. They will be way ahead of us.
Mr. Lucas. Just don't help too much.
The Chairman. We thank all of you for being here again.
Anybody that didn't have a chance to testify, we invite you to
come on to our website www.agricultural.house.gov. That's
anybody here today or watching on the web-cast.
We know there are lots of good ideas out there. We're
looking for those ideas. We're planning to spend the next
number of months looking at whether there are better ways to do
things, and better ways to make things work.
And this hearing has been very helpful in that regard, and
we'll give Mr. Minnick the last word.
Mr. Minnick. Thank you, Mr. Chairman. I think I can say on
behalf of my friend, and colleague, Congressman Simpson, that
we do work together on ag problems, just as the Committee does.
We do it in a nonpartisan way based on what's best for our
state and industry.
We are both honored to have this group of distinguished
representatives of agriculture with us today. And we are
extremely pleased, Mr. Chairman, and Ranking Member Lucas, that
you would spend this time with us.
There are big problems. But there are thoughtful people. I
think if we work together, we can come up with solutions that
will benefit Idaho, and benefit the country, and each of you as
important producers.
So thank you all for being here.
The Chairman. Thank you gentlemen for your hospitality and
for the constituency here today.
Under the rules of the Committee, the record of today's
hearing will remain open for 30 days to receive additional
material, and supplementary written responses from the
witnesses to any question posed by a Member.
And this hearing of the Committee on Agriculture is
adjourned.
[Whereupon, at 3:40 p.m. (MDT), the Committee was
adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement by Jim Evans, Past Chairman, USA Dry Pea & Lentil
Council
The USA Dry Pea & Lentil Council (USADPLC) would like to thank
Chairman Peterson, Representative Minnick and the House Agriculture
Committee for holding a farm bill hearing in the State of Idaho. I am
Jim Evans, Past Chairman of the USA Dry Pea & Lentil Council, a
national organization representing producers, processors and exporters
of U.S. grown dry peas, lentils and chickpeas. I am a third generation
farmer from Genesee, Idaho. Idaho is a long time producer of dry peas
and lentils. Idaho has also been the largest chickpea (Garbanzo Bean)
producer in the United States (40,000 acres) over the past 5 years.
Statistics
Acreage of U.S. pulse crops (dry peas, lentils and chickpeas) has
increased from under 500,000 acres in the year 2000 to over 1.5 million
acres in 2010. Last year the U.S. produced a record 1.0 million metric
tons of dry peas, lentils and chickpeas. Strong demand for these
legumes around the world has kept prices for these crops above the 10
year average for the past 4 years despite record production. Prices on
all pulse crops have dropped 25% in 2010 as a reminder of the volatile
nature of agriculture and the need for an adequate farm safety net.
Farm Programs
Pulse crops are grown across the northern tier states in rotation
with wheat, barley, minor oilseeds, corn and soybeans. Our industry
fought hard to have pulse crops added as a program crop in 2002 in
order to compete for acreage with other program crops. Our goal for the
2012 Farm Bill is the same as it was in 2002. Pulse producers seek to
be included and treated equally with other farm program commodities in
the area of farm and conservation program support. Pulse crops do have
a loan and countercyclical program but no direct payment. Dry peas,
lentils and chickpeas are eligible for the ACRE program and this
program should be continued under the 2012 Farm Bill with some
adjustments. For example, producers should be allowed to use RMA crop
insurance records to establish their ``plug yield'' on their farm in
those counties with a wide variation in environmental conditions. For
example, in Nez Perce County of Idaho, average rainfall ranges from 10
to 30 inches.
Research
The 2012 Farm Bill needs to revitalize agricultural research to be
a leader in providing solutions to the critical health, global food
security and sustainability challenges facing this country and the
global community. The United Nations projects that the world's
population will grow from six billion to nine billion people by the
year 2050. The competition for arable land and fresh water will become
our limiting factor and most likely the cause of the wars of the
future. We need to double the food supply in less than 40 years. To do
this we need to increase funding to agricultural research programming
that will provide short and long term solutions to these challenges.
The USADPLC in cooperation with the U.S. Dry Bean Council has launched
the Pulse Health Initiative (PHI) to meet these challenges head on. The
mission of the PHI is to provide solutions to the critical health and
sustainability challenges facing the citizens of the United States and
the global community through research on pulse crops. In March of this
year we gathered together 50 of the best scientific minds in this
country to map out a strategic plan to achieve the following three
goals:
1. To Reduce Obesity and associated diseases (CVD, Diabetes,
Cancer) by 50%.
2. To Reduce Global Hunger and Enhance Food Security by increasing
pulse crop productivity.
3. To Reduce Agriculture's Carbon & Water Foot Print by optimizing
pulse crop nitrogen fixation and sustainability attributes.
Because of their unique nutrition and environmental attributes,
pulse crops can achieve these goals, but it will take a significant
investment in research. We ask the House Agriculture Committee to
include the PHI in the 2012 Farm Bill. If we are to feed this world in
a sustainable way, we have to increase our research investment in pulse
crops and all agricultural research.
Federal Crop Insurance Reform
The 2012 Farm Bill must improve Federal Crop Insurance for those
crops without a futures market. The USADPLC has been working for over
10 years to secure a crop revenue policy for dry peas, lentils and
chickpeas. Ten years. The USADPLC has taken two pilot program ideas to
the RMA board for consideration. Both times our ideas have made it
through expert review with positive marks only to be rejected by the
RMA staff and/or board. Our two pilot programs were rejected primarily
because our crops do not have a futures market. There are a lot of
crops without futures markets that do have solid price discovery
mechanisms. The 2012 Farm Bill must include reform of the Federal Crop
Insurance Program that will be more responsive to the risk management
needs of those crops not traded on the Chicago Board of Trade.
Thank you for listening to these comments. The USA Dry Pea & Lentil
Council looks forward to working with your Committee on the 2012 Farm
Bill.
Comments Submitted on behalf of:
USA Dry Pea & Lentil Council.
______
Submitted Letter by Sid Freeman, Farmer, Caldwell, ID
Members,
House Committee on Agriculture,
Washington, D.C.
From: Sid Freeman, member of: Canyon County Farm Bureau Federation;
Nyssa Nampa Beet Growers Assoc.; Idaho Eastern Oregon Onion Growers
Assoc.; Potato Growers of Idaho; Idaho Contract Bean Growers Assoc.;
former FSA County Committeeman for 11 years.
Members of the Agriculture Committee:
My name is Sid Freeman. I am third generation Canyon County farmer,
a sixth generation American farmer. Each generation has basically stood
on it own, nothing having been passed on to the next, except for the
blood that has created the desire to sow and reap the land. My wife's
family has a long history in agriculture as well, she herself is a
fourth generation Canyon County farm wife. We have two very wonderful,
hard working, respectful sons, one in college and one in high school.
With the mix of the blood that runs through their veins, and with the
type of upbringing that they have shared, undoubtedly one or both of
them will have the same desires as both of their grandfathers, their
great grandfathers, and I possess. Unfortunately, with the current
economic situation in agriculture they may have to turn towards some
career other than farming in order to make their living.
I am here before you today, representing the small multi-
generational family farm. Something that is rapidly disappearing right
before your eyes, and soon will be gone forever. What I say here today
is my own opinion and does not necessarily represent the opinion of any
of the many agricultural organizations that I am a member of. My
intentions here today are not to get to far into the intricacies of the
farm bill, but rather to emphasize it's importance. The importance of a
well written, and well balanced farm bill. As time's change, so should
the substance of our the farm bill. There are a couple of issue's that
I would like to touch on later, if I have time.
But for now, how important is the farm bill? That question can only
be answered by, how important is the industry that it is written for?
During the 49 years of my life, I have developed a very deep and
profound understanding of the importance of the role that the
agricultural industry plays in the development of our country, past,
present, and hopefully the future. I would like to share it with you
here today. What I am about to read to you is a joint memorial passed
by the 2006 Idaho State Legislature. I personally drafted the
resolution that became House Joint Memorial #12, which I have attached
a copy of. Please feel free to read it at your pleasure.
Members of the Agriculture Committee, a strong and viable
agricultural industry is without a doubt one of the most important
cornerstones in the foundation of our counties national security. A
strong and viable agriculture is the only answer to the preservation of
the family farm unit, and the land that they so carefully steward.
In my eleven years as a county committeeman for FSA, I saw many
programs that seemed to work and many that did not seem to work as
well. I feel that the disaster payments made directly to farmers when
weather related circumstances interfered with their crop production was
far better than a multi peril crop insurance policy that most farmers
could not afford any way. And then if they did carry multi peril crop
insurance they seemed to get factored out of any kind of a ``just''
payment, even though they thought that they would be covered. This has
happened to me personally on more than one occasion. In my opinion it
is a huge ripoff not only to farmers but all American tax payers. The
insurance companies are increasing their profits at the farmers
expense, and tax payers are being told that this money is going to the
farmers.
I believe that the time has come to add specialty crops to the farm
bill. Lets face it before you can have crops for food, fiber, and fuel,
you have to have crops for the seed that is used to produce those
crops. As the population of the world is expected to increase to nine
billion by 2050, the need and importance for increased seed production
is going to be extreme. Idaho is a huge seed producing area for the
world, especially the treasure valley. Many seed companies from all
over the world come here to have the seed grown that they send around
the world to produce food. Seed crops are considered a specialty crop
and are not currently a properly protected by the farm bill.
My last contention I wish to bring to your attention is the fact
that we now currently have a situation where there is a reverse
discrimination written in the farm bill which allows special conditions
and programs for minority, or socially disadvantaged, people. I believe
this is absolutely hypocritical, and has no place in the farm bill.
This countries veteran farmers and their families are without a doubt
the ones that have the highest degree of probability to succeed in this
industry. We should not in any way be cutting them short of the
opportunities afforded by this farm bill or any other farm bill in the
future. We must get rid of any language of any kind that is
discriminatory in any way to anyone. Yes we do have a special need for
new beginning farmers, but it shouldn't matter what color their skin
is, or what gender they are.
Agriculture Committee, I thank you very much for your time, and for
allowing me to speak with you here today. I would gladly try to answer
any question that you may have.
Respectfully,
Sid Freeman.
attachment
Legislature of the State of Idaho
Fifty-Eighth Legislature Second Regular Session--2006
In the House of Representatives House Joint Memorial No. 12 By Agricultural Affairs Committee A Joint Memorial To the Senate and House of Representatives of the United States in
Congress
Assembled, and to the Congressional Delegation Representing the State of
Idaho in the Congress of the United States.
We, your Memorialists, the House of Representatives and the Senate
of the State of Idaho assembled in the Second Regular Session of the
Fifty-Eighth Idaho Legislature, do hereby respectfully represent that:
Whereas, since the beginning of time, the ability of man to provide
food, fiber, and fuel for himself and others has determined his
independence, freedom, and security; and
Whereas, when man began to colonize, the strength of each and every
colony was directly related to his ability to provide a safe and
reliable source of food, fiber, and fuel for his people; and
Whereas, when nations began to form, only nations with such ability
rose to the top and since then many have fallen because they lost such
ability; and
Whereas, agriculture is and will continue to be a fundamental and
vital industry in Idaho, our nation, and the entire world; and
Whereas, a strong and viable agricultural industry is a very
important part of our national security and overall well-being; and
Whereas, the primary source of funding for building schools,
roadways, fire stations, and providing police protection in our rural
communities comes from the taxes generated by agriculture and other
natural resource industries; and
Whereas, American farmers, ranchers, and food processors are held
by Federal, state, and local laws to meet the highest standards in the
world when it comes to environmental protection, worker safety, wage
rates, and food safety concerns; and
Whereas, the family farm unit is the foundation of agriculture and
one of the basic strengths of this nation.
Now, Therefore, Be It Resolved by the Members of the Second Regular
Session of the Fifty-Eighth Idaho Legislature, the House of
Representatives and the Senate concurring therein, that we urge that
American farmers, ranchers, and food processors be enabled to compete
freely and trade fairly in foreign markets on a strictly level playing
field.
Be It Further Resolved, that because of the importance of the
standards to which American producers and food processors are held,
primarily standards concerning food safety, we urge that foreign
countries wishing to participate in markets that lie within the
boundaries of the United States be held to the same standards.
Be It Further Resolved, when determining the economic values of
international trade agreements, we urge that these standards be
quantified and considered in such determinations.
Be It Further Resolved, that we encourage the education of the
general public as to the importance of the role agriculture plays in
the development of a society, recognizing that such public education is
critical in the preservation and strengthening of the family farm unit
and the overall preservation and strengthening of the agricultural
industry itself.
Be It Further Resolved that the Chief Clerk of the House of
Representatives be, and she is hereby authorized and directed to
forward a copy of this Memorial to the President of the Senate and the
Speaker of the House of Representatives of Congress, and the
Congressional Delegation representing the State of Idaho in the
Congress of the United States.
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
----------
MONDAY, MAY 3, 2010
House of Representatives,
Committee on Agriculture,
Fresno, CA.
The Committee met, pursuant to call, at 9:00 a.m., in
Fresno City Hall Council Chambers, 2600 Fresno Street, Fresno,
California, Hon. Collin C. Peterson [Chairman of the Committee]
presiding.
Members present: Representatives Peterson, Cardoza, Costa,
Minnick, Lucas, and Conway.
Staff present: Keith Jones, John Konya, Robert L. Larew,
Lisa Shelton, April Slayton, Nicole Scott, Pelham Straughn, and
Sangina Wright.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
The Chairman. The hearing of the House Committee on
Agriculture to review U.S. agriculture policy in advance of the
2012 Farm Bill will come to order. To begin with, a couple
things we need to say, the gentleman from California, Mr.
Nunes, is not a Member of the Committee but has joined us
today. I have consulted with the Ranking Member and we are
pleased to welcome him to join us in the questioning of the
witnesses today.
Mr. Nunes. Thank you.
The Chairman. Welcome to the Committee. Also, this is the
first time that there has ever been web-casting of these field
hearings. We have the opportunity for anybody that wants, to be
able to, in addition to the witnesses that are here today, to
be able to provide ideas and testimony to the Committee through
our website, which is www.agriculture.house.gov.
And there are some of these cards around, I believe, that
have our website on it, and we welcome the people that are with
us today on the web-cast.
So good morning, and I thank all you for joining us today
for the House Agriculture Committee hearing. We are glad to be
here, in Fresno, and to hear from area farmers and ranchers
about the issues facing agriculture in rural communities.
As we demonstrated in the 2008 Farm Bill, this is about
more than just farms. We continued the safety net that protects
farmers and ranchers, and provides the certainty that they can
rely on to stay in business. But we also made historic
investments in nutrition, conservation, renewable energy,
research and development, fruits and vegetables, and organic
agriculture.
While traditional farm programs have a relatively small
proportion of funding, these programs are essential to the
continuing success of U.S. agriculture. We have a system of
independent farmers and ranchers working the land, and without
the certainty of these programs, these farmers would not be
able to get the financing, in a lot of cases, that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking
time out of their busy schedules to talk to us today.
These farm bill hearings are the first step in a process of
writing the next farm bill. A bill this large, and that covers
so many important issues takes a lot of time and effort to get
it right, and I am committed to a process, like the last time,
that is open, transparent and bipartisan.
For all of those joining us today in the audience, I hope
that, as I said earlier, you will participate with us by making
your comments known. A lot of times, we get some really good
ideas from folks that do not necessarily get to the witness
table, and we would appreciate that input. So feel free to send
us your ideas about what you think we should consider for the
next farm bill.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon, and thank you for joining us for today's House
Agriculture Committee hearing. We are glad to be here in Des Moines to
hear from area farmers and ranchers about the issues facing agriculture
and rural communities.
As we demonstrated in 2008, the farm bill is about much more than
just farms. We continued the safety net that protects farmers and
ranchers and provides the certainty they rely on to stay in business.
But we also made historic investments in nutrition, conservation,
renewable energy, research, rural development, fruit and vegetable
products, and organic agriculture.
While traditional farm programs have a relatively small proportion
of funding, these programs are essential to the continuing success of
U.S. agriculture. We have a system of independent farmers and ranchers
working the land, and without the certainty that farm programs provide,
these farmers would not be able to get the financing that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking time out
of this busy time of year to talk to us today. These farm bill hearings
are the first step in the process of writing the next farm bill. A bill
this large and that covers so many important issues takes a lot of time
and effort to get it right, and I am committed to a process that is
open, transparent, and bipartisan.
For all those joining us today in the audience, I hope that you
will also participate in this process by sharing your thoughts on the
farm bill with us. We have a survey posted on our Committee website,
and we have cards available today with that web address so that
everyone has a chance to tell the Committee about what is working and
what new ideas we should consider for the next farm bill.
We have a lot of ground to cover, so let's get started.
The Chairman. So we have a lot of ground to cover. I
welcome everybody to the Committee. I recognize my good friend,
the Ranking Member from Oklahoma, Mr. Lucas, for an opening
statement.
OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA
Mr. Lucas. Thank you, Mr. Chairman, and I once again want
to thank you for calling these hearings and being so proactive
in preparation for the debate that we'll have on the future of
farm policy and the 2012 Farm Bill. We do have an extremely
difficult road ahead of us, but one thing I look forward to is
listening to our producers from across the country.
While I am fortunate and get to hear my own producers every
time I go home, whether it's in the coffee shop, the feed
store, or doing my own town meetings across my district, I
think it's vitally important to hear from producers with a
broad range of products that they produce in a broad range of
places.
My goal for the next farm bill is simple. I want to give
producers the tools to help you do what you do best, and that
is produce the safest, most abundant, most affordable food
supply in the history of the world.
I think it's extremely important to hear from you about
what is working and what is not working, and what changes we
can make to the farm bill to allow it to work more efficiently
for you.
The 2008 Farm Bill was another important investment in the
future of rural America. Not only did we provide a viable
safety net for producers, but we also made substantial
investments in conservation and nutrition programs during a
time of need for many Americans.
A lot of people do not realize that 75 percent of farm bill
spending goes to the nutrition programs. Three-quarters of all
the money spent in the 2008 Farm Bill goes to nutrition
programs.
In addition to those investments, this Committee is led by
Chairman Peterson, who has accomplished substantial reforms,
especially in the realm of payment limits. This is a fact that
should not be forgotten by those who always seem ready to
attack our programs.
Last week, during a hearing in Washington, I was concerned
to hear the Administration's priorities seemed to differ so
greatly from many of my producers' priorities.
In that hearing, barely was mentioned the topic of safety
net, conservation programs, or many of the programs I hear from
my producers. I think it's imperative that Congress work
together with the Administration to come up with workable
solutions to the many problems our rural communities face. But
first, the Administration needs to prove its commitment to
production agriculture.
I also want to hear from you about the impediments that you
face when bringing a crop to market, and see if we can help
alleviate some of those impediments.
I have serious concerns about the effects of an
overreaching Federal EPA will have upon you. It seems every
day, the Environmental Protection Agency is coming out with a
new regulation that makes it harder for producers to make a
living.
Can we do something about those impediments, or at least
give you the tools that can help mitigate some of the adverse
effects of those regulations. With all of that said, I look
forward to hearing from our witnesses today, and thank you
again, Mr. Chairman, for starting this process.
The Chairman. I thank the gentleman, and now want to
recognize one of my Subcommittee Chairmen, somebody that you
know well, from this area of California, Mr. Cardoza, who is
the Chairman of the Subcommittee on Horticulture and Organic
Agriculture. We very much appreciate his leadership, as well as
the gentleman who is hosting this hearing in his district, Mr.
Costa, another one of my good friends and allies, and somebody
that I rely on a lot. I would recognize him for an opening
statement.
OPENING STATEMENT OF HON. JIM COSTA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA
Mr. Costa. Thank you very much, Chairman Peterson and
Ranking Member Lucas. We appreciate Congressman Conaway coming
all the way from Texas, and Congressman Minnick from Idaho, and
Congressman Nunes and Congressman Cardoza, who all share a love
and a passion for our valley.
This is the third of four hearings on this swing.
Congressmen Lucas and Peterson, and I, have been in Des Moines
on Friday, and Saturday we were in Congressman Minnick's
district in Boise, Idaho, and today we are in Fresno. Tomorrow,
they will be heading to Cheyenne, Wyoming, really getting a
snapshot of the diversity of U.S. agriculture and the
challenges we face with difficult financing, on trying to write
a new farm bill for 2012.
So what we are doing is setting the table here. We are
setting the table, and the testimony that we will have on the
two panels here that represent the breadth and width of
diversity of California agriculture is very much, indeed,
desired by this Committee.
Both Congressman Cardoza, Mr. Nunes, and I, are always
trying to explain to our colleagues, in other parts of the
country, how diverse California agriculture really is with
almost 400 crops.
And of course we well know the challenges we have had with
the water problems that we have had here, the last 3 years.
I also want to recognize that we have some guests here. The
California Secretary of Agriculture, A.G. Kawamura, who is here
with us, Supervisor Phil Larson I saw in the audience, and
Council Member Sterling. And is there someone else that I have
left out here in our local elected officials? We are very
pleased that you are here as well.
Let me indicate that when we talk to our colleagues around
the country about California, many of them do not think of
farming. They think of aerospace, they think of the movie
industry, they think of high tech.
But the fact is is that California is the most diverse
agricultural state in the nation, and the Central Valley is one
of the, if not the most, productive agricultural region in the
United States.
We have over 81,000 farms in California, farms and ranches
and dairies, that last year, at the farm gate, totaled $36.2
billion. This state, our state, grows 99 percent of the
almonds, pistachios, peaches, plums, olives, kiwi, dates, figs,
artichokes, pomegranates, and walnuts. That is a mouthful, but
99 percent of the production is here, in California.
We produce 22 percent of the nation's dairy products, and
approximately 50 percent of the country's fruits and
vegetables.
California represents 11 percent of the entire U.S.
agricultural production with over 400 commodities, and that is
why it is so important, Mr. Chairman, and Ranking Member Lucas,
that you are here, and we appreciate that very much today.
California agriculture has always been innovative.
Today, we will have an opportunity to hear from some of
these innovators, on both panels.
The 2008 Farm Bill made great strides in recognizing the
needs and the value of California agriculture. Congressman
Cardoza and I appreciate that as it relates to specialty crops.
We want to build on that progress.
Today we will be listening to how the priorities ought to
be established for the 2012 Farm Bill. Do we believe that it is
important to have domestically-grown products, or do we want
them to be imported from other countries? I think not.
Do we want to invest in developing new renewable energy
sources from farm products, like methane digesters or sugarbeet
conversion, or should we allow Brazil and the European Union to
lead the way in these areas? I think not.
Do we want to have ready accessibility to healthy fruits
and vegetables and dairy products available for our children in
their school lunch program? We are dealing with the big problem
of obesity. It is really a conundrum. We grow abundant fruits
and vegetables, yet we have problems with young people
suffering from obesity.
We know here, in Fresno, in the Valley, that food does not
come from Safeway but it comes from our farms. It comes from
dedicated farm families, like those that will be testifying
this morning.
I am looking forward to hearing the testimony to ensure
that the next farm bill will help California agriculture, not
just our specialty crops, but in dealing with invasive species,
with research, with marketing, promotion, with air quality
issues, dealing with all the challenges that our farmers,
ranchers and dairymen face.
So I want to thank you again, Mr. Chairman, for your
leadership. I want to thank Congressman Lucas for the
bipartisan effort that takes place here, we appreciate it very
much. I would like to defer to my colleague, Congressman
Cardoza, for any comments he might want to make.
OPENING STATEMENT OF HON. DENNIS A. CARDOZA, A REPRESENTATIVE
IN CONGRESS FROM CALIFORNIA
Mr. Cardoza. Thank you for hosting us, Jim. I want to
especially recognize the Chairman, who has been helpful since I
have been in Congress. He has helped the Central Valley every
time we have asked. Ranking Member Lucas, I thank you for
coming to Fresno. We appreciate it.
This is a beloved valley, for those of us who live here and
call it home. In the last farm bill, we did some very important
things, trying to help the valley become even more productive.
We were able to secure $1.7 billion in dedicated Federal
funding for specialty crops. We increased the funding for the
popular EQIP Program because we have some of the dirtiest air
in the country and we created a new Clean Air Program.
We increased funding for pest and disease control, and
eradication programs. That is critically important to our
sustainability. The new outbreak, to be announced today,
underscores the importance of pest eradication and disease
control.
And finally, we did quite a bit in the last farm bill to
fund healthy eating programs. We did this all within the PAYGO
constraints that we have put in place in Congress to pay for it
as we went. We were one of the first bills that went through on
regular order. And, we may have been the only bill that went
through PAYGO, went through on regular order, went through on a
bipartisan basis, and successfully signed into law.
We have to replicate those kind of same strategies in 2012.
I am going to close with this, Mr. Chairman.
It is important to note that the first panelist to speak
today is a dairyman. As Jim said, 21 percent of the dairy
production for our country, is in California. California
dairymen are being devastated by the current price and
regulatory climate. They cannot survive without relief. I will
be listening very carefully to this testimony.
Thank you, Mr. Chairman, for being here.
The Chairman. I thank the gentleman. I thank Mr. Costa and
Mr. Nunes for welcoming us to this beautiful agriculture area.
We have the panel seated. Mr. Jamie Bledsoe, a dairy
producer from Riverdale. Mr. Tony Campos, an almond producer
from Caruthers. John Diener, who is almond, grape, wheat,
alfalfa--too many crops to name--from Five Points. Kevin
Kester, a cattle and grape producer from Parkfield. Jon
Reelhorn, a nursery plant producer from Fresno, and Frank
Rehermann, a rice producer from Live Oak.
Gentlemen, welcome to the Committee. Your full statements
will made part of the record. Feel free to summarize, in order
to stay within the Committee's 5 minute rule. We have a lot of
things to go through this morning, and we have to get on our
way to Wyoming before it gets too late.
Mr. Bledsoe, welcome to the Committee. We look forward to
your testimony.
STATEMENT OF WALTER JAMES BLEDSOE, DAIRY PRODUCER, RIVERDALE,
CA
Mr. Bledsoe. Good morning, Mr. Chairman, Ranking Member
Lucas, and my Congressman, Devin Nunes, and Members of the
Committee. Thank you for holding this hearing this morning.
My name is Jamie Bledsoe. I am currently serving as the
board President of Western United Dairymen and I am on the
board of directors of my cooperative, California Dairies,
Incorporated.
My wife, Elizabeth, and I, and our four children, I would
consider as a typical California dairy family, and we currently
milk about 1,200 Holstein cows and feed 2,500 replacement
heifers and bulls for breeding purposes. And our operation
supports my family as well as a family of 20 others that live
off of our business.
It is important to note, and I think Congressman Costa
brought up, that the California dairy industry is responsible
for more than 443,000 jobs in the State of California, and a
typical farm like mine generates $33 million in economic
activity and 232 jobs.
The dairy industry contributed $63 billion in economic
impact in our state in 2008. It's the number one industry in
the State of California. The economic situation for California
dairy farmers this past year was ruinous.
While things have improved slightly, dairy families are
still experiencing negative margins. May is at least the 18th
consecutive month of low milk prices and high input costs.
Margins are not just low. They do not exist. Milk prices
lingered at just over half the cost of production for a large
portion of 2009, and dairy families all over the state are
losing what took decades and generations to build.
In fact, my operation lost over $100 a cow in 2009, and my
equity took a major hit.
The industry has experienced periods of low prices before.
However, production costs have been on a steady upward trend,
up nearly 20 percent in California, just over the past 3 years.
If you will notice a chart in my written statement, it
shows negative margins in 5 of the past 9 years. And last
year's negative margin was over $6 a hundredweight. Dramatic
increases in feed prices propelled dairy production costs to
record levels in late 2008 and into 2009. California producers
typically do not grow all their feed and have to pay additional
transportation costs to bring feed in for their cattle.
At the same time, all the costs of doing business in
California have increased. Costs mount each year as producers
work to meet new waste discharge requirements. Our Water Board
estimates new regulations cost an additional $45,000 to $65,000
per farm, per year. Water for crop irrigation is a major
concern in California, particularly right here in our Central
Valley.
I farm in the Westlands Water District, and as you know,
limited water supplies affect feed prices and the availability
of feed. The milk price crash came early to California, because
our system reacts to market signals more quickly. Price
reporting in Federal Orders usually results in a 1 or 2 month
delay. Our board supports pricing that sends more immediate
market signals, so we support the California Order.
Prices for some commodities like butter, nonfat dry milk
are moving upward, but profitability still looks pretty far
off. The pressure on milk prices from current massive cheese
inventories, over a billion pounds of cheese we have in
inventory today, affects farmers everywhere.
Projections for the rest of the year are optimistic, but
they depend on demand recovery that outpaces milk production.
The downward adjustment in milk production has not kicked in,
nationwide, to any great extent. California farmers reduced
production, dramatically, in 2009.
In fact, California milk production has been down, year
over year, 20 of the last 21 months. Clearly, something
triggered a major difference in the supply response in
California versus other parts of the country.
Looking ahead, the dairy farmer safety net needs to change,
and first, it must be herd size and region neutral, and must
not send signals that more production is welcome when farm milk
prices are low.
Second, with these new input costs, an economic safety net
based on milk price will no longer be sufficient. Both
organizations are looking at programs for the future, that rely
on income assurance rather than milk price triggers alone.
On the concept of production management, Western United
Dairymen has organized and hosted meetings to gather input from
the industry. Both boards have offered suggestions for
improvements and shared our comments about the proposals as
those proposals have been developed.
Those who have developed those proposals have dairy
farmers' interests at heart, and, in my opinion, they are the
reason the production management is part of the current
mainstream Federal policy discussions.
We are very familiar with industry controlled production
management here, in California. Our co-ops have programs in
place and dairy farmer support for CWT here is as strong as
anywhere in the country.
Next, fluid standards, fluid milk standards are
specifically mentioned in the 2008 Farm Bill. Dairy farmers I
talk to all around the country are interested. I encourage the
Committee to add this to the list of things that could help
both farmers and our consumers.
And finally, there are some other important issues I would
like to mention. Immigration reform is a priority for farmers
everywhere. Both CDI and Western United are long-time
supporters of ag jobs. I thank the Members of the House
Agriculture Committee for their support for technology reform.
The need for reform has farm families like mine stuck in the
financial planning ``no man's land.'' Both organizations are
represented here today, and support the largest exemption
possible, along with the lowest tax rate on the amounts over
the exemption, and the use of a stepped-up basis.
EQIP has been especially useful to California dairymen, and
funding increases in the current farm bill must be maintained.
State and Federal regulators must work together, better, on
environmental compliance.
Producers here lead the way in renewable energy technology
to help reduce our dependence on foreign oil. But there are
local dairymen who have shut down their digesters for nearly a
year because our local air quality regulations cannot be met.
The production of renewable gas from livestock waste
deserves Federal incentives, at least equal to those provided
for ethanol.
A good start would be the Biogas Production Incentives Act
to provide a production tax credit for renewable biogas used to
offset the use of fossil fuels. And on trade, we support the
ratification of the free trade agreements with Colombia, Panama
and South Korea, and relaxing restrictions on trade with Cuba.
Assistance is needed from the House Agriculture Committee
to ensure that the dairy trade with New Zealand is excluded
from the negotiations of the Trans-Pacific Partnership
Agreement.
The Congress is now in the process of passing a new child
nutrition bill, and dairy's position, as part of the
reimbursable meals in Federal feeding programs is a win-win for
the public and for our farmers.
California dairy producers appreciate the Committee's
support for those programs, and with the importance of EQIP to
environmental compliance by dairy farmers everywhere, the
Senate proposal to cut funding for EQIP to provide the offset
for a nutrition bill is a serious concern to us. I support the
leadership of the House Agriculture Committee to help us find
an alternative.
Thank you again, Mr. Chairman, for holding this hearing
today, and providing me with the opportunity, and dairymen, to
share the perspective of our California industry, and our
future direction of the farm bill. I look forward to answering
any questions that you or the Committee may have.
[The prepared statement of Mr. Bledsoe follows:]
Prepared Statement of Walter James Bledsoe, Dairy Producer, Riverdale,
CA
Good morning Chairman Peterson, Ranking Member Lucas, my
Congressman, Jim Costa, and Members of the Committee. I want to thank
you for holding this hearing to examine Federal agriculture policy in
advance of the next farm bill. My name is Jamie Bledsoe. My family and
I dairy near Riverdale, California. I currently serve as Board
President of Western United Dairymen and am on the Board of Directors
of my cooperative, California Dairies, Inc. I am testifying on behalf
of both of those organizations today.
My wife Elizabeth (a third-generation dairy farmer) and I (a first-
generation dairy farmer) raised four children while making a career in
this industry. Our son, Joshua returned to the farm in June of 2009
after leaving California Polytechnic University at San Luis Obispo. Our
three daughters are at various stages of completing degrees at the
California State Universities at Fresno and Long Beach.
I have had many experiences in the industry; including managing
dairy operations, the development of elite dairy cattle genetics, and
marketing live cattle, semen, and embryos all over the world. But my
first love is to develop a profitable dairy herd and that endeavor
began in 2003.
We started our first herd 7 years ago with 120 cows. Our first
expansion was to 400 and in 2008 we tripled the size of our herd. Today
we milk 1,200 Holstein cows on two facilities and feed over 2,500
replacement heifers and 500 bulls for breeding purposes. In addition,
we continue to market dairy cattle and genetics locally and abroad. Our
operations support my family as well as provide food and shelter for
twenty employees and their families.
We are also involved in diversified farming. We recently purchased
640 acres of land in the Westlands water district where we can grow
nearly 80% of the roughages for our cattle. We also grow 110 acres of
wine grapes (Semillon and Muscat of Alexandria) and plan to expand into
other varieties, and into growing pistachios or almonds.
Economic Impact of the California Dairy Industry
A recent analysis of the dairy industry by J/D/G/ Consulting, Inc.,
on behalf of the California Milk Advisory Board, offers a perspective
on how vital the dairy industry is to California and its economy. The
California dairy industry is responsible for more than 443,000 jobs in
the state. A typical dairy farm in California generated $33.1 million
in economic activity and 232 jobs in the state. In total, the dairy
industry contributed $63 billion in economic impact to the state in
2008, which is more than the wine industry ($59 billion in 2007) and
the motion picture/television industry ($35 billion in 2008). For those
concerned about California being a ``drag'' on the nation's economy,
improving the economic health of the California dairy industry might
not be a bad place to start.
Current Economic Situation
The economic situation facing the California dairy industry this
past year was ruinous. While things have improved slightly, dairy
families are still experiencing negative margins. In fact, May will
mark at least the 18th consecutive month of low milk prices and high
input costs.
I. An economic snapshot of the California dairy industry.
A. Ruinous negative operating margins.
Farm milk prices and feed commodity prices tend to be
cyclical in nature. However, producers have never witnessed
such dramatically low milk prices combined with skyrocketing
production costs as they did for all of 2009. Margins haven't
just been low, they simply haven't existed. That is, we have
been losing money on every pound of milk produced for over a
year.
The price paid producers for milk lingered at just over half
what it cost to produce the milk for a large portion of 2009. A
good rule of thumb is that dairy farmers lost $100 per cow per
month last year. Dairy families all over the state are losing
what took them years and even generations to build.
The industry has experienced periods of low prices before.
However, production costs have been on a steady upward climb--
up nearly 20% in California in just the last 3 years (2009
versus 2006).
The following chart, compiled with data from the California
Department of Food and Agriculture, compares net operating
margins from 2001 through 2009 and year-to-date for 2010. While
the last really bad year on the dairy farm, 2006, showed
margins resulting in an average loss of $3.30 per
hundredweight, the negative margins in 2009 were nearly two
times larger. While milk prices have increased slightly and
milk production costs have eased moderately, negative margins
are still being experienced.
------------------------------------------------------------------------
CA Statewide
(per hundredweight) CA Overbase Cost of Margin
Price Production
------------------------------------------------------------------------
2001 $13.11 $12.24 $0.87
2002 $10.24 $12.61 ^$2.37
2003 $10.70 $12.44 ^$1.74
2004 $13.89 $12.75 $1.14
2005 $13.17 $13.43 ^$0.26
------------------------------------------------------------------------
2006 $10.87 $14.17 ^$3.30
------------------------------------------------------------------------
2007 $17.27 $15.77 $1.50
2008 $16.03 $18.54 ^$2.51
------------------------------------------------------------------------
2009 $10.81 $16.86 ^$6.05
------------------------------------------------------------------------
2010 YTD......... $12.88 $15.63 ^$2.75
------------------------------------------------------------------------
Source: CDFA.
These numbers are hardly unique to California. Previous low
price cycles have taken their predictable toll on operations
that failed to control costs relative to their competing
farmers serving the same markets. This cycle, however, is
different. These ruinously negative margins are hurting
everybody, including the most efficient.
Productivity gains on U.S. dairy farms over the past several
decades are nothing short of astonishing. However, all U.S.
producers will be higher-cost producers in the years to come as
a result of the additional debt load taken on to survive these
negative net operating margins.
B. Monthly milk price versus input costs 2008-2010 YTD and near-
term projections.
----------------------------------------------------------------------------------------------------------------
CA Overbase CA Statewide Cost Margin (OB less CA Mailbox (plus Margin (Mailbox
(per hundredweight) Price 1 of Production 2 COP) marketing costs) less COP)
----------------------------------------------------------------------------------------------------------------
Jan-08 $17.44 $17.31 $0.13 $18.50 $1.19
Feb-08 $16.72 $17.31 ^$0.59 $17.58 $0.27
Mar-08 $16.01 $17.31 ^$1.30 $16.57 ^$0.74
Apr-08 $15.86 $18.04 ^$2.18 $16.43 ^$1.61
May-08 $16.77 $18.04 ^$1.27 $17.34 ^$0.70
Jun-08 $17.42 $18.04 ^$0.62 $17.90 ^$0.14
Jul-08 $17.35 $19.21 ^$1.86 $17.75 ^$1.46
Aug-08 $16.31 $19.21 ^$2.90 $16.81 ^$2.40
Sep-08 $16.22 $19.21 ^$2.99 $16.85 ^$2.36
Oct-08 $15.44 $19.58 ^$4.14 $16.30 ^$3.28
Nov-08 $14.27 $19.58 ^$5.31 $15.22 ^$4.36
Dec-08 $12.41 $19.58 ^$7.17 $13.35 ^$6.23
----------------------------------------------------------------------------------------------------------------
Jan-09 $10.40 $18.51 ^$8.11 $11.09 ^$7.42
Feb-09 $9.58 $18.51 ^$8.93 $10.32 ^$8.19
Mar-09 $9.84 $18.51 ^$8.67 $10.44 ^$8.07
Apr-09 $9.87 $17.12 ^$7.25 $10.40 ^$6.72
May-09 $9.76 $17.12 ^$7.36 $10.22 ^$6.90
Jun-09 $9.62 $17.12 ^$7.50 $10.15 ^$6.97
Jul-09 $9.60 $16.17 ^$6.57 $10.12 ^$6.05
Aug-09 $10.48 $16.17 ^$5.69 $11.03 ^$5.14
Sep-09 $11.04 $16.17 ^$5.13 $11.72 ^$4.45
Oct-09 $11.91 $15.63 ^$3.72 $12.82 ^$2.81
Nov-09 $13.13 $15.63 ^$2.50 $14.30 ^$1.33
Dec-09 $14.47 $15.63 ^$1.16 $15.85 $0.22
----------------------------------------------------------------------------------------------------------------
Jan-10 $13.48 $15.63 ^$2.15 $14.64 ^$0.99
Feb-10 $13.11 $15.63 ^$2.52
Mar-10 $12.41 $15.63 ^$3.22
Apr-10 $12.64 $15.63 ^$2.99
May-10 $12.79 $15.63 ^$2.84
----------------------------------------------------------------------------------------------------------------
1 Actual through Mar 2010 and estimates for Apr. and May 2010 (based on prices through April 26, 2010).
2 Actual through 4th quarter 2009.
Source: CDFA.
The dramatic increase in feed prices propelled dairy
production costs to record levels in late 2008 and into 2009.
Though feed costs have come down a bit, we expect this general
upward trend to continue as the cost of doing business in
California continues to rise. Unfortunately, this will continue
to erode California's competitive advantage compared to other
regions where dairy farmers grow the majority of their own feed
and benefit from a friendly business climate.
California producers typically do not grow all their feed
and have to pay additional transportation costs to haul in feed
for their cows. While dairy farmers unwaveringly support the
drive for energy independence, those who purchase the bulk of
their feed have seen their bottom line impacted by Federal
ethanol policy.
At the same time, all other costs of doing business in
California have increased. Additional environmental costs are
mounting each year as producers work to meet new waste
discharge requirements. These new water quality regulations are
projected by the Water Board to cost an additional $45,000 to
$65,000 per year per farm.
Water for crop irrigation is a major concern in California,
particularly right here in the Central Valley where I farm.
Limited water supplies affect feed prices and availability. If
water is not returned to this area, farm jobs related to feed
production, jobs in feed processing and distribution, and jobs
related to other important economic activity will be forced to
relocate elsewhere.
Feed costs have eased somewhat from the record levels posted
in late 2008. However, the decrease in feed costs has not been
large enough to restore positive margins. California dairy
families felt a glimmer of hope in December 2009 as average
milk prices rose above production costs for the first time in
nearly 2 years. However, the milk price increase turned out to
be a short-term phenomenon instead of a sustained recovery.
California Statewide Cost of Production
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: CDFA--includes ROI for investment and management.
C. The crash came earlier to California.
The California milk pricing system responds more quickly to
current market conditions because it corresponds to the Chicago
Mercantile Exchange. In contrast, price reporting procedures
for the Federal Milk Marketing Orders usually result in a 1 or
2 month delay. Our Boards support the continuation of the
California Order.
D. Outlook for the remainder of 2010.
Some commodity prices are moving upward (butter and nonfat
dry milk) but profitability remains a distant prospect for most
dairy farmers. California, with a great deal of cheese
production (39% of California's pool utilization in March),
will continue to suffer from depressed cheese prices until a
drawdown in inventories is witnessed. The pressure current
massive cheese inventories place on farm milk prices affect
farmers everywhere in the country equally. Optimistic
projections for the remainder of 2010 weigh heavily on demand
recovery that outpaces milk production.
The downward adjustment in milk production, made necessary
by the disappearance of export markets caused by the global
financial crisis, has not kicked in nationwide to any great
extent. California producers, who felt the impact of lower
prices 2 months before the rest of the country along with the
sting of extremely high feed costs, reduced production
dramatically in 2009. In fact, California milk production has
been down year-over-year for 20 out of the last 21 months.
Year-over-year milk production trends completely reversed
course in California during 2009--annual production was down
4.1% from 2008 levels. This compares to a typical year-over-
year increase of 4%. It is also worth noting, that the U.S. as
a whole was down only 0.3% in 2009. Clearly something triggered
a major difference in the supply response in California versus
other areas of the country.
Though prices are expected to increase as we move through
the second half of 2010, a return to break-even simply will not
undo the damage done to dairy farmers over the past 18 months.
Economic experts often say farmers lost $100 per cow per month
in 2009. Whether you're a 100 cow producer who lost $10,000 per
month or a 1,000 cow farmer who lost $100,000 a month,
everybody's equity took a major hit. Producers will continue to
go out of business as it becomes clear that equity is gone and
lenders are reevaluating operating loans with a new set of
rules they must live by. Farmers must have access to adequate
operating capital to continue to weather this storm.
Those left standing will have a huge debt load to work
through. It may take years of higher prices (and healthy
margins) for the industry to recover.
Looking Ahead--The Next Farm Bill
A. Dairy Farmer Safety Net.
An effective and fair economic safety net is a must for
farmers.
Dairy farmers face new challenges from higher input costs.
Several factors contribute to high grain, forage and energy
costs. An economic safety net based on milk price alone will no
longer be sufficient.
Going forward, the new economic safety net must be herd size
and region-neutral and must not send signals that more
production is welcome when farm milk prices are low.
B. Production Management.
The Board of Directors has voted approval of the concept of
supply management. Western United has organized and hosted
meetings to gather input from the industry. Both Boards have
offered suggestions for improvements and shared concerns about
proposals as they have been developed.
The Boards have shared specific concerns about the potential
implications mandatory supply management could have for our
international trade agreements and the import and export
balance in the U.S. dairy market.
The Board members of both CDI and Western United Dairymen
continue to evaluate supply management proposals on an
individual basis as they are made available.
C. Income Assurance.
Both organizations are in the process of evaluating
proposals for risk management programs that recognize that more
than milk price triggers alone are needed and that achieve the
goals of being region and herd-size neutral.
D. Fluid Milk Standards.
There are more than 4 decades of successful history here in
California, the nation's largest milk shed and the nation's
largest milk market, with nonfat fortification standards for
fluid milk. The reason is simple. The product tastes better
and, per serving, provides more calcium and protein to
consumers.
I am encouraged that dairy farmers I talk to all around the
country are interested in looking at this issue for the next
farm bill. I encourage the Members of the House Agriculture
Committee to add this issue to the list of things under
consideration that could help both farmers and consumers.
Other Issues of Importance to California Dairymen
A. Immigration Reform.
Both CDI and Western United Dairymen are long-time
supporters of the AgJOBS legislation (H.R. 2414) and thank the
Members of the California delegation who are supportive of the
effort led by Senator Dianne Feinstein and Congressman Howard
Berman.
B. Estate Tax Reform.
I thank the Members of the House Agriculture Committee for
their support for reform of the estate tax to help provide
stability for farm families and to assist with the
intergenerational transfer of their businesses. Both
organizations I represent here today support the largest
exemption possible, along with the lowest tax rate on amounts
over the exemption and the return of the ``stepped-up basis.''
The House has passed legislation to exempt $3.5 million for
an individual and $7 million for a couple. The top tax rate
would be set at 35% with the stepped-up basis. The Senate is
working on a bill that would exempt estates up to $5 million
per individual with a 35% tax rates on amounts over that and a
return of the stepped-up basis.
Without action by the Congress, on January 1, 2011 the
exemption returns to $1 million. Farm families like mine are
stuck in a financial planning ``no-man's land'' right now and I
ask that the Members of the House Agriculture Committee
continue to work to find a resolution to estate tax reform
before the end of the year.
C. Environmental Regulation.
Maintaining and strengthening incentives in the Conservation
Title of the next farm bill is critical to all of agriculture.
The Environmental Quality Incentives Program has been
especially useful to California dairymen. Funding increases in
the current farm bill must be maintained and monies
appropriated annually so that farmers can continue to be the
primary stewards of one our nation's most precious resources--
our farmland. Our Boards especially thank Representatives Baca,
Cardoza, Costa, Nunes and Senators Boxer and Feinstein for
their exceptional support in shepherding increased EQIP funding
through the last farm bill.
Other states need only look to California for what may be in
store for them from state regulators as farmers come under
increasing pressure to comply with environmental legislation
and regulation. Producers here have led the way in adopting
renewable energy technology to help this country decrease its
dependence on foreign sources of energy. But in some cases
state and/or local regulators have imposed new restrictions
that resulted in the forced idling of that technology. There
are local dairymen right here, some of them are my neighbors,
who have shut down their digesters for more than a year now
because of air quality regulations that cannot be met. State
and Federal regulators must work together better in order to
hasten the march to energy independence.
D. Climate Change Legislation and Regulation.
Farmers are significant energy users. Opportunities to
increase farm income through carbon capture offer potential
economic benefits to producers. Legislation and/or regulation
that would push energy costs even higher, given the state of
the dairy farm economy described earlier in this testimony, is
a cause of great concern for producers.
E. Renewable Energy Legislation.
The production of renewable energy from agricultural
byproducts and waste deserves at least equal Federal incentives
as those provided for ethanol. A good start would be The Biogas
Production Incentives Act (H.R. 1158) that would provide a tax
credit for the production of renewable biogas that is used to
offset the use of a fossil fuel. This legislation would
increase the production of renewable biogas on farms and
provide an economically beneficial option to farmers when
electricity generation engines do not meet local air quality
regulations.
Tax incentives for electricity generation have been useful
in the construction of methane digesters on several dairies in
California. The production of renewable biogas is an option
that deserves equal incentives. The Biogas Production
Incentives Act (H.R. 1158) mentioned earlier would provide a
tax credit for the production of biogas that is used to offset
consumption of a fossil fuel.
F. Trade.
Western United supports ratification of Free Trade
Agreements with Colombia, Panama and South Korea and relaxing
restrictions on U.S. agriculture trade with Cuba.
Assistance is needed from the House Agriculture Committee to
continue working with the United States Trade Representatives'
Office to ensure that dairy trade with New Zealand is excluded
from negotiations for a Trans-Pacific Partnership Agreement.
G. Nutrition Policy.
Dairy's position as part of reimbursable meals in Federal
feeding programs is a win-win for the public and for farmers.
California dairy producers appreciate the Committee's support
for those programs.
With the importance of EQIP to environmental compliance by
dairy farmers everywhere, the Senate proposal to cut funding
for EQIP to provide the offset for a nutrition bill is of
serious concern. I support the work of the leadership of the
House Agriculture Committee to help find an alternative.
Conclusion
Thank you again, Mr. Chairman, for holding this hearing today and
providing me with the opportunity to share the perspective of
California dairy producers on the future direction of Federal farm bill
policy. I look forward to answering the questions the Members of the
Committee may have.
The Chairman. Thank you very much, Mr. Bledsoe. We
appreciate that testimony. Mr. Campos, welcome to the
Committee.
STATEMENT OF TONY CAMPOS, ALMOND PRODUCER, SHELLER AND SHIPPER,
CARUTHERS, CA
Mr. Campos. Good morning, gentlemen. My name is Tony
Campos. I am an owner and partner in a diversified family
farming and almond hulling and processing operation based in
Caruthers, California.
I would like to thank you for holding a field hearing,
here, in Fresno, to discuss the upcoming farm bill and
receiving our input and viewpoints on the various aspects of
the proposed bill.
I would like to give you a brief history of my beginning
here in the valley. I came to this country at the age of 17 on
a sheepherder's visa, and landed in Wyoming. After a year in
Wyoming, I made my way to California where I continued my work
as a sheepherder for the next 3 years.
I began farming in late 50's with my brother in the San
Joaquin Valley. Though there are many issues to discuss, I
would like to focus, the next few minutes, on the Environmental
Quality Incentive Program, also known as EQIP.
In the Natural Resources Conservation Service, in the 2008
Farm Bill, EQIP was given $150 million authorization for air
quality projects throughout the 50 states over 5 years. The
projects help growers and ranchers provide significant
environmental benefits to our communities, and provide growers
and ranchers with cost-share assistance for participating in
the program.
California is currently receiving $37 million over 5 years
to fund conservation efforts.
As you may know, California is developing very stringent
air quality rules. If adopted, those rules will force growers
and ranchers to accelerate the replacement of their farm and
processing equipment. We all want to be part of the solution
when it comes to bettering the air quality we all breathe, but
we need help in achieving the standards set before us.
Through EQIP funding in 2009, 340 tractors and pieces of
processing equipment were purchased, resulting in a reduction
in emissions of 560 tons NOX, 72 tons reactive
organic gases, and 18 tons PM10. This funding has
allowed California growers to take real positive steps toward
emission reductions and getting some of the most polluting
equipment out of the fields. This program has been one of the
most successful at reducing PM10 and
PM2.5.
One example of the program's success is the purchase of
farm tractors, engine replacement, and our goal is that 2010,
and forward, will lead to us looking at replacing the older
harvesters and, for example, almond harvesters or walnut
harvesters, which will reduce PM10. A study was made
at UC Davis, that a newer harvester will reduce the dust
emissions by 50 percent.
Almond harvesters are expensive to purchase. Many growers
would not be able to do so without EQIP funding. Not only is
the EQIP program reducing emissions from engines. It is
reducing the amount of dust as well. This is a situation where
an older engine is being replaced by a cleaner-burning Tier 3
engine. But the real advantage is that the newer harvesting
machine has been built in such a way, that the amount of dust
created is reduced by 50 percent.
I respectfully ask that the funding for this program be
increased to $400 million in the 2012 Farm Bill. There is a
great demand for the replacement of the older, higher-polluting
Tier 0 engines in both farm and processing equipment.
There are many of those Tier 0 engines on farms and ranches
that have been in operation because growers cannot afford to
upgrade to a newer, cleaner engine.
For farming operations with economies of scale, replacing
Tier 0 tractors can be quit costly. But the burden on smaller
family farms is far greater, and in some cases makes it almost
impossible to achieve, if not for assistance programs.
With all the economic and environmental stresses we have
faced within agriculture in the last year, an expansion of this
program would help growers become more efficient in their
operations and use less fuel, benefiting us all.
The key to the successful implementation of this program
has been the Natural Resources Conservation Services, NRCS. For
the past 20 years, they have earned the trust of the farming
and ranching community by providing the ability to work and
understand the Clean Air Act of 1990, and how complicated this
issue really is.
Second, they have gained the respect and trust of working
with local and state agencies. The program should continue to
be implemented by this agency, because NRCS has developed
expertise in many issues affecting farmers and ranchers,
including air quality and water use.
Because of this expertise, NRCS has facilitated key
relationships with the major stakeholders, including grower and
agricultural organizations, and has the buy-in of these groups.
Many growers are skeptical to work with government agencies,
but NRCS has been able to overcome that skepticism because
their program has been successful in achieving emission
reductions, while helping farmers to get equipment they need.
I would like to thank you all, once again, for the
opportunity to testify this morning, and for listening to my
concerns. Thank you very much.
[The prepared statement of Mr. Campos follows:]
Prepared Statement of Tony Campos, Almond Producer, Sheller and
Shipper, Caruthers, CA
Good afternoon.
My name is Tony Campos and I am an owner and partner in a
diversified family farming and almond hulling and processing operation
based in Caruthers, California. I would like to thank you for holding a
field hearing here in Fresno to discuss the upcoming farm bill and
receiving our input and viewpoints on the various aspects of the
proposed Bill. Though there are many issues to discuss I would like to
focus the next few minutes on the Environmental Quality Incentive
Program also known as EQIP.
In the 2008 Farm Bill EQIP was given a $150 million authorization
for air quality projects throughout the 50 states over 5 years. These
projects help growers and ranchers provide significant environmental
benefits to our communities, and provide growers and ranchers cost-
share assistance for participating in the program. California is
currently receiving $37 million dollars over 5 years to fund
conservation efforts.
As you may know, California is developing very stringent air
quality rules. If adopted, these rules will force growers and ranchers
to accelerate the replacement of their farm and processing equipment.
We all want to be part of the solution when it comes to bettering the
air quality we all breathe but we need help in achieving the standards
set before us. Through EQIP funding in 2009, 340 tractors and pieces of
processing equipment were purchased resulting in a reduction in
emissions of 560 tons NOX, 72 tons Reactive Organic Gases,
and 18 tons PM10. This funding has allowed California
growers to take real, positive steps toward emission reductions and
getting some of the most polluting equipment out of the fields. This
program has been one of the most successful at reducing PM10
and PM2.5.
One example of the program's success is the purchase of new almond
harvesting equipment. Almond harvesters are expensive to purchase brand
new. Many growers would not be able to do so without EQIP funding. Not
only is the EQIP program reducing emissions from the engine, it is
reducing the amount of dust as well. This is a situation where an older
engine is being replaced by a cleaner-burning Tier 3 engine; but the
real advantage is that the newer harvesting machine has been built in
such a way that the amount of dust created is reduced by more than 50%.
I respectfully ask that the funding for this program be increased
to $400 million in the 2012 Farm Bill. There is great demand for the
replacement of the older, higher polluting Tier 0 engines in both farm
and processing equipment. There are many of these Tier 0 engines on
farms and ranches that have been in operation because growers cannot
afford to upgrade to a newer, cleaner engine. For farming operations
with economies of scale, replacing Tier 0 tractors can be quite costly
but the burden on smaller family farms is far greater and in some cases
makes it almost impossible to achieve if not for assistance programs.
With all the economic and environmental stresses we have faced within
agriculture in the last year, an expansion of this program would help
growers become more efficient in their operations and use less fuel.
The key to this successful implementation of this program has been
the Natural Resources Conservation Service (NRCS). The program should
continue to be implemented by this agency, because NRCS has developed
expertise in many issues affecting farmers and ranchers, including air
quality and water use. Because of this expertise, NRCS has facilitated
key relationships with the major stakeholders including growers and
agricultural organizations, and has the buy-in of these groups. Many
growers are skeptical to work with government agencies, but NRCS has
been able to overcome that skepticism because their program has been
successful at achieving emissions reductions, while helping farmers get
the equipment they need.
Again, I would like to thank you for the opportunity to testify
this afternoon and for listening to my concerns.
The Chairman. Thank you, Mr. Campos. We appreciate your
testimony, and your being with us.
Mr. Diener, welcome to the Committee.
STATEMENT OF JOHN E. DIENER, ALMOND, GRAPE, WHEAT, ALFALFA,
SUGARBEET, TOMATO, AND SPINACH PRODUCER, FIVE POINTS, CA
Mr. Diener. Good morning, Mr. Chairman, Members of
Congress. Thank you for the opportunity to speak to you today.
As you know, nobody in the world farms better than American
farmers. We still continue to feed the world and have some of
the most innovative, sustainable practices at our disposal. But
we can do more.
The 2012 Farm Bill needs to include increased incentives
for farmers to commit to even more sustainable practices, and
create more ways to create new income bases for our
communities, some of these which are dire, in dire straits.
The 2012 Farm Bill can go beyond being our father's farm
bill. It can look toward the future, be a greener farm bill and
add new life to our industry.
For example, the City of Mendota, and surrounding areas,
have been hit hard by a number of factors, which has caused it
to have an unemployment rate of over 40 percent and a serious
reduction in its tax base.
The Spreckles Sugar Refinery, which closed in September
2008, after almost 50 years of operation, was a major employer
in the community. This closing not only had a significant
impact in Mendota, it trickled down to surrounding communities
in the Central Valley. The refinery allowed area farmers to
grow an important value-added commodity--sugarbeets.
I have handed out a little schematic of kind of what I'm
going to talk about here, if you wanted to follow that.
A group of these same farmers had previously grew this crop
for sugar, have now banded together to create a co-op to grow
this same crop for a new market--green energy.
The ``Beet Energy'' Mendota Advanced Bioenergy Beet
Cooperative has undertaken the type of project that should be
an important part of the 2012 Farm Bill; a project that creates
a technologically advanced, sustainable biorefinery; a project
that will create jobs and be an important green business for
this community.
We have taken a holistic approach to creating and
addressing multiple resource and environmental issues with a
long-term view towards sustainability and employment. This
project integrates a number of processes to create green energy
through advanced low-carbon ethanol, biomethane, and biomass
power; use locally grown crops and byproducts; create a tax
base and employment in a community sorely in need of both.
The advanced sugarbeet to ethanol facility takes in energy
beets grown within a 40 mile radius of the plant to produce
advanced low-carbon ethanol for cars and farm vehicles, use
byproducts to create soil amendments and biomethane, capture
CO2, and take almond prunings that can no longer be
openly burned, from within 50 miles, to make Green-e
electricity for the grid.
A water treatment unit will take the City of Mendota's
wastewater and recycled sugarbeet wastewater and use it for
biorefinery process water. It will also take in agricultural
drainage water for treatment. The Mendota biorefinery will be a
net exporter of irrigation-quality water south of the Delta.
We are currently partnering with the California State
University-Fresno, UC Davis, California Department of Water
Resources, the USDA-NRCS, to create a pilot project for this
process.
Undertaking this is expensive, but with the support of
these types of projects in the 2012 Farm Bill, we can have new
avenues for funding and setting up facilities to support a
project that has a significant impact on our communities and
our nation's energy future.
The definitions of farm bill programs need to be expanded,
so they can include a broader depth of energy resources. As our
industry grows, we cannot be stifled by narrow definitions.
We are not just corn-based energy resources any longer. We
now must include the ability to apply our sugarbeet technology.
There are many other examples of what can be done to take
farming practices to the next generation, while still being
cost-effective for our bottom line. On Red Rock Ranch, where I
farm, we are undertaking a number of innovative solutions to
make our farming practices greener.
Water Cleaning Project: We are currently spearheading a
pilot project that will clean up to 200 gallons of saline water
per minute, which will take care of the section of land that it
is associated with and be reclaimed back into full production
of Class 1 soil.
We will be using a desalinization process used on ships to
provide drinking water out in the ocean. We will be able to
clean out contaminants such as boron, selenium and salt, that
we will remove, will be converted to marketable chemicals
commonly used in plastics, glass and building materials. The
cost to clean the water may be as high as $2,500 per acre-foot,
but through selling of the byproducts, our clean water will
only end up around $300 per acre-foot.
Conservation Tillage: We work with the UC Conservation
Tillage Workgroup in implementing a minimum tillage program on
our ranch. It reduces the inputs across our fields.
Conservation tillage is aimed at reducing tillage operations
associated with multiple cropping, seedbed preparation, thereby
reducing tractor and implement passes, reducing fuel and
maintenance while increasing profit.
This, combined with the overhead irrigation, not only
reduces cost, but also reduces energy requirements, as well as
saves the land nutrients, and the environment.
Irrigation efficiency: We have recently taken a new look at
old technology that traditionally has not been well-accepted in
California--center pivots. We have worked with manufacturers on
finding solutions to meet our needs here, and they are working.
We have saved on labor costs, been able to use water that we
might not be able to use with other irrigation methods and have
had excellent production.
We need your help, including funds in the 2012 Farm Bill,
that will promote the creation of and support of the next
generation of projects like these, nationally, that create a
future for communities like Mendota, and help create a
sustainable green energy source for the United States.
The future of agriculture can be even greener, and should
not be narrowly defined by our next farm bill.
We must embrace the American farmer's ability to be
innovative and forward thinking, and by including broader
definitions for programs that include our expanding
technologies.
The foundation of our industry will always remain the same.
We are truly some of the first conservationists. However, we
continue to be innovative and expand the definition of green
technology as we grow and adapt our industry to our ever-
changing environments and markets.
And thank you for your time, and contact me if you have any
questions.
[The prepared statement of Mr. Diener follows:]
Prepared Statement of John E. Diener, Almond, Grape, Wheat, Alfalfa,
Sugarbeet, Tomato, and Spinach Producer, Five Points, CA
Mister Chairman and Members of Congress, thank you for the
opportunity to speak with you today.
As you know, nobody in the world farms better than American
farmers. We still continue to feed the world and have some of the most
innovative, sustainable practices at our disposal. We can do more. The
2012 Farm Bill needs to include increased incentives for farmers to
commit to even more sustainable practices and create more ways to
create new income bases for our communities, some of which are in dire
straits. The 2012 Farm Bill can go beyond being our father's farm
bill--it can look toward the future, be a greener farm bill and add new
life to our industry.
For example, the City of Mendota and surrounding areas have been
hit hard by a number of factors which has caused it to have an
employment rate of over 40% and a serious reduction in its tax base.
The Spreckles Sugar Refinery which closed in September 2008 after
almost 50 years of operation was a major employer in the community.
This closing not only had a significant impact in Mendota, it trickled
down to surrounding communities in the Central Valley. The refinery
allowed area farmers to grow an important value-added commodity,
sugarbeets.
A group of these same farmers previously grew this crop for sugar
have now banded together to create a co-op to grow this same crop for a
new market--green energy.
The ``Beet Energy'' Mendota Advanced Bioenergy Beet Cooperative has
undertaken the type of project that should be an important part of the
2012 Farm Bill--a project that creates a technologically advanced,
sustainable biorefinery, a project that will create jobs and be an
important, green business for this community.
We have taken a holistic approach to creating and addressing
multiple resource and environmental issues with a long term view
towards sustainability and employment. The graphic I have provided to
you will give you an overview of how this project integrates a number
of processes to:
Create green energy through advanced low-carbon ethanol,
biomethane and biomass power.
Use locally grown crops and byproducts.
Create a tax base and employment in a community sorely in
need of both.
The advanced sugarbeet to ethanol facility takes in energy beets
grown within a 40 mile radius of the plant to produce advanced low
carbon ethanol for cars and farm vehicles, use byproducts to create
soil amendments and biomethane, capture CO2, and take almond
prunings that can no longer be open burned from within 50 miles to make
Green-e electricity for the grid.
A water treatment unit will take City of Mendota waste water and
recycled sugarbeet waste water and use it for biorefinery process
water. It will also take in agricultural drainage water for treatment.
The Mendota biorefinery will be a net exporter of irrigation quality
water south of the Delta.
We are currently partnering with California State University,
Fresno, UC Davis, California Department of Water Resources, and the
USDA-NRCS (United States Department of Agriculture--Natural Resource
Conservation District) to create a pilot-project for this process. The
undertaking is expensive, but with support for these types of projects
in the 2012 Farm Bill, we can have new avenues for funding and setting
up facilities to support a project that has a significant impact on our
communities and our nation's energy future. The definitions of farm
bill programs need to be expanded so they include a broader depth of
energy resources--as our industry grows we cannot be stifled by narrow
definitions. We are not just corn based energy resources any longer. We
now must include the ability to apply our sugarbeet technology.
There are many other examples of what can be done to take farming
practices to the next generation while still being cost-effective for
our bottom line. On Red Rock Ranch where I farm we are undertaking a
number of innovative solutions to make our farming practices greener:
Water Cleaning Project: We are currently spearheading a pilot
project that will clean up to 200 gallons of saline water per minute.
We will be using a desalination process used on ships to provide
drinking water out of the ocean. We will be able to clean out
contaminants such as boron, selenium and the salt we remove will be
converted to marketable chemicals commonly used in plastics, glass and
building materials. The cost to clean the water may be as high as
$2,500 per acre-foot, but through selling of the by-products, our clean
water will only end up costing $300 per acre-foot.
Conservation Tillage: We work with the UC Conservation Tillage
Workgroup in implementing a minimum tillage program on our ranch. It
reduces the inputs across our fields. Conservation tillage is aimed at
reducing tillage operations associated with multiple cropping seedbed
preparation, thereby reducing tractor and implement passes, reducing
fuel and maintenance while increasing profit. This, combined with the
overhead irrigation, not only reduces cost, but also reduces energy
requirements as well as saves the land nutrients and environment.
Irrigation Efficiency: We have recently taken a new look at an old
technology that traditionally has not been well accepted in
California--center pivots. We have worked with manufacturers on finding
solutions to meet our needs here and they are working. We have saved on
labor costs, been able to use water that we might not be able to use
with other irrigation methods and have had excellent production.
We need your help including funds in the 2012 Farm Bill that will
promote creation of and support for next generation projects like these
nationally that create a future for communities like Mendota and help
create a sustainable, green energy source for the United States. The
future of agriculture can be even greener and should not be narrowly
defined by our next farm bill. We must embrace the American Farmer's
ability to be innovative and forward thinking by including broader
definitions for programs that include our expanding technologies. The
foundation of our industry will always remain the same, we are truly
some of the first conservationists, however, we continue to be
innovative and expand the definition of ``green technology'' as we grow
and adapt our industry to our ever-changing environments and markets.
Thank you for your time and please contact me if you have any
questions.
Cordially,
John E. Diener,
President,
Mendota Advanced Bioenergy Beet Cooperative;
Owner, Red Rock Ranch,
Five Points, CA.
Chart
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you very much, Mr. Diener.
Mr. Kester, welcome to the Committee.
STATEMENT OF KEVIN D. KESTER, CATTLE AND GRAPE PRODUCER,
PARKFIELD, CA
Mr. Kester. Thank you, Chairman Peterson, and Members of
the Committee, thank you for the opportunity to address you
today, to share California ranchers' perspective on U.S.
agricultural policy as preparations begin for the 2012 Farm
Bill. My name is Kevin Kester. I am a rancher from Parkfield,
California, and I am First Vice President for the California
Cattlemen's Association.
California is home to 34 million acres of rangeland. This
rangeland provides wildlife habitat; is home to a diversity of
common and threatened species; produces wholesome, nutritious
food; and economically supports family businesses, family
traditions, and many communities. These vast open landscapes
are under threat to invasive species, conversion to
development, and other land uses.
The 2012 Farm Bill must adequately address the economical
and environmental impacts and challenges facing these
rangelands. Conservation continues to provide the greatest
opportunity for partnership with Congress, that will mean the
most for ranchers and make wise use of Federal dollars to
address the issues that impact ranchers, as well as the public
needs for conservation and environmental stewardship. As such,
conservation should not be sacrificed for other priorities in
this bill.
And to this end, California ranchers support further reform
to the conservation title of the farm bill to make programs
more attractive and functional for producers on the ground.
In addition, authorization levels for programs that are
working need to be increased to meet the needs of ranchers in
the state. In California alone, demand for conservation funding
far exceeds the money available.
For example, more than 6,000 California farmers and
ranchers applied for EQIP funds, but only 1,700 projects were
accepted to receive cost-share funding to address pressing
natural resources issues and improve a producer's economic
viability.
Ranchers also recognize the value in targeting funding, and
in flexibility to address specific species and conservation
needs. A key example is the recent initiative undertaken by the
U.S. Fish and Wildlife Service, and the Natural Resources
Conservation Service, to cooperatively work with ranchers to
improve habitat, and ultimately help mitigate the need for
listing of the sage grouse, currently a species of concern
under the Endangered Species Act. This model of joint efforts
can help solve problems that affect the viability of, and
lessen the regulatory burden for, farmers and ranchers.
The 2012 Farm Bill should more explicitly recognize
environmental benefits of using managed grazing as a tool to
meet Federal priorities. Significant peer-reviewed research has
been conducted, illustrating that a number of threatened and
endangered species not only coexist with grazing, but benefit
from managed grazing, making the rancher's grazing efforts a
value that provides tangible public benefit.
An overall funding protocol for the next farm bill should
be based on key criteria that focus efforts to areas of need
and threat; that recognize state size, agricultural production,
number of federally-listed species; and other resource
challenges.
This need to consider unique situations, such as those that
exist on California's rangeland, is particularly true when it
comes to conservation easement programs that must account for
the potential of conservation and conversion to other land
uses.
Funding allocation to states should consider land values
and the number of acres for these high-quality proposals.
I would also like to note areas of concern about issues
that ranchers feel should not be addressed in the farm bill
process. We support agricultural policy based on private
enterprise and competitive market systems. We are concerned
about the inclusion in the farm bill of any language impacting
market structure or removing options for ranchers to sell
livestock.
Additionally, because animal agriculture is based on humane
care for cattle, horses, and other livestock, it is also
imperative that the livestock title of the farm bill not become
a platform for extremist organizations to push their anti-meat
and anti-agriculture agendas.
In conclusion, California ranchers believe that in working
with this Committee, and other interested stakeholders,
additional significant steps forward are possible. Working for
program improvements that increase funding to meet priorities,
and to review how funding is allocated to states, are issues of
critical importance.
So, on behalf of California ranchers, thank you for the
opportunity to provide this testimony, and I would specifically
like to thank Congressman Costa and Congressman Cardoza for
recommending and allowing us to give this testimony. We look
forward to working with each of you on the development of the
2012 Farm Bill. Thank you.
[The prepared statement of Mr. Kester follows:]
Prepared Statement of Kevin D. Kester, Cattle and Grape Producer,
Parkfield, CA
Chairman Peterson and Members of the Committee, thank you for the
opportunity to address you today to share the California ranchers'
perspective on U.S. agricultural policy as preparations begin for the
2012 Farm Bill. My name is Kevin Kester, and I am a rancher from
Parkfield, California and First Vice President of the California
Cattlemen's Association.
I'd like to welcome all of the Members to California, which--in
addition to the wide array of crop production you'll hear about from
other panelists--is home to 34 million acres of rangeland. This
rangeland, in turn, provides wildlife habitat, is home to a diversity
of common and threatened species, produces wholesome, nutritious food
and economically supports family businesses, family traditions and many
communities. These vast open landscapes are under threat to conversion
to development and other land uses, invasive species and the whims of
the weather.
The 2012 Farm Bill must adequately address the economical and
environmental challenges facing these rangelands. Conservation
continues to provide the greatest opportunity for partnership with
Congress that will mean the most for ranchers and make wise use of
Federal dollars to address the issues that impact them as well as
public needs for conservation and environmental stewardship. As such,
it should not be sacrificed for other priorities in the bill.
To this end, California ranchers support further reform to the
Conservation Title of the farm bill to make programs more attractive
and functional for producers on the ground. In addition, authorization
levels for programs that are currently working need to be increased to
meet the needs of ranchers in the state. In California alone, demand
for conservation funding far exceeds the money available. For example,
more than 6,000 California farmers and ranchers applied for EQIP funds,
but only 1,700 projects were accepted to receive cost-share funding to
address pressing natural resources issues and improve a producer's
economic viability.
Ranchers like me also recognize the value in flexibility and
targeting funding to address specific conservation, species and on-
ranch concerns. A key example is the recent initiative undertaken by
the U.S. Fish and Wildlife Service and the Natural Resources
Conservation Service to cooperatively work with ranchers to improve
habitat, and ultimately help mitigate the need for listing of the Sage
Grouse, currently a species of concern, under the Endangered Species
Act. This model of joint efforts by which individual and regional farm
bill investment can help solve problems that address complex issues
that may affect the viability of and regulatory burden for a broad
scope of farmers and ranchers should continue to be considered.
Along the same lines, the next farm bill should facilitate
additional coordination between USDA and other Federal agencies,
including the Department of the Interior. It is important that USDA
have explicit authority to share technical knowledge with other
entities regulating working farms and ranches, such as the
Environmental Protection Agency, to help ranchers navigate regulatory
hurdles. Additionally, the 2012 Farm Bill needs to ensure landowners
who improve the natural resources on their land are not later punished
with additional regulatory oversight because of their proactive
management practices today.
Positive changes to a number of conservation programs were made in
the 2008 Farm Bill--including the Grasslands Reserve Program and
Agricultural Water Enhancement Program--and, in developing and
executing programs for the next bill, those program changes and funding
authorizations need to be retained. Further progress can be made in the
2012 bill by working toward meeting state and regional priorities by
providing additional flexibility to work with landowners and other
partners, including states and NGOs who can be trusted partners in
advancing Federal priorities.
The 2012 Farm Bill also should more explicitly recognize the
economic value provided by ranchers, along with the environmental
benefits of using managed grazing as a tool to meet Federal priorities.
Significant peer-reviewed research has been conducted illustrating that
a number of threatened and endangered species not only coexist with
grazing, but benefit from managed grazing, making the rancher's grazing
efforts a value that provides tangible, financial public benefit.
An overall funding protocol for the next farm bill should be based
on key criteria that focus efforts to areas of need and threat, that
recognize state size, agricultural production, number of federally
listed species and other resource challenges. This need to consider
unique situations--such as that existing on California's rangeland--is
particularly true when it comes to conservation easement programs that
must account for potential for conversion to other land uses, land
value and number of acres included in high quality acquisition
proposals during program funding allocation to states.
California has returned to a normal rainfall pattern this year,
after 3 or more years of drought in most parts of the state. During the
past 2 years, many ranchers have been able to take advantage of the
permanently authorized disaster programs. While development of these
new programs was slower than any of us would have preferred, it appears
that this new direction has improved delivery to better meet the future
needs of ranchers who are highly subject to changes in weather as long
as the centralized monitoring of drought continues to recognize
changing conditions in each part of the country.
I'd also like to note a couple of concerns about issues that
ranchers feel should not be addressed in the farm bill process. First,
we support agricultural policy based on a free, private enterprise,
competitive market system, including a producer's ability to market
cattle however, whenever, and to whomever and so are concerned about
inclusion in the farm bill of any language impacting market structure
or removing options for ranchers to sell livestock. Additionally,
because animal agriculture is based on humane care for cattle, horses,
and other livestock, it is also imperative that the Livestock Title of
the farm bill not become a platform for extremist organizations to push
their anti-meat/anti-agriculture agendas.
In conclusion, California ranchers were pleased with a number of
program changes under the 2008 Farm Bill and believe that in working
with this Committee and a wide range of interested stakeholders that
additional significant steps forward are possible. Working for program
improvements that meet individual and broader resource and regulatory
concerns for ranchers, the need to increase funding to meet these
priorities and to again review how funding is allocated to states are
issues of critical importance.
On behalf of California ranchers, thank you again for the
opportunity to provide this testimony. We look forward to working with
each of you on the development of the 2012 Farm Bill.
The Chairman. Thank you very much for your testimony.
Mr. Reelhorn, welcome to the Committee.
STATEMENT OF JON REELHORN, NURSERY PLANT PRODUCER, WHOLESALER,
AND RETAILER, FRESNO, CA
Mr. Reelhorn. Thank you, Chairman Peterson, and Members of
the Committee, for a chance to speak today on what the 2008
Farm Bill has meant, and can mean to the future of the nursery
and greenhouse industry.
I am Jon Reelhorn, owner of Belmont Nursery, a grower and
retail nursery business operating right here, in Fresno. We are
a family-owned business that supplies trees, shrubs and flowers
to garden centers, landscape professionals, and homeowners
throughout northern and central California. My remarks are
offered on behalf of both the American and California Nursery
Associations.
Let me start by thanking the Committee, and Congressmen
Cardoza and Costa, especially, for crafting a farm bill that,
for the first time, recognizes our industry in a serious way.
We think that's justified. After all, specialty crops represent
about \1/2\ the value of crop production in the U.S., and our
industry represents about \1/3\ of the value of specialty
crops, according to the 2007 Census of agriculture, nursery,
greenhouse and floriculture, annual crop production totaled
over $16.6 billion at farm gate. Nursery and greenhouse crop
production now ranks among the top five agricultural
commodities in 28 states, and among the top 10 in all 50.
Wholesale production in California represents over 20
percent of the nation's production of nursery crops and we
employ over 217,000 people.
The U.S. nursery industry has developed and thrived without
the influences of subsidies, price supports, or similar
programs. Most of us wish to keep it that way. Our priorities
in the 2008 Farm Bill are focused on critical infrastructure,
programs to deal with pest and disease threats, and funding
needed research.
Because of accelerated global trade and travel, virtually
every new nursery pest that arrives and establishes in the U.S.
becomes a production or market access problem for our industry.
Pests such as emerald ash borer, Asian Longhorned beetle,
light-brown apple moth, Asian citrus psyllid, and Sudden Oak
Death, are just a few of the challenges we're struggling with
across the country. For this reason, we strongly supported
several pest-focused provisions for the 2008 Farm Bill.
Section 10201 provided critical funding and protocol to
identify and mitigate offshore pest threats, and improve pest
detection and rapid response in the U.S. Specific projects now
underway for the certification of nursery crops moving in
interstate and international commerce, and the development of
best management practices to facilitate clean and safe trade
are critical to our industry.
And Section 10202 established the National Clean Plant
Network. It was created to protect high-value specialty crops,
such as nuts, apples, peaches and other fruits, from the spread
of economically harmful plant pests and diseases.
The program will improve our growers' access to the newest
and most profitable plant varieties from around the world,
without the devastating plant diseases that exist elsewhere.
Tremendous progress has already been made on this program.
In Section 10203, Congress intended the Secretary of
Agriculture to be the final word on emergency pest funding
decisions. In California, we have witnessed, time and again,
where the experts at fighting pests are overruled by the Office
of Management and Budget. The result has been delayed funding
and more pests. We appreciate the Committee's efforts to
correct this problem.
We appreciate the recognition, through the Specialty Crops
Research Initiative in the 2008 Farm Bill, of the need for
research funding to support the specialty crops industry.
We are concerned, however, with a required one-to-one
funding match for these grants. The requirement puts specialty
crop growers at a disadvantage as these grants are multiyear,
and most industry-funding sources, like our own research
endowments, cannot commit funding for multiple years.
While many provisions in the 2008 Farm Bill are already
making a positive difference, one threatens us with a serious
unintended consequence. While the program's goals are worthy,
the Biomass Crop Assistance Program threatens to divert
softwood and hardwood bark from established value-added
markets. Over 70 percent of U.S. nursery crops, and virtually
100 percent of the greenhouse crops, are grown in containers.
Bark is the single most important media to fill those
containers.
We are looking for alternatives but they may not exist, or
our research has not delivered those solutions. The threat of
disruptions from subsides is immediate.
BCAP subsidies could divert bark availability and increase
pricing, jeopardizing nursery crop sales.
As important as the farm bill has become to America's
specialty crop industries, it is hard to have a serious
discussion about the future success of specialty crop producers
without acknowledging ``the elephant in the room''--farm labor.
We know farm labor is not a traditional farm bill issue. We
raise it because if Congress does not act to fix it, we will
see an exodus of specialty crop production in the U.S.
In conclusion, thank you for this hearing. Thank you for
hearing the views and needs of the U.S. nursery and greenhouse
industry. We thank you for your past efforts and ask that you
work with us to sustain and enhance the specialty crop
provisions in the 2012 Farm Bill.
[The prepared statement of Mr. Reelhorn follows:]
Prepared Statement of Jon Reelhorn, Nursery Plant Producer, Wholesaler,
and Retailer, Fresno, CA
Thank you, Chairman Peterson, Ranking Member Lucas, and Congressmen
Costa and Cardoza, for this opportunity to present testimony on behalf
of the U.S. nursery and greenhouse industry on what the 2008 Farm Bill
has meant to our industry, and the next farm bill cycle. I am Jon
Reelhorn, owner of Belmont Nursery, a growing and retail nursery
business operating right here in Fresno. We are a family owned business
that supplies trees, shrubs and flowers to garden centers, landscape
professionals and homeowners through out northern and central
California.
My remarks today are offered on behalf of the American Nursery &
Landscape Association (ANLA) and the California Association of
Nurseries and Garden Centers (CANGC), which I am representing here
today. The issues I plan to cover are also priorities of the Society of
American Florists (SAF). ANLA, SAF, and CANGC worked together on the
2008 Farm Bill's specialty crop provisions. We join in thanking the
Committee for crafting a farm bill that for the first time recognizes
our industry in a serious way. We look forward to close collaboration
with each of you as the 2012 Farm Bill discussion proceeds.
The nursery and greenhouse industry is a bright spot in U.S.
specialty crop agriculture. The combined U.S. nursery, floriculture,
and landscape industry, collectively known as the ``green industry,''
has an estimated economic impact of $147.8 billion. The industry
employs 1.95 million individuals, generates $64.3 billion in labor
income, and provides $6.9 billion in indirect business taxes. Products
and services offered by the green industry directly contribute to
production of apples, citrus, grapes, strawberries, and other food
crops; to sustaining our environment; and to improving the quality of
life in rural, suburban and urban communities. Landscape plants provide
ecosystem service benefits that range from reducing energy needs, to
fostering carbon sequestration, and improving water quality and storm
water management.
U.S. nursery and floriculture crop production represents a major
component of the nation's specialty crop agriculture. According to the
USDA's 2007 Census of Agriculture, nursery, greenhouse and floriculture
annual crop sales totaled over $16.6 billion at farm gate. Nursery and
greenhouse crop production now ranks among the top five agricultural
commodities in 28 states, and among the top 10 in all 50 states. The
sector represents roughly \1/3\ of the value of all specialty crop
production in the U.S.
Not surprisingly, California is the number one state for both
nursery and floral crop production. A recent economic report placed
production figures at roughly $4 billion and retail sales at over $13
Billion. Wholesale production in California represents over 20 percent
of the nation's production of nursery crop. Nurseries and garden
centers employ over 217,500 Californians.
The Farm Bill and the Nursery Industry
The U.S. nursery industry has developed and thrived without the
influence of market-distorting subsidies, price supports, or similar
programs. Most wish to keep it that way. Consistent with this history
and philosophy, our priorities in the 2008 Farm Bill focused on
critical infrastructure and programs to deal with plant pest and
disease threats, and to fund needed research. Global trade and travel
have accelerated the pace of new pest introductions. Given the
diversity of crops that the industry produces, virtually every new
plant pest that arrives and establishes in the U.S. becomes a
production or market access problem for the nursery industry. Emerald
ash borer, Asian Longhorned beetle, and the pathogen responsible for
``sudden oak death'' are just a few examples with which the industry is
struggling. The 2008 Farm Bill did several positive things relating to
the serious threat of plant pests and diseases:
Section 10201 provided critical funding and direction for
innovative initiatives to identify and mitigate offshore
threats, and improve pest detection and rapid response in the
U.S. So far, USDA's Animal & Plant Health Inspection Service
has set priorities based upon six goal areas drawn directly
from the language of the farm bill. While this is long-term
work, and success at prevention is not always easy to measure,
we believe APHIS has done a good job of involving stakeholders
in an open and transparent process for identifying and funding
the best ideas to accomplish the goals.
Specific projects under the ``Safeguarding Nursery Production''
goal are setting the stage for a modernized system for the
certification of nursery crops moving in interstate and
international commerce. Also, the newly established ``National
Ornamentals Research Site at Dominican University of
California'' is facilitating critically needed research on
quarantine pest prevention and containment under real-world
conditions.
Other specific 10201 projects are of critical importance in helping
USDA to identify potential threats to U.S. agriculture before
they come into our ports, rather than after they have become
crises because they were introduced through travel or trade.
Strategic research on pest threats which might reach our shores
in the next few years is essential to our ability to avoid
introduction, or to eradicate pests or diseases quickly if they
do arrive here.
Section 10202 of the farm bill established the National
Clean Plant Network (NCPN). The NCPN was created to protect
U.S. specialty crops, such as grapes, nuts, apples, peaches and
other fruits, from the spread of economically harmful plant
pests and diseases. The NCPN will contribute to the global
competitiveness of U.S. specialty crop producers by creating
high standards for our clean plant programs for these vital
crops. The program will improve U.S. growers' access to the
newest and most profitable plant varieties from around the
world, without the devastating plant diseases that exist
elsewhere in the world.
Effective clean plant programs are essential to preventing
catastrophic pest and disease problems and to maintaining U.S.
agricultural competitiveness. In California, wine and table
grape growers in particular depend on the introduction of
foreign selections, and demand for new varieties has exceeded
the capacity of existing clean plant programs. When demand for
new foreign selections is high but legal channels are
insufficient, some growers resort to illegal importation of
plant materials. Grapevine mealy bug, a new pest problem that
is approaching epidemic status in California, is suspected to
have been introduced in illegally imported grapevine planting
stock that was smuggled into the U.S. from Australia, most
likely due to the impatience of the importer. Plum pox in New
York and Pennsylvania is another example of where illegal
importation threatened an industry.
The establishment and maintenance of the National Clean Plant
Network was one of our highest farm bill priorities. We are
truly impressed with the progress that has been made already on
this program.
In Section 10203, Congress intended the Secretary of
Agriculture to be the final word on emergency pest funding
decisions. In California, we have witness time and again where
the experts at fighting pests are overruled by the Office of
Management and Budget. The result has been delayed funding and
more pests. We appreciate this Committee's efforts to correct
this bureaucratic problem. Early indications suggest that OMB
remains the final word and we would ask that you closely
monitor this situation.
Specialty Crops Research Initiative
We appreciate the recognition, through the Specialty Crops Research
Initiative in the 2008 Farm Bill, of the need for research funding to
support the Specialty Crops industry. We remain concerned, however,
with the required 1:1 funding match for these grants. This requirement
puts specialty crop growers at a disadvantage as these grants are
multi-year, and most traditional industry funding sources (including
our own research endowments, the Horticultural Research Institute, and
the American Floral Endowment) cannot commit funding for multiple
years. We are also concerned that the match requirement, as
implemented, is placing USDA-ARS and other Federal partners on a less-
than-competitive playing field because other Federal funds and
resources cannot be used to meet the matching requirement.
A longer term concern with the creation of the National Institute
of Food and Agriculture--NIFA--is that the move toward long term,
systems competitive funded research reduces funding that could be
applied to meet immediate or quickly emerging research needs, such as
those resulting from the introduction of invasive pest species. We feel
that it is critical for USDA to maintain and increase funding efforts
for its intramural research agency, USDA-ARS, in a balanced way with
respect to competitive funds available through NIFA. Increased funding
is also needed for the formula-funded Smith-Lever and Hatch Act as
these programs provide for the base research and educational delivery
infrastructure for Cooperative Extension and State Experiment Station
programs. If we allow our national research infrastructure to
deteriorate for lack of funding for traditional pest and disease
research, we will not easily be able to rebuild it.
Biomass Crop Assistance Program
While many provisions of the 2008 Farm Bill are already making a
positive difference, we must alert you to a serious potential
unintended consequence of one particular program, the Biomass Crop
Assistance Program, or BCAP. While the program's goals are worthy, the
potential diversion of certain forestry byproducts--most notably
softwood and hardwood bark--from established value-added markets could
devastate nursery producers across the U.S. for these simple reasons:
most nursery crops are now grown in containers, and the single most
important component of the growing substrate that fills these
containers is bark.
Over 70 percent of the nursery crop and 100 percent of the
greenhouse crop production in the U.S. is now grown in containers. The
major ingredients for the growing media used in container production--
``substrates''--are various bark based formulations. Diversion of bark
supplies for other uses, or a sharp and significant change in their
market price due to market-distorting subsidies, therefore threatens
the domestic nursery and greenhouse industry and much of the $16.6
billion in annual nursery and greenhouse crop sales across the country.
Market price distortions or diversion of bark resulting from inclusion
in the BCAP will seriously impact domestic production and could fuel
loss of market share to imports from Canada and elsewhere.
It is worth noting that already, over 95% of bark byproducts have
established markets. Roughly 83% of softwood bark, and 70% of hardwood
bark, is already used for energy generation. In this respect, BCAP
subsidies would seem to represent a solution in search of a problem.
ANLA recently submitted official comments to USDA's Farm Service
Agency, in which we offered a series of recommendations on how to
address this concern. While the issue is now in the regulatory realm,
we are grateful for the opportunity to alert the Committee to the
potential unintended consequences that will result if bark and other
wood waste materials with established markets are included in the BCAP.
Agricultural Labor and Immigration Policy
As important as the farm bill has become to America's specialty
crop industries, it is difficult to have a serious discussion about the
future success of specialty crop producers without acknowledging the
elephant in the room: farm labor. Hired labor is critical to most
specialty crop producers, and we now face a ``perfect storm''
characterized by the following:
For at least the last 12 years, a significant majority of
workers who plant, harvest, and tend specialty crops and
livestock lack proper immigration status even though most
employers fully comply with the law when hiring;
The recession has done virtually nothing to change the
reality: few Americans seek farm work, most farm workers are
foreign-born, and most lack proper immigration status;
Aggressive worksite enforcement that began near the end of
the Bush Administration has accelerated under the Obama
Administration. Specialty crop and dairy producers are
especially vulnerable. Farmers are one I-9 audit away from
disaster.
The only legal labor safety net, known as H-2A, has long
been difficult and unattractive. Producers are now struggling
through the third set of rules in 3 years. The program has
descended into regulatory chaos.
We fully recognize that farm labor is not a traditional farm bill
issue. Nonetheless, we raise it for this simple reason: lack of timely
and thoughtful resolution of the farm labor crisis will hasten the
offshoring of our specialty crop and livestock agriculture. As
production shifts to Canada or Mexico or Chile or China, America will
lose thousands upon thousands of U.S. jobs upstream and downstream of
the farmer that exist here now because we are producing here. We
respectfully urge your leadership and support for enactment of the
bipartisan and urgently needed reforms of the AgJOBS bill, H.R. 2414,
whether as part of a comprehensive immigration reform bill, or a
smaller first step toward fixing our broken immigration system.
Conclusion
Members of the Committee, thank you for this hearing, and for
listening to the views and needs of the U.S. nursery industry. The 2008
Farm Bill for the first time truly recognized the importance of
specialty crops, including nursery and floriculture. Together,
specialty crops now represent almost half of the value of total crop
production in America, and the specialty crop title of the 2008 Farm
Bill placed emphasis on practical, solutions-oriented programs. We
recognize that the next farm bill cycle will be exceptionally difficult
from a budgetary standpoint. We thank you for your work to date, and
hope you will join together to protect specialty crops' place at the
table, going forward.
Attachment
April 9, 2010
Director of CEPD,
USDA FSA CEPD,
Stop 0513,
1400 Independence Ave., SW,
Washington, D.C. 20250-0513
Dear Sir or Madam:
This letter is in response to the proposed rulemaking for the
Biomass Crop Assistance Program (BCAP)--Docket Folder CCC FRDOC 0001-
0145). These comments are being filed by the American Nursery and
Landscape Association (ANLA), the national trade association
representing nursery crop producers, landscape design, build and
maintenance companies and independent retail garden center businesses.
This official submission is also fully supported by the Society of
American Florists (SAF), the national trade association representing
the entire floriculture industry. SAF membership includes small
businesses, including growers, wholesalers, retailers, importers and
related companies that produce and sells cut flowers and foliage,
foliage plants, potted flowering plants, and bedding plants.
The combined U.S. nursery, floriculture, and landscape industry,
collectively known as the ``green industry,'' has an estimated economic
impact of $147.8 billion according to 2005 survey and analysis,
Economic Impacts of the Green Industry in the United States. In
addition, the industry employs 1.95 million individuals, generates
$64.3 billion in labor income, and provides $6.9 billion in indirect
business taxes. Products and services offered by the green industry
directly contribute to the U.S. food supply (e.g., fruit tree planting
stock), to sustaining our environment, and to improving the quality of
life in rural, suburban and urban communities. Ecosystem service
benefits of landscape plants include reducing energy needs, fostering
carbon sequestration, and improving water quality and storm water
management.
U.S. nursery and floriculture crop production represents a major
component of the nation's specialty crop agriculture and the ``green
industry.'' According to the USDA's 2007 Census of Agriculture,
nursery, greenhouse and floriculture annual crop sales totaled over
$16.6 billion at farm gate. Nursery and greenhouse crop production now
ranks among the top five agricultural commodities in 28 states, and
among the top 10 in all 50 states. The sector represents roughly \1/3\
of the value of all specialty crop production in the U.S. Nursery and
floriculture production is the top-ranking agricultural sector in
several states, ranging from Connecticut, Massachusetts, and Rhode
Island in the Northeast, to Oregon in the Northwest.
As an energy intensive ``green industry'', we support the
President's and USDA's efforts to increase the availability of
alternative energy sources, such as biomass, to help reduce the U.S.
dependence on foreign energy sources. Therefore, as a matter of
principle we do support the biomass energy Section 9001 of the 2008
Farm Bill. We are very concerned, however, about the BCAP Federal
subsidy for the redirection of wood and wood waste materials,
specifically bark, bark based materials and mulch from an existing and
established, value-added marketplace to the generation of energy. This
will result in market dislocations, supply shortages and possible
elimination of these materials for use by all business sectors of the
green industry, leading to serious unintended economic and
environmental consequences.
Specifically, over 75 percent of the nursery crop and 100 percent
of the greenhouse crop production in the U.S. is now grown in
containers. The major ingredients for the growing media used in
container production--``substrates''--are various bark based
formulations. Diversion of bark supplies for other uses, or a sharp and
significant change in their market price due to market-distorting
subsidies, threatens most of the domestic nursery and greenhouse crop
production industry and will jeopardize most of the $16.6 billion in
annual nursery and greenhouse crop sales across the country. This will
result in major economic dislocations in many rural areas of the U.S.
as nursery and greenhouse crop producers are major employers of both
seasonal and permanent help in these locations.
As of result of the current economic recession, the nursery and
greenhouse industry is already experiencing economic distress. Market
price distortion or diversion of bark resulting from inclusion in the
BCAP will seriously impact domestic production and drive loss of market
share to imports from Canada and elsewhere. Our ANLA members have
already received notification from their bark suppliers about future
product shortages and complete unavailability of bark, bark based
materials and landscape mulch. An industry survey conducted in March
2010 indicated that 95% of the nursery and greenhouse crop producers do
not have access to a viable, alternative replacement for bark and bark
based nursery and greenhouse crop substrates.
Even before the passage of the Section 9001 of the 2008 Farm Bill,
the national nursery industry was concerned about the future
availability of these wood waste materials because of long-term
structural changes within the forestry industry and the use of bark as
a fuel source at wood products production facilities. An industry
study--``Estimation of U.S. Bark Generation and Implications for
Horticultural Industries'' (2006) indicated that since the 1980's more
than 95 percent of the U.S. bark supply has been utilized in some way
as a ``value-added product'' or market. Industrial fuel consumption
already consumes the largest share for bark, absorbing 83 percent of
softwood bark and 66 to 71 percent of hardwood bark. Since there is
already an established, competitive marketplace for use the wood waste
materials as a fuel source for energy production, it is counter-
productive for this marketplace to be federally subsidized through BCAP
funding.
Recognizing the long term impact of current and future bark
supplies going for energy production, the nursery industry launched a
collaborative research project involving USDA ARS, land-grant
universities and industry, to look at the development of alternative,
sustainable replacements for bark in substrates. This project has been
underway for 2 years. At the present time, however, there are no viable
marketplace alternatives available for bark materials to be utilized in
the production of containerized nursery and greenhouse crops.
Development of viable alternatives will take time and sustained
research investment.
In addition to the very negative economic impact that possible BCAP
subsidies for bark based wood materials would have on the production of
nursery and greenhouse crops, other segments of the green industry
which rely on these materials will suffer. Landscaping firms depend
upon the availability of bark mulch and mulch based material in the
establishment and maintenance of plant material in commercial and
consumer landscapes. Retail garden centers rely on the sales of bark
mulch and mulch based materials for a large portion of their gross
consumer sales in the active spring and fall gardening seasons. A March
2010 industry survey indicated that 60% of the retail garden center
respondents have been told by their suppliers to expect a price
increase for future purchases, or warned of unavailability, of wood-
based mulching materials. Organic mulches used in landscape settings
are environmentally important. These materials contribute to water
conservation, reduction in use of chemical herbicides, and prevention
of soil erosion. Their diversion from established use patterns will
have negative environmental consequences.
In regard to the application of BCAP subsidies for bark, bark based
and mulching materials we respectfully request the following action in
the drafting of the final Rule by the USDA Farm Service Agency.
1. Remove bark, bark based materials, landscape mulching materials,
softwood chips and forest thinnings from the list of biomass
materials eligible for BCAP programs.
2. Clearly define as high-value/established market materials the
use of bark, bark based materials and landscape mulch and
nursery and greenhouse growing media substrates. In PART 1450,
Subpart A, Section 1450.2 add a specific definition of ``Value-
Added'' and ``Currently Established Markets.'' Include bark,
bark based materials landscape mulch and bark based nursery and
greenhouse growing media substrates as value-added and
established marketplace products--recognizing that there
already exists an established, functioning, competitive
marketplace for these materials.
3. Under the definition of ``Renewable Biomass'' in Section 1450.2,
we suggest that specifically define the concept/term of
``higher-value products'' to include bark, bark based
materials, landscape mulch and nursery and greenhouse growing
media substrates.
4. Conduct an economic impact study. We request that USDA FSA ask
that the USDA Office of Chief Economist, in cooperation with
the USDA Economic Research Service, conduct a cost-benefit
analysis of the marketplace and economic impact BCAP subsidies
on the use of ``wood waste'' materials. The Cost Benefit
Analysis, conducted by the Office of Management and Budget
under Executive Order 12866, as referenced in 7 CFR Part 1450,
Biomass Crop Assistance Program: Proposed Rule does not
adequately address all the possible negative economic impacts
that BCAP funding will have on agricultural industries who rely
on ``wood waste'' materials, including bark, bark based
materials and mulches as ``value-added'' products for the
production of agricultural crops.
5. Expand the restriction on the use of BCAP funds on federally and
other publicly owned lands for ``value-added'' biomass
materials and markets to privately owned forestlands.
6. Focus BCAP on the original intent of incentivizing on-farm
production of new, renewable biomass crops and the expansion of
and the proper management of privately owned forestlands.
Both ANLA and SAF stand ready to work with USDA FSA in the rule
making process so as to effectively craft BCAP policies which will
assist in the reaching of the biomass and energy production goals as
outlined in Section 9001. In defense of a $16.6 Billion nursery and
greenhouse specialty crop agricultural product market however, we must
continue to register our great concerns for the unintended negative
impacts that the BCAP Federal subsidy program, as it currently relates
to wood based materials, has and will have on the availability of bark,
bark based and mulch materials and nursery and greenhouse crop
substrates that are a critical input and resource for our industry.
We appreciate your serious consideration of the issues that we have
outlined in these proposed Rule comments and look forward to your
response.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Marc Teffeau,
Director of Research and Regulatory Affairs,
American Nursery and Landscape Association.
References:
Hall, Charles R., Hodges, Alan W. and Jolm J. Haydu. 2005. Economic
Impacts of the Green Industry in the United States. Final Report to the
National Urban and Community Forestry Advisory Committee, U.S. Forest
Service.
USDA 2007 Census of Agriculture, http://www.agcensus.usda.gov/
Publications/2007/Full_Report/index.
Lu, Wenliang, Sibley, Jeff L., Gilliam, Charles H., Bannon, James
S. and Yaoqi Zhang. 2006. Estimation of U.S. Bark Generation and
Implications for Horticultural Industries, J. Environ. Hort. 24(1):29-
34, March 2006.
The Chairman. Thank you very much, Mr. Reelhorn. We
appreciate it.
Mr. Rehermann, welcome to the Committee.
STATEMENT OF FRANK REHERMANN, RICE PRODUCER, LIVE OAK, CA
Mr. Rehermann. Thank you, Chairman Peterson, Ranking Member
Lucas, and Members Cardoza and Costa. Thank you for holding
this hearing to review farm policy in advance of the 2012 Farm
Bill, and thank you for inviting me to testify.
My name is Frank Rehermann. I am a rice farmer from Live
Oak, California, up in the Sacramento Valley. My wife and I
operate our farm as a family partnership, growing 800 acres of
rice. I am a hands-on rice grower of average size. Fortunately
for us, my wife also has a career off the farm in education.
Rice is planted on about 550,000 acres in the Sacramento
Valley by some 2,500 growers. Our Mediterranean climate is
well-suited for the production of medium grain rice.
Incidentally, we proudly claim to grow all of the sushi rice
used in the United States.
Rice farming also creates thousands of jobs in rural
California communities, and our fields provide unparalleled
habitat for over 230 species of wildlife.
In reviewing the 2008 Farm Bill, I would like to begin my
comments by focusing on the safety net provisions of that bill.
First, the marketing loan provides a modicum of assurance
to lenders regarding a grower's ability to service debt.
However, as a reality, loan values are no longer close to being
equal to production costs, excluding land costs.
Second, the countercyclical payment is critical when prices
fall below a modest target price. This is designed to assure
that farmers can cover a greater portion of their operating
costs when prices are low.
It's worthwhile to note that I have not received a
countercyclical payment since this bill began, and I submit
that if prices got so low, that countercyclical payments were
made, we would be in very, very serious trouble.
Finally, the direct payment is an important part of the
safety net. This direct payment, and its predecessors, such as
the deficiency payment, have provided an important offset to
the increasing costs of producing rice. In recent years, this
has been the most important safety net provision for rice
farmers.
This consistent program also supports the tremendous
habitat provided by rice fields.
Other conservation programs such as CSP and EQIP are mostly
not beneficial or effective for rice growers. Conservation
benefits in rice can be clearly linked to the commodity title.
We ask you to remember that the current farm bill,
specifically these three elements, are working for growers in
California and across our nation. Annual farm program spending
on rice has been reduced from $1.2 billion to just over $400
million annually.
The current farm bill also contains the programs Average
Crop Revenue Election and Supplemental Revenue Assurance.
However, as of now, these programs do not work well for rice,
as evidenced by the nearly nonexistent sign-ups for these
programs.
Risk management products offered under Federal crop
insurance have also been of minimal value to rice farmers. We
are working now to develop products that may be more
interesting to rice growers and more beneficial. What rice
growers could greatly benefit from are crop insurance products
that will help against--protect against rapidly-increasing
production costs.
For an example, field fertilizer and other energy-related
inputs are now increasing at an alarming rate, and constitute a
major portion of our cost of operation.
We strongly support and participate in voluntary incentive-
based USDA conservation programs. We are, however, deeply
disappointed in the practical on-the-ground results of many of
these programs.
After enthusiastically participating in the development of
the Conservation Stewardship Program, we find the new CSP to be
very confusing. It is unclear, to many of us growers, how we
can transition from the old program to the new. Screening tools
are poorly adapted and not easy to understand. As a result,
fewer and fewer producers are willing to participate.
In order to work effectively, CSP needs to be demystified
and transparency needs to be improved. It is important to note
that we appreciate the diligent efforts of NRCS staff, headed
up by Mr. Ed Burton, who is with us today. Rice provides an
unparalleled environmental dividend valued at $1.5 billion.
Where our fields were once burned each fall, many farmers now
incorporate straw and reflood, providing a wintering habitat
for seven million ducks and geese, that over-winter each year
in the Pacific flyway.
Biologists tell us that half of the food for these
waterfowl come from rice fields. What is more, over half the
managed wetlands rely on water that drains from our fields. So
critical is the habitat in the Pacific flyway, that experts
estimate that we would lose more than one million ducks if rice
acres were cut by half.
These benefits accrue to everyone in this country as a
direct result of a viable rice industry. It is the commodity
title of the farm bill, and its intended safety net provisions,
that supports this flurry of wings, and the essential habitat
for so many terrestrial species.
We have, and I will leave with you, an ad that we have done
emphasizing the importance of our benefits to waterfowl, and we
have been joined in this by many conservation organizations.
Regarding the development of the 2012 Farm Bill, our
industry is working to analyze all existing safety net policies
and evaluate their effectiveness.
We believe some improvements may be appropriate. Let's not
disrupt the production system that continues to provide our
country, and millions, around the world, with a safe, abundant,
affordable supply of food.
The key principles that are guiding our work in preparation
of the next farm bill are first, the maintenance of a strong,
effective safety net; second, recognition that current
conservation environmental practices on rice farms pay a large
public dividend; and third, understanding that risk management
tools such as Federal crop insurance, ACRE and SURE, are not
currently effective as written, but may be improved.
In conclusion, I would like thank you again for this
opportunity to share my views and our initial thoughts on
developing a 2012 Farm Bill that can help meet the risk
management needs of producers. We look forward to working with
you in this regard. I would be happy to respond to any
questions you may have.
[The prepared statement of Mr. Rehermann follows:]
Prepared Statement of Frank Rehermann, Rice Producer, Live Oak, CA
Introduction
Chairman Peterson, Ranking Member Lucas and Members Cardoza and
Costa thank you for holding this hearing to review farm policy in
advance of the 2012 Farm Bill.
I appreciate the opportunity to offer testimony before the
Committee on Agriculture concerning rice farmer's views on current farm
policy and the development of the 2012 Farm Bill.
My name is Frank Rehermann. I am a rice farmer from Live Oak,
California. My wife and I operate our farm as a family partnership,
growing 800 acres of rice in the Sacramento Valley of California. I
have been farming since 1972.
Rice Industry Overview
Rice is planted on about 550,000 acres in California primarily in
the Sacramento Valley. Our Mediterranean climate is ideally suited for
the production of medium grain rice. In addition to being the largest
producer of this type of rice in the nation, we also grow all of the
sushi rice used in the U.S. Rice farming also creates thousands of jobs
in rural California communities and our fields provide unparalleled
habitat for 230 species of wildlife. Internationally, about half of our
crop is exported to Japan, South Korea Taiwan and Turkey.
California rice is grown by 2,500 family farmers and milled into
brown or white rice by over 40 marketing organizations. Importantly,
the number of marketers has more than tripled in the last decade. This
increased competition benefits farmers, consumers and our customers
around the world.
Another 2.5 million acres of rice is produced in the other five
rice-growing states of Arkansas, Louisiana, Mississippi, Missouri, and
Texas. The U.S. rice industry is unique in its ability to produce all
types of rice, from long grain, medium grain, and short grain to
aromatic varieties. Last year, U.S. farmers produced a rice crop of
more than $3.1 billion in farm gate value.
Much of this economic activity occurs in the rural areas of the
Sacramento Valley in California, the Gulf Coast region of Louisiana and
Texas, and the Mississippi Delta region, which exported some $2.2
billion in rice to markets around the world.
Rice is an important food around the world and at home. The 2005
Dietary Guidelines and MyPyramid recommendation, published jointly by
the Departments of Agriculture and Health and Human Services, call for
five to ten servings of grains daily, with half the servings coming
from whole grains, such as brown rice, and 45 to 65 percent of calories
coming from complex carbohydrates, such as rice. Rice is a naturally
wholesome food with no sodium, no cholesterol, no glutens, and no trans
or saturated fats.
Beyond the substantial economic and nutrition benefits of rice is
the environmental dividend from winter-flooded rice fields. This $1.5
billion benefit is unparalleled in all of agriculture. We California
rice farmers have embraced the role that our fields play as critical
habitat for migratory waterfowl and other wetland-dependant species.
Where our fields were once burned each fall, farmers now re-flood their
fields, providing wintering habitat for some seven million ducks and
geese that overwinter each year in the Pacific Flyway. Biologists tell
us that half of the food for these waterfowl comes from rice fields.
What's more, over half of the managed wetlands in the state rely on
water that drains from our fields for their operations. So critical is
this habitat to the flyway that experts estimate that we would lose
more than one million ducks if rice acres were cut in half.
California ricelands and adjoining wetlands have also been
designated as Shorebird Habitat of International Significance by the
Manomet Center for Conservation Sciences. Home to over 300,000
shorebirds, it is the second largest area designated in North America.
Clouds of ducks, geese and shorebirds are seen every winter on the
drive into Sacramento on Interstate 80. The flights of pintail and teal
that almost stop traffic over the Yolo Bypass at the Vic Fazio Yolo
Wildlife area are feeding on the ricelands that are purposefully
incorporated into this Federal wildlife area for the food they provide.
All told, some 230 species of wildlife utilize California ricelands
during the year, with 31 listed as species of concern. This same
success story, with regional differences, is repeated in rice growing
regions across the Mid-South.
All of these benefits are essentially free to the people of
California and across the nation. It is the commodity title of the farm
bill that supports this flurry of wings and essential habitat for so
many terrestrial species.
2008 Farm Bill Review
The Food, Conservation, and Energy Act of 2008 (the Farm Bill)
provides a strong and effective safety net for California rice farmers
by maintaining three critical elements.
First, the marketing loan established in the 1985 Farm Bill
provides essential access to financing for farmers. The loan program
also serves as an important tool when world prices are impacted by
stiff competition from other countries, which underwrite substantial
government support.
Second, the countercyclical payment developed for the 2002 Farm
Bill is an important tool for farmers when prices fall below a very
modest target price. This ensures that farmers can cover a greater
portion of their operating costs in a bad year.
Finally, the direct payment is an important part of the safety net
both for farmers and for the environment. The direct payment is the
foundation of the rice farmer's safety net, providing an important
offset to the cost of production of high value crops such as rice. In
recent years, this is the only program that has supported rice farmers.
This predictable year in and year out program supports the tremendous
habitat provided by rice fields. Other conservation programs such as
CSP and EQIP are far from perfect and even less predictable.
Conservation program benefits in rice can be clearly linked to the
direct payment element of the commodity title.
We ask that you remember that the current farm bill is working and
that reforms adopted in 2008 are having a tremendous effect. Annual
farm program spending on rice has been reduced from $1.2 billion to
just over $400 million currently. Under the farm bill, farmers receive
a small but predictable level of ongoing support and have the benefit
of a greater safety net when market prices fall. This is a system that
works for farmers and for the country.
The farm bill also includes the addition of Average Crop Revenue
Election (ACRE), as an alternative to counter cyclical payments for
producers agreeing to a reduction in direct payments and nonrecourse
loan benefits. The bill also added Supplemental Revenue Assurance
(SURE) as a standing disaster assistance supplement to Federal crop
insurance.
Simply put, these programs do not work for rice, as evidenced by
the nearly non-existent sign-ups for these programs. Structured largely
for other crops and relying on significant price and production swings,
these two programs are not attractive to rice farmers who are more
often impacted by significant increases in production costs.
Crop Insurance
Risk management products offered under Federal Crop Insurance have
been of minimal value to rice farmers due to a number of factors.
Artificially depressed actual production history (APH) guarantees, high
premium costs for a relatively small insurance guarantee, and the fact
that rice is unique among most other major crops in its production
practices are all major flaws.
For example, since rice is an irrigated crop, drought conditions
rarely result in significant yield losses as growers are able to pump
additional irrigation water to maintain moisture levels and, thus,
relatively stable rice yields. These drought conditions do, however,
result in additional production costs due to the need to pump
additional water.
What rice farmers really need are crop insurance products that will
help protect against increasing production and input costs,
particularly for energy and energy-related inputs. For example, fuel,
fertilizer, and other energy related inputs represent about 70 percent
of total variable costs on average.
In this regard, the USA Rice Federation has been working for over a
year now to develop a new generation of crop insurance products that we
hope will provide meaningful risk management tools for rice producers
to protect against sharp upward swings in input costs. Our objective is
to gain approval from the Risk Management Agency (RMA) of two new
products that could be available to growers in time for the 2012 crop
year.
Conservation Policies
Rice producers are outstanding conservationists and stewards. We
strongly support and participate in voluntary, incentive-based USDA
conservation programs. We are however, deeply disappointed in the
practical, on-the-ground results of many of these programs.
After enthusiastically participating in the development of the
Conservation Stewardship Program (CSP), we find the current program
confusing. It is unclear how farmers get in the program or how they are
even excluded. Screening tools are poorly adapted and not understood.
As a result, we hear of fewer and fewer producers willing to
participate, unlike the broad participation seen in the initial
program. In order to work effectively, the program needs to be
demystified and transparency significantly improved.
The Environmental Quality Incentives Program (EQIP), while an
effective program for developing infrastructure like tailwater recovery
systems, is poorly designed for habitat projects. The 50 percent
matching fund requirement is a major stumbling block as farmers
conclude that habitat projects can wait. EQIP has far to go before it
can be a useful tool to provide incentives for wildlife habitat
improvement.
The Wetlands Reserve Program (WRP) is also an inadequate tool for
preserving working landscapes. With 30 year contract requirements, this
is essentially a land retirement program. While suitable for a small
number of acres in the state, it is contrary to the evidence that
clearly demonstrates the significant benefits provided by ricelands in
production.
We do appreciate the emphasis Congress has placed on technical
assistance to producers through the Natural Resources Conservation
Service (NRCS). We greatly value these significant NRCS services,
especially at the state level, both from agency officials and NRCS-
certified third-party providers. Conservation programs do not work
without the support provided by NRCS. We simply ask that you give them
the tools they need to make conservation programs truly work for rice
farmers.
I can assure you that rice farmers care deeply for the environment
and we take our responsibility to protect and enhance our farms for
future generations seriously. To replace the current commodity title
safety net with conservation programs, however, would be disastrous
given the experience we have had with CSP, EQIP, WRP and others
programs which are simply not tailored to rice farms.
Environmental Policy Challenges
Of ongoing concern to rice farmers is the economic impact of
climate change legislation on the U.S. rice industry.
One of the key areas of focus in our analysis is the impact on rice
production costs, as a result of higher costs for major inputs such as
fuel, electricity, fertilizer, natural gas, and propane. Rice is a high
yielding crop utilizing nitrogen fertilizer, which, in turn, is made
using natural gas. Moreover, all rice must be dried before it can be
stored again using natural gas or propane fuels. Finally, beyond the
increased costs of field production, U.S. rice must also be milled
before it can be consumed or utilized in products, an expense which is
also borne by producers if they are part of a cooperative. All of these
already significant costs are expected to substantially increase under
pending climate change legislation, both in the short and long term.
Increased input costs greatly reduces our competitiveness compared
to others in the global marketplace such as Vietnam, Thailand, Pakistan
and India, who will not likely bind their economies to the same level
of commitments to greenhouse gas emissions reductions.
Rice farmers are not afraid to address the issues of climate
change. California rice farmers have been working for 3 years with the
Environmental Defense Fund to understand methane production in our
fields. This effort is based on our commitment to understand the data
surrounding the impacts of rice farming and to provide policy makers
with the information necessary to evaluate viable practices for offset
trading. We look forward to contributing solutions for climate change,
but our research to date has failed to find any practices that are
economically feasible.
Trade Policy Challenges
Another key policy focus for our industry is trade. While many
previously negotiated trade agreements have promised market access
gains for agriculture, much of what was promised has yet to materialize
or is continually threatened by artificial sanitary and phytosanitary
(SPS) and other non-tariff barriers.
In California, our key export markets are Japan, South Korea, and
Taiwan, and we are regularly faced with one or more of these markets
failing to meet their trade commitments.
In terms of new agreements, rice was completely excluded from the
free trade agreement negotiated with South Korea, foreclosing new
markets for U.S. rice producers there. And the Colombian Free Trade
Agreement (FTA), which would provide significant new market access for
the Mid-South rice industry, remains stalled.
One market that has the potential to become a top five export
market for the Mid-South rice industry almost immediately is Cuba.
Unfortunately, the U.S. Government continues to maintain restrictions
on our agricultural exports to this country. Cuba, once the number one
export market for U.S. rice, is potentially a 400,000 to 600,000 ton
market, if normal commercial relations are established. In this regard,
we wish to commend Chairman Peterson and Congressman Moran for your
leadership in efforts to address this situation with the introduction
of legislation to further open agricultural trade as well as remove
travel restrictions to Cuba. We look forward to working with you to see
this legislation enacted into law.
I would be remiss if I did not at least touch on the Doha Round
negotiations of the World Trade Organization (WTO). We are currently
terribly outgunned by high foreign subsidies and tariffs and, at least
so far, we have seen nothing in the Doha Round negotiations that would
change this. In fact, in many ways Doha would make matters worse.
Enshrining in our trade agreements decisive advantages for our trading
partners, including such countries as China, India and Brazil, may be
marketed as trade liberalization in Washington or Geneva but we see it
as picking winners and losers in the global economy based on politics.
Given rising future global demand for food, the U.S. should exercise
great caution in negotiations, so as not to arbitrarily forfeit
America's domestic production to less efficient competitors.
Budget Challenges
As we look ahead to the development of the 2012 Farm Bill, we are
deeply concerned about the deteriorating budget baseline for
agriculture. Today, less than \1/4\ of 1 percent of the Federal budget
and less than 17 percent of the USDA budget is dedicated to the farm
safety net. Yet, the renegotiation of the Standard Reinsurance
Agreement (SRA) by USDA and the crop insurance companies could result
in another baseline reduction of nearly $7 billion. Clearly,
agriculture cannot afford this kind of hemorrhaging in advance of what
we understand may be a baseline farm bill and the potential of another
budget reconciliation effort. Of equal concern is the adverse impact
cuts to crop insurance that producers are told they will have to rely
on to a greater degree in the future.
As you know, the farm safety net sustained cuts in 2005 during
budget reconciliation and in 2008 in the context of the farm bill, even
as other policies administered by USDA received funding increases, some
very substantial. The success of farm legislation has always depended
upon carefully balanced legislation and coalition building. We are
deeply concerned that singling out the farm safety net for additional
cuts may upset this fragile balance.
2012 Farm Bill Development
Our industry is working internally to analyze all the existing
safety net policies and evaluate their effectiveness in providing a
measure of protection in the most efficient manner.
We believe some improvements may be appropriate but must be
accomplished in a manner that does not cause disruption and upheaval in
the U.S. agriculture production system that continues to provide our
country and millions around the world with a safe, abundant, and
affordable supply of food, fiber and fuel.
The key principles that are guiding our work in preparation for the
next farm bill are:
1. Maintenance of a strong, effective safety net that includes
marketing loans, countercyclical program and direct payments.
2. Recognition that conservation and environmental practices
currently undertaken on rice farms pay a large public dividend.
3. Understanding that risk management tools such as Federal Crop
Insurance, ACRE and SURE are not effective for U.S. rice
farmers, as currently written.
Conclusion
In closing, I would like to thank you again for this opportunity to
share my views on the current state of the rice industry, the diverse
challenges we face, and our initial thoughts on developing a 2012 Farm
Bill that can help meet the risk management needs of producers. We look
forward to working with you in this regard. I would be happy to respond
to any questions the Committee may have.
The Chairman. Thank you very much, Mr. Rehermann. I thank
all the members of the panel for that excellent testimony. We
will now move to questions. I will recognize Members for 5
minutes. I recognize the gentleman from California, Mr.
Cardoza.
Mr. Cardoza. Thank you, Mr. Chairman. We are on here.
I am going to ask everyone on the panel a very simple
question. We have 5 minutes, so we are not going to have much
time to discuss it. After I ask the question, I am going to go
to Mr. Bledsoe, and then I will come back to you for your
answers.
We did a lot of things in the last farm bill. I would like
you all to tell me the one thing that is most important to your
industry, and the thing that you would most like to eliminate,
or remove from the farm bill, or that is causing you problems
of impediments.
Mr. Bledsoe, I want to make a comment first, and then I
have another question for you, sir.
In my mind, the dairy farmer safety net is sending the
wrong market signals, right now, at least in some parts of the
country. The triggers based on milk prices alone are no longer
adequate in the new climate of high-input costs that our
farmers now face.
Jamie, can you please give me some details of your input
costs and highlight where and why California has higher inputs
than the rest of the country?
Mr. Bledsoe. Yes. Of course, since last spring, we have
made major cuts. But, if you figure a return on investment into
your input costs, prior to 2009, we were probably sitting at
$19 a hundredweight, would be a good average number to use
today. On my farm, because of the cuts I have made, and if I do
not figure in return on investment I think I can break even,
cashflow, at $13.50 a hundredweight. There are quite a few
other farmers in our state that would probably be closer to a
$15 and $16 range.
The biggest factor when determining our input costs is
feed. It is over 50 percent of our total cost. Corn is the
biggest component of our feed ration, and even today, when you
try to look ahead, I feel, as a dairy farmer in California, I
am competing against the Federal Government for my corn because
of subsidies for ethanol.
In the previous Administration they told us that was not
really the case, but it is very hard to sell that to my
neighbors.
And now, when you do try to plan ahead, and look at corn,
now we are also competing a little bit with the hedge funds,
with everything coming out of the stock market into the CME,
into the commodity markets.
It is very difficult for us, to learn what kind of risk
management tools to use. Our number one cost here has been
feed, also water. I mean, we can talk for hours on water. But I
hope that answered your question.
Mr. Cardoza. Thank you. There is no question, I think all
the members of this panel would agree with you, that the
California water situation requires some significant overhaul.
The Endangered Species Act is not working for the farmers, for
the fish, for any of us in the Central Valley, and certainly
not the California economy.
Very quickly now, what is a program that is not working,
for each one of you.
Mr. Bledsoe. For dairy, MILC is not working. In our
opinion, it sends a signal to the rest of the country, when
prices are low, to make more milk.
Mr. Cardoza. Is that the program that you think is causing
the greatest distortion in the dairy program and sending the
wrong signals?
Mr. Bledsoe. Yes. Right now. This is not a typical year
because of the economic crash, but today, we have a billion
pounds of cheese on inventory.
Mr. Cardoza. Okay. Thank you.
Sir. Mr. Campos.
Mr. Campos. Programs that work and programs that don't
work?
Mr. Cardoza. That is right.
Mr. Campos. I believe the EQIP Program, the funding to
replace the older equipment has really been working, and I say
that in my testimony.
Mr. Cardoza. That was great testimony, by the way.
Mr. Campos. Last year, in the last farm bill there was
about $150 million for that program. California got roughly 25
percent of that--$37 million.
Mr. Cardoza. Right.
Mr. Campos. That has been working. I believe that
California with $100 million, we can change the air quality and
the PM10 reduction tremendously.
Mr. Cardoza. For the out-of-area Members, we are out of
attainment in PM2.5 and PM10. The Air
Quality Board regulates us for those small particulates.
Mr. Campos. Yes.
Mr. Cardoza. Thank you, Mr. Campos. Mr. Diener.
Mr. Diener. Crop insurance--I have never been able to make
it work in California. I look at it as a Midwest program. We
are forced to be part of that as part of the particular farm
program, and we have to participate. That is what I do not care
about. We can talk about that later. But I do care a lot about
farmers as the source for the environmental betterment of the
society. The NRCS is where you are going to start, working with
the ARS, and the specialty crops area, I think we could
probably create quite a beneficial habitat within our farms,
just like the rice growers are doing within that whole system.
As a long-time participant in the NRCS programs, as well as
being on the conservation district board, I think that part of
the farm bill needs to be strengthened and actually enhanced.
Mr. Cardoza. We have very little time left. We are
overtime. Mr. Kester.
Mr. Kester. Really quick, I will start with the negative.
What I would like to see out of the farm bill from 2008 would
be country-of-origin labeling, and the negative effects that
has had on producers.
And then positively, I would like to see the conservation
title expanded through NRCS programs, specifically EQIP. That
program provides three benefits to the producer, the public and
the environment.
Mr. Reelhorn. For the nursery industry, funding for pest
and disease protocol, is huge. We move plants, so we need those
programs, and the negative consequence is the biomass research
initiative because of the lack of bark availability.
Mr. Cardoza. Thank you.
Mr. Rehermann. Very briefly, the most important is the
direct payment. The least important are the ACRE and SURE
Programs.
Mr. Cardoza. Thank you. Thank you, Mr. Chairman.
The Chairman. Thank you. The Ranking Member, Mr. Lucas,
from Oklahoma, is recognized.
Mr. Lucas. Thank you, Mr. Chairman. Mr. Campos, I cannot
help but inquire. You mentioned coming from Wyoming to
California. Would you be of Basque heritage, perhaps?
Mr. Campos. Excuse me? Can you ask the question again,
please.
Mr. Lucas. You said you came from California by way of
Wyoming and the herding business. Would you perhaps be of
Basque heritage?
Mr. Campos. Yes. I am.
Mr. Lucas. The reason I ask that--my very best friend in
college, the best man at my wedding, his mother came from the
Basque country in the 1940s. So I have spent a little time
around the American version of your culture. Wonderful people.
Wonderful people.
Mr. Campos. Thank you.
Mr. Lucas. Actually, pretty intense level of intensity.
[Laughter.]
Mr. Lucas. Let me mention for just a moment--and that is a
respectful statement, by the way--the challenges we face on
this Committee as we write a new farm bill. We had $79 billion
more in 2002, and when I sat as the Subcommittee Chairman for
conservation, we spent $17 billion of that on conservation. In
2008, the world had changed, the budget had changed, we had $7
billion and leadership mandated that virtually all of that go
to nutrition spending. That was a mandate from on high, the
Speaker's Office. Then, in 2012, or what we will most likely
face, at the very best, if we have what we had before, it will
be nothing short of a miracle. In the worst-case scenario--and
we will see how the Chairman's eyes dilate on this--we may have
fewer resources to write a farm bill with. It is just going to
be a tough process.
Fair statement, Mr. Chairman? Now with that said, with
these tighter resources, and I say this very respectfully to my
California friends, because many cousins, third cousins and
fourth cousins of my Oklahoma constituents have relatives in
your great state. I say that respectfully too.
I get the questions, across the country, especially on
things like carve-out of EQIP, which is a critically-important
program. I will ask it to all of you, and let you step in to
this, if you care to. How do I explain to my constituents in
Oklahoma, my colleagues across the country, and also farmers
and ranchers, that we should be directing more and more
targeted resources to California, when it appears your biggest
challenges perhaps are not the EPA but water issues and
environmental issues mandated on you by state government. How
do I respond to my constituents who say the Feds should pay for
the state mandates? Be brave, guys.
Mr. Kester. Mr. Lucas, I will take a stab at it. My
response would be that it is not just a California issue,
because I think every state has some sort of regulatory burdens
in each state. I would respond that it is a national benefit,
expand the EQIP Program and target those funds, because it is
the environment across the U.S. that benefits as well as the
taxpayers across the U.S., and it is just not a state issue. It
is a nationwide issue for conservation benefits, and I pick out
California, even though we are higher in the regulatory
burdens.
Mr. Lucas. Yes, sir.
Mr. Diener. Yes. Mr. Lucas, I would say if you look at the
food pyramid that has been developed by USDA, we have 50
percent of that food pyramid grown here. We are all specialty
crop growers at some level in this state. We comprise probably
50 percent of the food production for the United States.
If you are in charge of dividing the pot, the fact is is
that if you eat, you eat from us. If we do not survive, you do
not have the needed crop diversity, especially the specialty
crop component of the food pyramid.
Everybody that is beating on you about the old farm
program, the new farm program, are asking you for fresh, local
food. I can tell you, if you are in Tennessee today, you are
not eating fresh and local. It is a little underwater.
The fact is we are shipping produce off our farm today,
back East, and they have fresh produce every day from our area
here. If the United States wants to have fresh and local
produce, they are going to have to get it from California, or
it is going to be imported from some other country where there
are no controls.
The fact of the matter is that we have the cleanest food,
from California, because we have the strictest rules and
regulations, all stimulated by the EPA from back in Washington,
D.C.
We live under those mandates at the state level as well as
the Federal level. We have taken them probably, somewhat, to
another level, but what goes on in California goes elsewhere
soon. You should help us, because if you do not, you are not
going to have us.
Mr. Lucas. I appreciate that. Anyone else? Just bear in
mind, there is the perception, back East, that whatever the
standard is, your state government rushes to do it harder,
higher, greater than anyone else. Your state government has
shown a more aggressive nature about resource reallocation than
the folks in the rest of the country, and California has always
been subject to the green-eyed monster of envy. I will not deny
that for a moment. Not all of us came here. The rest of us
stayed in Oklahoma and watched you.
Nonetheless, that classic argument is if we provide enough
money for tractors and resources and better equipment, will
your standards just get higher and higher and higher? I think
it is a legitimate issue; but I appreciate the points that both
of you bring back.
Mr. Bledsoe, you mentioned in your written testimony your
support for the estate tax bill that has passed in the House,
41-54%, with its top bracket of 35 percent.
I think the bill actually has a top bracket maybe of 45
percent. Let's talk for a moment--and I address this to all of
you--the question about exemptions on how many dollars of
property can be moved. Assuming you sort out your water issues,
assuming you sort our your environmental issues, you do have
the most productive ag land. Therefore, the most valuable in
the world. Can you move very much farmland for $3.5 million in
most of your areas?
Mr. Campos. About 100 acres.
Mr. Kester. No. Your point is well-taken. The answer is no:
$3.5 million does not even come close, even on our rangeland,
let alone specialty crops with more intensive farming.
We are always looking for the more generous exemption,
because we are not going to be in business if onerous estate
tax laws get continued on, or even revert back to 2001 levels.
I have been through it. I am a fifth generation rancher, and I
have three children. I am trying to keep them in the ranch, and
if these estate tax issues are not solved, our sixth generation
is not going to be able to stay in business in this state.
Mr. Lucas. I know that is not an issue that the House
Agriculture Committee has primary jurisdiction over. That is
Ways and Means in the House. I know in much of the rest of the
country, our farmland simply is not as valuable per acre as
yours is.
But I do have a sympathy for you in trying to move the work
of one or two or three generations, keeping it within the
family--and that is not just farms, that is small business
too--keeping it within the family.
So I am sympathetic to that. I wish you well in the
challenges that you face. I really do. But you have some
challenges out here. Thank you, Mr. Chairman.
Mr. Cardoza [presiding.] Thank you, Mr. Lucas. On behalf of
my folks, would like to say that while California certainly
does do what you say, and ratchets everything up higher, I do
not think there is anybody in this room that would argue
against the fact that they think that the Clean Water Act, the
Clean Air Act, and the ESA Act cause them significant amounts
of challenge every single day.
Mr. Lucas. I think it is well within California's rights to
set the appropriate standards that they view, but it does have
economic impacts on the community, and if that affects the
overall Federal budget, you get those questions from the rest
of the country.
Mr. Cardoza. Absolutely. Thank you for your questions.
Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. Mr. Bledsoe,
your testimony on challenges affecting the dairy industry was
very compelling.
As you know, we are trying to deal with several proposals
that involve NMPF and National Holstein Association, all with
an idea to try to develop a mechanism to allow dairymen and
dairywomen better control over their supply of milk, and,
therefore, their prices.
Do you think, at the end of the day, as we deal with this
meltdown that has taken place in the dairy industry, that that
has to be a critical part of any change in Federal Order?
Mr. Bledsoe. As you know, there are a host of proposals to
now evaluate.
Mr. Costa. Right. We are working on them.
Mr. Bledsoe. We are working on them. And a major concern
now--and I am representing two boards here, that represent a
lot of dairymen.
Mr. Costa. I know you are wearing a couple different hats.
Mr. Bledsoe. Yes. I guess the best answer is that we are a
large manufacturing state. Our co-op brings in about 17 billion
pounds of milk a year, and we are going to produce 750 million
pounds of powder and 350 million pounds of butter.
Most of that butter, and powder, needs to go out of the
country.
As our boards look at those kind of proposals in our state,
we want to make sure that the impacts on imports and exports
are not devastating to our industry.
Mr. Costa. But the current system is devastating right now
to the industry, and doing nothing is not a solution. Being a
third generation farm family, a lot of my family is still in
the dairy business--I just think that producers, at some point,
have to have some ability to have some impact, nationwide, on
their own supply. Otherwise, they will never have an ability to
control the price.
Mr. Campos, you are an American success story, you and your
family, and we appreciate all your hard work.
One of the things that you touched upon, in terms of what
the industry, the almond industry has done to export those
almonds around the world, is I think critical.
In the Farm Bill of 2008, we provided money for the Market
Access Program. I would like to find out if the almond
industry, in general, and whether or not in your own specific
experiences, and marketing in Europe and Asia. What works best
and whether or not the Market Access Program is helpful?
Mr. Campos. Yes. The Market Access Program has been very
helpful. Another issue that we have, in the almond industry, is
trade. We export to 62 countries, worldwide. I do not know if
this Committee has any jurisdiction on that, but the trade
issue is--the duties that these countries put on almonds. They
never grow any almonds, but they still have high import duties.
India has 60 percent. China has 40 percent, they reduced to
ten percent, and when you go in, they add value-added tax, so
we go back to 40 percent.
Mr. Costa. This Committee does not have jurisdiction over
those issues, but we do know how you get leverage. We continue
to argue with the Ways and Means Committee, and others, that
fair trade has got to be an essential part of any WTO efforts.
Mr. Diener, I could go on about a lot of the different
issues you touched upon. I think that one of the things, having
been out to your farm, I would like you to touch upon the
ability to not only be among the most conservation-minded water
users anywhere in the world, but how we can better deal with
some of the problems with the brackish waters that you are
attempting to deal with to reuse water.
Can you touch upon that, quickly?
Mr. Diener. As you well know, Mr. Costa--thank you--one of
the solutions that we have is taking a resource that people
call a waste product and making a resource out of it.
I do not care whether it is the Waste Management Board from
California taking materials out of the landfill or us pulling
water from our farms.
The fact is that we have to be resource managers. We have
to take a negative and make something positive of it. Then the
question becomes, how do you offset the cost of doing that?
As we live in a water-short area, the approach that we have
taken, by working with a lot of good people from government, as
well as the private sector, is the salt coming out of our
ground, and make that a positive.
The salt basically, in this case, is sodium sulfate. Tide
soap is 60 percent sodium sulfate. The U.S. buys 1.5 billion
tons of sodium sulfate a year to put in soap so we can wash our
clothes. They buy that either offshore, or from a mine some
place. Why are we not making that from the water that comes out
of our ground and recycling it in a green sense, actually
taking and making clean water, using minerals that are used in
everyday life?
It is just so simple and straightforward. It takes energy.
It takes time. It is a very simple idea that requires a very
sophisticated process. I think we will achieve success, because
we are pretty close to doing that now. Hopefully, by next year
we will have this project running and be glad to show everyone.
Mr. Costa. We will bring people out there, and we
appreciate your innovation. I regret that we did not get an
opportunity to have a representative of the cotton industry
testify, an important part of this effort. I see some of them
here today. I do not know if you are still growing cotton or
not.
Mr. Diener. We grew up thinking we were cotton farmers.
Mr. Costa. I know we need to focus on, and the Chairman and
I have had that discussion, our issues with Brazil.
Mr. Kester, you talked about in your testimony, barriers to
your ability to market cattle. Do you want to be a little more
expressive on those barriers.
Mr. Kester. Well, I will start on trade, for example. We
would like to see the pending trade agreements with South
Korea, Panama, and Colombia, for example, be put into effect.
Trade represents somewhere upwards of ten percent of the total
beef industry dollars generated in the United States. It is a
huge component, potentially, to keep a lot of us in business. I
would start there.
Mr. Costa. I appreciate that. My time has expired, but Mr.
Reelhorn, I want to thank you for raising the issue of
immigration reform. Again, it is not the jurisdiction of this
Committee, but, frankly, we have to, on a national level, have
immigration reform. Whether it ultimately is in the form of
AgJOBS or a comprehensive effort. I think we would all like to
see, at least among production agriculture, immigration reform
has to happen. I do not know whether we can make it happen this
year or not.
Mr. Reelhorn. Thank you for addressing it. It has to be on
the top of our minds.
Mr. Costa. My time has expired, so thank you very much, Mr.
Chairman.
The Chairman [presiding.] Thank you, Mr. Costa, for hosting
this. I would like to introduce some guests we have here today,
who are very important to agriculture.
From the U.S. Department of Agriculture, the California
FSA, Director, Mr. Val Dolcini. Why don't you stand up. The
Rural Development Director for USDA, Dr. Glenda Humiston. And
the State Conservationist from NRCS, Mr. Ed Burton.
Thank you all so much, and thank you for what you do for
USDA and for agriculture. Why don't you give them a hand.
[Applause.]
The Chairman. I recognize the gentleman from Texas, Mr.
Conaway.
Mr. Conaway. Thank you, Mr. Chairman. I appreciate being
here. I don't get to come to California very often, but I enjoy
it when I do. I will make a comment about--I don't necessarily
want responses back--but with respect to California's higher
and higher standards, and the Federal taxpayer not having any
real input into how those are set, and why those get set. It is
almost as if you are asking us to allow you guys to write
checks the rest of us have to cash.
We all want to drink clean water, we all want to breathe
clean air. Mr. Costa, I understand your comments, but by the
same token, we can't drive public policy based on just what one
state does, and why they think something is better,
particularly a state that is in as deep financial trouble as
California finds itself right now.
Mr. Bledsoe, I was looking at your chart. I am a CPA, by
trade. I like those kind of charts. They speak to me. But what
it says is folks participating in your business for 9 years
have lost, cumulatively, $12.72 a hundredweight. How do you do
that?
Mr. Bledsoe. Equity.
Mr. Conaway. I understand. There are only 4 years in which
you have made money, and obviously, cumulatively, you are
``behind the curve.''
How do you turn that around? Other than equity, are there
other things that aren't in your chart, off-farm income things
that aren't in that chart, that allow you to survive?
Mr. Bledsoe. Yes. During that period of time the land
values have increased here, so borrowing base increases.
Dairymen that I know, around the world, are the most optimistic
breed of producer in the world, in my opinion. We always think
it is going to be better the next day or the next year.
But in California, that question has to be answered with
equity, and the value, of our laws.
Mr. Conaway. We are doing that at the Federal level,
borrowing more money and it won't work at your level. I don't
think it's going to work at our level either.
Mr. Bledsoe. That's true about this year. I think we are
done.
Mr. Conaway. Okay. Well, our country and you are finding
yourself kind a like the fellow that fell off the ten story
building. As he passed the fifth floor, he said, ``So far, so
good.'' ``So far, so good.'' It gets a snicker every time I say
that, but it is grave, and you may be about to see what the
impact of it is.
The ACRE, SURE programs. First off, a show of hands. How
many are participating in ACRE?
Let the record reflect that nobody raised their hand.
How many are participating in a SURE Program?
Again, no one. Any thoughts as to why that is the case?
Anybody on the panel.
Mr. Rehermann.
Mr. Rehermann. Yes, sir. My opinion is that the longevity
requirements of both those programs makes some people
reluctant. For instance, I rent some land from some elderly
people who are reluctant to gamble on pricing decisions, and
reluctant to gamble on programs that go into the future. They
are far more interested in what is going on now.
And so therefore, those programs have not been very
successful in rice country in California.
Mr. Conaway. Okay. So the direct payment tradeoff with ACRE
was not attractive?
Mr. Rehermann. Not attractive. No, not attractive.
Mr. Conaway. Okay.
Mr. Rehermann. Now we have enjoyed some pretty good pricing
over the last couple a years. We may be in a downward cycle in
that regard, and consequently, interest in those programs may
improve. But they are not there today.
Mr. Conaway. Okay. Mr. Reelhorn and Mr. Campos, you both
asked for new money into your programs. It's probably unfair to
ask you this, but at least get some sort of a head nod. Mr.
Campos, you wanted $400 million in new EQIP money. Where would
you see that coming from? Reduction in spending. Where else? Or
raise taxes?
Mr. Campos. Well, the way we see it, this program has been
very successful in California.
Mr. Conaway. Oh, I understand. But is there any----
Mr. Campos. I would hope that you will look at other
programs that are not as successful, and be able to transfer
some of that money----
Mr. Conaway. Okay. So I would go to the budget that says
money for unsuccessful programs, we would go ahead and start
reducing that one.
[Laughter.]
Mr. Conaway. Mr. Reelhorn, you mentioned the one-to-one
match on your research dollars. If we reduce that match, would
you call for just a reduction in total dollars spent, so that
the Federal share would stay whatever that dollar amount is,
and that you guys will just put up less money, so there is less
money going into it, or would you want to keep the same amount,
total, just have a bigger share for the Federal Government?
Mr. Reelhorn. Difficult for me to answer.
Mr. Conaway. Okay. Us too.
Mr. Reelhorn. I am really good at growing plants.
Mr. Conaway. Say again.
Mr. Reelhorn. I am really good at growing plants.
Mr. Conaway. All right.
Mr. Reelhorn. But fortunately, I have representatives to
the government that can make those difficult decisions for us.
Mr. Conaway. Yes. You mentioned new money for pesticides or
pest responses.
Mr. Reelhorn. It's huge. Right. It's huge for us, right.
Mr. Conaway. Given you could only have one of the two,
which would you do?
Mr. Reelhorn. One of the two. I am sorry. Clarify.
Mr. Conaway. Yes. More money for research, or pest
response. Which would you----
Mr. Reelhorn. Oh, they go together.
Mr. Conaway. I understand that. But you can't have both.
Which one?
Mr. Reelhorn. Yes.
Mr. Conaway. There you go.
[Laughter]
Mr. Conaway. You have a great career in politics because
that is the standard answer. When faced with a challenge, and
when I have friends on both sides of the challenge, I generally
stick with my friends.
[Laughter.]
Mr. Conaway. All right. What that points out, though, Mr.
Reelhorn, is that difficult trades are going to have to be
made. The Ranking Member mentioned it. The Chairman is, in all
likelihood, probably privy to some information the rest of us
aren't. We have tough times ahead in the 2012 Farm Bill. We are
going to have to make these kind of choices. One of the
criticisms of Congress, because we don't have a balanced budget
amendment at the Federal level, and we should, we have taken
the path of least resistance, and that is just borrow the money
from future generations.
We have to stop doing that. This city council, very nice
digs here, but they have to make choices between good programs,
and it is hard. We need the wisdom of Solomon to make that
happen and we don't have it. But at our Federal level, we have
to do a better job of doing that, and we are going to have to
cross the Rubicon and pick on good programs.
Mr. Reelhorn. And you understand, we are doing that in our
businesses too.
Mr. Conaway. Yes, you are.
Mr. Reelhorn. Whether to keep the employees hired, or
whether to buy the new equipment, or what have you, so----
Mr. Conaway. But whatever it is, you make the tough choice,
and we have to do that at the Federal level as well.
Mr. Reelhorn. Absolutely. Absolutely. Yes.
Mr. Conaway. I appreciate your comments. Mr. Chairman, I
yield back.
The Chairman. I thank the gentleman. The gentleman from
Idaho, Mr. Minnick.
Mr. Minnick. Thank you, Mr. Chairman.
As someone who has spent 12 years, before being elected to
Congress, in the retail nursery industry, and one of only two
Members of Congress with a nursery industry background, I would
like to commend the Chairman and my California colleagues for
inviting Mr. Reelhorn to talk about a very, very important
segment of the specialty crop agriculture. I was impressed, Mr.
Reelhorn, with your statistics about you being \1/3\ of the
entire specialty crop production in California, and I believe
you quoted a $16 billion impact, nationally.
Coming from Idaho as I do, where a nursery industry is also
extremely important, I have heard complaints like yours about
the BCAP Program, and the impact, unintended impact it is
having, not just on bark for the nursery industry, but on raw
material for the paper industry, for the particle board
industry, and even for taking small trees away from the sawmill
industry.
My question to you is this, if you think it is important
that this country put in place incentives that will move us
away from our dependence upon fossil fuel energy, how would you
design an incentive program that nudges the country toward
green energy, without having the kinds of disadvantages that
your industry, my industry, has suffered through the BCAP
approach of basically subsidizing one segment of raw materials,
provided it ends up in a specific end-use, and therefore
punishing the other end-users?
Mr. Reelhorn. Possibly research. Rice hulls are an example.
We can use different media. But, you can help me on that. I
don't know the answer to that.
Mr. Minnick. I would like to, but I need some----
Mr. Reelhorn. Yes.
Mr. Minnick. We are about to consider reauthorizing this
program, and I share the same reservations you do. That is why
I thought you might have some input.
Mr. Reelhorn. We are always looking at different media to
use Obviously, we want to produce a product that is less
expensive and more competitive. I don't know if this answers
your question. But it is a difficult one.
Mr. Minnick. So we take that raw material for you and force
you to do something different, because it is no longer
competitive for that end-use?
Mr. Reelhorn. That is what has happened. Right.
Mr. Minnick. Let me ask you another question. You mentioned
AgJOBS and the need for immigration reform. Let's assume we
can't get AgJOBS through--and I hope that's not the case--but I
don't see immediate prospects for it. Are there some narrow
changes we could make to the H1 and H2 Programs, that would
allow your industry to have access to the labor that you need
as a year-round producer, to keep the labor talent you need?
Mr. Reelhorn. Understand, Mr. Minnick, that we, in
California, don't take advantage of H-2A and H-2B, as much as
other parts of the country. I understand they are critical.
Mr. Minnick. It is not just the nursery industry.
Mr. Reelhorn. Absolutely.
Mr. Minnick. We have many, many agriculture industries that
are not operating with, at least knowledgeably, legally,
because we, in the government, have put you in that position.
But what one or two things would we have to do that would
allow you to operate legally?
Mr. Reelhorn. Well, the AgJOBS legislation. I would hope
that you support that.
Mr. Minnick. Yes. I do.
Mr. Reelhorn. What legislation will allow us to have a
stable workforce is a tough one. As I said earlier, I am really
good at growing plants, but I need your support to be able to
do that.
Mr. Minnick. Well, continuing to turn a blind eye to the
problem is not the solution.
Mr. Reelhorn. It's very difficult. Very difficult.
Mr. Minnick. Thank you very much, Mr. Reelhorn.
Let me ask one question to Mr. Bledsoe. Would the
California dairy industry be better off, if you had no Federal
income support programs at all, except this new insurance
program to which you spoke, and simply left the activities of
the Department of Agriculture to funding such things as crop
promotion, research, export assistance, conservation
incentives, but no other direct incentive programs? Would that
be a solution that would be viable for your industry, which is
very important to my state as well?
Mr. Bledsoe. You are speaking about the price support?
Mr. Minnick. Yes.
Mr. Bledsoe. Yes. As I mentioned earlier, we are such a
large manufacturing state, at least in the near term. We are
not willing to give that up. We need to keep our plant
capacity, keep our plants alive, and guarantee our producers
that they have at least a bottom. Not to say that as we look
ahead, that there may not be some interest in a transition off
of those programs. But for the moment, we would be done. If
those disappeared tomorrow, we would be done.
Mr. Minnick. Thank you, Mr. Chairman. My time has expired.
The Chairman. I thank the gentleman. I am now pleased to
recognize the gentleman from California. Although this isn't
his district, when we went roaming around last night, they
pointed out that you are pretty close here. So we appreciate
you being with us.
I will give you a little bit extra time so you can make an
opening statement and then ask some questions. We are glad to
have you with us today.
STATEMENT OF HON. DEVIN NUNES, A REPRESENTATIVE IN CONGRESS
FROM CALIFORNIA
Mr. Nunes. Absolutely, Mr. Chairman. Mr. Peterson and Mr.
Lucas, I want to thank both of you for being out here, taking
your time to come out here, to bring the Committee out here. I
think it is important for the committees in the House to get
out across the country, to see how the real people are living,
and what is going on in different states, especially as it
relates to agricultural issues, resource issues and other
issues. I know this is not easy for those of you who come from
a long way away.
I want to thank Mr. Minnick and Mr. Conaway also for coming
out.
It is important for you folks, in Washington, to understand
what is going on, especially out here in California, and I want
to point out that one of the industries that you don't see here
today, that perhaps, if we would have held this hearing 10
years ago or 20 years ago, is the forest and timber industry.
We used to have a huge forest and timber industry here, in
California, here in the San Joaquin Valley, and all those empty
chairs you see there are probably representatives, or
monuments, to those forest and timber industry employees that
are no longer here.
And what you are seeing, Mr. Lucas kind a hinted at in his
questioning about the state government and the rules and
regulations that they are putting on agriculture.
But essentially what you are seeing between the state
regulations, coupled with, sometimes in combination, sometime
separately, with the Federal regulations, is you are seeing
total destruction of California's number one industry, and
those of you who are from other states, in some cases you are
benefiting from California. I know like Mr. Conaway, you have
several of my constituents who now have operations, I don't
know if they are in your district but I do know that they are
in your state.
So, this is part of the bigger problem with our country
today, is this continued job destruction throughout the United
States of America. But one thing that is for sure, is that
there is nowhere worse than the San Joaquin Valley of
California, and it is partially water-related, partially air
and air regulations, and other regulations that have been put
on by the state and the Feds.
But the bottom line is is that another 10 or 20 years from
now, there may not be anybody else left in this valley in
agriculture, except for maybe a few nurseries and other smaller
industries, because by and large, our water is quickly exiting
this region.
There is a story today, for those of you who saw the Fresno
Bee. I get a kick of how they report on these things now. But
essentially, we are going to waste away several hundred
thousand acre feet this year, due to a state law that was used
in Federal court to recreate a salmon run on the San Joaquin
River, right here, just a few miles from here.
And of course in the local paper, it is reported as if this
is some great water delivery for farmers, when hundreds of
thousands of acres are gone. When it relates to the pumps being
off, they are still off. The Obama Administration made some
meaningful water delivery increases, to get us from five
percent--I don't know what it will be now, 30 or 40 percent.
But it is important for the record to note that, number one,
this could have been done last year and it was not. And number
two, we have well over a 100 percent of our water supply, and
we are going to be lucky to get 40 to 50 percent of our water
supply, which is going to mean there is going to be hundreds of
thousands of acres of farmland out of production, probably the
same amount out of production as last year.
I just want to take this time and opportunity to impress
upon my colleagues from other states, thank you for coming out
here to see this. It is very important and I hope that,
hopefully, if you come back here in 10 years, that we won't
have what happened to the timber industry in all these other
industries, like dairy and farming and everything else.
So with that, one area of jurisdiction that is in the
Committee that I sit on is the free trade agreements, that I
think all of you have, or some of you talked about the
Panamanian, Colombian, South Korean Free Trade Agreements. Is
everyone here in favor of those agreements? Is there anyone
that is not in favor of those agreements?
So let the record show that all six of you are in favor of
those three trade agreements. Those trade agreements are still
stalled in the House, and hopefully we can move those quickly,
because I think trade is really one of the biggest factors for
marketing our products overseas.
Well, my time is up, Mr. Chairman. But thank you so much
for being here, and I want to thank all the panelists, some of
whom are my constituents. So thank you for being here.
The Chairman. And I will claim my time. I would note that
we have a bill in our Committee that is ready for action, that
would also increase, significantly, trade, and at least in my
district, and in my part of the world, it's a very important
issue.
I will ask those of you on the panel. This is a bill that
would open up trade with Cuba, and also the travel
restrictions.
Do any of you support that agreement? Or any of you oppose
it? How many support it?
Mr. Rehermann. I suppose.
The Chairman. Mr. Rehermann.
Mr. Rehermann. Rice industry supports it.
The Chairman. Yes.
Mr. Rehermann. Yes, sir.
Mr. Campos. I have been in Cuba on a trade mission, and I
think for humanitarian reasons, alone, I think we should have
an open trade.
The Chairman. All right. Well, we are hoping that we can
have a successful vote on that in the next couple weeks.
On the BCAP program, it has come up a couple times, that is
a program that I designed, or was an idea that I came up with.
There was never any intention, on my part, to have wood use
this program. And it was designed to bring new crops in that
could be the basis for the second generation, third generation
biofuels.
During the process, and in the Senate, there was a lot of
pressure to expand the definition of biomass, and apparently
they have more lobbyists than we did--the wood industry.
But one of the things that I did, if we are going to create
these new crops, I didn't want to grow those crops unless we
have a place to utilize them, to burn them, or try to figure
out how to grow these new crops, transport them, so forth and
so on.
So we put a requirement in there that they had to have a
plant, some kind of a facility to utilize this, and they had to
be within, I don't know, a 40, 50 mile radius to make it
economic.
Well, the wood industry ginned up the lobby and they knew
that they could fit in this definition, and I resisted, but at
the end of the day, we put it into law. Had the department gone
through the rulemaking in the regular order, this problem would
have never happened.
But what they did is they authorized this before the
rulemaking because the language was specific enough,
apparently, for them to justify it.
Now there is a rule that has been put in place, or is being
put in place, that will rein this back in. It would cut the
subsidies, substantially, and we think fix the problem. So we
are on your side there. This is not something that should have
happened and is one of the things that we need to fix.
But as long as I am over here, we are looking at the crop
insurance system. We have a SRA that is going on right now, and
some of you have heard me say that I think we need to develop a
crop insurance system that covers all ag crops, or all of
agriculture. I think we need a simpler system than we have, and
I think we could come up with one.
And one of the ways that I think we get there is by
eliminating CAT coverage and NAP coverage. Is your industry
okay with that?
Mr. Reelhorn. The crop insurance is very difficult for us
to use because we grow a diverse selection of crops, and so
it's virtually unusable.
The Chairman. But you probably have CAT coverage.
Mr. Reelhorn. Only because it is subsidized so much.
The Chairman. Pardon me. What?
Mr. Reelhorn. Only because it is subsidized so much. But we
will never use it. we will never be able to cash in.
The Chairman. Well, that is because of the way it is
designed.
Mr. Reelhorn. Right.
The Chairman. And my point is, I mean, we could pick up a
lot of revenue by eliminating CAT coverage. It actually gives
us extra money to fix the other parts of the system.
Mr. Reelhorn. Sure.
The Chairman. But if we could design a product that would
fit your needs, and was actuarially sound, and you had to pay
some part of it, you would be very much interested in that?
Mr. Reelhorn. We would jump at it. We would jump at it.
The Chairman. How about the rest of you? That would be
similar, that where the----
Mr. Diener. I made the comment, that I don't think your
farm insurance program works, but----
The Chairman. Pardon?
Mr. Diener. I said I made the comment, that I don't think
your farm insurance program works for California. It is a long,
involved thing, but we would be interested in being involved in
coming up with the right kind of program that would fit that,
for everybody, because we have so many diverse crops here. NAP
gets so confusing, I mean, you have to be a lawyer to be able
to figure it all out.
The Chairman. Yes. The CAT coverage was originally designed
to give people that weren't utilizing crop insurance, to get
them to start using the system. It started off at $50 a crop.
And it worked. We got a lot more people into the insurance
system, especially in the South, than we had before. But I
think it has kind of served its usefulness, and that was the
main purpose of it when we started it.
And now people are buying it because they have do, because
in order to get disaster coverage, or whatever you're required.
I think rice has a similar kind of problem with the insurance
system, but I think that they could design, we could design
crop insurance that would work for rice. That is what we need
to be working on, in my opinion, looking at a way to make these
coverages effective. It is not going to be free, but it is
going to be another risk management tool that people would have
available, and I think we should have it.
Mr. Rehermann.
Mr. Rehermann. The rice industry agrees with you, Mr.
Chairman. We can do something. We can come up with a tool. I
agree with everything you've said about growers, and now I will
speak for California, my area. We only enrolled in CAT coverage
because it has been a prerequisite for receiving a disaster
payment.
I have been a bought-up customer of crop insurance for
several years, and I believe in it. But most growers in
California believe because we irrigate, that we have a minimal
risk----
The Chairman. Well, you have a different risk. You have a
price risk and you have a cost-of-production risk. You don't
have a crop loss risk. So it is a different kind of a
situation. But, there is no reason that we can't design a
program that fits those needs. One of the things we are looking
at is so much of our safety net is focused on the price of
commodities, and one of the things that I am interested in is
looking at more of a safety net that looks at the cost or
production and looks at trying to make the crop profitable and
not necessarily just focus on the price.
You know, I think it would be a more efficient way for us
to move ahead with the safety net.
Mr. Rehermann. And we look forward to working with you in
that regard.
Mr. Lucas. Will the gentleman yield for a moment on that
point.
The Chairman. I yield to Mr. Lucas.
Mr. Lucas. Having now worked with you on several farm bills
and through several farm bills, in general, the main point,
like CSP, that keeps coming across to me, is the thoughtful way
that we work through these processes.
Whatever we do in crop insurance, let's spend a year and a
half doing it, and let's not surprise anybody.
The Chairman. Right. Well, and that is one of the reasons--
I will take a little more time here--that is why we are
starting early. I think, and I have asked all, you guys know, I
have asked all the commodity groups, all the people, not just
in the agriculture area, but in conservation and nutrition,
energy, fruits and vegetables, all the different areas of the
farm bill, to take a look at what we are doing, analyze the
money we are spending, and don't just get stuck in this idea
that, well, we have to have the same thing we have always had.
Take a look at if we could do this better? Is there a way
that we could have a more efficient, effective system, maybe
with less money, in some cases?
And that is why I wanted to start a year early, so that we
could have that discussion, and we aren't going to surprise
anybody. If we waited till next spring, started then, and would
try to get a bill done in the next few months, nobody would be
ready.
And so that what I am saying to all of you, I want you to
get engaged to work with us, to see if there is a way that we
can make changes and reforms in this farm program that makes it
work for agriculture. That is what we all want. We want risk
management, the safety net for producers, the people that are
out there feeding this country and feeding the world, and we
look forward to working with you.
Thank you very much to this panel. You have been excellent
in your testimony, in answering the questions, and we
appreciate you taking your time and making yourselves available
today. And so you are excused and we will immediately call the
next panel of witnesses to come forward.
We have Mr. David Roberts, orange, lemon and grapefruit
producer from Visalia. Mr. Jamie Strachan, vegetable producer
and shipper from Salinas. John Teixeira, organic tomato,
eggplant, bell pepper, melon and corn producer, from Firebaugh.
Paul Van Konynenburg, peach, apple, cherry, apricot, almond and
walnut producer from Modesto. And Justin Parnagian, peach,
nectarine, plum, grape, apricot and citrus producer, packer and
shipper, from Fresno.
So welcome to the Committee. We appreciate all of you
making the time available to the Committee today, and we will
get started. I think we have just about everybody up here. So
Mr. Roberts, it looks like you are ready to go.
Mr. Roberts. I am ready.
The Chairman. Your testimony, in full, will be made a part
of the record, so we would encourage you to summarize and try
to stay as best you can within the 5 minute rule, and we look
forward to your testimony.
STATEMENT OF DAVID ROBERTS, ORANGE, LEMON, AND GRAPEFRUIT
PRODUCER, VISALIA, CA
Mr. Roberts. My name is David Roberts. I am a family citrus
producer, here, in the San Joaquin Valley, and I am proud to
welcome you to the number one----
The Chairman. If you are having to leave, do that, but with
respect to the witnesses, let's have everybody please be quiet.
Mr. Roberts. I am proud to welcome you to the number one
citrus-producing, fresh citrus-producing state in the nation.
My brother and I have been here since our parents started
farming, and hope to witness my son and daughter take over the
ranch operations. I would also like to welcome my son, Percy
David, probably one of the younger members of the audience here
today. He can witness some of the contortions the government
goes through to come to solutions.
In addition to citrus, we have smaller interests in
avocados, plums, pistachios, Asian pears, and we run a few
trucks to harvest our commodities. Our main interest, however,
is citrus. I have been on various boards, ranging from water
districts to our local farm bureau, and a cooperative citrus
packing house. I am completing my term of service as a
California Citrus Mutual Director, and for the past 2 years,
have been fortunate to serve as board chair. I am not sure how
that happened, however, as I was present to defend myself.
It has clearly opened the doors for me to offer policy
makers, from a wide variety of areas, my thoughts on edicts and
decisions that affect my family.
In the next couple of paragraphs, I wish to highlight
comments in my written testimony. First, invasive pests and
diseases are not just an agricultural issue. Today, industry is
waging a battle against the Asian citrus psyllid and the deadly
disease it carries, Huanglongbing.
Fellow growers in Florida are literally dying from that
incurable disease, and have pulled over 200,000 acres from
production. That is about \2/3\ of the acres that the
California citrus industry has.
Along our coast, we have bark beetles killing pines, we
have pitch canker in landscape trees, we have foreign fish
destroying our waterways, and we have a multiple of invasive
species throughout the country.
The problem is not the exclusion system. We were at the
forefront of that battle a few years ago, and I believe USDA,
APHIS, along with Customs and Border Protection, are doing all
they can to protect our environment. The system is overloaded,
and we believe it started back when Congress passed the Plant
Protection Act of 1999.
It was then that USDA, and other agencies, acquired a
flexibility in determining risk. I can tell you, that as a
farmer, what works on paper, through analysis, and in modeling,
is not necessarily reality.
It was believed that you can import disease-free and pest-
free product from pest-infested areas. After a decade, we don't
believe it is working, and we urge the Committee to consider an
evaluation of the Plant Protection Act within the context of
the farm bill.
Our second immediate concern is an area which we have just
learned about, and now fully understand--the use and abuse of
biological opinions and the alleged science that serves as a
foundation.
Candidly, the issue is not the science. The issue is what
question is asked, and then how Fish and Wildlife, or the
National Marine Fisheries Service frames the science to answer
the question and achieve a preconceived opinion.
Their process does not allow stakeholders such as me to
participate. Their process does not call for notice and
comment. Their process is conducted in a dark backroom, and
their process is adversely affecting production throughout the
West.
By edict, within the confines of the ESA, they are removing
crop protection tools and limiting the availability of water.
They are forcing viable food and fiber land out of production,
causing unemployment, reduced economic activity, not to mention
a reduction in healthy food products.
Your bill needs to mandate that USDA and EPA have a role in
determining risk and mitigation steps. It is hard for me to say
that EPA is a partner, but as I visit with them, their
frustration over the process is only exceeded by mine. These
agencies must have a role in the ESA biological opinion
process.
Last, I wish to implore that you remove the word
sustainability from your lexicon. That is an attack vehicle
against family farmers. Quite frankly, I am sick and tired of
hearing that I need to be more sustainable. I don't need more
regulation to be sustainable. I don't need ``cap-and-trade.'' I
know I am a net benefit to the environment because my 75 year
old trees produce nutritious food and absorb ozone and VOCs
from the air.
I don't need some activist to tell me to be more efficient
with water, since I have been on low-volume irrigation systems
since before they were born. I don't need government to tell me
about sustainability, because all on my own, and with the help
of the university, our ranches have been on IPM programs for
years.
Believe me--I know a good bug from a bad bug. This word has
been adulterated to the point that only this Committee can
adequately define the word, sustainability.
Which begs the question: does society and Congress really
want the family farmer to survive? I always thought my fellow
panelists, and I, were the ones that provided the needed food
security for the nation.
But in the past 2 years, I wonder. According to the
``enviros,'' all I do is contaminate, waste and poison. Do you
want costly programs to subsidize the family farmer, or do you
want me to provide and be part of the most efficient farming
and food distribution system in the world?
Thank you. Thank you.
[The prepared statement of Mr. Roberts follows:]
Prepared Statement of David Roberts, Orange, Lemon, and Grapefruit
Producer, Visalia, CA
Good morning, Mr. Chairman and Members of the House Agriculture
Committee. On behalf of my fellow citrus producers I welcome the
opportunity to offer our thoughts relative to farm bill deliberations
as your Committee begins its exercise to develop a policy that benefits
producers and our nation.
Again, my name is Dave Roberts and along with my brother we farm
several hundred acres of citrus in the San Joaquin Valley. We are
second generation farmers and I hope to turn over a successful
operation to my son and daughter. I'm not here to talk about farm bill
titles or the previous farm bill. Frankly I don't have that expertise.
But I do know how to farm and I do know what government policies are
affecting me and my colleagues in the citrus industry.
Our industry is dominated by family farmers. Over 80% of our $3
billion economic activity is generated by families such as mine.
Collectively we directly employ 12,000 people and indirectly another
10,000 look to our industry for their employment. We are the nation's
number fresh citrus producing state. Depending upon the variety we
export approximately 30% of our tonnage, primarily to Asian markets.
My purpose in presenting testimony is to offer my thoughts as to
how we on the farm are being impacted by government policies and to
bring them to your attention in the hopes that these subject areas are
worthy of your consideration as we move forward. Our industry and its
representatives utilize the TASC program, crop insurance, the Specialty
Crop Block Grants and some day will hopefully benefit from the
nutrition language as our nation moves to a better diet.
Invasive Pests & Diseases
But let's talk about our family farm and my concerns and
priorities. Invasive pests and diseases are a major priority. I think
our government needs to revisit the Plant Protection Act and the
latitude USDA now has relative to import issues and phytosanitary
subjects. I believe in APHIS, its role and its efforts to protect
production agriculture. However I simply believe that our entire system
is overwhelmed with product originating from pest or disease infested
areas and no matter how hard we work on our border inspection program
or how accurate we are in analyzing on paper risks the bottom line is
the industry is inundated with pest and disease.
Pest Risk Assessments and border inspections allegedly allow the
importation of product, relatively risk free, into our production
areas. Yet the reality is something different. More imported product
and more consumer travel has created more eradication efforts either by
government or the farmer. The system is not perfect and never will be
thus are we sentenced to constant and expensive eradication programs
that diminishes the ability of our nation to provide food and fiber?
The situation in Florida with Huanglongbing is destroying the viability
of that once vibrant industry. Customs and Board Protection is not
necessarily the problem. We have worked with that office and believe
they are doing as good a job as possible.
Thus I believe we need to take a step back and determine whether we
are not asking for the impossible. Bugs, fruit flies and diseases are
constantly threatening the viability of my operation and fellow
producers. I believe we have simply overwhelmed our system and throwing
more money to inspection and eradication will not solve the problem. So
I support any and all efforts to keep the APHIS and CBP fully funded
but I ask Congress to reevaluate the impacts and value of the Plant
Protection Act. Even though this is a farm bill discussion there are
many examples of impact on urban or non-farm environments as well.
Use & Abuse of Biological Opinions
Second, I ask this Committee to insert language mandating the
participation of USDA and landowners in the development of Biological
Opinions originating from Fish & Wildlife and the National Marine
Fisheries Service. Somebody needs to balance the table on these non
scientific opinions. I know that sounds harsh but the manner in which
they are being used and abused threatens the viability of farming in
California, the Northwest and I would assume the balance of this
nation.
Without adequate input, without transparency and without balanced
direction; but with a bias, these services are robbing farmers like me
of our crop protection tools, our water, our land and ultimately our
ability to farm in an economically viable manner. I have given water
up. I rely less on pesticides today than I ever have and those that I
use are much softer in nature. Yet the Services mentioned above fail to
take into consideration any input I may offer to achieve an objective.
They have failed to acknowledge the work and input from our state
government to protect listed species or their habitat. They issue top
down edicts that are woefully short on science and long on conjecture.
This Committee, the farm bill and Congress must provide balance to a
process that is too narrowly directed.
In 1988 when the ESA was last amended Congress wrote in report
language: Agriculture is a major part of the U.S. Economy and provides
nutritional sustenance for our population and exports abroad . . . The
Conferees, therefore, anticipate that . . . the Federal agencies shall
implement the Endanger Species Act in a way that protects endangered
and threatened species while minimizing, where possible, impacts on
production of agricultural foods and fiber commodities.
Somewhere that has been lost.
I laugh when I hear Congress is accused of operating in a smoke
filled room behind closed doors when in fact that's just what the
Services do. I just shake my head when I hear activists, members of
government and the media shout that the family farmer must be protected
all the while passing or issuing edicts that I can't begin to comply
with. I clearly understand the need for the ESA but when it comes to
reducing the very foundation for this nation's food security I have to
question the fairness.
Committee Members I submit that science is not the issue, it is the
manner in which science is directed and whether it is the National
Academy of Sciences, or even USDA and EPA the questions asked of them
dictate the scientific answer. We have lost the capability of
evaluating the whole and deciphering unintended consequences. Add this
to the bias that exists with two Service Agencies and it is a recipe
for intrusion, lost farm land and reduced production. Is that direction
good for this country? It is if you believe reliance on other oil
producing nations for our energy is good for the country.
Sustainability
More regulation is not what's needed, more help from government is
not what's needed and more ``good ideas'' are not needed. I farm in an
environmentally sensitive and sustainable manner yet that word,
sustainability, has become an attack vehicle against the family farmer.
Right now my farming costs are exacerbated to the tune of $400 per acre
just for regulatory fees and permits. We farm almost 1,000 acres of
citrus. My industry consists of 300,000 acres. Somebody must connect
the dots. Input costs do rise but the cost of government inclusion has
exploded. By the way that amount per acre was quantified by Cal Poly
San Luis Obispo with a study initiated in 2004 and updated 2 years ago.
I believe a fair definition of sustainability is necessary within
the context of the farm bill. It makes no sense for me to use more
water than necessary; spray when it is not needed, contaminate the soil
in which I seek to make a living or foul the air to the detriment of my
family, my neighbors and those around us. I rely upon the Universities,
the scientific community and I continue to strive towards better
agricultural practices as they develop. But don't tell me I am not
farming in a sustainable manner and don't allow others to saddle me
with their vision of farming when I'm the one working the land with a
proven track record.
So Committee Members these are my priorities for a viable and
profitable future. I do worry about our nation's food security. We are
the envy of the world with our production and distribution system. But
nobody is connecting the dots and as I try to incorporate or adapt I am
forced to become a member of the agribusiness community. Take away my
water, my crop protection tools; or inundate me with pest and disease
and then attack me for not farming in a sustainable manner and I will
leave the ranks of the family farmer. I may survive as an agribusiness
person but more than likely I will simply sell my operation to those
who have deeper pockets.
So this farm bill must tell me whether I am wanted as a valuable
member of our food security team or I am just a wanted criminal being
viewed as a negative influence on our environment and nation as a
provider of food and fiber.
The Chairman. Thanks very much, Mr. Roberts. We appreciate
it.
Mr. Strachan. Strachan.
The Chairman. Strachan. Okay. I am sorry. Welcome to the
Committee.
STATEMENT OF JAMIE STRACHAN, VEGETABLE PRODUCER AND SHIPPER,
SALINAS, CA
Mr. Strachan. Chairman Peterson, Ranking Member Lucas, and
Members of the Committee, thank you for inviting me to testify
here today before the House Agriculture Committee. My name is
Jamie Strachan. I am President and CEO of Growers Express, a
specialty vegetable company located in Salinas, California,
with partner-owned and operated farming operations throughout
the Salinas Valley, Santa Maria, Oxnard, Huron, Imperial, Yuma,
and northern Mexico.
We farm 40 commodities and ship more than 15 million
cartons of produce annually. Our crops include lettuces,
celery, spinach, brussel sprouts, artichokes, broccoli,
cauliflower, and others. My company was mistakenly raided by
the FDA and FBI following the spinach outbreak in 2006, and our
farming companies lost millions of dollars as a result of this
tragic industry event.
Following that, I was a founding member of the California
Leafy Greens Advisory Board, the food safety board, and have
held roles as Treasurer, Vice Chairman, and now Chairman of the
Board. I run a health insurance trust, spending more than $10
million, annually, on health benefits for my employees, a
worker's comp insurance company covering more than 3,500
employee, and sit on the board of a packaging cooperative.
We will be one of the first companies in specialty crops to
meet the Produce Traceability Initiative, milestones four and
five, for putting labels on cases of produce.
As you know, specialty crops represent a mere three percent
of farmland, nationally, while contributing close to half the
U.S. crop production. The farmland that we have for specialty
crops is irreplaceable, and despite what others might think,
there is no other place in the country that can grow specialty
crops for 9 out of 12 months of the year.
And this cropland, and these crops, will be critical in
delivering on the child nutrition objectives and combating the
national obesity epidemic.
We use H-2A programs in Yuma and Imperial Valley, along
with operating two of the largest farming operations South of
the border, to help us balance our labor issues and cost
issues.
We operate 30 crews in the U.S., along with multiple
distribution centers and packing operations which all require
immigrant workers.
The new Arizona law, which requires police to look for
illegals, could have large negative ramifications on our
operations in agriculture in Arizona. AgJOBS is the answer, or
if we need to call it something else, those types of approaches
are the answer to keep production of specialty crops in the
U.S.
This is the single most important requirement for us to
stay competitive in a global marketplace, and to continue to
contribute GDP and exports to our economy.
Without viable labor, we will cease to exist overnight.
One current ``hot'' issue for my company is in commerce and
border pathogen testing, that is being performed by FDA and
USDA. One of my customers recently moved their purchases of our
produce to Guatemala, because the imports from Guatemala are
not being subjected to the same border testing and enforcement
standards that FDA currently requires on my operations coming
out of northern Mexico.
The California Leafy Greens Marketing Agreement is
protecting public health by establishing a culture of food
safety on the farm. I fully support the efforts being made in
Washington to implement a similar food safety system on a
national level that maintains the high bars we have established
in other states.
As part of my role in California LGMA, I have been actively
engaged in the food safety efforts relating to USDA's national
leafy greens marketing agreement as well as the food safety
legislation, and FDA's current rulemaking efforts.
The California and Arizona Leafy Green Advisory Boards
support the development of these programs.
Food safety is a multimillion expense for my organization,
and I feel a lot like it is R&D, due to the lack of valid
science to support everybody's good ideas. Food safety
incentives in the form of tax incentives would be a wonderful
way to help handlers do the right thing and invest the
necessary dollars in their operations, and assist in
determining real answers to these food safety concerns.
The FDA lacks the traceback tools to accurately and
identify real causes of foodborne illness outbreaks, or isolate
them through targeted recalls based on real-time supply chain
information. Until this is addressed in a holistic way,
innocent parties, including consumers and industry, will
continue to suffer.
I recommend that more research, including the type being
authorized by the farm bill, be devoted to food safety and
traceability. I encourage Congress, through the farm bill, to
fund additional food safety-related research, so we, as
growers, can do an even better job of managing risks on the
farms.
Organizations like the Center for Produce Safety, and
California Leafy Greens Research Board, exist to implement this
type of research, and additional funding will make great
strides possible in a fairly short period of time.
Further, when an outbreak occurs, a whole industry is
affected, whether companies contributed to the event of not. I
would suggest that some sort of crop insurance be provided in
the event of an outbreak, whereby companies that did not
contribute but were hit with decline in sales, like my company
in 2006, would receive offsets.
While FDA is likely to receive broad new regulatory
authority in the area of on-farm food safety, we believe they
can best carry out that mandate by working closely with USDA,
the agency that knows agriculture, has experience on the
inspection of farms and practices, and has existing regulatory
oversight on the farm.
The 2008 Farm Bill provided a significant allocation of
funding dedicated to the specialty crop industry, and I want to
thank this Committee, and the agency, for that allocation. Four
programs that I would like to recognize are the Fresh Fruit and
Vegetable Snack Program, the Department of Defense Fresh
Program, the Specialty Crop Block Grant Program, and the
Specialty Crop Research Initiative.
I support continued expansion of those programs to support
healthy eating habits, and combat childhood obesity, increased
healthcare costs and poor food quality in our schools and
communities.
Healthcare reform, in the way this bill is interpreted,
could impact our current costs of healthcare by a factor of
four. Currently, we spend about $10 million, so that means
upwards of $40 million on healthcare is what we may be faced
with, depending on different interpretations of that bill.
So, last, in closing, the specialty crop policies and
programs contained in the 2008 Farm Bill generated broad
industry support and have helped to enhance the competitiveness
of our industry, as well as address critical specialty crop
needs.
We look forward to working with this Committee when
Congress begins writing the next farm bill. Thank you for
allowing me to testify before the Committee today.
[The prepared statement of Mr. Strachan follows:]
Prepared Statement of Jamie Strachan, Vegetable Producer and Shipper,
Salinas, CA
Chairman Peterson, Ranking Member Lucas, and Members of the
Committee, thank you for inviting me to testify before the House
Agriculture Committee today. My name is Jamie Strachan, and I am
President and CEO of Growers Express, LLC. Growers Express was founded
in 1987 by eight produce growers who all believed in a few simple
values: Producing our own premium quality products, consistent supply
and superior service. Our owners have taken three generations of
knowledge and respect for the land and have developed it into one of
the nation's largest suppliers of fresh vegetables. Unlike many
shippers who have grown in size but have actually reduced their own
operations, the vast majority of our 15 million cartons of produce
grown and shipped annually are still grown by our own owners. We still
maintain the values on which our company is based. Headquartered in
Salinas Valley, California, our total year-round ground base exceeds
50,000 acres. To offer our 40+ items on a year-round basis, we also
grow in Arizona, Mexico, Oregon, Michigan and Ohio. Our largest volume
items-- iceberg lettuce, broccoli, cauliflower, green onions, celery
and leaf lettuces--are complimented with a full line of bunched items.
We also offer several value-added packs to round out our line.
In addition to my role at Growers Express, I also serve as the
Chairman of the California Leafy Greens Products Handler Marketing
Agreement (LGMA), which is the most rigorous food safety program for
produce in the U.S. The CA LGMA is a mechanism for verifying, through
mandatory government audits, that growers and handlers implement
accepted Good Agricultural Practices in the growing and harvesting of
lettuce, spinach and other leafy green products. In other words, the CA
LGMA is protecting public health by establishing a culture of food
safety on the farm, and I fully support the efforts being made in
Washington to implement a similar food safety system on a national
level.
The 2008 Farm Bill provided a significant allocation of funding
dedicated to the specialty crop industry, and I want to thank this
Committee for that allocation. The 2008 Farm bill provided my company
and our industry with a set of tools necessary to enhance our
competitiveness and expand our markets. While we benefit from most of
the programs contained in the Farm bill, there are four that I would
like to highlight today:
1. The Fresh Fruit & Vegetable Snack Program.
2.The Department of Defense (DOD) Fresh Program.
3. The Specialty Crop Block Grant Program.
4. The Specialty Crop Research Initiative.
I support the continued expansion of programs, such as the Snack
Program and the DOD Fresh Program, that increase the consumption of
fresh fruits and vegetables. These programs will develop life-long
healthy eating habits for millions of children by providing fresh
fruits and vegetables in our nation's schools. In addition, these
programs help address the problems our nation faces with increased
rates of childhood obesity, increased healthcare costs, and poor food
quality in schools and many communities. The mandatory funding provided
for the Block Grant Program helps focus on local efforts to enhance
producers' ability to compete in the marketplace and provide consumers
with safe, abundant food. The Specialty Crop Research Initiative helps
to develop and provide the industry with science based tools to address
the critical needs of the industry.
Food safety being a number one priority area for my company,
coupled with the food safety reforms being discussed in Washington, I
recommend that more research funds be devoted to food safety and
traceability. While the leafy greens industry and others are doing all
they can to raise the bar for food safety, there is a real need for
more research in this area. I would encourage Congress, through the
farm bill, to fund additional food safety-related research so that we,
as growers, can do an even better job of managing risks and upgrading
our practices in order to grow, harvest and ship the safest food
possible. Organizations like the Center for Produce Safety and the
California Leafy Greens Research Board exist to implement this type of
research, and additional funding will make great strides possible in a
fairly short period of time.
Last, I applaud the USDA for its cooperation with the Food and Drug
Administration in recent months on food safety initiatives, and we
encourage a continuation of this collaboration. While FDA is likely to
receive broad new regulatory authority in the area of on-farm food
safety, we believe that they can best carry out that mandate by working
closely with USDA, the agency that knows agriculture, has experience on
the inspection of farms and practices, and has an existing regulatory
oversight role on the farm. In the leafy greens industry, we welcome a
greater level of Federal scrutiny and oversight of our practices, but
we believe this can best be achieved in a collaborative manner working
with both the USDA and the FDA.
Summary
The Specialty Crop policies and programs contained in the 2008 Farm
Bill generated broad industry support and have helped enhance the
competitiveness of our industry as well as address critical specialty
crop needs. We look forward to working with this Committee when
Congress begins writing the next farm bill. Thank you for allowing me
to testify before this Committee today.
The Chairman. Thank you very much, Mr. Strachan. We
appreciate it.
Mr. Teixeira, welcome to the Committee.
STATEMENT OF JOHN M. TEIXEIRA, ORGANIC TOMATO,
EGGPLANT, BELL PEPPER, MELON, AND CORN PRODUCER, FIREBAUGH, CA
Mr. Teixeira. I am from Firebaugh, California, 1 hour
northwest of Fresno, an agricultural community of 6,000, to the
San Joaquin River. I produce on Lone Willow Ranch certified
organic small greens, wheat, alfalfa, hay, tree fruit, herbs,
greenhouse transplants, heirloom seeds, grow crops, pastured
chickens, pigs and dairy goats.
I am also a partner in Teixeira and Sons, with my two
brothers and father, in a conventional family farm of 5,000
acres producing, processing tomatoes, fresh market tomatoes,
cantaloupes, alfalfa, wheat, hay, cotton, livestock, greenhouse
transplant production, composting 6,000 tons a year. I have
been farming 40 years and 20 years organic.
I serve as California Certified Organic Farmers' Fresno-
Madera Chapter Certification Standards Chair, and board member
of the Organic Farming Research Foundation, and board member of
SlowFood Madera Chapter, and board member of the Sustainable
Cotton Project.
Thank you, Chairman Peterson, and Committee Members, for
the invitation to speak out on developing the next farm bill.
We, here in California, appreciate you coming to the Central
Valley to hear our thoughts on Federal policies for food and
agriculture.
The 2008 Farm Bill established a number of new provisions
concerning organic agriculture. These provisions covered
research, conservation, crop insurance, and support for the
USDA Organic Standard and Certification Systems.
USDA is still in the early phase of implementing some of
these provisions. Overall the initial results show promise.
We must nurture these programs, as seedlings, for good
results in the future. It is like growing a crop, starting out
with a good seed source, preparing the soil, making a good seed
bed, and to get a good germination with the right temperature
and moisture. We want the seed to pop out of the Earth and
continue to grow strong.
The farm bill policies for organic agriculture will be the
same.
They get off to a good start but need careful attention and
adjustment, so that we have a good bountiful harvest in years
to come.
Congress has recognized that organic farming has multiple
public benefits, in addition to sustaining high levels of food
and fiber production.
These benefits range from conservation of pollinator
species to the provision of good jobs in production and
processing. In California, the organic market is a strong
economic force, and one of the brighter spots in our
agriculture economy.
The next farm bill should begin to really leverage these
benefits and amplify them by getting more coordination between
agencies and programs. The benefits of organic research and
organic conservation systems can have positive ``spillovers''
for improving the environmental performance of all farming
systems.
But the agencies need to approach it that way and have a
coordinated strategy for this effect. If it receives a fair
share of research and development resources organic will lead
the way towards a much lighter impact on the nation's soils,
waters, and wildlife while providing the productivity that we
need.
Research, Education and Extension: Increased funding for
organic research and education in the 2008 Farm Bill was
historic. Many projects from the first round of funding look
promising. The dedicated organic research funds are also
helping to build baseline capacity in organic systems research.
But there is still only a relative trickle of science and
technology for organic systems coming from the agencies and
universities.
Research and education for organic systems is still only
about two percent of USDA's research budget. That is only about
half of the overall market share that organic products have at
retail level.
If you look at the scale of problems that organic systems
could affect an outsize contribution, such as pollinator
declines and greenhouse gas emissions, and compare that to the
relative resources available, you see that the potential
contribution is being hobbled.
The overall effort on science and technology for
sustainable organic systems has to be scaled up. That is still
a primary limiting factor in the long-term success of existing
organic farms and for effective transition.
I am particular concerned about seed breeding. We have a
critical need for varieties that are adapted to organic systems
and we need adequate seed supplies for increased organic
production.
We need organic plant and animal breeding for increased
resilience in the face of climate change and reduced water
supplies. Policy passed by Congress must continue to
aggressively rebuild our national capacity for developing and
releasing high-quality public cultivars.
Organic can use all the advanced tools, except for
transgenic modification, but the science is moving beyond that
anyway, and it is not needed.
Marker-assisted selection, environmental genetic analysis,
and other tools need to be applied alongside classical breeding
tools, to produce varieties in the public domain that respond
best to the ecological fertility and pest management strategies
that are built into organic systems.
Economic research and regional marketing infrastructure
development are crucial to the success of our growing organic
production sector. Rewards for organic's environmental services
are important, but we still need to have a basically successful
economic model in the marketplace.
Here, again, 2008 made a start, and the results of those
investments should inform the next stage of scaling up.
Advanced organic soil management systems can improve
performance in soil health and biodiversity, water retention
and drought tolerance, energy conservation, pollinator health,
and more.
Extension programs and applied technology development are
needed to put all these parts together in regionally and site
specific packages.
The conservation effects of organic agriculture were
singled out by Congress in 2008 as an important purpose of
Organic Research and Extension Initiative. This area of study
is going to be incredibly important and will deserve continued
support by Congress.
Conservation Programs: As directed in the 2008 Farm Bill,
the USDA Natural Resources Conservation Service has made great
strides in trying to integrate organic and transitional
production systems into the EQIP and Conservation Stewardship
Programs. In some places, this seems to have worked very well.
In other places, it does not appear to be working so well.
There is a great need for the NRCS field personnel to be
trained in the principles and requirements of organic
production. In some places, there is still a need for NRCS
personnel to just be open to it at all.
As the 2010 sign-ups and contracts for the NRCS
conservation programs are completed and analyzed, we will have
a better picture of how to improve Congress's goal of
integrating insurance and transitional growers into the
programs, and get the resulting conservation benefits that
organic systems provide.
I have enjoyed working with our local office, signing up
for the EQIP Program and the organic high-tunnel project. I
have passed the word to other growers on the benefits of
signing up to learn more about conservation practices. NRCS
needs to be better at outreach and get the word out. They also
need to be able to be better prepared when organic growers and
small farmers come into the office.
Crop insurance, credit and disaster payments: Again, we
still only have a very incomplete picture of how well the 2008
organic provisions for crop insurance are working.
There does seem to be some focused activity, but we don't
have results to see yet. Likewise, the related data collection
and analysis, that could help remedy the problems for organic
growers with farm credit and disaster payments, is not yet
sufficient. We hope that the efforts started under the 2008
Farm Bill will yield enough information to shape further
constructive policy changes in the next round of legislation.
In conclusion, Mr. Chairman, there is still a ways to go to
get organic agriculture on an equal footing with the USDA's
agencies and programs; but we are making great progress. The
outcomes are good, not only for organic farmers and their
customers, but for all of agriculture.
I thank you for listening and ask that I may be able to
submit revised written remarks for the record.
[The prepared statement of Mr. Teixeira follows:]
Prepared Statement of John M. Teixeira, Organic Tomato, Eggplant, Bell
Pepper, Melon, and Corn Producer, Firebaugh, CA
My name is John Teixeira. I live at [Redacted] in Firebaugh,
California. My town is 1 hour northwest of Fresno, an agricultural
community of 6,000 population, next to the San Joaquin River. I produce
certified organic small grains, wheat and alfalfa hay, tree fruit,
herbs, greenhouse transplants, heirloom seeds, row crops, chickens,
pigs, and dairy goats. I am also a partner with two brothers and father
in family farm of 5,000 acres producing processing tomatoes, fresh
market tomatoes, cantaloupes, alfalfa, wheat hay, cotton, livestock,
greenhouse transplant production and composting 6,000 tons a year. I've
been farming for 40 years, 20 years organic. I serve as California
Certified Organic Farmers' Fresno-Madera Chapter Certification
Standards Chairman, and Board member of the Organic Farming Research
Foundation. I am also a board member of SlowFood Madera Chapter, and
board member of the Sustainable Cotton Project.
Thank you Chairman Peterson and Committee Members for the
invitation to speak on developing the next farm bill. We here in
California appreciate you coming to the Central Valley to hear our
thoughts on Federal policies for food and agriculture.
Building on the 2008 Farm Bill
The 2008 Farm Bill established a number of new provisions
concerning organic agriculture. These provisions covered research,
conservation, crop insurance, and support for the USDA organic
standards and certification system among other things.
USDA is still in the early phases of implementing some of these
provisions. I think we can all draw some general conclusions but the
Committee will need to sort out some details over the next year in
order to fine-tune the details. Overall the initial results show
promise.
We must nurture these seedlings for good results in the future.
It's like growing a crop: starting out with a good seed source and
preparing the soil making a good seed bed to get a good germination
with the right temperature and moisture. We want the seed to pop out of
the earth and continue to grow strong. The farm bill policies for
organic agriculture will be the same: they are getting off to a good
start but need careful attention and adjustment so that we have a good
harvest in years to come.
Congress has recognized that organic farming has multiple public
benefits in addition to sustaining high levels of food and fiber
production. These benefits range from conservation of pollinator
species to the provision of good jobs in production and processing. In
California the organic market is a strong economic force and one of the
brighter spots in our agricultural economy. The next farm bill should
begin to really leverage these benefits and amplify them by getting
more coordination between agencies and programs. The benefits of
organic research and organic conservation systems can have positive
``spillovers'' for improving the environmental performance of all
farming systems, but the agencies need to approach it that way and have
a coordinated strategy for this effect. If it receives a fair share of
research and development resources, organic will lead the way towards a
much lighter impact on the nation's soil, waters and wildlife while
providing the productivity that we need.
Research, Education and Extension
Increased funding for organic research and education in the 2008
Farm Bill was historic. Many projects from the first round of funding
look promising. The dedicated organic research funds are also helping
to build baseline capacity in organic systems research.
But there is still only a relative trickle of science and
technology for organic systems coming from the agencies and
universities. Research and education for organic systems is still only
about 2% of USDA's research budget. That's only about half of the
overall market share that organic products have at the retail level. If
you look at the scale of problems that organic systems could make an
outsized contribution (such as pollinator declines and greenhouse gas
emissions), and compare that to the relative resources available, you
see that the potential contribution is being hobbled.
The overall effort on science and technology for sustainable
organic systems has to be scaled up. That is still a primary limiting
factor in the long-term success of existing organic farms, and for
effective transition.
I am particularly concerned about seed breeding. We have a critical
need for varieties that are adapted to organic systems and we need
adequate seed supplies for increased organic production. We need
organic plant (and animal) breeding for increased resilience in the
face of climate change and reduced water supplies. Policy passed by
Congress must continue to aggressively rebuild our national capacity
for developing and releasing high quality public cultivars. Organic can
use all the advanced tools except for transgenic modification, but the
science is moving beyond that anyway and it is not needed. Marker-
assisted selection, environmental genetic analysis, and other tools
need to be applied along side classical breeding tools, to produce
varieties in the public domain that respond best to the ecological
fertility and pest management strategies that are built into organic
systems.
Economic research and regional marketing infrastructure development
are crucial to the success of our growing organic production sector.
Rewards for organic's environmental services are important but we still
need to have a basically successful economic model in the marketplace.
Here again, 2008 made a start and the results of those investments
should inform the next stage of scaling up.
Advanced organic soil management systems can simultaneously improve
performance in soil health and biodiversity; water retention and
drought tolerance, energy conservation, pollinator health, and more.
Extension programs and applied technology development are needed to put
all these parts together in regionally- and site-specific packages.
The conservation effects of organic agriculture were singled by
Congress in 2008 as an important purpose of the Organic Research and
Extension Initiative. This area of study is going to be incredibly
important and will deserve continued special attention by Congress.
Conservation Programs
As directed in the 2008 Farm Bill, the USDA Natural Resources
Conservation Service has made great strides in trying to integrate
organic and transitional production systems into the EQIP and
Conservation Stewardship programs. In some places this seems to have
worked very well. In other places it does not appear to be working so
well. There is a great need for NRCS field personnel to be trained in
the principles and requirements of organic production. In some places
there is still a need for NRCS personnel to just be open to it at all.
As the 2010 sign-ups and contracts for the NRCS conservation programs
are completed and analyzed, we'll have a better picture of how to
improve Congress' goal of integrating organic and transitional growers
into the programs, and get the resulting conservation benefits that
organic systems provide. I have enjoyed working with our local office
signing up for EQIP program and the high-tunnel project. I pass the
word to other growers on the benefits of signing up to learn more about
conservation practices. NRCS needs to be able to do better outreach and
Get The Word Out. They also need to be able to be better prepared when
organic growers and small farmers do come in.
Crop Insurance, Credit and Disaster Payments
Again, we still have only a very incomplete picture of how well the
2008 organic provisions for crop insurance are working. There does seem
to be some focused activity but we don't have results to see yet.
Likewise, the related data collection and analysis that could help
remedy the problems for organic growers with farm credit and disaster
payments, is not yet sufficient. We hope that the efforts started under
the 2008 bill will yield enough information to shape further
constructive policy changes in the next round of legislation.
In conclusion, Mr. Chairman, there is still a ways to go to get
organic agriculture on an equal footing within USDA's agencies and
programs but we are making great progress. The outcomes are good not
only for organic farmers and their customers, but for all of
agriculture.
I thank you for listening and ask that I may be able to submit
revised written remarks for the record.
The Chairman. Thank you very much, Mr. Teixeira, and we
will definitely make room for any additional comments you want.
Mr. Van Konynenburg, welcome to the Committee.
STATEMENT OF PAUL J. VAN KONYNENBURG, PEACH, APPLE, CHERRY,
APRICOT, ALMOND, AND WALNUT PRODUCER,
MODESTO, CA
Mr. Van Konynenburg. Thank you, Mr. Chairman. Chairman
Peterson, Ranking Member Lucas, Congressmen Cardoza, Costa,
Minnick, Conaway and Nunes, and other distinguished Members of
the Committee, thank you for the opportunity to address the
Committee today in advance of the 2012 Farm Bill.
My family has been growing fruit and tree, nut tree
specialty crops in California for over a 100 years. Thank you
for recognizing the contribution and the importance of
specialty crops to the overall farm economy.
Before I get to my comments on the 2012 Farm Bill, there
are two items of importance that Congress needs to address
immediately.
These are the estate tax reform and agricultural labor
reform. On the estate tax reform, as you are well aware, in
2009, the estate tax rate was 45 percent with an exemption up
to $3.5 million. And that tax expired on December 31, 2009. But
a new rate of 55 percent and a $1 million exemption is
scheduled to take effect on January 1st, 2011, if there is not
a significant change.
As Ranking Member Lucas stated earlier, this estate tax can
be unusually hard-hitting on farmers who need substantial
capital assets to generate income.
USDA's Economic Research Service estimates that the
proposed 2011 estate tax could see up to ten percent of farm
estates owing taxes, a marked increase from the 1.5 percent of
farm estates which owed tax in 2009. An immediate legislative
solution is required.
The next item, the agricultural labor reform. Labor-
intensive agriculture, including all fresh market tree fruits,
from coast to coast, is faced with a long-term labor problem.
This isn't about wages. Many of these jobs pay well above the
minimum wage. Most are $12 to $15 an hour. But the work is
physically demanding and seasonal.
Growers need a sufficient, sustainable, and legal supply of
workers to produce, pack and market specialty crops to
consumers. Without reliable and legal labor, our industry will
eventually be forced offshore, or outsourced to where labor is
available. This would greatly impact our food safety and
reliability.
At a time when the nation's health community is encouraging
us to eat more fruits and vegetables, we should do everything
possible to encourage their production here and discourage
greater dependence on imports.
This is a problem Congress can fix by passing agricultural
labor reform with improvements to the H-2A guest worker program
and the opportunity to earn legal work status by continued work
in agriculture. Please approve the AgJOBS bill.
Now looking forward to the 2012 Farm Bill, please
considering expanding specific priorities from the 2008 Farm
Bill.
First of all, in the USDA Fruit and Vegetables Snack
Program. This program is important since it develops life-long
eating habits for children through the consumption of fruits
and vegetables.
The current program is particularly effective with school
districts that have modern and efficient logistics and
distribution infrastructure. However, the program needs greater
flexibility in order to assist school districts that are not
equipped to handle large volumes of fresh produce.
For these districts, allowing the inclusion of preserved
items to the program, such as peach snack cups or a box of
raisins, would allow the district to meet the goals of the
program.
Second, the Special Crop Research Initiative, also known as
SCRI, is helping improve production efficiency, lower costs,
and enhance taste and quality for our consumers.
Particularly exciting to our operation has been research
into engineering and automation technologies to improve the
safety, efficient, and sustainability of apple and stone fruit
orchards. Thanks to the SCRI we were able to work with Roger
Duncan at the UC Extension to test the Darwin String Mechanical
Fruit Tree Thinner in peaches. We must continue research into
technology that will reduce labor and enhance the quality of
specialty crops.
There are new programs for the 2012 Farm Bill that I would
like for Congress to consider. The first is expanding the USDA
Germplasm Repository. We need a global DNA database/
registration system for the purpose of cultivar protection, so
that plant breeders can adequately defend their intellectual
property around the world.
The USDA Germplasm Repository is the right agency and
program to develop a global repository, that would be the first
step in strengthening the intellectual property rights of
American plant breeders around the world.
Once fully established, a global recognition of cultivar
protection could be enacted.
Second, expand the crop insurance guarantees for all
specialty crops. Currently, crop insurance for specialty crops
is affordable and workable in some crops and completely
unaffordable and unworkable in others.
While there has been significant improvements in cherry and
apple insurance programs over the past 10 years, crop insurance
for other crops remain nonviable.
As the Committee considers changes, please note the unique
aspects of specialty crop production in California. We
oftentimes have one operator in partnership with several
different land-owning entities. Therefore, having income
guarantees for just the operator doesn't always work.
Thank you for the opportunity to testify today. I will be
glad to answer your questions. Thank you very much.
[The prepared statement of Mr. Van Konynenburg follows:]
Prepared Statement of Paul J. Van Konynenburg, Peach, Apple, Cherry,
Apricot, Almond, and Walnut Producer, Modesto, CA
Chairman Peterson, Ranking Member Lucas, Congressman Cardoza and
distinguished Members of the Committee,
Thank you for the opportunity to address the Committee in advance
of the 2012 Farm Bill. My family has been growing fruit and nut tree
Specialty Crops in California for over 100 years. We currently grow
almonds, apples, cherries, peaches and apricots in Stanislaus County.
Let me first say to the Committee how much we appreciate the
Specialty Crop provisions that were included in the 2008 Farm Bill.
Thank you for recognizing the contribution and importance of Specialty
Crops to our overall farm economy. Specialty Crops account for nearly
half of all U.S. cash crop receipts, play a vital role in our economy
and are important for our health.
Before I get to my comments on the 2012 Farm Bill, there are two
items of importance that Congress needs to address immediately: Estate
Tax Reform and Agriculture Labor Reform.
Estate Tax Reform
In 2009, the estate tax rate was 45 percent with an
exemption of up to $3.5 million. The tax expired on December
31, 2009, but a new rate of 55 percent and a $1 million
exemption is scheduled to take effect on January 1, 2011. The
estate tax can be unusually hard hitting on farmers who need
substantial capital assets to generate income. USDA's Economic
Research Service (ERS) estimates that proposed 2011 estate tax
could result in up to 10% of farm estates owing taxes, a marked
increase from the 1.5% of farm estates which owed tax in 2009.
An immediate legislative solution is required.
Agricultural Labor Reform
The farm bill presumes that Specialty Crops will be
harvested and available to market. However, labor intensive
agriculture, including all fresh market tree fruits, from
coast-to-coast is faced with a long term labor problem.
It's not about wages; many of these jobs pay well above the
minimum wage ($12 to $15 per hour national average). But the
work is physically demanding and seasonal. It is next to
impossible to find American workers who are capable and willing
to do the work.
Growers need a sufficient, sustainable, and legal supply of
workers to produce, pack and market specialty crops to
consumers.
Without reliable and legal labor, our industry will
eventually be forced offshore--outsourced--to where labor is
available.
This would greatly impact our food safety and
reliability.
At a time when the nation's health community is
encouraging us to eat more fruits and vegetables, we should
do everything possible to encourage their production here
and discourage greater dependence on imports.
This is a problem Congress can fix by passing agricultural
labor reform with improvements to the H-2A guest worker program
and the opportunity to earn legal work status by continued work
in agriculture. Please approve the AgJOBS bill.
Looking forward to the 2012 Farm Bill, please consider the
following:
Overall Recommendations
Tree fruits and nuts are vital to the good health of the
American diet. The next farm bill should support foods which
the nation's medical community believes will enhance health and
help fight disease.
Improving the Specialty Crop provisions in the farm bill
that addresses nutrition, increases food safety, expands
exports, fights invasive pests and disease, and expands
research is not just good for farmers, but it is a victory for
every American's health.
Expand Specific Priorities from the 2008 Farm Bill
USDA Fruit & Vegetable ``Snack'' Program: This program is
important since it develops life-long healthy eating habits for
children through consumption of fruits and vegetables.
The current program is particularly effective with
crops that have long storage life (apples) or a long
growing season (table grapes) and with school districts
that have modern and efficient logistics and distribution
infrastructure.
However, this program needs greater flexibility in
order to assist school districts that are not equipped to
handle large volumes of fresh produce. For these districts,
allowing the inclusion preserved items--such as peach snack
cups or a box of raisins--would allow the districts to meet
the goals of the program.
Specialty Crop Research Initiative (SCRI) is helping improve
production efficiency, lower costs, and enhance taste and
quality for our customers. The SCRI has supported collaborative
projects already impacting specialty crops, including the apple
and stone fruit industry. Particularly exciting to our
operation has been the research into engineering and automation
technologies to improve the safety, efficiency, and
sustainability of apple and stone fruit orchards. Thanks to the
SCRI, we were able to work with Roger Duncan at UC Extension to
test the Darwin String Thinner in peaches. We must continue
research into technology that will reduce labor and enhance the
quality of Specialty Crops
Specialty Crop Block Grants: This program provides Federal
help to meet crop specific problems with localized solutions.
This program is funded by the USDA but operated by state
departments of agriculture to focus on regional and local needs
for specialty crops such as improving food safety, increasing
the consumption of home-grown specialty crops as well as pest
and disease research.
Market Access Program: Let's continue to grow the export
market, where much of the world's future population expansion
will occur. Exports are a bright growth market for almonds,
apples and cherries. We need to enhance critical trade
assistance and market promotion tools to expand international
markets for apples and other specialty crops.
Pest and Disease Prevention Programs: Please continue to
support the USDA's work with the California Department of
Agriculture to implement prevention and mitigation protocols to
combat invasive pest and diseases, which cost the economy
billions of dollars per year.
Section 32 Program: We need to be serving more fresh and
canned fruits and vegetables to our children. Please recognize
their importance and therefore emphasize these items over fried
or less healthy processed foods.
New Programs for the 2012 Farm Bill
Expand the USDA Germplasm Repository. We need a global DNA
database/registration system for the purpose of cultivar
protection so that plant breeders can adequately defend their
Intellectual Property. The USDA Germplasm Repository is the
right agency and program to develop a global repository that
would be the first step of strengthening the Intellectual
Property rights of American plant breeders around the world.
Once fully established, a global recognition of cultivar
protection could be enacted.
Expand crop insurance guarantees for all Specialty Crops.
Crop insurance in Specialty Crops is affordable and workable in
some crops and completely unaffordable and unworkable in other
crops. While there have been significant improvements in cherry
and apple insurance programs over the past 10 years, crop
insurance programs for other crops remain nonviable.
Thank you for the opportunity to testify today. I'd be glad to
answer your questions.
The Chairman. Thank you, Mr. Van Konynenburg.
Mr. Parnagian, welcome to the Committee.
STATEMENT OF JUSTIN PARNAGIAN, PEACH, NECTARINE, PLUM, GRAPE,
APRICOT, AND CITRUS PRODUCER, PACKER AND SHIPPER, FRESNO, CA
Mr. Parnagian. Thank you. Good morning, Chairman Peterson,
as well as Members of the Committee. My name is Justin
Parnagian and I am an employee, as well as a member of the
Fowler Packing Company family, which grows, packs and ships
stone fruit, table grapes and citrus throughout the world.
My grandparents, Sam and Gladys Parnagian, who were already
farmers in the area, started Fowler Packing less than a decade
after World War II. My father, Dennis Parnagian, along with his
brothers, joined the family business after completing their
formal education, and helped grow our company, continuously,
for more than 50 years.
I am proud to be the latest generation actively growing,
selling and shipping healthy fruits all around the United
States and the globe.
We very much appreciate the House Agriculture Committee,
and all of you taking the time and making the effort to be here
in Central California, an area that is, arguably, the most
productive agricultural region in the world.
We look forward to the continuing dialogue as it relates to
the discussion and the formation of the 2012 Farm Bill.
While it truly does seem such a short time ago, we were
discussing the 2008 Farm Bill, those of us in production
agriculture in California very much appreciate your foresight
in holding these hearings at this early point of the process.
As a specialty crop producer who grows fresh grapes, tree
fruit and citrus, I was particularly gratified that the current
farm bill recognized for the first meaningful time, the
importance of specialty crops in improving the quality of life
for all Americans.
Due to the focus and resources of the current bill, we
better understand the importance of fruits and vegetables, and
their role in providing needed nutrition and fighting obesity.
We applaud the efforts of First Lady Michelle Obama and her
childhood obesity initiative, appropriately named ``Let's
Move,'' and the ability of the farm bill to assist in providing
funding for healthier diets for our youth, as evidenced by the
expansion of the Fruit and Vegetables Snack Program to all 50
states.
However, as we all know the 2008 Farm Bill did not just
stop at nutrition, but looked to improve the overall
competitiveness of specialty crops by providing critical trade
assistance and market promotion tools that help grow
international markets; expanded research and APHIS initiatives
to combat invasive pests and diseases; invested in the latest
research to make the nation's food supply safer, more
economical, better tasting and nutritious; promoted the
conservation of our agricultural resources; and expanded the
funding for state specialty crop competitiveness projects in
all 50 states.
We believe we are on the right track with these kinds of
investments, in that they provide true value for all of our
citizens. But, realizing the fiscal and budgetary challenges
our country now faces, we are even more committed to analyzing
and assuring that all of these programs provide the tangible
returns that will guide the allocation of resources under the
next farm bill.
I can tell you from personal knowledge of the success of
such programs as EQIP, that help on our conservation and
environmental efforts. TASC that assists in developing markets
for California tree fruit in Mexico, working in conjunction
with the California Grape and Tree Fruit League, and MAP funds
that help promote our products around the world.
As we move forward in the 2012 Farm Bill discussion, there
remains clear benefits to increase consumer education and
awareness in consuming fruits and vegetables.
We also need to recognize the importance, from many
viewpoints, but particularly that of national security, of the
production of our domestic food supply. We will again require a
farm bill that will help our competitiveness, strengthen our
research efforts, enhance our conservation programs, and
encourage investment and efficiency in all agricultural
production sectors.
But in addition, we will also need to address developing
issues that look to negatively impact the true sustainability
of California agriculture and its ability to produce that
domestic food supply.
These include the lack of sound science connected with
biological opinions related to the Endangered Species Act, and
the resulting reductions of water and plant health material
supplies.
I would hope the USDA would assist in advocating on behalf
of agriculture in regard to these issues with the EPA, as well
as the Department of the Interior, and to work with the NRCS,
to provide additional and more efficient water supplies.
If we do not address these concerns properly, the chances
that we will continue to outsource an increasing percentage of
our fruits and vegetable from other countries such as China
will only grow.
And please make no mistake, they will be eager to take our
place.
We look forward to providing specific and detailed
examples, and working with you through this very important
process. Thank you very much, again, for taking the time to be
here today.
[The prepared statement of Mr. Parnagian follows:]
Prepared Statement of Justin Parnagian, Peach, Nectarine, Plum, Grape,
Apricot, and Citrus Producer, Packer and Shipper, Fresno, CA
Good morning, Chairman Peterson, Ranking Member Lucas, Congressman
Boswell, Congressman Conaway, Congressman Costa and Congressman
Cardoza. My name is Justin Parnagian and I am an employee as well as a
member of the Fowler Packing Company family. My grandparents, Sam and
Gladys Parnagian, who were already farmers in the area, started Fowler
Packing Company less than a decade after World War II. My father,
Dennis Parnagian, along with his brothers, joined the family business
after completing their formal education and has helped grow our company
continuously for more than fifty years. I am proud to be part of the
latest generation actively growing, selling and shipping healthy fruits
all around the United States and the globe. We very much appreciate the
House Agriculture Committee and all of you taking the time and making
the effort to be here in Central California; an area, as you know, that
is arguably the most productive agricultural region in the world. We
look forward to the continuing dialogue as it relates to the discussion
and the formation of the 2012 Farm Bill.
While it truly does seem such a short time ago we were discussing
the 2008 Farm Bill, those of us in production agriculture in California
very much appreciate your foresight in holding these hearings at this
early point of the process. As a specialty crop producer who grows
fresh grapes, tree fruit and citrus, I was particularly gratified that
the current farm bill historically recognized for the first meaningful
time the importance of specialty crops in improving the quality of life
for all Americans. Due to the focus and resources of the current bill,
we better understand the importance of fruits and vegetables and their
role in providing needed nutrition and fighting obesity. We applaud the
current efforts of First Lady Michelle Obama and her childhood obesity
initiative appropriately named ``Let's Move'' and the ability of the
farm bill to assist in providing funding for healthier diets for our
youth as evidenced by the expansion of the Fruit and Vegetable Snack
Program to all 50 states.
However as well all know, the 2008 Farm Bill did not stop just at
nutrition but looked to improve the overall competitiveness of
specialty crops by providing critical trade assistance and market
promotion tools that help grow international markets; expanded research
and APHIS initiatives to combat invasive pests and diseases; invested
in the latest research to make the nation's food supply safer, more
economical, better tasting and nutritious; promoted the conservation of
our agricultural resources and expanded the funding for state specialty
crop competitiveness projects in all 50 states. We believe we are on
the right track with these kinds of investments in that they provide
true value for all of our citizens but realizing the fiscal and
budgetary challenges our country now faces we are even more committed
to analyzing and assuring that all of these programs provide the
tangible returns that will guide the allocation of resources under the
next farm bill. I can tell you from personal knowledge of the success
of such programs as EQIP that help on our conservation and
environmental efforts, TASC that assists in developing markets for
California tree fruit in Mexico working in conjunction with the
California Grape and Tree Fruit League, and MAP funds that help promote
our products around the world.
As we move forward in the 2012 Farm Bill discussion, there remains
clear benefits to increase consumer education and awareness in
consuming fruits and vegetables. We also need to recognize the
importance, from many viewpoints but particularly that of national
security, of the production of a domestic food supply. We will again
require a farm bill that will help our competitiveness, strengthen our
research efforts, enhance our conservation programs and encourage
investment and efficiency in all agricultural production sectors.
But in addition we will also need to address developing issues that
look to negatively impact the true sustainability of California
agriculture and its ability to produce that domestic food supply. These
include the lack of sound science connected with biological opinions
related to the Endangered Species Act and the resulting reductions of
water and plant health material supplies. I would hope that USDA would
assist in advocating on behalf of agriculture in regard to these issues
with the Environmental Protection Agency as well as the Department of
Interior and to work with NRCS to provide additional and more efficient
water supplies. If we do not address these concerns properly, the
chances that we will continue to outsource an increasing percentage of
our fruits and vegetables from other countries such as China will only
grow.
We look forward to providing specific and detailed examples and
working with you through this very important process. Thank you very
much again for taking the time to be here today.
The Chairman. Thank you very much, Mr. Parnagian. I thank
all of the witnesses for their excellent testimony.
I would like to recognize Mr. Earl Williams, who I think is
in the audience, from the California Cotton Growers and Ginners
Association. We had a hard time getting everybody to fit in
here, but I just want you to know, you maybe are aware, I met
with your national people last week, and it is probably
premature to talk about what we are going to do, given the
Brazil case and all that.
But we look forward to working with you to make this all
work and figure out how to get through this. We appreciate you
being here today and look forward to working with you as we
move forward.
The gentleman from California, Mr. Cardoza.
Mr. Cardoza. Thank you, Mr. Chairman. I appreciate each of
you being here today. I asked the previous panelists a single
question, because I think it speaks about what we need to do
more of and what we need to do less of.
My question is, what is working for you in the bill, very
briefly, and what is not working for you in the bill, and what
you would like to see eliminated.
So Mr. Roberts, why don't you begin.
Mr. Roberts. The Plant Protection Act has allowed more
invasive pests and diseases to come in our direction. I hope
you are all aware of Huanglongbing, I am sure you are, but we
have never fought a battle like that before.
I think we could ask the Office of Management and Budget, I
believe, to do an audit of what we were faced with before the
Act, and what we are faced with now, as far as incursions of
diseases and pests. I think the system is failing us on the
risk of what is acceptable to come in. I don't think we can do
any better job of monitoring our borders than we are currently
doing.
We are overwhelmed by the amount of pests and diseases that
may be headed in our direction.
Mr. Strachan. I think the thing that we like about the
recent farm bill is just the Fresh Fruit and Vegetable Snack
Program. The thing that I don't like about it is that it is not
in every school, or there is not enough funding for it to be in
every school.
I would encourage you to reauthorize it at a higher level,
so that it can get to everybody.
Mr. Teixeira. Yes. More funding for organic research has
started. We need a little bit more.
Mr. Cardoza. What do you think the adequate level of
research would be?
Mr. Teixeira. Well, it's only at two percent, so if you
could double it, or more, it would be big advantage. I know it
is a gradual thing and it costs money. It has got to come from
somewhere. So we have a start, let's nurture it and continue to
grow it.
Mr. Cardoza. Have any of the organic practices been able to
be applied to general crop practices?
Mr. Teixeira. Yes. I use a lot of organic practices in
conventional ag, composting for one, cover crops. A tremendous
amount of my neighbors, in my area, are responding to some of
these innovative ways. We need more research and a systems
approach, and it just takes time; but it is making a change.
Mr. Van Konynenburg. The Specialty Crop Research Initiative
is working. I would urge its continuance. What is not working
is the current way we are going about doing crop insurance. For
specialty crops, especially, our main insurable need is for
hail, or something like that. Right now, the private hail
market is working in some areas; it is not in others. And long
term, this year, given the economic conditions, labor, for our
area is not going to be an issue this year. But long term,
labor is going to be an issue.
Mr. Parnagian. I believe the Trade Assistance Programs are
working for us and MAP funding, as we ship and promote our
products throughout the world. That is of extreme benefit to
us. What is not working is little too early to tell yet, so I
can't comment on that right now.
Mr. Cardoza. Mr. Van Konynenburg, I know you I experienced
huge problems with the hail. Some of your colleagues who grow
peaches have just been devastated. The current program requires
you to maintain practices all the way to where you would
normally pick, in order to show whether the blemish is there or
not, and if you do that, you only get 50 percent. You just
continue the losses.
Mr. Van Konynenburg. It doesn't work.
Mr. Cardoza. Doesn't work.
Mr. Van Konynenburg. The current program doesn't recognize
how much money has gone into the crop. It is a disconnect
between what is reality.
Mr. Cardoza [presiding.] Exactly. Thank you for your
testimony and thank you for being here. Next up, Mr. Lucas.
Mr. Lucas. Thank you, Mr. Chairman. I guess, first, let me
put this question to Mr Parnagian, and then anyone else who
wants to touch on it.
You testified to the effect the EPA is making the domestic
market a great place for the Chinese and other countries to
sell to us.
Would you expand on that for just a moment.
Mr. Parnagian. Well, the EPA, you say, is making it easier
for China? I don't necessarily think that it was the EPA. But I
think that the restrictions that are required, and I think
justifiably so, that are required within California, because we
have to maintain certain levels and standards in our farming
practices.
I think China doesn't have those restrictions on their
growing practices, and a lot of the restrictions require labor
and added cost to our product. A huge competitive advantage for
China is the fact that their labor is very cheap, and they
don't have those types of restrictions, thereby making it easy
for them to get into our country, to bring product in. They can
deliver it at a much, much lower price than we can, and
obviously, what is very attractive to a lot of consumers, is
price.
We deal with crops that are--you know, it's very elastic,
it's a true form of price equals demand sense, and the lower
price that these Chinese can bring in their products, they can
overshadow us and they can beat us to market.
Mr. Lucas. From your marketing experience, and then I'll
call upon everybody else who might offer an opinion, does it
make a difference when a product is labeled California or USA,
or is the consumer typically more focused on the bottom line?
And I'm not asking for a scientific analysis, just your
impression.
Mr. Parnagian. My opinion?
Mr. Lucas. Your opinion.
Mr. Parnagian. It depends on the economy. We were seeing a
resurgence in California grown products, and I would like to
think that the consumers do pay particular attention to that. I
can't be certain that that is the case. I think that if they
see a nice-looking piece of fruit, competitively priced,
they're going to initially go to that. I mean, that is what my
gut tells me.
Mr. Lucas. Anyone else like to touch on either part of that
question?
Mr. Van Konynenburg. Yes. We are in favor of food labeling
for origin, especially I think a lot of the issues is there is
more--we have earned more good will and trust than some of our
offshore competitors. And so when someone buys something that
is made up of fruit concentrate that came out of China versus
fruit concentrate that came out of the United States, I think
that makes a big difference. There is traceability.
Mr. Strachan. As far as fresh fruits and vegetables,
typically, the best-selling fruit and vegetables are the ones
on the shelf. There is typically only one to choose from when
you go into a store. So a lot of times, the decision to buy
domestic versus international lies with the buyer, the
purchaser that represents that retail store chain or that food
service chain.
We would continue to encourage country-of-origin labeling,
so that the end consumers ultimately see what decisions those
retailers and food service companies make in terms of their
vegetable and fruit selection.
Mr. Roberts. Actually, on the biological opinions, the
citrus industry would like the EPA to be more involved in that,
because those biological opinions are supposed to be science-
based, but they see them as opinion papers. They are being
directed to come to a preconceived answer that we are doing
things wrong.
The Center for Biodiversity is ready to launch suit on the
use of 400 crop protection tools. Without those crop protection
tools, I think we are pretty much finished.
EPA is not given a chance to offer their expertise in that
system with Marine Fisheries Service. That needs to be more
open, the biological opinions need to be more open than they
are now.
Mr. Lucas. Thank you, Mr. Roberts. Anyone else? I yield
back my time, Mr. Chairman.
The Chairman [presiding.] Thank you, Mr. Lucas.
Mr. Costa.
Mr. Costa. Thank you very much, Mr. Chairman. Mr. Roberts,
in working with you and your association over the years,
dealing with trade issues with a number of countries; I am
wondering if you would care to comment on what we might be able
to do to make trade more fair. There are limitations to what
the jurisdiction of this Committee is.
Do you want to make any quick comment on that.
Mr. Roberts. We need to make sure that we revisit the 1999
Plant Protection Act and look at the amount of risk that we are
subject to on diseases and pests. Our system is being
overwhelmed.
Mr. Costa. I think that is a good description. I mean, we
try to deal with these issues, we push and we push, but I think
you describe it quite well in terms of being overwhelmed.
Mr. Roberts. The free trade agreements that were mentioned
earlier, I don't remember what all countries were involved in
it, but the Koreans are maintaining a 54 percent tariff against
citrus. We are not completely happy with that.
Mr. Costa. Yes. The bottom line is free trade is fine as
long as it is fair trade, and it has got to be a two-way
street, and too often that is not the case.
Mr. Roberts. In California, it costs us, as a citrus
producer, $400 in state regulatory costs, more than it does a
producer in Texas.
And then you add on the Federal costs of doing business in
the United States versus some of these other countries, and you
put the two together, and we are quite a burden to be the low-
cost producer.
Mr. Costa. That is in spite of that fact, some of my other
colleagues may not know--but we have become the number one
citrus state in the nation, as a result of all that good work,
notwithstanding the challenges.
Mr. Roberts. Yes.
Mr. Costa. Thank you for your good work. Mr. Strachan, we
have talked before on the efforts with regards to food safety
and your testimony went into detail about that. The problems we
have had with leafy greens over in the Salad Bowl, in Salinas,
but there are a lot of people that grow a lot of leafy greens
in the valley, out in my district on the west side.
I want to commend your efforts in supporting our food
safety systems with United Fresh, Western Growers, and a whole
lot of other ag organizations. We got that out of the House,
thanks to Chairman Peterson's help, and others. Congressman
Cardoza and I worked very hard on that.
The bill that is over on the Senate side, they are trying
to pattern it after our efforts. What concerns might you have
if there is a chance that we can get a conference committee
this year and get a national food safety standard out there.
Mr. Strachan. You know, the committees, the FDA agencies,
everybody has been really open to trying to learn from the
experience that we have had. We have been running a food safety
forum that combines government auditing with industry, and been
running it for about 3 years now. We have a lot of experience--
--
Mr. Costa. And the traceback program, as you noted, has
really been perfected, here in California.
Mr. Strachan. Yes. And so I think the lessons that we have
learned are starting to make their way into the bill. They
were, in many ways, in the House bill, and so I think we are
really positive about the way the legislation is moving along.
I don't have any specific feedback. I have read both bills. I
am fairly familiar with them. I have a few concerns about some
of the traceback provisions.
Mr. Costa. Please bring any concerns to our attention. We
will go from there. Before my time expires, I want to get to
the other three witnesses.
Mr. Teixeira, you share the same last name as my father's
grandmother, so we may be related somewhere back there. What do
you think is the potential for organic farming in this country?
You talked about a number of statistics in your testimony. What
do you think the appropriate role on the Federal side is in
dealing with both our traditional farmers and the organic
farmers that are continuing to grow in numbers.
Mr. Teixeira. Organic agriculture is the fastest-growing
segment in the United States right now. It is growing very
fast. A lot of people are in transition. I think there are a
lot of things to be looked at. We have to address some of the
concerns in that growing phase. Organic research is a real
important component. The transition component is very helpful
for transition growers to start up and get involved, and I
think that has really made a big difference by having those
funds. It has really increased the amount of people involved.
Mr. Costa. Thank you. Two more quick questions, if you
don't mind, Mr. Chairman.
Mr. Van Konynenburg, I just want to ditto the importance of
good estate planning. We would not be able to keep our farm in
our family had that not happened. I am glad that you noted that
we, who represent agriculture areas, need to continue to see if
we can come together on estate taxes, because if are going to
maintain family farms in America, you have to have this issue
dealing with the estate tax resolved in a way that makes sense.
I also want to commend you for your comments as it relates
to immigration reform. It is long overdue. I think agriculture
has stepped to the plate in terms of the need to have reform,
whether it is AgJOBS or comprehensive reform, which we must
achieve. I don't know whether we are going to be able to put it
together this year or not.
Finally, Mr. Parnagian, your family and ours have worked
together over the years, and we commend you. We made some
progress on obesity with the farm bill, last time, to get
healthy fruits and vegetables in the school lunch program, and
expand those efforts.
What else should we be doing as we look at the 2012 Farm
Bill to increase consumption of healthy fruits and vegetables?
I don't care where they are grown in this country, they are a
key to dealing with obesity. What are your thoughts on how we
can do a better job?
Mr. Parnagian. We have seen that when you're training the
children and getting them involved at a early age with the
fruits and vegetables that is a huge incentive. I don't know
what more you can do.
We do support what you have done with the school systems. I
think continuing to educate the children and getting them
involved, in any way, with soccer programs and whatnot, becomes
the building blocks of healthy habits.
Mr. Costa. Thank you very much, Mr. Chairman. My time has
expired.
The Chairman. I thank the gentleman. The gentleman from
Texas, Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman. I appreciate this
panel coming here. While we have been sitting here this
morning, my wife has sent me a picture of her one tomato plant,
with two tomatoes on it, of which she is spectacularly proud.
And it gives me just a microscopic sense of what pride you
bring to the table in providing this country with the safest,
most abundant, and cheapest food supply in the world. Those of
you in the tomato-growing business, who are in direct
competition with my wife, don't lose a lot of sleep about her
having much of an impact on the tomato market.
[Laughter.]
Mr. Conaway. When you talk about the estate tax, you need
to be for something. And I am for repeal. But that is probably
not going to be in the cards. If you look back at 2006, the
House passed a version that was not a bad first step in getting
rid of it totally, but not a bad compromise.
It would have provided for a $5 million exemption that is
indexed for inflation, a step-up in basis, it would have
provided a tax rate for the first $25 million of taxable estate
to be at the capital gains rate, and anything beyond $25
million would be double the capital gains rate.
And it would have addressed this issue much better than
what we think might be coming around.
So as your organizations look at your responses to the
estate tax and what you want, you might look back at the 2006
version that passed the House, that we were not able to get
through the Senate.
As we talk about immigration and labor, I am hopeful that
as this thing moves forward, that the voices on both sides can
be what I refer to--remember when you came in off the
playground and the teacher would say, all right, boys and
girls, let's start using our inside voice. Much of this debate
over the last 3 years has been conducted at the top of our
lungs.
We have been screaming at each other, and when you scream
at somebody, they don't really listen, and when somebody
screams at me, I don't listen.
This is important stuff. These are human beings. These are
people. And it is perfectly okay for America to operate in
America's best interest. It is in America's best interest to
protect our borders and secure them. It is in America's best
interest to know who is in this country. But these are people
and we need to deal with them accordingly, and I think we can.
We have to be careful that the folks on the way left and
the way right don't dominate this conversation, going forward,
because this is important stuff. I don't know if we will get it
done this year but we need to get it done.
The employers, as one of the earlier panel members said,
you need to be able to comply with these laws, you want to
comply with these laws, and it is important that we get that
done right.
One of the things about the conversation we have not had
yet, is what will the employer responsibilities be for this
workforce that we might be provided under the reform?
So you need to be thinking about that as well, because that
is going to help those who see the workforce as a threat, to
understand that that is not really the case.
I would like to get some comments, because the folks in
Texas who try to deal with this issue, and bring in people who
are unfamiliar with how hard labor is in your industry, they
don't really last more than a half a day, at best, and that the
only people who will do this work are the folks who have been
doing it and know how hard it is.
Can you comment, Mr. Van Konynenburg. Thank you for the
comment earlier about today is it is not really an issue
because the unemployment across this country is ten percent.
And when you hear that number, and then you hear folks talk
about not being able to find people to go to work, there is a
disconnect. And so could you talk to us, anybody on the panel
want to talk just a little bit about that?
Mr. Van Konynenburg. There is a high unemployment, so labor
is not going to be, at least for our area, an issue this year.
But there is a, for whatever reason, a need for a stable
supply of labor who can pick fruit, thin fruit, prune trees.
That is what we have to have. Unfortunately, it is seasonal. I
try to spread it out as best I can get, and situate our
operation the best I can to keep people working, 9, 10 months
out of the year, if I can; but it is seasonal and it is always
going to be seasonal.
We have to have a long-term solution that recognizes that
this labor need is going to be with us for fruit and vegetable
growers. This is the reality, going forward.
We have people who want to work. Let's put together a
program that is workable and let's get away from the noise. I
wholeheartedly agree with you. Right now, we have the volume up
too loud. We have to have a workable solution that works for
everybody.
Mr. Conaway. Mr. Roberts. Thank you, by the way, for
bringing the easiest to pronounce last name to this panel.
Mr. Roberts. Several years ago, when labor was tight, I did
take part in a small pilot H-2A worker program. All I did
during that period of time was donate my crop to that program.
I mean, the harvest costs in that program ate every dollar my
crop was worth, and then some. That program was certainly not a
viable option for us. It was too burdensome, too costly, there
was no incentive for the workers to speed up, to learn quick.
The housing, the transportation. It was way too much for us to
handle.
It is not fair of the U.S. Government to make me a criminal
every day. I mean, I do everything I can to do things right.
But, I cannot tell you that all my guys are legal. I get forms.
I turn them in. I photocopy them. I do everything I am supposed
to do. But I am made to feel like a criminal, on multiple
levels. It gets rather frustrating.
We need a good documented guest worker program, I think
would be the solution. I know that may not be palatable to a
lot of people, but for food security I would appreciate it.
Mr. Conaway. I do think we could have a worker program that
is based on two pretty straightforward issues. One, if you are
in this country on a legal basis, you can work. If you are
illegal, you can't work, which means let's make it as easy as
we can on the employers to comply, and then enforce that
compliance. And two, if you have a job, fine; if not, you go
home. Nothing to do with citizenship. It's absolutely
citizenship-neutral, doesn't help, doesn't hurt. It just
provides taking the ag arena, those folks who want to come here
and work, seasonally, to do that, and I think we can make this
work.
But we are going to have to ``lower the volume'' in order
to listen to each other properly, in order to make this thing
work.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank you. I thank the panel for their
excellent testimony. We appreciate you taking the time to be
with us today and answering the questions, and it was very
helpful to the Committee. So you are excused.
I recognize the Ranking Member for any closing statement he
might have.
Mr. Lucas. Thank you, Mr. Chairman. Just to note, briefly,
that the Committee does place great value on your California
Members of the Agriculture Committee. I think I can say, not
only for myself, but on behalf of the Agriculture Committee,
you have many challenges here but you also have some of the
most tremendous resources--soil, weather, the climate, all of
those things. Given a fair fight, you will continue to be the
productive ``jewel'' you have always been.
We want to help facilitate that and you will see us work
through a very tight budget in the coming year, to try and make
that happen. And I think I can say that in a bipartisan spirit,
Mr. Chairman.
The Chairman. That is definitely true. I associate myself
with your remarks. I would yield my time to Mr. Costa and Mr.
Cardoza for any brief closing statements they would like to
make.
Mr. Costa. Again, I want to thank you, Mr. Chairman, and
the Ranking Member, for the time and the patience that you have
taken to come out here. Congressman Cardoza and I, as Members
of the House Agriculture Committee, enjoy working with U.S.
agriculture throughout the country. We are obviously very proud
of our agricultural resiliency and our productiveness, and our
quality and innovation, here in California. The challenges we
face here, in some cases, are different, but I think we share
many of the challenges throughout the country. That is why this
hearing today is important.
The hearings we are having around the country are important
as we reset the table for the 2012 Farm Bill. When you talked
about being criticized for being premature in these actions,
let me commend both of you for being at the right place and the
right time.
As you noted in our hearing, Friday and Saturday, we didn't
meet the timeline in the last farm bill, so starting early
seems prudent given all the challenges and the fiscal
constraints we are going to have to deal with in Washington.
So I add these comments to those that both of you have
made, my colleagues here. We share, in a bipartisan fashion,
the advocacy of American agriculture. We try every day to
continue to allow you, our producers, to do what you do best,
which is produce the finest food and fiber anywhere in the
world.
To the witnesses on this panel and the previous panel, we
say thank you. For those who were not able to testify, we
regret that. When you have 400 commodity crops in California,
and you have two panels, it makes it difficult. Know that those
of you who weren't able to testify, we will take your written
testimony, your submission, as a part of the evidence.
There will be further hearings that will take place. I want
to close by thanking the Fresno City Council, and the mayor,
for allowing us to use these very nice chambers. To the comment
from my colleague from Texas, they were built in better fiscal
times. It was 10 years in the planning, and this building, as
modern as it looks, was completed, I think over 15 years ago.
We thank them for allowing us to use the council chambers
today.
Mr. Cardoza. I just will say thank you to you all again for
coming here. I think this was a productive hearing. I think you
heard our constituents tell you, directly, what doesn't work
and what we need to work on. Some of the things that we did
change in the last farm bill are ``hits'' that folks are very
pleased with. There are a few things that turned out to be
``dogs'' and we need to work on those. And there are programs
that simply aren't meeting the needs. Industries like dairy
that are just devastated.
The dairymen need to be on the same page, or at least close
to the same page. We have talked about it, time and time again.
But Mr. Chairman, I know that with the cooperation that is on
this Committee, that we can forge something that will work for
the different parts of the country.
Thank you for being here. I thank everyone for attending
and have a great trip home.
The Chairman. Thank you very much. I thank the gentleman,
and again, for those that weren't on the panels, you can send
any kind of testimony, any kind of information, suggestions, to
the Committee, it will be made part of our hearing record, at
www.agriculture.house.gov.
And so with that, under the rules of the Committee, the
record of today's hearing will remain open for 30 calendar days
to receive additional material and supplementary written
responses from the witnesses to any question posed by a Member,
and this hearing of the Committee on Agriculture is adjourned.
[Whereupon, at 12:03 p.m. (PDT), the Committee was
adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letter by Alan J. Bengyel, City Manager, City of Orange Cove,
California
April 27, 2010
USDA Rural Development
Fresno, CA.
RE: Letter of Support for USDA Rural Development Programs
Dear Sirs:
The City of Orange Cove is a rural agricultural farm worker
community located in eastern Fresno County. The City has been actively
involved with a variety of USDA programs ranging from farm worker
mortgage assistance, community water and sewer infrastructure funding
assistance, Intermediary Relending business financing and Rural
Business Enterprise Grant programs funding. We currently have two USDA
water system loans outstanding with your agency. The City has benefited
tremendously from USDA assistance.
Our needs remain ongoing, and we are currently working with USDA
Rural Development for two major infrastructure financing projects for
our community sewer and water systems. We have had ongoing meetings
with USDA staff to address these issues. We plan to have financing in
place with USDA, for these projects, within the next 12 months. These
projects are critical for the ongoing stability and growth of our
community. As well, we are working with USDA Rural Development staff
for another round of farm worker mortgage assistance funding for
another 35 homes in our community.
We wholeheartedly support USDA Rural Development's mission. We
encourage ongoing legislative support for USDA's programs. Our
community has befitted greatly from the professional support of USDA
agency personnel. These USDA programs items are greatly needed for our
community, and we support all efforts to maintain USDA Rural
Development programs in place.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Alan J. Bengyel,
City Manager.
______
Submitted Statement from Paul Boyer, Community Development Manager,
Self-Help Enterprises
USDA Rural Development is an important resource for small
disadvantaged communities in our country. Historically many San Joaquin
Valley communities have benefited from these programs. However, due to
the current USDA definition of rural and because it is anticipated that
2010 Census data will eliminate the eligibility of many communities,
California's share of RD Water and Waste Disposal funding will
diminish. The following includes excerpts from the recently completed
(February 2010) ``Jobs, Economic Development, and Sustainable
Communities'' report prepared by the California USDA State office
containing the issues raised in 43 Jobs Forums held throughout
California.
Find a Definition of Rural That Fits California's Needs and Realities
The USDA definition of ``Rural'' impacts the eligibility of
communities and individuals to receive financial assistance. Rural
Development has several different definitions for its programs. The
definitions are not standardized and often confusing. Different
programs and services at the state and national level define rural
area, rural community, and rural city and/or county in a variety of
ways. Some programs use definitions such as ``communities under 50,000
that are rural in nature,'' ``areas of less than 2,500 not in Census
places,'' or ``nonmetro county.''
All SJ Valley counties now have MSAs and do not have their
population counted as rural. Yet, those of us that live outside the few
Valley metro areas definitely live in a rural experience. The growth
experienced within the San Joaquin Valley communities is often without
the generally-related economic benefit such as diversified economies,
developed infrastructure, and access to important services such as
health care and higher education. When applying for resources, rapidly
urbanizing rural areas can find themselves ineligible for rural-
targeted programs due to tight population eligibility criteria.
However, because of the limitations discussed above, these areas are
often unable to compete when vying for resources against truly urban
and suburban areas.
Changes to Federal funding formulas should be made to reward
counties working to direct growth to cities to protect agricultural
land and open space.
California policy encourages ``city-centered'' or ``regional''
growth patterns that concentrates population growth, development and
economic activities in areas that are then considered non-rural under
current USDA definitions. In California this is even more so now with
green house gas goals further discouraging sprawl and encouraging
preservation of agricultural land.
Standardize and simplify the definition of ``Rural''.
USDA has several different rural definitions which can be confusing
and contradictory. Rural Development has separate and distinct rural
definitions for its Housing, Business, Water & Waste, and Community
Facilities programs. Simpler and more standardized definitions would
improve public understanding about USDA programs that are available in
rural areas.
Funds should be allocated to states based on the percent of the
population that lives in eligible communities.
Fifty percent of the weight in allocating funds nationally under
the Water and Environmental Program and Communities Facilities Program
is based on rural population. In the past, population data came from
the population living in communities the Census determined to be rural
(less than 2,500 population). However program eligibilities under the
actual statutes are much higher. Aligning allocations with actual
numbers of population that is eligible under the statutes would allow
for a much more equitable allocation of funds throughout the country.
Utilize Census block group data and Census designated places
instead of county level data to determine areas of persistent poverty.
Several Rural Development programs maintain set asides for
persistent poverty counties. These set-asides supplement regular state
allocations to provide added resources in areas of persistent poverty.
USDA's Economic Research Service defines counties as being persistently
poor if 20 percent or more of their populations were living in poverty
over the last 30 years (measured by the 1980, 1990, and 2000 decennial
Censuses). County size varies significantly across the country. Georgia
has 159 counties with an area of 59,000 square miles. Fifty counties
are designated persistent poverty. California has 58 counties in
164,000 square miles and no persistent poverty counties. Many SJ Valley
cities, Census Designated Places and Census Tract Block Groups
chronically exceed the 20% poverty level with some over 30%.
Census income data is collected to the Block Group level and as
Census Designated Places (CDPs). If persistent poverty were calculated
on that basis throughout the country there would be a greater
possibility of eliminating areas of persistent poverty that exist in
many states.
Regulatory Allocation Factors
Below are regulatory factors for 3 of USDA's programs: Water and
Environmental Program (WEP, which includes Water and Waste Disposal),
Community Facilities (CF), and Business and Industry (B&I). The data
was updated in 2009 based on data from the Economic Research Service.
As you can see under Rural Population (Criteria A), California's
minimal percentage of national rural population is a significant factor
in the allocation of funds since only communities less than 2,500 are
counted as rural. Criteria B and C below are calculated using non-
metropolitan population and unemployment data. Typically the use of
non-metropolitan population and unemployment data significantly
penalizes the more populous states by eliminating a significant portion
of the population eligible under the statute from the formula used to
allocated funds. We see this as an even more significant issue once the
2010 Census data is received and implemented.
WEP/CF/B&I Allocation Formula
(from USDA regulations 1780 and 1940-L)
The current criteria used in the basic funding allocation formula
to states are:
(A) State's percentage of national rural population will be 50
percent.
(B) State's percentage of national rural population with incomes
below the poverty level will be 25 percent.
(C) State's percentage of national nonmetropolitan unemployment
will be 25 percent.
In California WEP, CF and B&I programs will all lose many eligible
communities after receipt of the 2010 Census. This is supported from
the 2008 population estimate for cities which shows 14 California
cities will no longer be eligible for assistance from WEP; 18 for CF
and 19 for B&I programs. In addition, a number of CDPs would be
eliminated, but those estimates have not yet been made.
Most of these communities are in the SJ Valley and are agricultural
in nature. Consideration should be made to raising the limits on
population for these programs. The current cut off for Water and Waste
Disposal is ``rural and rural areas means any area not in a city, town
or Census designated place with a population in excess of 10,000
inhabitants, according to the latest decennial Census of the United
States.''
Recommendations
Increase the cap for population for Water Environmental
Program from 10,000 to 20,000.
Change the allocation formula to states for WEP/CF/B&I
Programs by:
Redefining ``Rural'' as less than 20,000 population.
Counting chronic poverty (>20%) for cities, CDPS and
Census Tract Block Groups with less than 20,000 population.
Counting unemployment for cities, CDPs, and CT Block
Groups with less than 20,000 population.
Paul Boyer,
Community Development Manager,
Self-Help Enterprises.
______
Submitted Statement from Hon. Mike Lane, Council Member, Visalia City
Council, State of California; Management Analyst, Self-Help Enterprises
I appreciate the opportunity to provide input for development of
the 2012 Farm Bill. There is nowhere more appropriate for input than
here in the center of the world's richest agricultural region--the San
Joaquin Valley.
Self-Help Enterprises is a regional nonprofit organization which
for over 45 years has worked closely with USDA Rural Development to
develop, improve, and preserve housing for low income valley residents
and especially farmworkers as well as the infrastructure that is
essential to the communities we call home.
We utilize Rural Development programs to provide mutual self-help
housing, housing rehabilitation, multifamily rental housing, and sewer
and water systems.
As many of those who speak today know so well, agricultural in
California is more than farms--it is the communities, the
infrastructure, and the people who manage the farms, who work the
farms, and who provide the services that rural communities depend upon.
Though this might surprise our more urban counterparts, the Valley
consists of much more than the 99 and I-5 corridor. In fact, the rest
of the valley is mostly unincorporated, invariably poor, economically
disadvantaged and typically woefully lacking in infrastructure.
Unincorporated communities like Planada, Ballico, Delhi, Kettleman
City, Armona, Lost Hills and cities of under 25,000 population like
McFarland, Avenal, Huron, Firebaugh, Mendota, Dos Palos, Livingston and
Patterson are home to 45% of the valley population.
With the most ``affordable'' housing in the Valley, these
communities are often plagued by substandard housing, lack of municipal
resources, and outdated infrastructure.
In a report commissioned by the Valley congressional delegation,
the Congressional Research Service stated, ``By a wide range of
indicators, the San Joaquin Valley is one of the most economically
depressed regions in the United States.''
At the same time, we know the Valley as an area of great resources
and even greater potential.
So just as this is an appropriate venue to hear input about
agriculture policies in the farm bill, so too is it an appropriate
venue to hear about USDA's critical role in community development and
the importance of USDA's comprehensive role.
These communities--like so much of rural America--need investment
beyond what they alone can muster--and it is important that a national
agriculture policy incorporate the broader investment needs of
agricultural communities.
It is against this backdrop that the ``other'' part of USDA, the
Rural Development mission area works quietly, yet effectively, to
invest in the communities we call home, and the lives of those who live
there. And the story of rural development in this valley is one of
successes. As you know, the RD, mission area encompasses three distinct
but coordinates efforts--RBS, RUS and RHS.
USDA Rural Development has been a key resource for Valley
communities. Perhaps the most significant element of USDA's Rural
Development role one that is often taken for granted--is the delivery
system. Throughout the San Joaquin Valley, indeed throughout the
nation, USDA is connected in to rural communities in a way that is
unique. Key because it is often the people who make the connection to
resources, who provide the TA necessary to enable the community to
access the complex resources available to them. In recent years,
despite consistent reductions, RD staff have continued to have a major
impact. But staff reductions cause strains, and it is important to
maintain the delivery system that exists.
Of course, when you get right down to it, the other key element of
USDA's Rural Development role is capital--it takes capital to invest in
our communities, and the USDA capital and technical assistance programs
are crucial to past and future success. It is important to realize that
loan guarantees and shallow resources are not a substitute to direct
capital investment.
For example, in one Kern County community SHE worked with USDA to
provide a water system. Without grant capital from USDA low income
families would have faced bills of $54 per month house for water on top
of the existing sewer charge. By comparison, in Visalia we pay about
$58 per month for water, sewer, trash & street cleaning.
The programs known among us as 502, 504, 514 & 516, 515, 535, sewer
and water systems loans and grants, and the Rural Community Development
Initiative, constitute a direct investment in rural people, in Rural
Communities, in Rural America. In fact, California leads the nation in
production and utilization of the 502 program. This key rural
homeownership program has a very low foreclosure rate.
An important element of the Rural Development role is the fact that
RD does not try to go it alone, but works in partnership with other
Federal, state, local, and private resources.
Working in partnership, USDA and SHE, counties, cities, and perhaps
most significantly, the people of those communities, have been
extraordinarily effective in bringing resources to the local level.
Whether it is an investment in a community water system, the
construction of rental farm labor housing in Planada, the opportunity
for mutual self-help homeownership in Shafter, or a new roof over the
heads of an elderly couple, the resources of USDA Rural Development
constitute a direct investment in rural people, in rural communities,
in rural America. It is a noble mission and an excellent investment.
The definition of ``rural'' continues to be of concern particularly
in light of the 2010 Census. Rural counties in California are far
larger than most counties in the Midwest and East. In fact, several
counties in the San Joaquin Valley are larger than whole states.
However, due to the fact that these large counties contain a
Metropolitan Statistical Area (MSA) they are defined as ``Metro
Counties'' notwithstanding the fact that outside of the urban area they
are completely rural counties in nature and heavily agricultural.
______
Submitted Letter from Barry F. Kriebel, President, Sun-Maid Growers of
California
May 28, 2010
Hon. Collin C. Peterson, Hon. Frank D. Lucas,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Re: Sun-Maid Growers of California 2012 Farm Bill Testimony
Dear Chairman Peterson and Ranking Member Lucas:
Sun-Maid Growers of California is a vertically integrated
cooperative owned by approximately 750 farmer-members. As Sun-Maid's
President and Chief Executive, I am submitting this testimony for the
2012 Farm Bill on behalf of our growers.
Maintain the eligibility of dried fruit in all school meal and
snack programs and in the WIC program--Traditional dried fruit, like
raisins, dried plums, figs and dates are nutritionally dense, shelf
stable, have no shrinkage and are always available as an alternative to
fresh fruit in all governmental meal, snack and feeding programs.
Traditional fruits contain no added or infused sugars and have
essentially the same nutritional food values as their fresh
counterparts, only without the water. Additionally, when compared to
many processed snack foods offered in schools and, when considering the
Administration's national goal to reduce childhood obesity, traditional
dried fruit it is an all natural alternative, contains no fat and has
no added salt.
Dried Fruit/Raisin Participation in USDA Programs--Currently, there
is a prevalent USDA theme for schools to participate in the ``buy
local'' and ``know your farmer, know your food'' programs. While such
messages appear harmless in thought, they clearly have nutritional and
practical limitations. Certain nutrient dense, natural products which
are only produced in one area of the United States, like traditional
dried fruits, yet are sought nationally by school nutritionists and
other Federal feeding programs, can be restricted for purchase. Simply,
California school districts would be able to access an abundance of
raisins or other traditional dried fruit, yet other school purchasers
throughout the country would be able to access fewer dollars for those
same products. Conversely, sellers of traditional dried fruit would not
be able to compete on a level playing field by selling to schools
throughout the nation if those schools are incentivized to ``buy
local'' products.
Another element we question under the ``buy local'' and ``know your
farmer, know your food'' themes is the fact that implementing such
programs displace existing providers of fruits and vegetables produced
on now what could be considered ``non-local'' farms. If the Department
is to provide incentives for schools to ``buy local,'' is it in turn
going to compensate those farmers whose sales are displaced by such
actions? There is nothing prohibiting schools from presently buying
local without a special program. We believe buying local should be
defined as purchases of fruits and vegetables produced within the
borders of the United States and its territories. Please consider
instead the theme, ``Buy Local, Buy American, Buy Healthy!''
Compliance with the Buy American requirement--State agencies have
an obligation to ensure that purchases under the Child Nutrition
Programs and by School Food Authorities adhere to the Buy American
requirement. While it is clear the language of the requirement states
``. . . the Department shall require that a school food authority
purchase, to the maximum extent practicable, domestic commodities or
products,'' the compliance with the requirement is highly questionable.
Fresh fruits and vegetables produced in the United States are
seasonally available to schools. Essentially, when they are not
available, schools could purchase non-domestic produce for their
students. This action would seem inconsistent with the intent of the
Buy American program which is to encourage the consumption of domestic
products. The program should be modified to require the purchase and
consumption of fruits and vegetables in all forms which would include
fresh, dried, canned and frozen.
We believe the spirit of the Buy American program can be maintained
and conformity take place by implementing the following compliance
steps and modifying the requirement as shown below:
Include a Buy American clause in all procurement documents
including product specifications, bid solicitations, requests
for proposals, purchase orders, etc.
Monitor contractor performance.
Require suppliers to certify the origin of the product sold
to schools.
Examine product packaging for identification of the country
of origin.
Change the language in the Buy American requirement to state
``. . . the Department shall require that a school food
authority purchase, to the maximum extent practicable, domestic
commodities or products in all forms including fresh, dried,
canned and frozen.''
Thank you for your leadership and this opportunity to submit
testimony for the 2012 Farm Bill. We look forward to working with you
through this very important process in support of the United States
agricultural industry.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Barry F. Kriebel,
President,
Sun-Maid Growers of California.
______
Submitted Letter from Jeff Marchini, President, Merced County Farm
Bureau
May 20, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture,
Washington, D.C.
Chairman Peterson:
The Merced County Farm Bureau represents one of the most productive
agricultural counties in California and the United States. We have over
1,600 members in dairy and ranching industry as well as growers of
almonds, tomatoes, and sweet potatoes crops. We are encouraged by the
efforts of Chairman Collin Peterson (D-MN) to bring the full Committee
to the Central Valley to discuss the 2012 Farm Bill.
California agricultural producers have typically not been deeply
involved in farm bill issues, but in recent years the farm bill's focus
has expanded to include new programs and provisions that benefit many
of our members. The 2008 bill's historic inclusion of the first-ever
specialty crop title has proved especially important to our growers of
fruits, vegetables and nuts. Many producers also take advantage of
conservation programs, including the popular EQIP, a program that
recently was threatened for budget cuts. Research, nutrition, and other
areas of agricultural policy also receive greater attention in the 2008
bill.
Looking to 2012, the Merced County Farm Bureau would like to work
with the Congress to ensure that the farm bill continues to acknowledge
the importance of promoting conservation programs like EQIP, preserving
the specialty crops title, and strengthening other programs that ensure
a safe and abundant domestic food supply. We are eager to share our
thoughts, comments, and expertise in the crafting of a bill that works
for our producers. Thank you for taking the opportunity to visit us in
order to learn more about the challenges we face to farm and ranch in
California.
Sincerely,
Jeff Marchini,
President,
Merced County Farm Bureau.
______
Submitted Letter by Anthony R. Mendes, Chairman of the Board,
California Dairies, Inc.
May 3, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture,
Washington, D.C.
Dear Congressman Peterson:
On behalf of its producer-members, California Dairies, Inc. (CDI)
respectfully submits this letter into the hearing record for the farm
bill field hearings. CDI is a full-service milk processing cooperative
owned by approximately 465 producer-owners located throughout the State
of California and collectively producing over 17 billion pounds of milk
per year, or 42% of the milk produced in California. CDI supplies 40%
of its milk directly to customers located in California and processes
the balance in its own processing plants. Our producer-owners have
invested over $500 million in seven large processing plants, which are
projected to produce about 350 million pounds of butter and 750 million
pounds of powdered milk products in 2010.
We thank the Members of the House Agriculture Committee for calling
the series of field hearings and allowing members of various
agricultural sectors the opportunity to present our respective industry
views that the Committee may find to be valuable during future farm
bill discussions. I appreciate the occasion to speak to the current
status of the U.S. dairy industry, current dairy policy considerations
and our suggestions for the next farm bill.
The situation that the U.S. dairy industry has faced in the last 18
month has led to a proliferation of ideas and proposals for new
policies and programs. Ostensibly, these proposals have been put forth
as solutions to the incredibly difficult times that dairy producers
have had to endure. While the goals of the various proposals differ in
the details, the suggestions are mostly focused on stabilizing milk
prices or providing a higher floor price for milk. Conceptually, the
programs are laudable, and most producers could support the idea of
higher and more stable prices. In fact, CDI's Board of Directors voted
affirmatively at its April 27th 2010 Board meeting to work with Agri-
Mark Dairy Cooperative (Agri-Mark) and National Milk Producers
Federation (NMPF) to help them further develop their concepts for
creating a more stable environment for dairy producers.
The various proposals being considered, including those from Agri-
Mark and NMPF, are at various stages of review within the dairy
producer community. As they are being discussed in broader forums, we
are starting to see modifications to the proposals so that they share
more common elements. We remain hopeful that the process of convergence
continues so that a single proposal emerges for dairy producers to
consider. We recognize that there are still unresolved issues in all of
the plans, even in their current stages of development. We are also
cognizant that as the concepts are transformed into enabling language,
the details provided may ultimately affect how many producers will
support the programs when they are finalized.
While we hope that continued discussions among dairy producers will
result in the general agreement needed to move the programs forward, it
is clear that the proposals are new enough to the dairy industry and
complex enough in their administration that they are not likely to be
implemented very soon. The dairy industry needs stabilizing forces
sooner rather than later. Therefore, we recommend that consideration be
given to a program that can provide what the dairy industry needs
quickly. As such, we favor programs that encourage dairy producers to
utilize risk management tools, some of which are available today. In
doing so, dairy producers would be establishing their own guaranteed
income.
We offer two potential programs that highlight the use of risk
management tools. The first program would need to be developed but
would follow some basic principles that would serve as cornerstones of
the program:
1. The risk-management program would be voluntary. All dairy
producers nationwide would choose whether or not they
participate.
2. The program would be established as an incentive-based program
that rewards those producers who choose to be proactive in
establishing their own milk pay price.
3. Dairy producers who execute a risk management strategy, such as
buying a put, would be compensated to offset the cost of
initiating that strategy (e.g., premiums and brokerage fees).
To be mindful of the effort of deficit reduction, we recommend that
other government dairy subsidy programs (such as the MILC program) be
restructured or eliminated in order to generate the funding necessary
to carry out the risk management-based program.
The second option we would favor is to simply revive the Dairy
Options Pilot Program (DOPP) that was provided for in the Federal
Agriculture Improvement and Reform Act of 1996. In January of 1999,
USDA started the DOPP to introduce milk producers to the futures and
options approach for managing risks. It was a cost-sharing program that
allowed dairy farmers to gain hands-on experience with options trading
for a period of 6 to 8 months. USDA paid 80 percent of the premium (or
cost) of each option and broker fees up to $30 per option. A similar
but more expansive program could be implemented to keep within the
theme of emphasizing risk management. Based on the experiences acquired
with the DOPP, there may be reason to launch a modified program that
uses some of the elements of the DOPP but improves on the original
concept.
Either of the two programs would be a tremendous step forward in
helping to stabilize milk prices. We also see that implementation of a
risk-management program can be pursued while we work to address other
issues that would enhance returns to all U.S. dairy producers, such as
establishing and enforcing higher fluid standards throughout the U.S.,
and maximizing the exposure of dairy products in school lunch programs
and ``WIC'' programs by introducing new products, such as snack-sized
yogurt products and string cheese.
Thank you for the opportunity to submit these views.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Anthony R. Mendes,
Chairman of the Board.
______
Supplementary Material Submitted by Kevin D. Kester, Cattle and Grape
Producer, Parkfield, CA
May 28, 2010
Hon. Collin C. Peterson,
Chairman,
House Committee on Agriculture,
Washington, D.C.
Dear Mr. Chairman:
I appreciated the opportunity to serve as a panelist at the May 3,
2010, House Committee on Agriculture field hearing on the 2012 Farm
Bill in Fresno, California, representing the California Cattlemen's
Association. I wanted to take this opportunity to share a few
additional comments in response to a question raised by two Members of
the Committee at the time.
During the question and answer period, questions were raised that
implied that farm bill funds in California were being sought only as a
means to mitigate the state regulatory burden and that--for that
reason--our state was already receiving or seeking to receive a
disproportionate amount of farm bill funding.
I in no way believe that California is receiving an uneven share of
funding and would offer the following response in addition to the
comments I made at the time.
First, California agriculture's request for farm bill funds is
primarily targeted at the Conservation Title, which represents a
relatively small portion of the bill, particularly as compared to
dollars allocated through other titles. Those conservation funds are
applied across millions of acres of California farm and ranchland that
stretch across a vast number of geographic and ecological zones to help
improve habitat, conserve and manage water, improve air quality and
stimulate other conservation activities that provide benefits to
landowners, the environment and the public at large.
In addition to the conservation challenges faced in California's
diverse agricultural production, ranchers and farmers in the state also
encounter higher than average incidence of endangered species habitat
and proliferation, development pressure and associated land value
appreciation that make managing a business especially challenging. As
such, demand for programs to conduct conservation work in the state
greatly outstrip the availability of dollars and technical assistance
to conduct projects. As I mentioned in my testimony, each year there
are hundreds of California farmers and ranchers who propose to address
important resource concerns and are willing to invest their own money
to improve environmental resources, but are turned away from EQIP
because of the lack of funds available in California.
In light of the significant ecological challenges in the state,
there is a lot that can be accomplished through government and private
collaboration. Even still, in many programs California receives equal
or lesser allocations of funds compared to states with significantly
lower acreages of farm and ranchland or agricultural productive output.
California's farm gate revenue is much higher as a percentage of the
nation's total than is our allocation of Federal conservation funding.
Beyond the proportionately low allocation of Conservation Title
funding to California, it even more disheartening that our state
receives a significantly lower portion of Conservation Technical
Assistance (CTA) funding than other states. CTA makes it possible for
NRCS to provide voluntary, non-regulatory technical assistance to help
people conserve, maintain and improve the long-term sustainability of
working landscapes. This funding is imperative to put conservation
program dollars on the ground and to assist the state's land managers
in improving management decisions. In a state where there is already a
general shortage of technical assistance, it is imperative that in the
next farm bill California does not experience a decrease or it will
further erode Natural Resources Conservation Service's conservation
capacity.
Despite the size and scope of production in our state and these
many challenges, most ranchers and farmers in California receive no
direct payments as they grow and raise a staggering range of more than
400 crops and livestock commodities that feed people all around the
country and the globe. Many of these products are grown only in
California and therefore made available solely due to the work of
California farmers and ranchers. These factors speak to the need to
increase, not decrease, investment in ensuring conservation work can be
completed.
Mr. Chairman, as California agriculture remains the economic
powerhouse of the most populous state in the Union and as our state's
progressive farmers and ranchers continue to seek more creative ways to
raise the food and fiber our nation needs in a fashion that continues
to enhance our natural resources, we look forward to your continued
support.
Thank you again for the opportunity to participate in the hearing
and to share my comments. Please be in contact if I can ever be of
assistance or feel free to contact Matt Byrne in the CCA office at
[Redacted].
Best regards,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Kevin D. Kester,
First Vice President.
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
----------
TUESDAY, MAY 4, 2010
House of Representatives,
Committee on Agriculture,
Cheyenne, WY.
The Committee met, pursuant to call, at 8:00 a.m., at
Laramie County Community College, Center for Conferences and
Institutes, 1400 East College, Centennial Room 130, Cheyenne,
Wyoming, Hon. Collin C. Peterson [Chairman of the Committee]
presiding.
Members present: Representatives Peterson, Cardoza, Markey,
Lucas, Conaway, Fortenberry, Smith, and Lummis.
Staff present: Keith Jones, John Konya, Robert L. Larew,
Lisa Shelton, April Slayton, Nicole Scott, Pelham Straughn, and
Sangina Wright.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
The Chairman. This hearing of the Committee on Agriculture
to review U.S. agriculture policy in advance of the 2012 Farm
Bill will come to order.
Good morning everybody, and thank you for joining us today
as we have our fourth hearing this weekend. We are glad to be
here in Cheyenne and hear from the area farmers and ranchers
about the issues facing agriculture in rural communities.
As we demonstrated in the 2008 Farm Bill, it's about much
more than just farms. We continue the safety net that protects
farmers and ranchers and provides the certainty they rely on to
stay in business, but we also made historic investments in
nutrition, conservation, renewable energy, research, rural
development, fruits and vegetable products and organic
agriculture.
While traditional farm programs have a relatively small
proportion of the funding in the farm bill, these programs are
essential to the continuing success of U.S. agriculture.
We have a system of independent farmers and ranchers
working the land, and without the certainty the farm programs
provide, many of these farmers would not be able to get the
financing that they need to put a crop in the ground.
I want to welcome our witnesses and thank them for taking
time out of their busy time of the year to talk to us today.
These farm bill hearings are the first step in the process of
writing the next farm bill. And a bill that's this large and
covers so many important issues takes a lot of time, a lot of
effort to get it right; and I'm committed to a process, as we
had last time, that is open, transparent and bipartisan.
For all those joining us today in the audience, I hope that
you'll participate in the process by sharing your thoughts on
the farm bill with us. We have a survey posted on our Committee
website. We have cards available today with that web address so
that everyone has a chance to tell the Committee about what's
working and what new ideas we should consider for the next farm
bill. That address is www.agriculture.house.gov. Anybody that's
in the audience that's not on the panel is welcome to provide
that testimony to the Committee, or anybody that is watching on
the web.
We are, for the first time in history, broadcasting all of
these field hearings on the website, and people around the
country are watching us. So we appreciate everybody being here.
We have a lot of ground to cover, so let's get started.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon, and thank you for joining us for today's House
Agriculture Committee hearing. We are glad to be here in Cheyenne to
hear from area farmers and ranchers about the issues facing agriculture
and rural communities.
As we demonstrated in 2008, the farm bill is about much more than
just farms. We continued the safety net that protects farmers and
ranchers and provides the certainty they rely on to stay in business.
But we also made historic investments in nutrition, conservation,
renewable energy, research, rural development, fruit and vegetable
products, and organic agriculture.
While traditional farm programs have a relatively small proportion
of funding, these programs are essential to the continuing success of
U.S. agriculture. We have a system of independent farmers and ranchers
working the land, and without the certainty that farm programs provide,
these farmers would not be able to get the financing that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking time out
of this busy time of year to talk to us today. These farm bill hearings
are the first step in the process of writing the next farm bill. A bill
this large and that covers so many important issues takes a lot of time
and effort to get it right, and I am committed to a process that is
open, transparent, and bipartisan.
For all those joining us today in the audience, I hope that you
will also participate in this process by sharing your thoughts on the
farm bill with us. We have a survey posted on our Committee website,
and we have cards available today with that web address so that
everyone has a chance to tell the Committee about what is working and
what new ideas we should consider for the next farm bill.
We have a lot of ground to cover, so let's get started.
The Chairman. I recognize the Ranking Member, my good
friend and colleague and working partner, Mr. Lucas, from
Oklahoma for an opening statement.
OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN
CONGRESS FROM OKLAHOMA
Mr. Lucas. Thank you, Mr. Chairman. And let me note ever so
briefly the nice, little, gentle breeze you have out there
reminds me of western Oklahoma this morning; so I do feel at
home. It's a pleasure to be here with you and to be a part of
this important process of preparing the 2012 Farm Bill.
I think it would be appropriate, Mr. Chairman, if it's all
right, I would yield my time to Wyoming's very own outstanding
Member of the Agriculture Committee, Congresswoman Lummis, for
her comments at this moment.
OPENING STATEMENT OF HON. CYNTHIA M. LUMMIS, A REPRESENTATIVE
IN CONGRESS FROM WYOMING
Mrs. Lummis. Well, I would like to thank the Ranking Member
and thank the Chairman. On behalf of all the people of the
State of Wyoming, and particularly our ag community, I want to
welcome all of you to our state. We're honored and grateful
that you brought the House Agriculture Committee to Cheyenne,
and I'm personally grateful to my colleagues on the Committee
who are here today. I apologize for our brisk breeze. It's
usually not this bad, but winds around here don't usually calm
down until around the first of June. We have the most gorgeous
summers and falls that you can possibly imagine, but we're
still grappling with winter in May. Thanks for your indulgence
of our brisk breeze.
It would be easy to hold an all-day hearing and still not
cover the wide variety of issues facing agriculture in Wyoming.
I know several people from around the state have prepared and
will submit written testimony for the record. Amongst them are
the Wyoming Wool Growers Association which is seeking the
Committee's help to adjust the Loan Deficiency Payment Program
and a strong Federal partnership in dealing with predator
control; the Wyoming Association of Conservation Districts
whose on-the-ground conservation efforts result in tangible
environmental improvements all across our state; and the Rural
Electric Co-ops who appreciate the Committee's work on the RUS
program and seeks our assistance in the face of railway rate
hikes pending as a result of Warren Buffet's recent acquisition
of Burlington Northern.
But I'm going to move on now to the main topics of our
hearing today. The scourge of bark beetle is taking its toll on
the forests of Wyoming and the West. Over the past decade,
about 17 million acres in Regions 1, 2 and 4 have been affected
by bark beetle epidemics. I wish the Committee had time to fly
over the areas, and I know Representative Markey agrees because
her area is as affected as ours in the Medicine Bow. The
magnitude of the problem is really difficult to grasp without
seeing it. But this hearing and the opportunity to hear
witnesses who can vouch for the seriousness of this issue is
truly important, and I'm really grateful that you came today
for that. For my part, last week I introduced H.R. 5192, the
Forest Ecosystem Recovery and Protection Act, which takes some
of the best bipartisan ideas on forest management and adds some
new strategies to begin the long road to forest recovery.
Forest health is critical to Wyoming's livelihood and
economy, but so too is the health of Wyoming's vast ranges,
open spaces and, particularly, watersheds. In the semi-arid
climate of this state, the health of the land is synonymous
with the health of the state. There's an old saying in Wyoming,
Mr. Chairman, and I think we were exposed to it last night,
that whisky is for drinking and water is for fighting. That
gives you an indication of how important water conservation is
to our farmers and ranchers.
Farm bill programs like EQIP, the Farm Ranchland Protection
Program and the Grassland Protection Program are invaluable
tools, and they're so important to the lasting success of both
the ag industry and land and water conservation that I look
forward to the testimony on the second panel about these
programs.
Again Mr. Chairman and Mr. Ranking Member, we're so
grateful that you came. And I hope you can see by this turnout
this morning, and at the reception for you last night, that
this means a lot to us, that you chose to come to our state.
And we are really grateful for the opportunity to have input on
the next farm bill. And, Mr. Chairman, I yield back.
The Chairman. I thank the gentlelady.
And we thank her for her hospitality and the warm reception
that we've received in Wyoming. I want to assure her I made
certain on the last farm bill that we got the loan rate for the
wool raised, and we will continue to work on it. We want to
keep the sheep industry going in this country, and we know they
have challenges.
We welcome the first panel of witnesses. But, before I do
that, we have some people here that do a great job for us at
USDA, and I want to recognize them. Gregor Goertz, the head of
the Wyoming FSA operation; Mr. Derrel Carruth, who is the Rural
Development Director for USDA; and Xavier Montoya, who is the
State Conservation Officer; and the State Director, Todd
Ballard. So thank you for your service. Let's give them a hand.
They do a great job.
We welcome the first panel: Mr. Bill Crapser, the Wyoming
State Forester from Cheyenne; Rick Cables, Regional Forester,
Region 2, from the U.S. Forest Service; Nancy Fishering, forest
products producer from Montrose, Colorado. And I guess, Mr.
Cruz, you're in a support role here.
Mr. Cruz. Yes, sir.
The Chairman. So we welcome you to the Committee. A lot of
people don't realize we have jurisdiction over a lot of the
forest policy. We sometimes don't pay as much attention to that
as we should; so we're pleased you're able to join us today and
look forward to you educating us a little bit about some of the
issues.
So welcome to the Committee. Mr. Crapser, you're up. Your
full testimony will be made part of the record, and we would
like to keep it to 5 minutes. We've got to get back to
Washington and vote tonight; so we've got to keep this show on
the road. So welcome to the Committee.
STATEMENT OF BILL CRAPSER, FORESTER, STATE OF WYOMING,
CHEYENNE, WY
Mr. Crapser. Thank you, Mr. Chairman, Members of the
Committee. Welcome to Wyoming. I also apologize for the wind.
We are in red flag fire danger in the eastern half of the state
today because of the wind. My name is Bill Crapser. I'm the
State Forester, and I appreciate the opportunity to speak to
you today.
Wyoming has approximately 11\1/2\ million acres of forest
within its boundaries. Of these forests, about 9 million acres
are in Federal ownership and 2\1/2\ million acres are in
private, tribal or state ownership. The state and private
forestry program authorized by Congress and administered by the
U.S. Forest Service, along with the other forestry programs in
the farm bill, are invaluable tools in helping the state
provide technical and financial assistance to private
landowners promoting stewardship and the health of our forests.
Without these programs, the long-term ecological, financial and
societal value of these forests would be lost.
Like all areas of the country, Wyoming faces many
challenges and threats. We've heard a lot about the bark beetle
and fire, and they're probably our two largest threats that our
forests face, but they are just two of the challenges that the
forests face.
As a key element of the 2008 Farm Bill, states were
directed to develop a statewide forest resource assessment and
strategies to address the issues raised in the assessment. I'm
proud to say that they're due in July, I believe, to the
Washington Office of Foresters. I'm proud to say that Wyoming
has completed this task. I will be giving Mr. Cables our
assessments and strategies today. I believe we're the first
state to finish our assessment in the country, and I'm pretty
proud of my crew for that.
We don't have time today to review the entire assessment,
but I would like to hit some of the high points on how we
developed our assessment and what it does for us. It's an all-
lands approach to forestry. It assesses a snapshot in time of
the status of all forestlands. We developed it with a wide
variety of input from agencies, interest groups and
individuals. The assessment is a geospatial analysis using 14
key data layers identified by our partners. These include
everything from development risk to wildfire risk, insect and
disease, aquatic habitat, community forestry, green
infrastructure and several other data layers.
With the help of our partners, we then developed 15 threats
that face Wyoming's forests. And it's in my written testimony,
the threats and the strategies. I would just like to hit on a
couple of the threats. These threats that Wyoming is facing in
forest health issues is probably unprecedented. Congresswoman
Lummis alluded to the bark beetle issues. We've never seen
anything like where we're at with bark beetles across the
state.
Threat two is a lack of a viable forest products industry.
Seven years ago when I became State Forester, there were seven
large sawmills--fairly large--sawmills operating in the state.
Today there's one in operation. Congresswoman Lummis used to be
one of my bosses when she was State Treasurer. And I didn't
usually tell the landlord how successful I had been in losing
the industry, but we do have a huge drop in industry.
Many areas of older forests are being converted to young
forests just by Mother Nature, by the bark beetle and by the
amount of mortality in this forest. Threat of wildfire both in
the urban interface, and outside the urban interface, and in
watersheds, is on the great increase. Our occurrence of fire
and our acreage burn have almost quadrupled over the last 10
years.
Aspen is a growing focus of concern within the Rocky
Mountain Region. We're seeing Aspen decline throughout the
Rocky Mountains and there are lots of different health problems
with Aspen stands. We have numerous challenges facing any type
of healthy forest community.
Water quality and water quantity is an important issue.
Congresswoman Lummis again said that whisky is for drinking and
water is for fighting. Water is a big issue in our state and in
our part of the country.
Terrestrial habitat is under pressure; and we have
fragmentation of land ownership. We're seeing a lot of ranches
and farms that really just can't afford to stay in the farming
business or ranching business anymore for various reasons. They
are being pretty much forced to fragment their lands and divide
up a lot of their lands.
Access for management is becoming more and more complicated
with new owners, different ownerships, Federal lands, state
lands all intermingled, and that continues to be an issue.
With any type of global climate change, the high deserts
are always on the front runner of those type of issues. The
management guidance for private landowners, because of all
these things, is increasingly important.
And invasive species, including insects, plants, all types
of things, is on the increase. As most of you know, in the
Midwest right now, we have a huge outbreak of Emerald ash
borer. It's killed most of the ash trees in Indiana, and in
Michigan. That bug is moving West. Even in a state like ours,
about 30 percent of the street trees in our communities and
cities are green ash. So if Emerald ash borer gets in this
state, we're seeing a huge impact. Nebraska is even in worse
shape. I think there 47 percent of your street trees in
Nebraska are affected by the Emerald ash borer.
What we plan to do with these documents is to help focus
our efforts and to help the Forest Service focus their efforts
in areas and in projects that will deliver maximum return on
investment. We believe that partnership between the state and
the Federal agencies, both the Forest Service and NRCS, are
important for all of us to succeed, and the forestry programs
and the farm bill are important facets of that success. Thank
you very much.
[The prepared statement of Mr. Crapser follows:]
Prepared Statement of Bill Crapser, Forester, State of Wyoming,
Cheyenne, WY
Good morning and welcome to Wyoming. My name is Bill Crapser, I am
the State Forester for Wyoming and I appreciate the opportunity to
testify before you today.
Wyoming has approximately 11.5 million acres of forests within its
borders. Of these forests 9 million acres are in Federal ownership, and
2.5 million acres are private and state lands. The State and Private
programs authorized by Congress and administered by the U.S. Forest
Service, along with the forestry programs in the farm bill are
invaluable tools in helping the state provide technical and financial
assistance to private land owners promoting the stewardship and health
of our forests. Without these programs much of the long term value
(ecological, financial, societal) of these forests would be lost.
Like all areas of our country the forests of Wyoming face many
challenges and threats. We have heard and seen a lot about bark beetles
and fires of late, but these are just two of the challenges we face.
Under the 2008 Farm Bill states were directed to develop a
Statewide Forest Resource Assessment along with Strategies to address
issues raised in the assessment. I am proud to say that Wyoming has
completed this task, and that our documents are being submitted to the
U.S. Forest Service this week. We do not have time today to review the
entire document, but I would like to take this opportunity to hit on a
few of the high points.
Our Assessment and Strategies were developed with the help and
input of wide variety of agencies, interest groups, and individuals.
The assessment is a geospatial analysis using fourteen key data layers
identified by our partners including: Development Risk, Forest
Fragmentation, Wildfire Risk, Insect and Disease, Aquatic Habitats,
Terrestrial Habitats, Water Quality and Supply, Economic Potential,
Green Infrastructure, Community Forestry, Agro-Forestry, and land
Stewardship Potential. These data layers allowed us to identify
priority landscapes, and to focus on issues and threats that are facing
our forests.
With the help of our partners we then developed fifteen threats
that are facing the forest of Wyoming along with strategies to deal
with them.
Threats and Strategies:
Threat 1: Wyoming is facing forest health issues that are
probably unprecedented.
Threat 2: lack of a viable forest products industry.
Threat 3: In many areas, older forests are being converted
to young forests on a large scale due to bark beetle epidemics.
1. Increase age class and species diversity.
2. Use fire as a tool.
3. Ensure a predictable, dependable supply of forest products.
4. Develop additional forest products markets.
5. Retain whitebark and limber pine.
Threat 4: The threat of fire in the Wildland Urban Interface
(WUI) is significant and expanding.
Threat 5: Wildfires in areas outside of the WUI are also a
threat.
1. Mitigate risk of catastrophic fires in WUI areas.
2. Increase training and capacity.
3. Actively manage suitable lands.
4. Reintroduce prescribed fire.
5. Utilize natural fires.
6. Continued cooperation between agencies.
Threat 6: Wyoming's low elevation riparian forests are in
decline.
1. Increase stream flow rates.
2. Manage ungulate populations.
3. Manage upstream forests.
4. Forest management activities in riparian areas to increase
forest health.
5. Increase the public's understanding.
Threat 7: Aspen is a growing focus of concern within the
Rocky Mountain region.
1. Increase regeneration of aspen.
2. Analyze current and potential aspen sites.
3. Manage ungulate populations.
Threat 8: There are numerous challenges to maintaining
healthy community forests in Wyoming.
1. Enhance species and age diversity.
2. Increase local community forestry expertise.
3. Enhance funding and build capacity.
4. Measure progress within communities.
5. Build green infrastructure.
Threat 9: In an arid state like Wyoming, water quality and
quantity will always be important issues.
1. Compliance with Wyoming's Silviculture BMP's.
2. Conduct forest management activities.
3. Emphasize riparian forest restoration.
4. Reduce runoff from urban areas into watersheds.
5. Evaluate community tree canopies.
Threat 10: Terrestrial habitat is under pressure in Wyoming.
1. Encourage landscape level planning.
2. Provide management information.
3. Maintain continuity across ownerships and programs.
4. Mimic natural disturbance regimes.
Threat 11: Fragmentation of land ownership is likely to
adversely affect natural resource management in Wyoming.
Threat 12: Access for management is becoming more
complicated.
1. Cross-boundary collaboration.
2. Manage subdivisions as one land unit.
3. Landscape-level travel management plans.
4. Provide incentives to conserve working forestlands.
5. Keep forestry practices financially viable.
Threat 13: Management guidance for private lands is
increasingly important.
1. Emphasize stewardship plan development.
2. Provide information and education to private landowners.
3. Better inventory on private lands.
4. Establish/maintain a local contractor base.
5. Provide financial incentive for management.
6. Develop and implement Certification programs for landowners.
Threat 14: Wyoming will be on the leading edge of the
impacts of global climate change.
1. Explore the carbon sequestration potential.
2. Address forest management under a changing climate.
3. Adapt water management to accommodate changes.
Threat 15: Invasive species, both insects and plants, pose a
threat to forested lands.
1. Monitor invasive insects, pathogens, and plants.
2. Early Detection and Rapid Response (EDRR) guidelines.
3. Build awareness of invasive species.
4. Focus efforts on the control and management.
5. Develop rehabilitation and restoration strategies.
6. Encourage management techniques that do not promote the spread
of invasive species.
7. Manage forests and rangelands to increase resistance.
We plan to use these documents to help in focusing our efforts and
limited funds (both Federal and state) in areas and on projects that
will deliver the maximum return on our investment.
We believe that the partnership between the state and the Federal
agencies, both the U.S. Forest Service and the NRCS are important to
all of our success, and that the forestry programs in the farm bill are
important facets of that success.
Thank You.
The Chairman. Thank you, Mr. Crapser, for that testimony.
Ms. Fishering, welcome to the Committee.
Are we going to have Mr. Cables do the presentation? All
right. You have a PowerPoint for us.
STATEMENT OF RICK CABLES, REGIONAL FORESTER, ROCKY MOUNTAIN
REGION, U.S. FOREST SERVICE, U.S.
DEPARTMENT OF AGRICULTURE, GOLDEN, CO;
ACCOMPANIED BY PHIL CRUZ, DEPUTY FOREST
SUPERVISOR, MEDICINE BOW-ROUTT NATIONAL FOREST, U.S. FOREST
SERVICE, USDA
Mr. Cables. Mr. Chairman, Members of the Committee, good
morning. My name is Rick Cables. I'm the Regional Forester for
the Rocky Mountain Region of the U.S. Forest Service which
includes five states including Nebraska, Wyoming and Colorado,
South Dakota and Kansas.
I'm going to give an overview this morning on this bark
beetle situation we have in my region and touch a little bit on
some of the interior West issues. With me is Phil Cruz, the
Deputy Supervisor on the Medicine Bow-Routt National Forest,
and he'll be available for questions.
This is the State of Wyoming. You're right here in
Cheyenne. This is the Medicine Bow National Forest, the
Bridger-Teton Forest, the Shoshone National Forest, Black Hills
National Forest up here. The red is forests that are
substantially dead in terms of the mature timber. It's a huge
amount of acreage. I'm going to focus my discussion right now
on the Medicine Bow and the national forests in Colorado. But I
just want to show you the extent of the insect and disease
damage.
And again, this is Yellowstone National Park right here.
I'm going to show you a progression from 1996 to today in terms
of the bark beetle, and the red will indicate that the forests
that are--that have a hundred percent mortality. So just watch
closely: 1998, 1999, 2000, 2002, 2003, 2004. In the last couple
of years, this thing has exploded: 3.6 million acres of dead
forests the size of the State of Connecticut. And the
ramifications in terms of infrastructure threats and human
health and safety threats are significant, and we're very
worried about that.
This just gives you an indication of what's happening now.
One county commissioner said to me that this issue has gone
from, ``Oh, my God, the trees are dying'' to ``Oh, my God, the
trees are falling.'' We have two major threats: Falling trees
and fire.
On average over this 3.6 million acres, we're going to see
100,000 trees a day fall down for 10 years every day unless we
have a wind event then they will fall earlier.
Here is just a 50 yard stretch of trail. You can see how
labor intensive it's going to be to keep the trails open.
Here's a slide of an aerial view. There are horseback riders
right here riding on a trail with a bunch of deadfall. That
threatens them and threatens the infrastructure itself. Here is
the same view of the horseback riders at ground level right
here.
In recreation sites, we've had to remove every tree. Also,
we have major world-class ski areas in this area: Breckenridge,
Vail, Steamboat, Keystone; in Wyoming, the Snowy Range. And
with the substantial portion of the timber that provides
shelter and wind protection on ski areas being lodgepole pine
which are dying at these incredible rates, we're removing the
dead trees as fast as we can, working with the ski areas.
Power lines and utility corridors are threatened. We have
over 550 miles of power lines. One tree on a power line, and
you're out of power. So you can just imagine if you look at
those corridors how much cutting back adjacent to the
infrastructure we need to do to protect the power source.
As for roads, there are 3,700 miles of roads in this
country. We've treated about 500. We've got 3,200 miles to go.
And of all the values that are really threatened, this is a
picture of the watershed. This is the Colorado River Basin;
this is the Rio Grande Basin; this is the Arkansas River, the
Platte River. There are 177 counties that depend on water from
this watershed. The reach of this watershed in this country is
unparalleled in the West. This is literally the headwaters of
the West. With our 13 downstream states, agriculture interests
depending on this water, the condition of the watershed is not
very good right now given the mortality with the trees and the
falling trees.
We have 211,000 acres to be treated adjacent to communities
to protect from fire. You can see the data here. Miles of
roads, trails, power lines. Significant infrastructure in this
area.
Last year I ordered a national incident management team,
which is one of the big, elite teams, Type 1 teams that address
fires just because I wanted to look at this as an incident not
in individual pieces or by state. That team gave us an initial
assessment a few weeks ago that we're digesting right now in
terms of actions to take. Last year Secretary Vilsack allocated
or dedicated $40 million to be spent on this issue, which we
really appreciate, but there's so much work to do.
And there are opportunities related to this incident in
terms of jobs, sustaining the supply of wood and biomass, and
the research associated with it. So there's a lot of work to be
done and a lot of opportunities associated with this. But it's
a daunting challenge.
So we'll look forward to your questions, Mr. Chairman.
Thank you.
[The prepared statement of Mr. Cables follows:]
Prepared Statement of Rick Cables, Regional Forester, Rocky Mountain
Region, U.S. Forest Service, U.S. Department of Agriculture, Golden, CO
Mr. Chairman, Ranking Member and Members of the Committee, thank
you for the opportunity to appear here today to discuss the
implementation of the Food, Conservation and Energy Act of 2008 in
Wyoming. The National Forests of this state lie in two Forest Service
Regions: the Medicine Bow, Shoshone, Bighorn, and two ranger districts
of the Black Hills are in the Rocky Mountain Region, known as Region 2.
The Bridger-Teton, as well as portions of the Wasatch, Ashley, Caribou
and Targhee, are in the Intermountain Region, known as Region 4.
Let me start by acknowledging the hard work of the Members of this
Committee and your staff. Having worked with my staff over the past 15
months to implement titles in the bill relevant to the Forest Service,
I can fully appreciate the months of hard work that went into crafting
this important piece of legislation. You are all to be commended for
the strong bipartisan bill that overcame multiple obstacles before
becoming law.
I know many of you are very interested in the status of the bark
beetle outbreak, so before I describe specifics of farm bill
implementation, let me briefly discuss the existing forest condition in
Wyoming. In 2009, our annual aerial survey in Wyoming detected
increased mortality in several species: 1,205,000 acres of lodgepole,
limber, whitebark and ponderosa pines killed by mountain pine beetle;
26,000 acres of Engelmann spruce killed by spruce beetles; 3,800 acres
of Douglas-fir killed by Douglas-fir beetles; and 86,000 acres of
scattered mortality in subalpine fir caused western balsam bark beetle
and root disease.
In the areas where mountain pine beetles have been active for the
past several years, standing dead trees are starting to fall, posing
threats to public and employee health and safety. On the Medicine Bow
National Forest, falling dead trees threaten over 20,000 acres of
Wildland Urban Interface, 334 miles of trails; 1,396 miles of roads;
and 41 developed recreation sites (campgrounds, picnic grounds,
trailheads, and administrative sites).
In FY 2010, we are prioritizing work in those areas that receive
the most public use such as roads and developed recreation sites. We
plan to reduce hazardous fuels on 5,914 acres in the wildland urban
interface, and we plan to mitigate falling tree hazards on 52 miles of
roads and 21 miles of trails.
Now I'll turn my remarks to implementation of the farm bill in
Wyoming. The 2008 Farm Bill made significant changes to the Cooperative
Forestry Assistance Act and provided a number of new authorities for
the National Forest System several of which have been implemented in
Wyoming.
Market-Related Contract Term Additions (MRCTA) (Sec. 8401)
The 2008 Farm Bill authorized the Secretary to use market-related
contract term additions to add up to 4 years to the terms of certain
timber sale contracts awarded prior to January 1, 2007. Prior to the
2008 Farm Bill, contracts could only receive a maximum of 3 years of
MRCTA. The agency revised its regulations on November 4, 2008, to allow
all contracts, regardless of their award date, to receive up to 4 years
of MRCTA. In Wyoming, purchasers took advantage of the MRCTA timber
contract relief on four sales in Region 2, and four sales on the
Bridger-Teton in Region 4.
Contract Cancellations and Emergency Rate Redeterminations (ERR) (Sec.
8401)
The 2008 Farm Bill also authorized the Secretary to provide
Emergency Rate Redeterminations and cancellations to certain qualifying
timber sale contracts awarded between July 1, 2004, and December 31,
2006. Specifically, the farm bill gave the Secretary discretion to
cancel certain qualifying contracts that were advertised as of June 18,
2008, (the farm bill's date of enactment) at rates at least 50 percent
less than the sum of their original bid rates. Other qualifying
contracts were eligible to have their rates redetermined to more
accurately reflect timber markets. In Wyoming, seven timber sale
purchasers requested rate redeterminations, and six of them had their
rates reduced. The seventh contract, which was on the Bridger-Teton
National Forest, was cancelled subsequent to the emergency rate
redetermination.
Forest Resource Coordinating Committee (Sec. 8005)
The Forest Resource Coordinating Committee, chaired by the Chief of
the Forest Service, was established in accordance with the Federal
Advisory Committee Act to provide advice and assistance in coordinating
USDA actions that relate to educational, technical and financial
assistance to private landowners for conservation, management,
productivity and improvement of forestland. Specifically, for the
Forest Service, it provides advice on implementation of the Cooperative
Forestry Program. Nominations are being reviewed and our goal is to
have the first meeting of the Committee in calendar year 2010.
State Assessments and Strategies (Sec. 8002)
Each state forestry agency is working on a State Assessment of
forest conditions state-wide across all ownerships, including an
assessment of threats to forestland and resources in the state, and on
developing a Strategy that identifies priorities for the protection,
conservation, and enhancement of forest resources. This program has
provided an opportunity for state forestry agencies to collaborate with
interested parties. In addition, this program captures the essence of
the all lands landscape scale approach to management of our forests.
State assessments and strategies are due to the Forest Service by June
18, 2010, and will be reviewed by the Deputy Chief for State and
Private Forestry.
The Wyoming State Forestry Division has solicited input from a wide
variety of stakeholders on drafts of its Assessment and Strategy, and
it has worked closely with the Wyoming Forest Supervisors and Regional
Office staff. The draft Wyoming State Assessment and Strategy
identifies three primary threats related to bark beetles: unprecedented
deterioration in forest health due to epidemic bark beetle levels, lack
of retention of a viable forest products industry as an essential
forest management tool, and conversion of older forests to young even
age stands due to beetle epidemics.
Competition in Programs Under Cooperative Forestry Assistance Act of
1978 (Sec. 8007)
Competition in Programs Under Cooperative Forestry Assistance Act
of 1978 (Sec. 8007): For the past 3 years, approximately 15 percent of
Cooperative Forestry Assistance funds have been awarded nationally
through a competitive process to better conserve, protect and enhance
forest resources. Wyoming received $431,749 through this competitive
process for the following projects:
Clear Creek Vegetation Enhancement, $74,500;
Wyoming Information and Education Program, $56,812;
Southeastern Wyoming Tree Enhancement, $ 33,000;
Northern Laramie Range Integrated Forest Management Project
$255,075; and
Forest Landowner Education Project: ``Today's Forest,''
$12,362.
Community Wood Energy Program (Sec. 9013)
This program provides grants to state and local governments to
develop community wood energy plans and to acquire or upgrade wood
energy systems. The President's 2011 budget includes full funding of $5
million.
This concludes my prepared statement. I would be pleased to answer
any questions you may have.
Attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you very much. That was a very good
presentation.
Ms. Fishering, have you got a PowerPoint for us too?
STATEMENT OF NANCY M. FISHERING, FOREST PRODUCTS PRODUCER,
MONTROSE, CO
Ms. Fishering. Good morning, and thank you for letting
industry be part of this panel. I represent Intermountain
Resources which is the large, commercial-size sawmill remaining
in Montrose, Colorado. However, we also own a mothballed
sawmill in Saratoga, Wyoming, which we've been diligently
looking at getting that open. But at this point, we're just
happy to be a survivor.
Our company has hundreds of employees in the mill, but we
also support an industry that has to work in the woods. We hire
the loggers; we hire truck drivers; we get the wood out of the
woods. This is the kind of equipment we use. It's highly
mechanized; it's very expensive. We no longer have people with
chainsaws on the ground. We tend to be in equipment above the
ground. It's safer.
This is a piece of equipment working in a bark beetle
forest. These are the type of saw logs we get. Here is one of
the sawmills that closed this past year. See that ring? It's
called blue stain. Some sawmills can use blue stain wood. Some
need very clear, bright wood. We can use anything in the mill
that we've got going in Montrose, Colorado. We create premium
studs from the bark beetle. We've purchased 90 percent of the
timber sales that were done as a result of the bark beetles,
and they went to a mill in Montrose, Colorado. So we were
commuting over 230 miles from the bark beetle heart of the area
from where the epicenter was in Colorado. But, it's now
extremely strong in Wyoming, as you saw in the pictures.
So that's kind of a little history of our little company.
But what I would like to do is talk about the context that
we're operating in, and this is the economics that we've been
dealing with. You watch that progression of the insects. If you
looked at the height, the height of that map, of this chart,
the fact that the height of the building boom in 2005 and 2006,
and now we are in a declining market, dropping in terms of
prices since, well, 2006. At the bottom of this chart was 2009.
So at the same time you have this huge increase in need to get
wood out of the woods, we also had the worst lumber markets.
The prices went down to 1960's levels. This became an extreme
challenge for the whole industry, not just in Colorado or
Wyoming. The entire country was feeling this dynamic.
At the same time we had issues such as those Rick already
explained; we have this same bark beetle issue. This is a map
of the entire West. The bark beetles aren't just attacking
within this region. It's a whole western United States issue.
And so what I am here to educate you about is what the
timber program has done over time. This is a map from 1905.
It's a history of the industry working with the Forest Service.
This isn't private because we're so much dominated by public
lands in the West. And it went to the height in about the mid
1960s, and it's been declining every since.
And I think it's the contention as I work with my
counterparts locally, regionally, nationally that the program
isn't large enough anymore. And the way that we're spending
budget dollars, it goes through the USDA to the Forest Service.
The budget doesn't sustain an industry anymore. And we're down
here obviously at the lower point at this point in time.
One of the things industry as a whole has come together
across the country to say is you need to grow the program. The
timber management budget has gotten so small, it's hard to
sustain an industry. I would like to put a series of letters
into the record that we've sent to the Interior Appropriations.
I know it's not USDA, but it's Interior Appropriations. But
we're trying to get a critical mass of people to understand the
issue, and part of that issue is for $57 million, whether it's
reprogrammed or new dollars, you could grow the program from a
2.2 billion board foot program up to a 3 billion board foot
program which would give the Forest Service across the West the
money needed to deal with a huge issue like this.
You saw an increase in pressure in the forest; you see what
the public health and safety issues are. Believe it or not,
we've been seeing budget cuts coming to our region in timber
management dollars. Every year I'm astounded that we get
another cut.
This year Mr. Cables was very heroic and went back to D.C.,
and said this is an emergency; it's unacceptable; and we kind
of brought it to a head this year. But we're getting emergency
dollars, not timber management dollars.
We believe strongly in accountability. If you have a
sawmill, you need saw logs. If you don't have saw logs, you
can't create 2x4s to pay for the money to go in the woods, get
the trees, get the downfall out, and get it to a higher-end
product, which for us would be selling it as 2x4s.
The other issues that they've got on the forest, is when
we're finished with a traditional logging job, we'll end up
with a lot of different biomass on the landscape. What we would
do traditionally would be burn it, the slash. We have air
quality issues, huge ones, inversions in Colorado and in
Wyoming; and you can't burn the amount of biomass that's left
at the end of this kind of massive event of 3.6 million acres
of dead trees.
So the bottom line is we can do additional investments. Our
business plan, if we were to reopen Saratoga, would include
burning woody biomass residues, turning it into renewal energy
by cogeneration and selling onto the grid. We have projects all
over the State of Colorado specifically, some in Wyoming, to
take some of this extra biomass for co-fire/co-burning electric
generation.
It is private enterprise that has stepped up to the plate
to purchase most of this timber, and timber sale contracts, and
it's been very unsettling. Our banks don't particularly like us
now. We haven't been making money for a year. The economy has
improved. The markets are coming back up right now, as we
speak, in the past couple of months. Will they stay up? It's an
uncertain time.
So bottom line is we really appreciate some of the things
you have done in your Committee. We would appreciate any
letters of support to the Interior Appropriations to say this
isn't working for the folks that we are responsible for in our
program, which is forestry. So any assistance you can give us
on helping to retool how they look at funding through Interior
Appropriations would be very helpful, we believe.
BCAP is something that was in a former farm bill, and that
gives subsidies to get the wood out of the woods to a renewable
energy type end-certified plant. That's helpful. But, the
biomass definition, there are 14 different definitions of
biomass floating around in different pieces of legislation. The
farm bill is our favorite because it does allow biomass from
Federal lands. We thought that was huge.
And that's just a mere summary of what we deal with, but we
appreciate the chance to give testimony today. Thank you very
much.
[The prepared statement of Ms. Fishering follows:]
Prepared Statement of Nancy M. Fishering, Forest Products Producer,
Montrose, CO
Good morning, Mr. Chairman, and Subcommittee Members. My name is
Nancy Fishering and I represent Intermountain Resources, LLC a company
that has a operating sawmill in Colorado and a closed sawmill in
Saratoga Wyoming.
I very much appreciate this opportunity to join this panel to
relate their testimony to the small business perspective and to the
families and towns that depend upon public land policy for their
livelihoods and quality of life. Our company investments are in the
heart of the vast forest health issues that face our national forests.
According to a 2009 Forest Service Decision Notice, of the total amount
of standing dead timber that has been removed from the bark beetle
affected forests in southern Wyoming and northern Colorado, almost 90%
was processed by Intermountain Resources and our 150+ loggers and log
truck drivers. We know that it is important to the local Forest Service
Ranger Districts and the folks who live in Southern Wyoming that
Intermountain continue their investment by opening the sawmill in
Saratoga, Wyoming. Oddly, although Saratoga is centrally located in the
3.6 million acres of dead lodgepole, a big obstacle to opening the
Saratoga mill is securing sufficient log supplies.
Let me explain. The company business plan adopted in fall of 2008
was to continue to operate the mill in Montrose and to invest capital
to retrofit and re-open the mill in Saratoga. That decision would
entail hiring 90 employees in Saratoga and hiring another 150+ loggers
and truckers to bring logs in from the woods for processing into lumber
and generating electricity by burning sawmill residues and slash from
the forest.
This was a win-win fit for the Forest Service that need additional
capacity to remove the dead timber from the landscape while benefiting
the town of Saratoga which would very much like to see new jobs in
their community.
Unfortunately, this investment decision was interrupted by the
horrific financial events following the collapse of the housing markets
and the crisis on Wall Street. The company focus turned to simply
surviving the economics of 2009. Due to plummeting lumber demand and
lumber prices, analysts tracked a significant shrinkage in sawmill
capacity in the U.S. and Canada. A June 2009 article noted that ``over
the last 3 years, 127 sawmills representing 8.9 billion board feet of
production capacity have closed permanently in the U.S. and Canada.''
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\1\ Random Lengths, ``Through a Knothole'', June 12, 2009, Vol. 65,
Issue 24.
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At this time we are happy to be a survivor, but we look at the
economic aftermath and the issues facing a healthy timber industry
continue to loom largely in the future. A recent forecast by Western
Wood Products Association calls for ``modest gains in housing, lumber
consumption and U.S. production this year after setting modern lows
during 2009,'' and they conclude that there will be a slow, steady
recovery for mills like ours.
We are juxtaposed between a recovering lumber market, and a huge
demand for our abilities to work in the woods and remove standing dead
timber that poses risks to public health and safety. Our ability to
perform depends on overcoming several challenges facing our company and
our industry.
Both issues relate to the work that is done by our Members of
Congress.
First, in Western states containing significant acres of National
Forests or Bureau of Land Management forest the log supply is largely
determined by Forest Service or BLM budgets. We were pleased to see the
President's 2011 budget recognized the importance of the Forest Service
with an increase in funding. We are concerned, however, about policies
embedded within this budget that merged important line items, including
the primary line item historically tied to timber management. The net
effect of the creation of a new ``Integrated Resource Restoration''
account may be to change the predictability and accountability for
these funds. If adopted as proposed, the outputs will become `acres
treated' rather than targets for saw timber. This `acres treated'
number is difficult to plug in a business plan and take to the bank.
The only language related to targets in the 2011 budget reduced outputs
from 2.5 billion board feet nationally to 2.4 billion. The uncertainty
in hard numbers results in reticent bankers and bonding agents which
ultimately stymies investment and job creation.
According to the Forest Service, the Medicine Bow-Routt National
Forests FY 2010 timber target is less than 25% of their desired targets
to aggressively respond to the mountain pine beetle epidemic, due
solely to reductions in funding. Similarly, other National Forests in
our region will be experiencing similar funding cuts which threaten the
log supplies for both the mill at Saratoga and the operational mill in
Colorado. This dilemma results from shifting priorities between
emergency funding and management funding and poses untenable positions
for the investors and land managers in the middle.
We believe that the Forest Service budget would better serve rural
communities if they would recognize the connection between the timber
program and jobs. A conservative estimate of jobs created per 1 million
board feet of timber harvested is 11.4 new direct and indirect jobs.
Increasing the FY 2011 Forest Products line item by $57 million would
increase the USFS timber harvest level to 3.0 billion board feet and
thus create some 6,600 new jobs. This would be a modest, incremental
budget increase that complements the slow and modest lumber market
recovery forecasted for 2011.
In the case of Intermountain, our future will depend on (1) a
steady increase in lumber prices and lumber consumption, (2) an
adequate log supply to feed both the mill in Montrose and the mill in
Saratoga, and (3) access to credit for the final retrofit investment
and the upfront cash necessary for startup employment costs. The log
supply and credit needs go hand-in-hand since a primary condition for
any loan is an assurance that the business plan fits consistently to
the life of the loan. That means simply that a 10 year loan requires a
10 year log supply to assure payment on that loan.
While struggling to survive the difficult small-business economics
of 2010, we can least afford a cut in Forest Service timber budgets and
timber outputs. The local national forests can least afford a cut in
industry capacity since we are the most cost-effective tool for
addressing the unprecedented forest health challenges. The local
logging contractors can least afford a year or more delay until a new
investor arrives to build new infrastructure that may or may not fit
the needs of our forests and community.
Several pieces of proposed legislation would assist industry
dependent on public lands for their economic sustainability.
(1) H.R. 4398 ``The National Forest Insect and Disease Emergency
Act of 2009'' introduced by Congressman Salazar presents a
strategy for forests to fund their needs to manage
unprecedented challenges presented by events such as the
mountain pine beetle epidemic in the Intermountain West.
(2) We have been working with Congresswoman Lummis on draft
legislation to address the supply issue with a pilot
stewardship approach combined with a modest, but very helpful
attempt to assist in the credit needed by the timber industry
partners (loggers and sawmillers) who have challenges accessing
capital. We embrace stewardship, and in addition will continue
to need timber sale contracts to assure a variety of treatments
and volumes to profitably accomplish goals to reduce fuel loads
and perform land management.
(3) Careful attention to the language, funding levels, and timber
targets in the 2011 Budget to ensure long-term viability for
the traditional infrastructure. A robust industry means a
robust capacity to treat the land.
(4) The 2008 Farm Bill contained the new ``Biomass Crop Assistance
Program'' (BCAP) which was designed to encourage biomass
production. We are concerned that BCAP disrupts the vital
relationship between existing infrastructure and national
forest management. Using programs designed to encourage green
jobs to create new companies has the unintended consequence of
generating new competition against the primary infrastructure
our forest managers depend on--for land management, hazardous
fuel reduction, removal of beetle-killed timber, and other
important forest health restoration goals. At a time when
lumber prices are at historic lows and threaten the stability
of what little industry remains, these programs could hasten
the decline of our most vital management tool.
(5) A similar issue is the continuing debate about the definition
of `renewable biomass'. Who would ever have guessed that such a
small seven letter word could create such consternation and
policy debate among so many? What we need in Wyoming is a
definition that includes the national forests and other Federal
lands, subject to NEPA and the direction in the forest plans.
(6) H.R. 4233, the Healthy Forest Restoration Amendments Act of
2009, introduced by Congresswoman Herseth Sandlin, which
expands the Federal lands on which hazardous fuel reduction
projects can be conducted, and adds protection of
infrastructure in rural communities as an additional purpose of
the Healthy Forest Restoration Act.
With careful implementation of projects, we can reduce the
potential for catastrophic fires, begin the management of the `the next
forest' to reduce the potential for another cycle of bark beetle
epidemics a hundred years from now, put local residents to work with
good jobs, manufacture wood products, and increase the economic
diversity and vitality of local economies.
Much of the solution is in the hands of private enterprise. Our
entrepreneurs and investors assume the risks and challenges of
operating in an uncertain economy. It is an essential component for our
Federal partners to maintain an adequate log supply, and to be assured
by the national leadership that budgets and strategies will be crafted
to help industry survive in the near term and grow for the long term.
Thank you for your invitation to share our challenges and needs
with you. You are a critical partner to our success. I would be happy
to answer any questions.
The Chairman. Thank you very much.
We look forward to working with all of you to try to help
find solutions. As we move to questions, I would recognize
somebody who has been at the forefront of some of these issues
and has worked very hard doing everything she can to bring this
issue forward. I know that she has talked to me many times, the
gentlelady from Colorado, Ms. Markey, for questions.
Ms. Markey. Thank you very much, Mr. Chairman. And thank
you all for your excellent testimony.
My first question is to Mr. Cables. You gave a very
sobering analysis of what's going on in the region: A hundred
thousand trees falling a day. I mean, that is absolutely
incredible.
What kind of an impact do you see this having on tourism in
our state? Obviously we know it has impacted the ski industry,
recreation in the summer. It's very dangerous when you're in a
forest where trees are falling.
Also, I know you received the $40 million this year from
USDA from Secretary Vilsack. How is that money being used right
now? And I know you have done an excellent job in coordinating,
not only a Federal response, but a state and local response,
working closely with our state legislators, and with county
commissioners in the affected areas to have a coordinated
response. But if you could just give us a little bit of
background on how that $40 million is being used right now.
Mr. Cables. Thank you, Mr. Chairman, Representative Markey.
Quickly your first question on--relating to tourism. This
event has a very significant potential to affect tourism in a
negative way. Not only are there threats as I pointed out, we
have outfitters--folks just wanting to enjoy the forest--who
have access to the forest. So, in the developed recreation
sites, we've had to cut the trees out which affects that
experience. We have ski areas that have infrastructure
threatened that we're working with. And so the long-term
potential to affect those industries is significant.
And one of the things that we're concerned about is, if we
aren't able to accelerate this work in terms of roadside
clearing and trail clearing, we may need to think about the
potential of forest closures. Allowing people into these areas
with that amount of trees falling--even for our own crews and
our own firefighters--because of the safety considerations.
We've had several near misses already where falling trees have
come very close to hurting people. So, if we get to that stage,
then that will have an even more dramatic effect potentially on
tourism.
The second part of your question on the $40 million: we've
spent that money on roadside-clearing contracts, on fuels
treatment next to communities. Believe me, it didn't take very
long to spend that amount of money in terms of the scale of
this event. So I think the Medicine Bow Forest let a contract
for 170 miles. Phil?
Mr. Cruz. It was for 160 miles.
Mr. Cables. One hundred and sixty miles. So that sort of
thing is how we've used the $40 million that we received in
Fiscal Year 2010.
Ms. Markey. And so that money is being used now? What
percentage of the problem do you think you were able to
address, and what do you see as the long-term forecast in terms
of how long it's going to take get the situation under control.
Mr. Cables. Thank you, Representative Markey. Let me just
give you a sense of the scale. The last contract we received
for roadside clearing, clearing the trees back like a hundred
feet either side of the centerline, so when they fell they
didn't close the road, was in the neighborhood of $40,000 a
mile. And if you do the math on over 3,000 miles, that gives
you a sense of over $100 million, if we did every road and we
had that kind of price in terms of our contract.
The WUI treatments, the Wildland Urban Interface is what
WUI stands for. It's the stuff next to communities to protect
them from fire--has been running in the neighborhood of $2,500
an acre. And we've got over 200,000 acres identified. If you do
the math on that and we treated every one of those acres,
that's a very, very large number too.
So we really appreciate the $40 million, and it enabled us
to do that much more than we would have from our initial
budget, but the scale of this problem is very large. And that's
why it's so important for industry to be able to operate and
utilize this material and reduce those costs in terms of the
amount of appropriated funds we need.
Ms. Markey. And just one other question for Ms. Fishering
about the timber management program. You said a $57 million
increase is needed. What form would that take place? Are you
also talking about grants or a guaranteed loan program? And
would a guaranteed loan program, for instance, help jump-start
the industry to get some private capital investment in.
Ms. Fishering. Thank you, Representative Markey. Actually
you're bound into line items when you get into the Federal
budgets, and we were talking about a timber management forest
products line item that would be designed to keep us alive.
When you just put money in emergency or roadside clearing, that
doesn't always provide the foundation that you need to keep the
sawmill open before you can add the slash and some of this
stuff that's less merchantable.
So it's $57 million to one line item. We said that that
would increase a board foot, which is a hard target, something
you can measure and see from 2.2 to 3 billion. We believe if
you use a modest multiplier, that's 6,600 jobs. It would be
money to the Forest Service, but it creates that private
investment that you're speaking of.
We've been looking at USDA Rural Development. Every single
one of your agencies have contacted our company to say that
there is a program that can help open Saratoga. What we find is
they are not at the table with us and the banks. They are risk
averse. When you see that falling price to 1960s prices for
lumber, they're not real excited to back that bond. And until
you've got that private guarantee from a bank, you can't even
access private activity bonds or pure revenue bonds, or SBA
loans. So that's where we're stuck. It's the banks not wanting
to get involved with an industry that has such a volatile
pricing stint in the lumber market.
We know we're going to survive. We are actually upbeat,
believe it or not. We're like a lot of the commodity programs.
We know we will get through these years, and we'll make it to
that profitable point. The banks aren't quite as encouraged as
we are. So actually right now it takes either grants to jump-
start us, or loans, which are very important. Don't get me
wrong. We just need enough investors willing to sign on the
dotted line, giving personal guarantees to be able to be
eligible for the other tools in the Rural Development toolbox.
Thank you.
Ms. Markey. Thank you. Mr. Chairman, I yield back.
The Chairman. I thank the gentlelady for the good
questioning. I recognize the gentlelady from Wyoming, Mrs.
Lummis.
Mrs. Lummis. Thank you, Mr. Chairman.
My first question is for our State Forester, Bill Crapser.
The farm bill requires every state forestry agency to develop a
forest resource assessment. Wyoming recently completed its
assessment and ranked the lack of private industry
infrastructure among its top concerns for the health of
Wyoming's forests. Do you believe the Forest Service could
produce a predictable supply under the current laws,
regulations, appeals and litigation affecting the Forest
Service?
Mr. Crapser. Mr. Chairman, Congresswoman Lummis, I do
believe the Forest Service has shown over the last 5 or 6 years
that they have kind of stabilized the program, if you will. I
don't want to put words in my Federal colleagues' mouth, and I
would have them answer exactly where they think their program
will go. But I think we've seen some good things, as far as
forest management. I think the importance of having the
infrastructure--when Mr. Cables talked about just the vast
amounts of money it would take to clear the hazard trees along
the roads. We look at everything that you all deal with every
day, there's not enough money in the U.S. Treasury to pay for
the work that needs to be done. So without some type of private
forestry infrastructure being able to utilize that material, we
really can't make headway into it.
Mrs. Lummis. Ms. Fishering, you're the only sawmill in
Colorado. There's only one in Wyoming that's open, and that's
up in Black Hills National Forest. Could you explain what
challenges are presented when you're the only game in town. And
then could you also talk a little bit about how the Forest
Service could help facilitate the reopening of the Saratoga
mill?
Ms. Fishering. Thank you very much for the question. In my
view, we face challenges. When I speak to my counterparts
across the country, I find we have unique challenges when you
are the only large commercial mills, it's not the only sawmill
because we have smaller mom and pops. We have sawmills that
just devote their end-products to Aspen; it's not bark beetle
trees.
For us, one of the things that we found out when we went to
try to get an industrial revenue bond, they said, ``Well,
what's your supply?'' We purchase 90 percent of the timber
sales that have been put up a percent in the bark beetle. It
wasn't enough. It's a 3 year supply. It's a year and a half if
we have two mills open. That is, a bank that's going to loan
you maybe a 10 year loan isn't real encouraged when you only
have a year and a half under contract. And the dilemma is two-
fold. They need urgent removal. You can see we can't wait 10
years to get to some of these areas and clear the roadside. So
you're in this dilemma of moving quickly.
We would appreciate more stewardship contracts. I think you
might have heard of those. The bank feels much more comfortable
if we were to have a 10 year stewardship contract, so that we
can say here is a 10 year supply. Maybe not a hundred percent
of a 10 year supply, but here is a mechanism that we can take
to the bank.
Taking documents to the bank is just key for us. And so
when we see topsy-turvy changes in Federal policy and
priorities and where they put the funding, banks don't like
that at all. It's the certainty question the Chairman mentioned
for the other commodity groups. We need certainty.
Long-term contracts would be one key area. We actually
received some ARRA money in the State of Colorado. They carved
out an area called industry retention. I found that very unique
in the country, to see them actually go to the foundation, the
companies that are doing the processing. Most of those funds
went to fuel reduction and projects on the ground. But they're
cutting wood, they're decking it and leaving it because there's
not enough processing. So you really have to start at the
bottom if you're going to get that cost effective bang for the
buck. And none of the money that we saw today, very, very
little of it, went to industry that needed that foundation.
So if there's any other stimulus money out there, if they
choose to spend it, I think that's where it goes. It goes to
the processing level. You're helping private enterprise. They
helped the auto industry. We could use help too.
Mrs. Lummis. Thank you. Another question for the Wyoming
State Forester. Colorado has been operating a pilot Good
Neighbor Program that allows state forests to undergo fuels
reduction and other work on Federal land where state forests
border national forests. I know that Senator Barrasso, our
senator, has a bill to grant that authority more broadly, and
we borrowed from his language in the bill we filed last week.
Could you tell the Committee how Good Neighbor Authority
would work in Wyoming, how it could be helpful in this fight?
And then for anyone: How long can a dead bark beetle-killed
tree stand dead and still be good lumber?
Mr. Crapser. Congresswoman Lummis, I'll make a shot at the
second question first. From talking to Intermountain, from
other contacts I have in the industry, with today's sawmilling
technology, you're probably looking at 5 to 9 years, as far as
merchantability for a stud-type operation. If you're up in the
Black Hills and Ponderosa Pine like Mr. Neiman's operation, you
would probably be looking at only 2 or 3 years because of the
type of products and the things you're trying to make.
As far as Good Neighbor Authority, we feel that it's been
very successful in Colorado. We would love to see the Authority
West-wide. To me where it makes sense is it's not a ploy by
state foresters to take over the national forests or anything
of the sort. That works really well, especially in WUI-type
projects, clearing hazard trees along trails, roads, doing
defensible space, if we have contractors working on the private
side of the line on private land or on state land, and the
Forest Service or the BLM have a project across the boundary,
it makes no logical sense to me or efficiency sense to do
totally separate contracts for us to do our little piece, and
then to have the Forest Service do their piece and bring
different contractors in.
So it's more an efficiency bang for our buck type thing
that I see Good Neighbor Authority really helping us with. We
do a little bit of it with our similar type projects, not with
contractors but with our inmate crews now, and utilize them
across the boundary on the Forest Service or BLM land. I just
see it as a huge efficiency of utilizing the scarce resources
to get work done.
Mrs. Lummis. Thank you, Mr. Chairman. My time has expired,
and I yield back.
The Chairman. Thank you. Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman. In full and fair
disclosure, I'm from west Texas, and I represent a community
that's got the name of No Trees. So asking foresters questions
is maybe a little out of my league. I would like to ask one
kind of a group question; that is, the state-managed forests in
Wyoming are reported to be healthier than the federally-managed
properties. Is there a differential; and, if so, what's causing
that? Is it something that's just a philosophy differential, or
are there things at the Federal level that ties your hands,
that won't allow you to manage them so that they're as healthy
as their state counterparts? So just between you two guys, hash
it out.
Mr. Crapser. Mr. Chairman, Congressman Conaway, we deal
with different things with state lands. For one thing,
statewide, our state lands are state trust lands commonly known
as school sections. We have about 300,000 acres of forested
land that are state lands statewide. So we're not dealing with
the vast acreages that the Forest Service is. We also have a
different mission. Our mission, because we are trust lands, are
for the beneficiaries of the trust, which are the school kids.
So our lands have been more intensively managed than Forest
Service lands. I think right now in the bark beetle area,
almost 30 percent of the state lands--30 to 35 percent of the
state lands within the bark beetle area have been harvested
over the last 20 years. So we have younger stands of Lodgepole
Pine that are too small to be impacted by the bark beetle.
So while, as state forester, I would like to say that our
lands are healthier than the Forest Service, I don't have the
impediments to management, and have a lot more flexibility in
addressing the issues.
Mr. Cruz. Representative Conaway, thank you for the
question. I think some of the situation is that the Federal
lands probably have a lot more Lodgepole Pine, and that's the
species that's most at risk here in the Rocky Mountains.
Mr. Conaway. But are there things under your rules that you
would have changed that would allow you to manage it better.
Mr. Cruz. I believe we do have more complex rules. We have
probably a lot more interest from groups, individuals,
communities, folks of all sort in what happens on the Federal
lands. So our process might be a little bit more intense in
terms of planning and the implementation afterwards.
Mr. Cables. In addition, I think Bill Crapser hit one of
the seminal points is the objectives for the land. State trust
lands often are managed for return to the state. National
forests are managed for multiple uses, and they're managed for
the long-term sustainability of those lands, including things
like recreation, wildlife habitat. And the management
objectives vary. So I think that's a significant element.
And, obviously, we have Federal laws like the National
Environmental Policy Act that apply to the Federal lands which
require us to do assessments, analyses and decisions. Those
decisions are subject to appeal and litigation. So if you look
at the history of timber management over the last couple of
decades, or 3 decades really in the West, there have been a lot
of challenges to some of our management protocols and what
we're trying to do on the landscape. And obviously that has an
effect, both in cost and time. So those are things that the
state lands are not subject to.
Mr. Conaway. Thank you, Mr. Chairman. I yield back.
The Chairman. I thank the gentleman. Anybody else.
Mr. Fortenberry. One quick question.
The Chairman. The gentleman from Nebraska.
Mr. Fortenberry. Well, good morning, and thank you all
again for welcoming us. I'm your neighbor to the east in
Nebraska. It's interesting. I noticed a road sign on the
highway out here: Omaha 525 miles. It puts it in perspective
how big the country is out here. I represent eastern Nebraska.
Again, it's a pleasure to be with you.
Two questions: One is, of the nearly 4 million acres that
have been impacted by the bark beetle, you talked about the
impact on the watershed of 13 states, and clearly Nebraska is
one of those states. My own community, Lincoln, draws its water
from the Platte. We've got other water issues throughout the
state.
Define that correlation a little bit better. Talk about how
the impact on the forest actually is correlated to the
diminishment or the--just how it correlates to that watershed,
what are the direct effects, and over what amount of time.
Mr. Cables. Thank you, Representative Fortenberry. Let me
talk about it in two ways. One is the immediate threat on the
water infrastructure, reservoirs and that sort of thing from
fire. And we experienced this in Wyoming. And memorable to me
was both 1996 and 2002 fires on the Front Range, the Buffalo
Creek fire and the Hayman fire both down in Colorado where they
burned. And then we had subsequent rain events, and the
sediment filled in reservoirs or substantially filled them in.
Denver Water has spent over $30 million dredging their storage
reservoir, from the sediment that came after the fire. So there
are very real remediation costs associated with post-fire
activity, and that's a major threat, and someone has to pay
that bill. So there's that threat.
Then second, we're doing research right now and looking at
the relationship of how long does the snow stay on the
landscape when the trees are all dead. So, when the snow falls,
the canopy of a green forest intercepts some of the snow, and
some of it evaporates back into the atmosphere. Some hits the
forest floor. Then it benefits from the shade of the green
trees, and it holds the snow longer. And then, particularly
late in the summer, August and September, where you really need
to have that water in the streams and downstream, if you don't
have the shade to hold the snow, the snow melts off quicker.
And when you put that together with some of the issues
around climate change and the way the temperatures have changed
in the past decade or so in this part of the world, what is
that relationship. And I don't think anyone can say
quantitatively what it is. But there's a worry that the snow is
going to melt off sooner and faster, and we're not going to be
able to capture it with storage and then allow it to come down
the rivers slowly and, particularly, late in the season.
So there are two effects. The second one, the relationship
between green trees and a forest with dead trees, no canopy,
and no shade. I don't think you can say definitively we have
the science on that. But I think there is a lot of anecdotal
evidence that we're going to see the snow melt off faster,
sooner, and it's not going to be available during some of the
more critical months late in the summer.
Mr. Fortenberry. Thank you. Let me turn quickly to the
issue of defining biomass as appropriate for renewable energy.
I have a bill in this regard. But what are some of the
controversies? What is the resistance that perhaps you've seen,
including what appears to me to be logical, including biomass
in the broader definition of renewable energy opportunities.
Ms. Fishering. A lot of it has been controversy over,
believe it or not, over-cutting. It's like if we include
Federal lands in our biomass definition, then they're afraid
that they'll be inappropriate--they're going to come and slice
off the entire forest. And that, indeed, doesn't happen. We get
in these arguments all the time in Colorado as we try to
explain that when we have a timber sale contract, no matter
what it is, we have to leave a certain amount of debris, tons
per acre or trees per acre when you're finished. You don't take
every single tree. So some people have that vision. Maybe not
in our part of the world, but maybe it's in the eastern United
States. Because there's a mounted effort nationally against
allowing biomass to include Federal lands within that
definition.
Mr. Fortenberry. Frankly, I think it's helpful to talk
about how some of this waste is simply burned off. It seems to
me to be tragic or a real loss, or lack of appropriate
environmental stewardship if you're simply burning it. There
would be better, higher uses.
I think I'm out of time, so thank you, Mr. Chairman.
The Chairman. Thank you, Mr. Fortenberry.
Mr. Smith?
Mr. Smith. Thank you, Mr. Chairman.
I was wondering, Ms. Fishering, if you feel in terms of the
regulatory framework if you have the flexibility to address the
heightened challenges given the beetle infestation in the kill
areas. Do you feel that maybe some regulatory efforts should be
revisited to allow more flexibility?
Ms. Fishering. Thank you for the question. We've worked on
that very diligently because typically a timber sale contract
can be held up. The operating season gets restricted by elk
calving, deer fawning, snowmobile season, hunting season. It
becomes so complicated. And in a traditional timber sale
environment, that's fine, you can do that. But when it's urgent
removal, or public health and safety on 3.6 million acres, you
need to be able to relax some of those regulations that are
typically part of multiple use of managing public lands.
We go through huge hurdles, but we're partners trying to
figure out how we overcome that. In Colorado we've cut through
a lot of those issues. We're actually closing roads and saying,
I'm sorry, this road is closing. We're going to be using log
trucks because we just need to get this area cleared out. So
we're working on that all the time, and we're looking for
flexibility.
But to me, number one, it's going to be budgets because
they can't put up the next project unless they've got the
budget to put it up and go through those regulatory hoops. We
do use the Healthy Forest Restoration Act. That was key. If
that hadn't passed back in the late 1990s or 2000s--I don't
know. That was key because they're going through the projects,
getting it up and out the door quick enough. That to me is
always going to be key, is the budget. And the other regulatory
stuff, we're working through that pretty well.
Mr. Smith. Thank you.
Mr. Cruz, I know that some reports have uncovered some of
the controversy relating to, and perhaps questioning, the need
to reduce hazardous fuels in kill areas. I know that the
controversy existed even before the beetle issue, and I'm
guessing it's even compounded now. Could you speak to the
science about the danger of catastrophic wildfire in these kill
areas?
Mr. Cruz. Representative Smith, thank you for the question.
It's a complex question also. Over time it's evolved our
relationships with neighbors and subdivisions, communities, et
cetera, on treating the urban interface. It's taken a lot of
education; it's taken a lot of sitting down at the table with
city councils, homeowner associations and individuals to talk
about fire behavior and the implications of protecting homes in
the communities, not only on Federal lands but also on their
own lands. And it's been a long journey. We have seen more and
more folks understanding and seeing the realities.
The experience that I've had with wildfire approaching
infrastructure and homes and things like that is, even in a
thin forest, it can take as much as a \1/4\ mile to \1/2\ mile
to take a fire that's flaming through the crowns to drop to the
ground. And that's kind of a scary reality, especially if one
is out on the ground trying to protect the community.
Our ability to treat the vast amount of acreage, we are
doing the best we can. We do appreciate the amount of support
that we have. To us, it has become so much about working with
folks and changing fire behavior. If we can change the fuel
bed, we can have some influence over suppression or getting
that fire down to the ground. And so the impacts just aren't
the same then.
Another thing is folks have chosen to live in the forest
environment because it's beautiful. There are a lot of other
amenities: recreation, beauty, visuals, the solitude. If that
fire burns right up to their home, a lot of that value is lost.
So, that is part of the reason why it's very important for us
to create buffers and to work with communities on their own
lands. And then its also important to have defensible space for
firefighters so there is enough time to stop those flames.
Mr. Smith. Can you speak a little bit, either one of you,
in terms of the likelihood of catastrophic fire and how we
might address that? I know it's a big challenge.
Mr. Cables. Thank you, Representative Smith. Let me take a
shot at that, and particularly the last aspect of your question
about science. It is a bit of a puzzlement, and I would like to
separate advocacy from science. And I think there has been a
lot of advocacy that some of the fuels work is not beneficial,
but it just is not upheld by science.
I refer this to the Committee, and we can provide copies of
this. This is a Rocky Mountain Research Station General
Technical Report 229 that was done in July of last year that
talks about fuel treatments, fire suppression and their
interactions with fire and its effects. It clearly demonstrates
that managing the fuels changes fire behavior. When you change
fire behavior, you're able to put crews in there, or aerial
retardant on the ground, or have a fighting chance to suppress
the wildfire. If you don't treat the fuels, we may not even put
a crew in the country because it's not safe. So breaking up the
fuels, the continuity of fuels is a critical element in our
fire suppression strategies.
[The information referred to is located on p. 701.]
Mr. Cables. And I would say in this area of the bark beetle
kill where we're going to have these trees falling, you can
just imagine one of those photographs of jack-strawed trees, a
continuous fuel bed for miles of jack-strawed trees. If we
don't break that fuel up in some way with fuels treatments,
there's just a continuous fuel bed to carry fire if you get
wind. And it's even compounded because the fuel is closer to
the forest floor which means the fire is hotter closer to the
soil which means you can actually ruin the soil, create what we
call hydrophobic soils and sterilize the soil. So it's kind of
a double whammy. So in my mind there's no question that the
science supports fuels treatment, our own science. And if you
talk to the practitioners, the firefighters themselves, they
would vouch for that as well without a question.
Mr. Smith. Thank you, Mr. Chairman.
The Chairman. I thank the gentleman. You guys have become
almost as risk averse as the Corps of Engineers trying to get
anything done because you're so afraid of being sued and so
forth. The environmentalists that keep you from doing anything,
they don't feel any culpability? What do they say when this
stuff that's obvious? How do they keep having this position?
It's ridiculous. What do they say in these hearings?
Mr. Cables. Well, let me first say that I think we've
actually made some progress. And I like to use the term
``social license.'' I think the Forest Service has more social
license, in other words, public support, to manage these lands
than we've had in a long, long time. It's because of what
people have seen, as Phil talked about. They've seen the
results of wildfire and insect and disease----
The Chairman. It's changing?
Mr. Cables. Yes. And they don't like that. However, there
is still an element of a certain set of interests that really
are, as Nancy said, are operating with a fear-based approach
that somehow we, the agency, will go back to some huge, ugly
timber program and create all these bad results on the
landscape. I have never feared this, and I don't think it's a
legitimate fear, personally.
The Chairman. Too bad we can't send them the bill.
Mr. Cables. So we're making progress, I believe, Mr.
Chairman. But here is the real crux of this for me. This is an
urgent situation. We do not have time to have a lot of meetings
and discuss this, at least in the area that I described today.
The trees are falling now, and we've got infrastructure
threatened and communities. And people are worried, and it's
time do things, and we want to expedite this to the maximum
extent we can to prevent further damage.
The Chairman. Thank you.
Ms. Fishering, this biomass situation, I was the one that
came up with this BCAP Program. It morphed into something that
I never intended at all. All this money was spent. Why didn't
you guys get some of it? Because you're not close enough to any
facility that can utilize this? Some of these areas went wild
and, but I take it that you didn't use it as much?
Ms. Fishering. As you know, it's under suspension right now
because there's such a huge national demand for those dollars.
And we could have used it for part of it if we were delivering
it to our pellet mills in Colorado that were eligible for those
funds, but they closed this year. The markets were hard on all
of us, and those biomass companies as well. I do believe that's
a long-term answer. It would be--for example, if we put
cogeneration at the sawmill in Saratoga, then we could go and
be certified and be eligible for BCAP funding.
The Chairman. But you would have to put in cogeneration for
that to be valid.
Ms. Fishering. What we have there--and we already have
thermal because we have to use heat to dry the lumber, and that
is a biomass boiler.
The Chairman. But the boilers don't exist now.
Ms. Fishering. No, it does at Saratoga. But it's in this
Montrose mill, and that would have taken an investment. We were
needing $10 million.
The Chairman. Well, I'm not sure we want to have this,
creating more investments that may not be sustainable. But, we
want to work with you to try. When I accepted this biomass
definition on adding wood, the idea was that it would hopefully
help the situation out here. It was mostly used on the East
Coast. That should have never happened. The rulemaking has made
some of that more sensible, but we want to work with you to try
to get the definition so we can utilize it here. And not have
it be utilized places where it's driving up the price of
particle board or other things that are going on which causes
other kinds of problems. So we look forward to working with
you.
Ms. Fishering. Thank you, Mr. Chairman. We think that
subsidy to get that biomass off the ground to the facility is a
good idea.
The Chairman. I thought that too, but that isn't exactly
how it worked.
Well, I want to thank the panelists. It's been very good,
very educational for the Committee. We appreciate your
testimony and being with us today and look forward to working
with you.
The Chairman. We'll call the next panel to the witness
table: Jerry Cooksey, wheat producer from Roggen, Colorado;
Ogden Driskill, cattle and buffalo producer, Devils Tower,
Wyoming; Les Hardesty, dairy producer, Greeley, Colorado; John
Snyder, sugarbeet producer from Worland, Wyoming; and Dennis
Sun, cattle producer from Casper, Wyoming.
We appreciate you being with us and look forward to your
testimony.
STATEMENT OF JERRY COOKSEY, WHEAT PRODUCER, ROGGEN, CO
Mr. Cooksey. Mr. Chairman, Members of the Committee, good
morning. My name is Jerry Cooksey, President of the Colorado
Association of Wheat Growers. Thank you for the opportunity to
testify on behalf of Colorado wheat producers. Three
generations of my family work together on a farm and ranch
business located in northeast Colorado. Weld County where we
live is consistently ranked in the top eight counties in
agricultural commodity sales in the country. On our farm we
produce wheat, corn, sunflowers, pumpkins, hay and have a small
cow/calf operation.
Colorado wheat producers have been in a continuous drought
since 1999 until last year. Production and prices have been
very volatile. During the last 10 years, Colorado winter wheat
production has ranged from a low of 36.3 million bushels in
2002 to a high of 98 million bushels in 2009, with a 10 year
average production of 63.3 million bushels.
Statewide average yields have ranged from a low of 22
bushels per acre in 2002 to a high of 40 bushels per acre in
2009, with a 10 year average yield of 30 bushels per acre. At
the same time, Colorado average price for wheat has ranged from
a low of $2.70 per bushel in 2000 to a high of $6.47 per bushel
in 2008, with a 10 year average of $4.06 per bushel.
CAWG has several goals related to farm policy:
A farm safety net that reflects realities of today's
production system, protecting us from weather and market
conditions, volatile weather and market conditions, and
supports our stewardship and conservation of our agricultural
land.
Components of that safety net should be reliable, provide
meaningful coverage for producers throughout the country, and
be flexible to respond to the worldwide commodities marketplace
where we do business.
Conservation programs provide incentives for farmers to
maintain existing conservation activities, adopt new
activities, as well. They should be available nationwide on a
continuous application basis and be properly funded.
Agricultural currently constitutes the one segment of our
nation's trade portfolio that results in a trade surplus.
Growers support continued funding for market development
program that enables us to create, maintain and grow
international markets for U.S. ag products.
CAWG and the National Association of Wheat Growers
supported the passage of the 2008 Farm Bill due to the
inclusion of a number of significant programs to wheat growers
including direct payments, crop insurance, conservation,
renewable fuels, market development programs and research.
During the 2008 Farm Bill, CAWG and NAWG fought to maintain the
direct payment, as it was the most reliable WTO-compliant
safety net mechanism for wheat farmers.
CAWG supports a strong, properly funded crop insurance
program that provides meaningful coverage for wheat producers
in all regions growing all types of wheat. Crop revenue
insurance protects producers from weather-related production
problems and the volatility of the commodity markets. Higher
revenue coverage at reduced rates would be very beneficial to
producers.
Trade is vital to our marketplace since 50 percent of the
United States wheat production, and 80 percent of Colorado's
production, is typically exported. We support a robust trade
agenda including immediate passage of pending bilateral free
trade agreement with Colombia as a top priority and an eventual
Doha deal that provides significant new market access for U.S.
wheat producers.
Normalization of trade--U.S. trade--U.S. and Cuba trade
relationship including the lifting of the travel ban, the full
funding of both Market Access Program and Foreign Market
Development.
We are in support of incentive-based, voluntary,
cooperative conservation programs that help producers maintain
and improve the quality of land and water resources. The
Conservation Stewardship Program is a voluntary program that
encourages agricultural producers to maintain existing
conservation activities and adopt new ones such as the resource
conserving crop rotation. CSP provides support for producers
and landowners of working land, providing environmental
benefits for everyone.
The Conservation Reserve Program takes marginal cropland
out of production, which is then seeded to grass. This has been
very beneficial to the environment, preventing water and wind
erosion. In 2009, Colorado had 11,761,000 acres of cropland
with 2.4 million acres in CRP. Unfortunately of the 743,000
acres that expired that year, approximately 335,000 acres were
offered a 2 or 3 year extension. That's 45 percent. This had a
negative economic impact in these areas. We encourage you to
maintain the CRP.
Wheat growers are continuing to gather experience with the
new programs such as ACRE, Average Crop Revenue Election, and
SURE, Supplemental Revenue Assistance.
Twelve percent of the wheat-based acres nationwide were
involved in ACRE while there was only one percent enrollment in
Weld County where I live and farm. This is a very complex
program. Farmers in eastern Colorado did not see the benefits
of ACRE and chose the direct payments. There is a concern over
the timeliness of the program sign-up for SURE. This is a
program that would benefit a producer that has a loss in the
one crop they grow, or losses in all the crops grown on a
particular farm.
On our operation we had significant hail losses on two of
the crops, and good production on the other two crops in 2008.
The result was no SURE payment. A producer that spreads risk by
diversifying into a number of different crops will see less
benefits from SURE even when there are heavy crop losses.
We have concerns with the Standard Reinsurance Agreement,
SRA, negotiation currently being conducted by the Department of
Agriculture.
First, CAWG is concerned that the proposed level of cuts,
nearly $7 billion to the companies and agents, could
significantly jeopardize the service here in Colorado and
Wyoming and other regions in the country.
Second, we are very concerned that the level of cuts will
reduce the agriculture spending baseline, making the next farm
bill even more difficult to write. Given tight budget
forecasts, I urge the Members here today to work with the
Administration to ensure that the negotiated agreement does not
negatively impact the delivery of crop insurance programs in
these areas, and to ensure that any savings that are achieved
can be captured to maintain the farm bill baseline.
Farmers seek a safety net that reflects the realities of
today's production system, protects agricultural producers from
volatile weather and market conditions and supports the
nation's foremost environmentalists: Farmers.
Thank you.
[The prepared statement of Mr. Cooksey follows:]
Prepared Statement of Jerry Cooksey, Wheat Producer, Roggen, CO
Mr. Chairman and Members of the Committee,
Good morning. My name is Jerry Cooksey, President of the Colorado
Association of Wheat Growers (CAWG). Thank you for the opportunity to
testify on behalf of Colorado wheat producers. Three generations of my
family farms together on a farm and ranch business located in
northeastern Colorado. Weld County where we live is consistently ranked
in the top eight agricultural commodity sales in the country. On our
farm, we produce wheat, corn, sunflower, pumpkins and have a small cow
calf operation.
Colorado wheat producers have been in a continuous drought since
1999 until last year. Production and prices have been very volatile.
During the last 10 years, Colorado winter wheat production has ranged
from a low of 36.3 million bushels in 2002 to a high of 98 million
bushels in 2009 with 10 year average production of 63.3 million
bushels. Statewide average yields have ranged from a low of 22 bushels
per acre in 2002 to a high of 40 bushels per acre in 2009 with a 10
year average yield of 30 bushel per acre. At the same time the Colorado
average price for wheat has ranged from a low $2.70 per bushel in 2000
to a high of $6.47 per bushel in 2008 with a 10 year average of $4.06
per bushel.
CAWG has several goals related to farm policy:
A farm safety net that reflects the realities of today's
production system, protecting us from volatile weather and
market conditions, and supports our stewardship and
conservation of our agricultural land.
Components of that safety net should be reliable, provide
meaningful coverage for producers throughout the country and be
flexible to respond to the world-wide commodities marketplace
where we do business.
Conservation programs provide incentives for farmers to
maintain existing conservation activities and adopt new
activities as well. They should be available nationwide on a
continuous application basis and be properly funded.
Agriculture currently constitutes the one segment of the
nation's trade portfolio that results in a trade surplus.
Growers support continued funding for market development
programs that enable us to create, maintain and grow
international markets for U.S. agricultural products.
CAWG and the National Association of Wheat Growers (NAWG) supported
passage of the 2008 Farm Bill due to the inclusion of a number of
significant programs to wheat growers including the direct payment,
crop insurance, conservation, renewable fuels, market development
programs and research. During the 2008 Farm Bill debate, CAWG and NAWG
fought to maintain the direct payment, as it was the most reliable,
WTO-compliant safety net mechanism for wheat farmers.
CAWG supports a strong, properly funded crop insurance program that
provides meaningful coverage for wheat producers in all regions and
growing all types of wheat. Crop Revenue insurance protects producers
from weather related production problems and the volatility of the
commodity markets. Higher revenue coverage at reduced rates would be
very beneficial to producers.
We support a robust trade agenda including passage of pending
bilateral free trade agreements, participation in WTO trade discussions
and more open trade with Cuba. Trade is vital to our marketplace since
50 percent of U.S. wheat production and 80 percent of Colorado's
production is typically exported. We also strongly support continued
funding for market development programs including the Market Access
Program and Foreign Market Development Program (FMD).
We are in support of incentive-based, voluntary, cooperative
conservation programs that help producers maintain and improve the
quality of land and water resources. The Conservation Stewardship
Program (CSP) is a voluntary program that encourages agricultural
producers to maintain existing conservation activities and adopt new
ones, such as the adoption of resource conserving crop rotations. CSP
provides support for producers and landowners of working lands
providing environmental benefits for everyone.
The Conservation Reserve Program (CRP) takes marginal crop land out
of production, which is then seeded to grass. This has been very
beneficial to the environment, preventing water and wind erosion. In
2009 Colorado had 11,761,279 acres of cropland with 2,412,238 acres in
CRP. Unfortunately, of the 743,795 acres that expired that year
approximately 335,000 (or 45%) of those acres were offered a 2 or 3
year extension. This has had a negative economic impact in these areas.
We encourage you to maintain CRP.
Wheat growers are continuing to gather experience with the new
programs, such as, Average Crop Revenue Election (ACRE) and
Supplemental Revenue Assistance (SURE).
Twelve percent of wheat base acres nationwide were enrolled in
ACRE, while there was only one percent enrollment in Weld County, where
I live and farm. This is a very complex program. Farmers in eastern
Colorado did not see the benefits of ACRE, and chose direct payments.
There is concern over the timeliness of the program sign-up for
SURE. This program would benefit a producer that has a loss in the one
crop they grow or losses in all the crops grown on a particular farm.
On our operation, we had significant hail losses on two crops and good
production on the other two crops. The result was no SURE payment. A
producer that spreads risk by diversifying into a number of different
crops will see less benefits from SURE even when there are heavy crop
losses.
It is very important to maintain the same baseline spending in farm
bill programs going into the 2012 Farm Bill since producers and rural
communities depend on it. Farmers seek a safety net that reflects the
realities of today's production system, protects agriculture producers
from volatile weather and market conditions, and supports the nation's
foremost environmentalists--farmers.
Thank you again for this opportunity to testify. Are there any
questions?
The Chairman. Thank you very much, Mr. Cooksey.
Mr. Driskill, welcome to the Committee.
STATEMENT OF OGDEN DRISKILL, CATTLE AND BUFFALO PRODUCER,
DEVIL'S TOWER, WY
Mr. Driskill. Thank you, Chairman Peterson, all the Members
of the Agriculture Committee. I'm pretty nervous. I don't talk
so well.
The Chairman. You don't need to be nervous. We're ordinary
folks like you are.
Mr. Driskill. I can't tell you how proud I am, first off,
to have a pioneer ranching family, Cynthia Lummis, as our
Representative from Wyoming. It is so neat to have working
ranchers on the Agriculture Committee. That's been a huge point
of pride of mine.
I'm a sixth-generation rancher from Devil's Tower, Wyoming.
Our family came out of Texas in the 1850s and kind of fled
people and trailed the cattle north to Cheyenne in 1871, and
followed buffalo trails up to Crook County where we live, as
the first settlers.
I spent a lot of my life watching family ranches getting
broken up and divided, disappear. Our families use lots of your
grants and programs. They're phenomenal programs. One thing I
see out of them is very often they're recurring expenses. They
come in. You know, I get money from the different programs, and
they keep coming back year after year after year.
The last farm bill, you guys enhanced the FRPP program.
That's really what I'm going to talk about here. That's a
phenomenal program for working ranches. And it's working, it's
working well. They're one-time expenses. You guys put the money
up on them. I happen to be part of an agricultural land trust
that's part of a big number of ag land trusts that come out and
work to put in conservation easements that are permanent. When
you guys spend that money, a lot of times it seems pretty
pricey up front, but it's a one-time spend. That money is
forever. I'm here to encourage you to continue to fund FRPP and
GRP, preferably at an increased pace.
You know, coming in here yesterday, you can see all through
the West what's happening to our intact ranchlands. If we don't
have tools to work with into the next centuries, we don't have
anything to fund farm programs for because we won't have farms
left. These ranches that you guys are funding easements on are
going to be here not 100 years, not 200 years but 500 years
from now. We don't come back and ask for more money. Once
you've done the easements and put them on, these ag land trusts
are entrusted to ranches and farms. They have really done a
fine job of administering them. The organization has high
integrity, and they have done just a nice job of it.
I would encourage you to make the rules really flexible
when you look at the length of the programs on any of your ag
programs. The longer the programs go, the more flexibility you
need to have for these programs to really work well. Envision a
hundred years ago and looking a hundred years into the future.
It gets really hard to write in-depth rules that work for the
long term. So I would encourage you to really look at good
flexibility, keeping in mind the value of intact ranchlands,
what they do for the scenic, watershed, wildlife lands. I mean,
every value is there. And it's intact units; it's not just
pieces. These are working units that are going to be able to
work forever.
Also, through the West, they encompass some of the very
prime best land that the feds didn't manage to get ahold of.
When they homesteaded, they got in on the root grounds. These
are the grounds that are at the highest risk very often. Our
ranch is similar to that. Cynthia's ranch is one of them. The
best ranches have the highest threats to them. They're also the
toughest to protect, often because they're hard to get it done.
The conservation dollars you guys spend--I don't know. I'm
rambling a little. I can't follow the script version.
For every dollar you spend on conservation--the one figure
that really sticks with me is on private land conservation--you
get $6 back in public benefits. That $6 is kind of an
interesting figure because it's a one-time deal. The permanence
to me is just so important in your programs. We're all
scrambling for money between the different programs. I would
encourage you to really look strongly at spending money for
this all through the United States. I would like to see my
family ranching for another six generations.
Good farm programs that ensure permanence are of extreme
importance. Thank you.
[The prepared statement of Mr. Driskill follows:]
Prepared Statement of Ogden Driskill, Cattle and Buffalo Producer,
Devil's Tower, WY
Chairman Peterson, Ranking Member and Members of the Committee,
thank you for the opportunity to appear here today to discuss
conservation and the new farm bill.
I am a working, 6th generation rancher. Our family began ranching
in Texas in the 1850s and trailed cattle into Wyoming by 1871. Love for
the land and livestock has kept our family with a keen sense of the
values of intact ranchland. I am a member of the WY Stock Growers
Agricultural Land Trust Board of Directors. I also serve on the Board
of the Land Trust Alliance, a national trade organization dedicated to
establishing guidelines for quality conservation as well as ethical
transactions and organizational oversight. From these perspectives, I
cannot emphasize strongly enough the importance of voluntary,
conservation incentives on private lands, particularly those that
protect our working ranch lands, permanently.
Thank you for some of the positive changes gained in the 2008 Farm
Bill which provided:
a. Generous funding of the Farm and Ranchland Protection Program.
b. Reauthorization of the Grasslands Reserve Program.
d. Elimination of the need for the Federal Government to be a co-
holder of conservation easements but rightfully acknowledges
the United States as funder.
e. Recognition of the importance of land trusts as third party
entities that can hold, manage and enforce easements on private
working landscapes.
f. The ability to count a landowner donation of a portion of the
conservation value as match.
Why is the conservation of private ranchland in Wyoming important?
43% of the land in Wyoming is privately owned. 93% of the
private land is in agricultural production. We rank first in
the nation for the average size of ranches and farms: the av.
size is 3,600 acres with 80% of farms/ranches operating on
5,000 acres or more). These lands are the most productive in
the state, agriculturally as well as from a broader biological
perspective. They encompass much of our riparian lands, often
buffer national parks and forests, and tend to be in the
transition areas linking mountains and plains. They are highly
sought after by developers and trophy landowners.
Nationally, about 40 million acres of land were newly
developed between 1982 and 2007, bringing the national total to
about 111 million acres. The American Farmland Trust describes
the current rate as 1 acre every 2 minutes.
Population growth in the Intermountain West has stimulated
competition between exurban developers and agricultural
producers for the allocation of land and other natural
resources.
The average price of a ranch in Wyoming increased by more
than three times on a production-unit basis from 1993-1995 and
2002-2004, and the average price for irrigated meadowland in
Wyoming nearly doubled.
8.7 million acres of agricultural land in Wyoming are
managed by operators 65 years of age and older. What happens
when they retire? These funds can help enable a new generation
of producers by providing much needed capital and helping to
keep ranches at ag value.
Why are the Farm and Ranchland Protection Program and Grasslands
Reserve Program Critical to Conserving Wyoming Ranchlands?
Wyoming's wide open spaces and working ranchlands define the
Cowboy State. There is a culture here which is clearly separate
from the more urban areas of our country. The land use patterns
of our state preserve this uniquely western culture, and also
provide wildlife habitat--particularly winter range, breeding
grounds and uninterrupted migration routes. They enable our
second-largest industry, tourism, and co-exist with our first--
the production of energy.
WY ranchers are hit hard with regulatory programs--this
voluntary, incentive program has the potential to do far more
good in the long run, at less cost.
FRPP dollars leverage millions of dollars--from private
individuals and foundations as well as state investment. The
Trust for Public Land has determined that for every dollar
spent on private land conservation, $6 is returned in natural
resource benefit, including forage for both livestock and
wildlife and other ecosystem services.
How can we build and improve these programs?
This year, $6 million will be allocated to WY projects.
There is at a minimum, a $50 million backlog according to our
state NRCS office--but just submitted projects. Every land
trust in this state has even more projects in the pipeline,
without any advertising whatsoever. Please keep FRPP and GRP
fully funded. Take the long view. The benefit of conservation
easements does not produce instant gratification. They are an
investment in our future. Keep these important tools in the
2012 Farm Bill. They provide the most efficient bang for our
buck.
Private land trusts are community based! And, they provide
conservation benefit through the protection of private lands
far more efficiently than the Federal Government! Enable
private land trusts with the right tools:
Reduce or eliminate the required cash match with FRPP.
Allow third-party easements the same benefit of no cash
match required as the Federal Government receives with GRP.
Match dollars are difficult to raise and the need
exponentially increases each year.
Consider funding the transactions costs for donated
easements.
These two suggestions would make our Federal
investment go many times further.
Stay clear of using these funds for the benefit single
species management. The best thing we can for species like the
sage grouse, for example, is to keep large open lands
unfragmented, sparsely populated, and available for the
production of natural resources.
What is working the best?
Private land conservation groups that are geared
specifically to working farms and ranches are making huge
strides at protecting large critically important lands from
development or conversion. They have the trust of the
agricultural community as well as the expertise to write,
document and enforce easements.
PORT (Partnership of Rangeland Trusts), consisting of
agricultural land trusts in Wyoming, California, Colorado,
Montana, Oregon, Nevada, Kansas and our newest Texas has
conserved over 1.7 million acres of ranchlands in the last 15
years, making it the fastest growing conservation segment in
the country today. As of 2008 PORT members held one in six
privately held easements in the United States.
FRPP and are great programs--all they are lacking is slight
refinement and increased funding.
Thank you for the opportunity to be a part in helping agriculture
remain viable into the next century.
Ogden Driskill.
The Chairman. Thank you very much. You were right on the
money. I don't know how you figured out to end right at the 5
minutes, but you did a good job.
Mr. Hardesty, welcome to the Committee.
STATEMENT OF LES HARDESTY, DAIRY PRODUCER, GREELEY, CO
Mr. Hardesty. Well, thank you, Mr. Chairman, distinguished
Members of the Committee. I really appreciate the opportunity
to be here today and testify before you today on the future of
dairy policy.
I'm Les Hardesty. My wife and I milk about 650 cows about
an hour south of here and farm about 300 acres of forage
grounds. I would like to begin by thanking the Members of the
Committee for acknowledging the severe distress that dairy
producers have been weathering, and express my appreciation for
all of your support over this last year. With your help we
succeeded in securing action from the USDA and passage of the
ag appropriations measure which contained $350 million of
direct support for the dairy industry. On behalf of the nearly
18,000 Dairy Farmers of America members, I want to thank you.
Mr. Chairman, as the Committee considers future dairy
policy, it is important the Committee identifies and develops
policy that addresses the real concern of our nation's dairymen
and dairywomen: Price volatility. In the last decade, we have
seen dramatic volatility in dairy prices. The upward spikes are
higher, depressed prices have been lower and the time in
between has been shortened with little allowance for recovery.
Current Federal dairy policy fails to provide an adequate
safety net, is inflexible and provides few tools for producers
to access in times of low prices or extreme volatility. We must
identify the tools necessary to decrease and mitigate such
extreme swings if we are to sustain a vibrant, domestic dairy
industry.
In May of 2009, Dairy Farmers of America began evaluating
current dairy policies and considering future options. For
future policy development, DFA supports proposals which adhere
to the following five guidelines: Be market oriented to allow
for growth both domestically and globally; be responsive to
quick-changing market conditions; have 100 percent financial
participation by producers; be global in nature to consider the
impact of imports as well as exports; and finally, be national
in scope with the ability to implement regionally.
Following much consideration and with these principles in
mind, the DFA's board of directors adopted a growth management
concept called Dairy Growth Management Initiative, DGMI, as I
will refer to it. DFA's primary goal with DGMI has been to
identify policy that would reduce price volatility, provide
additional tools to assist producers in times of low prices,
including the ability to spur demand and enhance exports.
DGMI was meant to bring new ideas to the table that could
be used to build consensus within the industry. DFA, other
dairy cooperatives and industry organizations like National
Milk Producers Federation then began working together in an
effort to build that consensus for future national dairy
policy, a policy that allows for growth in the industry while
addressing price volatility. These efforts at collaboration are
proving to be successful, and I am pleased to see that several
of our DGMI concepts for addressing volatility are now being
integrated in the proposal NMPF is presenting.
NMPF's policy proposal recommends changes to national dairy
policy in an effort to assist dairy producers in times of low
prices by four points here: Revamping the Dairy Price Product
Support Program and the MILC, Milk Income Loss Contract;
creating a program that sends a direct economic signal to each
individual producer to manage their own production in a manner
that allows the producer to remain in business, while
addressing supply and demand imbalances; creating a new dairy
producer gross margin insurance program that responds to milk
price and feed costs; and, finally, reforming Federal Milk
Marketing Orders.
DFA is supportive of NMPF's policy direction and is pleased
to see a focus on policy proposals that address volatility, as
well as provides numerous other tools. We look forward to
working towards a unified proposal with NMPF as member
cooperatives and other organizations interested in the success
and longevity of the U.S. dairy sector.
Mr. Chairman, on a personal note, as I conclude and wrap up
here, while I understand and appreciate the timeline you have
outlined for farm policy--farm bill policy development, I want
to stress that the idea of waiting until 2012 to reform dairy
policy leaves many of us concerned. Two thousand and nine was a
disaster, 2010, the recovery is expected but is coming much
slower than we had hoped or thought, and is likely not to be
enough in 2010.
Many of my neighbors are wondering if they will make it to
2011. Keep that in mind as you continue your discussions. Dairy
leaders are working hard to develop a consensus within the
industry this year. Dairy producers will be anxious for its
implementation.
Again, thank you for allowing me to provide testimony
before you today. I appreciate all of your efforts and look
forward to working with you all in the coming weeks. Thank you.
[The prepared statement of Mr. Hardesty follows:]
Prepared Statement of Les Hardesty, Dairy Producer, Greeley, CO
Mr. Chairman, distinguished Members of the Committee, I appreciate
the opportunity to testify before you today on the future of dairy
policy. My name is Les Hardesty. My wife and I milk 650 cows and farm
300 acres of forage crops in Greeley, CO. Besides my duties on the
farm, I also serve on the Executive Committee of Dairy Farmers of
America's (DFA) Board of Directors, as well as several other DFA
committees. I also am Chairman of the National Dairy Board and a member
of the board of the National Milk Producers Federation (NMPF). In
addition, I am a member of the U.S. Meat Export Federation, the
National Cattlemen's Beef Association and the Future Farmers of America
Agriculture Advisory Council.
The past eighteen months have been very difficult for dairy
producers across the nation. The depressed milk prices, brought on by a
supply/demand imbalance, coupled with high input costs, a collapse of
our financial structure and an international recession has led to an
economic situation not witnessed for generations within the dairy
industry.
I want to thank Members of the Committee for acknowledging the
severe distress dairy producers have been weathering and express
appreciation for all your support over the last year. With your help,
we succeeded in securing action from the United States Department of
Agriculture (USDA). We asked them to use the tools available to them to
bring some relief to dairy producers. Working together, we succeeded in
securing a temporary increase the Dairy Product Price Support Program
(DPPSP) which resulted in increased purchase prices for cheese and
nonfat dry milk (NFDM), while boosting farm level income for dairy
farmers. Together we succeeded in securing the reactivate of the Dairy
Export Incentive Program (DEIP) for the 2009-2010 year which resulted
in the transfer of significant volumes of NFDM, butter, and cheese to
international customers. Additionally, we reminded USDA of the needs of
those struggling to afford nutritious food for their families and USDA
transferred 200 million pounds of NFDM to Food and Nutrition Services
(FNS) for use in domestic feeding programs. Last, Congress passed an
appropriations measure which contained $350 million and direct support
to the dairy industry. On behalf of the nearly 18,000 member-owners of
DFA, I thank you.
Mr. Chairman, as you know, extreme volatility in the industry
during the past 18 months has resulted in drastic swings in the price
dairy farmers are paid for their milk and their costs of production.
Recovery has come much slower than expected, and producers are low on
equity and heavy with debt. While, in general, lenders have been
patient--waiting for the rebound in prices, the starts and fits we have
witnessed in price recovery this year has many of them in a state of
increased concern and with a decreased appetite for lending. The
situation, for many dairy producers, will surely get worse before it
gets better because of this additional pressure.
Mr. Chairman, as the Committee considers future dairy policy, it is
important the Committee identifies and develops policy that addresses
the real concern of this nation's dairymen and women--extreme
volatility. In the last decade, we have seen dramatic volatility in
dairy prices. The upward spikes have been higher, the depressed prices
have been lower and the time in between has been shortened with little
allowance for recovery. Current Federal dairy policy fails to provide
an adequate safety net, is inflexible and provides few tools for
producers to access in times of low prices or extreme volatility. We
must identify the tools necessary to decrease and mitigate such extreme
swings if we are to sustain a vibrant domestic dairy industry.
In May of 2009, DFA began evaluating current dairy policy and
considering future options when the Board of Directors established a
Price Stabilization Study Committee. The purpose of this Committee was
to provide guidance in the development of, and support for, a future
dairy policy that met the following principles:
Be market oriented to allow for growth both domestically and
globally.
Be responsive to quickly changing market conditions.
Have 100 percent financial participation by producers.
Be global in nature to consider the impact of imports and
exports.
Be national in scope with the ability to implement
regionally.
Following much consideration and with these principles in mind,
DFA's Board of Directors adopted a growth management concept called the
Dairy Growth Management Initiative (DGMI). DFA's primary goal with DGMI
has been to identify policy that would reduce price volatility and
provide additional tools to assist producers in times of low prices,
including the ability to spur demand and enhance exports. DGMI was
meant to bring new ideas to the table that could be used to build
consensus in the industry.
DFA, other dairy cooperatives and industry organizations like NMPF
then began working together in an effort to build that consensus for
future national dairy policy--a policy that allows for growth in the
industry while addressing price volatility. These efforts at
collaboration are proving successful, and I am pleased to see that
several of the DGMI concepts for addressing volatility are now being
integrated in the proposal NMPF is developing.
NMPF's policy proposal is being developed by the organization's
Strategic Planning Task Force, of which DFA is an active participant.
The proposal recommends changes to national dairy policy in an effort
to assist dairy producers in times of low prices by:
Revamping the DPPSP and Milk Income Loss Contract
programs.
Creating a program that sends a direct economic signal
to each individual producer to manage production in a manner
that allows the producer to remain in business while addressing
supply/demand imbalances.
Creating a new dairy producer income insurance program.
Reforming Federal Milk Marketing Orders.
DFA is supportive of NMPF's policy direction and is pleased to see
a focus on policy proposals that address volatility as well as provides
other tools. We look forward to working in a collaborative fashion with
NMPF, its member cooperatives and other organizations interested in the
success and longevity of the U.S. dairy sector.
Mr. Chairman, just a personal note as I conclude. While I
understand and appreciate the timeline you have outlined for farm bill
policy development, I want to stress that the idea of waiting until
2012 to reform dairy policy leaves many of us concerned. Two thousand
and nine was a disaster. The expected recovery of 2010 is slow in
coming and likely will not be enough. Many of my neighbors are
wondering if they will make it to 2011. Keep that in mind as you
continue your discussions. Dairy leaders are working hard to develop
consensus within the industry yet this year. Dairy producers will be
anxious for its implementation.
Again, thank you for allowing me to provide testimony before you
today. I appreciate all your efforts and look forward to working with
you in the months to come.
The Chairman. Thank you, Mr. Hardesty.
And I want to commend DFA and the other folks, National
Milk Producers Federation, for the work they have been doing.
You guys have been ahead of the program here. I was in
California yesterday talking to some folks. We've got some work
to do to get those guys in the tent. But we're making good
progress, and we appreciate you guys and the effort you're
making. We look forward to working with you.
Mr. Hardesty. Thank you.
The Chairman. Mr. Snyder, as the representative of the
largest sugar-producing district in America, I am pleased to
see you here today as one our good friends, and also doing a
great job with the sugar industry. Welcome to the Committee.
STATEMENT OF JOHN W. SNYDER, Jr., SUGARBEET PRODUCER, WORLAND,
WY
Mr. Snyder. Thank you, Mr. Chairman and Members of the
Committee, for convening this hearing. On behalf of beet
growers in the mountain states, I want to express my deep
appreciation for your leadership and bipartisanship, and the
successful passage of the 2008 Farm Bill. We look forward to
working with you on the 2012 Farm Bill. I especially want to
express my gratitude to Congresswoman Lummis for her excellent
work and strong voice on the Committee for farming and
agriculture.
My name is John Snyder. I'm President of the Washakie Beet
Growers. My family has farmed in Wyoming for over 70 years. My
wife and I have been farming for over 20 years and raise
sugarbeets, malt barley, corn, alfalfa and alfalfa seed. My
youngest son, Steven, recently graduated from the University of
Wyoming with a degree in agricultural economics and has bought
into our farm. I hope the farming legacy will continue with his
involvement.
For over a century, the beet sugar industry has played an
important economic role in the mountain region of Wyoming,
Colorado, Nebraska and Montana. Today there are two companies
operating six beet sugar factories in our region. In 2002 the
growers I represent purchased our factory, the Wyoming Sugar
Company, which is based in my hometown in Worland. At the same
time, a thousand producers in Colorado, Montana, Nebraska and
Montana purchased their company and formed Western Sugar
Cooperative. Western Sugar is based in Denver and owns and
operates five factories in the four-state area. Our two
companies produce 13 percent of the U.S. sugarbeet production
on 135,800 acres, and support 1,500 full-time factory and
seasonal jobs.
Since the 2002 Farm Bill, the entire U.S. sugar industry
has become a hundred percent grower owned. The sugar provisions
in that bill, and in the 2008 Farm Bill, have given producers
confidence in the stability of domestic sugar industry.
The United States is the fifth-largest sugar producer.
We're also the fifth-largest sugar consumer and the second
largest net importer. We're good at what we do. Our sugar
producers are among the lowest-cost producers in the world.
We're doubly proud of this distinction because we have achieved
it by being fair to our workers and responsible stewards of the
land. The U.S. is one of the most open sugar markets and
provides guaranteed access for 41 countries as it is required
to do under trade laws. Trade agreements such as WTO and NAFTA
force the U.S. to provide duty-free access for 1.4 million
short tons of sugar each year whether the country needs the
sugar or not. In addition, under NAFTA, Mexico now enjoys
unlimited access to the U.S. market. The Doha Round of WTO
could result in additional market access concessions, and the
recently launched Trans-Pacific Partnership, or TPP, trade
negotiations could result in even more concessions. These
important concessions could reduce U.S. sugar producers' access
to their own market even further, reduce prices and make it
impossible for many of us to survive.
Congress in its wisdom designed a sugar policy in the 2008
Farm Bill that is working to the considerable benefit of
consumers at zero cost to taxpayers, and is giving sugar
farmers a chance to survive, plus it fully complies with the
rules of WTO. Under this market balancing approach, the USDA
has retained its authority to limit domestic sales of sugar.
Producers who exceed their allotments must store the excess at
their own expense, not the government's. If imports exceed the
difference between domestic sugar allotments and consumption,
the USDA will divert surplus sugar to fuel ethanol production
and restore balance to the sugar market for food. This
provision has not been needed yet and government forecasters
expect it not to be over the course of this farm bill.
The current farm bill's benefits to American sugar
consumers and American taxpayers are clear. American food
manufacturers and consumers can count on reliable supplies of
sugar that has been responsibly produced and is reasonably
priced, high-end quality and safe to consume. U.S. wholesale
and retail prices are below the average of the rest of the
developed world and, in real terms corrected for inflation,
have declined substantially over the past 3 decades.
Sugar producers receive no government payments. Sugar is
the only major commodity program that operates at no cost to
taxpayers, and government projections through 2020 say it will
remain no-cost over all of these years.
American sugar farmers are grateful to Congress for
crafting the sugar policy that balances supply and demand,
ensures consumers a dependable, high-quality supply, and is
improving market prospects for sugar producers. The policy
achieves all of these goals at zero cost to American taxpayers.
We strongly urge the continuation of this successful no-
cost policy in the next farm bill. Thank you, Mr. Chairman for
holding this important meeting and for all of you on the
Committee for what you do for American agriculture. We look
forward to working with you in the future. Thank you.
[The prepared statement of Mr. Snyder follows:]
Prepared Statement of John W. Snyder, Jr., Sugarbeet Producer, Worland,
WY
Thank you, Mr. Chairman and Members of the Committee, for convening
this hearing. On behalf of the beet growers in the mountain states, I
want to express my deep appreciation for your leadership and
bipartisanship in the successful passage of the 2008 Farm Bill, and we
look forward to working with you on the 2012 Farm Bill. I especially
want to express our gratitude to Congresswoman Lummis for her excellent
work and strong voice on the Committee on behalf of Wyoming
agriculture.
My name is John Snyder, and I am President of the Washakie Beet
Growers. My family has farmed in Wyoming for the past 70 years. My wife
and I have been farming for 20 years, and raise sugarbeets, malt
barley, corn, alfalfa and alfalfa seed. My youngest son, Steven,
recently graduated from college with a degree in agriculture economics,
and has bought into our farm. I hope the family farming legacy will
continue through his involvement.
For over a century, the beet sugar industry has played an important
economic role in the mountain region of Wyoming, Colorado, Nebraska and
Montana. Today, there are two companies operating six beet sugar
factories in our region. In 2002, the growers I represent purchased our
factory, The Wyoming Sugar Company, which is based in my home town of
Worland. At the same time, 1,000 producers in Colorado, Montana,
Nebraska and Wyoming purchased their company and formed the Western
Sugar Cooperative. Western Sugar, based in Denver, owns and operates
five factories in the four-state area.
Our two companies produce 13% of the U.S. sugarbeet production on
135,800 acres, and support 1,500 full-time factory and seasonal jobs.
Since the 2002 Farm Bill, the entire U.S. sugarbeet industry has
become 100% grower-owned. The sugar provisions in that bill, and in the
2008 Farm Bill, have given producers confidence in the stability of a
domestic sugar industry.
Food Security
Sugar is an essential ingredient in our nation's food supply. As an
all-natural sweetener, bulking agent and preservative, it plays an
important role in about 70% of processed food products and is called
for in a multitude of favorite home recipes. Dependence on unreliable
and unstable foreign suppliers is a threat to our food security, which
is why a strong, diversified and reliable domestic industry has long
been recognized as important to the nation.
U.S. sugar producers are globally competitive, but for decades we
have been threatened by unfair competition. Roughly 120 countries
produce sugar and all their governments intervene in their sugar
markets in some way. Many countries subsidize their producers and dump
their surpluses on the world market for whatever price it will bring.
This depressed, so-called ``world price'' has averaged below actual
global costs of producing sugar for many years. American producers are
competitive, but cannot be expected to compete against these foreign
treasuries and unfair predatory trade practices.
Importance, Size, Efficiency
In addition to the critical role it plays in local economies, sugar
is a significant job producer and revenue-generator nationally. The
U.S. sugar producing industry, with sugarbeets and sugarcane grown or
processed in 18 states, generates over 146,000 jobs and more than $10
billion per year in economic activity. These jobs range from the cane
fields of Hawaii and the beet fields of Wyoming to the cane sugar
refineries in New Orleans, New York City, and other cities.
The United States is the world's fifth-largest sugar producer. We
are also the fifth-largest sugar consumer and the world's second-
largest net importer. And, we are good at what we do. Our sugar farmers
are among the lowest cost producers in the world. We are doubly proud
of this distinction because we have achieved it while being fair to our
workers and responsible stewards of the land. Farmers in the developing
world, who dominate the world sugar market, generally operate with
little or no enforced requirements for worker safety and benefits, or
for air, water, and soil protection. Our standards, and compliance
costs, are among the highest in the world.
Restructuring
Despite our efficiency, we are an industry that has been under
enormous stress. From 1985 until 2009, we did not receive any increase
in our price support level. Over this long period of essentially flat
nominal prices, the real price we received for our sugar dropped
sharply because of inflation. (Figures 1-2)
Only the producers who could match the declining real price with
efficiency gains and lower production costs were able to survive. More
than half could not. From 1985 to 2009, 54 of America's 102 cane mills,
beet factories, and cane sugar refineries shut down, with terrible
consequences for the local families and communities. Just since 1996,
35 mills, factories, and refineries have closed. (Figures 3-4)
Trade Challenges
The U.S. is one of the most open sugar markets and one of the
world's largest sugar importers. The U.S. provides access to its market
to 41 countries, as it is required to do under trade laws. Virtually
all are developing countries, and most are highly supportive of U.S.
sugar policy because it provides an import price at which many can
recover their costs of production.
In addition to coping with the problems of rising costs, pests,
disease, and natural disasters, American sugar farmers have had to deal
with another threat: trade agreements that have ceded more and more of
the American sugar market to foreign producers--even if the foreign
producers are subsidized and inefficient. And more such concessions are
being contemplated.
Trade agreements force the U.S. to provide duty-free access for 1.4
million short tons of sugar each year, whether the country needs the
sugar or not. This amounts to about 15% of domestic sugar consumption.
In addition, under the NAFTA, Mexico now enjoys unlimited access to
the U.S. sugar market. It is difficult to predict how much sugar Mexico
might send north each year. Key variables include Mexican sugar
production, government decisions (\1/4\ of the sugar mills are owned
and operated by the Mexican Government), and the pace at which corn
sweetener, mostly from the U.S., replaces sugar in the massive Mexican
beverage industry. Mexican sugar exports to the U.S. have varied widely
in the past, and could in the future--over 1.4 million short tons last
year, but only about 0.5 million forecast for this year. (Figure 5)
Furthermore, the U.S. is negotiating a Doha Round of the WTO that
would result in additional market access concessions. The TPP (Trans-
Pacific Partnership) trade negotiations, recently launched by the Obama
Administration, could also eventually result in substantial market
commitments for sugar to the many countries lining the Pacific Rim.
Such trade concessions threaten to reduce U.S. sugar producers' access
to our own market even further, and reduce prices as well, making it
impossible for those of us who are struggling to survive. (Figure 6)
Previous Farm Bill
In the 2002 Farm Bill, USDA had only two tools to balance U.S.
sugar supplies with consumer demand.
1. It could limit foreign supplies to minimum import levels
required by the World Trade Organization (WTO) and other trade
agreements.
2. It could limit domestic sugar sales through marketing
allotments. Each year, USDA would forecast domestic sugar
consumption, subtract required imports, and allow U.S.
producers to supply the balance.
If U.S. production was insufficient to fill demand, USDA
could increase imports by expanding the tariff-rate quota
(TRQ).
If U.S. production exceeded the allotment quantity,
American producers had to store the excess at their own
expense, not the government's.
This market-balancing system worked reasonably well until 2008,
although misjudgments in setting the TRQ in 2006 seriously depressed
the U.S. sugar market. That's when Mexico gained unlimited access to
our market under the NAFTA, and USDA effectively lost control of the
market.
The 2008 Farm Bill
Congress, in its wisdom, designed a sugar policy that is working to
the considerable benefit of consumers and at zero cost to taxpayers,
and is giving the remaining American sugar farmers a chance to survive.
And, it fully complies with the rules of the WTO.
While retaining the basic-market-balancing tools described above,
Congress made a number of important improvements in 2008. The farm bill
minimizes the erosion of American sugar farmers' share of their own
market by limiting reductions in their marketing allotments to not less
than 85% of consumption. It's worth noting that in many years, imports
amount to much more than 15% of the U.S. market.
If imports exceed the difference between domestic market allotments
and consumption, USDA will divert surplus sugar into fuel ethanol
production and restore balance to the sugar market for food. The added
ethanol production would be consistent with national goals to reduce
American dependence on foreign oil and improve air quality.
In addition to the use of ethanol as a market balancing mechanism,
two other farm bill measures are helping to stabilize the market and
improve producer prospects:
1. The first increase in the sugar support price since 1985. The
raw cane sugar loan rate rose by \1/4\ cents per pound this
year, and will rise the same amount in Fiscal Years 2011 and
2012. Refined beet sugar rates will rise by a commensurate
amount. In Fiscal Year 2012, the raw cane loan rate will be
18.75 cents per pound and the refined beet sugar rate will be
24.09 cents.
2. USDA may not announce a TRQ above the minimum required by trade
agreements until halfway through the crop year (April 1),
unless there is a supply emergency. By April, much more is
known about actual U.S. sugar production and consumption and
the volume of imports from Mexico. This will prevent a
recurrence of situations such as that in the summer of 2006,
when USDA announced an excessive TRQ for the coming year, the
market was badly oversupplied, and producer prices languished
for almost 2 years.
Consumer Benefits
American food manufacturers and consumers continue to benefit from
reliable supplies of sugar that has been produced responsibly and is
reasonably priced, high in quality, and safe to consume. In real terms,
corrected for inflation, U.S. wholesale and retail prices have declined
substantially over the past 3 decades. Food manufactures and consumers
in the rest of the developed world pay about 10% more for sugar than
Americans do. Taking per capita income levels into account, sugar is
more affordable in America than in virtually every other country in the
world--rich or poor. (Figures 7-12)
Taxpayer Benefits
Sugar is the only major commodity program that operates at no cost
to taxpayers, and government projections through 2020 say it will
remain no cost over all these years. Projections prior to the enactment
of the 2008 Farm Bill suggested significant costs because of excessive
imports from Mexico, low prices, and government loan forfeitures.
But thanks to steady consumption growth, stable domestic
production, manageable import levels from Mexico, and sound program
management by USDA, costly surpluses have not occurred. (Figures 13-14)
The 2012 Farm Bill
The U.S. sugar industry has endured a wrenching restructuring over
the past 2 decades. American sugar farmers remain are grateful to the
Congress for crafting a sugar policy that is balancing supply and
demand, ensures consumers of dependable, high-quality supplies, and is
improving market prospects for sugar producers. The policy achieves all
these goals at zero cost to American taxpayers.
With some prospect of continued market stability, producers should
be able to re-invest in their operations, further reduce their costs of
production, and survive. We strongly urge the continuation of this
successful, no-cost policy in the next farm bill.
Thank you again, Mr. Chairman, for holding this important hearing
and for all that you and the Committee do for American agriculture. We
look forward to working with you in the future.
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The Chairman. Thank you, Mr. Snyder.
Mr. Sun, welcome to the Committee.
STATEMENT OF DENNIS SUN, CATTLE PRODUCER, CASPER, WY
Mr. Sun. Good morning, Mr. Chairman, Committee Members. My
name is Dennis Sun. Again, welcome to Wyoming, and thanks for
the opportunity to speak with you.
I have ranched in central Wyoming all my life and now
publish a weekly agricultural newspaper based out of Casper.
I'm speaking to you this morning about the Natural Resources
Conservation Service, NRCS, an agency that's been a friend and
partner to Wyoming for many years. We've been very fortunate in
Wyoming to have some very dedicated people associated with NRCS
and conservation. All across the state, NRCS staff and
administration have always been in the front assisting private
landowners with their conservation practices by providing both
technical and financial assistance.
As most of you realize, here in Wyoming, our private and
state lands only amount to about 58 percent of the state's
total landmass. Most of the private lands are in the eastern
part of the state. And in the western part, most of the private
lands are along the rivers and the creeks, in the valleys or
irrigated lands. Water, next to our people, is our most
valuable resource and something we both manage and conserve. We
are the headwaters for major rivers leaving all sides of our
state. That water is vital to other parts of the West and
America, and we hear about it every day from those states. So
our water and our soil management in Wyoming is of great
importance for those of us who live in Wyoming, and also across
the western region.
Like all government agencies, NRCS has changed in recent
years. Some changes are good; some not so good. Our late
Senator, Craig Thomas, through his work helped create
conservation programs to use on range lands, programs that
would work on our ranges intermingled with Federal lands. We
have utilized these programs very well and hope that they will
continue as our range lands and their conditions are a very
important resource to all of us.
We value the technical assistance we have received from our
local and state NRCS staff. That technical assistance has
diminished lately as the local NRCS found themselves tied down
to their offices with the focus on writing contracts. While
this does get money out on the ground, it may not be the best
planned use of those dollars. With the current evaluation for
both offices and personnel tied to the number of contracts
signed, there is no incentive for those resource professionals
to leave the office. As a producer, our one-on-one technical
assistance spent on the ground with NRCS has really gone down.
Technical assistance is the most critical element to the
selection and adoption of conservation practices enhanced by
participation in farm bill conservation programs.
Wyoming is a very diverse state. One size doesn't fit all.
We utilize the Environmental Quality Incentives Program, EQIP,
as our priority program. One could combine EQIP along with the
Wildlife Habitat Incentives Program, Forest Land Enhancement
Program and the Grasslands Reserve Program. With tight dollars
these days, we need incentives, matching dollars and technical
assistance to get the job done. We feel the focus should be on
maintaining and enhancing working lands programs.
We would also like you to review and support the
flexibility of the use of the Technical Service Providers or
third-party vendors to aid in the technical assistance of the
farm bill programming.
One could also restructure the easement programs into one
program. The more one simplifies, provides flexibility and
combines programs, helps ensure quality decisions are made and
meaningful resource projects are carried out.
In summary, one should consolidate working lands programs,
consolidate easement and rental programs, consolidate
stewardship/entitlement programs, and clarify all program terms
and policies and purposes earlier in the application process so
landowners have a greater knowledge of the program right at the
start.
There's also a need to utilize local working groups to keep
flexibility and decisions with improved communication and
coordination among local, state and Federal agencies. There has
been continued diminishment of the local working groups' role
in identifying priorities, having input on program
implementation, et cetera. The recent Sage Grouse initiative is
an example. We do appreciate the additional resources to our
state to address this issue, but I feel there has not been
enough input or involvement from local working groups from
people on the ground.
Wyoming has a great partnership with NRCS and success in
utilizing the farm bill conservation programs to maintain and
enhance the natural resources. We hope that will continue
through the improved programs and opportunities for on-the-
ground partnerships and discussions.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Sun follows:]
Prepared Statement of Dennis Sun, Cattle Producer, Casper, WY
Good morning. My name is Dennis Sun. Again, welcome to Wyoming and
thanks for the opportunity to speak with you. I have ranched in central
Wyoming all my life and also publish a weekly agriculture newspaper
based in Casper, Wyo. and serving all of Wyoming.
I am speaking to you about the Natural Resources Conservation
Service (NRCS), an agency that has been a friend and partner to Wyoming
for many years. We have been very fortunate in Wyoming to have some
very dedicated people associated with NRCS and conservation. All across
the state, NRCS staff and Administration have always been in the front,
assisting private landowners with their conservation practices by
providing both technical and financial assistance.
As most of you realize, here in Wyoming our private and state lands
only amount to about 58 percent of the state's land mass. Most of the
private lands are in the eastern part of the state. In western Wyoming
most of the private lands are along the rivers and creeks in the
valleys or irrigated lands. Water, next to our people, is our most
valuable resource and something we both manage and conserve. We are the
headwaters for major rivers leaving all sides of our state. That water
is vital to other parts of the west and America and we hear about it
every day from those states. So our water and soil management in
Wyoming is of great importance to those of us who live in Wyoming and
across the region.
Like all government programs, NRCS has changed in recent years.
Some changes are good, some not so good. Our late Senator Craig Thomas
through his work helped create conservation programs to use on
rangelands, programs that would work on our ranges intermingled with
Federal lands. We have utilized these programs very well and hope that
they will continue as our rangelands and their condition are a very
important resource to us.
We value the technical assistance we have received from our local
and state NRCS staff. That technical assistance has diminished lately
as the local NRCS found themselves tied down in their offices with a
focus on writing contracts. While this does get money out on the
ground, it may not be the best planned use of those dollars. With the
current evaluations for both local offices and personnel tied to the
number of contracts signed, there is no incentive for those resource
professionals to leave the office. As a producer, our one-on-one
technical assistance spent on the ground with NRCS has really gone
down. Technical assistance is the most critical element to the
selection and adoption of conservation practices enhanced by
participation in farm bill conservation programs.
Wyoming is a very diverse state, one size doesn't fit all. We
utilize the Environmental Quality Incentives Program (EQIP) program as
our priority program. One could combine EQIP along with the Wildlife
Habitat Incentives Program, Forest Land Enhancement Program, and the
Grasslands Reserve Program. With tight dollars these days, we need
incentives, matching dollars and technical assistance to get the job
done. We feel the focus should be maintaining and enhancing working
lands programs.
We would like you to review and support the flexibility of the use
of Technical Service Providers (TSP) or third party vendors to aid in
the technical assistance and farm bill program implementation.
One could also restructure the easement programs into one program.
The more one simplifies, provides flexibility and combines programs,
helps ensure quality decisions are made and meaningful resource
projects are carried out.
In summary, one should consolidate working land programs,
consolidate easement and rental programs, consolidate stewardship/
entitlement programs and clarify all program terms, policies and
purposes earlier in the application process so landowners have a
greater knowledge of the program right at the start of the process.
There is also the need to utilize local working groups to keep
flexibility in decisions with improved communication and coordination
among local, state and Federal agencies. There has been a continued
diminishment of the local working group's role in identifying
priorities, having input on program implementation, etc. The recent
Sage Grouse initiative is an example. We do appreciate the additional
resources to our state to address this issue, but I feel there has not
been enough input or involvement from local working groups or people on
the ground.
Wyoming has a great partnership with NRCS and success in utilizing
the farm bill conservation programs to maintain and enhance our natural
resources. We hope that will continue through improved programs and
opportunities for on-the-ground partnerships and discussions. Thank
you.
The Chairman. Thank you, Mr. Sun. We appreciate your
testimony.
We appreciate all the panelists for their great testimony
and being with us today, taking their time.
The gentlelady from Colorado, Ms. Markey.
Ms. Markey. Thank you very much, Mr. Chairman. I want to
address my first question to Mr. Cooksey. Thank you for being
here. And you mentioned with regard to the ACRE program that
only one percent of producers in Weld County in our district
actually participate in that program, and it's 12 percent
nationwide. So can you tell me why do you think that is? What
could be done to make that program more appealing to the
farmers in our area? Is it a matter of just streamlining the
administrative processes, or are there other substantive
changes that you think need to be made to the ACRE program?
Mr. Cooksey. Congresswoman Markey, in Colorado farmers like
the sure thing of that grant payment, and that's worked well in
past years. I understand that in ACRE it's taken from a state
average, and it may be better to localize it to a county
average if there's a loss on ACRE. So I would look at possibly
localizing the losses to smaller areas.
Ms. Markey. And then also you talked a little bit about the
Conservation Reserve Program. And we have had 45 percent now
being able to reenroll. Can you talk a little bit about
Conservation Reserve? How large do you think it should be? What
should be the focus? Do you think that we should concentrate on
continuous practices or general sign-up enrollments with CRP?
Mr. Cooksey. That's a good question. When I traveled around
the state in January, the Conservation Reserve Program seemed
to be one of the largest issues in Colorado. And we talked
about, 45 percent of those acres were renewed. That leaves 55
percent that are not being renewed. So there are farmers out
there that have this marginal ground, and they're trying to
decide whether to take it and put it back into crop production
or use it for pasture.
And I think you should look at the existing contracts. The
problem that we see is, it's kind of dependant on how they were
signed up initially. But some of the marginal acres are the
acres that are actually coming out and not being renewed. So I
would first look at the existing contracts and try to move
forward with those. And I know that funding is tight, but after
that point I would look at additional contracts. But it's very
critical that we maintain conservation in this--in Colorado and
Wyoming and in neighboring states. So with water and soil
erosion we need to watch those.
Ms. Markey. It's an important program. I just have one
additional question for Mr. Hardesty. Thank you for being here
today. You had talked about volatility being the biggest
problem right now in the dairy industry and current policy
being number one, inflexible and, number two, with too few
tools available for producers.
With what's gone on with USDA this year to help dairy
farmers, can you talk about what programs or policies have
worked, what hasn't worked; and how do you develop a policy
that is more flexible for producers, if you can just elaborate
on that a little bit.
Mr. Hardesty. Absolutely. Thank you, Congresswoman Markey.
Two thousand and nine, being such a disaster for the dairy
farmers, absolutely horrendous, generations of equity were lost
during 2009, and the recovery is not by any means complete yet.
So the programs that were implemented in 2009 that were of
significant importance to dairy farmers across the United
States included Dairy Export Incentive Program. The reenactment
of the DEIP program certainly helped us move some of our
surplus product offshore without displacing our normal exports.
So that was a tremendous help. The other opportunity that we
had through the $350 million program that you all helped us
approve was the $60 million that was spent for food aid and
feeding the under privileged, if you will. And again, you're
taking a product off of surplus shelves, putting it into either
school lunch programs and/or feeding programs that not only
help agriculture in general, because dairy does have a trickle-
down effect, buying feed from my neighbors here at the table,
but also a humanitarian effect in providing help for the needy.
So those were the two programs that I think helped in an
impactful way in 2009. Going forward, price volatility, the
extreme highs and the extreme lows, have to be minimized. And
we as dairy farmers have to work off of a margin. It doesn't
matter if milk is $16 or $12 if we can manage a margin, a
profitable margin, in between. So any tools that we can develop
such as those that are presented by NMPF will be helpful, going
forward.
Ms. Markey. Thank you very much. We look forward to
continuing to work with you to make sure that dairy remains
strong here in this country. So thank you again for being here.
Mr. Chairman, I yield back.
The Chairman. Mrs. Lummis.
Mrs. Lummis. Thank you, Mr. Chairman.
First question for Mr. Sun. You mentioned, Dennis, that
technical assistance as a role of the NRCS has kind of
diminished. What types of projects are affected when the NRCS
role is diminished as it applies to the technical assistance
role?
Mr. Sun. Thank you, Congresswoman. I think they're all
affected. Here, in a sense, a lot of the NRCS people now are
kind of regulated as a salesman sitting in the office. If
you're selling a car, you have to get out and look at the car
to sell it. In this case, you've got to get out on that
person's ranch or farm, because each one is different, and see
what the goals and objectives of that ranch or farm or that
piece of land are. It can also bring in that big knowledge of
having worked with others that this may work here and it may
not; this has been tried and didn't work; here is a way to save
you some money. So I think they all fall within that.
Mrs. Lummis. Could you talk a little bit about how on your
ranch water conservation projects have been assisted by the
NRCS.
Mr. Sun. Congresswoman, thank you. I had one riparian area
that I wanted to improve. We started with baseline data, and it
came up to about 800 pounds of forage per acre. I had gotten
some dollars, through matching funds, and we worked with a lot
of people, different agencies on it. In the end we put in some
small stream structures. And in the end we're over 4,000 pounds
of forage per acre, large enough so that all the elk winter on
it now.
Mrs. Lummis. Thank you. My next question is for Ogden
Driskill about the FRPP. And before I ask the question, for Mr.
Conaway's benefit, the Driskill Hotel in Austin, Texas, is the
grand, historic hotel in downtown Austin. And this is the
Driskill family that founded that fabulous Driskill Hotel and
then trailed cattle out of Texas, north.
Mr. Conaway. And they're still responsible for the ghost on
the sixth or seventh floor.
Mr. Driskill. Family is there.
Mrs. Lummis. The Driskill Ranch is right at the base of
Devil's Tower, which is the nation's first national monument.
It is drop-dead gorgeous, and this family maintains that ranch
as open land and open space even though the highest and best
use for that land is probably high-end housing that would
fragment that landscape and diminish the experience at Devils
Tower. And so it is properties like that and the ranchers that
are managing them that provide a public benefit that the public
doesn't pay for. And yet the ranchers are scratching out a
living in many cases on those properties. And the fact that Mr.
Driskill was one of the founders of our Wyoming Stock Growers
Agricultural Land Trust is because of his love for that land
and recognizing what ranchers do to provide benefits to the
public in terms of open space and the beautiful landscapes we
have, while not getting compensated for it.
So the FRPP program does provide opportunities for ranchers
like that to keep those lands open and not develop them into
high-end housing, so all Americans can benefit.
And with that, Mr. Driskill, can you elaborate on how the
connection between the land owner, a land trust and the Federal
Government plays out with programs like FRPP?
Mr. Driskill. I can, and I will do it. It's great fun to
sit down and look Representatives in the eye and say it's great
to work with the Federal Government. You know, the last farm
bill they granted us some new flexibility to deal directly with
ag land trusts. The ag community really had been hesitant to
deal directly with the Federal Government. Through some real
stages, they allowed ag land trusts and other land trusts, but
specifically ag land in our case, to deal directly with the ag
community. You know, we've created a great amount of trust.
In a period of 15 years, there are now seven western ag
land trusts that hold one in six easement acres on private
ground in the United States. Absolutely incredible. These
partnership ranchland trust areas have gone absolutely crazy.
In short, it needs better funding and a little better
flexibility. Like I say, it's just been outstanding for me to
see this three-way partnership emerge and emerge with strength.
You know, the farm agencies have been great to deal with as
a whole. There was some frustration early on. We got some
yardage. We would like to see you guys help us get some more
flexibility, and also increase the funding long term. These
ranches are going to be here hundreds of years from now without
any more expense to the Federal Government. Our organizations
are happy to administer and help keep these ranches in ag
forever. Thank you.
Mrs. Lummis. Thank you, Mr. Chairman. I see that my time
has expired, but if we get to a second round, I have other
questions as well. I yield back.
The Chairman. Mr. Lucas.
Mr. Lucas. Thank you, Mr. Chairman, and let's run and gun
on some topics here, my friends.
Mr. Cooksey, you commented on the direct payment program,
about how it was nice to have something consistent you could
count on, that with all the uncertainties of SURE and ACRE and
CSP and all these other programs that your folks can count on
direct payments. I would add one other caveat to that, and that
is, of the WTO issues we deal with, the direct payments are the
most WTO compliant. In a world where we watch the CRP people be
taken limb from limb over their program, being WTO compliant is
critically important. So I appreciate your comments to that
point.
To my cattleman friends here, being the father of GRP in
the 2002 Farm Bill, I must tell you this has been an arduous
little adventure. This program was created as a combination way
to allow certain acres of CRP that should just not be
constantly rolled over and rolled over, to be returned on the
range side to a practical use. The other half of the original
concept, in 2002, was to provide ranchers with the ability to
sign up for a decade, to be able then to use those dollars to
meet all of those cost share programs to fully develop and
enhance their property. We slammed into a little thing called
administrative rules. And while I love the previous President
of the United States very much, some of his folks at USDA in
D.C. were a bit frustrating for me as we tried to create the
rules. And that still is an ongoing process.
But I am pleased with your comments about your ability to
work with CRP. But given the chance, there's a lot more good
and wondrous things that could come out of it if we're able to
pursue the direction that the program was created.
Mr. Driskill, talking about the long-term conservation
needs of easements to preserve ranches in place, that's a one-
time payment basically, correct, and then you commit the land
for generations to come?
Mr. Driskill. Yes, sir. To me that was the beauty of it. It
felt kind of like you said. It was interesting as it worked
around. But the one-time payment, interestingly enough,
originally the Federal Government was going to take the cost of
administering those easements, would have made us keep coming
back to you for more money to continue to have the
administration. By you allowing third parties to come in and
administer those easements, it not only allowed that cost to be
transferred away, which helps. It also made it as a one-time
program, which I think it's the only permanent conservation in
the United States. It will never be housing.
Mr. Lucas. Would you say typically, Mr. Driskill--and I'm
speaking typically because there's never such a thing as
average or overwhelming percentage--typically this one-time
money by most ranchers have been used for conservation purposes
or to expand the properties? Typically where do you think those
funds have gone, because it's just a one-time thing.
Mr. Driskill. A vast majority of the FRPP has gone to
working ranches. It's gone to enhance ranch operations,
sometimes to buy a family out, sometimes to buy others out. It
doesn't guarantee profitability; it guarantees an operation is
going to be there in the future.
Mr. Lucas. Which takes me to my next point. It's important,
I would believe, that those resources be used wisely because
the next generation or two or five or ten are going to be
working under that easement given. And making sure those funds
are wisely used shows good stewardship, and I don't doubt for a
moment you're a good steward.
Let me address both you and Mr. Sun for just a moment. The
issue--and this is something that we worked diligently on in
the 1960s and 1970s and finally eradicated in the great State
of Oklahoma. Talk to me about brucellosis in the greater
Yellowstone area, the tri-state area.
Mr. Driskill. You want to start, Dennis, or me.
Mr. Lucas. You can mention APHIS or anyone else in the
Federal Government you want to talk about.
Mr. Sun. Congressman and Members, with brucellosis, it's
turned into a wildlife problem. It used to be a human health
problem. It's evolved into a wildlife problem. But, one of the
problems is that the rules and the laws governing it haven't.
They've stayed where it was. Somehow we've got to clean up the
problem with brucellosis. The major factor is, here at the
University of Wyoming and other universities, we're developing
a vaccine.
Now we've got to find out, once we get the vaccine
developed, what's the delivery system for the wildlife and how
to get the wildlife to it? Once that happens--we don't know if
the problem will ever be corrected. But the greater Yellowstone
area is just waiting to erupt.
In the livestock business, we have solved the brucellosis
problem time and time again and always will. But as long as the
wildlife are there, it's going to be a problem, and it will
come up again. APHIS says they want Wyoming and the other
surrounding states to come up with a way to fix it. Having said
that, they've not moved to help us out. So we're kind of
sitting here confused. They want to do a split state. We're
saying that's not right. If you happen to have your ranch in
that area, you're at a severe disadvantage. But Wyoming can set
up a surveillance area, and we can manage for it. We're
optimistic, but kind of guardedly optimistic.
Mr. Lucas. That's why I asked the question as your fellow
cattleman from down South.
Mr. Driskill, any thoughts?
Mr. Driskill. I think Dennis covered it really well. I feel
like the issue is so complicated because you're dealing with
national parks, national forest, state lands, private
producers, game and fish and wildlife. When you put all those
together in a room and they're all competing over what goes, it
leaves it incredibly difficult. Back to Dennis talking about a
split state. I live in the east, and the brucellosis hasn't
gotten there. The bad news is it's going to. We're watching
this spread through the elk. It was confined to the Yellowstone
area through all my youth. It is no longer. It's moving out of
the Yellowstone area. We're going to deal with this throughout
Wyoming and ultimately, like Chronic Wasting Disease. We are
going to deal with it through a lot of western states, I
believe, if we don't deal with holding it in that greater
Yellowstone area. That's going to require decisions that are--
--
Mr. Lucas. Tough.
Mr. Driskill.--fairly impossible to do on a producer level.
It's going to have be dealt with on your level.
Mr. Lucas. Well, clearly there is wildlife or public good,
then there is a public obligation to address the problem.
Mr. Driskill. Thank you.
The Chairman. Thank you. The gentleman from Texas.
Mr. Conaway. Thank you, Mr. Chairman. I would like to ask
Mr. Driskill, Mr. Sun: Animal ID efforts at USDA have modified
or morphed into a state-based model. What's your thought on
complying or building a model that will allow traceability at
the state level, and what's going on within your producer
groups, as well as the folks at the state.
Mr. Driskill. I'll take a little bit of the first shot at
that.
I applaud whoever the powers were that got it back to a
state level. State is the place that ought to handle that. I
hate rules and regulations. We need flexibility rather than
volumes of rules to deal with it.
Ag industry recognizes the need for traceability. It's the
delivery system that does it. On a state level, I believe that
if it's turned loose with good flexibility, you'll see that a
good program will be implemented statewide.
Mr. Sun. Congressman, I agree with Mr. Driskill. At the
state level, I think we can find some type of process that will
work. That's where it needs to be.
Mr. Conaway. Well, are the efforts far enough along at this
stage here in Wyoming to see a program that most producers can
buy into and afford.
Mr. Sun. We're working on it, Congressman.
Mr. Conaway. Mr. Chairman, I would like to yield the
balance of my time back to Mrs. Lummis. She had a couple other
questions.
Mrs. Lummis. Thank you, Mr. Conaway, thank you, Mr.
Chairman.
I have a question about the Clean Water Act for Mr. Snyder.
As you know, there's a revamped version of Clean Water
Restoration Act going through Congress now. If the new effort
to expand the authority of the Federal Government over all U.S.
waters passes, what would it mean to your growers?
Mr. Snyder. Congresswoman Lummis, I appreciate your
question. The good Lord chose a different conveyance of water
for Wyoming than the Chairman's district, and so irrigation
obviously is very important to us. We do a lot of things--our
growers do a lot of things to improve water quality. The EQIP
program has been very important to that with our irrigation
districts and our conveyance of irrigation water.
Water quantity is something very important. Where I live,
we have annual precipitation of 7 to 9 inches. So it's very
limited, and so irrigation is very important. Water quantity is
very important.
I believe that the water situation should be more of a
state issue than a Federal issue. I think the state feels that
way. Those EPA regulations are some of our top five concerns
for all of our growers throughout the nation, and so we are
monitoring that very closely.
But water quantity is very important to the producers of
this region throughout Colorado, Nebraska, Wyoming, Montana and
even into Idaho. So it's something we'll keep a very close look
on. Thank you.
Mrs. Lummis. Mr. Sun, what are the top three or four
challenges facing the livestock production industry in Wyoming.
Mr. Sun. Thank you, Congresswoman. I failed to talk about
the issues as Mr. Snyder said: The Clean Water Act revision,
air quality, endangered species; the wolf and the sage grouse
nowadays are hammering us; the uncertainty of the estate tax
and then just the challenges of maintaining economically viable
public land on our ranches. Without those public lands, for
most of us, while they're not the heart of the ranch, we really
depend on them.
Mrs. Lummis. And I might add, I saw a presentation the
other night, Mr. Chairman, that elk numbers have decreased by
90 percent in the Lolo Unit in Montana; and moose numbers in
the Grovant area in Teton County, Wyoming, have decreased over
90 percent due to wolf deprivation. At those numbers, those
herds are absolutely unsustainable. And we now have a problem
of too many wolves and a potential loss, catastrophic loss, of
our moose population, and certainly in some areas our elk
population as well.
Thank you, Mr. Conaway, for yielding me your time, and I
yield back.
The Chairman. I thank the gentlelady.
The gentleman from Nebraska, Mr. Fortenberry.
Mr. Fortenberry. Thank you. Mr. Chairman, I think we need
to let the record show or at least be emphasized that this is a
very historic day. Mr. Driskill was quoted as saying it's been
great to work with the Federal Government. I'm not sure those
words have ever been uttered in the history of the farm
program. I'm, of course, joking. My own family has members who
are USDA employees, and there are a lot of good civil servants
and public servants who are trying very hard to be good
stewards and good partners with the private agriculture
interests.
But let me ask this. Let me break out of the framework for
just a moment. We have a tendency to talk about, in our ag
hearings, either trying to strengthen or adjust current
programs or expand exports. I put on my Facebook page this
morning a statistic that the average age of the farmer in
Nebraska is now 58 years old, and that keeps ticking upward
every year. I assume it perhaps is similar in Wyoming. So let's
talk about that perspective. What are the emerging new
opportunities in agriculture that are going to attract a
younger--perhaps younger or entrepreneurs into this most
important sector that again in Washington may be de-emphasized,
but it is about 15 percent of the overall economy. It is
essential not only to the well being of our nation, but we help
feed the world as well. From your perspective, where are those
opportunities emerging?
Whoever would like to take it.
Mr. Sun. Congressman, I think that ranchers and farmers are
always optimistic, otherwise we wouldn't be around. I think
that nowadays we're hearing about what the world population is
going to be. Somebody has to provide that protein source.
Farmers and ranchers do provide the safest food in the world,
and we're happy to do it. I take examples of Congresswoman
Lummis on her Equal Justice Act revision. If that takes place,
that would stop some of the legal problems that we faced in the
West with environmentalists suing the government agencies and
then making money at it.
In a sense there's government money put inside a business
making our life harder. It's those little things that count out
there. And I think people realize that while it's a business,
other people characterize it as a way of life. And if you ever
notice, if somebody's always successful in life, they head to
Montana, Colorado or Wyoming and buy a ranch. So in essence
we've got what they want.
Mr. Fortenberry. Are you saying you first have to make your
money elsewhere to make it in farming and ranching.
Mr. Sun. Well, it helps. In Wyoming we're an energy state
also, and that also helps. But, with the sage grouse and the
wolf and other things hitting us, I don't mean to sound
negative, but it's a tough go. But we are optimistic or we
wouldn't be here and our children wouldn't be with us.
Mr. Driskill. I've got to agree with Dennis. You know, this
is a dynamic time for youth in agriculture. For one of the
first times, I'm getting where I still kind of consider myself
a kid. I'm one of the ones not so young anymore at this point.
But for my children, which they're of age now, just coming
home, I hear that excitement. They see a future in ag. That
light wasn't so bright a few years ago. It was really a tough
time we've been through. They've grown up, particularly the
kids who have grown up in the ag world, understand the
challenges, a good deal of it. Part of it is public opinion of
ag has gotten so much better. It's not a dishonorable
occupation at this point. I think the next decades are going to
be an absolutely dynamic time for the youth. We're going to see
a lot more young kids want to come into ag. The profitability
is going to come back. The population, we're going to have that
end of it. The realizations of the value of ag to the
environment, not just in general but all the way around, is
there. Like I say, I think it's going to be a great time for
the youth.
Mr. Snyder. Mr. Chairman and Congressman Fortenberry, with
a son just recently coming back to our farm, we have three
generations on our farm now. His 83 year old grandfather is
still active every day on the farm and, of course, myself and
my son who is 23. It was very interesting. He had a dire love
for the farm. Not seeking other opportunities outside of the
farm, he had several job opportunities because of the work
ethic that was instilled upon him during his youth and
different things, but he chose to come back. I think it's
because a lot of the new technologies, biotechnology, things
like GPS systems.
There's a lot of change in agriculture, but it all comes
back to being able to sustain that farm. Good sugar policy, for
us, allows us to bring another partner back to that farm.
Without a good sugar policy, without a good farm bill, it
wouldn't have been sustainable for us. So I think that's
important. But they do see opportunity. They have a love for
the land. And so I think that's there. But we all see it. As
farmers and ranchers are getting older, we have to feed more
and more people throughout the world. And so all of this, new
technologies, are important to all of us. Thank you.
Mr. Fortenberry. Thank you. Mr. Chairman.
The Chairman. Thank you, Mr. Fortenberry.
Mr. Smith, do you have any questions?
Mr. Smith. Yes. Just real briefly. Mr. Hardesty, could you
elaborate on the factors in dairy demand, the demand of milk? I
know you spoke of the variables there, if you could elaborate.
Mr. Hardesty. Absolutely. I assume you're referring to the
collapse of prices in 2009 and what happened in that whole
regime there: 300 million people in the United States, six
billion people in the world; 95 percent of the population lives
someplace other than the United States. You all know these
statistics.
With a run-up in dairy exports over the last 5 years
topping out at 10.8 percent of our U.S. production on milk
solids basis being exported offshore or to some other country
other than the United States, we had a demand signal within our
industry to continue to grow production and grow cow numbers
over that period of time. We peaked at about 9.3 million
milking dairy cows in the United States at the height of dairy
exports in the dairy economy. The signals weren't there, and
many of us even in other businesses didn't realize that the
economy was going to suffer as severely as it did.
So the signals were there for us to increase production and
demand, and so we reached this peak of production when the
global economy crashed.
Here locally in the United States, we can achieve about a
1\1/2\ percent growth per annum in consumption of dairy
products. So if we want to do any growing other than about 1\1/
2\ percent per year within the dairy industry, we need to
continue to look offshore for those opportunities.
I hope that answered your question.
Mr. Smith. Thank you. I yield back.
The Chairman. I thank the gentleman. I thank the panel for
the excellent testimony and answers to the questions. We very
much appreciate it. I recognize the gentleman from Oklahoma for
our closing statement.
Mr. Lucas. Thank you, Mr. Chairman. It has been a
productive series of four hearings as we now head back East. I
promise you it's more fun here than it will be when we get
there this evening.
The Chairman. I thank the gentleman. We thank the Members
for being here today. We thank the people from the agriculture
community and other communities around the area for being with
us. The Committee has learned a lot on this trip. We have
another trip scheduled in a couple of weeks to go through the
South, Texas and so forth. We're on the road to get an early
start and figure out if what we're doing is the right thing, or
whether we should be doing something different. This is
complicated stuff and it takes a long time to get everybody on
the same page. That's why we're doing this early. I am
determined to get this bill done before September of 2012 when
it expires--for the first time in I don't know how many farm
bills--so you guys that are growing winter wheat can know what
the program is when you plant. That's our goal. Thank you all
very much.
I have to say the magic words here. Under the rules of the
Committee, the record of today's hearing will remain open for
30 calendar days to receive additional material and
supplementary written responses from the witnesses to any
question posed by a Member on this hearing on the Committee of
Agriculture. The meeting is adjourned.
[Whereupon, at 10:21 a.m. (MDT), the Committee was
adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Statement from Dick Coose, Retired Forest Service Employee,
Ketchikan, AK
May 2, 2010
Hon. Cynthia M. Lummis,
Member,
Committee on Agriculture,
Washington, D.C.
RE: House Agriculture Committee Hearing Cheyenne, Wyo. May 4, 2010
Please accept the attached as a comment and possible questions for
the panel relating to forest health and bark beetle epidemic.
Thank you,
Dick Coose.
I have received a copy of your message concerning a hearing panel
that will discuss forest health and the bark beetle epidemic.
I would like to provide this comment to Representative Lummis and
the Committee.
I am a retired Forest Service employee who worked as a forester on
the old Encampment and Snake River District (Medicine Bow NF) for 11
years (1961-1973). I prepared, harvested, and completed the
silviculture treatment several thousand acres of lodgepole pine. Those
stands are now 40-50 years old and about 5 inches in diameter.
I visited the area last fall to view the pine bark beetle disaster
the Forest Service has allowed to occur. The beetle has likely killed
every mature lodgepole pine in southern Wyoming and northern Colorado.
The beetle is also attacking the young stands. I observed this and I
know the Forest Service also knows it.
To keep this brief, I believe the Committee deserves answers to at
least two questions from the Regional Forester Cables.
First
The Forest Service has issued a Federal Register notice (April 16,
2010) stating the intent is to prepare a environmental impact statement
(EIS) concerning the restoration (they should define this term) of the
beetle killed areas. I have attached a copy of the Federal Register
notice. Considering the time it normally takes the FS to complete all
EIS plus the legal aftermath, there will very likely be no trees
salvaged until at least 2011. Considering that these trees have already
been dead for several years and are rapidly loosing value, these trees
need to be harvested starting right now. The Committee should ask the
FS to justify an EIS now that should have been done years ago and when
trees are loosing value daily and the lands need treatment now.
If the Regional Forester Cables insists they have to do a EIS on
this salvage then they should consider making it an amendment to the
forest plan (and keep the same time frame) concerning beetle kill
salvage and eliminate the need for any future EIS's on beetle kill
salvage sales--restoration--stewardship or what ever they want to call
it.
If they ever want these beetle killed stands to regenerate, they
have two choices; get the cones on the ground by salvaging the trees or
let it burn.
This destruction of National Forest lands should never have be
allowed to happen.
Second
Considering the beetles are now in the 40 year second growth (about
5" diameter trees). The Committee should ask what plans the FS have to
treat these young stands to attempt to prevent more loss. The FS
clearly knows the beetles are attacking the young growth.
If I can ever provide more information on this issue please contact
me.
I wish Representative Lummis good luck in holding the Forest
Service officials accountable for gross lack of professional management
of our National Forests.
Dick Coose.
Attachment
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Submitted Statement from Larry Cundall, Rancher, Platte County, WY
Hon. Cynthia M. Lummis,
Member,
Committee on Agriculture,
Washington, D.C.
Rep. Loomis,
Thank you for doing this good work on behalf of Wyoming and the
Agriculture Community.
I am a long time rancher in Platte County, Wyoming. A 45 year
volunteer rural firefighter experiencing ``beetle kill'' forest fires,
a 20 year FSA County Committee member, RC&D Committee member and user
of NRCS programs, thank you for discussing these topics.
I am on the Administrative Council for Western SARE hosted by Utah
State University. Until very recently I was the only rancher on the
council in this very large Western states region. As I'm sure you know
SARE (Sustainable Agriculture Research & Education) is the only USDA
competitive grants program that requires farmers and ranchers to be
involved in all of its grants. An idea that I believe keeps this
program grounded in reality that is not always found in today's
institutions of higher learning or other grant programs. Grant
proposals undergo a rigorous and competitive review, and are based on
merit.
I am proud to be a part of this little known program that serves a
wide ranging group of agriculture producers, from organic to production
agriculture. I have reviewed grants from Guam to Alaska and Wyoming to
California. For example Farmer/Rancher Grants is one area that shows
that with relatively few dollars we can help real world people with
real world problems in an integrated approach that also educates others
with the same problems. Honey Bees to High Tunnels, Riparian protection
to Beetle banks, all unique but important to sustainable agriculture.
Sustaining the economic viability of farmers and ranchers, make the
most efficient use of nonrenewable and on-ranch resources and where
appropriate, integrate natural biological cycles and controls. Enhance
environmental quality and the natural resource base upon which the
agricultural community depends and Improve the quality of life for
farmers, ranchers and society as a whole.
Although these are SARE's guidelines I believe they have always
been part of agriculture's code so I am proud to be a part of and glad
to support this great program. I hope to be in Cheyenne May 4th with
some short handouts to better explain the program and in support of
SARE and I hope to get a chance to get a minute or two with you and
some of the other Members hoping to strengthen your support.
Sincerely,
Larry Cundall.
______
Submitted Letter from Frank Galey, Ph.D., Dean, UW College of
Agriculture and Natural Resources; and Chair, Consortium for the
Advancement of Brucellosis Science
April 29, 2010
Hon. Collin C. Peterson, Hon. Frank D. Lucas,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Re: The Consortium for the Advancement of Brucellosis Science (CABS)
Dear Committee Members:
The last remaining reservoir for Brucella abortus in the United
States is in the wild bison and elk in the Greater Yellowstone Area
(GYA). In the last few years, the disease has spilled over from those
affected wildlife to cattle populations in the states surrounding the
GYA, thus threatening the ultimate success of the Brucellosis
Eradication Program nationwide.
The Consortium for the Advancement of Brucellosis Science, called
CABS, consists of a science team, with members from around the United
States (including California, Texas, Louisiana, Virginia, Iowa,
Wyoming, and Montana), and stakeholder advisory team comprised of
leaders from the Federal Government as well as from the three states in
the GYA. This consortium is designed according to the model provided by
the USDA-NIFA CAP grant programs. The mission of CABS is to evaluate
current research, identify gaps, secure funding, award research grants
on a competitive and transparent basis, and conduct outreach for the
advancement of brucellosis science for domestic and wild animals.
Research will focus on development of vaccines, and diagnostic tests.
The goal of the CABS is to work toward successful disease control
and prevention. In-depth research projects under CABS will be conducted
at veterinary disease labs in the United States, including the $25
million University of Wyoming (UW) BSL3 laboratory currently in
construction. This is a collaborative research effort, with stakeholder
consensus, and an adaptive research approach with results to be widely
disseminated to policy makers, scientists, and stakeholders.
The CABS project has been designed to further the efforts of the
Laramie Agenda, a major meeting with the leading scientists from around
the world, which took place in Laramie, Wyoming in 2005. This CABS
consortium was proposed at that meeting. Development of improved
vaccines and tests for elk, bison, and cattle was estimated to cost $40
million or more and take up to 20 years to undertake.
Approximately $1.8 million per year for the next 5 to 10 years is
required to initiate the research projects and operations. Brucellosis
has cost the USA and producers billions of dollars since eradication
efforts began. Despite the fact that this disease remains a national
issue for industry and Federal agencies, including USDA-NIFA; Federal
agencies increasingly view this as only a regional issue and thus are
reluctant to provide research funding. Therefore, please consider every
avenue within this current and next farm bill's research provisions to
support efforts to eradicate brucellosis by leading researchers around
the country.
Thank you for considering this issue.
Sincerely,
Frank Galey, Ph.D.,
Dean, UW College of Agriculture and Natural Resources; and Chair,
Consortium for the Advancement of Brucellosis Science
______
Submitted Letter from Ken Hamilton, Executive Vice President, Wyoming
Farm Bureau Federation
May 12, 2010
Members,
House Committee on Agriculture,
Washington, D.C.
Dear Sirs and Madame:
Recently you held a hearing in Wyoming on the upcoming ``farm
bill'' reauthorization. As a representative of over 2,600 agricultural
producers in the state I certainly appreciate the Committee taking the
time and effort to come to a state which has not been traditionally
associated with U.S. farm bill issues. When you are talking about
agriculture in Wyoming you would be talking about livestock production
generally. According to the 2009 Wyoming Agriculture Statistics
livestock production account for $748.7 million in cash receipts out of
a total of $974.2 million cash receipts. Of the $748.7 million in
livestock cash receipts, $598.5 million was from cattle and calves.
This type of production means that Wyoming ranks first in the nation in
the average size of agricultural operation. However, the farming aspect
of agriculture in Wyoming cannot be overlooked and we certainly have
many important cash crops raised in the state.
Perhaps the most utilized USDA program the majority of our members
avail themselves of would be the Federal insurance programs to mitigate
against weather related impacts. However, many of the current USDA
insurance programs are not structured to take into account Wyoming
conditions.
You heard testimony in Cheyenne regarding the Natural Resources
Conservation Service. The programs offered through this agency are also
utilized by producers in this state. NRCS has been an important partner
with many of our producers. The focus of programs away from enhancing
production agriculture and more towards environmental programs is of
concern to our organization. The U.S. Department of Agriculture should
focus their efforts on programs which help to produce food for this
nation and the world.
You also heard testimony regarding the need to continue funding
conservation easement programs. While conservation easements have been
popular the Committee needs to recognize that the current structure is
at best a crude tool to achieve conservation needs and has several
significant defects which should be addressed.
The first is that most conservation easements are written in
perpetuity. Most citizens recognize that drafting a management plan
today to meet the needs of landowners 25, 50 or 100 years from now
would be a challenge. Locking land up in perpetuity is not, in our
members view, a wise public policy decision. Our organization has had a
policy against perpetuities for over a decade. In those years we
continue to have concerns that perpetual conservation easements will
have a significant impact on future generations. As one of our members
asked when our policy was debated, ``What would have happened to our
nation if our founding fathers would have locked up everything outside
of the original 13 states in perpetuity?''
Many agricultural producers face the ``Hobson's choice'' of passing
an agricultural operation on to their heirs with a substantial tax
liability, or passing their agricultural operation on with a
conservation easement in perpetuity. Neither is a good choice! We
realize, the scope of these hearings is to take comments on farm bill
related issues, but allow us to put a plug in here for the extreme need
for the larger body to address the ``death tax issue'' to help
eliminate the ``Hobson's Choice'' dilemma facing many of our producers.
The average size of a Wyoming agricultural operation is 2,745 acres
and the average farm value per acre is a little over $550, so the
average agricultural operation in Wyoming has $1.5 million just in the
real estate. The 2007 Census of Agriculture for Wyoming shows that over
half of the principal operators of agriculture are 55 years or older
and a significant percentage of that number is over 70. So you can see
how important legislation that can limit the cost of the inheritance
tax burden on agricultural operations is needed.
Utilizing conservation easements for this purpose is not good
public policy. A better policy would be to place a limit on the term of
the easement which can then be renegotiated by the landowner based on
conditions that exist in the future.
The current CRP contracts for farm ground recognize this, but
ranching operations do not have such options. A term easement would
still allow for retention of agricultural properties while allowing
payment for those uncompensated functions that these operations
perform.
We also believe that all government programs must be considered in
the context of increasing budget deficits. Our members have always felt
that a more proper role for Congress to help out agricultural producers
is to eliminate those programs which add costs to those goods purchased
by producers or those rules and regulations which add costs to doing
business. We have to recognize that costs added to producers come out
of their bottom line. Too many of those costs result in more producers
going out of business regardless of how many programs are provided to
help those same producers.
The Committee also heard testimony about the critical need for
additional funding to work on the beetle killed trees. Many of our
members depend on USFS land for seasonal grazing. With an estimated
100,000 trees falling each day, several areas may need to have roads
closed due to danger factors. If our members cannot utilize roads to
access grazing allotments, they could lose aspects of sustainability of
private land resources, caused by a reduction in productivity.
Again, thank you for coming to Wyoming.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ken Hamilton,
Executive Vice President.
CC:
Board, SGA Chairmen.
______
Submitted Letter from Taylor H. Haynes M.D., President, Independent
Cattlemen of Wyoming; Board Member and Director Region II R-CALF--USA
May 14, 2010
Hon. Cynthia M. Lummis,
Member,
Committee on Agriculture,
Washington, D.C.
Dear Congresswoman,
Thank you for this forum in our Great State. While the farm bill
represents a great deal of excellent work, Independent Cattlemen of
Wyoming and R-CALF--USA will take this opportunity to apprise you of
the crisis in which the United States domestic cattle producer is
found.
The Cattle cycle and the domestic market are broken by monopsony.
The Multinationals by both owning and packing cattle have unfair and
devastating control of the cattle market.
We urge you to work to remedy this situation before we are all
fully vertically integrated and mostly gone.
Since the 1990s we have averaged losing 12,000 ranches and cattle
farms annually. This is devastating to rural America and ultimately the
country.
We request and welcome any opportunity to meet with you and your
staff to discuss the situation in detail and present solutions in equal
detail. The attached provides some insights.
Again, many thanks for your excellent service to our Great state
and our Republic.
Sincerely,
Taylor H. Haynes M.D.,
President, Independent Cattlemen of Wyoming;
Board Member and Director, Region II, R-CALF--USA.
attachment 1
Thirteen Indications that the Cattle Industry is in a Serious State of
Crisis
The Entire U.S. Livestock Industry Is in a Severe State of Crisis!
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Today's U.S. Cattle Industry
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 1: Disconnect Between Cattle Prices and Beef Prices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 2: Increasing Price Spreads Between Ranch Gate and Wholesale, and
Ranch Gate and Retail
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 3: Industry Shrinks as Consumption Increases
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 4: Domestic Beef Production Lags Behind Domestic Beef Consumption
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Domestic Beef Production v. Total U.S. Beef Production Explained
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 5: Domestic Beef Production Losing Share of Total Available Beef
Supply
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 6: Cattle Feeders Suffer Long-Run Losses While Beef Prices Steadily
Climb to Record Levels
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 7: Packer Margins Rise as Cattle Feeders Suffer Losses
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 8: Consumers Paying Record Beef Prices While . . .
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
. . . Cow/Calf Producers Receive Depressed Prices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 9: Cattle Prices Fell When Exports Peaked
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 10: Shrinking Number of States Receiving Above-The-Average Cattle
Prices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 11: The U.S. Cattle Cycle Has Been Disrupted
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Description of Historical Cattle Cycle
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 12: Huge Disparity in Regional Weekly Cattle Prices
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
No. 13: Tremendous Volume Deficit in Cattle and Beef Trade
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
How to Address this Crisis
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attachment 2
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______
Submitted E-Mail from Martha N. Hellyer, Hellyer Limited Partnership,
Lander, WY
From: Martha Hellyer
Sent: Tuesday, May 04, 2010 9:56 AM
To: Obermueller, Pete
Subject: Grassland Reserve Program
Follow Up Flag: Follow up
Flag Status: Flagged
RE: Hearing on Grassland Reserve Program
Dear Pete and Pam,
Our ranch enrolled 4,000 acres in the Grassland Reserve Program in
2006. We have a 10 year enrollment. These 4,000 acres are scattered
across and within our 100,000 acre Federal Grazing Allotment. These
acres are in wilderness study areas, historical landscapes, and
critical wildlife habitats. The GRP has been very beneficial to the
viability and success of our ranch. The GRP has also been very
beneficial to the viability and success of the Landscape; the ranch and
the landscape are dependent on each other.
We would like to note that the long term stability of the land is
directly related to the long term security of the Federal grazing
permits.
Thank you,
Martha Hellyer.
______
Submitted Statement from Carl A. Larson, Sheep Rancher, Summit County,
UT
Statement regarding ``Forest Health and the Bark Beetle Epidemic''
House Agriculture Committee Hearing--Cheyenne, Wyoming--May 4, 2010
My name is Carl A. Larson. I graduated from the University of
Wyoming in January 1958 with a major in Range Management. I am a third
generation sheep rancher in southwestern Wyoming. We summer our sheep
(4 herds) on the North Slope of the Uinta Mountains in Summit County,
Utah. My Grandfather began running his sheep in these mountains about
1900. We have been intimately involved in being good stewards of the
forest in which we graze our sheep, over all of these years.
We are now very sad to see the devastation caused by the bark
beetle infestations over these past few years. We know that these
beetles come in cycles--and we also know that healthy trees can
withstand an attack by these bark beetles.
The Intermountain Forest & Range Experiment Station, Forest
Service, USDA, in Ogden, Utah published. in 1965, the Research Paper
INT-23, titled, Timber Management Issues on Utah's North Slope. This
Research Paper states, ``If the North Slope were to be brought under
management as a sustained yield unit, the task would be difficult
because the age distribution is unbalanced and is dominated by
overmature stands. More than half of the coniferous forest bears stands
that are mature or overmature . . . The North Slope Forest is in a
state of rapid attrition. Because more than half of the conifer timber
is mature or overmature, the North Slope lodgepole pine has been under
intermittent siege by mountain pine beetles for several decades . . .
Forty-four percent of the 201,000 acres of mature and overmature timber
is classified as `high risk'. Until this timber is logged or killed,
periodic flareups of the mountain pine beetle and other insects must be
expected.''
The 1985 Forest plan confirmed the deteriorating condition of the
forest, by stating, ``Of the Forest's 212,000 acres of lodgepole pine,
about 98,700 acres is rated as having high to medium susceptibility to
attack by mountain pine beetle.''
In the 5 year monitoring report of the 1985 Forest Plan, dated June
1, 1992, under goal #25 it states, ``Concentrate timber harvesting in
the moderate to high risk lodgepole pine stands to reduce resource
losses caused by the mountain pine beetle. Objective: Offer 14.7
Million boardfeet (MMBF) of sawtimber annually by the end of the first
decade.''
The 1985 Forest Plan set the Annual Sale Quantity (ASQ) of timber
at approximately 16 MMBF, later reduced to 12.5 MMBF due to an error in
double counting part of the timber resource. The actual timber volume
offered and sold ranged from 11.5 to 14.0 MMBF in the late 1980's, to
10.0 MMBF in 1991, 1992 and 1993, down to 1.8 MMBF in 1995, 1.7 MMBF in
1996 and 4.9 MMBF in 1999. The timber required for the sawmills in
Uinta County at this time was approximately 12 MMBF. The timber
supplied to our local mills from Forest Service lands has decreased
from approximately 90% to 50% for one of our two largest sawmills and
to 0% for our largest sawmill.
The Reason_The Environmental Movement
Roadless areas were set out, then expanded. Threatened & endangered
species were used to stop proposed timber sales. Almost every timber
sale was appealed by the environmental groups. The destruction of our
forests and watersheds is blood on their hands.
We are now faced with the difficult task of removing roadless areas
designations so we can access the areas of dead trees, in order to
construct fire breaks, remove the massive fuel load which will
inevitably contribute to a major wildfire and begin a needed forest
management plan.
We Need Your Help in Removing the Roadless Area Designations--
Especially The ``Little West Fork Blacks''--Without this we are facing
`A hot, fast moving wildfire, resulting in the loss of human lives,
death of livestock, homes burned to the ground, water quality impaired,
air quality polluted & our large irrigation and culinary water
reservoirs filled with silt.
Thank you.
______
Submitted Letter from Robert LeResche, Chair, Powder River Basin
Resource Council
May 4, 2010
Hon. Colin C. Peterson,
Chairman,
House Committee on Agriculture
Washington, D.C.;
Hon. Frank D. Lucas,
Ranking Minority Member,
House Committee on Agriculture
Washington, D.C.
Dear Chairman Peterson and Ranking Member Lucas,
Thank you all for this opportunity to provide our input on the next
farm bill. We very much appreciate the Committee traveling to the State
of Wyoming today.
Powder River Basin Resource Council is a member-run organization
based in Wyoming whose mission includes the preservation and enrichment
of our agricultural heritage and rural lifestyle. PRBRC is a member
organization of the Western Organization of Resource Councils which has
a critical presence in Washington, D.C.
As you deliberate the next farm bill that addresses such a vast
array of programs for the people and Agricultural producers of these
United States, we would prioritize our comments today to a specific
issue that is yet to be fully initiated as requested by Congress in the
2008 Farm Bill.
Congress is currently wrestling with issues of regulation in the
banking and financial industries. So too, must Congress bring fairness
back to our food industry. For far too long, the meats packing industry
has been dominated by a handful of corporate processors. There is close
to a 90% chance that the beef you consume today would have been
slaughtered and processed by one of the only four biggest controlling
companies in this industry.
To bring fairness to all producers, feeders and processors, we urge
you to continue to use your legislative powers to:
(1) Prohibit packers from procuring cattle for slaughter through
the use of a forward contract, unless the contract contains a
firm base price and can be equated to a fixed dollar amount on
the day that contract is signed, and that forward contracts are
offered or bid in an open, public manner.
(2) Prohibit packers from owning and feeding cattle, unless the
cattle are sold for slaughter in an open and public
marketplace.
In the 2008 Farm Bill, Congress directed the USDA to fully define
what constitutes an ``undue and unreasonable preference'' in livestock
markets as contained in the Packers & Stockyards Act of 1921.
Subsequent rule making is presently being generated within the USDA and
the public awaits this publication.
The outcome of this rule making is unknown. We anticipate that the
fight for fair competition and successful free enterprise agriculture
among our independent ranchers and farmers, feeders and processors will
continue for years to come.
Therefore, as you anticipate the major issues of the 2012 Farm
Bill, please continue to strive toward open and fair markets for
livestock producers. The control of our precious wealth of food stuffs
by a small cartel of industrial giants will no doubt continue due to
volume of scale and capacity alone. However, the laws and subsequent
rules passed by Congress can return fairness and openness to these
markets and provide true competition in agriculture once again.
Thank you again for the opportunity to provide input to this
Committee today. We very much appreciate your efforts on these issues
critical to America. If you would like more information on solutions
which Congress can enact to return this fairness to the livestock
industry, please contact us at [Redacted] or go to our website at
powderriverbasin.org.
Sincerely,
PRBRC.
CC:
Rep. Boswell;
Rep. Conaway;
Rep. Cardoza;
Rep. Fortenberry;
Rep. Costa;
Rep. Lummis;
Rep. Markey;
Rep. Smith.
______
Submitted Statement by Alan Merrill, President, Montana Farmers Union
Congressman Peterson and Members of the Committee: Thank you for
the opportunity to testify today on farm bill possibilities for
Montana's agricultural producers. My name is Alan Merrill, and I am
President of the Montana Farmers Union. I want to thank you for holding
this hearing, and we look forward to working with you as the
development of the 2012 Farm Bill moves forward.
As you may know, Montana Farmers Union is an organization whose
policies originate from the ground up. Our producer members develop our
policy every year at our convention. I'd like to share some of their
concerns and goals with you today.
One of our first policy charges is to work to promote a price
balance between sales and cost of farm operations. A priority for the
2012 Farm Bill should be profitability for our country's farmers and
ranchers: a policy that allows farmers to earn their income from the
market and assures them a safety net during times of low commodity
prices and/or rising costs of production.
We believe that farm policy should provide a meaningful measure of
price protection, be targeted toward family farmers and ranchers, and
ensure competition in the marketplace.
It is our belief that the next Farm Bill should include provisions
to ensure that farmers, ranchers and rural communities will be a part
of an economic climate that will permit family-based agriculture to
flourish.
1. We believe the primary goal of commodity programs should be to
provide economic stability and opportunities for producers. We
suggest a farm income safety net that uses countercyclical
payments indexed to the cost of production to support family
farmers during periods of low commodity prices;
2. The next farm bill should continue to fine-tune programs
designed to assist farmers and ranchers to develop and
implement conservation cost-share programs;
3. A competition title that addresses current anti-trust practices
and ensures anti-trust laws will be enforced;
4. A renewable energy title that makes energy independence a
national priority--one that puts farmer, rancher and community
ownership of renewable energy first; one that encourages value-
added projects, including biofuels and farmer and community-
owned wind energy;
5. A rural development title that helps farmers, ranchers and rural
communities develop economic opportunities for the betterment
of rural America; and
6. The bill needs a strong nutrition title that provides basic food
and nutrition needs for all citizens in need and enhances
increased development and delivery of community-based food and
local agriculture systems.
Fuels from the Farm
Energy is vital to securing our nation's needs for food and fiber.
Montana Farmers Union supports a balanced, comprehensive energy policy
that seeks energy independence for the United States, protects our
nation's environment and recognizes the special needs of America's
agricultural sector.
Renewable energy from farm-generated operations continues to
provide opportunities in farm country. Montana Farmers Union members
believe the economic benefits made possible through renewable energy
projects should remain in our rural communities. Many times in our
state's history we have seen large corporate investments draw the
wealth out with little or no reinvestment in the local economy. We urge
the Committee to ensure that USDA Rural Development and other programs
that are developed for renewable fuels give a competitive advantage to
farmer-owned and locally owned efforts.
Energy, economic development, national security and environmental
quality are inextricably linked. Home-grown energy solutions offer
tremendous potential for farmers and ranchers to capture more income;
for rural communities to prosper, and for the nation to lessen its
dependence on foreign oil.
Conservation Investments
Montana Farmers Union policy advocates for conservation funding to
include soil, water, and energy as responsible economic investment
avenues now and into the future. Conservation programs should be good
for the environment, reward stewardship, discourage speculative
development of fragile land resources, strengthen family fanning and
enhance rural communities.
Competition
One thing that has not changed through the years is the
vulnerability of agriculture producers to anti-competitive conduct.
Consolidation in rail transportation, for example, has injured
Montana's ``captive'' grain farmers who are served by one dominant
railroad. According to the USDA, rail rates for grains and oilseeds
have increased 73 percent since 2003 and rail rates in 2008 for grains
and oilseeds were 81 percent higher than rates for all other
commodities. A recent report by Montana's Attorney General's Office
found that Montana's captive grain shippers have been charged $19
million more annually by the single monopoly railroad serving the state
than grain shippers in more competitive transportation markets.
Montana Farmers Union's agriculture producers strongly urge that
all Federal agencies enforce current antitrust laws, and that Congress
take the necessary steps to review and reform antitrust regulations
where necessary to prevent abuse of captive shippers.
Trade
Free trade and fair trade are incongruent terms in today's world.
Montana Farmers Union believes that our current trade agenda does not
provide opportunities for farmers to make a profit from the
marketplace. Trade negotiations must include labor standards,
environmental standards and address currency manipulation situations.
Nutrition and Local Food Systems
We do not believe that there should be hungry people when we have
such a capacity to produce safe, nutritious food. We support strong and
fully funded nutrition and food programs.
Specifically, we support current programs being developed within
USDA that support and promote common-sense solutions for community-
based food systems such as the popular Know Your Farmer; Know Your Food
initiative, and grant programs for specialty crops, beginning farmers,
rural cooperative development, value-added ventures, and farmers'
market nutrition for seniors and women, infants and children.
We believe in the need to promote local food systems based on
cooperative business models in order to reverse the trend of the rural
exodus to urban centers and from food deserts back to food self-
sufficiency.
At about the same time that USDA announced its pilot Hoop House
initiative, Montana Farmers Union awarded its own grant for a hoop
house to a newly formed Agricultural Academy at a public high school
district in our state. It is programs such as these that help put
students and parents in touch with knowledge of where some of their
food comes from and helps forge a link between consumers and the
farmers and ranchers who grow and raise the food we all enjoy.
In conclusion, we support a 2012 Farm Bill that will help farmers,
ranchers and rural Montanans make a profit from the market. The family
farm is the keystone of a free, progressive society, as well as a
strong America. Farm policy needs to recognize and build on the
strength of our nation's agriculture. Every politician, voter,
taxpayer, environmentalist, and consumer needs to realize independent
family farmers are by far the best stewards of the land and animals.
Federal agricultural policy, with strong conservation, food and
energy components, that prioritizes the interests of independent family
farmers and ranchers, is vital to the people on the land and to our
country.
It is my hope that the committee will keep these proposals in mind
as it works to prepare future farm policy. We look forward to working
with you to achieve these goals.
Mr. Chairman and members of the committee, again I thank you for
holding this hearing and for the opportunity to testify.
Alan Merrill,
President,
Montana Farmers Union.
______
Submitted Statement from Patrick O'Toole, President of the Board,
Family Farm Alliance
Good morning, Chairman Peterson and Members of the Committee. My
name is Patrick O'Toole, and I serve as president of the Family Farm
Alliance (Alliance).
The Alliance is a grassroots organization of family farmers,
ranchers, irrigation districts and allied industries in 16 Western
states. The Alliance is focused on one mission: To ensure the
availability of reliable, affordable irrigation water supplies to
Western farmers and ranchers. We are also committed to the fundamental
proposition that Western irrigated agriculture must be preserved and
protected for a host of economic, sociological, environmental and
national security reasons--many of which are often overlooked in the
context of other Federal policy decisions.
Introduction
I am honored to be here today to discuss the farm bill, watershed
health, conservation and the challenges and opportunities facing
Western farmers and ranchers who depend upon adequate water supplies
that irrigate the arid West. The Alliance Board of Directors played an
active role in the development of the last farm bill. In particular,
working with a diverse coalition of commodity groups, conservation
organizations, and urban water users, we developed a framework that
ultimately became the Agricultural Watershed Enhancement Program
(AWEP). We will also soon release a report that contains a dozen case
studies that highlight real-world examples of water conservation, water
transfers and markets, aging water management infrastructure problems,
and watershed restoration and enhancement projects. An important
objective of our final report will be to demonstrate that water
managers, ranchers and farmers are resourceful and creative individuals
who should play an active role in resolving the water conflicts of the
West. This testimony touches on these issues and other matters critical
to the future of Western farmers and ranchers' ability to provide food,
fiber and energy to our nation and the world.
Farm Bill Water Conservation Recommendations
Ranches in the West depend on the availability of both public and
private land for economically viable operations. The single most
important factor leading to the loss of wildlife and degraded
landscapes is fragmentation from development. Ranchers want a stable
business climate for their operations. Conservation groups want healthy
and productive landscapes. We are already working with conservation
groups who share a common interest in supporting working ranches and
healthy landscapes and will work further with those groups to ensure
that continued emphasis is placed in the farm bill to support
incentive-driven conservation programs. Thousands of water and land
conservation projects have been completed across the Western United
States, and these efforts should continue. We urge that this Committee
continue to make farm bill conservation programs a priority and fund
those programs accordingly.
Concerns with AWEP
AWEP is a newly-established part of the Environmental Quality
Incentives Program (EQIP), a program administered by the Natural
Resources Conservation Service (NRCS). The main difference between
typical EQIP projects and AWEP projects is that applications for
project funding are made directly to the U.S. Secretary of Agriculture
from an organization on behalf of a group of agricultural producers who
intend to make water improvements in a geographic area.
The Family Farm Alliance was part of a diverse coalition formed
during the crafting of the last farm bill that focused exclusively on
the development of the AWEP concept. Our primary motive for engaging in
this process was to provide additional funding opportunities--outside
of the Interior Department--for irrigation districts and other
agricultural water delivery and management organizations to tackle
aging infrastructure and water conservation challenges in a more
coordinated and effective manner. The original concept behind AWEP was
to focus on cooperative approaches to enhancing water quantity and/or
quality on a regional scale. This new program--in tandem with multiple
conservation tools (including farmland management practices, easement
purchases, and ecosystem restoration assistance)--was intended to
provide flexibility to cooperative conservation partners to achieve
improved water quantity and quality goals.
Some of our members have witnessed firsthand the types of
challenges that AWEP advocates were trying to address. For example, the
2002 Farm Bill contained $50 million of EQIP funding to implement water
conservation measures in the Klamath Basin of northern California and
southern Oregon. These Federal funds were matched by $12.5 million of
local money, put up by individual landowners. While the water
conservation measures undertaken undoubtedly contributed to improved
water use efficiency on individual farms, the EQIP program was intended
for on-farm purposes and was not designed to coordinate conservation
benefits to meet specific regional goals, such as conserving water for
storage and future use. Irrigation districts and other, larger
conservation entities, which many times coordinate conservation
projects to maximize benefits, were not eligible to compete for these
funds in the last farm bill.
Our push on AWEP, in part, was intended to address these types of
challenges. There is a need to fund projects that provide water quality
or water quantity benefits at a scale that benefits more than just one
or two producers. In many instances, coordinated regional water
conservation efforts can lead to improved water quantities and quality
that can only be physically captured and managed by the water delivery
organizations to meet overall goals and objectives. We had hoped that
AWEP would provide substantial grant money to irrigation districts or
other water agencies, which would be placed in a lead position to work
with multiple producers to achieve locally-generated objectives. If
consensus at a regional level can be reached on a common approach,
there will be a better chance of positive community participation and
ultimately, a better bang for the Federal buck.
The original AWEP proposal was solid from a conceptual standpoint,
but by the time it made it through the legislative and administrative
process, the program that is now in place is not being implemented in a
manner consistent with the original vision. Rather than providing funds
directly to irrigation districts, the districts instead have been put
in situation where they essentially pass the phone number of the local
NRCS office on to the individual landowner, and NRCS takes over from
there. In essence, this AWEP has simply become an expansion of the
existing EQIP program, which was definitely not the intent when this
concept was crafted 4 years ago.
Recommendations to Improve AWEP
There may be opportunities with the new farm bill to further
improve upon AWEP's initial concept:
1. Provisions should allow direct payment made to irrigation
districts, who can than administer the program, working
directly with their landowner member farmers. NRCS should still
approve the contracts, but we believe more efficient delivery
of funds that results real improvements on the ground will
occur if the irrigation districts distribute the funds and work
with the landowners. Some of these districts have innovative
ideas that would lead to the creation of grower education
programs, testing, farm water management classes, and
irrigation technology seminars that would have immeasurable
long-term conservation benefits. Administrative expenses for
such partners should be allowed, but be capped;
2. Irrigation districts or similar entities should be allowed to be
the basis for ``pooling'' arrangements, where the benefits of a
project which affects multiple landowners is funded by
``pooling'' their individual AWEP interests into a bigger
project;
3. Direction must be provided to improve how NRCS program
administrators deliver timely and accurate information, provide
reliable and transparent processes, and set firm deadlines;
4. Administrative costs associated with any work performed by the
NRCS should be capped at a reasonable level;
5. The role of the Bureau of Reclamation and how that agency
coordinates with NRCS in the implementation of this program in
Western states must be well thought out, and should compliment
the collaborative philosophy (between the Departments of
Agriculture and Interior) embedded in the ``Bridging the
Headgates'' initiative endorsed by both the Bush and Clinton
Administrations; and
6. The program should provide assurances that the intent is not to
reallocate water away from agriculture, but to help stretch
limited water supplies for future regional beneficial use. It
must also recognize the traditional deference of Federal
agencies to state water allocation systems.
Conservation Caveats
The Alliance supports continued voluntary implementation of
efficient water management practices included in the farm bill and
opposes mandatory or enforceable requirements for agricultural water
use efficiency. Only practices that reduce irrecoverable losses
actually increase the total useable water supply. Furthermore, water
saved within a water district or on-farm is used elsewhere within the
same district or farm. Western agriculture in many areas--including
California's Central Valley and the Klamath Bain--is already highly
efficient in its use of water. More efficient water application does
not necessarily increase useable water supplies, but with changes to
the AWEP program, coordinated regional water conservation projects can
lead to stretching limited supplies to satisfy unmet needs in the
future.
Conservation is often seen as the solution to water supply issues.
While conservation is surely a tool that can assist in overcoming water
supply problems, it cannot be viewed as the single answer to water
shortages, as discussed further below. And, as was keenly demonstrated
in California's San Joaquin Valley last year--you cannot conserve water
if there is no water to conserve.
Importance of Federal Climate Change, Conservation and Infrastructure
Assistance
Water conservation and water transfers are important tools for
improved management of increasing scarce water resources. However,
demand-management actions must be balanced with supply enhancement
measures that provide the proper mix of solutions for the varying
specific circumstances in the West.
Supply enhancement should include rehabilitation of existing
facilities and construction of new infrastructure. Rehabilitation
measures should focus on maximizing the conservation effort through
increased delivery efficiencies, construction of re-regulation
reservoirs on irrigation delivery systems to minimize operational
waste, and construction of new dams and reservoirs in watersheds with
inadequate storage capacity to increase beneficial use and provide
operational flexibility. Additional groundwater supplies should also be
developed, but in a manner where groundwater use falls within the safe
yield or recharge parameters of the aquifer. Conjunctive management of
surface and groundwater supplies should be encouraged. Installation of
additional stream gauges, water meters, groundwater recharge projects
to employ during times of high surface flow, groundwater monitoring
wells and better estimates of consumptive use are of paramount
importance for the equitable management of available water supplies.
The Federal Government needs to seriously consider adopting a
policy of supporting new projects to enhance water supplies while
encouraging state and local interests to take the lead in the planning
and implementation of those projects. Local and state interests have
shown enormous creativity in designing creative water development
projects. For example, the State of Wyoming has initiated its Dam and
Reservoir Program, in which proposed new dams with storage capacity of
2,000 acre feet or more and proposed expansions of existing dams of
1,000 acre feet or more qualify for state funding. Wyoming water
managers and policy makers recognize that dams and reservoirs typically
provide opportunities for many potential uses. While water supply is
emphasized in the Wyoming program, recreation, environmental
enhancement, flood control, erosion control and hydropower uses are
also explored as secondary purposes.
Many water projects are ready to be developed in the West, as
demonstrated by studies completed by the Family Farm Alliance and the
Bureau of Reclamation in 2005. While conservation and recycling
programs have done a tremendous job of meeting new growth, only a small
amount of new water storage capacity has been developed in the past 30
years. Maintaining the status quo simply isn't sustainable in the face
of continued population growth, diminishing snow pack, increasing water
consumption to support domestic energy, and emerging environmental
demands. We must immediately start building the water infrastructure
needed to cope with a changing climate, meet the needs of a burgeoning
population, and support a healthy agricultural base in the West.
The Need to Support Local Efforts to Manage Western Watersheds
There are many opportunities for Federal agencies to improve
management of the West's biggest ``reservoir''--our watersheds. In most
Western states, much of the water used derives from snowmelt in
mountainous areas. I can tell you from personal experience that I have
serious concerns about how the Federal Government is managing the
watersheds.
A July 2008 report released by the National Research Council, one
of the first major studies on forest and water since a U.S. Forest
Service project in 1976, underscores the importance of forests to the
nation's water supplies: Forested lands cover about \1/3\ of the
nation's land area, and although they have roles in timber production,
habitat, recreation and wilderness, their most important output may be
water. Forests provide natural filtration and storage systems that
process nearly \2/3\ of the water supply in the U.S. Demand for fresh
water continues to rise, while forest acreage is declining and
remaining forest lands are threatened by climate change, disease
epidemics, and fire. Forest vegetation and soils, if healthy and
intact, can benefit human water supplies by controlling water yield,
peak flows, low flows, sediment levels, water chemistry and quality.
One of the biggest threats to forests, and the water that derives
from them, is the permanent conversion of forested land to residential,
industrial and commercial uses. The 2008 report found that modern
forest practices have helped to protect streams and riparian zones, but
more needs to be learned about the implications of such practices as
thinning or partial cuts. This understanding can lead to the
development of ``best management'' practices could help balance timber
harvest with sustainable water flow and quality.
We strongly believe that locals should be encouraged and given the
tools to lead watershed enhancement efforts. The best decisions on
natural resources issues happen at the state and local level. I live in
the Little Snake River watershed. Since 1991 numerous agencies,
organization, and NGO's have recognized my community and the local
governmental natural resource agency, the Little Snake River
Conservation District (LSRCD), as leaders in natural resource
conservation. Numerous articles featuring work conducted by the LSRCD,
area land owners, and its partners have been featured in popular
publications like Farm Journal, Beef Today, Bugle Magazine, Wyoming
Wildlife, and Range Magazine as well as peer reviewed journal
publication in the Journal of Soil and Water Conservation (2008) and
the Journal of Rangeland Ecology (2009).
These efforts have all been locally-led. Conservation of natural
resources in the Little Snake River Basin integrated with agrarian life
style and perpetuation of this culture is the highest priority for the
local community in the Little Snake Basin. In Wyoming, the local
residents have passed a conservation property tax to carry on this
work. Since 1990 this tax has generated approximately $8 million in
local revenues. These funds have leveraged over $40 million in project
money to implement conservation and development projects in the Little
Snake River Basin.
Today the Little Snake River Basin hosts a myriad of wildlife and
robust natural resources while sustaining compatible agricultural uses
and natural resource based recreation businesses. This was accomplished
through local leadership and commitment of the Little Snake River
Conservation District working collaboratively with over 30 different
partner organizations and agencies that have assisted in the
conservation of the Little Snake Basin, in a collaborative locally-led
process.
Properly managing federally-owned watersheds and encouraging
Federal agencies to work with the agricultural community to solve local
water problems are imperative. Through thoughtful planning, Congress
can play a truly important role in helping find the solutions that have
proved so elusive to date.
Climate Change Legislation Considerations
There is broad scientific consensus that even modest changes in the
global climate would likely alter precipitation patterns in ways that
could pose serious threats to water supplies and agricultural
production worldwide, particularly in arid regions such as the American
West where a large portion of agricultural production is dependent upon
irrigation. A significant reduction in the amount of food and fiber
produced by American farmers would have adverse consequences for our
economy and national security and for our trading partners abroad.
In the past year, legislation has been introduced to address
climate change in a comprehensive and aggressive manner. We had hoped
that Congress would share our concern that safeguarding the nation's
ability to feed itself should be one of the principal goals of any
legislation whose purpose is to marshal a national effort to minimize
and adapt to the effects of climate change. Unfortunately, while House-
passed climate legislation (H.R. 5424) and legislation introduced by
Senators Boxer and Kerry (S. 1733) would commit the Federal Government
to employ ``all practical means'' to protect fish and wildlife from the
adverse effects of climate change, those proposals include no
comparable commitment to ensuring the continued vitality of domestic
agriculture and agriculturally-based rural communities. Legislation (S.
1933) introduced by Chairman Bingaman takes a more reasonable approach
to natural resources adaptation, and it specifically incorporates the
goals and measures of the SECURE Water Act (P.L. 111-11). But it, too,
places the greatest emphasis on fish and wildlife.
The Family Farm Alliance supports the goal of conserving natural
resources with fish and wildlife adaptation planning, research and
programs. But the lack of comparable attention to adaptation needs of
domestic agriculture and rural communities calls into question the
intent and effects of a large-scale effort focused exclusively on
natural resources.
If Congress enacts comprehensive climate change legislation, it
must include additional adaptation programs for irrigated agriculture
and rural resource-based communities if such efforts are to be given
the necessary attention and resources. Farms and communities in the
western United States face the prospect of economic disruption and
increased competition and conflict over agricultural and water
resources as a result of climate change. Helping them adapt to and
withstand the impacts of climate change should be no less a national
priority than meeting the needs of fish and wildlife and of farmers in
other nations.
We refer you to the October 27, 2009 statement the Alliance
submitted to the Senate Committee on the Environment and Public Works.
It provides specific observations and recommendations on how Congress
can provide adaptation programs that benefit Western irrigated
agriculture and rural communities. We hope this Subcommittee can play a
role in advancing these recommendations as the Senate considers climate
change legislation.
Opportunities for Environmentally-Safe Low-Head Hydropower Development
The U.S. Interior and Energy Departments and the Army Corps of
Engineers (USACE) have agreed to create a new strategy for promoting
hydropower development while reducing environmental impacts and
streamlining regulations. Many Family Farm Alliance members are lining
up with creative new projects to take advantage of this development.
Under a new Memorandum of Understanding (MOU), the Obama administration
will evaluate new hydropower technologies and their potential impact on
U.S. renewable energy supplies. The MOU directs USACE, the Office of
Energy Efficiency and Renewable Energy, the Bureau of Reclamation, the
agencies to formulate a resource assessment of current Federal
facilities as well as identify ways to upgrade and modernize those
facilities and install hydropower technologies at new sites. The
Federal Energy Regulatory Commission (FERC) will also be involved in
the process.
The Alliance was invited by Interior Secretary Salazar's office to
participate in the MOU signing ceremony last March in Washington.
Alliance President Pat O'Toole and Advisory Committee Member Gary
Esslinger (NEW MEXICO) told those assembled that many of the farmers
and ranchers we represent are interested in installing low-head
hydropower facilities in existing irrigation canal systems. While this
would seem to be a no-brainer--the actual construction is not that much
more difficult than installing an irrigation turnout and there are no
new ``environmental impacts''--alas, that is not the case.
Under current regulations, anyone who wants to develop hydropower
less than 5 megawatts (which would apply to virtually every single
potential location within irrigation canals) can get an exemption from
FERC licensing requirements. However, the process required to get that
exemption can cost $100,000 and 18-36 months just to satisfy National
Environmental Policy Act (NEPA) compliance requirements. The costs and
time associated with the environmental compliance issues (noticing,
public meetings, etc.) can make projects that only cost $20,000 in
materials suddenly become infeasible. Meanwhile, new solar and wind
projects can move full-steam ahead without these ridiculous licensing
impediments. We believe the process for installing in-canal low-head
hydro facilities should be the same.
The Alliance this year will be working hard to make it easier for
Western irrigators to develop new low-head hydropower. A preferable fix
would be a new exemption category for low-head hydro in irrigation
projects that does not require Federal agency interaction. For more
complicated projects that still fall under the existing FERC 5 megawatt
exemption ceiling but exceed this new minimum threshold (whatever that
may be), the process must be streamlined. We also want the Bureau of
Reclamation to aggressively work with its water customers to find ways
to get more low-head projects built into the existing delivery system.
At this time, we are working with the Obama Administration to find
administrative solutions to these challenges. However, it may be
necessary to enlist the support of Congress to expedite the common-
sense solutions we are looking to achieve. We look forward to working
with your Committee on this matter in the future, if need be.
Other Needs
Other critical problems remain to be solved, and Congress can help
address these needs.
1. Streamline the Regulatory Permitting Process
Modern, integrated water storage and distribution systems can
provide tremendous physical and economic flexibility to address climate
transformation and population growth. However, this flexibility is
limited by legal, regulatory, or other institutional constraints, which
can take longer to address than actually constructing the physical
infrastructure. The often slow and cumbersome Federal regulatory
process is a major obstacle to realization of projects and actions that
could enhance Western water supplies.
The Family Farm Alliance has long worked on finding ways to
streamline the regulatory process, and worked closely with past
administrations and Congress towards that end. In the past year, our
members are becoming increasingly concerned about the number of
environmental policies that are currently being re-written by this
Administration. It appears the changes being contemplated could result
in stricter requirements that would further slow down Federal approvals
on water projects that are already very time-consuming and challenging.
We are concerned about the following administrative actions that could
carry the risk of real potential harm for Western irrigators:
Economic and Environmental Principles & Guidelines for Water
and Related Resources Studies. The White House in December
released a draft of new standards for Federal water projects
that for the first time put environmental goals on the same
plane as economic development concerns. The proposed overhaul
of 1983 standards for the Army Corps of Engineers (Corps)
directs the agency to fold non-monetary benefits into project
assessments by measuring improvements to wildlife habitats and
biodiversity. These proposed changes for the Corps and Bureau
of Reclamation may have a significant impact on new water
project planning and Federal funding in the future.
National Environmental Policy Act Expansion. It is our
understanding that the Administration may soon issue an
Executive Order adding climate change to the list of factors
Federal agencies must take into account when evaluating
projects and policies. Some conservation groups have pushed for
the expansion of the 40 year old National Environmental Policy
Act (NEPA), which currently requires agencies to consider
environmental factors such as land use, biodiversity and air
quality. Our members fear that requiring analysis of climate
change impacts during the NEPA process, especially at the
project-specific level, will slow economic recovery while
providing no meaningful environmental benefits.
ESA Administrative Revisions. The U.S. Fish and Wildlife
Service (USFWS) is considering wide-ranging revisions to the
1973 Endangered Species Act (ESA), that could provide new
definitions for some key provisions, including those addressing
critical habitat and consultations between service biologists
and other agencies over projects that could impact protected
animals and plants. For example, the USFWS earlier this year
proposed to revise a 2005 designation of critical habitat for
the bull trout, a threatened species protected under the ESA.
If finalized, the proposal would increase the amount of stream
miles originally designated as bull trout critical habitat in
five Western states by 18,851 miles and the amount of lakes and
reservoirs designated as critical habitat by 390,208 acres. The
problem here is, for many Western water users, the maze of
requirements for ESA permits that can restrict activities or
delay projects for months or years. We essentially supported
the administrative regulatory changes put forward prior to 2009
that would have streamlined the consultation process. It now
looks like those changes have been reversed, with no apparent
request for agency input offered to the regulated community.
EPA Pesticide Restrictions. EPA is making a precedent-
setting decision to impose pesticide restrictions that will
essentially prohibit their use in large areas of Washington,
Oregon, California and Idaho. The most serious deficiency in
EPA's announced plan involves expansion of no-use buffer zones
to every ditch, drain, canal, and irrigation furrow that might
eventually drain from an agricultural field into a salmon
habitat. EPA also recently singled out the state of Florida as
the first state in the nation on which they are proposing to
establish a nutrient standard for all bodies of water. These
proposed standards are being imposed on the basis of an
EarthJustice lawsuit and will establish nitrogen and phosphorus
standards different from the rest of the country. This is
another very disturbing development, but consistent with other
recent administration actions.
EPA Reconsideration of the ``Water Transfers Rule''. A 2008
U.S. EPA rule allows water transfers from one water body to
another without Clean Water Act (CWA) permits. We now
understand that EPA is planning on reconsidering the ``Water
Transfers Rule'', which states that a mere transfer of water
from one meaningfully distinct navigable body of water to
another does not require a NPDES permit, even though the water
being transferred may add new pollutants to the receiving body
of water. The Justice Department in a recent document says EPA
may abandon the rule, a move that would subject water transfers
throughout the nation to pollution permitting requirements.
This could have severe consequences in states like Colorado and
California, where huge quantities of water are moved from one
basin to another.
Many of the above administrative changes are drawing praise from
environmental organizations that have been advocating them for some
time. The Family Farm Alliance hopes that the Administration will give
equal consideration to the concerns of agricultural organizations. We
pledge to work with the Administration, Congress, and other interested
parties to build a consensus for improving the regulatory processes
associated with improving water systems.
Family Farm Alliance Water Management Case Study Report
The Family Farm Alliance is currently compiling in to a report a
number of case studies that highlight real-world examples of water
conservation, water transfers and markets, aging infrastructure
problems, and watershed restoration/enhancement. This document will be
used in several forums. For example, we would like to describe water
conservation and management projects that work well (best management
practices), especially those that have benefited from Federal grant
programs, and pass the lessons learned from those projects on to the
Bureau of Reclamation and NRCS. Our report can further be used as a
template to advocate for the types of conservation activities that
could be potentially funded under the climate change bills currently
moving through Congress.
Another area of focus in our report will include water markets and
transfers, where we would like to provide examples of successful
efforts, identify where there are impediments to success, and describe
where adverse impacts negated such benefits. These studies will help
form the framework for Alliance policy on water transfers, which will
be advanced in the agricultural/urban/environmental water sharing
coalition we are involved with in the Colorado River Basin. We are
already assembling work for transfer programs undertaken in the Central
Valley (CALIFORNIA), in the Klamath Basin (CALIFORNIA/OREGON), in
Southern California, and along the Front Range of the Rocky Mountains
(COLORADO).
We will also include examples of aging water infrastructure
predicaments facing our members. Findings and recommended solutions can
be used in our ongoing efforts to implement the loan guarantee
provisions we advocated for in the Rural Water Supply Act and to
underscore the additional funding needs that are required to address
key infrastructure issues in the West, such as the St. Mary Facilities
(MONTANA) and rehabilitation of Minidoka Dam spillway (IDAHO).
Finally, we will describe the complications facing local water
users, the creative solutions that can be developed to meet those
problems and recommendations that ensure continued, locally-driven
success. We already have developed one case study in Nebraska, where
irrigation districts have completed project transfers resulting in
expanded opportunities to partner with new entities to improve
infrastructure, flood control, and water management. Another case study
here in Wyoming describes the efforts of a local conservation district
to take the lead in implementing holistic watershed solutions. That
case study is included as an appendix to this testimony.
An important objective of our final report will be to demonstrate
that water managers, ranchers and farmers are resourceful and creative
individuals that should play an active role in resolving the water
conflicts of the West.
When our report is completed, it will include a dozen individual
case studies for projects located in virtually very major river basin
in the Western United States. We look forward to sharing the final
report with this Committee and other important water policy makers.
Conclusion
The impacts of climate change, population growth, new power sources
and our society's emphasis on providing water for ecological purpose
will significantly challenge all water users in the West--municipal,
industrial, agricultural, and environmental--in the near future. Being
prepared requires investment and adaptation in the management of
Western water supplies. To survive this trial, our efforts need to
begin today--before crises, before conflict, and before there are
winners and losers.
We stand ready to assist you, Chairman Peterson, and the Members of
this Subcommittee in furthering these efforts that are so important to
all our communities in the face of such an uncertain and challenging
future. We must emphasize, however, that we are facing water problems
right now. As evidenced in California's San Joaquin Valley and the
Klamath Basin, legislation, water transfers and data collection alone
will not resolve these problems. The amount of water on the planet
remains the same. We need policy and water decisions that are based on
sound science. And we need the infrastructure to conserve, reuse,
store, treat, manage and convey water to where and when it is needed,
at the quality and quantity needed, to resolve these problems and avoid
even more severe consequences that loom on the horizon.
Thank you for this opportunity to provide input on this matter,
which is very important to the family farmers and ranchers of our
membership. Our comments and recommendations are intended to help the
new farm bill become something that they will embrace.
appendix a: little snake river conservation district
A case study highlighting integrated collaborative watershed
management and the importance of locally-led management efforts.
Backdrop
In most Western states, much of the water used derives from
snowmelt in mountainous areas. We are hearing more frequent reports
from state and local governments and water users who question how the
Federal Government is managing the watersheds. Forested lands cover
about \1/3\ of the nation's land area, and although they have roles in
timber production, habitat, recreation and wilderness, their most
important output may be water. Forests provide natural filtration and
storage systems that process nearly \2/3\ of the water supply in the
U.S. Forest vegetation and soils, if healthy and intact, can benefit
human water supplies by controlling water yield, peak flows, low flows,
sediment levels, water chemistry and quality. One of the biggest
threats to forests, and the water that derives from them, is the
permanent conversion of forested land to residential, industrial and
commercial uses.
Real management is needed in the real ``reservoir'' of the West--
our federally-owned forest lands in upper watershed areas.
Location
The Little Snake River is a Colorado River Headwaters Basin arising
on the continental divide with land in both Colorado and Wyoming. It is
a major tributary to the Yampa and Green Rivers in the Upper Colorado
Basin.
Geography and Hydrology
The area is relatively geographically isolated from any large
metropolitan or urban communities (> 300 miles from Denver or Salt Lake
City). Population in the basin is less than 1,000 people. There are
three towns in the basin, Baggs, Dixon, and Savery with populations of
400, 82, and 26, respectively. There are 20,000 acres of irrigated
lands adjacent to the main stem of the Little Snake River and its major
tributaries. Land ownership in the basin is approximately 31% private,
8% state, and 61% Federal (BLM & USFS).
Elevations and precipitation in the basin range from 10,000 feet
and 55 inches of annual precipitation to 6,000 feet and 8 inches of
annual precipitation. Low elevation landscapes are dominated by desert
shrub land communities and transition to mixed mountain shrub, aspen,
and pine/spruce/fir plant communities at the highest elevation.
Average annual water yield out of the basin is approximately
449,000 acre-feet (AF) per year. Total consumptive water use in the
basin is approximately 44,000 AF per year. The largest annual
consumptive use is for municipal water project via a trans-basin
diversion (21,000 AF) followed by agriculture (20,000 AF) and
environmental and miscellaneous uses (3,000 AF). The first water rights
for irrigation where filed with the Territory of Wyoming in March of
1875.
Land Use and Habitat Characteristics
Predominant land uses are range land agriculture, recreation, and--
more recently--fluid mineral development (oil & gas). Historically, the
basin also supported some timber harvest and hard rock mining for
copper, gold, and silver. Because of the basin's geographic isolation
and low population, it has not incurred major deleterious impacts
associated with human activity until the recently development of fluid
minerals. Consequently, the area has a fairly intact ecosystem that
supports the largest population of Colorado Cutthroat Trout, flannel-
mouth suckers, and round-tailed chubs. It also supports some of the
largest populations of Columbian Sharp-tail and Greater Sage Grouse in
the U.S. The basin is also home to 8,000 elk, 21,000 mule deer, 22,000
antelope, 130 species of birds, 15 species of fish, and numerous other
species of mammals and amphibians.
In 1844 John C Fremont traversed the Little Snake River Valley and
noted in his journals ``The country here appeared more variously
stocked with game than any part of the Rocky mountains we had visited:
and its abundance is owing to the excellent pasturage and its dangerous
character as a war ground''. The game (wildlife) that attracted the
warring Native American tribes to area was a byproduct of the excellent
pasturage that Fremont spoke of. It is also the reason the area
attracted early ranchers. The first cattle entered the Little Snake
Basin in 1871 when Noah Reader brought 2,000 head that where turned out
at the mouth of Savery Creek. In 1873 George Baggs brought 2,000 head
into the valley near the vicinity of the town bearing his name. Today
the area supports around 25,000 head of cattle, 6,000 head of sheep,
and 2,500 head of horse both domestic and wild.
Organization
The Little Snake River Conservation District (LSRCD) has a locally
elected board of supervisors and is staffed by dedicated professionals.
Key Integrated Collaborative Watershed Management Actions
Muddy Creek and Savery Creek Clean Water Act Section 319
Watershed Projects. The LSRCD has received and administered
over $1 million from EPA to implement best management practice
for livestock grazing.
Muddy Creek Wetlands. Established the largest wetland
project in the State of Wyoming and received over $800,000 in
grant funding for this project including $165,000 from Ducks
Unlimited.
Little Snake River Aspen Conservation Joint Venture. Locally
lead effort with BLM & USFS, private land owners to restore and
enhance 12,000 acres of Aspen forest.
Little Snake River Watershed Fish Barrier Assessment.
Collaborative effort with Trout Unlimited, LSRCD, and local
landowners/irrigators.
Little Snake Watershed Fish Barrier Removal and Aquatic
Ecosystem Restoration Project. Joint project with numerous
local, state, Federal, and NGO partners. Current expenditure
and obligation for this project is $2.5 million.
Cooperative Conservation Planning Initiative (CCPI). This is
a USDA-NRCS farm bill program. The LSRCD is the local sponsor
on two different CCPI projects including the Fish Barrier
Removal and Hazardous fuels--forest health projects in the
Little Snake Basin.
Battle Collaborative Stewardship Contract. The USFS and the
LSRCD agreed to address hazardous fuels on 3,000 acres of the
Medicine Bow National Forest due to bark beetle infestation.
Little Snake River Conservation Planning initiative. This is
a joint effort among the LSRCD, NRCS, The Nature Conservancy
(TNC), and private land owners. It consists of inventorying and
updating conversation plans for 42,000 acres of private lands
for consideration under Conservation Easements.
Results
In 2005 the local community, working with the State of
Wyoming, constructed a 23,000 acre foot $30 million water
storage project to provide water for municipal, agricultural,
fisheries and recreational use.
As part of the overall watershed project, Clean Water Act
Section 319 monies were utilized to implement grazing Best
Management Practice to restore and enhance riparian and upland
areas. Other funds and partners have assisted with the
restoration and enhancement of more than 20 miles of river and
stream channels for both cold and warm water fish species. Over
800 acres of wetland habitat has been constructed, improved,
and enhanced.
3,500 acres of forest treatment has been completed to reduce
hazardous fuels and improve wildlife habitat.
Thousands of acres have been put under conservation
easements in order to perpetuate agricultural use and protect
critical wildlife habitat.
Ten irrigation diversion structures have been modified to
allow for fish passage and in 2011 all remaining irrigation
diversion structures in the Little Snake basin are scheduled
for modification for fish passage.
Recognition
Since 1991 numerous agencies, organization, and NGO's have
recognized the Little Snake River community and the local governmental
natural resource agency, the Little Snake River Conservation District
(LSRCD), as leaders in natural resource conservation. Following are
list of acknowledgments and achievements.
1996 USDI-BLM Rangeland Stewardship Award.
1996-2000 National Demonstration Project ``Seeking Common
Ground--Livestock and Big Game on Western Range Lands''.
1997 & 2002 EPA volume II & III Section 319 Success Stories.
2007 National Association of Conservation District South
West Region Collaborative Conservation Award.
2009 Rocky Mountain Elk Foundation Imperial Habitat Partner.
Numerous articles featuring work conducted by the LSRCD, area land
owners, and its partners have been featured in popular publications
like Farm Journal, Beef Today, Bugle Magazine, Wyoming Wildlife, and
Range Magazine as well as peer reviewed journal publication in the
Journal of Soil and Water Conservation (2008) and the Journal of
Rangeland Ecology (2009).
Lessons Learned
These efforts have all been locally-led. Conservation of natural
resources in the Little Snake River Basin integrated with agrarian life
style and perpetuation of this culture is the highest priority for the
local community in the Little Snake Basin. In Wyoming, the local
residents have passed a conservation property tax to carry on this
work. Since 1990 this tax has generated approximately $8 million in
local revenues. These funds have leveraged over $40 million in project
money to implement conservation and development projects in the Little
Snake River Basin.
Today the Little Snake River Basin hosts a myriad of wildlife, and
robust natural resources while sustaining compatible agricultural uses
and natural resource based recreation business. This was accomplished
through local leadership and commitment of the Little Snake River
Conservation District working collaboratively with over 30 different
partner organizations and agencies that have assisted in the
conservation of the Little Snake Basin, in a collaborative locally-led
process.
Properly managing Federal watersheds and encouraging Federal
agencies to work with the agricultural community to solve local water
problems is imperative. Through thoughtful planning, the Administration
can play a truly important role in helping find the solutions that have
proved so elusive to date.
______
Submitted Letter from Jerry D. Paxton, Commissioner, Carbon County, WY;
Member, Public Lands Committee, Wyoming County Commission
May 3, 2010
Hon. Cynthia M. Lummis,
Member,
House Committee on Agriculture,
Washington, D.C.
Representative Lummis and Congressional Agriculture Committee:
Thank you for the opportunity to comment on the beetle kill problem
in Wyoming. I am a Carbon County Commissioner and live near the
Medicine Bow/Routt National Forest in Encampment, Wyoming. As you may
know the Mountain Pine Beetle has devastated our area. My fellow
Commissioners and I have been working for more than three years to find
ways to help mitigate the problem. We have become convinced that
removing as many dead trees as possible as quickly as possible will
help speed up the restoration process. It is our belief that we must
engage or re-engage industry to get this done.
We have helped the town of Encampment acquire a sawmill within the
city limits of the town and turned the property into an industrial
park. We have been working with town official to attract businesses
that are interested in removing the trees for timber or for woody
biomass uses. We currently have a log home manufacturer, a small custom
portable mill and a greenhouse located on the property. It appears that
we now have someone interested in opening a portion of the mill to
manufacture dimensional lumber. Our biggest problem is how to dispose
of the waste materials that will be generated. We realize that there is
an emerging interest in the woody biomass industry and have been
vigorously pursuing biomass companies to locate in our industrial park.
Our efforts have put us in contact with companies that produce a
variety of products from torrified bio-coal to ethanol. The problem we
have encountered with the woody biomass industries is a lack of a
viable market primarily due to the end cost of the products. We feel it
may be necessary to provide some assistance to these companies to help
get them started. We are asking that you and your Committee explore
ways to help these companies become established in Wyoming. The
economic benefits would certainly help offset the devastating effects
that loss of the timber industry has had on state. The removal of
hazard trees and reduction of fuel would help preserve our tourist
industry, reduce wildfire danger, protect the watershed from further
damage and protect wildlife habitat. We are also convinced that it
would help speed the process of restoring forest health.
Any assistance you could provide would be appreciated. Thank you
for the opportunity to comment on this very important issue.
Sincerely,
Jerry D. Paxton,
Carbon County Commissioner;
Wyoming County Commissioners Public Lands Committee Member.
Submitted Report by Rick Cables, Regional Forester, Rocky Mountain
Region, Forest Service, U.S. Department of Agriculture
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HEARING TO REVIEW U.S. AGRICULTURE POLICY IN ADVANCE OF THE 2012 FARM
BILL
----------
FRIDAY, MAY 14, 2010
House of Representatives,
Committee on Agriculture,
Morrow, GA.
The Committee met, pursuant to call, at 1:40 p.m., in the
National Archives Southeast Region, 5780 Jonesboro Road,
Morrow, Georgia, Hon. Collin C. Peterson [Chairman of the
Committee] presiding.
Members present: Representatives Peterson, Scott, Marshall,
Goodlatte, Rogers, Smith, and Thompson.
Staff present: Aleta Botts, Dean Goeldner, John Konya,
Clark Ogilvie, Anne Simmons, April Slayton, Kevin Kramp, John
Mathis, and Jamie Mitchell.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
The Chairman. The hearing of the Committee on Agriculture
to review U.S. agriculture policy in advance of the 2012 Farm
Bill will come to order.
I want to welcome everybody to the hearing today. This is
our fifth hearing in a series of eight hearings that we have
been doing for the last couple of weeks. We have a number of
folks here on the Committee from the area and so instead of me
taking up the time to do a statement.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Good afternoon, and thank you for joining us for today's House
Agriculture Committee hearing. We are glad to be here in Morrow to hear
from area farmers and ranchers about the issues facing agriculture and
rural communities.
As we demonstrated in 2008, the farm bill is about much more than
just farms. We continued the safety net that protects farmers and
ranchers and provides the certainty they rely on to stay in business.
But we also made historic investments in nutrition, conservation,
renewable energy, research, rural development, fruit and vegetable
products, and organic agriculture.
While traditional farm programs have a relatively small proportion
of funding, these programs are essential to the continuing success of
U.S. agriculture. We have a system of independent farmers and ranchers
working the land, and without the certainty that farm programs provide,
these farmers would not be able to get the financing that they need to
put a crop in the ground.
I want to welcome our witnesses and thank them for taking time out
of this busy time of year to talk to us today. These farm bill hearings
are the first step in the process of writing the next farm bill. A bill
this large and that covers so many important issues takes a lot of time
and effort to get it right, and I am committed to a process that is
open, transparent, and bipartisan.
For all those joining us today in the audience, I hope that you
will also participate in this process by sharing your thoughts on the
farm bill with us. We have a survey posted on our Committee website,
and we have cards available today with that web address so that
everyone has a chance to tell the Committee about what is working and
what new ideas we should consider for the next farm bill.
We have a lot of ground to cover, so let's get started.
The Chairman. I am going to yield my time to our host
today, one of our Subcommittee Chairmen that deals with
livestock issues and dairy and so forth on the Committee. He
does an outstanding job for us, and we appreciate him hosting
the Committee here today, David Scott from this district. We
are glad to be here with you.
OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Scott. I am glad to have you here, Mr. Chairman, and I
just want to say how appreciative we are to our Chairman, who
is doing just an excellent job and has a great deal of care and
concern about our farm bill and our agriculture policies all
across the states. The Chairman wanted to make sure that he got
down here to Georgia, to make sure that we opened a discussion
up to get the input of the people in the agriculture community
from Georgia, to make sure we are putting together the right
elements of the farm bill as to how they relate to the
interests of Georgia. And I want to thank you, Mr. Chairman,
for making that decision to bring the full Committee down here.
And so I welcome everyone on the Committee to my district
here in Morrow, in Clayton County, to our wonderful facilities
here. I certainly want to thank the Georgia Archives and
Clayton State University for hosting us. And I want to welcome,
and we certainly appreciate all of our panelists, some of whom
have had to travel far to get here. We appreciate you coming
from south Georgia, west Georgia, east Georgia, all down by the
coast, to travel up today. And I certainly want to express
appreciation to all of my colleagues. We have an excellent
turnout of my colleagues from all across this state and other
parts of the nation. I just want to say thank you.
Mr. Chairman, agriculture has always been central to
Georgia's identity--Vidalia onions, Georgia peaches, peanuts,
poultry, king cotton, watermelon from a great part of our state
down in Cordele. Agriculture has always been what Georgia does
and does very well. Agribusiness is our leading business here
in Georgia. Our farmers and our ranchers producer over $7
billion in goods every year, so it is especially important that
we in Washington make sound policies that allow Georgia
producers to continue to thrive and have profitable farm
operations.
As such, I very much look forward to the perspectives of
our panelists and the insights that they can provide us into
the unique challenges and opportunities in Georgia agriculture.
And of course, Georgia does more than just grow things well.
Our state and its institutions are at the cutting edge of
agricultural research and development. We are just down the
road from the Centers for Disease Control and Prevention, which
of course is the world's preeminent epidemiology laboratory.
And we cannot forget the great work of the University of
Georgia, one of our nation's largest land-grant universities.
The University of Georgia does yeoman's work in not only
improving production agriculture, but improving our food safety
systems as well. As many of you know, we have one of the most
excellent food safety programs right down the street, the
University of Georgia's south campus down near Griffin. We do
surprisingly well, but not to others, those wonderful engineers
who populate the North Avenue trade school that we
affectionately call Georgia Tech. And of course, our friends in
middle Georgia at Fort Valley State are at the forefront of
research and education.
But I think most importantly, agriculture is ultimately
about people, not institutions. And no person is more important
than the American farmer. So I am especially interested in
hearing from the producers on our second panel, their
perspective on the farm bill and how these programs play out
here in Georgia. It will be invaluable to our efforts to craft
well functioning agricultural policy.
So without further delay, Mr. Chairman, I just want to
thank you again and I welcome everyone, and especially our
Members that have come from all over the nation to be with us
today. Thank you very much, Mr. Chairman.
The Chairman. I thank the gentleman for his hosting the
Committee here today, we appreciate it.
And now I am pleased to recognize a former Chairman of the
Committee and today the Ranking Member, Mr. Goodlatte from
Virginia, for his opening statement.
OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN
CONGRESS FROM VIRGINIA
Mr. Goodlatte. Well, thank you, Mr. Chairman. I want to
thank you for calling these hearings and being so proactive in
preparation for the debate we will have on the future of farm
policy in the 2012 Farm Bill. It seems like we just completed
the 2008 Farm Bill, seems like it was not long ago I was
sitting next to you although I was there and you were here----
[Laughter.]
Mr. Goodlatte.--in the hearings for that last farm bill. It
is hard to believe we already need to start the process all
over again.
Those who observed the 2008 Farm Bill process will remember
that it was a very difficult task. Other committees were asked
to help pay for the spending in the bill. Not only did they
bring money to the table, but they also brought their non-farm
priorities to the table.
The Chairman has already stated that process will not be
duplicated and that, if necessary, we will write a baseline
bill. Simply translated, that means we will only have the money
currently spent on our programs to work with. But even that is
not a certainty. Writing a baseline bill could be further
complicated by the fact that we do not have a budget right now.
The current Congress shows no signs of passing a budget. And
without a budget, our already difficult task will become much
harder. Writing that budget is a major challenge. No matter
which party may be in the majority in the next Congress, it
will be a difficult thing and it may entail a reduction in that
baseline.
With that in mind, the 2008 Farm Bill was an investment in
the future of rural America. Not only did we provide a viable
safety net for producers, but we also made substantial
investments in conservation and nutrition programs during a
time of need for many Americans.
It is important to note that 75 percent of farm bill
spending goes to nutrition programs, leaving less than a
quarter of the funding for all of the other functions,
including the traditional farm and conservation programs. I
fear that trend of shifting money out of farm-focused programs
will continue. Recently, during a hearing in Washington, I was
concerned to hear that the Administration's priorities differed
greatly from my producers' priorities. In a presentation to the
Committee, there was barely a mention of the safety net,
conservation program, or many of the programs my farmers
appreciate.
I think it is imperative that Congress work together with
the Administration to come up with workable solutions to the
main problems our rural communities face. Converting rural
America into bedroom communities, however, is not what I
consider a workable solution.
I have concerns beyond the USDA. I want to learn if you
share my serious concern about the effect of an over-reaching
Environmental Protection Agency. It seems every day the EPA is
coming out with a new regulation that makes it harder for
farmers and ranchers to make a living. Can we do something
about those impediments or at least give you the access to
tools that can help mitigate some of the adverse effects of
regulations?
I look forward to listening to the producers today. I look
forward to hearing your concerns about the way government can
make it easier for you to make a living at a very high-risk
enterprise. But I also look forward to hearing from you ways
that we can save money in our current farm programs. I am very
concerned about the fact that in this coming year, we are
projecting spending $3.8 trillion, based on the President's
budget, and yet expecting only $2.2 trillion in revenues, a
$1.6 trillion deficit in just 1 year. That endangers our
economic future for the entire country, but it also poses a
threat to the ability of this Committee to fund programs for
agriculture. So areas that you can identify that will help us
to save money, or to spend the money that we do have in a more
efficient fashion, are very welcome today.
I thank you all for coming today and it is a great
opportunity for us to hear from you.
The Chairman. I thank the gentleman.
We are also pleased to have with us two other Members of
the Georgia Delegation, one of whom is an outstanding Member of
our Committee, one of whom was an outstanding Member of the
Committee before he went on to bigger and better things on the
Appropriations Committee, but he is helping us in agriculture
over there. I would like to recognize them for a brief opening
statement. Mr. Marshall, one of our Committee Members, the
floor is yours.
OPENING STATEMENT OF HON. JIM MARSHALL, A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Marshall. Well, thank you, Mr. Chairman. I do not have
any prepared remarks. I would like to thank everybody who is
here as witnesses, I see a lot of friendly faces, folks I have
known for the last few years who are very important to
agriculture in Georgia and in the United States because you are
advocates. You give us guidance and we are here to get guidance
from you.
I would simply observe that this Friday we are in District
13, so drive safely when you go home.
[Laughter.]
The Chairman. I thank the gentleman.
I need to do this before I introduce Mr. Bishop. The
gentleman from Georgia, Mr. Bishop, is not a Member of the
Committee, but has joined us today. I have consulted with the
Ranking Member and we are pleased to welcome him to join us
today in the questioning of the witnesses, and also to make a
brief statement.
So welcome back to the Committee, Sanford. We have missed
you but you are doing great work over where you are, so keep it
up.
STATEMENT OF HON. SANFORD D. BISHOP, Jr., A REPRESENTATIVE IN
CONGRESS FROM GEORGIA
Mr. Bishop. Thank you very much, Mr. Chairman. I want to
personally welcome you and all the Members of the House
Agriculture Committee to Georgia.
Mr. Chairman, it goes without saying that we all owe you
and Chairman Goodlatte a sincere debt of gratitude for the
leadership that you have exhibited in guiding all of us in
shaping our nation's agriculture policy and related issues.
I want to thank my friend and colleague, David Scott, who
is Chairman of the Subcommittee of Livestock, Dairy, and
Poultry, for hosting the hearing here in his district. I would
also like to thank and welcome each of the panelists for coming
and for bringing very valuable testimony from your respective
areas. I might add that many are from the Second Congressional
District of Georgia, which I am privileged to serve--Dr. Mark
Latimore of Fort Valley State University; Mr. Andy Bell of
Climax; Mr. Ronnie Lee of Bronwood, who happens to be the new
Chairman of the Georgia Farm Service Agency State Committee;
and Mr. Hilton Segler from my hometown in Albany.
The rest of the panel may not be from the Second
Congressional District but they are all great friends, and my
staff and I often confer with them on various topics pertaining
to agriculture. So I thank you for what all of you do to make
agriculture the number one economic engine in the State of
Georgia.
As a former Member of this Committee and as a Member of the
House Agriculture Appropriations Subcommittee, I look forward
to continuing the relationship that I have had with the
Committee over the years and with the panelists that are here
today.
Mr. Chairman and Members of the Committee, I do not have to
tell you that our country is facing one of the toughest
economic periods in the history of our nation, and of course
agriculture is no exception. The uncertainty of the
marketplace, the volatility of input prices and devastating
natural disasters force our producers to face difficult
decisions every day. I commend this Committee for starting
early to craft this important 2012 legislation.
I would also like to add my thanks to you. When I am
traveling through the Second District, the farmers tell me that
they are adapting well to the 2008 Farm Bill and the changes
that were made in that legislation--the safety net, crop
insurance, other programs always seem to come up in those
conversations that I have. I fully understand that the budget
situation is more challenging than it was while putting
together the 2008 Farm Bill. The budget constraints will likely
place pressure on the Committee to look at modifications to the
commodity payment levels and the payment limit structure.
However, given their importance to Georgia's producers, and
throughout the southeastern United States, particularly in our
district, I look forward to working with the Chairman and
Members of the Committee to assure that these important
programs are reauthorized and continued in the next farm bill.
So, if changes are made, that none will be made to jeopardize
the ability of Georgia farmers and other farmers across the
nation to be successful and compete favorably in the global
marketplace.
I would like to provide you with the reason I think the
farm bill is important, and it is simple. It is to ensure that
our agrarian way of life that our country was founded on can
still be realized in rural America, and that American farmers
can continue to produce the high quality, safest, most
economical food and fiber and now fuel in the industrialized
world.
I am grateful that all of you panelists have come to share
your insight--folks who work in agriculture every day, who
understand first hand the challenges that we face in Georgia
and the Southeast, folks who live and work in agriculture,
literally where the rubber meets the road.
Finally, Mr. Chairman, and Members of the Committee, thank
you for holding the hearing here and for allowing me to share
my brief remarks.
The Chairman. I thank the gentleman and you are very
welcome to be with us. You have always been--you, Mr. Marshall,
and Mr. Scott have always been great champions of agriculture
in Georgia and we look forward to continuing to work with you.
We will have the panelists come forward, I think you know
who you are. I am going to introduce you when you get up here.
While you are moving forward to the table, I want to
introduce--we have from USDA the State FSA Director Mr. Charles
Stripling in the audience I think. Stand up. Yes.
[Applause.]
The Chairman. The Rural Development State Director Shirley
Sherrod. Shirley, welcome.
[Applause.]
The Chairman. And the State Conservationist, Mr. James
Tillman.
[Applause.]
The Chairman. Welcome, all of you, and you do a great job
on behalf of USDA and agriculture.
I also want to announce that for those of you who have
additional thoughts, we have to limit the testimony or we would
never have time to get through everything. So those of you that
haven't had time, we are taking testimony from anybody that
wants to offer it on our website, which is
www.agriculture.house.gov. We find a lot of times we get some
great ideas, great suggestions, great input from folks that
maybe are not always the ones that are at the table. So we
encourage people to put forward any information or any ideas
that they might have as we move into this new process.
As Sanford said, we want to maintain risk management, the
safety net, the ability of farmers to continue to do what they
do. I just think that we can probably do this in a simpler,
more coordinated way, and maybe if we make those kinds of
corrections, maybe in a more efficient way. And that's what we
are trying to do here, but we are of no mind to undermine the
safety net that we have for our producers.
So gentlemen, welcome to the first panel. Dr. Scott Angle,
who is Dean and Director of the College of Agricultural and
Environmental Sciences at the University of Georgia; Dr. Mark
Latimore, the Interim Dean of the College of Agriculture, Home
Economics and Applied Programs, Fort Valley State University,
Fort Valley, Georgia; Mr. Gary McMurray, Chief, Food Processing
and Technology Division, Georgia Tech Research Institute in
Atlanta; and Mr. Robert Farris, Director of the Georgia
Forestry Commission in Dry Branch, Georgia. Gentlemen, welcome
to the Committee.
Your full statements will be made part of the record. We
urge you to summarize down to as close to 5 minutes as you can
make it happen.
Dr. Angle, welcome to the Committee and you are recognized.
STATEMENT OF J. SCOTT ANGLE, Ph.D., DEAN AND DIRECTOR, COLLEGE
OF AGRICULTURAL AND ENVIRONMENTAL SCIENCES, UNIVERSITY OF
GEORGIA, ATHENS, GA
Dr. Angle. Thank you, it is an honor to be able to speak to
all of you today. I am the Dean of the College of Agricultural
and Environmental Sciences at the University of Georgia. I am
also the incoming head of the Board on Agriculture Assembly,
which is the organization that represents agricultural land-
grant universities around the United States. Our college, along
with our friends and partners at Fort Valley State University,
represent the land-grant system in Georgia, where agriculture
is the largest industry, and is responsible for 16 percent of
our total economy.
While the world has plenty of food to eat today, it is
clear that much more food will be needed in the near future. It
is predicted by the year 2050 food production will have to
double. Unfortunately, many areas of the world will be unable
to respond to this need.
Asia has poor soils and limited rainfall and will be hard
pressed to significantly increase food production. Africa
remains hopeful, yet until political instability is resolved,
the continent will not be able to feed itself. South and
Central America, while blessed with good soils and rainfall,
will not likely cut down rain forests for additional
production. And Europe, also with good soil and rainfall, will
likely produce less food in the future due to a variety of
social policies that are causing the continent to
agriculturally stagnate.
This leaves North America as the world's hope for meeting
the challenge of producing more food and feed. But even here,
production patterns are changing. As you know, water
availability in the western U.S. is declining. There will be
less food produced west of the Rockies 10 years from now than
today. And in the northern part of the United States,
temperature and sunlight will limit the amount of new food that
can be produced.
U.S. production must increase and the Southeast, in my
opinion, is where much of this additional production will have
to happen.
This is not just an obligation, it is an opportunity. In
2007, the U.S. imported $79 billion worth of food, feed and
fiber, while we exported $116 billion of the same. We have the
opportunity to widen this surplus even further.
The only way the Southeast can increase food production is
through science and technology. Yet, science and technology
development in agriculture are unlike any other industry.
Agriculture's disparate nature means that no single farmer
is capable of supporting the needed research and development
for future improvements. The vast majority, 90 percent, of
American farms are privately owned. Individually, they do not
have the means to invest in technology development and
education; hence, the need for the land-grant system of higher
education.
Some crops or commodities, such as specialized fruits and
vegetables are grown in small quantities and do not generate
sufficient income to attract outside investment.
Technologies that have a ``public'' good also see little
investment from private companies. Reduced pesticide and
fertilizer use, integrated pest management, water-use
efficiency, and natural resource conservation are all public
goods. We need research and outreach programs in each of these
areas and only local, state and Federal Governments will
support this investigation.
The land-grant system was established to fill the void of
agricultural research, education and extension when no one else
was able to do that.
Land-grant universities are crucial in most states. Note
that I did not say in all states. There are some areas where
information and research may indeed overlap. Today could be
that historical juncture when we take a critical look at the
entire land-grant system. A study to investigate potential
improvements in our national structure may well be needed and
productive to set our future course, and ensure our continued
success. We can no longer afford any duplication within our
system.
Keeping the land-grant system positioned to create and
support necessary agricultural production increases requires a
reliable, sustainable funding system. As you know, Federal
funds are provided to the land-grant system through three basic
routes. The first route is competitive funding primarily
through the USDA. This is the life blood of agricultural
research, and to a lesser extent, to extension and teaching.
The funding level for research has been growing and we hope
that it will eventually rise to the level where funding success
rates mirror that of other competitive science programs. Thank
you for your support of competitive funding for competitive
research in agriculture.
Earmarks are the second important source of funding. As
some of you know, I have been an advocate for Federal earmarks
to support agriculture research. Federal earmarks remain the
only process for supporting vital research that falls between
the cracks of the high-minded studies supported by the National
Science Foundation, USDA's AFRI, and that of profit-driven
research that private companies might support. So until the
scientific system is changed to recognize the importance of
this highly applied research, Federal earmarks are just about
the only way for this very important research to be supported.
More transparency, limited high level peer review, and greater
accountability may allow a skeptical public to feel greater
comfort with this process.
The third source of funding is traditionally referred to as
formula funds. The formula is a complicated equation that takes
into account farmer numbers and the number of farms to
distribute available Federal funds to each state. For more than
30 years, I have been in the land-grant system, and the drum
beat against formula funds has been steady. Yet, each year we
make protecting these funds our highest priority.
We so strongly support these funds against a background of
concern for the process, because formula funds provide the
infrastructure that allows both competitive and earmarked funds
to be used successfully. Unlike many other disciplines, you
cannot turn on and off our infrastructure when competitive and
earmarked funds come and go. Herds of cattle, flocks of
chickens, or orchards of oranges must be maintained in a system
of research and training for use by our faculty.
We are proud of the advancements we have helped agriculture
reap, environmental improvements we have furthered in the
industry and hands-on, extension education we have provided
that contributed to the remarkable success of agriculture in
the United States. But challenges loom large on the horizon. We
need help in four major areas that will be discussed in the
2012 Farm Bill. These are especially important to the Southeast
where biomass and specialty crops are rapidly growing.
Specialty crop block grants to states for research and
marketing: This is a very rapid method to get money to research
and education system when new and emerging diseases, weeds and
insects are found.
Second, Specialty Crop Research Initiative: Many specialty
crops, as previously noted, are not of sufficient acreage to
warrant industry funding, nor is the basic research environment
competitive for these crops. Therefore, specialty crop research
initiatives again are one of the few sources for funding for
these relatively small crops.
Biomass research and development programs: Most of us
realize that biomass is important to agriculture and our
society. The exact role agriculture will play in energy
production has not yet fully been defined and needs additional
government support before the private sector can fully carry
this burden.
And last, the Biomass Crop Assistance Program. Scale up for
production remains risky obviously in biomass production. The
USDA assumption of some degree of risk will encourage the
private sector to enter this segment of agriculture and
forestry more quickly.
So to conclude, agriculture has a bright future in most of
the United States. It is going to change, but the unique
partnership between local, state and Federal Governments as
well as the private sector will make sure this industry
continues to be successful. Strategic security needs for the
United States, a pressing need for a positive trade balance and
the humanitarian need to feed the world are coming together in
a way today that makes agriculture more important than ever.
Thank you.
[The prepared statement of Dr. Angle follows:]
Prepared Statement of J. Scott Angle, Ph.D., Dean and Director, College
of Agricultural and Environmental Sciences, University of Georgia,
Athens, GA
Thank you for the opportunity to speak to you today. I am the Dean
of the College of Agricultural and Environmental Sciences at the
University of Georgia. I am also the incoming head of the Board on
Agriculture Assembly which is the organization that represents
agricultural land-grant systems around the United States. Our college,
along with our friends and partners at Fort Valley State University,
represent the land-grant system in Georgia, where agriculture is the
largest industry and is responsible for 16 percent of the state's
economy.
My background is in the area of soil science. I have specifically
worked on ways to use agriculturally friendly means to clean up
polluted soil. And, I am a farm owner.
I am here to talk about my assessment of agriculture of today and
to discuss what I see as the primary issues facing agriculture both in
the short term and the long term. Most of what I discuss will relate to
the southeastern region of our nation.
While the world has plenty of food today, it is clear that much
more food will be needed in the near future. It is predicted that we
need to double world-food production by the year 2050. Unfortunately,
many areas of the world will be unable to respond to this challenge.
Asia has poor soils and limited rainfall and will be hard-pressed
to significantly increase food production. Africa remains hopeful, but
until political instability is resolved, the continent will never be
able to feed itself. South and Central America, while blessed with good
soils and rainfall, will not likely cut down rainforests for enhanced
production. And Europe, also with good soil and rainfall, will likely
produce less food in the future due to a variety of social policies
that are causing the continent to stagnate.
This leaves North America as the world's hope for meeting the
challenge of producing more food and feed. But even here, production
patterns are changing. As you know, water availability in the western
U.S. is declining. There will be less food produced west of the Rockies
10 years from now than is produced there today. And in the northern
part of the U.S., temperature and sunlight will limit the amount of new
food that will be produced.
U.S. production must increase and the Southeast will be, in my
opinion, the primary area where production must and will increase.
This is not just an obligation; it is an opportunity as well. In
2007, the U.S. imported $79 billion of food, feed and fiber while we
exported $116 billion of the same. We have the opportunity to widen
this surplus even more. As noted, the Southeast is especially well
positioned for increased production. The Port of Savannah and an
efficient transportation infrastructure make this is an ideal region
for growth.
It is my opinion that past Federal policies have not always focused
on southeastern agriculture. However, with the need for this region to
step up production, we must have good policies coming from the new farm
bill that will allow this region to meet the challenge and obligation
to produce more food for the rest of the world.
Federal policy can either promote production in the Southeast,
allowing this need to be met, or it can limit production, forcing more
of the world's poor to continue to go hungry.
The only way that the Southeast can increase food production is
through science and technology. Yet, science and technology development
in agriculture are unlike any other industry. Boeing Corporation and
the Ford Motor Company have in-house research and development
capabilities as well as training. They have all the needed support for
future innovation. Agriculture, however, is different.
Agriculture's disparate nature means that no single farmer is
capable of supporting the needed research and development for future
production improvements. The vast majority (90%) of American farms are
privately owned. Individually, they don't have the means to invest in
technology development and education; hence, the need for the land-
grant system of higher education.
Much of the needed research is to find ways to reduce production
costs with the goal of increasing profitability. While some research is
generated within the private sector, the private sector has no
incentive to help reduce inputs which also reduces their profits.
Further, no private concern will invest in technologies that have
limited potential for economic return.
Some crops or commodities, such as specialized fruits and
vegetables, are grown in small quantities and don't generate sufficient
income to attract outside investment.
Technologies that have a ``public good'' also see little investment
interest from private companies. Reduced pesticide and fertilizer use,
integrated pest management, water-use efficiency, and natural resource
conservation are all public goods. We need research and outreach
programs in each of these areas and only local, state and Federal
governments will support this important investigation.
The land-grant system was established to fill this void of
agricultural research, education and extension. Our Federal, state and
local partnership has become the envy of the world. Many studies of
agricultural policy credit much of the success in American agriculture
to the knowledge provided by the land-grant system.
Our country has come a long way since the Great Depression when
nearly four out of every ten Americans were involved in food
production. Today, as you know, less than two percent of the country's
population work on the farm. The cost of our food today is much less of
our total income than it was when 40 percent of our population was
working on a farm. Many of the improvements that help farmers produce
abundant, affordable food for exponentially more people came about
through technology developed at land-grant institutions. The land-grant
system is poised to continue to increase production efficiency to meet
the challenges ahead of us.
Land-grant universities are crucial in most states. Notice that I
did not say land-grant colleges of agriculture are needed in every
state. There are some areas where information and research may indeed
overlap. Today could be that historical juncture when we take a
critical look at the entire land-grant system. A study to investigate
potential improvements in our national structure may well be needed and
productive to set our future course and ensure our continued success.
Until recently, merging land-grant programs was nearly impossible,
mainly due to limitations in technology. But, as new and better
communications methods are developed, we should begin to look at
program and system integration. Reductions in state support may drive
this process. The Federal Government should get ahead of the issue now
to make sure the needs of agriculture are met, duplication is avoided
and efficient use of available resources is maximized.
Making needed systemic changes won't be easy. Agricultural
production is quite complex, especially in the Southeast. For example,
Georgia produces over 100 major commodities with a value of at least
$10 million each. And while similar crops are grown in multiple states,
best management production practices vary from state to state because
of differences in soil, climate, markets, disease pressure and
especially water. Information from one state is often not applicable to
production in another state.
Keeping the land-grant system positioned to create and support
necessary agricultural production increases requires a reliable,
sustainable funding stream. Federal funds are provided to the land-
grant system through three basic routes:
Competitive funding via the USDA is the life blood of agricultural
research and to a lesser extent, teaching and extension. The funding
level for research has been growing and we hope that it will eventually
rise to the level where funding success rates mirror other competitive
science programs. Thank you for your support of competitive funding for
research.
Earmarks are the second important source of funding. As some of you
know, I have been an advocate for Federal earmarks to support
agriculture research. Federal earmarks remain the only process for
supporting this vital research that falls between the cracks of the
high-minded studies supported by the National Science Foundation,
USDA's AFRI and profit-driven research that private companies might
support. So, until the scientific system is changed to recognize the
importance of this highly applied research, Federal earmarks are the
only source to support it. Changes are needed to make the process more
transparent, but I remain adamant that earmark-supported research is
vital to the success of our farming community. More transparency,
limited high level peer review, and greater accountability may allow a
skeptical public greater comfort with the process.
The third source of funding is traditionally referred to as formula
funds. The formula is a complicated equation that takes into account
farmer numbers and the number of farms to distribute available Federal
funds to each state. For the more than 30 years I have been in the
land-grant system, the drum beat against formula funds has been steady
and each year we make protecting these funds our highest priority.
We so strongly support these funds against a background of concern
for the process because formula funds provide the infrastructure that
allows both competitive and earmarked funds to be used successfully.
Unlike many other disciplines, you can't turn our infrastructure on and
off when competitive or earmarked funds become available. Herds of
cattle, flocks of chickens or orchards of oranges must be maintained in
a system of research and training farms for our faculty's use.
When competitive funds are awarded to an institution, research and
training can be initiated quickly. Most agricultural problems need
quick answers. New diseases or insects can decimate an industry within
just a few years if no solution is discovered. The U.S. system of land-
grant research and information transfer makes this immediate response
to new and emerging problems possible.
I want to emphasize the importance of Cooperative Extension to the
system. Without a way to deliver research information to those who need
the help, why conduct the research? In fact, most other scientific
disciplines are now discovering that information transfer is a vital
link to successful research. They are searching for effective
information delivery mechanisms. In agriculture, we are fortunate to
have discovered this key to success nearly 100 years ago, and that
Congress had the foresight to authorize establishing Cooperative
Extension systems in each state.
Other countries seeking to improve their agricultural systems
typically identify extension-type programs as their greatest need. We
are the envy of the rest of the world.
At the university level, other colleges and disciplines see
Cooperative Extension's value and remarkable tradition of success. Many
are looking for ways to tap into extension's grassroots-education
capabilities or to reinvent similar information delivery systems.
We are proud of advancements we have helped U.S. agriculture reap,
environmental improvements we have furthered in the industry and hands-
on, extension education we have provided that contributed to this
remarkable success. But, challenges loom large on the horizon. We need
help in four major areas that will be discussed for the 2012 Farm Bill.
They are especially important to the Southeast where biomass and
specialty crops are rapidly increasing.
1. Specialty crop block grants to states for research and
marketing.
This is a very rapid method to get money to the research and
extension system when new and emerging diseases, weeds and
insects are found.
2. Specialty Crop Research Initiative.
Many specialty crops, as noted previously, are not of sufficient
acreage to warrant industry funding, nor is the research
basic enough for competitive funding.
3. Biomass research and development program.
Most of us realize that biomass is important to agriculture and
our security. The exact role agriculture will play in
energy production has not been fully defined and needs
additional government support before the private sector can
carry the burden.
4. Biomass Crop Assistance Program.
Scale up for production remains risky. USDA assumption of some
degree of risk will encourage the private sector to enter
this industry.
Agriculture has a bright future in most of the United States. It is
going to change, but the unique partnership between local, state,
Federal Governments and the private sector will make sure this industry
continues to be successful. Strategic security needs for the U.S., a
pressing need for a positive trade balance and the humanitarian need to
feed the world are coming together in a way that makes agriculture more
important today than ever.
The Chairman. I thank the gentleman.
Dr. Latimore, before you start--at the Committee in
Washington, we do not normally introduce the Members, I should
have done that before we got started, because we are not in
Washington, obviously.
So I would like to welcome a couple of neighbors here, Mr.
Rogers from Alabama--who I will do by seniority--a Member of
the Committee has joined us today, as well as Mr. Bright from
Alabama, one of our new Members on our side of the aisle. And,
Mr. Adrian Smith from the western \2/3\ of Nebraska. You have
what, 65 counties or something.
Mr. Smith. Sixty eight.
The Chairman. A big area out there--from Nebraska. And, Mr.
Glenn Thompson from Pennsylvania, who is also a relatively new
Member of the Committee. So we appreciate them being with us
today. And I apologize for not introducing them earlier.
Dr. Latimore, welcome to the Committee and you are
recognized.
STATEMENT OF DR. MARK LATIMORE, Jr., INTERIM DEAN, COLLEGE OF
AGRICULTURE, HOME ECONOMICS AND
APPLIED PROGRAMS, FORT VALLEY STATE UNIVERSITY, FORT VALLEY, GA
Dr. Latimore. Good afternoon. Mr. Chairman and Members of
the Committee, we just recently had a name change at the
College of Agriculture to the College of Agriculture, Family
Sciences and Technology. As Interim Dean----
The Chairman. Dr. Latimore, we will try to get these
microphones right. That one works I guess. Okay, that sounds
good.
Dr. Latimore. All right. As I said, we just recently had a
name change to the College of Agriculture, Family Sciences and
Technology which we are very happy about and we are still
trying to get used to. To the Committee, especially the Members
that are not from the State of Georgia, Fort Valley State
University is an 1890 land-grant university, about 115 miles
south of here. We have about 3,500 students, there are about 50
disciplines at the University, 11 in the College of
Agriculture. We have a Masters program as a graduate program in
animal science, as well as biotechnology.
I am testifying this afternoon on behalf of Fort Valley
State, but also keep in mind the other 1890 land-grant
universities as well as our colleagues at the 1862s, especially
when we engage in the National Institute of Food and
Agriculture Sciences.
The restructuring of some USDA agencies and the creation of
the National Institute of Food and Agriculture was clearly a
key element in the Title VII of the 2008 Farm Bill. So with the
structural change, this afforded the 1890s opportunities that
they did not have in the past.
For example, the 1890 Capacity Building Grants Program was
expanded to include extension activities in addition to
research activities and education.
The Expanded Food and Nutrition Education Program was
amended to provide at least $100,000 to 1890s and the formula
for distribution of future funds was changed.
Authorization of 1890 Cooperative Extension Program was
changed to index it to the Smith-Lever Program at a higher
level, and there were a few others as well.
As we look at the changes that are taking place, we still,
in the 1890 community and the 1862 community, we still suffer
in the area of agriculture research from the lack of funding,
to really conduct a program in order to aid in solving the
problems that our clients, rural America, is faced with.
The 1890s have never forgotten the expectation that as a
historical black land-grant university or institution, they
must be relevant to the multitude of the beginning, the small
and medium sized farmer, as well as the limited resource
producer and entrepreneur. With that in mind, we have to
provide programs that are going to bring about a wider range of
skills and ideas for agriculture, improve the quality of life
for these individuals in rural America. We have a mobile
technology unit that we have been using for quite some time,
and it has been instrumental in affording us the opportunity to
really educate rural America, not only to different programs in
agriculture, but also to the use of computer technology. So
that has been very successful for us.
Services to the country's low-income and limited resource
families and communities is no less--and may be even more--
important today as it was in the early days of the national
land-grant system. So these are challenges which we are faced
with in 2010.
So when we look at the 1890s, and of course Fort Valley
State University, we are engaged in an integral part in
creating opportunities that will build a wholesome living and
learning through responsible pursuit of their goals and
aspirations. So stronger partners, this is one of the things
that we definitely need to engage in, partnerships, increasing
partnership sizes. What this means is increasing the size of
the funding amount, not simply including us as eligible to
compete in a funding pool that has not increased in size. So as
we continue to increase and try to solve the problems which we
are faced with, we have to consider the opportunities that are
there and take advantage of those.
So when we look at the 1890 land-grant universities and the
mission which they serve, we have a need to increase funding.
There is a need to increase the funding in order for any of
these opportunities to take place.
Agriculture diversification and marketing strategies are
some things that we definitely need to enhance. These are:
increasing the viability and competitiveness of farms through
sustainable practices; improving the nutrition, diet and health
of rural Americans; improving their economic viability; after-
school enrichment programs definitely through 4-H and skills in
science, technology and math; improving the technology
proficiency for farmers, senior citizens, youth and other rural
Americans; and providing educational outreach to the community
regarding affordable housing is also a part that we must
consider.
Without additional funding, the 1890 Extension will be
unable to address the needs that are core to its mission, and
will also fail to respond to the clients that need their
assistance. The 1890 Extension funding is authorized at 20
percent of Smith-Lever, but is currently funded at 14.3
percent. So when we look at programs, not only through
extension, but also research, we have a strong small ruminant--
the Georgia Small Ruminant Research Center, bioenergy
activities as well as other sustainable agricultural practices.
These are just as important to the small farmers as other
farmers throughout the country.
We would like to thank you for the opportunity for sharing
with you some of our concerns and some of the opportunities
which we are faced with through the 1890 land-grant system.
[The prepared statement of Dr. Latimore follows:]
Prepared Statement of Dr. Mark Latimore, Jr., Interim Dean, College of
Agriculture, Home Economics and Applied Programs, Fort Valley State
University, Fort Valley, GA
Mr. Chairman and Members of the Committee, I am Mark Latimore, Jr.,
Interim Dean of the College of Agriculture, Family Sciences and
Technology at Fort Valley State University, Fort Valley, Georgia. Thank
you for the opportunity to testify at today's hearing to offer our
views on the U.S. Department of Agriculture's Research, Education, and
Extension Programs, especially those that benefit the 1890 Land-Grant
Universities.
Fort Valley State University was established in 1895 and was
designated a land-grant university pursuant to the Second Morrill Act
(1890). Presently, Fort Valley State University has more than 3,500
students in over 50 disciplines. Our particular college offers
undergraduate programs in 11 areas and graduate programs in Animal
Nutrition, Reproductive Biology, and Animal Products Technology, Plant
Biotechnology, Animal Biotechnology and Applied Biotechnology.
While I am testifying today on behalf of Fort Valley State
University, I should also point out that we are a member of the
Association of Public and Land-grant Universities (APLU) where we work
closely with our colleagues at other 1890s and 1862s land-grant
universities to support the periodic reauthorization of the
agricultural research, extension, and teaching programs at the National
Institute of Food and Agriculture (NIFA) and the annual appropriations
for these programs.
Restructured of some USDA Agencies and creation of the National
Institute of Food and Agriculture was clearly the key element of Title
VII of the 2008 bill. This structural change in the research
organization at USDA will foster better coordination between the
department's extramural capacity building programs for 1890
Institutions (Evans-Allen and 1890 Extension) and their sister programs
for research and extension at 1862 Institutions (Hatch and Smith-Lever,
respectively). The new structure will also ensure better coordination
and integration of USDA's intramural research, conducted by the
Agricultural Research Service (ARS) and U.S. Forest Service.
As you know, the 2008 Farm Bill included many provisions
specifically intended to benefit 1890 Institutions including Fort
Valley State University:
The 1890 Capacity Building Grants Program was expanded to
include extension activities in addition to research and
education.
The Expanded Food and Nutrition Education Program (EFNEP)
was amended to provide at least $100,000 per year for 1890
Institutions and the formula for distribution of future funds
was changed.
The 1890 Universities were authorized to participate in the
Animal Health and Disease Research Program.
Authorization for the 1890's Cooperative Extension Program
was changed to index it to the Smith-Lever Program at a higher
level.
The Smith-Lever Act was revised to allow the 1890
Universities to participate in the Children, Youth and Families
Research Program.
And, the 1890 Universities were made eligible to participate
in the McIntire-Stennis Cooperative Forestry Program.
Working through APLU, the land-grant system has begun a
comprehensive process to develop recommendations for the next farm bill
and we expect to have our suggestions fully developed well in advance
of any Committee action. However, in the absence of specific
recommendations for new programs or amendments to existing programs, I
can assure you that the greatest need in agricultural research remains
funding--regardless of whether such research is conducted at an 1890
Institution, a state agricultural experiment station, or USDA. Many of
the opportunities for 1890 Universities provided by the 2008 Farm Bill
are only beneficial to us if Congress actually increases funding for
these programs.
For example, funds provided for the McIntire-Stennis Cooperative
Forestry Program are allocated to governors--who then divide those
dollars among institutions of higher learning within their state.
Adding 1890 Institutions to the list of eligible schools without also
increasing funding for the program is just a reallocation of already-
too-scarce resources.
The 1890s have never forgotten the expectation that as Historically
Black Land-Grant Institutions, they must be relevant to the multitude
of smaller, limited resource producers and entrepreneurs. When these
clientele are assisted, as is the 1890 mission, these individuals have
great potential of (1) bringing a much widened range of skills and
ideas for agriculture and natural resource practices, (2) improving the
quality of life of rural Americans through computer literacy training
via the Mobile Technology Laboratory, (3) of bringing economic activity
to rural communities, and (4) of supplying a variety of specialized
market niches. Without this segment of the food and natural resource
system, the nation would be lacking in the richness of its agricultural
and renewable natural resource based businesses. Service to the
country's low-income or limited resource families and communities is no
less (and may be even more) a land-grant mandate today as in earlier
days of the National Land-Grant System. The 1890s, and of course Fort
Valley State University, are integrally involved in creating a society
where all people have opportunities for wholesome living and learning
through responsible pursuits of their goals and aspirations. We are
able and anxious to be stronger partners in establishing a region and a
world with a safe and plentiful supply of food, fiber, fuel and water
for all, where natural resources and businesses are managed in ways
that are sustainable and serve the common good. Increased funding
allows more inclusiveness of universities like ours to help solve the
complexities of our times. That means increasing the size of the
funding amounts, not simply including us as eligible to compete in a
funding pool that has not increased in size.
The 1890 Land-Grant Universities have a unique mission of serving
the beginning, small to medium limited-resource and hard to reach
clientele. The public outreach effort of these universities is known as
Cooperative Extension.
These universities have been enormously successful in addressing
issues and challenges confronting the limited resource clients, but the
unmet needs have become more demanding. These clients are confronted
with severe difficulties during normal conditions, but the economic
recession has escalated their needs for assistance from the 1890
Universities.
These Universities depends primarily on Federal funds allocated
through NIFA to meet the needs of the clients. These funds are matched
by the state, but state funding remains stagnant if the Federal funds
are not increased. It is evident that these universities are faced with
increasing needs from their clientele, but the level of funding has not
kept pace.
Additional funding is needed to develop programs that are critical
to the clients served by the 1890 Universities. An increase in funding
will enable Extension to focus on the following:
1. Agricultural diversification and marketing strategies to reverse
the decline of small minority owned farms.
2. Increasing viability and competitiveness of farms through
sustainable practices.
3. Improving nutrition, diet and health of limited-resource
families with emphasis on reducing obesity, utilizing the
Mobile Technology Laboratory as planned through Fort Valley
State University Cooperative Extension Program Family and
Consumer Sciences Program.
4. Improving the economic viability of rural families, including
reducing energy consumption.
5. After school enrichment programs to enhance 4-H and youth skills
in science, technology and math.
6. Protecting the environment and natural resource management.
7. Improving technology proficiency for farmers, senior citizens,
youths and other rural Americans through our Mobile Information
Technology Center.
8. Landowner Initiative for Forestry Education (LIFE) Program
designed to provide education opportunities for landowners in
sustaining and/or increasing their land productivity.
9. Financial Literacy and Consumer Economics
10. Providing educational outreach to the community regarding
affordable housing.
Without additional funding, the 1890 Extension will be unable to
address the needs that are core to its mission, and will also fail to
respond to the clients that need their assistance. 1890 Extension
funding is authorized at 20% of Smith-Lever, but is currently funded at
14.3%. In the 2012 Farm Bill, we would like to see an increase in the
authorization level for 1890 Extension. This will enable the 1890
universities to continue to receive Extension funding at a level to
respond to the needs of its clientele.
Research (Evans-Allen and 1890 Capacity Building Funding at Fort Valley
State University, ongoing.)
Small Ruminant Research
The Georgia Small Ruminant Research and Extension Center (GSRREC)
at Fort Valley State University (FVSU) is the largest facility of its
kind east of the Mississippi River and is recognized as a national
leader in goat research. Small ruminant scientists, producers, and
individuals interested in goat production from all over the world visit
GSRREC to learn more about our research programs. Current programs
include increasing muscle mass in native goats by modifying the genome
(particularly the myostatin gene), embryo transfer technology in goats,
developing basic roughages and dietary supplements for dairy and meat
goats, developing a year-round grazing system, genetic-marker assisted
selection for internal parasite control in sheep, invasive vegetation
management with sheep and goats, breed characterization and genotype x
environment interaction studies with meat goats and sheep, improving
meat goat management methods, improving meat quality in small ruminants
using pre- and post-slaughter methodologies, developing value-added
goat meat and dairy products, and food safety.
The resources and project activities of the 1890 Capacity Building
grant helped us achieve successful simulation of goat milk to human
milk with respect to milk fat and protein compositions. The resources
and project activities of Evans-Allen formula project provided us with
the opportunity to develop and evaluate the reduced-fat goat milk
cheeses. Studies on food and nutritional qualities of reduced fat goat
milk cheeses are almost non-existent. Consumer demand for reduced-fat
cheeses has been continuously increasing due to the relationship
between dietary fat consumption and coronary heart diseases, stroke,
and diabetes. The production and marketing of reduced-fat dairy goat
products is expected to have great impacts not only on health of
consumers but also on the economic viability of limited resource dairy
goat farmers and the industry. Although the reduction of fat in goat
milk cheeses have some challenges in consumer acceptability of the
products due to defects in texture, flavor and sensory qualities with
reference to the full-fat counterparts, the results of the project
confirmed that reduced-fat goat cheeses can be successfully produced.
Through these project activities and resource allocations, we have been
able to produce a Ph.D. student at the Department of Food Science &
Technology, University of Georgia, Athens, GA, who finished her degree
in 2007 by undertaking part of this research project as her Ph.D.
dissertation research and experimentations. In addition, we have been
able to produce an MS student in Animal Science program at Fort Valley
State University, who has performed parts of this research project as
his Master's thesis research. These projects greatly helped us in
training and producing minority food scientists at FVSU.
Development of value-added products using goat meat (chevon) and
quality studies conducted at FVSU, and dissemination of information
through our outreach activities have increased awareness among
consumers on the benefits of chevon. Food companies have approached
FVSU regarding releasing chevon products to national and international
markets. So far, six graduate students have been trained in chevon
product technology and food safety.
FVSU is the lead institution for the Southern Consortium for Small
Ruminant Parasite Control (SCSRPC), an international research group
dedicated to finding non-chemical methods of controlling
gastrointestinal nematodes in sheep and goats. Small ruminant
parasitology research was initiated at FVSU 14 years ago, and the
University is now the lead institution for an international consortium
of Scientists, Extension Educators, Veterinarians, and producers
developing and testing novel, non-chemical methods of controlling
gastrointestinal nematodes (GIN) in goats and sheep. The Southern
Consortium for Small Ruminant Parasite Control (SCSRPC) includes 20
institutions from ten states in the southern USA, and from Puerto Rico,
the U.S. Virgin Islands, and South Africa. The Institutions include,
but not limited to Land-Grant 1890 Universities (Delaware State,
Langston, Kentucky State, North Carolina A&T State, Virginia State),
1862 Land-Grant institutions (Auburn, Louisiana State University, North
Carolina State University, Texas A&M University, The University of
Georgia, Virginia Tech) and USDA Research Stations (Booneville, AR;
Brooksville, FL) in the U.S., as well as overseas institutions,
including The University of Puerto Rico, University of the Virgin
Islands, and Pretoria University (South Africa).
All of the research of our Consortium to date has included a strong
extension component, with emphasis on information dissemination to
producers and the general public through extension publications, a
consortium web site (SCSRPC.org), and producer workshops. Including
producers in our SCSRPC research and outreach planning meetings has
allowed our work to remain relevant to producer needs. These meetings
are held twice per year (at least once at FVSU) to foster unity and
creativity in developing new initiatives and overcoming challenges.
Following this principle, FVSU and our Consortium members have been
very successful at attracting funding to support this program,
published numerous scientific and producer-oriented manuscripts, and
positively impacted sustainability of small ruminant industries in the
U.S. and overseas. Parasite research at GSRREC and other institutions
of the SCSRPC have greatly impacted small ruminant producers in the
U.S. and overseas by reducing dependence on expensive, ineffective
anthelmintic drugs. Specific impacts of the Consortium are listed
below:
1. Over 16,000 FAMACHA (Parasitologist Fafa Malan, Charts) cards
sold for on-farm use at over 300 FAMACHA workshops held
throughout the United States, Puerto Rico, and the U.S. Virgin
Islands.
2. Average farmer can save 70-80% of his drug treatment costs for
controlling internal parasites using this system (Savings of
$200-$400/year for every 100 breeding ewes or does)
3. Research with Sericea Lespedeza (low-input, warm-season legume
high in condensed tannins) to control sheep and goat parasites
has created a tremendous surge in interest with U.S. farmers in
planting this forage for grazing, or making hay or pellets,
particularly for use in organic livestock production systems.
4. Changed perception of U.S. farmers from the exclusive use of
chemical dewormers (anthelmintics) to try to eliminate internal
parasites in grazing animals, which has led to a world-wide
epidemic in anthelmintic resistance, to using integrated
systems, including grazing management and other non-chemical
control strategies, to keep parasitic infection rates below an
economic threshold (Increasing profits by managing parasite
levels rather than trying to eradicate parasites).
Specialty Plant Biotechnology
The recent sociodemographic changes have created enormous
opportunities for the American farmers to grow high value specialty
crop plants. Research activities on specialty plants biotechnology to
benefit wholesome healthcare and balanced nutrition are geared to
identify medicinal plants through phytochemical screening, application
of biotechnology to regenerate plants and enhance their value-added
characters, and investigations on the biomedical evaluation. We also
plan to emphasize conservation of these plants for their sustainable
uses. The introduction of nutraceutical plants for health benefits and
developing them as premium crops for local growers has been a major
spotlight. Our fundamental goal is aimed at improving wholesome
healthcare and balanced nutrition through specialty plants
biotechnology research.
In collaboration with Wayne State University, we have been able to
establish that oral administration of Scutellaria (medicinal plant)
extract could significantly delay the in vivo growth of gliomas in both
intracranial and subcutaneous tumor models.
The in vitro studies also showed significant dose-dependent
inhibition of F98 (rat malignant glioma cell line) cell proliferation
by specific inhibitors of PI3K as well as NF-kB, confirming important
roles for these signaling molecules in glioma survival and
proliferation.
Bioenergy
Biofuel Research for lowering dependence on foreign oil is also
timely. Plants are a rich source of non-edible oil (for biodiesel) and
selected carbohydrates (for fermenting into ethanol). This research
aims at screening plants for rapid biomass production, oil yield and
ways to convert the high sugar reserve trapped as cellulose into
ethanol. Biofuel Research may lower dependence on foreign oil. Selected
specialty plants, those with medicinal, nutraceutical and biofuel/
bioenergy values, are being studied for their in vitro plant
regeneration, genetic enhancement for value-added traits including
quality and quantity of phytomedicines, healthy nutrients, and
biofuels. The goals of our biofuel research are to produce biodiesel
and ethanol for lowering dependence on foreign oil utilizing sweet
sorghum and native grasses and Paulownia.
Paulownia elongata is being studied as a fast growing tree to meet
biomass feedstock requirement for South-Eastern USA. Preliminary
analysis is encouraging as compositional analysis revealed 50%
cellulose, 13% hemicelluloses and 21% lignin.
Power generation companies have visited our experimental research
farm to see the potential uses of Paulownia in moving toward biomass-
based power generation.
Sustainable Agriculture
The highlights of our sustainable agriculture research findings are
as follows:
Due to the hard pan below the plow layer in the coarse textured
soils of the Southeast, the best option for conservation tillage in
this region was strip-till rather than no-till.
Winter cover crop can substitute up to half the nitrogen fertilizer
needs of a number of crops.
Napier grass is among the highest biomass yielding energy feedstock
in the southern United States yielding more than switchgrass and energy
cane.
An organic garden/classroom demonstration (approximately 12 acres)
is being developed.
Teaching
Classroom/Laboratory to Enhance Teaching and Training
Forestry. Future Farmers of America (FFA) Forestry Career
Development Events have been conducted annually since 2008 at the
Outdoor Forestry Classroom/Laboratory site. One hundred and fifty high
school students from nine high schools have participated in this
activity each year. At least twenty high school teachers have attended.
Foresters employed with USDA, the Georgia Forestry Commission and
Weyerhaeuser assisted with the Forestry Career Development Event
activities. Foresters from these agencies interacted with the high
school students discussing career opportunities with the forestry
industry.
Two Summer Forestry Camps have been conducted that were attended by
80 students and ten teachers.
Biotechnology. Fort Valley State University (FVSU) received three
NIFA grants to establish and support an undergraduate degree program in
Plant Sciences with a major in Biotechnology in 2001 through 2010.
Since its inception, scholarships have been awarded to more than 50
deserving students. Four new courses in Biotechnology/Genetic
Engineering have been introduced into the curriculum.
Environmental Soil Sciences. An 1890 Capacity Building Grant
afforded this Program GPS/GIS equipment to include an ATV mounted soil
probe for sampling.
Extension (1890 Extension Funding Formula)
Successes in Extension at FVSU range from:
Collaborative production of sweet sorghum with local
industry in the production of ethanol.
Utilizing the Mobile Technology Transfer Center ( Mobile
Laboratory with 25 computer stations) to train small farmers,
migrant workers, seniors for medicare programs for seniors,
youths and seniors on successful test taking skills, etc.
One-on-one county extension agents training from proper
fertilization of crops to nutritional food consumption.
Seeking enterprises for farmers to diversify or replace
existing enterprises that are no longer profitable.
USDA 1890 Facilities Grant
Projects funded through USDA Facilities Grants for Fort Valley
State University include but are not limited to:
Agricultural Technology Conference Center (a Cooperative
Extension training facility), 2007.
Agricultural Arena and Pavilion, under construction.
Stallworth Agricultural Research Station, 1983.
From USDA/NIFA Website (for the period 2003-2005)
Results and Impacts for 1890 Land-Grant Institutions Programs:
1890 Institution Teaching and Research Capacity Building
Grants Program.
Evans-Allen 1890 Research Formula.
1890 Extension Formula.
1890 Facilities Grant Program.
1890 Institution Teaching and Research Capacity Building Grants Program
The following represents results and impacts for the 1890
Institution Teaching and Research Capacity Building Grants Program from
activities that occurred between June 2003 and June 2005.
Alabama A&M University
The NIFA funding has enabled Alabama A&M University to incorporate
advanced technology into the department's degree programs in
Environmental Science, Soil Science, Forestry, and Plant Science. It
established a minor (18 course credits) in Remote Sensing, GIS, and GPS
technology for each degree program in the School of Agricultural and
Environmental Sciences. The laboratory can accommodate 20 students for
individual instruction or a maximum of 40 students (two per computer)
for introductory courses. The GIS laboratory is shared with faculty in
the Department of Community Planning and Urban Studies to enhance
courses and degree programs in Urban Planning.
Delaware State University
A NIFA teaching grant at Delaware State University (DSU) provides
service-based field experience in resource management at Trap Pond
State Park (TPSP) in Delaware. The project has linked DSU with the
Department of Natural Resources and Environmental Control (DNREC)
headquarters in Dover, DE. In 3 short years, the research program at
TPSP has become a major field program in the Department of Agriculture
and Natural Resources, providing an ongoing research area in which
student projects and masters' theses can be developed and carried out.
The equipment and field training provided by this project enabled DSU
undergraduate and graduate students to participate in real-time
research projects of present-day interest to resource managers in the
state. This project played a central role in the rewriting of the
undergraduate curriculum in Environmental Science and the masters'
curriculum in Natural Resources. All students in the Environmental
Science and Natural Resource education programs (30 majors as of 2003-
2004) have been exposed to the equipment and newly modified curricula
and courses. The project is providing valuable man-hours for park
research and data sets that would otherwise not be obtained. Data from
the project have been made available to the state for use in park
management both at TPSP and at other parks in Delaware, and the data
are being made available to the public on an outreach website.
Fort Valley State University
Fort Valley State University (FVSU) received two NIFA grants to
establish an undergraduate degree program in Plant Science with a major
in Biotechnology in 2001. Since its inception, FVSU has awarded
scholarships ($2,000/year) to 32 deserving students. Four new courses
in Biotechnology/Genetic Engineering have been introduced. Twenty-eight
students participated in the Research Experience for Undergraduate
Program in Biotechnology during the academic year, working in the
developed infrastructure facilities to perform cutting-edge research in
Molecular biology/ biotechnology at Fort Valley State University. In
addition to receiving hands-on experience in the laboratory, these
students also participated in enrichment activities such as GRE
workshops and interacted with distinguished speakers. The invited
speakers represent regional diversities, Federal labs and industry.
FVSU has successfully established a partnership with major research
institutions to provide summer research experiences for undergraduate
students. Twenty-five (25) students travel to different destinations
throughout the nation each summer. These students conduct independent
research work and have made more than 45 scientific award-winning
presentations at national meetings. Four students graduating with
biotech training joined the graduate/professional schools for higher
education in Biotechnology. In addition, these programs allowed FVSU to
provide resources for more than 15 high school students to participate
in the Summer Research Apprenticeship Program (SRAP). The funding
helped the foundation to bring additional funding from other Federal
agencies such as NSF and EPA totaling over $3 million to strengthen
technology, teaching, and research programs in Biotechnology under the
Plant Science Department in the College of Agriculture, Economics, and
Allied Programs.
North Carolina A&T State University
With funding from NIFA, North Carolina A&T established a
centralized research facility integrating the use of state-of-the-art
survey methodologies with computer and communication technologies. This
Applied Survey Research Laboratory has the capacity to conduct and
analyze mail, telephone, Web-based, self-administered, and face-to-face
surveys, focus groups, and other survey research methodologies. In
addition, North Carolina A&T's agricultural programs have infused
instructional technologies throughout the curricula, and distance
learning has become an alternative, yet very important, mode of
instruction. Hands-on learning is greatly facilitated by access to
``smart classrooms'' (interactive whiteboards, multimedia cabinets, and
software that facilitate teaching and research) and state-of-the-art
laboratories. Finally, the program has allowed North Carolina A&T to
establish a graduate program (M.S.) in International Trade.
Southern University and A&M College
Southern University and A&M College received a NIFA grant to
enhance teaching and recruitment in Food and Fiber Sciences through
computer technology. This project has had far-reaching impact in
improving teaching and equipping students with the necessary skills
they need for employment. The project provided funds to establish a
modernized computer aided design laboratory in the Division of Family
and Consumer Sciences. Computer hardware and software was purchased to
integrate Computer-Aided-Design and Manufacturing for textiles (CAM/
CAM), Computer-Aided Diet Analysis and menu planning, and use of the
Internet in the curriculum. Textile students gained hands-on experience
using high tech textile equipment. The University has recognized this
project as one of the most innovative on campus. This project has also
helped bring the University to national prominence. A second NIFA grant
to conduct textiles research was won by Southern University as a direct
result of this project. The capacity-building research project merges
computer-aided-design and textile testing. Another very significant
impact was a $1.8 million software donation from Lectra Systems, Inc.
This donation places the Apparel Merchandising program at Southern
University among a few select institutions worldwide that are using
industry standard software. In addition, Dr. Grace Namwamba (PI)
received the NASULGC Excellence in College Teaching for the Southern
Region in 2003.
Tennessee State University
The NIFA funding has provided Tennessee State University with the
ability to respond to stakeholder concerns in the Southeast U.S.
nursery industry. By establishing a program on integrated disease
management for powdery mildew, improved flowering dogwood selections
have been developed that will reduce homeowner dependence on chemical
pesticides while improving the profitability of the regional nursery
industry. The capacity-building grant program has facilitated the
establishment of state-of-the-art equipment and collaborative linkages
for research in nursery crop disease management.
University of Arkansas_Pine Bluff
NIFA funding has enhanced research and teaching needs in three
areas at UAPB: agriculture, fisheries, and human sciences. Support of
programs for student recruitment and retention, curriculum development,
faculty and student development, and academic enrichment have greatly
strengthened and increased enrollment. Capacity-building funds were
instrumental in curriculum design, resource and equipment acquisition,
and faculty development for (1) implementing the M.S. degree program in
aquaculture/fisheries that enrolls 23 students, (2) creating the
nutrition intervention and research program for the study of
nutritional needs and food security of families in the Mississippi
Delta, and (3) developing the only regulatory science degree program in
the nation. The regulatory science program enrolls 27 students in three
options: Agriculture, Industrial Health, and Safety and Environmental
Biology.
University of Maryland_Eastern Shore
Capacity-building funds have allowed the University of Maryland
Eastern Shore (UMES) to establish an impressive, collaborative, multi-
state research nutrient management program focused on reducing
phosphorus loading levels to the Chesapeake Bay and Maryland Coastal
Bays. This work provides protection for the economic viability of
watermen and the tourism industry on the Delmarva Peninsula. Another
NIFA grant is being used by the Department of Human Ecology at the
University of Maryland Eastern Shore to establish an interactive video
teleconferencing classroom of courses. The department is partnering
with Chesapeake Community and the Eastern Shore Community College in
Virginia to offer courses leading to a bachelor's degree for students
residing in remote areas on the Eastern Shore who are pursuing a career
in child development.
Evans-Allen 1890 Research Formula
The following represents results and impacts for the Evans-Allen
1890 Research Formula from activities that occurred between June 2003
and June 2005.
Alabama A&M University
Alabama A&M University is conducting research to study the various
forms of phosphorus over time in poultry manure, or litter, amended
soil, using cutting-edge technology to enhance management of animal
waste applied to land. Discoveries will aid in the development of
remediation strategies to reduce phosphorus mobility in soils.
Fractionation studies are identifying differences in phosphorus levels
at various soil depths using different treatment methods and advanced
instrumentation testing.
Alcorn State University
The profitability of American agriculture is extremely important to
the nation's vitality, yet rising input costs and low market prices for
agricultural commodities increasingly jeopardize the industry's
profitability. Since American producers have little ability to affect
market prices, it is critical that they have and understand how to use
new technologies that can optimize their input costs with respect to
profits. Alcorn State University recently completed a project to
monitor the growth of sweet potatoes to optimize production using
remote sensing methods. This research shows that remote sensing, GPS/
GIS, and ground truthing should help identify the most suitable areas
in the field for high sweet potato yield and areas that are
problematic. Results from the study will be helpful to small limited-
resource producers, will assist extension in the application of the
research findings, and will provide researchers with necessary tools
for additional study.
Delaware State University
The Claude E. Phillips Herbarium is a resource center for
researchers at Delaware State University. Researchers have included in
the herbarium native and cultivated plants from across the globe. Those
research specimens have been pressed, dried, and mounted on archival
paper, then housed in a state-of-the-art, climate-controlled
environment. The holdings are available to researchers, students, and
the general public.
Florida A&M University
Development of environmentally sound sustainable practices is
paramount to the successful growing of hot peppers, an alternative
niche enterprise identified for small farmers. Florida A&M University
researchers evaluated the effects of bio-solid waste material on plant
growth and fruit yield of Scott Bonnett and Caribbean Red hot pepper
varieties and on quality characteristics of the soil on which the crop
is grown. Results showed that poultry manure, mushroom compost, and
earthworm castings produced fruit yield that were numerically, but not
statistically, different compared to fruit yield from inorganic
fertilizer treatment, but significantly higher compared to fruit yield
from control treatment. Fruit yield from cow manure was significantly
lower than all other treatments except the control.
Fort Valley State University
Sweet potato potential for human nutrition and future energy needs
can be realized through the application of biotechnology, but a
reliable in vitro regeneration would be required for the application of
recombinant DNA technology. Fort Valley State University completed a
research project to develop an efficient tissue regeneration system via
organogenesis and embryogenesis for sweet potato and to transfer genes
of desirable traits into sweet potato using recombinant DNA technology.
Establishment of reliable and efficient plant regeneration protocol and
gene delivery protocol for sweet potato will ensure introduction of the
designed ``value-added'' genes into this crop through genetic
engineering.
Kentucky State University
Kentucky State University researchers developed a program to grow
freshwater shrimp in farm ponds to further reduce the state's
dependence on tobacco. Economic analyses indicate net incomes of
between $2,500 and $4,500 per acre for freshwater shrimp. So far, 18
farmers have adopted the practice, bringing the total additional income
derived from shrimp to about $185,250 annually.
Langston University
Langston University continues its research on goat production. A
recent study showed that the number of Boer crossbred meat goats has
been increasing rapidly, although how their growth and harvest traits
compare with those of Spanish goats and influences of maternal genotype
has not been thoroughly evaluated. This information would be useful to
achieve optimal meat goat production systems and yield of goat products
desired by consumers. Langston University's scientists studied post-
weaning growth and harvest traits of Boer x Spanish, Spanish, and Boer
x Angora wethers consuming a concentrate-based diet. Research shows
that live weight gain was greater for Boer crossbreds than for Spanish
wether goats, with little or no difference between Boer x Spanish and
Boer x Angora goats. Because of more rapid growth of Boer crossbreds
than Spanish goats, weights of the carcass and primal cuts were greater
or tended to be greater for Boer crossbreds.
Lincoln University
Lincoln University is investigating an indoor water recirculating
aquaculture system for the production of bluegill sunfish. There is a
high demand for 5 to 6 inch bluegill for pond stocking. Producing
suitable sized bluegill for pond stocking, however, requires an
inordinate amount of time and increased labor costs because variable
growth requires continual sorting and grading to obtain fish of a
desirable size. The research is aimed at raising bluegill fingerlings
over winter in controlled temperature systems that will produce 5 to 6
inch fingerlings by spring to meet current market demands.
North Carolina A&T State University
Greensboro waters drain into the Jordan Lake, an essential drinking
water supply in the Chapel Hill-Raleigh-Durham area. The lake is a
``nutrient sensitive water,'' since it has a nutrient over-enrichment
problem. North Carolina A&T State University is in its second year of a
study to determine sources of nutrients coming into the Jordan Lake so
best management practices can be implemented to remove nutrients
draining into the lake. Soil and Water Assessment Tool (SWAT) model
inputs were collected for the farm. A nearly complete set of SWAT peer-
reviewed literature has been listed on the project's website, providing
SWAT users a centralized source for information.
Prairie View A&M University
Goats are an important livestock species in many parts of the world
and their prevalence in the U.S. is rapidly increasing. Nonetheless,
knowledge of goat nutrient requirements lags behind that of cattle and
sheep. To help with this, a database of treatment means observations
from goat feeding/nutrition studies was constructed and used to develop
and describe nutrient requirements of goats by scientists at Prairie
View A&M University. Research will yield more knowledge about accurate
estimates of nutrient requirements of goats, including composition of
tissue being accreted or mobilized, changes in maintenance energy
requirements with advancing maturity and differences among nutritional
planes, energy costs of activity, and conditions influencing the supply
of ruminally under grade protein. A clearer understanding of these
factors is being revealed and will improve feeding programs as well
increase accuracy of predicting performance by goats.
South Carolina State University
South Carolina State University purchased a mobile technology
learning center with NIFA funds. The customized Winnebago, which
travels across the state, is equipped with a 12-station Internet-ready
computer lab, a child development classroom, dual generators, a
satellite, and an instructor workstation. By design, the mobile
technology center delivers the services that 1890 Extension provides
such as 4-H and youth development, family life and nutrition, adult
leadership and community development, small farm assistance, and
computer literacy classes to citizens. The mobile center also provides
1890 Extension with the opportunity to take programs to the people and
enhances efforts to address the digital divide.
Southern University
Southern University is furthering research into the effects on
animal performance of grazing cattle and goats together and separately.
The goal of this project is to assist small and limited-resource
producers in increasing their production and economic base by
efficiently using the available natural and farm resources. Results of
this project are determining the most efficient method of resource use
by two or more species.
Tennessee State University
Production efficiency of the doe herd is a major determinant of
annual income in a commercial meat goat enterprise; however, doe
performance has received little attention when assessing new meat goat
breeds in the United States. Most pastures in the Southeast have
endophyte-infected tall fescue, posing a risk of endophyte-induced
reductions in animal performance. Tennessee State University has
undertaken a project to evaluate doe-kid performance for economically
important reproductive and growth traits as influenced by breed and
forage type. The study recognizes that understanding genetic diversity
among breeds for economically important traits and endophyte effects on
goat performance can aid in enhancing meat goat herd productivity.
Further results of this study should provide producers with information
useful for genetic management and breed selection within seedstock and
commercial meat goat operations.
Tuskegee University
Land loss phenomena and efforts to recoup it continue to be a
challenge for African American farmers and other minority communities
in Alabama and the rural South. Rural communities and the underserved
families in the Black Belt region have problems accessing government
programs. Access of programs and policies affecting the underserved in
the Black Belt region of Alabama are being assessed by Tuskegee
University. The approach involves multidisciplinary teams within the
social sciences, as well as among the social sciences, Cooperative
Extension, and continuing education. Target areas are being assessed in
terms of economic growth, equity, and quality of life as they apply to
sustainable rural development. As a result of the study, specific
policies, strategic directions, and programs will be proposed to
enhance the potential for sustainable rural development, and a database
including a ``State of Black Belt'' report will be generated on each of
the target areas.
University of Arkansas_Pine Bluff
Insect damage to alternative crops produced by small and limited-
resource farmers has a significant effect on production. University of
Arkansas--Pine Bluff scientists have conducted studies to evaluate Bt
sweet corn insect suppression and initiate Bt gene field corn trials,
work on bionomic and integrated pest management (IPM) methods for
cowpeas in Arkansas, and evaluate insects on new lines of hot peppers.
They have also evaluated insect infestation on promising pigeon pea
lines, designed an IPM system for control, conducted verification
trials on hot peppers and pigeonpeas, and constructed an economic model
of production costs. This research has developed a sufficient data base
needed to develop insect management and control strategy for multicrop
production by limited-resource farmers.
University of Maryland Eastern Shore
The University of Maryland Eastern Shore has established a private-
public partnership with Bell Nursery to help the university and its
constituents enhance economic development opportunities for surrounding
rural communities. The 2.5 acre hydroponic greenhouse was funded at
$3.2 million through NIFA, state, county, university and private
industry funds to engage in floral production that links the University
of Maryland Eastern Shore with a commercial business. The hydroponic
greenhouse project sponsored by the University's Rural Development
Center and Small Farm Institute is demonstrating that, through formal
alliances, economic development strategies can bring needed resources
to the Delmarva Peninsula of Maryland.
Virginia State University
In the United States, the need for healthful food is a driving
force in the search for nutritious alternative crops. Among the
alternative vegetable crops, soybean has the distinction of being low
in saturated fat and active in reducing blood cholesterol level. Direct
consumption of vegetable soybean is very popular in the Orient;
however, the cultivars used in Asia are not adapted to U.S. production
systems. Virginia State University recently completed a study to
determine the physiological and/or chemical basis of vegetable soybean
that could serve as reliable indicators in predicting the proper stage
of harvest; to develop vegetable soybean with large seed size, high
seed yield, and with desirable agronomic traits and nutritional values;
and to identify vegetable soybean cultivar ideotypes that fit into
mechanical harvesting.
West Virginia State University
Societies worldwide produce large quantities of waste organic
matter. This material arises from human population growth, industrial
byproducts, and agricultural sources, such as animal farms. The overall
goal of the environmental microbiology program at West Virginia State
University is to understand the fundamental microbial processes that
produce anaerobic digestion and to apply this knowledge to improve the
control and performance of anaerobic digesters. The scientists found
that the organic waste bioconversion process can also transform
agricultural industrial organic wastes into a valuable agricultural
commodity (fertilizer) and renewable energy (methane).
1890 Extension Formula
The following represents results and impacts for the 1890 Extension
Formula from activities that occurred between June 2003 through June
2005.
Delaware State University
The Delaware State University 's Cooperative Extension staff
annually participates in Coast Day at the University of Delaware Marine
Sciences Lab in Lewes, DE. Information is provided to several thousand
people who attend. Media presentations and demonstrations provide
information on feeding, diseases, and management for aquacultural
species, including oysters, crayfish, and smallmouth bass.
Kentucky State University
Kentucky State University aquaculture researchers and extension
specialists assist catfish farmers in western Kentucky who have more
than 400 acres stocked with catfish. A local Aquaculture Cooperative
operates a processing plant with an average of 30,000 to 40,000 pounds
of catfish processed each week. These farmers are expected to supply
more than a million pounds of catfish in 1 year.
North Carolina A&T State University
North Carolina A&T State University provides educational resources
to improve farm business management skills so that limited-resource,
small and part-time farmers can increase their incomes from direct
marketing. The program is designed so that program participants learn
through practices, discussions, role play, planning, and
implementation. It monitors and reports results and uses evaluation for
constant program improvement.
South Carolina State University
The Extension Beef Cattle Improvement Project (BCIP) at South
Carolina State University has provided assistance to 111 small beef
cattle producers in production, improving bloodline, marketing,
decision making, and risk and enterprise management. One hundred
eighteen heifers and 18 bulls have been placed on limited-resource
farms to date. Ninety-two farmers are enrolled in this initiative.
Fifty-eight families have been assisted through the animal Pass-on-
Project, with 62 heifers and three bulls being passed on to these
families. The BCIP participants can effectively compete on the beef
cattle market. The top 10% of these participants receive premium prices
for their products. The most important accomplishment is that
participants have increased their knowledge of quality production
(breed selection to improve their bloodline) and, as a result, have
increased their farm income by 40 percent to 50 percent.
1890 Facilities Grant Program
The following represents results and impacts for the 1890
Facilities Grant Program from activities that occurred between June
2003 and June 2005.
Delaware State University
The Claude E. Phillips Herbarium is a 3,672 square foot building
completed in 1999. The Herbarium is the largest at a historically black
college or university. With approximately 106,000 specimens, it ranks
87th out of 525 herbaria in the United States and is an active center
for education and research. It includes native and cultivated plants
that are pressed, dried, and mounted on archival paper as well as some
pickled plant specimens. The facility encloses special holding cases in
a climate-controlled environment. Scientists, gardeners, educators,
students, physicians, and lawyers regularly consult these holdings for
identification and education.
North Carolina A&T University
The Cooperative Extension Program at North Carolina A&T State
University faced many new challenges as it moved into the new
millennium. The extension program, as well as the academic and research
programs, needed to address such challenges as sustainable agriculture
and its effect on the environment, biotechnology and its applications
to the food chain, burgeoning information technologies, economic
revitalization of rural communities, and increased accessibility to
international markets. Facilities needs had to be addressed to plan for
meeting these challenges. Coltrane Hall, headquarters for the
Cooperative Extension program, was constructed in 1951. With funds from
NIFA, the university developed and executed plans for construction and
renovation of Coltrane Hall. The first floor was renovated, and a
second floor added on top of the original first floor, using an open
space design. Footage for the second floor equaled that of the first
floor--11,521 square feet. The second level features a building face of
smoked glass.
Prairie View A&M University
Before receiving the facilities funds, agricultural research at
Prairie View A&M University was conducted in facilities built in the
early 1940s and 1950s that were designed primarily for teaching. The
E.B. Evans Animal Industries building, a 28,000 square foot facility
built in the early 1950s, served as the primary Agriculture Teaching
and Research facility. This facility did not have the size nor proper
design for research, and an inadequate electrical system, poor
ventilation, and outdated plumbing could not accommodate state-of-the-
art research equipment. Therefore, faculty/research scientists were
hampered in their efforts to carry out effective research projects. The
funds received were used to construct a new state-of-the-art research
laboratory, along with several auxiliary buildings. The Jesse H. and
Mary Gibbs Jones Building, completed in 1988, serves as the primary
research laboratory for research in the food and agricultural sciences,
as well as headquarters for the Cooperative Agricultural Research
Center. Auxiliary buildings built with these funds include a poultry
complex, a swine complex, a feed mill, greenhouse/headhouse complex,
and state-of-the-art laboratory equipment and furnishings.
Southern University
Southern University has completed two facilities. The Ashford O.
Williams Hall is a two-story, 55,160 square foot building consisting of
more than 45 offices and cubicles to house the research and extension
faculty, staff, and administrators; telecommunication equipment with
graphics, television, and distance learning components; and more than
20 research labs. The Maurice A. Edmond Livestock Arena has more than
58,943 square feet consisting of a regulation horse ring and swine,
sheep, and beef cattle stables. These facilities greatly enhance the
capability to conduct research and extend extension programs.
Tennessee State University
Facilities funds at Tennessee State University have been used to
renovate an old dairy barn into a contemporary agricultural research
and extension complex of 46,220 square feet. The complex provides a
multi-purpose meeting room, Docu Tech printing area, storage rooms,
first and second floor conference rooms, and offices. This modern
facility has enhanced the planning, implementing, and evaluating of
educational programs, increased technology for extension program
delivery, and increased programming and program visibility among
decision makers, stakeholders, and clientele groups. The university's
educational programs in agriculture and natural resources, community
resource development, 4-H and youth development, and family and
consumer sciences have been made more visible, allowing the university
to serve a larger clientele base.
University of Maryland_Eastern Shore
The swine facility at the University of Maryland Eastern Shore was
constructed with NIFA facilities funds. Research conducted there
involves growth, reproduction, and meat quality. The facility includes
a 60 sow, total confinement farrow-to-finish unit that includes a
metabolism room with crates adaptable for swine, sheep, and goats and
other rooms that can accommodate the individual housing and feeding of
swine, sheep, or goats as necessary for many experiments. All sows are
bred using artificial insemination. Pregnant sows are group-housed in a
large pen serviced by a computerized sow feeding apparatus. The
facility includes a surgery suite used for hormonal studies to improve
reproduction efficiency. The facility has had a positive impact on the
Maryland eastern shore farming community. Research results have been
generated and disseminated through field days, conferences, workshops,
extension bulletins, and scientific journals. The construction of this
facility and its equipment provided the necessary infrastructure to
engage not only in cutting-edge research, but it provided the resources
to enhance undergraduate and graduate courses in biotechnology and
molecular biology. The facility also was an attraction for the support
from the swine industry and allowed the university to partner with that
industry and other agricultural constituents in research, teaching, and
outreach activities.
Mr. Chairman, from 1970 to 2005 the population of the world
increased by 2.75 billion people, a 74% increase. In 1950, only eight
countries had a population of 50 million people. By 2030, the United
Nations estimates that 33 countries will have populations in excess of
50 million.
According to a Farm Foundation Issue Report entitled, ``Agriculture
Research and Productivity for the Future,'' commodity yields in the
United States are increasing at a much lower rate in the period after
1990 than when compared to the period between 1950 and 1989. At the
same time the farm productivity orientation of public research and
development in the United States dropped from 68% in 1985 to 57% in
2006/2007.
Agriculture represents only 1.8% of the nation's Gross Domestic
Product, but it accounted for more than 12% of total productivity
growth in the United States' economy between 1970 and 2004. Our
competitors are not sitting idly by. Between 1981 and 2000, China's
share of the world publicly funded agricultural research grew from 4%
to 9%. In the same time period, the United States' share grew from 18%
to 19%.
Today, the National Institutes of Health spends $120 on competitive
research for every dollar spent by USDA.
While NIH funding is greatly needed, we believe that funding
agricultural research, education and extension is as important if not
more so. After all, we only feed fuel and clothe the world. Isn't an
investment in research that solves the causes of problems--obesity,
malnutrition, air and water quality, and carbon emissions to name a
few--a better investment than research aimed at the addressing the
result of those problems?
We appreciate the long support that this Committee has shown for
agricultural research, extension and higher education at land-grant
universities and especially the 1890 Institutions. We appreciate the
opportunity to testify before you today and look forward to working
with the Committee in the development of the next farm bill.
The Chairman. Thank you very much, Dr. Latimore, and we
thank you for the good work you do and the work that the land-
grants do, we appreciate it.
I guess you have a microphone there, Mr. McMurray.
Mr. McMurray. I believe so.
The Chairman. We are technology challenged today. Dr.
Latimore, maybe you can give us some advice to straighten us
out here.
Mr. McMurray, you may proceed.
STATEMENT OF GARY McMURRAY, CHIEF, FOOD PROCESSING TECHNOLOGY
DIVISION, GEORGIA TECH RESEARCH
INSTITUTE, ATLANTA, GA
Mr. McMurray. Thank you. Good afternoon, Mr. Chairman,
Committees Members, ladies and gentlemen; thank you for the
opportunity to appear here today. My name is Gary McMurray and
I am the Division Chief for the Food Processing Technology
Division at the Georgia Tech Research Institute. I am honored
to lead a team of 17 professionals, four academic professors
and 20 students working in the areas of sensing for food
quality and safety, robotics and automation, worker safety,
energy, and environmental engineering in support of bringing
technology to the food processing industry.
Today, we are recognized nationally and internationally for
developing new and innovative technology and systems for the
food industry. In addition, we are partners with the Georgia
Tech Integrated Food Chain Center for sensing throughout the
food supply chain. We have been funded for the last 35 years
through the State of Georgia Agricultural Technology Research
Program. The program's mission is to conduct basic and applied
research that improve productivity and efficiency in Georgia's
agribusiness community. In addition, the State of Georgia has
funded the Food Industry Program that is focused on the
commercialization of technology for the broader food industry,
including red meat, fruit and vegetable and baking industries.
One of the reasons for the success of our program is in the
partnership we have in the food processing industry, our
colleagues at the University of Georgia and the Georgia Poultry
Federation. With the help and support of the Georgia Poultry
Federation, we have assembled a world class advisory board that
consists of top management from the nation's leading poultry
processing companies.
The USDA NIFA program is an important new program and food
safety is a major focus. The manufacturing industry realized
many years ago that you cannot inspect quality into a product.
Instead, they have learned to control the process with
statistical control procedures and effective policies. I
believe that this approach needs to be applied to the food
system as a whole. A systems-level approach to the food system
would focus on identifying the appropriate control points,
sampling requirements, sensor requirements, policies and
procedures for the system as a whole, and not attempt to sub-
optimize for individual substances.
By adopting this approach, the value to the industry and
the consumer is two-fold. First, there is increased food
safety. It is important to restore the confidence that the
public has in the safety of our food. Second, we can reduce the
spoilage of products throughout the supply chain. While we need
to address the critical issue of food production, the first
step should be to drive out the waste in the current system.
Researchers can partner with farmers to better understand the
initial state of the product at the farm through the use of the
appropriate sensing technology and monitor its state throughout
the food chain. The information can be used with predictive
models to better enable decisions and increase the economic
benefit for all participants in the system. I believe that by
increasing the flow of data throughout the entire food chain,
spoilage of product can be dramatically decreased.
The current RFA from NIFA is largely focused on the
development of fundamental science. This is important work to
be sure, but it does not address a system as discussed earlier.
I encourage NIFA to include broader scope projects that allow
for the development of teams with diverse backgrounds to
address the system as a whole. I also encourage the USDA to
focus on technology development that can be used to focus on
technology development that can be translated into
commercialized hardware and software systems. Developing
systems will benefit the farmer, but it will also sustain an
entire industry of equipment companies, distributors, sales
people and support staff. This creates real jobs and helps
build the nation's rural communities.
GTRI recognizes the important work that USDA NIFA is doing
and as such has already submitted three letters of intent for
proposals to this program. We believe that collaboration is
vital to this work and our proposed team reflects that spirit.
Our team includes experts at the University of Georgia, as well
as other universities such as Oklahoma State, Florida A&M
University, the University of Tennessee and North Carolina A&T
State University.
One hindrance to fostering such collaboration between land-
grant and non-land-grant institutions is a cap on university
overhead rates. Today's major engineering universities drive
innovation in every economic sector other than agriculture.
These universities will be deterred from participating in USDA
opportunities until the overhead issue is revisited. A
partnership between engineering universities with their systems
approach and technology focus, and land-grant universities with
their agriculture expertise would be a powerful team to address
food safety issues, and would provide a great service to the
food industry and consumers.
The entire Georgia Tech community looks forward to working
with USDA and NIFA to solve the problems that face our food
industry. We know that these problems are critical to
maintaining one of the most important industries to our nation
and world. The challenges are large, but I am confident that
through a systems approach coupled with integrated,
multidisciplinary teams, we can begin to solve these problems
in a cost-effective manner. I look forward to working with
USDA, the academic community as a whole, and the industry to
achieve these goals.
I would be happy to respond to any questions that the
Members might have at the end. Thank you.
[The prepared statement of Mr. McMurray follows:]
Prepared Statement of Gary McMurray, Chief, Food Processing Technology
Division, Georgia Tech Research Institute, Atlanta, GA
Good afternoon, Chairman Peterson, Committee Members, ladies, and
gentlemen, thank you for the opportunity to appear here today to
discuss the 2012 Farm Bill. My name is Gary McMurray and I am the
Division Chief for the Food Processing Technology Division at the
Georgia Tech Research Institute (GTRI). I am honored to lead a team of
13 full-time research professionals, four academic professors, and 20
students working in the areas of image processing and sensing (food
quality and food safety), robotics and automation, energy, and
environmental engineering in support of the food processing industry.
We are primarily funded through the State of Georgia's Agricultural
Technology Research Program (ATRP). The program's mission is to conduct
basic and applied research focused on the development of new
technologies that improve productivity and efficiency in the processing
operations of Georgia's agribusiness community. Particular emphasis is
placed on the commercialization of these technologies and we work
closely with our industrial partners to facilitate this. We have
licensed ten systems/technologies to commercial companies in the past
15 years. In addition, we have a mandate to educate engineers to
prepare them for careers in the food industry as well as provide
technical outreach and assistance to the industry. We also work closely
with our colleagues at the University of Georgia (UGA) on many
projects. This team approach allows the application and transfer of
knowledge from multiple disciplines to deliver the best possible
solution for each research challenge.
For more than 35 years, ATRP researchers have developed numerous
innovations that have improved food, particularly poultry, processing
operations. Food safety technologies have also been a key focus area of
the program. ATRP has funded groundbreaking work in the rapid detection
of pathogens and chemicals. Our biosensor uses an interferometric
optical measurement system for rapid, on-line quantification of various
chemicals and pathogens in the food system. The research team, working
with UGA and under USDA funding, recently demonstrated the system's
ability to quickly and accurately identify avian influenza in live
chickens. This system has also led to two commercial licenses.
One of the reasons for the success of our program has been the
partnership we have with the food processing industry, our colleagues
at UGA, and the Georgia Poultry Federation. With the help and support
of the Georgia Poultry Federation, we have assembled a first-class
advisory board that consists of top management as well as plant and
complex managers from some of the nation's leading poultry processing
companies. This advisory board plays a critical role in identifying the
industry's technology needs and guiding the technology development
process.
In addition to the Agricultural Technology Research Program, the
State of Georgia has funded the Food Industry Partnership (FIP) program
that is focused on the commercialization of technology for the broader
food industry. FIP has funded numerous projects focused on food safety,
water conservation, automation, and imaging for the red meat, fruit and
vegetable, peanut, and baking industries. This unique program uses an
industry-led committee to select projects that have broad industry
appeal. Each project brings together an academic research team, an end-
user, and a commercial partner to bring the system to market.
The USDA NIFA program is an important new initiative that should
generate interest from the research community. Food safety is a major
focus of the program and it is one that requires a multidisciplinary
team Our approach to food safety, from a technology development point
of view, has been to not only consider the specific technologies
required to achieve it, but also to consider the food chain as a
system, not just individual parts. The manufacturing industry realized
many years ago that you cannot inspect quality into a product, but
instead, you must learn to control the process with adequate
statistical control procedures and effective control policies. You only
use inspection to verify that the process is under-control. I believe
this approach needs to be applied to our food system as well. A
systems-level approach to the food system (farm to fork) would focus on
identifying the appropriate control points, sampling requirements,
sensor requirements, data requirements, policies, and procedures that
would ensure the safety of the food chain but not impose significant
costs on the system. Then, the correct handling of the product through
the system that would ensure that the product arrives safely to the
consumer is defined and a methodology for controlling that process is
devised. In addition, the information system to convey that information
to the appropriate decision makers is equally important. Requiring 100%
inspection of the product at any point along the food chain is neither
cost-effective nor necessary as long as the rest of the supply chain is
not ``in control.''
By adopting this approach, the value to the industry and the
consumer is two-fold. First, there is increased food safety. It is
important to instill public confidence in the safety of the nation's
food supply. Only through a systems approach can we achieve this.
Second, we can reduce the waste/spoilage of product throughout the
supply chain. The need for increased food production has been well
documented. The population of the world continues to grow and with it,
the need for more food. While we need to address the critical issue of
food production, the first step should be to drive out the waste in the
current system. Researchers can partner with farmers to better
understand the initial state of the product at the farm (through
sensors) and monitoring its state through the food chain. The
information can be used with predictive models (simulating the variety
of conditions by product as it is transported through the chain) to
enable better decisions and increase the economic benefit for all
participants in the system. I believe that by increasing the flow of
data throughout the entire food chain, spoilage (or waste in the
system) can be dramatically decreased and at the same time overall food
safety can be maintained.
The current RFA from USDA NIFA is focused for the large part on
very specific issues in food safety. This approach is very appropriate
for the development of fundamental science, but it does not facilitate
a systems approach as discussed earlier. I encourage the USDA NIFA to
craft broader scoped projects that allow for the development of teams
with diverse backgrounds to address the system as a whole. I also
encourage the USDA to focus on technology development that can be
translated into commercialized hardware and software systems.
Developing systems that can do more for the farmer brings benefit not
only to the farmer, but it sustains an entire industry of equipment
companies, distributors, sales people, and support people. This creates
real jobs and helps build the nation's rural communities.
The problems facing our agricultural system are complex ones that
require multidisciplinary team-based solutions. I believe the best
teams can be formed by joining researchers from both land-grant and
non-land-grant universities. These teams require skills typically found
at the land-grant institutions such as microbiology, food science, and
animal science. However, the non-land-grant institutions are an
untapped resource that can supplement the research teams and allow them
to tackle the larger problems. I strongly feel that the non-land-grant
universities have a tremendous amount of technology and skills that can
be brought to bear on the problems that face our agricultural system.
While GTRI is considered one of the preeminent sensors universities in
the nation for the Department of Defense (DOD), very little of that
work has translated over to the agricultural community. Within the DOD
world, sensors for detection of various chemicals are well known and
commonly deployed. In addition, the DOD has invested heavily in
multispectral and hyperspectral imaging as a means to collect data and
identify objects of interest. This technology has many applications to
the agricultural community. Can these non-land-grant universities
address these problems alone? No. They still need to partner with the
land-grant universities because that is where the domain-specific
knowledge resides. They must partner to accomplish the greater goals of
USDA.
GTRI recognizes the important work that USDA NIFA is doing and as
such we have already submitted three letters of intent for proposals to
this program. We believe that collaboration is vital to this work and
our proposed team reflects that spirit. Our team includes experts at
the University of Georgia as well as other universities such as
Oklahoma State, the University of Tennessee, and North Carolina A&T
State University. The multidisciplinary teams include experts in signal
processing, sensor systems, environmental engineering, and energy
systems that are working with their counterparts in economics, poultry
science, microbiology, and food science to work on projects of mutual
interest.
One hindrance to fostering such collaborations between land-grant
and non-land-grants institutions is the cap on university overhead
rates. Today's major engineering universities drive innovation in every
economic sector other than agriculture. These universities will be
deterred from participating in USDA opportunities until the overhead
issue is revisited. A partnership between engineering universities with
their systems approach and technology focus and land-grant universities
with their agriculture expertise would be a powerful team to address
food safety issues and would provide a great service to the food
industry and to consumers. They must partner to accomplish the nation's
food safety goals.
The entire Georgia Tech community looks forward to working with
USDA and NIFA to solve the problems that face our food industry. We
know that these problems are critical to maintaining one of the most
important industries to our nation and our world. The challenges are
large, but I am confident that through a systems approach coupled with
integrated, multidisciplinary teams, we can begin to solve these
problems in a cost-effective manner that will maintain the public's
confidence in the safety of our food supply. I look forward to working
with the USDA, the academic community, and the industry to achieve
these goals.
I would be happy to respond to any questions that the Members might
have.
The Chairman. Thank you very much, Mr. McMurray.
Mr. Farris, welcome to the Committee and I think we have
the microphone working now.
STATEMENT OF ROBERT FARRIS, DIRECTOR, GEORGIA FORESTRY
COMMISSION, DRY BRANCH, GA
Mr. Farris. Thank you and good afternoon. I will go for
the one that is working here, and now if I can just figure out
where the reset button is on this little box here.
Good afternoon. I am Robert Farris, Georgia's State
Forester. Mr. Chairman, and Members of the Committee, thank you
for the opportunity to review agricultural policy as you
prepare for the 2012 Farm Bill.
Georgia has over 24 million acres of forestland, more
privately-owned, commercially available forests than any other
state. In addition to the many environmental and social
benefits, forestry has a $28 billion impact on our state's
economy and provides over 128,000 jobs here in Georgia. You
will find similar statistics throughout the South.
I say all this to emphasize that our forestlands are a
strategic national resource. The actions of the Committee on
the 2012 Farm Bill are of critical importance to Georgia, the
South and indeed the nation. Allow me to review what we see as
growing challenges and opportunities to manage Georgia's forest
resources.
The 2008 Farm Bill required that state forestry agencies
prepare comprehensive assessments and strategic plans as a
condition of receiving Federal funds through the Cooperative
Forestry Assistance Act. As states engage with many partners to
implement these plans, numerous factors require consideration
which may also influence development of the 2012 Farm Bill:
Numerous strategies require long-term participation and
expanded investment of cooperative forestry assistance and
conservation title programs, including forestry measures
contained in EQIP and Conservation Stewardship Program.
Flexibility is needed in the program funding process for
cooperative forestry assistance. Emphasis should be placed on
provisions that assure dependable levels of funding for Federal
programs, as well as initiatives identified through the state
assessments. Expanded flexibility is strongly encouraged for
state-specific priorities.
As state assessments are completed, more will be understood
about the opportunities for climate mitigation and adaptation.
Certain conservation title programs may need enhancement to
better address forest adaptation. The Healthy Forest Reserve
Program may be re-examined to address both climate mitigation
and adaptation.
As metrics for carbon storage become more reliable,
specific incentive payment programs may be appropriate.
Significantly expanding tree planting should be an
important consideration in the farm bill.
Ongoing water wars between Georgia, Alabama and Florida
clearly demonstrate that water quantity and quality are of
ever-growing concern. Two out of every three rain drops that
fall in Georgia land on our forests, which filter the water and
enhance absorption into our streams. Retaining and properly
managing our working forests plays a critical role in the
protection of our water resources.
The 2012 Farm Bill may provide opportunities to better
recognize and support the role of our extremely effective
Forest Water Quality Best Management Practices. We have
concerns about recent U.S. Corps of Engineers rulings, and we
also have concerns about recent Congressional proposals to
change the Clean Water Act and the potential adverse impacts
that that may have on silvicultural exemptions.
The 2008 Farm Bill's definition for renewable biomass
assures reliable and sustainable supplies to manage woody
biomass as a component of the national renewable energy policy.
Healthy and dependable forest product markets are absolutely
essential for encouraging land owner investment in
reforestation and keeping their working forests working.
Measures to advance sustainable production of woody biomass are
appropriate for the 2012 Farm Bill.
Additionally, the U.S. Forest Service FIA program is
critical for understanding the current and potential future
condition of forest resources as they relate to climate,
renewable energy, landscape level conservation and forest
health. Potential 2012 Farm Bill considerations may include
expanded FIA services including remote sensing capabilities to
support facility level supply and demand and impact
assessments.
Some forestry-related programs and authorities established
in the 2008 Farm Bill remain uncertain, or have not been fully
implemented. To date, no progress has been made to implement
provisions of the Emergency Forest Restoration Program, the
Forest Resource Coordination Committee has not yet been
established.
BCAP experienced difficulties as implemented under NOFA.
It's our view that BCAP can generate increased investment and
commitment to sustainable forest resource management.
On behalf of the Georgia Forestry Commission, I thank the
Committee for your recognition of the strategic importance of
our nation's forests.
Thank you.
[The prepared statement of Mr. Farris follows:]
Prepared Statement of Robert Farris, Director, Georgia Forestry
Commission, Dry Branch, GA
Good morning and welcome to Georgia. I am Robert Farris, the State
Forester for Georgia. Mr. Chairman and Members of the Committee, thank
you for the opportunity to appear here today to review U.S. Agriculture
policy as you prepare for the 2012 Farm Bill.
Georgia has over 24 million acres of forestland, of which 92
percent is privately owned. Georgia has more privately-owned,
commercially available forestland than any other state in the nation.
By any measures you care to use, forestry is important to Georgia. In
addition to its many environmental and social benefits, forestry has a
$28 billion economic impact on our state and provides more than 128,000
jobs for Georgia citizens. You will find similar statistics throughout
the southern U.S., which is well-known as the ``wood basket of the
world.''
I say all of this to emphasize that our forestlands are a strategic
national resource, and the actions this Committee takes on the 2012
Farm Bill are of critical importance to Georgia, the South and our
entire nation. I would like to take this opportunity to review what we
see as growing challenges and opportunities to manage Georgia's
forestry resource.
State Assessments and Strategies
The Forestry Title of the 2008 Farm Bill requires that state
forestry agencies prepare comprehensive assessments and strategic plans
as a condition of receiving Federal funds pursuant to the Cooperative
Forestry Assistance Act. These plans must be completed and submitted to
the U.S. Forest Service by June 18, 2010. These evaluations have been a
significant undertaking, involving considerable collaboration with
resource management agencies, organizations, and the public at large.
The process has produced important findings and guidance about major
issues, priorities and strategic guidance for state and Federal
programs, including regional and national perspectives on forest
policy. During the next 5 years, as states engage with the Forest
Service and other partners to implement these plans, many factors will
require consideration which may also influence development of 2012 Farm
Bill:
Numerous strategies will require significant long-term
participation and expanded investment of Cooperative Forestry
Assistance and Conservation Title programs, including forestry
measures contained in the Environmental Quality Incentives
Program and Conservation Stewardship Program.
State plans have helped identify landscape-level initiatives
that will require interagency cooperation and multi-program
coordination to achieve objectives; depending upon the scope
and scale of these projects, the 2012 Farm Bill may facilitate
organization and implementation of these types of projects,
particularly in cases of multi-state initiatives.
The current set of Cooperative Forestry Assistance Programs
may not be the best configuration of Federal services and
policies to efficiently assist states in meeting the challenges
identified in the planning process; the 2012 Farm Bill may
present opportunities to restructure those programs
accordingly.
Budget and Appropriation Processes
The State Assessment and Strategies process, as well as funding
challenges experienced by most states, have generated discussion about
potential improved efficiencies in budget development, appropriations
and grants administration. More flexibility is likely needed in the
program funding allocation process for Cooperative Forestry Assistance.
Emphasis should be placed on provisions that assure dependable levels
of funding for Federal programs as well as additional opportunities to
participate in regional and national initiatives which may be
identified through the State Assessment and Strategies process.
Moreover, expanded flexibility is encouraged for state-specific
priorities. Reallocating a portion of funding among Cooperative
Forestry Assistance programs may more effectively address high priority
forest resource issues. Such alternatives will require careful
discussion among the U.S. Forest Service, National Association of State
Foresters, and House and Senate Agriculture and Appropriation
Committees. The 2012 Farm Bill may present opportunities to
institutionalize some of these concepts.
Climate Mitigation and Adaptation
Congressional legislation to develop policies for the management of
greenhouse gas emissions remains undefined. However, efforts continue
to be made to quantify carbon sequestration and resolve climate change
issues. The 2008 Farm Bill set an important stage for potential program
development through the current USDA Office of Environmental Markets.
As State Assessments and Strategies are completed, more will be known
and understood about opportunities, but several concepts may generate
additional attention in the 2012 Farm Bill:
Certain Conservation Title Programs may need enhancement to
better address forest adaptation strategies.
As metrics for carbon storage become more reliable and
accountable, specific payment programs may be appropriate in
which landowner options to participate in marketplace
activities are limited or not preferred.
Debates about carbon mitigation policies notwithstanding,
there is consistent agreement that afforestation and
reforestation produce carbon sequestration benefits.
Accordingly, initiatives to significantly expand tree planting
may be an important consideration in the 2012 Farm Bill.
A re-examination and revision of the Healthy Forest Reserve
Program to address both climate mitigation and adaptation may
be suggested.
Water and our Forestlands
Water issues have often been considered a concern of the western
United States. However, the recent escalation of the ``Water Wars''
between Georgia, Alabama and Florida along with Federal court opinions
clearly demonstrates that water quantity and quality are of ever-
growing concern here in the South. Two out of every three drops of rain
that fall in Georgia land on our forests, which filter the water and
enhance water intake to our streams. The maintenance and proper
management of our working forests play a large and critical role in the
quality and quantity of our water.
The 2012 Farm Bill may provide opportunities to better recognize
and support the role of our extremely effective Forest Water Quality
Best Management Practices (BMPs). The recently completed Georgia
Statewide Water Management Plan recognizes our BMPs as a model program
that other land use practitioners should emulate. We have concerns
about recent U.S. Corps of Engineers rulings and Congressional
proposals to change the Clean Water Act and the potential adverse
effects on silvicultural exemptions.
Renewable Energy and Woody Biomass
Debates and discussions continue regarding the best combination of
Federal and state programs to manage woody biomass as a component of
national renewable energy policy and a significant contributor to
achieving energy independence. The 2008 Farm Bill's definition for
renewable biomass assures reliable and sustainable supplies for meeting
such objectives. Healthy and dependable forest product markets are
essential for encouraging landowner investment in the establishment and
expansion of forest cover, which is otherwise at risk in many areas
throughout the South. With continued improvements in technology for the
cost-effective utilization of woody biomass for thermal energy,
generation of electricity and cellulosic-based fuels, it is more likely
that forest resources and their associated multiple benefits will be
enhanced. Our view is that one of best ways to conserve our forests and
the many economic, environmental and social benefits they provide is to
ensure that it remains economically viable for private forest
landowners to keep their working forests working. The most effective
and efficient way to accomplish this is to ensure that traditional
forest markets are maintained and emerging markets are developed by
creating forest policies and incentives that promote forest
utilization, timber production and wood product research and
development. The role of the 2012 Farm Bill in this regard is not
certain, but measures to reaffirm and advance sustainable production of
woody biomass would seem appropriate. The cooperative efforts between
Federal and state forestry agencies to implement the Forest Inventory
Analysis Program and the Forest Stewardship Program are excellent
examples of measures that reaffirm and advance forest sustainability.
Forest Inventory and Analysis
The Forest Inventory and Analysis Program (FIA) of the U.S. Forest
Service is a fundamental database for understanding the current and
potential future condition of forest resources. The analytical and
reporting services of FIA are routinely relied upon at multiple levels
of forest resource assessment. With expanding attention to issues
associated with climate, renewable energy, landscape level conservation
and forest health, FIA will increasingly be expected to provide
meaningful support to state forestry agencies and other forest resource
managers. Potential 2012 Farm Bill considerations may include the
following:
Develop expanded and robust inventory and analysis services
including remote sensing capabilities at statistical scales of
resolution to support facility level supply/demand and impact
assessments.
Achieve inventory and analysis capabilities to assess
ecosystem services, particularly carbon sequestration.
Develop analytical measures to assist in understanding
climate adaptation potential.
Status of 2008 Farm Bill Authorizations
The status of some forestry-related programs and authorities
established in the 2008 Farm Bill remains uncertain or has not been
fully implemented. The Emergency Forest Restoration Program (EFRP) is
intended to provide direct services and recovery capabilities for
forestlands impacted by natural disasters. To date, no progress to
implement provisions of that program has been made. However, we
understand that following the recent tornado events in Mississippi,
USDA expressed intentions to expedite administrative procedures
necessary to implement EFRP. In any event, it would be unfortunate to
experience future losses, such as potential damages from the upcoming
2010 hurricane season.
The Biomass Crop Assistance Program (BCAP) has experienced
difficulties as it was preliminarily implemented under a Notice of
Funding Availability. Forestry agencies including the National
Association of State Foresters have filed extensive comments on the
proposed rules, which we trust will resolve some of the problems and
inefficiencies initially encountered. We understand as well that issues
remain regarding disparities in authorized funding levels and expected
program needs. In any event, it is our view that BCAP can generate
increased investment and commitment to sustainable forest resource
management through the requisite forest stewardship plans and technical
assistance provisions of that program.
As part of the Forestry Title, the Forest Resource Coordination
Committee (FRCC) was established to coordinate nonindustrial private
forestry activities within USDA. Among its duties is the significant
task of providing advice on allocation of funds, including those
subject to competitive application. Thus far, the Committee has not
been established and discussions about the findings and implications of
the State Assessment and Strategies process may take place without the
benefit of FRCC participation. Efforts by the House Agriculture
Committee to encourage prompt establishment of the Committee would be
appreciated.
We are very grateful for the tremendous work you are doing for
American citizens. On behalf of the Georgia Forest Commission, thank
you for your recognition of the strategic importance of our nation's
forests. We appreciate your track record of working hard to do the
right things to maintain our working forests, for taking time to hear
from people across the country, appropriately addressing our challenges
and for enabling legislation that capitalizes on emerging
opportunities. The ongoing partnership between state and Federal
agencies, non-government organizations and private industry are
critical to the successful conservation and utilization of our nation's
forests.
Thank you for your time and commitment. I would be happy to address
any questions.
The Chairman. Thank you very much, Mr. Farris and thank all
of the panelists for their fine testimony and being with us
today.
Now, we are going to have some questions and my question is
how are we doing with microphones up here that work? Has
everybody got one that works so we can pass it around, before
we get going here? How are we doing? That one doesn't work
apparently, Dr. Angle; how about that one? I do not know if the
cord is long enough there.
All right, well, we will do the best we can here.
I want to recognize the Chairman of the Livestock
Subcommittee Mr. Scott, our host here, for the first questions.
Mr. Scott. Thank you very much.
First, Dr. Latimore, may I ask you the first question? In
the 2008 Farm Bill, thanks to Chairman Peterson and several of
us on the conference committee, we made quite a few significant
changes to research funding programs, opening a whole new world
of potential funding sources for 1890 land-grant universities.
Can you please tell the Committee whether Fort Valley State
University has been able to access any of those funds yet? And
if so, what have you been using it for? If not, what has
prevented you from doing so? And is the story the same for
other 1890 institutions? And finally, what recommendations for
further changes would you have for our Committee, as we begin
the process of reauthorizing these programs for 2012, where we
can improve your 1890 institutions for getting this funding?
Dr. Latimore. As noted, there were changes in the 2008 Farm
Bill. As far as Fort Valley State is concerned, we have not
enjoyed a lot of the opportunities that were there. And
frankly, my sister universities are in the same situation.
The 1890 Capacity Building Grant opportunity, that
continued to be a success for us.
Mr. Scott. Would you repeat that success again?
Dr. Latimore. The 1890 Capacity Building Program. That has
been a success for us and enhanced our research, our extension
and definitely our teaching--well, actually our research,
teaching and now extension opportunities.
But the move in a lot of the programs, let us say, toward a
lot of the more competitive programs, competitive
opportunities, we have scientists at Fort Valley State who are
engaging those now. The recent proposals that are there, we
have scientists that are participating in those as well. But we
are still having challenges really accessing these
opportunities as a whole.
I mentioned the 1890 Capacity Building, the facility
funding. The facility funding has been a plus for us. We have
been able to utilize that really to enhance our infrastructure.
For an example, we were able to engage in the development of
the programming stage for a family development/child
development center as a result of the facility funding.
Mr. Scott. Could you tell us in the 1890--in just your
institution, how much funding have you been able to get through
the farm bill, the 2008 Farm Bill?
Dr. Latimore. I really cannot answer that now.
Mr. Scott. If you could just tell us what recommendations--
did you say that this would be true for all the 1890s--Albany
State, Savannah State, I think they are all 1890s here--what I
am trying to get at is we were trying to put that in--whether
you have been receiving the funds, what the difficulty has been
where you have not been receiving them, and what
recommendations you would make to us where we can improve your
ability to access this money, to help the schools.
Dr. Latimore. From what we have seen, other than what I
mentioned, we have challenges, we have challenges seeking those
funds. What we would like is an opportunity in place right now,
for example, to visit with the 1890 team so that we can come
together and put a recommendation together and present those
recommendations to you.
Mr. Scott. Okay, fine; thank you very much, I appreciate
you doing that.
Dr. Angle, I have had the pleasure of representing your
fine university's food safety center down in Experiment Station
down in Griffin, that is part of my district and we had an
opportunity to tour that program. What challenges remain for
you in terms of getting us in Congress to improve the program
for you? Are you accessing the funding? Where can we do better
for you to help you get more funding down to your institution?
Dr. Angle. Well, we have done relatively well. On the
competitive side, the University of Georgia ranks number three
nationally for land-grant universities only behind the
University of California-Davis and much to my dismay University
of Florida.
[Laughter.]
Dr. Angle. So we feel reasonably good about our ability to
compete at the competitive level. I would go back to what Dr.
Latimore was talking about and I also have mentioned, the
infrastructure. Unfortunately the State of Georgia is
significantly reducing its support for land-grant universities,
as we see happening around so many other states in the country
right now. So we are being hit from both sides with state and
potentially Federal reductions impending, as the severity of
the deficit becomes more obvious over the next couple of years.
For us in particular, we continue to have some problems
with infrastructure just like the Fort Valley State University.
There is no 1862 infrastructure included in the program any
more, and with state reductions on that side, we are very much
at a crossroads in our ability to maintain our world-class
infrastructure going into the future.
Mr. Scott. Thank you very much.
Mr. Bishop. Would the gentleman yield?
Mr. Scott. I would be pleased to yield to my colleague from
south Georgia.
Mr. Bishop. I would just like to ask Dr. Latimore and Dr.
Angle if it would be helpful if we were able, in the farm bill,
to develop more opportunities for the 1890s and the 1862s to
work together cooperatively on research. Would that facilitate
better than having what has traditionally been two systems, if
we are able to make them work more closely together with the
1890s and 1862s, so that they can collaborate with the research
opportunities and therefore share those resources? Do you think
that that would be helpful?
Dr. Latimore. Yes, that would be helpful. But keep in mind
also that not at the level that we are addressing now. We have
scientists in 1890s and 1862s that are presently collaborating
on projects and basically it's a relationship there. These are
scientists that have gone to school, or have interacted over
the past, and an opportunity presented itself so we have some
of those opportunities. But it needs to be done at a higher
level, it needs to be done more than where we are now such that
like in Georgia, both Fort Valley State University as well as
the University of Georgia, could share in a lot of
opportunities.
Also keep in mind that we have to submit an annual plan and
that annual plan includes both Fort Valley State as well as the
University of Georgia. So through that and through the
opportunities to enhance the collaboration, we see an
opportunity there where we really can enhance the contact with
the clients which we need to be serving.
But to answer your question, yes.
Mr. Bishop. Thank you.
The Chairman. Dr. Angle.
Dr. Angle. Dr. Latimore and I have known each other for a
long time, we actually shared a lab together many years ago. So
we have been having these conversations repeatedly over the
last couple of years. We do have joint planning and joint
reporting, as I say, which makes sure that no one is--no one or
no program is falling between the cracks and that has been
relatively successful. Yet there are various things--more
integration is possible and certainly needed. And not just
limited to research, I would include teaching and particularly
extension in that area where there are some great opportunities
for us to better integrate our program within the State of
Georgia, as well as many other states around the country.
Mr. Bishop. Thank you.
Mr. Scott. I thank the Chairman.
The Chairman. I thank the gentleman.
The gentleman from Virginia, Mr. Goodlatte.
Mr. Goodlatte. Thank you, Mr. Chairman.
Dr. Angle, I noted with interest your discussion of one of
the popular topics in Washington these days, earmarks, which
have been fraught with, shall we say, adverse publicity, given
the scandals that have tainted a number of Members of Congress,
including former Members of Congress who are in prison as a
result of misuse of earmarks.
We are in the process, on our side of the aisle anyway, to
try to reform this process. We have proposed a 1 year
moratorium, we are engaged in trying to encourage the Majority
to join us in this kind of reform. I know that you talked about
peer reviewing the requests and so on. Hopefully we will find a
way to continue to have Congressional Constitutional
responsibility for appropriations reflected, including
individual member input into that.
But the bigger problem we have is the other problem that
you cited in your comments, and that is that you are being
squeezed on both the state and the Federal level in terms of
the funding that is available to you. The state funding will
probably ebb and flow based on the state challenges in
balancing their budget each year. The Federal Government does
not have that challenge, so we face an even greater challenge,
and that is that there is going to be a dramatic decline in the
amount of money that is available at the Federal level for
almost anything that you can think of, not just in the
agriculture sector.
I am wondering what you can tell me is being done at your
institution to--and I will ask Dr. Latimore this as well--to
achieve greater efficiencies, greater outcomes and alternative
sources of funding for the kind of important research that you
do.
Dr. Angle. At the state level, in our case at the
University of Georgia, we have had a 22 percent reduction in
state level funding, which began as $100 million just 2 years
ago. So it has been a loss of state support since that time. We
have had to make some very hard decisions, we have lost about
18 percent of our total employment of both faculty and staff.
We will shortly be making some very hard decisions about
closing, permanently closing extension offices. Right now we
may have one of the top extension and 4-H programs in the
country. We will have to close--and we have an office in all
159--we have offices in 158 counties of 159 in the State of
Georgia. Some of them will be permanently closed, several of
our research farms will be permanently closed as well.
Trying to deal with this, we are working with the local
governments much more carefully and closely than we have in the
past. In fact, for our local extension offices, we now require
that they come up with and provide \1/3\ of the funding for
that office. And I think that is fairly unprecedented around
the United States.
We are working closely with private donors to fill in the
gaps, so they can do that. In fact, we just had a large gift
last year of $1.4 million from an individual to create the
first privately funding 4-H--an endowment for the first
privately funded 4-H agent in the country. So we are moving
very aggressively into that side of the funding equation. But
there is no doubt there are some difficult times ahead and very
difficult choices. We understand both the Federal and state
governments have funding problems, and as part of state
government and Federal Government, we have to do our part to
downsize and what we are calling right size, to make sure that
we can provide the most important services to the citizens of
Georgia. But unfortunately, some of those services that may not
rank near the top, but in my opinion are still important, may
not be offered in the future.
Mr. Goodlatte. Thank you. Dr. Latimore.
Dr. Latimore. When you look at our funding, our funding is
primarily Federal. We are at the stage where we, as far as the
state is concerned, this is for research and extension, we have
a state match, maybe close to one-to-one match and it has been
a challenge for us. In order to grow our state contribution,
then we definitely need to grow the Federal contribution.
In addition, the dollars that we receive from the Federal
Government for research and extension, as I say, is primarily
targeted to our teaching component, we engage our scientists in
proposal writing. We have been very successful over the years
in getting grants funded through our station, actually through
research, teaching and extension. Through the teaching area, we
receive anywhere from $3 to $4 million for scholarships and
research intern opportunities for students from the National
Science Foundation. We have just been accepted and receiving
funds and collaborating with the Department of Education in the
State of Georgia by utilizing our technology unit, as I
mentioned earlier, to provide training throughout the state,
training to migrant workers, training related to Medicare, in
addition to training targeted at youth.
So we are collaborating with agencies as well as industry.
We have industry partners where we are looking at small
projects, and they are opportunities for us to grow into even
larger projects. So we have those opportunities available for
us and we still have challenges with state budget cuts, and we
are still trying to make those adjustments.
Mr. Goodlatte. Thank you, Mr. Chairman. My time has
expired.
The Chairman. I thank the gentleman.
Dr. Angle, you had mentioned the formula funds. They are
based on rural population and farm numbers, right?
Dr. Angle. Yes, sir, primarily farm numbers.
The Chairman. Now as I understand it, is this the
definition that is currently being used in most of USDA, which
is that if you could sell $1,000 of farm products, you are
considered a farmer. You do not have to sell it, you just have
the ability to sell. So if you have a horse and you could have
sold the horse, you are going to be a farmer. So is that the
definition that is being used for those formula funds?
Dr. Angle. That certainly is an area of debate and that
is--you are correct in my understanding of it.
The Chairman. You know, I have been harping on this, but I
just think this is crazy, this definition that we are using.
And I do not know what the resistance to changing this is.
Maybe it is the universities, you know.
But the other day we had USDA talking about that the
farmers get 89 percent of their income from off the farm, you
know. But they are using these statistics of the 2.2 million
farmers, 1.9 million of them are probably not really farmers.
They are lifestyle farmers, they are retired, whatever. You
know, we have about 350,000, what I would consider, commercial
full time farmers.
Does it make sense to base these formulas on that type of a
system? Would we not get a really skewed result in terms of--
you know we have to ramp up this production. I agree with you,
we have to do better on research because we are going to have a
lot of people to feed. But if we are using skewed statistics,
we are not going to get there, I do not think. Is this a
discussion within the university community at all?
Dr. Angle. Well, it certainly is and it is primarily a
discussion, not based upon politics, but rather between the
East and the West and the North and South part of the country
where farm sizes tend to be different and quite diverse. It is
true in Georgia at least we have a number of medium size farms.
We do not have a lot of small farms and we do not have a lot of
large farms. So we are probably more what most people think of
as the typical agricultural state. But there are plenty of
other states where I think what you were describing was exactly
true.
I should say in Georgia, the fastest growing segment of our
farm population are those mid-size farms. The people who do
make a living off of their farm, generally the husband or wife
works full time on the farm and the other spouse works off the
farm. We are not seeing a lot of large growth in either the
very, very large farms or the very, what you were referring to
as hobby farms.
The Chairman. Well, I mean I proposed using a $20,000
number. Clearly those middle size farms would exceed that.
Dr. Angle. Yes, sir.
The Chairman. You know. It just seems to me if you have
less than $20,000 in sales, it is not much--you know, it is not
supporting the family. So I just think we have to look at this
definition because it is skewing things in a lot of different
areas. I do not know how much resistance I am going to get from
the land-grant colleges if I try to do that.
Dr. Latimore, do you use these farm statistics too in terms
of your funding? Do they use--is that part of the formula?
Dr. Latimore. Yes, especially when we are submitting grants
that is targeting the small farmer. As a matter of fact, that
definition has been a definition that has been debated really
ever since I have been----
The Chairman. Do you think it makes sense if you could sell
$1,000, you are considered a farmer, in this day and age? Maybe
50 years ago, but, I do not mean to put you on the spot.
[Laughter.]
The Chairman. Well, you get my point.
Mr. Farris, this BCAP situation. I was probably the main
person in getting that thing put together, and I did not
envision it being used in the way it is being used at all. My
vision was that this was going to help us develop new crops
that we currently are not growing that might have a potential.
And at the end of the day, we had to accept this biomass
definition which I thought potentially had problems, and then
the USDA went ahead and authorized this without a rulemaking.
In my part of the world, we had a whole bunch of money go
out to what I would consider not what this was intended to
support. I guess my question is, in Georgia here, have you had
that same kind of situation where you had a lot of money going
to a farm where this is already going on, which is what
happened in Minnesota and a lot of other places.
Mr. Farris. I believe we kind of got off in the ditch right
out of the gate with the program trying to roll it out rapidly.
The Chairman. Yes. So you agree that we went off in the
wrong direction?
Mr. Farris. Yes, sir, I think we got off in the ditch
quick. And we need to get it out of the ditch. We do believe
there are great opportunities to promote----
The Chairman. Yes, I support it, but this is about
developing a long-term sustainable renewable energy resource.
It is not about subsidizing something that is currently
happening.
Mr. Farris. Yes, sir.
The Chairman. That is the problem I had with it.
Mr. Farris. Yes, sir.
The Chairman. And I think there were some lobbyists that
worded this in such a way and so forth. As I understand it, the
new rule is getting this under control.
Mr. Farris. Yes, sir, the state forestry agencies have
submitted numerous comments on the new rule.
The Chairman. Okay. But there were some problems here in
Georgia with this as well, like we had in Minnesota?
Mr. Farris. Yes, sir. And I would like to thank the
Chairman strongly for the position on the broad renewable
biomass definition. That is tremendous related to forestry here
in Georgia. Under the renewable fuel standards definition, only
7 million acres of Georgia forestland qualifies or is
classified as renewable biomass. With the renewable biomass
definition that you promoted, 23 million acres of our 24 are
classified as renewable biomass.
The Chairman. I appreciate that, but I do not deserve the
full credit. These three gentlemen and others from this part of
the world deserve some of the credit too because they worked
hard on it.
Mr. Farris. Thank you, Mr. Chairman.
The Chairman. Thank you all very much.
The gentleman from Alabama, Mr. Rogers.
Mr. Rogers. Thank you, Mr. Chairman.
First of all, Dr. Angle, I wholeheartedly agree with your
comments about earmarks. I have two land-grant institutions in
my district, Tuskegee and Auburn, who do very important food
safety research and but for earmarking, it would be difficult
to get a lot of those monies there. So I appreciate you drawing
attention to that in your opening remarks.
You did say something that puzzled me in your opening
remarks when you talked about changes in temperature and
sunlight in the Northeast was going to cause decrease in their
food production. What time line are you looking at? That is the
first I have heard of that.
Dr. Angle. No, I am sorry, perhaps I did not explain that
properly. Sunlight and temperature are limited as you go
further north in the country and so light and temperature
become limiting in the ability to grow more food. I was not
suggesting changes, climate changes.
Mr. Rogers. Okay, thanks.
Dr. Angle. That is already maxed out in many areas of the
country.
Mr. Rogers. Great.
Mr. Farris, I want to talk to you about conservation
programs right now. Are they sufficient, given current timber
prices to be able to allow the small landowners to have proper
timber management on their land?
Mr. Farris. No, sir, they are not with current stumpage
prices. Forestry is a long term investment, typically running
30+ years on planting and establishing. And one of the real
concerns we have looking down the road is we have a wall of
wood working its way through the system right now with some
tremendous growth, exceeding harvest. But what we are not
seeing is reforestation. Reforestation rates have been dropping
drastically throughout the South.
Mr. Rogers. To what do you attribute that?
Mr. Farris. It's directly related to market prices. So one
of the things that we feel is critical to do is to develop
strong markets, retaining our traditional market, as well as
taking advantage and promoting emerging opportunities such as
the bioenergy markets.
Mr. Rogers. And that is where I was leading. One of the
things that caught my attention was Dr. Angle's remark, talking
about the increased demand on the Southeast for not only food
but fiber. And, we do hear a lot about the potential for
cellulosic technology for ethanol. And I get a lot of cross
current critiques about where that is going and the pressures
it could put on other customers who usually are depending on
that basket right now.
How would you like to see that develop, the policy that
this Committee would implement, as far as promoting cellulosic
technology, and what it might mean for the current consumers of
your products?
Mr. Farris. I think it is very important to maintain a
level playing field so that we do support traditional markets
as newer markets are emerging. And that is a lot easier said
than done.
Mr. Rogers. That is why I was hoping you would tell me how
to do it.
Mr. Farris. That is one of the real challenges, but the
fact is in Georgia and across the South, we have the woody
biomass, the feedstock to develop these markets and expand
traditional markets.
Mr. Rogers. Do you think it could be done without hindering
current consumers of that product, natural resource?
Mr. Farris. Yes, sir. Certainly here in Georgia, we have
growth exceeding harvest to the level that we could outfit or
supply feedstock for close to 20 new businesses, large
industries taking half a million tons.
Mr. Rogers. That is the concern. I get a lot of feedback
from paper companies. Obviously they are concerned about
promotion of cellulosic technology putting some real pressures,
price pressures, on them. So I would be interested if anybody
else had any thought on what they would like to see happen with
that.
Dr. Angle. I follow this technology pretty closely and
there remains some very significant technology hurdles before
cellulosic ethanol production will become widespread. There are
some breakthroughs that are needed. We do not know what those
breakthroughs are yet. We do not know what we do not know at
this point.
So while we think that this has tremendous opportunity,
Georgia likes to call itself the Saudi Arabia of bioenergy,
there is that needed breakthrough that is not on the immediate
horizon at least.
Mr. Rogers. Okay. And let me ask, while I have you, Dr.
Angle, what do you want this Committee to do to continue to
improve and grow agricultural research already happening in the
U.S.? You talked a little bit about funding sources. What would
be the one thing that you would want us to take away from this
hearing that we could do to improve that research funding?
Dr. Angle. We would like to see agricultural research
treated in the same way that we think every other important
area of research in the country is, whether it is human health,
environmental research. Agricultural research, in our opinion,
ranks right up there with those two and many others. In some
ways, it lacks the respect of many other research communities,
and I think by allowing USDA AFRI to grow, we feel like we are
moving in the right direction.
Mr. Rogers. Thank you very much. I yield back.
Mr. Scott [presiding.] The gentleman from Georgia Mr.
Marshall.
Mr. Marshall. Thank you, Mr. Chairman. Thank you all for
being here and my questioning is along the same lines as Mr.
Rogers.
We did go back and forth on the definition of renewable
woody biomass and part of the concern was that if you define it
one way, it is going to have X effect on the face of Georgia,
if you define it another way, it is going to have X effect on
the face of Georgia because the the economic forces that are
out there are so large. And what we came up with seems to me to
be fairly reasonable and then we can expand it from there. But
instead of seeing too little, just opening the state up totally
seemed too much. That caused a judgment by us that I feel like
we are not really capable to doing in a very competent way.
You mentioned that forestry, Mr. Farris, is a 30 year
investment, and you suggested that what we need to do in the
upcoming farm bill is figure out different ways that we can
expand forestry in Georgia. I have a good friend right now who
probably along with a whole bunch of other folks, but my good
friend, with Federal help, is clearing 600 acres of land for
pasture for beef. He is going to expand his beef cattle
operation, not growing trees. But Federal help was involved in
that instance in actually diminishing the amount of acres
devoted to trees.
Dean Angle in his opening remarks talked about food
challenges that the world is likely to see as a result of a
number of different phenomena, and suggested that the Southeast
can sort of come to the rescue and provide a lot of food that
the world needs. And I found this kind of interesting that Dean
Angle, on the one hand, seems to be suggesting that what we
ought to be doing in the next farm bill is focusing on
protecting and expanding our ability to grow food here in the
Southeast anticipating that that is where the market is going
to be. And then at the other end, Mr. Farris is suggesting we
need more trees, less acreage devoted to food.
And so I am wondering, do y'all talk to one another?
[Laughter.]
Mr. Marshall. Is there anybody out there who is coming up
with some sort of plan, here is the acreage available in
Georgia that could be producing energy, producing wood,
producing food? Given what is likely to happen over the next
few decades, the Federal program should be prompting balance
among those three things. Dean Angle.
Dr. Angle. One thing I would say is that the balance
happens at the farm level for the most part. Most farmers in
this room today probably think about the balance between
forests versus ag land on almost a daily basis and they make
economic judgments. I see farms going in both directions right
now for a variety of different reasons.
I should say I think within the next couple of months, we
will have more definitive information. Our Center for
AgriBusiness at the University of Georgia is working on this
very type of question now and trying to look at the balance,
and trying to help you and some of our state leaders with
better information on making these decisions.
Mr. Marshall. Mr. Farris.
Mr. Farris. If I can add as well, we are working on a
statewide forest assessments strategy under your guidance and
we will be presenting that to the Secretary this summer.
But there are a couple of things. The greatest challenge to
our forests in Georgia is not--there has always been a swap, a
shift between forestry and agricultural practices, as Dean
Angle mentioned, driven by markets. Our greatest threat to
forests in Georgia and across the South is growth and urban
sprawl, unbridled development and all the associated elements
that come along with that. Here in Georgia, we lose 106 acres a
day to impervious surfaces, rooftops and pavement.
So one of our real challenges is not really whether it is
in ag crops or forestry, but how do we enhance productivity on
both of those.
Mr. Marshall. I am delighted to hear, Dean Angle, that you
have somebody working on a bigger vision here, it is not just
food, it is not just roads and houses, it is not just energy
and it is not just wood, but somebody trying to figure out,
given what is likely to happen over the next few decades, how
we ought to--well, what sort of programs we ought to be putting
together that is going to foster the best mix of those four
things.
Dr. Angle. Right. And our study was prompted by an expected
increase in both the forestry, as well as agricultural sectors
contributing additional acreage to bioenergy. That was the
driver that started all of this.
Mr. Marshall. Thank you, Mr. Chairman.
Mr. Scott. The gentleman from Nebraska, Mr. Smith.
Mr. Smith. Thank you.
Mr. Farris, I know in your remarks, you talked about, I
think you called it recent Congressional proposals to change
the Clean Water Act. If you might elaborate on what you were
talking about. Perhaps might it be the effort to extend Federal
control to almost all bodies of water or all amounts of water
wherever they might be?
Mr. Farris. Yes, sir, actually as far as the definition
going from navigable waters to waters of the U.S. and what does
that mean. Does it mean the mud puddle in the road or in the ag
field out there? And our real concern is silvicultural
exemptions that currently exist regarding 404 permitting.
Mr. Smith. I am sorry, would you say that again?
Mr. Farris. Our real concern is maintaining existing
silvicultural exemptions related to Clean Water Act, 404
permitting, requirements to go through the process to get a
permit before you can do a forestry operation.
Mr. Smith. Would anyone else wish to comment on that?
[No response.]
Mr. Smith. Obviously, my constituents in Nebraska are very
concerned about the reach of the Federal Government as well
into mud puddles, if you will.
Thank you. I yield back.
Mr. Scott. Mr. Bishop.
Mr. Bishop. Yes, I will forego my questions of this panel.
I think I talk with them pretty frequently, I am looking
forward to the next panel.
Mr. Scott. All right. The gentleman from Pennsylvania, Mr.
Thompson.
Mr. Thompson. Thank you.
First of all, thanks to each of you gentlemen for your
expertise and your leadership in your respective areas.
Mr. McMurray, I have a question. In hearing your testimony
and reading it, in terms of outcomes with investments, I was
very pleased to hear about in the past 15 years, you have had
ten licensed technologies or systems. I think that is
wonderful. I am a supporter of those types of investments. I
think when we invest in those, it is important to make sure
that we are expecting outcomes back and commercialization is
just a great outcome when you are not just developing the
technology, so that we are not just perpetuating the same
research study year after year after year, but we have a final
outcome.
I just question to what do you attribute your success,
having at least ten of those technologies and systems
commercialized in that period of time?
Mr. McMurray. Well, first of all, thank you for recognizing
the contribution. We feel that has been a very important
contribution that we have made, and we are very proud of that.
I think a lot of this comes from the collaboration between the
University along with industry.
One of the programs that we have that was funded through
the state allowed us to put together a team of academic
researchers along with industry which would be the end-user
along with also the commercial company who is going to
commercialize the technology for licensing. So you put the
three of those into a single team working together, it
significantly increases the odds that you are going to have a
successful outcome for a commercial product. And that is one of
the key ways we do this.
But also, back up even further, back when we do the
research, we are very focused on developing business plans with
all of our research. We all understand that as academic
researchers, we can sit around and write research proposals and
dream up wonderful great problems to solve. Finding and
identifying the ones which have economic benefit to the
community--if we can start off by identifying that, then we are
off to a good start from the very beginning. We have teams of
people that we are able to bring together, the various hardware
and software people along with business people, from a very
early point in the development, to be able to guarantee that we
have something that is going to be of value at the end.
Mr. Thompson. Great. That sounds like a great model.
Dr. Angle, in your testimony, you talked about the
importance of increased production efficiency with the
shrinking numbers--the loss of farms, of agricultural land all
across this country and yet the continued growth of
populations. The Secretary of Agriculture in Pennsylvania
described it pretty cleverly I thought in a hearing recently.
He talked about having 303 million stomachs in this country and
seven to ten billion stomachs across the world, so the need for
increased agricultural production efficiency.
Are there specific programs and initiatives that you would
recommend or would like to see either new or continued support
in the expansion of agriculture efficiency of production?
Dr. Angle. Well, that has been one of our concerns with the
USDA funding over the last year, they have started some very
specific issues primarily related to human health. While we are
all very supportive of that, as you said, we recognize that we
have to double food production on a worldwide basis and
probably more than that within this country, and that is only
going to happen through enhanced science and technology.
We want to make sure that the USDA, through their
approaches, are allowing our farmers to increase production on
a per-acre basis, because you are correct, we are not making
any more acres of land in this country. And so we are a little
concerned as a system about some of the directions that they
have taken. We support and applaud all the directions they have
taken, though we do not want to forget that we need to enhance
production on a per-acre basis.
Again that does two things. That allows us to produce more
food for humanitarian needs and for those issues, but it also
allows farmers to increase their profit per farm to help keep
them in business. Primary for a farmer not to sell their farm
for urban development is to allow them to make a reasonable
living for their family.
Mr. Thompson. Thank you. Please.
Dr. Latimore. In addition to that, when we think in terms
of locally grown, locally produced, the approach was
sustainable organics. The move that that has taken in this
country is another step toward solving this problem. Throughout
the years--and I have had some time in industry prior to my
academic involvement, we pushed to increase production. We
tried to increase production because we know the world
population is increasing, but our land base is not. So we have
to look at both perspectives here, increasing production as
well as enhancing it, and also influencing individuals at the
local level, even like the small farm. But that is an
opportunity, that is a market that will add food and fiber to
this system.
Mr. Thompson. Great. I am out of time. Dr. Latimore, I
would love to get more information, and maybe we could do that
by correspondence, on a particular project you referenced in
your testimony, the mobile technology laboratory, that
specifically was looking at obesity. I think maybe it is a
planned or a proposed project that was referenced in your
testimony. But I look forward to talking more with you about
that.
The Chairman. [presiding.] I thank the gentleman and I want
to thank this panel for your testimony and being with us today
and answering our questions, we appreciate it.
If the Members have additional questions, I think they can
submit them to you and you would be willing to answer them in
writing I assume.
Thank you all very much, you are excused and we will call
the second panel.
Mr. Andy Bell, cotton, peanut, corn and cattle producer
from Climax, Georgia; Vincent Duvall, cattle and poultry
producer from Macon, Georgia; Mr. Ronnie Lee, cotton producer
from Bronwood, Georgia; Mr. Richard Minor, fruit and vegetable
producer from Andersonville, Georgia; Mr. Armond Morris, peanut
producer from Ocilla, Georgia; Mr. Hilton Segler, pecan
producer from Albany, Georgia; and Mr. Ricky Williams, dairy
producer from Baxley, Georgia.
I guess we are going to have to squeeze you guys in there.
It might be good to hold those microphones up close when you
are testifying, that seems to work the best way. So we welcome
all of you to the Committee, we appreciate your making your
time available to the Committee today. As soon as you all get
settled, Mr. Bell, welcome to the Committee. Is there a
microphone there? I think if you just take that end there and
hold it up close, it will work the best.
Your full testimony will be made part of the record, so
feel free to summarize. I think it might work better is you
hold it up, if that does not bother you too much. You have to
hold it up close though.
STATEMENT OF WILLIAM A. ``ANDY'' BELL III, COTTON, PEANUT,
CORN, AND CATTLE PRODUCER, CLIMAX, GA
Mr. Bell. Good afternoon, Chairman Peterson, Members of the
Committee. I am pleased to be here today and I appreciate the
invitation to attend and speak to you.
My name is Andy Bell, I am a fourth generation farmer from
Decatur County, Georgia. I was raised on a family farm near
Climax, Georgia. Today, I farm in partnership with my brother.
We farm both irrigated and non-irrigated land on approximately
2,000 acres. We have a diversified farming operation that
includes corn, cotton, peanuts, hay, winter forages, and a beef
cattle operation. We own land and we also rent land from
neighbors.
During my lifetime of farming, I have produced and sold
many crops. I have sold corn for as high as $6.00 per bushel
and as low as $1.70 per bushel. I have sold cotton for as high
as $1.00 per pound and as low as 26 cents per pound. This type
of price fluctuation can be seen in most all crops and
livestock during the last 25 years.
Southern agriculture is unique in that our cost of
production is higher on certain crops. For example, peanuts and
cotton have their own set of tillage and harvest equipment.
This specialized equipment is very expensive to own and
maintain. A six row peanut picker costs approximately $100,000
and a six row cotton harvester over $300,000. These implements
are crop specific and are only used for their designed purpose.
Grain farmers are then required to have even another set of
equipment. As you can see, our costs can quickly escalate as we
produce these various crops.
I believe several key provisions of the current farm bill
must remain in place in any new legislation. Farmers need
downside price protection against extreme low prices. The
marketing loan program is a must for all program crops. All
crop production on a farm should remain eligible for the
marketing loan.
In some years, a farmer may forward contract his expected
production. Other times, farmers must place their crop in the
marketing loan in hopes of waiting for a higher price.
The Direct and Counter-Cyclical Program, has worked well
and should remain in the new farm bill. The target price system
has worked and gives some protection against low prices. The
DCP program helps deliver this assistance. Market gains and
loan deficiency payments also provide some relief against low
prices and should remain in the new farm bill.
Crop insurance is a must on many farms in the South. We can
have extreme rainfall, drought, windstorms, hurricanes, or
early or late freezes all in the same year. However, any crop
insurance coverage above the 70 to 75 percent level is simply
not affordable. Crop insurance needs to be improved and must
remain affordable for it to be a useful tool in today's
agriculture.
Finally, some type of workable permanent disaster program
is needed. The Supplemental Revenue Assistance Program, SURE,
as it is known, does not work well for southern agriculture.
Growing multiple crops and diversification on many farms makes
it almost impossible to qualify for benefits.
In conclusion, the current farm bill has worked reasonably
well for southern agriculture. Any changes in the current farm
bill should create new opportunities as well as preserving the
proven target price system. Agriculture is the leading industry
in Georgia and most of the South. We need sound agricultural
policy to continue producing the best food and fiber in the
world.
Mr. Chairman, thank you for holding this hearing in
Georgia, and thank you for allowing me to be a part of this
discussion.
[The prepared statement of Mr. Bell follows:]
Prepared Statement of William A. ``Andy'' Bell III, Cotton, Peanut,
Corn, and Cattle Producer, Climax, GA
Good afternoon, Chairman Peterson, Ranking Member Lucas, and
Members of the Committee. I am pleased to be here today, and I
appreciate the invitation to attend and speak to you.
My name is Andy Bell, and I am a fourth generation farmer from
Decatur County, Georgia. I was raised on a family farm near Climax.
Georgia. Today I farm in partnership with my brother. We farm both
irrigated and non-irrigated land on approximately 2,000 acres. We have
a diversified farming operation that includes corn, cotton, peanuts,
hay, winter forages, and a beef cattle operation. We own land and we
also rent land from neighbors.
During my lifetime of farming, I have produced and sold many crops.
I have sold corn for as high as $6.00/bushel and as low as $1.70/
bushel; cotton as high as $1.00/pound and as low as $0.26/pound. This
type of price fluctuation can be seen in most all crops and livestock
during the last 25 years.
Southem agriculture is unique in that our cost of production is
higher on certain crops. For example, peanuts and cotton have their own
set of tillage and harvest equipment. This specialized equipment is
very expensive to own and maintain. A six row peanut picker costs
approximately $100,000 and a six row cotton harvester over $300,000.
These implements are crop specific and are only used for there designed
purpose. Grain farmers are then required to have even another set of
equipment. As you can see, our costs can quickly escalate as we produce
these various crops.
I believe several key provisions of the current farm bill must
remain in place in any new legislation. Farmers need downside price
protection against extreme low prices. The marketing loan program is a
must for all program crops. All crop production on a farm should remain
eligible for the marketing loan.
In some years, a farmer may forward contract his expected
production. Other times, farmers may place their crop in the marketing
loan program in hopes of waiting for a higher price.
The direct and countercyclical program (DCP) has worked well and
should remain in the new farm bill. The target price system has worked
and gives some protection against low prices. The DCP program helps
deliver this assistance. Market gains and loan deficiency payments also
provide some relief against low prices and should remain in the new
farm bill.
Crop insurance is a must on many farms in the South. We can have
extreme rainfall, drought, wind storms, hurricanes, or early or late
freezes, all at in the same year! However, any crop insurance coverage
above the 70-75 percent level is simply not affordable. Crop revenue
coverage helps, but it is not available for all crops. Crop insurance
needs to be improved and must remain affordable for it to be a useful
tool in today's agriculture.
Finally, some type of workable permanent disaster program is
needed. The Supplemental Revenue Assistance Program (SURE) does not
work for southern agriculture. Growing multiple crops and
diversification on many farms makes it almost impossible to qualify for
benefits.
In conclusion, the current farm bill has worked reasonably well for
southern agriculture. Any changes to the current farm bill should
create new opportunities as well as preserving the proven target price
system. Agriculture is the leading industry in Georgia and in most of
the South. We need sound agricultural policy to continue producing the
best food and fiber in the world.
Mr. Chairman, thank you for holding this hearing in Georgia and for
allowing me to be a part of the discussion.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
William A. Bell, III (Andy).
The Chairman. Well, thank you very much, Mr. Bell. You get
extra points for beating the time limit.
[Laughter.]
The Chairman. We are doing good here.
Mr. Duvall, welcome to the Committee.
STATEMENT OF VINCENT ``ZIPPY'' DUVALL, CATTLE AND POULTRY
PRODUCER, MACON, GA
Mr. Duvall. I think in the South with our drawl, we ought
to have a longer time.
[Laughter.]
Mr. Duvall. Thank you, Mr. Chairman, for coming to our
beautiful state here in Georgia. And every time I see you, you
are working. I hope that you can enjoy your time here. And
thank you to the rest of the Committee, especially Congressmen
Jim Marshall and David Scott and also Congressman Bishop for
representing us so well.
I would like to introduce myself. I was listed as Vincent
Duvall and that was what I was named, but everyone knows me as
Zippy. I spent 30 years dairying on my family farm before I
became Farm Bureau President. So I live in Greensboro, Georgia
and I work in Macon as Farm Bureau President. I have been Farm
Bureau President for 8 years.
We sold our 300 cow dairy herd in 2005, they went to west
Texas and I replaced them with 200 beef cows. And I have four
broiler houses that we grow for an integrator here in the State
of Georgia. We are very proud to still be in agriculture, and I
think it is important for the Farm Bureau President to be still
actively farming so I can go home and face the paycheck and the
labor problems that we have there.
I would tell you that Georgia Farm Bureau is the largest
general farm organization in the state, and we strive to
represent all Georgia farmers in whatever they produce. We have
20 major commodity groups with farmers from all over the state
represented, giving us advice on policy and how to implement
them. In Georgia, agriculture creates one out of every seven
jobs, agriculture and agribusiness. We have 159 counties in our
state and \2/3\ of those counties still depend on agriculture
as their economic engine.
Agriculture is very diverse. We are number one in the
nation in poultry production. We are the four big P's--poultry,
peanuts, pine trees and pecans, pe-kahns, whatever you want to
call them. We call them pecans at home. We are the number two
state in cotton, with about a million acres in cotton, very
proud of that. And many, many other crops that are important to
the economic engine of this state.
U.S. farm policy is important, and it should be market
oriented for most production of quality products to meet the
market demand, to ensure availability of U.S. produced farm
products at competitive prices, and to provide a safety net for
farmers with market and weather caused problems.
The 2008 Farm Bill has worked very well in our state.
Direct and countercyclical programs work well. Our farmers and
lending institutions are very familiar with them and feel
comfortable working within those programs.
The Supplemental Revenue Assistance Program, SURE, presents
some challenges here in our state. It is hard for our farmers
here to qualify because we are very diverse. And you heard Mr.
Bell over here, who has participated, explain that to you.
The ACRE program, according to our FSA officials in
Georgia, no one has entered into the ACRE program or signed up
in the State of Georgia. There are many questions around it, we
cannot find anybody that understands it, and it requires a
commitment for the full term of the farm bill, which concerns a
lot of us. Farmers in our state tend to stick with what they
trust, understand and are used to.
But on the other hand, conservation programs are very
popular here. Conservation Reserve Program, CRP, is important
to our family farms here in the State of Georgia. As our
country moves toward a renewable energy, CRP will fit well with
our farm families. The EQIP program, Environmental Quality
Incentives Program, there are more people requesting those
funds than there are funds. And it is very well thought of in
our state and will be used.
The drought is still on our mind even though we have had a
wet last 10 months in Georgia. Water is plentiful in our state,
but only if we manage it. We would like to see more cost-
sharing on farm ponds and reservoirs, so that we can continue
to utilize and manage our water to water our crops and our
livestock.
Concentration, consolidation and anti-competitiveness is an
issue with our inputs on our farms and also with what we sell.
USDA should have more authority to investigate ag concentration
regarding companies that buy farmers' products and companies
that sell inputs to farms. USDA should work more closely with
the Department of Justice. We do not oppose agricultural
contracts, but farmers should have more power in negotiating
with these companies.
Biomass Crop Assistance Program, BCAP, very little BCAP
money has been going to our landowners. I heard you explain,
Mr. Chairman, what your intention was. I will tell you the
growers and farmers in the State of Georgia, if you presented
them a program that they can plant and make money on, they will
commit themselves to it. But we have to make sure that the
people will stand behind that commitment, because it is going
to take a huge investment for them to move in that direction.
We would agree that the BCAP program has not gone in the
direction it should have. We filed for a Freedom of Information
Act request of what people have received that money in the last
3 months, and I was surprised. I could not find a farmer on
there, a tree farmer, unless of course he had his own logging
crew. So we share the same concerns that you do. I think it was
developed for farmers to take advantage of.
Technology upgrades have been a challenge in our FSA
offices for a long time. FSA office is a provider of a service,
and our employees in our FSA offices have had their hands tied
behind their backs because of the lack of technology. The money
that is appropriated--no one wants to talk about spending money
on computers and I understand that. However, technology
upgrades are badly needed. We need to improve the efficiency
and the help programs so FSA can be more timely and effective
for our family farms and for our rural communities.
In conclusion, I would like to congratulate you, Mr.
Chairman, on the 2008 Farm Bill. It has worked well in our
state. I think there is one thing we need to make sure that we
do. We can take care of farmers daily, but if we do not do
something to encourage young people that are graduating from
our ag schools to go back and actually apply themselves on the
land with livestock or with crops, then we will lose
agriculture in the future. We have to get our young people to
return to the land.
I will tell you and I will sum it up by saying this, you
are in the Bible Belt and there are a lot of people down here
praying that God will give you all the wisdom to lead us in the
right direction. God bless you and God bless agriculture in
this state and across this country, and God bless America.
[The prepared statement of Mr. Duvall follows:]
Prepared Statement of Vincent ``Zippy'' Duval, Cattle and Poultry
Producer, Macon, GA
Good afternoon, Chairman Peterson, Ranking Member Lucas, and
Members of the Committee. Thank you for calling this meeting and
providing Georgia Farm Bureau the opportunity to speak.
My name is Zippy Duvall, and I am President of the Georgia Farm
Bureau. I am a lifelong farmer from the Greshamville Community in
Greene County, Georgia. I was a dairyman for more than 30 years. In
1986, our farm diversified into poultry, and in 2005, we stopped milk
production to produce beef cattle and hay. Today, we have a 150 cow
commercial beef herd and four poultry houses through which we produce
about a half million chickens annually.
I want to thank the Georgia Congressmen who serve on this important
Committee: Congressman Jim Marshall, who lives in Macon, the
headquarters of Georgia Farm Bureau; and Congressman David Scott, a
true friend to Farm Bureau, agriculture, and within whose district this
meeting is being held. We are happy to be in the 13th Congressional
District, and Congressman Scott, we appreciate your hospitality and the
work done by your staff to coordinate this hearing.
Georgia Farm Bureau is a general farm organization, and Georgia has
a very diverse agriculture. Our state ranks first in peanuts, poultry,
and forest products, second in cotton, and we produce a wide variety of
other products in economically significant amounts. As a testament of
this diversity, Georgia Farm Bureau appoints twenty different standing
commodity advisory committees to make recommendations on Georgia's
different farm enterprises.
Sound farm policy is essential for an economically viable
agriculture. We believe effective farm policy should be market
oriented, with a goal of promoting quality products that meet market
demand. The policy should ensure the availability of competitively
priced U.S. produced farm products. Because of the vagaries of the
weather and markets, farm policy should provide for an effective
financial safety net for farmers without regard to farm size or
structure.
We believe the 2008 Farm Bill meets most of these principles and
has worked well for Georgia farmers. We are grateful to the Agriculture
Committee for the work done on this legislation.
Georgia's cotton and peanut farmers fundamentally support the
current program of direct and countercyclical payments (DCP) provided
by the 2008 Farm Bill. This program makes sense and it is well
understood by farmers and rural lenders alike. There is also broad
support for the marketing loan program for these crops.
The ``Supplemental Revenue Assistance Program'' (SURE) is being
adopted slowly by Georgia farmers. Many Georgia counties experienced
declared disasters in 2008 and 2009, so the yields are at low levels.
Crop insurance is offered at low rates of reimbursement and many crops
are only available through the ``Noninsured Assistance Program'' (NAP).
Finally, payments under the SURE program are not available until a full
year after the end of the crop year in which the disaster occurred.
This assistance is not timely enough for a farmer in severe financial
distress.
Not a single Georgia farm has signed up for the ACRE program,
largely because it is not beneficial to cotton and peanut farmers. Many
crops grown in Georgia had relatively low prices in 2007 and 2008, the
base price years for calculating ACRE revenue guarantees. Also, once in
ACRE, farmers are in the program for the duration of the farm bill.
Given a choice between DCP or ACRE, most farmers will go for the
program with which they are most familiar and satisfied.
Adjustments to dairy policy are needed to allow dairymen in the
Southeast to remain in production to supply the market with locally
produced fresh milk. We recommend a feasible operation plan be created
that allows regional differences while encouraging production in
deficient areas so that southeastern dairy farmers may reduce drastic
swings in milk prices.
Good farm policy does not accomplish much if commercial farming
operations are ineligible for benefits. As an organization, we oppose
payment limits and means testing to determine farm program eligibility.
However, we understand the necessity of these reforms in 2008 Farm
Bill.
Two conservation programs are particularly successful in Georgia.
The ``Conservation Reserve Program'' (CRP) is popular with landowners.
The ``Environmental Quality Incentives Program'' (EQIP) is also a
popular program, but more funds are needed so that more farmers can
participate.
Because of recent droughts, Georgians are particularly concerned
with water issues. We support Federal funding of producer incentives
for water conservation, including construction, repair, and maintenance
of impoundments and farm ponds for livestock and irrigation.
Consolidation and concentration within U.S. agriculture is having
adverse economic impacts on farmers. Congress should review existing
statues, develop legislation where necessary, and strengthen
enforcement activities to ensure proposed agribusiness mergers and
vertical integration arrangements do not hamper farmers' access to
inputs and markets.
We believe USDA should be empowered to investigate mergers,
consolidation of farm input suppliers, processors, and retailers for
anti-competitive activities. USDA should be given authority to review
and provide recommendations to the Department of Justice on
agribusiness mergers and acquisitions. Producers impacted by unfair
marketing practices should be compensated when harmed by monopolistic
practices.
We are not opposed to the continued use of production contracts so
long as producers have meaningful input in the process of negotiating
contracts. Also, it is important that companies owning critical
genetics do not obtain too much market power. Either of these scenarios
creates situations where farmers have few viable options and can be
subject to economic abuse.
The 2008 Farm Bill authorized a ``Biomass Crop Assistance Program''
(BCAP) to assist agricultural and forest landowners in the utilization
of unused biomass byproducts. Our state has received substantial
payments regarding this program, but most farmers and forest landowners
are unaware of it. We are concerned the program is not working as
Congress intended.
Additionally, the BCAP is supposed to promote utilization of
products without a current use. Bark and other wood residues have value
and are important inputs in the horticulture industry as potting soil.
Diversion of these products for energy production should not take place
under BCAP.
Computer technology offers the promise of government programs being
delivered in a more efficient and timely manner. However, many FSA
staff work with slow, obsolete machines. During the busiest times at
FSA offices, the office computers are unable to input data due to heavy
use. We support upgrading computer technology and appropriate software
to allow FSA to achieve savings by improving administrative efficiency
at the Federal, state, and local level.
In summary, Georgia Farm Bureau believes the 2008 Farm Bill is
working well. We suggest the basic funding structure of the 2008 Farm
Bill should not be altered significantly. Our organization stands ready
to work with the Agriculture Committee and Congress to help clarify
issues as the 2012 Farm Bill debate begins.
Thank you for the opportunity to offer these comments.
Sincerely,
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Zippy Duvall, President.
The Chairman. Thank you very much, Mr. Duvall.
Mr. Lee, welcome to the Committee.
STATEMENT OF RONNIE LEE, COTTON PRODUCER, BRONWOOD, GA
Mr. Lee. Good afternoon, Chairman Peterson, Georgia Members
of Congress and other guests. I am Ronnie Lee, I am from
Bronwood, Georgia, cotton, peanuts, grain, cattle farmer. I
also own a cotton gin, serve on the Board of Directors of
Southern Cotton Growers and that is who I represent. This
organization represents every cotton producer in six
southeastern states--Alabama, Florida, Georgia, North Carolina,
South Carolina, and Virginia.
I want to thank you for hosting this hearing and giving us
an opportunity to testify.
Cotton is a cornerstone of the rural economy of our region
and the Cotton Belt. Its scope and economic impact extends well
beyond the approximately 19,000 farmers that plant between 9
and 12 million acres of cotton each year in the 17 cotton-
producing states. Taking into account diversified cropping
patterns, cotton farmers cultivate more than 30 million acres
of land each year.
Processors and distributors of cotton fiber and downstream
manufacturers of cotton apparel and home-furnishings are
located in virtually every state, with much of this
infrastructure located right here in Georgia. Beyond the farm
gate, distribution and processing of cotton includes cotton
gins, independent merchants and cooperative merchandisers,
warehouses, cottonseed distributors, textile mills and so
forth.
Nationally, farms and businesses directly involved in the
production, distribution and processing of cotton employ almost
200,000 workers and produce direct business revenue of more
than $27 billion. Accounting for the ripple effect of cotton
through the broader economy, direct and indirect employment
surpasses 420,000 workers with economic activity well in excess
of $100 billion.
In our six-state region--Alabama, Florida, Georgia, North
Carolina, South Carolina, and Virginia--the cotton industry's
ripple effect is responsible for over 173,000 jobs and
generates economic activity surpassing $47 billion annually.
Southern Cotton Growers maintains that sound farm policy is
essential for the viability of the cotton industry in this
region and the United States.
Effective farm policy should adhere to several principles:
it should be market-oriented with a goal of promoting quality,
efficiency and domestic competition; it should allow for full
production to meet market demand; it should provide for an
effective financial safety net; it should ensure the
availability of competitively-priced U.S. cotton to domestic
and international textile mills; and it should encourage
maximum participation without regard to farm size or structure.
We believe the 2008 Farm Bill meets most of these
principles and has worked well for the cotton industry. We
commend this Committee for its diligent work on this
legislation.
The centerpiece of the upland cotton program and
traditional commodity programs has been, without question, an
effective marketing loan program. It provides a safety net for
producers, but does not harm the competitiveness of U.S.
commodities, not just cotton. It is a program component that
makes sense, that works, and serves many critical purposes.
Because it is well-understood and a fundamental part of
commodity policy, the marketing loan gives rural banks the
confidence they need to make critical operating loans
available. I will say in my own operation, I do not think I
could get financed without this type safety net.
We believe that USDA overstepped the intent of Congress in
key payment eligibility provisions and issued regulations that
were overly complicated and restrictive. Sound policy
provisions are of little value if commercial-size farming
operations are ineligible for benefits. The vast majority of
these are true family farm operations that have expanded in
size in an attempt to lower per unit cost of production or gain
economies of scale. While we oppose any artificial payment
limitations, we advocate administering the current provisions
within the intent of Congress, and strongly oppose any further
restrictions.
In summary, our industry believes the cotton provisions of
the 2008 Farm Bill are working well. If policy changes are
inevitable as part of the 2012 Farm Bill, the cotton industry
remains ready to work with the Agriculture Committee to explore
alternative programs that can provide the needed safety net for
our industry in a manner that is consistent with our
international trade obligations, and within budget constraints.
Thank you for giving us the opportunity to be here today,
and I look forward to answering questions.
[The prepared statement of Mr. Lee follows:]
Prepared Statement of Ronnie Lee, Cotton Producer, Bronwood, GA
Chairman Peterson, Ranking Member Lucas, Georgia Members of
Congress and other guests, my name is Ronnie Lee. I am cotton, peanut
and grain producer from Bronwood, Georgia where I also own and operate
a gin. I also serve on the Board of Directors of Southern Cotton
Growers. This organization represents every cotton producer in the six
states that comprise the Southeast Region (AL, FL, GA, NC, SC & VA).
Thank you for hosting this hearing and for the opportunity to testify
before you regarding farm policy issues.
Cotton is a cornerstone of the rural economy of our region and the
Cotton Belt. Its scope and economic impact extends well beyond the
approximately 19,000 farmers that plant between 9 and 12 million acres
of cotton each year in the 17 cotton-producing states. Taking into
account diversified cropping patterns, cotton farmers cultivate more
than 30 million acres of land each year.
Processors and distributors of cotton fiber and downstream
manufacturers of cotton apparel and home-furnishings are located in
virtually every state with much of this infrastructure located right
here in Georgia. Beyond the farm-gate, the distribution and processing
of cotton includes cotton gins, independent merchants and cooperative
merchandisers, warehouses, cottonseed distributors and processors, and
textile mills.
Nationally, farms and businesses directly involved in the
production, distribution and processing of cotton employ almost 200
thousand workers and produce direct business revenue of more than $27
billion. Accounting for the ripple effect of cotton through the broader
economy, direct and indirect employment surpasses 420 thousand workers
with economic activity well in excess of $100 billion.\1\
---------------------------------------------------------------------------
\1\ Direct employment and revenue based on 2007 Census of
Agriculture and 2002 Economic Census. Indirect employment and economic
activity derived from input-output multipliers reported by University
of Tennessee's Agri-Industry Modeling and Analysis Group.
---------------------------------------------------------------------------
In the six-state region of Alabama, Florida, Georgia, North
Carolina, South Carolina and Virginia, the cotton industry's ripple
effect is responsible for over 173 thousand jobs and generates economic
activity surpassing $47 billion annually.
Cotton's Economic Impact
----------------------------------------------------------------------------------------------------------------
Cotton Sector Broader Economy
---------------------------------------------------------------------------
Direct Revenue Economic Activity
Jobs (Million $) Jobs (Million $)
----------------------------------------------------------------------------------------------------------------
Southeast (AL, FL, GA, NC,77,733A) $10,647 173,454 $47,502
Mid-South (AR, LA, MO, MS, TN31,434 $6,090 70,143 $27,172
Southwest (KS, OK, TX) 41,569 $5,715 92,758 $25,497
West (AZ, CA, NM) 24,028 $2,318 53,616 $10,343
---------------------------------------------------------------------------
United States..................... 191,405 $27,622 427,102 $123,241
----------------------------------------------------------------------------------------------------------------
Southern Cotton Growers maintains that sound farm policy is
essential for the viability of the cotton industry in this region and
the United States. Effective farm policy should adhere to several
principals:
(1) It should be market-oriented with a goal of promoting quality,
efficiency and domestic competition;
(2) It should allow for full production to meet market demand;
(3) It should provide for an effective financial safety net;
(4) It should ensure the availability of competitively-priced U.S.
cotton to domestic and international textile mills; and
(5) It should encourage maximum participation without regard to
farm size or structure.
We believe the 2008 Farm Bill meets most of these principles and
has worked well for the cotton industry. We commend this Committee for
its diligent work on this legislation.
The centerpiece of the upland cotton program and traditional
commodity programs has been without question, an effective marketing
loan program. It provides a safety net for producers but does not harm
the competitiveness of U.S. commodities. It is a program component that
makes sense, that works, and that serves many critical purposes.
Because it is well-understood and a fundamental part of commodity
policy, the marketing loan gives rural banks the confidence they need
to make critical operating loans available. This foundational program
has also been the lever to move other important reforms, such as
standardized bales and bale packaging for cotton, electronic warehouse
receipts, and heightened standards for storage and elevator facilities
for cotton and for other commodities.
With respect to cotton, while the 2008 Farm Bill maintained the
marketing loan and several other program components from prior law, the
bill also made many reforms, such as a revision in the calculation of
cotton premiums and discounts, placing a ceiling on the payment of
storage credits for cotton under loan, and an economic adjustment
program for the U.S. textile industry.
Fundamentally, we continue to support the 2008 Farm Bill's approach
to the cotton program and all of its components, from the marketing
loan to direct and countercyclical payments. Each component serves a
distinct purpose that is beneficial to U.S. farmers.
The 2012 Farm Bill debate, however, will take place with several
new and increased points of pressure. Record budget deficits will put
intense pressure on funding. The WTO Brazil Case puts cotton's
marketing loan and countercyclical programs under special scrutiny even
though the cotton program, as revised by the 2008 bill, has never been
evaluated by a WTO Panel. Ongoing negotiations in the Doha Round of
trade negotiations could result in a dramatically altered landscape for
domestic commodity support. If circumstances arise that make it
impossible to maintain a reasonable safety net using existing delivery
mechanisms, the cotton industry will look at alternatives.
As evidenced by recent sign-ups, the ACRE program has not been a
very attractive alternative for cotton farmers in our region or across
the Cotton Belt. The support mechanisms within ACRE do not provide an
adequate safety net for cotton farmers when compared to the traditional
DCP program. If a revenue-based approach is to find support among
cotton producers, a more reasonable revenue target would have to be
established. Mr. Chairman, we are working as an industry to evaluate
fully our industry's concerns with ACRE in order to develop
recommendations for effective modifications.
Even as our industry commits to an in-depth review of the structure
of the cotton program, I must emphasize our commitment to the
principles I outlined earlier in my statement. One of those principles
is that effective farm policy must maximize participation without
regard to farm size or income. The 2008 Farm Bill contained significant
changes with respect to payment limitations and payment eligibility. In
general, the limitations were made more restrictive, and the adjusted
gross income test was substantially tightened.
In addition to the legislative changes, we believe that USDA over-
stepped the intent of Congress in key payment eligibility provisions
and issued regulations that are overly complicated and restrictive.
Sound farm policy provisions are of little value if commercial-size
farming operations are ineligible for benefits. The vast majority of
these are true family farm operations that have expanded in size in an
attempt to lower per unit cost of production (economy of scale). While
we oppose any artificial payment limitations, we advocate administering
the current provisions within the intent of Congress and strongly
oppose any further restrictions.
Conservation programs were strengthened in the 2008 Farm Bill. The
Conservation Stewardship Program and similar conservation programs can
lead to improved environmental and conservation practices but should
not serve as the primary delivery mechanism for farm program support.
The Conservation Stewardship Program has also been hampered by overly
restrictive payment limitations contrived by USDA regulators--
restrictions that we do not believe are supported by the statute.
USDA's unilateral decision to exclude commercial-size farming
operations dramatically limits the environmental and conservation
benefits that are possible with this program. In an effort to improve
the effectiveness of these programs, we recommend that all conservation
payments and other administrative such responsibilities be turned over
to the Farm Service Agency. In other words, let FSA do the paper work
which in turn will enable the Natural Resources Conservation Service to
devote all their efforts towards providing technical assistance.
Furthermore, lack of consistency between county offices is often an
issue. For example, a producer who farms in more than one county may or
may not qualify for a like conservation program or practice and often
times at varying levels of support.
We support a permanent natural disaster program as part of the farm
bill, but our experience so far with the SURE program indicates it
cannot provide an effective level of natural disaster assistance. We
recognize the challenge facing Congress to make improvements in this
program. Without increased baseline spending authority, there will be
no funds to even continue the program in the next farm bill much less
make the necessary improvements for it to be an effective disaster
relief mechanism. However, we do not support reallocating existing
spending authority from current farm programs to apply to SURE.
Crop insurance is an essential risk management tool for cotton
producers in our region. As a matter of fact, over 87% of all cotton
acres in the Southeast purchase buy-up coverage. Our industry continues
to examine concepts that improve the various cotton crop insurance
products. Revenue coverage, enterprise policy rates and group risk
products are examples of improved products that can provide a menu of
risk options for growers. One change we do support would be to allow
separate enterprise units for irrigated and non-irrigated practices in
the same county. Some growers do not opt for the enterprise unit deal
(with the additional subsidy) because it throws their irrigated and
non-irrigated units together. However, we continue to view the current
insurance products as complements to traditional commodity programs but
do not consider those programs as a replacement system for delivering
farm program support.
While the cotton industry supports a viable biofuels industry, it
must be recognized that benefits are not equally shared by all
commodity producers. Renewable fuels mandates and other policies
regarding biofuels have changed the competitive balance between
commodities, placing severe pressure on cotton infrastructure in
certain parts of the Cotton Belt. Mandated demand can result in
excessive and harmful market distortions. The support given to biofuel
crops must be taken into consideration when comparing relative levels
of support across commodities, when evaluating payment limitations and
before trying to mandate a one-size-fits-all farm program for biofuel
and non-biofuel commodities.
In summary, our industry believes the cotton provisions of the 2008
Farm Bill are working well. If policy changes are inevitable as part of
the 2012 Farm Bill, the cotton industry remains ready to work with the
Agriculture Committees to explore alternative programs that can provide
the needed safety net to our industry in a manner that is consistent
with our international trade obligations and within budget constraints.
Thank you for the opportunity to present these comments on behalf
of Southern Cotton Growers. I will be happy to try and answer any
questions you might have.
The Chairman. Very good. Thank you very much, Mr. Lee.
Mr. Minor, welcome to the Committee.
STATEMENT OF RICHARD ``DICK'' MINOR, FRUIT AND VEGETABLE
PRODUCER, ANDERSONVILLE, GA
Mr. Minor. Good afternoon, Chairman Peterson and Members of
the Committee. We welcome you to Georgia.
My name is Richard Minor. With my brothers, we own and
operate a diversified farming operation in southwest Georgia.
Last year, we grew over 1,700 acres of vegetable crops. In
addition, we grow cotton, peanuts, field corn, wheat, soybeans
and turf grass.
Today, I speak on behalf of the Georgia Fruit and Vegetable
Growers Association. I want to thank you for this opportunity
to present this testimony.
In 2008, this Committee recognized the importance of fruit,
vegetable and other specialty crop production in the United
States and dedicated approximately $3 billion in funding for
the specialty crops pest, disease, nutrition, research and
conservation priorities. We are most appreciative, and deeply
grateful, for the leadership that this Committee demonstrated
in the 2008 Farm Bill.
I have provided the Committee with detailed written
testimony, but in my comments today, I wanted to touch briefly
on a few of the most critical issues.
First, we strongly support continuation of the specialty
crop state block grants. The 2008 Farm Bill provided $466
million in state block grants. We believe state block grants
provide the centerpiece of the fruit and vegetable component in
the farm bill. It is at the state level that growers, shippers
and packers, working together with industry and government,
have the expertise to identify programs that can help enhance
the competitiveness of specialty crop producers.
Block grants have been tremendously beneficial to Georgia's
specialty crops. With funds from previous block grants, our
association was able to establish a food safety initiative that
has grown to train over 350 growers, and certified more than 70
farm operations.
The 2008 block grants have provided money for a number of
innovative programs by our fruit and vegetable organizations.
These grants have helped expand locally grown marketing
programs, funded commodity promotional activities for
watermelon, peach, pecan and others, made available cutting
edge grower educational programs, and supported multi-
discipline specialty crop field research. Working through our
state departments of agriculture puts the funds at a grassroots
level where they can be the most effective.
Second, we believe there should be increased funding for
specialty crop research. Georgia fruit and vegetable growers
are receiving basically the same price for their crops as they
received in the mid-1990s, while input costs have increased 100
to 350 percent. The only reason fruit and vegetable growers are
surviving is due to the increased yield levels and production
efficiencies, and improved pest management systems developed
from agricultural research projects.
The 2008 Farm Bill established Specialty Crop Research
Initiatives with funding at $230 million, which we very much
appreciate. However, we must continue to expand and increase
the funding levels for this type of research.
Third, nutritional aspects. The 2012 Farm Bill must
continue and expand the progress initiated in the 2008 Fresh
Fruit and Vegetable Snack Program, which develops life-long
healthy eating habits for our children. The Georgia Fruit and
Vegetable Growers Association supports the National Salad Bar
Policy recommended by USDA as a strategy to increase children's
consumption of fruits and vegetables.
Finally, we believe that a total restructuring of USDA's
disaster assistance program is needed. To date, there is still
much confusion at the Farm Service Agency county office level
about the implementation of the Supplemental Revenue Assistance
Program. For example, USDA headquarters has not made clear to
the county offices how to handle several issues related to the
processing of claims under SURE. Another major concern with the
SURE program is that benefits will not be available to the
producer for 12 to 18 months after the crop loss. With the
significantly large input costs of specialty crop producers,
this delay may be too late to help a producer struggling to
stay in business.
In addition, the MAP program is of little benefit and needs
to be reformed. Producers are willing to pay for insurance
products that truly protect income. Today, those products are
not available for specialty crop producers.
Finally, we question whether a permanent disaster program
can react to specific emergencies, as well as disaster
legislation structured in real time for specific disasters.
In closing, let me mention that the future of specialty
crop production in the Southeast is largely dependent on three
regulatory and workforce issues over which this Committee has
limited jurisdiction. The EPA--at no time in my memory has EPA
issued as many guidelines, regulations or policies as they have
in the last 24 or 36 months.
Climate change legislation--as Congress considers energy
independence and climate change, the specialty crop industry is
very concerned as to the impact this final legislation will
have on specialty crops.
Immigration reform--the need for a predictable and legal
workforce in agriculture remains a critical concern for all
fruit and vegetable producers.
Mr. Chairman, thank you for the opportunity to present our
thoughts and views, and we look forward to working with you to
craft the 2012 Farm Bill.
[The prepared statement of Mr. Minor follows:]
Prepared Statement of Richard ``Dick'' Minor, Fruit and Vegetable
Producer, Andersonville, GA
Good morning, Chairman Peterson and Members of the Committee. My
name is Dick Minor. I am President of Minor Produce. With my two
brothers we own and operate a diversified farming operation in Sumter
County, Georgia. In 2009, we grew over 1,700 acres of vegetables,
including cucumbers, snap beans, watermelon, pepper and squash. In
addition we grow cotton, peanuts, field corn, wheat, soybeans and turf
grass. We also operate or have ownership in a trucking company, cotton
gin and warehouse and a custom aerial crop care service. I am here
today representing over 250 producer members of the Georgia Fruit and
Vegetable Growers Association.
The fruit and vegetable industry is a major economic generator for
the State of Georgia. We are adding jobs and dollars to rural economies
throughout the state. In Georgia, the 2008 farm gate value of
vegetables alone was almost $850 million. Combined with Georgia's fruit
crops, including peaches, blueberries, blackberries and strawberries,
the farm gate value of fruit and vegetable production in Georgia is
over $1 billion. But this large product value is not limited just to
our state. Specialty crop growers produce approximately 50% of the farm
gate value of total plant agricultural production in the United States.
As a part of developing the 2008 Farm Bill, this Committee
recognized the importance of fruit, vegetable and other specialty crop
production in the United States, providing significant support to our
sector of the agricultural industry. The 2008 Farm Bill dedicated
approximately $3 billion in funding for specialty crops, pest and
disease, nutrition, research and conservation priorities. Of particular
note is that none of this funding goes to direct payments or subsidies
from the Federal Government but rather it strongly supported
infrastructure investments and market expansion opportunities to build
a stronger specialty crop industry. We are most appreciative and deeply
grateful to the leadership this Committee demonstrated to insure
specialty crop programming in the 2008 Farm Bill.
My comments today are directed at several areas of the 2008 Farm
Bill from which specialty crop growers in Georgia have received
benefits which offered those growers competitive advances in their
production and marketing operations. I will also outline several areas
which we believe should be addressed in the 2012 Farm Bill.
Specialty Crop State Block Grants
In 2001, Congress provided approximately $159.4 million in
mandatory funding for Specialty Crop block grants as part of the
Agricultural Economic Assistance Act of 2001. The funding was
distributed by the state departments of agriculture in 2002.
The Specialty Crop Competitiveness Act of 2004 was aimed at
building on the success of the 2001 block grants by reauthorizing the
block grants. Congress provided $7 million in appropriations for the
specialty crop block grants in FY 2006. The FY07 appropriations bills
also contained specialty crop block grant funding.
The 2008 Farm Bill provided $466 million in state block grants to
enhance producers' ability to compete in the marketplace and provide
consumers with safe, abundant food. We believe state block grants
provide the centerpiece of the fruit and vegetable component in the
farm bill. Each specialty crop and each geographic area have unique
challenges and attributes which must be addressed individually, the
block grants are critical in helping to improve the competitiveness of
our specialty crop producers. It is at the state level that growers,
shippers and packers working together with industry and government,
have the expertise to identify programs that can enhance the
competitiveness of specialty crop producers. Innovative programs
developed at the state level have included production related research,
nutritional focus on youth, commodity promotion, food safety and
inspections, and other items.
Block grants have been tremendously beneficial to Georgia's
specialty crops. With funds from the 2001 block grant our association
was able to establish a food safety initiative that has grown to train
over 350 growers and certified more than 70 farm operations. As a
cooperative program between the Georgia Department of Agriculture,
University of Georgia, the Georgia Crop Improvement Association and our
association, Georgia GAP provides on farm training, consultation and
third party audit to our growers.
Our industry is in a crisis at the moment as it relates to food
safety concerns. Block grant funds would help states develop more
aggressive food safety educational programs as we have done in Georgia.
The produce industry must move forward to establish the proper protocol
to restore this nation's consumer confidence in fresh produce. Research
is needed to develop economical traceability solutions, reduce field
contamination and improve post harvest handling. Block grants can
address this on the state level where it is desperately needed.
In addition block grant funding has provided assistance to expand
the `Georgia Grown' marketing program, locally grown promotions,
specific commodity (watermelon, peach, pecan, etc.) promotional funds,
provide grower educational programs and fund intra-structure for a
multi-discipline specialty crop field research lab.
We recommend the state block grant program continue and funding be
expanded in the 2012 Farm Bill.
Increasing Specialty Crop Research
Researcb provides a foundation for the growth of any industry and
acts as catalyst for change. Federal investment in specialty crop
research to assure the economic vitality and long-term viability of the
specialty crop industry has been limited, despite the fact that
specialty crops and their research needs are unique and important.
These crops are typically characterized by high production input costs,
unique market challenges and the fact that there are a plethora of
specialty corps produced in numerous growing regions throughout the
country, each with specific challenges. The USDA/DHHS Dietary
Guidelines recommends the daily dietary intake of Americans be at least
52% fruits, vegetables and foods derived from specialty crops. Federal
investments in agriculture should be allocated to reflect the national
importance of these products to the American diet.
The 2008 Farm Bill established the Specialty Crop Research
Initiative (SCRI) with funding at $230 million. Due to the timing of
the legislative approval of the farm bill and the SCRI program
announcement, we compliment the hard work at USDA to ensure 2009 SCRI
project proposals were accepted, evaluated and awarded. Without this
extra effort, specialty crop research would have been delayed twelve
months.
Specialty crop growers are receiving basically the same price for
their crop(s) as they received in the mid-1990s, while input costs have
increased 100% to 350%. The only reason fruit and vegetable growers are
surviving is increased yield levels, production efficiencies and
improved pest management systems due to research. Applied research is
critical to the survival of southeastern fruit and vegetable growers.
As a member of the Georgia Agricultural Commodity Commission for
Vegetables, we have committed 75% of our crop assessments will be used
for research. Georgia growers recognize the value of applied research
that addresses current production pest management, regulatory, food
safety and product quality problems.
GFVGA supports expansion of the SCRI and increased funding.
Food Safety
As noted earlier in this testimony, since 2001 the Georgia Fruit
and Vegetable Growers Association has been a leader in providing
education and consultation to southeastern growers concerning food
safety. While food safety is the regulatory responsibility of the Food
and Drug Administration, we encourage USDA to continue its role to
provide guidance and support to growers in the area of food safety
which effects product quality and market interruptions.
Congress and FDA are moving forward with food safety legislation
and regulations. Most likely before the end of 2010, growers will be
mandated to conform with certain FDA guidelines in the growing, packing
and handling of fresh produce. GFVGA has supported this governmental
oversight for science founded, risk based, commodity specific
guidelines. The depth of experience and body of knowledge at USDA
should be utilized and called upon as these guidelines are developed,
and when product recall investigations occur. FDA and CDC lack of
experience and knowledge of fresh produce production and supply chain
led to the tomato/pepper fiasco in 2008.
Based on our commitment to food safety and regaining consumer
confidence, GFVGA took a leadership role as a member of the proponent
group calling for a National Leafy Greens Marketing Agreement. We urge
USDA to conclude its work on the NLGMA so industry can develop a
Federal marketing program that establishes national measures to address
leafy green food safety through the Federal Government oversight.
Nutrition
The 2008 Farm Bill expanded the Fresh Fruit & Vegetable Snack
Program to all 50 states. The goal of this nationwide expansion of the
Snack Program is to develop life-long healthy eating habits for
millions of children by providing fresh fruits and vegetables in our
nation's schools. Data, and practical experience in the schools, has
shown if the fresh products are available, most students will select
tasty (and healthy) fruits or vegetables over candy or chips.
Increasing the amount and variety of fruits and vegetables served
in the School Lunch and Breakfast Programs will improve children's
health and are critical investments in prevention and health care
reform. The Institute of Medicine's (IOM) Report School Meals: Building
Blocks for Healthy Children recommends doubling the amount of fruits
and vegetables served in school meals and recognizes that serving more
fruits, vegetables and whole grains will require a higher Federal
reimbursement rate. As Congress deliberates on the Child Nutrition
Reauthorization Act, school meal standards must be aligned with the
2005 Dietary Guidelines; the IOM's Report provides specific
recommendations to improve the healthfulness of school meals.
GFVGA supports the following:
1. A National Salad Bar Policy recommended by USDA to schools as an
effective intervention strategy to increase children's fruit
and vegetable consumption.
2. Increased reimbursement rates for school meals, with those
increases tied specifically to increased servings of fruits,
vegetables and whole grains in order to meet the Dietary
Guidelines and IOM recommendation for school meals.
3. Increased funding for salad bars and cafeteria equipment.
4. Expansion of USDA commodity purchasing of fresh and fresh-cut
fruits and vegetables that children want to eat. Today, less
than 3% of USDA fruit and vegetable purchases are for fresh
produce, unfortunately perpetuating the practice of schools
serving children from a 10 pound can rather than offering fresh
foods.
5. Updated nutrition standards for school meals consistent with the
Dietary Guidelines.
6. Updated nutrition standards for foods and beverages sold outside
of school meals.
Restructuring Disaster Assistance and Crop Insurance
Georgia growers have a concern with the Supplemental Revenue
Assistance Payments Program (SURE). The establishment of this program,
as intended, makes ad hoc disaster programs more difficult
Unfortunately, the SURE program has yet to live up to grower
expectations. Despite USDA announcing this program opportunity early on
the website, to date there is still much confusion at the Farm Service
Agency county office level about implementation of the program.
Specifically, USDA headquarters has not made clear to the county
offices how to handle producers farming in multiple counties. In the
Southeast, our growers may farm in several different counties.
Another major concern with the SURE program is that benefits will
not be available to the producer for 12 to 18 months after the crop
loss. With the significantly large input costs of specialty crop
producers this delay may be too late to help a producer struggling to
stay in business. Finally, we question whether a permanent disaster
program can react to specific emergencies as well as disaster
legislation structured in real time for a specific disaster.
Unlike my situation, most fruit and vegetable growers do not
produce program commodities so the farm structure as established at the
FSA offices is not such that growers can benefit from some USDA
programs as traditional program commodities benefit. The current
payment limit structure punishes specialty crops for the few programs
they can participate in at USDA. Southeast produce farms have to be
large to make a profit. Labor, input costs, prices for products, etc.,
are such that small producers have little chance to be full-time
farmers. In establishing payment limitations for all producers,
consideration should be given that fruit and vegetable growers do not
have USDA program history and farm structure established at FSA as do
many producers that have a long history of participating in farm
programs.
With regard to crop insurance, over the years RMA has attempted to
re-formulate a traditional crop insurance program to be a `one size
fits all' and force specialty crop coverage into a row crop model.
However, this does not work due to the high cost of inputs per acre for
our specialty crop growers. Currently there are very few vegetable
growers that utilize crop insurance due to the extremely high premium
costs. There are a few specialty crop insurance programs that appear to
have satisfactory participation and coverage including pecans, peaches
and blueberries.
As banks tighten the credit and the loan requirements become more
stringent, we believe many growers would consider AGR as a crop
insurance alternative with proper education about the program. An AGR
policy offers growers total farm income protection rather than specific
crop revenue coverage. However, the full AGR program has not been
offered in Georgia. AGR-Lite was offered during the 2009 crop year and
received limited sign up due to the revenue limitation on the policy.
For AGR-Lite the maximum farm income protection is $1 million making
the `lite' program of little benefit to many Georgia producers. For the
full AGR program the maximum income protection is $6.5 million.
Farm Policy Challenges for Specialty Crops
The future of specialty crop production in the Southeast is largely
dependent on regulatory and workforce related issues. As more and more
regulations, restrictions and agency generated guidelines are
developed, the United States consumer will see more and more of its
fresh produce imported. The international trade agreements, designed to
open foreign markets to U.S. growers, has also shown imported products
can easily be transported into our domestic food supply chain. Many
U.S. growers are looking to non-domestic farm operations as an
alternative if/when Federal regulations become too onerous to comply.
Outlined below are regulatory issues which threaten the national
security of the United States. The late U.S. Senator Paul Coverdell
from Georgia, was a strong proponent that the strength of American
agriculture was a national security issue. If the U.S. cannot produce
enough food to feed our people and our troops, we will not be a nation
capable of defending itself any longer. American agriculture is not to
that position yet, but we are losing farms everyday due to these
challenges.
1. Environmental Regulations
At no time in my memory has EPA issued as many guidelines,
regulations or policies that have the potential to threaten our
livelihood and shutdown our operations. That statement makes it sound
like we are operating an `unsafe' farm; which might be harmful to our
families and workers. I can assure you we are not--I will not expose my
family or my workers to anything that I do not consider safe.
An example of EPA regulations that are issued but not based on
sound science was the Soil Fumigant Regulations. In late 2008, EPA
issued new regulations concerning application and usage of soil
fumigants. The required buffer zones under these regulations were based
on vaporization and drift studies conducted in the 1990's. In fact
these primary studies did not include any measurement of soil
temperature or moisture content, two key elements in vaporization and
drift, caused the regulations to be flawed.
If these regulations had been implemented, one of Georgia's key
vegetable production counties would have lost over 96% of its vegetable
crop land. Another key county would have lost 89% of its available land
due to the buffer zone requirements.
GFVGA working with the University of Georgia, was able to conduct
emergency research studies to update the 1990 data and show with proper
soil moisture and temperature, the required buffer zones could almost
be eliminated. Once the research was conducted, EPA accepted the new
results after a careful study of the data.
Recently EPA is proposing a new registrant labeling policy for key
chemicals. They are moving from a FIFRA-based standard of ``no
unreasonable side effects'' to a new policy of ``do not apply this
product in a manner that results in spray (or dust) drift that could
cause an adverse effect to people.'' So, what is an adverse effect a
nose irritation?? How does a grower make that determination as to what
is an adverse effect. This is essentially a move from a standard based
on scientific risk assessment to an untenable zero-risk standard. EPA
is moving from regulations that are based on risk and can work in
practice, to an environmental regulation that is easily enforced--
`prohibition on use--do not use!'.
We encourage this Committee and USDA to advocate for production
agriculture in this regard to ensure EPA issued regulations are based
on--risk and current science. In addition production agriculture should
be represented early in the regulatory development process to ensure
the regulations can actually be implemented. If a proposed regulation
such as the buffer zones mentioned earlier were implemented, it would
have eliminated vegetable production in Georgia and many other states.
2. Climate Change Legislation
As Congress considers energy independence and climate change the
specialty crop industry is very concerned as to the final legislation.
Fruit and vegetable growers are heavily dependent on production inputs
to be affordably priced in order to remain competitive domestically and
in the global economy.
As Congress debated legislation earlier this year, the specialty
crop producers may not be able to receive any of the credits or
participate in the offset programs. Specialty crops represent 44
percent of U.S. agriculture's farm gate value but only 3.2% of the
agricultural farmland. In additional growers have taken steps for
decades to increase production efficiencies, minimize energy
consumption and conserve natural resources, all resulting in decreased
greenhouse gas emissions. Therefore the specialty crop industry's
ability to compete for `credits' based on new carbon sequestration
efforts (or GHG-reducing technology) will be difficult.
We urge this Committee to study and understand the impact of the
costs associated with any climate change legislation before it is
signed into law, and have in place strategies to address these costs as
they will have a significant impact on specialty crop livelihoods.
3. Immigration
We realize immigration reform is not under the authority of this
Committee; however, when discussing specialty crops and farm policy'
the need for a predictable and legal workforce in agriculture remains a
critical concern for all producers.
Many of our producers in Georgia are using the H-2A program in
which they can legally bring in guest workers on a temporary work visa
issued by the Department of Labor. As a part of this program the grower
pays for the worker's transportation to and from their home country,
covers their housing while in the states and provides a guaranteed wage
rate. The paperwork for the program is very onerous and time consuming.
Revisions were made to the program in late 2008 which made it much
easier to accommodate to the point we had an increasing number of
growers enrolling in the program. Unfortunately in February 2010, the
current Administration revised the guidelines again and reverted to the
old regulations, some even as far back as the mid 1990's. The revised
changes are adding even more time and cost to the program. One grower
shared with me recently the new regulations will cost him over $1.5
million
In addition to the high cost and excessive regulations our H-2A
employers in Georgia and other southeastern locations have experienced
a very high incidence of frivolous claims by Legal Services. Many times
a legal services agency representative will file a `trumped up' charge
against an H-2A employer and it costs the grower less to pay a fine
than to defend the charge. This excessive cost to the grower is due to
the legal services agency continuing to file appeals if the case is
found in the grower's favor, and the grower having to continue pay
legal fees or his defense.
Mr. Chairman, thank you for the opportunity to present our thoughts
and views today. We look forward to working together to craft a farm
bill over the next year that will establish a strong farm policy for
specialty crop producers and all of agriculture. Thank you.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Richard `Dick' Minor,
President, Vice President,
Minor Produce; Georgia Fruit and Vegetable Growers
Assn.
The Chairman. Thank you very much, Mr. Minor.
Mr. Morris, welcome to the Committee.
STATEMENT OF ARMOND MORRIS, PEANUT PRODUCER, OCILLA, GA
Mr. Morris. Thank you, Mr. Chairman. And I would like to
say thank you to the rest of the Committee for being here in
Georgia, and we welcome you and invite you to come back again.
Not only that, but it is great to be here in Representative
Scott's district. We have a lot of consumers that eat peanut
butter here. So again, thank you for inviting us to your
district, Mr. Scott.
I am Armond Morris, a peanut producer from Irwin County,
Georgia. I am Chairman of the Georgia Peanut Commission and am
here today representing the Southern Peanut Farmers Federation.
The Federation is comprised of Alabama Peanut Producers, the
Georgia Peanut Commission, the Florida Peanut Producers
Association, and the Mississippi Peanut Growers Association.
The Southern Peanut Farmers Federation represents about \3/4\
of the peanuts grown in the United States.
Mr. Chairman and Members of the Committee, our message
today is that: peanut producers support the marketing loan
program; and the current program prices are set too low to be a
true safety net for producers.
As you are aware, peanut program prices were reduced in the
2002 Farm Bill when it changed from a supply-management program
to a marketing loan peanut program. The 2008 Farm Bill
maintained the same prices as the 2002 Farm Bill.
Since the 2002 Farm Bill, peanut variable costs for
National Center for Peanut Competitiveness representative farms
have increased 52 percent per acre. Yields will need to be over
400 pounds above the state average this year to break even at
the current price of peanuts.
I have attached a copy of a recent review by the National
Center for Peanut Competitiveness. As you can see, peanut
growers are not making a profit even with our current prices.
The number one goal for our producer organization is to
obtain a legitimate safety net for our growers. The current
$355 per ton marketing loan is not sufficient.
The peanut loan repayment rate guidelines were established
in the 2002 Farm Bill. The loan repayment rate has not
functioned appropriately.
It is this last variable the Committee included in the 2008
Farm Bill and similar language in the 2002 Farm Bill that has
not been adhered to. In setting the loan repayment rate, USDA
has not taken into account world market prices.
We recognize the fiscal and political limitations in
drafting a successful farm bill. Peanut producers want to
stress to the Committee that we will work with you to develop
the best possible program, but the pricing structure in the
2008 Farm Bill is not sufficient and certainly will not work
for peanut producers if these same prices hold through the life
of the 2012 Farm Bill.
There are additional considerations for any program changes
in the next farm bill. If a new program is structured to limit
farm size beyond the payment limit structure imposed by the
2008 Farm Bill, peanut producers will face more serious
limitations for profit than we do under the current program
which lowers prices. We must maintain our separate limit for
peanuts. The current program will not work without the separate
payment limit.
If we depend on farmers' markets, hobby farmers and the
smallest peanut farms for peanut production, there would not be
a sufficient supply of peanut butter on the shelves of
America's grocery stores or in our school lunch program.
The Conservation Stewardship Program included provisions
for a crop rotation program. We believe this program will
enhance the environment and improve crop yields.
The feeding programs at the USDA are very important to our
producers. Peanut butter is a long-time participant in the
school lunch program. Peanut butter also qualifies for the
breakfast program and after school snack program. Our
Congressional delegations and industry leaders struggled to get
the attention of those preparing food assistance for Haiti
relief. Although our industry provided three million servings
of peanut butter to the relief effort, we were not successful
in reaching the decision-makers involved in establishing food
assistance lists for U.S. and international aid.
Peanut butter does not qualify for the Fresh Fruit and
Vegetable Snack Program. We believe all school feeding programs
should allow for the purchase of peanut butter.
In closing, production agriculture is part of our national
security. The Secretary has spoken a great deal about rural
development, but production agriculture, at the heart of which
is Federal farm programs, should be at the top of the list of
roles for USDA. Please help the Department remember the
importance of production agriculture.
Thank you for allowing me to address the Committee today
and the Federation looks forward to working with you.
[The prepared statement of Mr. Morris follows:]
Prepared Statement of Armond Morris, Peanut Producer, Ocilla, GA
Good afternoon, Chairman Peterson, Members of the Committee, my
name is Armond Morris. I am a peanut producer from Irwin County,
Georgia. I am Chairman of the Georgia Peanut Commission and am here
today representing the Southern Peanut Farmers Federation. The
Federation is comprised of the Alabama Peanut Producers Association,
the Georgia Peanut Commission, the Florida Peanut Producers Association
and the Mississippi Peanut Growers Association. The Southern Peanut
Farmers Federation represents about \3/4\ of the peanuts grown in the
United States. Peanuts have an economic impact of hundreds of millions
of dollars in our states and tens of thousands of jobs.
I have been a peanut producer for over 40 years. I farm
approximately 2,000 acres of peanuts, cotton, wheat, rye and
watermelons. I have been active in local, state and national
agricultural organizations and am a graduate of the Abraham Baldwin
Agricultural College.
Peanut producers support the marketing loan program.
The current program prices are set too low to be a true
safety net for producers.
Farm programs should be developed for farmers--not for
absentee baseholders.
As you are aware, peanut program prices were reduced in the 2002
Farm Bill when we changed from a supply-management program to a
marketing loan peanut program. The 2008 Farm Bill maintained the same
prices as the 2002 Farm Bill. The market prices for this year should
hold above the marketing loan price but this is no guarantee and
certainly not a guarantee for the future.
Since the 2002 Farm Bill, peanut variable costs, for National
Center for Peanut Competitiveness representative farms, have increased
52% per acre. In addition to the increased costs associated with
producing a crop of peanuts, we are competing with other countries like
Argentina, China and India where the environmental costs, other
regulations and labor rates are much less than U.S. input costs.
I have attached a copy of a recent review, by the National Center
for Peanut Competitiveness, of sample peanut farms across the country
based on the January 2010 baseline. As you can see, peanut growers are
not making a profit even with our current prices.
The number one goal for our producer organization is to obtain a
legitimate safety net for our growers. We do not believe the current
$355 per ton marketing loan is sufficient to be a real safety net for
producers.
The peanut loan repayment rate guidelines were established in the
2002 Farm Bill. The loan repayment rate has not functioned
appropriately since the 2002 Bill. Congress directed the U.S.
Department of Agriculture to consider the following when determining
loan repayment rates: