[Senate Hearing 111-801]
[From the U.S. Government Publishing Office]



 


                                                        S. Hrg. 111-801

                       REVITALIZING RURAL AMERICA 

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

                             FIELD HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION


                               __________

                           NOVEMBER 23, 2009

                               __________

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


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

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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                 BLANCHE L. LINCOLN, Arkansas, Chairman

PATRICK J. LEAHY, Vermont            SAXBY CHAMBLISS, Georgia
TOM HARKIN, Iowa                     RICHARD G. LUGAR, Indiana
KENT CONRAD, North Dakota            THAD COCHRAN, Mississippi
MAX BAUCUS, Montana                  MITCH MCCONNELL, Kentucky
DEBBIE STABENOW, Michigan            PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska         MIKE JOHANNS, Nebraska
SHERROD BROWN, Ohio                  CHARLES GRASSLEY, Iowa
ROBERT CASEY, Jr., Pennsylvania      JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
MICHAEL BENNET, Colorado
KIRSTEN GILLIBRAND, New York

               Robert Holifield, Majority Staff Director

                    Jessica L. Williams, Chief Clerk

            Martha Scott Poindexter, Minority Staff Director

                Anne C. Hazlett, Minority Chief Counsel

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Field Hearing(s):

Revitalizing Rural America.......................................     1

                              ----------                              

                       Monday, November 23, 2009
                    STATEMENTS PRESENTED BY SENATORS

 Lincoln, Hon. Blanche L., U.S. Senator from the State of 
  Arkansas, Chairman, Committee on Agriculture, Nutrition, and 
  Forestry.......................................................     1

                                Panel I

Bedell, Allen, Chairman, Arkansas Forestry Commission, Hot 
  Springs, Arkansas..............................................     9
Gillam, Jeremy, Specialty Crop Producer, Gillam Farms, Judsonia, 
  Arkansas.......................................................    11
Jones, Michael, President, Merchants and Farmers Bank, Dumas, 
  Arkansas.......................................................    13
Jones, Tom, Livestock Producer, and Member, Arkansas Farm Bureau 
  Board of Directors, Pottsville, Arkansas.......................     7
Veach, Randy, President, Arkansas Farm Bureau, Manila, Arkansas..     5

                                Panel II

Gardner, Teddy L., President/Executive Director, South Arkansas 
  Community Development, Arkadelphia, Arkansas...................    28
Mccullough, Lawrence, State Director, Rural Development, U.S. 
  Department of Agriculture, Little Rock, Arkansas...............    21
Sternberg, Dennis, Executive Director, Arkansas Rural Water 
  Association, Lonoke, Arkansas..................................    25
Walls, Sam, Chief Executive Officer, Arkansas Capital 
  Corporation, Little Rock, Arkansas.............................    23

                               Panel III

Cole, Robert L., Private Consultant, East Arkansas Enterprise 
  Community, and Program Coordinator, University of Arkansas At 
  Pine Bluff, National Water Management Center...................    40
King, Calvin R., President, Arkansas Land and Farm Development 
  Corporation, Brinkley, Arkansas................................    43
Pagan, Annett, Director, U.S. Programs, Winrock International, 
  Little Rock, Arkansas..........................................    39
Squires, John, Chief Executive Officer, Community Resource Group, 
  Fayetteville, Arkansas.........................................    47
                              ----------                              

                                APPENDIX

Prepared Statements:
    Bedell, Allen................................................    58
    Cole, Robert L...............................................    60
    Gardner, Teddy L.............................................    70
    Gillam, Jeremy...............................................    74
    Jones, Michael...............................................    76
    Jones, Tom...................................................    78
    King, Calvin R...............................................    80
    Mccullough, Lawrence.........................................    85
    Pagan, G. Annett.............................................    93
    Squires, John................................................    97
    Sternberg, Dennis............................................   105
    Veach, Randy.................................................   117
    Walls, C. Sam................................................   120
Document(s) Submitted for the Record:
    Housing Assistance Council, prepared statement...............   128
    Delta Studies Center, Arkansas State University-Jonesboro, 
      prepared statement.........................................   129



                       REVITALIZING RURAL AMERICA

                              ----------                              


                       Monday, November 23, 2009

                              United States Senate,
         Committee on Agriculture, Nutrition, and Forestry,
                                              Little Rock, Arkansas
    The Committee met, pursuant to notice, at 1:00 p.m., in the 
William J. Clinton Presidential Library, 1200 Clinton Avenue, 
Little Rock, Arkansas, Hon. Blanche L. Lincoln, Chairman of the 
Committee, presiding.
    Present: Senator Lincoln.
    Also Present: Skip Rutherford.
    Mr. Rutherford. Good afternoon, ladies and gentlemen. My 
name is Skip Rutherford. I am Dean of the University of 
Arkansas Clinton School of Public Service, and we are honored 
to host this hearing today at the Clinton Library. So on behalf 
of the students, faculty, and staff at the world's only college 
to provide a master's in public service, we hope you enjoy this 
public service.
    It is my pleasure to introduce someone who needs no 
introduction to the people in this room, but to say that this 
is a historic occasion because this is the first field hearing 
being held for the new Chairman of the Senate Agriculture 
Committee, her first field hearing. And in the 184-year history 
of the Senate Ag Committee, Senator Blanche Lincoln becomes not 
only the first Arkansan to chair that Committee, but the first 
woman to chair that Committee. So we are honored that she has 
chosen here for this hearing.
    In 1998, she became the youngest woman ever elected to the 
United States Senator, and she has served our State with honor 
and distinction, not only the Agriculture Committee but on the 
Finance Committee and other positions in
    Washington, DC A former Congresswoman from the 1st 
Congressional District, the mother of twin sons, and the wife 
of a physician, would you please welcome the distinguished 
Senator from the State of Arkansas, the Honorable Blanche 
Lincoln.
    [Applause.]

  STATEMENT OF HON. BLANCHE L. LINCOLN, U.S. SENATOR FROM THE 
    STATE OF ARKANSAS, CHAIRMAN, COMMITTEE ON AGRICULTURE, 
                    NUTRITION, AND FORESTRY

    Chairman Lincoln. Thank you. Well, thank you all for being 
here today. Now, there are plenty of seats up front in case 
anybody cannot see or hear. So I do not want this to be the 
church service that everybody say in the back. But we want to 
say welcome to you all and good afternoon,
    and welcome from the U.S. Senate Agriculture, Nutrition, 
and Forestry Committee and the field hearing that we are having 
here today. I am very excited that this is our first official 
field hearing that I am holding as Chairman of the Senate 
Agriculture Committee. It is extremely meaningful to me not 
only because it is here in my home State, but it is also on an 
issue that I am passionate about.
    As we look towards the future of what we have to do in this 
great country, it is to put our economy back on track, it is to 
create jobs. And as we move forward in this hearing, I think 
its timing is important because with the new year I think you 
will see an added effort. Many of us have been clamoring in 
Washington to focus on jobs and to focus on the economy, and 
this hearing will provide us great information, great 
resources, both questions as well as ideas of how we can really 
get the ball rolling in terms of job creation in wonderful 
areas of our Nation in rural America. So I am very pleased.
    I also want to say a very special thanks to Skip for those 
kind remarks, but I also want to thank Skip for his leadership 
here and the Clinton School of Public Service for hosting our 
hearing. We are so proud, very proud in Arkansas to have the 
only graduate school in the Nation offering a master's in 
public service right here in Little Rock. And I want to thank 
the members of the Arkansas State Legislature. I saw a few of 
them when I came in. I know there are some that are here. I am 
very grateful that they are here with us today, and I continue 
to look forward to working with them. I know that they hear as 
much as I do, if not more, with boots on the ground as they 
are, certainly the dilemma in rural America, and particularly 
with production agriculture right now. So I am grateful to them 
for their friendship and the hard work that they do.
    I also want to thank--there are some mayors here and county 
judges who are in attendance. I know they also hear and see an 
awful lot firsthand, and I am grateful for the working 
relationship we have with them and want to continue that 
working relationship to benefit all of our constituents.
    And, finally, I want to thank everyone else who is here. 
This is an issue that we all must tackle. Building our economy 
in this country is critical and making sure that the rest of 
our Nation understands the important role that rural America 
has to play in that, the good ideas, the challenges that we 
face, but without a doubt, the stamina that we have and the 
perseverance that we have to make sure that we are a part of 
the solution and not a part of the problem. And I hear and see 
that enthusiasm every time I visit rural America, whether it is 
here or in other parts of our Nation.
    Today, we are very fortunate to have three panels of 
distinguished witnesses to discuss Arkansas' rural economy, and 
I really look forward to hearing their testimony, as I know you 
do as well. For those of you in the audience who will not be 
testifying, we hope that you will take the opportunity to fill 
out the cards that were given to you as you entered today to 
let us know your questions and concerns, feedback on all of the 
issues discussed here today. There are also several members of 
my staff here, so I encourage you to visit with them about how 
you can share your thoughts with the Committee. This is an 
official Committee event, and so it will go on the record, and 
these will be great ideas and certainly great concerns that we 
take back to my colleagues in Washington on the Senate 
Agriculture Committee.
    I am honored to be the first Arkansan to serve as the 
Chairman of the Senate Agriculture Committee and excited about 
the opportunities this presents for Arkansas to elevate our 
voice in Washington on issues critical to the economic well-
being of our State and all of rural America. This first 
official field hearing provides an opportunity for Arkansans to 
begin a new dialogue with the Senate Agriculture Committee that 
will help shape our agenda moving forward in the Committee.
    Creating jobs, putting our economy back on the right track, 
is my number one priority. With over 100,000 Arkansans now 
unemployed, families across our State are struggling to make 
ends meet. Together with your help and input, we will use this 
chairmanship to put people back to work and reverse the 
devastating effects our ailing economy has had on Arkansas and 
other rural areas of our Nation.
    When our Nation faces difficult economic times, rural 
Americans are often the very first to feel the impact and the 
last to recover. With 48 percent of our State's population 
living in rural areas, it is absolutely critical that this 
Committee focus on providing our rural communities with the 
tools they need to strengthen and grow their economies.
    An issue of particular importance to our State's economy 
right now is the hardships many of our agricultural producers 
are seeing as a result of recent excessive rainfall and 
flooding. According to the National Oceanic and Atmospheric 
Administration, 2009 has been our wettest year in 115 years of 
recordkeeping. Last week, the University of Arkansas's Division 
of Agriculture released a report on the State's crop losses due 
to the flooding and the poor weather conditions. The report 
estimated the crop loss for the 2009 harvest has risen to more 
than $300 million, and this does not even factor in the lost 
wages of agriculture-related jobs of more than $80 million.
    And that is why I have joined forces with Senator Thad 
Cochran, the highest ranking Republican on the Senate 
Appropriations Committee--and, remember, that is the Committee 
that controls the money--to introduce legislation to provide 
additional direct payments to producers in counties where there 
is a USDA-declared disaster. To date, over half of Arkansas' 
counties have received a disaster declaration. Obviously, there 
is never a good time for us to suffer these kinds of losses, 
especially in an industry that is the economic engine of rural 
Arkansas.
    However, given the current recession, it is difficult to 
imagine this flooding occurring at a worse time. In our 
Nation's history, the economics that we face right now are 
treacherous. As Chairman of this Committee, I will continue to 
be a strong advocate for supporting the thousands of jobs and 
hundreds of rural small businesses in Arkansas that production 
agriculture provides.
    In addition, I know that improving our rural infrastructure 
is also critical for our farms and rural communities to thrive. 
Fostering the development of key infrastructure provides new 
opportunities to support our rural economy and spur new job 
creation. Providing accessible, affordable broadband to rural 
communities is one of my top priorities. Broadband Internet 
service is quickly becoming a requirement for many businesses 
when they consider where to locate, and rural Arkansas will not 
be able to compete with the rest of the country without it.
    Much like broadband, many rural Americans lack access to 
safe and reliable sources of water. There are rural communities 
right here in Arkansas that are struggling with this issue, and 
helping them to provide clean water to their citizens will 
continue to be a priority for me. I have worked on it since I 
was first elected in 1992 and will continue to make this a 
priority.
    Through the 2008 farm bill and economic stimulus bill, 
there are USDA programs to help. In fact, just last week, I 
worked with USDA to secure over $4 million for Arkansas to put 
people to work and help provide clean water resources. However, 
there is clearly more to be done, as we will hear from the 
witnesses today. But I have to say that when I was first 
elected in 1992, it was unbelievable to witness the 
installation of a new water system out in western Arkansas. And 
I was amazed. A woman came up to me, and she looked at me and 
she, just with tears in her eyes, was so grateful to finally 
have good, clean water in her home. And she looked at me and 
she said, ``Yes, ma'am, I am so proud.'' She said, ``And I got 
to tell you, I had colored sheets long before colored sheets 
was popular.'' She said, ``I am so glad to be able to have this 
clean water.''
    Some of us take that for granted. We should never, and we 
should be doing everything we can to ensure that all Americans 
enjoy safe, clean water.
    Affordable housing is another important issue for 
Arkansans. In 2008, an estimated 48 percent of Arkansas renters 
could not afford two-bedroom housing. In some regions of the 
State, that number is over 50 percent. Homeownership is 
essential to building economic wealth in a community as well as 
safety, and we must do more to help Arkansas families achieve 
the dream of owning their own home.
    Finally, we are blessed in Arkansas to have a number of 
community development organizations in our rural communities, 
encouraging entrepreneurship and helping Arkansans find ways to 
improve their quality of life. I look forward to hearing about 
successful community and economic development initiatives and 
discussing how we can replicate these successes over our State 
and Nation.
    We have an impressive set of witnesses here today, and I 
look forward to their testimony on these critical issues. This 
will be a productive hearing for the Committee, and it will 
help us ensure that the economic needs and the strengths of 
various sectors of Arkansas' economy as well as all of 
America's rural economy will be guiding me and the other 
members of our Committee as we move forward in constructing the 
Committee's agenda. While there are many pressing issues facing 
our Nation and our State, none are more important to me than 
fixing our economy and helping Arkansans get a good job.
    So now I would like to move to our panelists, and I would 
like to introduce our first panel of witnesses who will come 
and join us here at the witness table.
    Our first witness today will be Randy Veach. In December of 
2008, Mr. Veach was elected president of the Arkansas Farm 
Bureau. He previously served 5 years as the organization's vice 
president and has been on the State Board of Directors since 
December of 1999. He is a third-generation farmer. He produces 
cotton, rice, soybeans, wheat, and corn on farmland cleared by 
his grandfather and his father.
    We will also hear from Mr. Tom Jones. Tom is a third-
generation farmer from Pottsville who raises beef cattle and 
grows hay. Mr. Jones is a member of the Arkansas Farm Bureau 
Board of Directors.
    We are also fortunate to have Allen Bedell with us. Mr. 
Bedell is the Chairman of the Arkansas Forestry Commission. He 
is also a board member of the Arkansas Agriculture Department. 
He previously served as president of the Arkansas Timber 
Producers Association and the Arkansas Forestry Association.
    Then we will hear from Mr. Jeremy Gillam. Mr. Gillam, owner 
of Gillam Farms in Judsonia, is a specialty crop producer. He 
currently serves as the horticulture chairman of the Arkansas 
Farm Bureau and is also a member of the Southern Region Small 
Fruit Consortium Board of Directors. And I have actually 
visited up there with Jeremy and been enormously impressed with 
their operation.
    Finally, we have Mr. Michael Jones with us today. Mr. Jones 
has served as president of Merchants and Farmers Bank in Dumas 
for 20 years. He is active in local and county economic 
development efforts and has served as a board member for the 
Winthrop Rockefeller Foundation, Arkansas Community Foundation, 
and Arkansas Historic Preservation Program's State Review 
Board.
    Welcome to all of you all. Thank you, gentlemen, for 
joining us today. Please know that all of your written 
testimony will be made a part of the official Senate record. 
And with that, we will begin. Mr. Veach, if you will provide us 
your testimony.

  STATEMENT OF RANDY VEACH, PRESIDENT, ARKANSAS FARM BUREAU, 
                        MANILA, ARKANSAS

    Mr. Veach. Good afternoon, Senator Lincoln, and thank you 
so much for this privilege that we have to be with you this 
afternoon. I want to really thank you especially for scheduling 
this field hearing that we have the opportunity to come before 
you and this Committee to express problems that we have 
suffered in agriculture this year and how those affect rural 
communities in rural Arkansas. And I just want to thank you for 
the opportunity that have given us to testify today.
    You know--and you and I have talked several times-- 
Arkansas is a rural State, and rural Arkansas and all of rural 
America depends on agriculture, and agriculture depends on our 
rural communities in all of rural America.
    Arkansas agriculture is so important to the structure of 
these rural communities, keeping them stable and making them 
financially sound. The Arkansas Farm Bureau is a general farm 
organization, and as president of that organization, we are 
interested and understand the impact of the weather-related 
disasters that have been on all of agriculture. Not just 
certain segments of agriculture but all agriculture has 
suffered from these weather disasters that we have had over the 
year of 2009.
    Any disaster program assistance that is considered needs to 
cover the full spectrum of all agriculture, whether it is row 
crops to livestock, dairy, forestry, poultry growers, fruit and 
vegetable producers. They all have had an impact from the 
weather in this past year of 2009.
    We have had timber losses. We have had poultry plant 
closings with the Pilgrim's Pride bankruptcy, and two plants in 
Arkansas in particular were closed down, and those producers 
are hurting. We have had the impact of the heavy rains on our 
row crop and hay production.
    The 2009 weather disasters started with the ice storms at 
the beginning of the year, and they have just continued to 
compound upon agriculture with horrendous amounts of rain that 
fell all across our State, with any areas receiving up 2 feet 
more than normal rainfall. And at times, it was very 
devastating to production agriculture in times of planting and 
also in times of harvesting.
    The impact that the weather has had on Arkansas farms and 
ranches has been significant and, at the very least, 
challenging to us over this past year. This impact will be felt 
throughout the Arkansas economy, and especially in rural 
Arkansas. The Arkansas Farm Bureau has, in fact, projected the 
total economic loss in Arkansas could reach over $650 million. 
A lot of those figures are not able to be put together yet 
because we are still harvesting in the State.
    Now, this is in a State that the largest industry in our 
State is agriculture. Our State's economy is tied directly to 
our agriculture. It is the foundation, agriculture is the 
foundation of our economy, and, you know, Senator, Lincoln, you 
and I have talked times before about it is also the foundation 
of our country and the economy of our country. Without 
assistance, these losses will reduce the ability to provide 
food, fiber, and shelter not only for Arkansas and not only 
just for our Nation, but also for the world, because that is 
how important agriculture is in our country to the other parts 
of the world. Many nations depends on us to feed their hungry 
people.
    In Arkansas, Arkansas contributes more than 270,000 jobs in 
our State from agriculture. Agriculture contributes that many 
jobs. Workers receive $9.1 billion in wages and salaries each 
year; 16 percent of our State's total labor income is derived 
from agriculture. Agriculture contributes 18 percent to all 
value-added in Arkansas, amounting to almost $16 billion.
    Arkansas ranks number 11 nationally in total farm receipts, 
with 46,500 farms and ranches in our State; 14.3 million acres 
is in production, including ranches. Arkansas is number 4 in 
timber production, with 18 million acres in time production, 
32.3 million acres in agricultural production in our State.
    Our State ranks near the top producers in many areas of 
agriculture: we are number 1 in rice, we are number 2 in 
cotton, number 5 in grain sorghum, and number 10 in soybeans.
    Impact of weather on Arkansas agriculture, to date, as 
calculated by the University of Arkansas Division of 
Agriculture, which you alluded to a little while ago, with all 
of it ground in together, about $471.2 million. That accounts 
for about $115 million in cotton, $127 million in soybeans, and 
$50 million in rice. And we know that in my case, for instance, 
in Mississippi County where I farm, that we planted many of our 
crops three times. We planted cotton three times, we planted 
soybeans three times, and this made the crop much later in that 
area. And with a light crop, your production goes down and your 
yields go down. And then compounded on top of that, the rains 
that came during harvest and as the crop was maturing. So we 
have not only had yield reduction but a lot of reduction in 
quality in our agricultural products.
    We have lost almost 3,000 jobs due to weather; lost wages 
total $83 million; loss of more than $27 million in rice, corn, 
and sorghum, over $8.3 million lost in jobs in cotton ginning. 
And we know that once those gins go out, we lose that 
infrastructure in cotton. Our cotton production in the State is 
going to continue to bottom out. We could lose a lot of cotton 
production because of those issues.
    We anticipate many more losses. These fields are in 
terrible condition, and we will have to reshape those soils and 
get those fields ready for planting; and not only that, but we 
also probably will see in the quality issue in a lot of our 
seed that our seed quality is not going to be as good, and we 
probably will have a shortage of quality seed, planting seed, 
which translates to a higher cost to us in agriculture as well 
at that time.
    The SURE program, the regulations have not been released 
yet, but we do not feel like that is going to be of a benefit 
to us in the interim, but especially not as soon as we need the 
help in agriculture, that we need that help right away, because 
we are going to start making loans for the next crop 
production, and without some help immediately, we are going to 
lose some producers in our State of agriculture products.
    If we want to continue to have stable rural communities, 
protect the largest industry in our State, while providing an 
abundant, affordable, safe food supply for this State, for this 
Nation, and for the world, we will need some assistance in 
agriculture.
    I want to thank you for your time this afternoon. I also 
want to thank you for your commitment to American agriculture 
and for your commitment especially to the men and women who 
make their living in agriculture.
    Thank you.
    [The prepared statement of Mr. Veach can be found on page 
117 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Veach.
    Mr. Jones.

    STATEMENT OF TOM JONES, LIVESTOCK PRODUCER, AND MEMBER, 
 ARKANSAS FARM BUREAU BOARD OF DIRECTORS, POTTSVILLE, ARKANSAS

    Mr. Tom Jones. Thank you, Senator, and I also want to echo 
welcoming you back to our home State, the great State of 
Arkansas.
    Chairman Lincoln. Absolutely. I am glad to be home.
    Mr. Tom Jones. My comments today will be on behalf of 
livestock producers, a segment of agriculture that is a target 
for some, but a godsend to a greater number of people.
    I have the privilege not only of serving with the Farm 
Bureau but also on the Cattlemen's Beef Board, and that has 
given me the opportunity to tell a lot of cattle producers in 
this country what we have gone through in Arkansas. They cannot 
believe what we have had this year, so it has been a tough 
year.
    We certainly have had some definable losses in livestock 
agriculture, not to the point that the row crop producers have 
had at this point. We think our losses will be felt over the 
next several months. So we do not know exactly how bad our 
losses are at this point.
    We do know this: When there are troubles in the grain 
markets, those of us in livestock agriculture are certainly 
impacted by that, because agriculture works best when we are 
all profitable and moving forward.
    I would like to say that of the animal agriculture in 
Arkansas, it provides about half of the income for agriculture 
in the State of Arkansas: some $3.1 billion in poultry and 
eggs; $611 million in beef and swine; $41 million in dairy--a 
number that is declining, and you are fully aware of that; and 
then $185 million in other livestock. And just like Mr. Veach 
pointed out where we are in some of the grains, I would point 
out that we are number 1 in baitfish, number 2 in catfish, 
number 2 in broilers, number 4 in turkeys, number 8 in eggs, 
and 11th in the very vast cattle industry in this country.
    The losses that livestock has experienced so far this year, 
and will continue to, are not only in the amount of our forage 
but also in the quality of it, and that is, again, where we 
just do not know where those losses are going to come out at 
the end because we just will not know until the end of the 
feeding season how that goes.
    I do want to specifically address the situation with our 
poultry growers. We have had the loss of a major integrator, 
the loss of a complex in Clinton and in El Dorado, some 140-
plus growers in the Clinton area, 290 in the El Dorado area. 
The vast number of these producers were unable to get contracts 
with other growers. This has led to a lot of farm debt that is 
just sitting there without any income to handle that. That 
certainly is going to see a rise in bankruptcies, and 
especially with our younger producers who may not have as many 
assets.
    I will bring up one name, Terry Laster, down in the El 
Dorado complex, a 7-year payout from right now on his poultry 
complex, but he cannot get a contract. He has 160 acres and a 
home, and he is not sure that he will have any of that when 
this is over. So we do talk about the industry, but we need to 
talk about some people.
    Certainly in our swine industry, we do not have as much 
swine industry as we used to have, but those that are still in 
production matter. They are good, hardworking people in vital 
parts of their community. Again, a major integrator left. We 
are down to less than 1,200 swine operations in the State, and 
that number is still declining.
    Our dairies obviously are through a period of tough 
economic times with sluggish prices, market interruptions. They 
are still underwater and they need our assistance.
    And I think all of this has to be brought into everybody's 
mind in the time when animal agriculture is really under 
attack. We know there are people who would tell all of us in 
this audience and tell you on a daily basis that we just do not 
need animal agriculture anymore, we are not doing it right.
    Senator, we are doing our best to provide that safe, 
healthy, abundant food system that President Veach spoke about. 
We also are contributing to our rural communities. But 
livestock agriculture, I would submit to you, is in desperate 
need of rural development. A lot of livestock producers do 
depend on off-farm income, and those off-farm jobs in those 
small communities are what allow those producers to stay in 
business. So rural economic development is vitally important.
    I think the thing that I would say to you is if we can do 
rural development and if we can open up some markets to our 
products, Senator, we have to open up some markets to our 
products. If we can do that, we can accomplish what we need to 
do in livestock agriculture, which is explain to people that we 
do it right, we do work hard at what we do, and we can provide 
that food system to the world.
    So I want to thank you again for the opportunity to visit 
with you today, and if you are ever up around Pottsville, come 
see us at Jones Cattle Company
    [The prepared statement of Mr. Tom Jones can be found on 
page 78 in the appendix.]
    Chairman Lincoln. I will take you up on that. Thank you, 
Mr. Jones.
    Mr. Bedell.

    STATEMENT OF ALLEN BEDELL, CHAIRMAN, ARKANSAS FORESTRY 
               COMMISSION, HOT SPRINGS, ARKANSAS

    Mr. Bedell. Thank you, Madam Chairman, and welcome home. My 
comments today will concern the part that forestry plays in the 
rural economy. First, I know that you are all aware of the 
obvious fact that most, if not all, of the forests and the 
harvesting of forest products occur in rural Arkansas and rural 
America. Chain saws are seldom heard in the city, and most 
harvesting in urban areas occurs only when forested land is 
being removed from productivity in favor of shopping malls or 
housing developments.
    The prolonged downturn in housing construction has 
devastated the ``solid wood'' sector of the forest products 
industry. The downturn in the global economy has certainly 
affected the pulp and paper industries. Employment numbers are 
certainly a moving target, with mills in Arkansas and across 
the Nation announcing temporary shutdowns and permanent 
closures almost on a weekly basis. International Paper Company 
recently announced the permanent closure of two mills and a 
reduction in capacity at another with the resulting layoff of 
1,700 workers. In Arkansas, recent closures of sawmills or 
plywood plants have been announced by Potlatch, Georgia-
Pacific, and Weyerhaueser Corporations, and several other mills 
are operating on severely restricted schedules.
    Each mill shutdown or closure asserts tremendously negative 
impacts on supporting businesses, such as logging contractors, 
equipment dealers, repair facilities, local hardware stores, 
automobile dealers, and even mom-and-pop stores. In Arkansas 
alone, approximately 30 businesses in the Mechanized Logger 
Program have shut down in 2009, probably never to return. Once 
forest products facilities are closed and logging contractors 
cease operations, these jobs are difficult to recover. The 
industry is highly capital intensive, and labor lost to other 
industries is difficult if not impossible to re-attract and put 
back to work.
    Each mill closure devastates local economies, not only the 
logging contractors but tax-supported entities are affected, 
including school systems and State, local, and county 
governments. In Arkansas, our Forestry Commission is supported 
in large part by the collection of ``severance'' taxes. The 
Commission staff estimates a net loss of $1.2 million over the 
next year because of decreased tax revenue generated from the 
downward trend of harvesting of forest products.
    I will not continue to attempt to impress on you the 
seriousness of the plight of the forest products industry, but 
I will attempt to make you aware of its importance in the rural 
agricultural regions of our State and the United States. For 
too long the timber industry has been a ``step-child'' in the 
agricultural field, whatever the reasons. This industry 
provided the materials for our homes and the paper products 
that we use daily. Even today we furnish 50 percent of the 
energy needs in our manufacturing plants by burning otherwise 
waste materials.
    Let us focus on some other realities. Recent weather 
occurrences in Arkansas have caused major problems in the 
agricultural fields. Flooding was at major levels and continues 
to cause problems. The State is some 25 inches above the annual 
rainfall, as has been mentioned before. But rain falls in the 
forests just as it does on the fields. Just as flooding wreaks 
havoc with production and harvesting of crops, so it does with 
timber. Retrieving timber from the forests becomes much more 
difficult and expensive, if not totally impossible. The rural 
timber access roads and county roads deteriorate and suffer 
increased damage. Tracts offered for sale are often much 
farther from the normal base of operations, resulting in 
increased logistical problems and costs, especially for fuel.
    Meetings with Federal, State, and local officials are 
ongoing. I am especially appreciative of your staff for 
providing audience to the timber industry representatives that 
have been in contact with that office. In addition, 
Representative Mike Ross of the Fourth Congressional District 
and Governor Mike Beebe have listened attentively to our 
concerns.
    Some ideas that surfaced from these meetings are: possible 
involvement of the Small Business Administration on financial 
matters; possibilities of legislation, i.e. ``cash-for-
boards,'' tax breaks for housing purchase, anything that puts 
housing construction back on track; recognition of forestry/
timber issues when considering agriculture relief legislation; 
continue the efforts to look responsibly at biomass energy 
programs that are economically feasible and provide value to 
the American citizen; serious consideration of proposed 
legislation to increase GVW limits on highways with the 
addition of a sixth axle.
    In closing, I must tell you that in the 49 years I have 
spent working in the forests of Arkansas, with some 35 years of 
that time being actively engaged in the logging business, 
things have never been this bad. Forests and harvesting have 
always been a great part of the American landscape, and I honor 
the time and experiences that I have been privileged to spend 
in this arena. I can define a logger as a timber harvesting 
professional who is fiercely competitive, independent, and hard 
working, that goes about the daily process of delivering wood 
fiber to manufacturing facilities regardless of the pitfalls 
confronting all of agribusiness, including weather, government-
and industry-imposed regulations, and they are always aware of 
the financial restraints confronting them. Loggers are the 
``sharecroppers'' of modern agriculture.
    I urge you to consider ways to help preserve an industry 
that is a vital part of the fabric of rural America.
    Thank you again.
    [The prepared statement of Mr. Bedell can be found on page 
58 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Bedell.
    Mr. Gillam.

  STATEMENT OF JEREMY GILLAM, SPECIALTY CROP PRODUCER, GILLAM 
                   FARMS, JUDSONIA, ARKANSAS

    Mr. Gillam. I would like to echo the appreciation of my 
colleagues on just the opportunity to be here today. When word 
got out that I had been invited to participate with this, I had 
several phone calls, as you could imagine, come in from 
producers and growers from around the State who were very 
distraught in their conditions and what has happened not only 
this year, but the compounding effect that has occurred over 
the last 2 or 3 years, between freezes like we all experienced 
in 2007, the market and rain and things, conditions again, and 
then 2008, and then on to this year with the excessive 
flooding. Their biggest concern was surviving the short term, 
but also coming up with some game plans on the long term.
    We have been growing here in Arkansas with the fruits and 
vegetable segment of the agriculture industry here at really, 
really good paces here the last several years. We have made 
great strides and have brought new growers, young growers such 
as myself, so they are all very concerned at this moment on 
where to go forward.
    One of the biggest things that was relayed to me was with 
the insurance programs that are available right now to the 
fruits and vegetable growers, especially here in Arkansas. Many 
are turned away from these programs due to the nature of their 
businesses. The insurance a lot of times is considered to be 
volatile of a risk. And so access is something that has been 
prevalent on the minds of many of the fruits and vegetable 
growers, and improving that is something that they have hoped 
that this example of what has happened this year would be able 
to maybe foster some growth in that area as well.
    When talking with some of the grape producers in northwest 
Arkansas, they were relaying to me that in 2007, for instance, 
total crop loss year they had a payout of 1 percent to come 
back to them on their crop insurance. The tomato growers that I 
have talked to that are experiencing problems this year have 
relayed to me that many of them have still not received any 
payments at all and are lost in bureaucracy.
    And so one of the things that is my hope that will come out 
of some of these events and that we might be able to move 
forward on through these difficulties is improving that system 
for our fruits and vegetable growers, that they would be able 
to survive and move on to other years and continue to grow.
    Mr. Jones mentioned the young producers and the problems 
that they have. Many of the young farmers that we are 
attracting in to the agriculture industry right now are doing 
so through fruits and vegetables, and they have not had the 
chance to build up their reserves and their assets. So having 
years like we have had in the last two or three are forcing 
many of them to make some tough calls. We are very hopeful that 
maybe there might be some aid that can come on the short term 
that would help them bridge that gap and survive and continue 
to grow this industry and segment because, as we push forward 
to be a healthier Nation, fruits and vegetables are going to 
play a vital role in that, and especially here in Arkansas with 
the growth that we have seen.
    Also, one of the things that was mentioned to me quite a 
bit was the impact that it had on the rural communities this 
year. I spoke to several of our pumpkin growers throughout the 
State and was told in great detail of the loss of a lot of the 
fall festivities that were unable to happen this year because 
of the rain and everything and the impact that it had on the 
communities and their way of life and the enjoyment factor that 
goes into being a part of our rural communities. And so I had 
several that mentioned to me the impact that occurred there.
    One thing that I think was mentioned and alluded to in 
President Veach's comments, too, was the impact on our rural 
infrastructure that has occurred with these rains, and, of 
course, a lot of that are roads that we all take in agriculture 
in order to be able to transport our crops and our harvest. So 
the road damages that occurred through this has also had a 
domino effect not only just with the roads and the general 
traffic, but also impacting our agriculture as well. And that 
domino effect is something that has been of great concern not 
only for me but for several of my colleagues that I have spoken 
to because the fruits and vegetable industry, especially in 
grapes, blackberries as well like I raise, they are not a crop 
that you plant ever year. You have waited several years in 
order to get to that point, and then you have problems. And so 
the impact that it is going to have on the future years is 
something that I appreciate the opportunity to address with you 
today.
    Thank you.
    [The prepared statement of Mr. Gillam can be found on page 
74 in the appendix.]
    Chairman Lincoln. Thank you.
    Mr. Jones.

 STATEMENT OF MICHAEL JONES, PRESIDENT, MERCHANTS AND FARMERS 
                     BANK, DUMAS, ARKANSAS

    Mr. Michael Jones. Senator, thank you for including a 
banker from a row crop county on your panel today. You know 
from growing up in Helena that weather is a constant topic of 
conversation in farm families and bankers who lend to farmers. 
2009 was the year we quit talking about the weather in the 
Delta because it was so bad. We might mutter about it under our 
breath, but it was that severe.
    As has already been mentioned, the flooding in the spring 
was devastating from the standpoint of replanting. The flooding 
in the summer actually might have been okay had everything else 
worked out. It cut down on irrigation costs, one little bright 
spot. But when harvest came, if you did not have an early crop, 
you suffered loss.
    The bank I serve has been there for 100 years, and I have 
seen 30 of those, and this is as bad as we have ever seen it 
from the standpoint of excess water, and never have we seen 
this kind of water at harvest. We have encountered hurricanes 
and their damage, but it blows through and it blows away. In 
October of this year, we had 4 days that it did not rain in 
Desha County.
    I made a lot of calls, preparing to come to see you today, 
to producers and other lenders, and in southeast Arkansas--and 
I would venture to say it is no different from Mississippi 
County to Chicot County; it is just some spots are a little 
worse than others. Out of the portfolio of agricultural loans 
we have, we do not have a single producer who is not seriously 
hurt by the weather factors of this year.
    Our borrowers will fall into three categories. We have one 
small group that will make a little money. They had early rice 
or they got an early corn crop out, maybe did not plant any 
cotton. Then we have another group that I doubt there is 
anything you or I can do to help them, and thankfully, that is 
a small group. But the group I would ask you to focus on is the 
group that is hanging in the balance, and that is the largest 
group, where if they pay out, they will not have anything left 
for their other expenses, whether they are equipment payments 
or payments to the local chemical houses or just a way to get 
through the wintertime until next year's crop furnish.
    I also asked the producers that I visited with to talk 
about what they would like to see in the way of help, if it 
could come, and I am delighted to tell you that the proposal 
that you and Senator Cochran have put forward was far and away 
the most popular way to address the problem, and that is, 
another single direct payment to those in the disaster areas.
    Crop insurance is something that a lot of our producers 
make use of if they are in soybeans or other grains, but they 
do not feel that it works for them in cotton and rice, and 
perhaps that is something you and your Committee could focus 
attention on, is how to make that seem fairer to those 
producers going forward. And I know you are very familiar with 
these issues.
    Emergency loans at low interest are of interest perhaps to 
the younger farmers or to those who are thinly capitalized, but 
for a lot of people it will bring help, but maybe not soon 
enough, and that is the other thing I would make a plea for 
and, that is, timely action.
    That brings me to talk about FSA and the role it plays both 
in administering payments and loan programs. Those offices 
often are not fully staffed, or if they are staffed, things are 
not always able to be done as quickly as the producers or their 
lenders need. I do not mean to sound harshly critical there. It 
is just a fact. And the delays can really hurt in a crisis 
year.
    We really appreciate knowing, have always, that we have a 
Senator who really understands row crop issues from firsthand 
experience, and in your position as Chair of this Committee, it 
is just a monumental moment for the farmers of my section of 
Arkansas, and we appreciate all that you do.
    [The prepared statement of Mr. Michael Jones can be found 
on page 76 in the appendix.]
    Chairman Lincoln. Well, thank you, Mr. Jones, and we look 
forward to working with you and all of you all on the panel 
with so many of these challenges that we face.
    Before I go to some questions, I would like to also 
recognize that we do not do this job alone. We have wonderful 
staff that works with us. Certainly our Senate Agriculture 
Committee staff are here. I would like to especially recognize 
Martha Scott Poindexter and Jane Anna Harris who are here of 
Senator Chambliss' staff on the Committee, and they do a 
tremendous job. They are both unbelievably brilliant women, but 
they also are kind of native to the area a little bit. They at 
least speak our language, both being, I think, natives of 
Mississippi, which is wonderful for us because we do get to 
work together closely. But they are tremendous and do a 
wonderful job for the Committee, and I am very grateful to both 
of them especially for being here today.
    We also have other great Committee staff that are here with 
us today, and I will let you introduce yourself to them if you 
do not already know them. Robert Holifield is our new Committee 
staff director, and he is joined by Brandon McBride, both of 
whom are Arkansans, and the real test goes to both Ashlee and 
Jessie who put this hearing together. I do not know where those 
ladies are, but they are the ones that made it happen, so I am 
grateful to all of them.
    Just briefly, I want to touch on some questions for you 
gentlemen. I will try to be cognizant of the time so we can get 
to our other panels and I do not keep all of you all afternoon 
and into the evening because I have not prepared dinner for 
you. So I am going to get busy.
    [Laughter.]
    Chairman Lincoln. Mr. Veach, I just want to make sure--your 
statement is very compelling. There is clear action that is 
needed, and it needs to happen soon to keep our producers from 
suffering from some devastating weather that we have all 
experienced this year. Some of them have had a double whammy. 
Some of them have had a triple whammy. But can you kind of go 
into greater detail about the Farm Bureau's concerns 
particularly in regard to the SURE program, the Supplemental 
Revenue Assistance program that is in the farm bill. I have my 
own significant concerns about the program and certainly the 
timeline the Department of Agriculture is proposing for this 
implementation and what that is going to mean to these growers 
if, in fact, they do not see their assistance until January of 
2011.
    Mr. Cravens. Well, that is too late for the assistance that 
we need, obviously, to start off with. The SURE program in 
southern Arkansas--of course, the regulations have not even 
been published yet, and so that is another big problem that we 
have. FSA did promise us on a visit to Washington that they 
would be out in November, but November is drawing quickly to a 
close, and we do not have them yet.
    But we are concerned about the relief that we could 
possibly get there and the fact that most of our producers have 
mitigated a lot of their losses primarily through irrigation, 
which most of the time we have drought issues that create these 
losses, but this year it is a different situation. It is a 
particular situation in that it is too much rain.
    We have also had a big, big hit in quality. There have been 
producers that had to actually dump some of their soybean 
production because they would not take it at a granary because 
of the low quality of it. And we have had a lot of quality 
issues in cotton. We do not think it can address those issues 
as it should, and SURE is going to be way late, and with the 
type of agriculture and the crop production that we have in 
Arkansas and in Southern agriculture, it is also very--we 
usually pretty well are a different situation especially when 
it comes to Federal crop insurance because of the way that we 
are structured. You may have a loss on half of a farm, but the 
other half you do not, so that is going to put you above that 
50-percent damage. And we all realize that we operate on such a 
narrow margin that if we have got a 50-percent damage, we are 
definitely in big trouble, and to get down to that before it 
triggers any help is not enough.
    We have got to have some help for producers that do not 
have that big a loss because what loss they do have, especially 
in quality, could take them right out of business.
    Chairman Lincoln. Well, and I know we are inquiring, 
because the understanding is that the rule might--they were 
hoping to have completed by November, but I am not sure if that 
did not just affect the 2008 payment that people are still 
waiting on or if that would, in fact, cover the assistance they 
need from the loss of the 2009 crop year. So we are 
investigating that as well, and certainly we will make sure 
that they understand that we cannot wait until 2011 because the 
banker at the end of the table down there is going to have a 
real hard time helping them start their next crop year.
    But we would like for your to consider specifically from 
the Farm Bureau's standpoint any ways that you think we could 
fix the program, and we look forward to working with you on 
that and hope that you will help provide us some of those 
suggestions.
    Mr. Veach. We would love to.
    Chairman Lincoln. And I very much appreciated your comments 
on seed and making sure that the seed are there for us in the 
future. These disasters do not just affect our income for the 
year, but they also affect future crops as well.
    Mr. Jones, you talked about something that I spent a lot of 
time on, and that is trade, and I have worked extremely hard, 
cosponsored legislation in the Senate that would go a long way 
to loosening up the existing restrictions on agricultural trade 
with Cuba, and have been in constant contact with the new U.S. 
Trade Report Ron Kirk, along with working to ensure from 
Secretary Vilsack that agriculture and USDA will be actively 
engaged in trade negotiations, realizing how critically 
important--if there is one thing my Dad taught me, he said, 
``Darlin', we cannot circle our wagons and just sell our 
widgets, gadgets, and hamburgers to each other. It is going to 
be a global economy, and we have got to be engaged in it.''
    So I appreciate you bringing it up. What would that 
expanded trade to Cuba mean for livestock producers in 
Arkansas?
    Mr. Tom Jones. Well, certainly it would make a great deal 
of difference to the poultry sector. I think Cuba is one of 
those areas that would really matter. And, also, any opening of 
a market to a country like Cuba that would boost grain 
production and send those products over there would just be 
beneficial to all.
    I will have to at least bring up another country, if I 
might. We have really got to get back into Japan with beef. We 
have just got to. And if we cannot completely get in there now, 
just moving them from 20 to 30 months would be a boon to the 
beef producers of this country that could just be a very 
important thing.
    So, you know, there are a lot of people who say, no, it 
should be fully open, and I think that is where we all would 
like to get to. But I sure wish we could get part of the way 
there and then get the rest of the way there if that is what it 
has to be.
    Chairman Lincoln. Well, all of Asia, certainly there are 
opportunities, Korea and other places as well, and we want to 
stay focused on that.
    I was interested--you mentioned that we were fourth in 
turkeys, and I stood up to the plate in Washington the other 
day and mentioned that to one of my colleagues who was claiming 
to be one or two. And one of the interesting facts that came 
out of that to me was that of all the turkeys that are produced 
in this country, over 60 percent of them are consumed between 
October through December, which is amazing. So if you have an 
effect on those crop and you have got such a limited window of 
when you are marketing and selling that product, you have got a 
real problem that you have to consider. So that is important.
    The last thing I would bring up is your comments about 
being respectful of livestock and meat products and how 
important it is to maintain them out there, and I just hesitate 
to mention this, but I do think it is important that we are 
cognizant in some efforts--I know in one of the--I was asked by 
the press not too long ago about a meatless Monday in the 
school lunch program, and I think it is so important to be 
respectful for all of the diversity that exists and all of our 
priorities that we have. But it is also important to have that 
variety, and you can do that without being disrespectful to 
people. So I hope that we will keep that in mind as well. So 
thank you very much.
    Mr. Bedell, I toot the horn of forestry all the time, and 
we are glad that you are here. As you know, I have championed 
legislation to ensure the tax rate on timber gains is and 
remains low for our growers. The TREE Act is going to provide 
that cap gains rate. We want to create and extend and expand 
the homebuyer's tax credit because we know what that means to 
our forestry and lumber business, getting our housing market 
moving, fighting to ensure that our timber products and 
manufacturers have the opportunity to take part in the green 
energy economy, as you mentioned, through utilization of 
renewable tax incentives, because under the current law--folks 
may not know that, but the current tax law, biomass does not 
far as well as some of our other types of renewable energy 
sources. So we want to work hard to make sure that both on-site 
is the use of biomass for renewable electricity, that there is 
a tax credit there under Section 45 that is comparable to what 
others have, and then also that biomass receive the same value 
in Section 45 credits as all the other renewable sources. And 
those are important tools for us, and I think we will stay 
focused on that.
    But I just want to make sure you know that we do not 
consider forestry a stepchild, particularly here in Arkansas, 
but neither do we on the Committee, and we will definitely stay 
focused.
    I do want to compliment the Arkansas forestry industry. You 
set a good example in terms of best management practices and 
the fact that everyone in the forest and the wood forest 
products industry as well as the forestry, the Arkansas State 
forestry, as well as the U.S. Forest Service and others work 
together to build a best management practice that really makes 
sense and is very well respected nationally. So I appreciate 
that.
    Any ideas that you have regarding additional ways that we 
could be working to ensure whether it is providing useful tax 
incentives that help our domestic industry as it fights to 
really regain its competitiveness and keep those jobs that we 
have got left, but bring some of them back?
    Mr. Bedell. What we urgently need is something that is 
quick, and most all the legislation and things are items that 
are down the road. But our industry has been--we were in the 
doldrums long before a lot of the rest of the economy were, and 
it has been a long, long battle, and some of our people are 
right at the end of the rope, as all of our economy is. We need 
jobs. If people had jobs, they could buy houses, they could put 
our industry back to work. What we need is something that is 
urgently quick.
    Chairman Lincoln. Well, and that is a point well taken and 
one I have tried to bring up with my colleagues as we talk and 
hopefully move ourselves to focusing on the economy, and that 
is predictability. The timber tax expired in June. We were 
promised that we would be able to get that done sooner than 
later, and our hope is now that it will be a part of the 
extenders package that we do next month. But any industry 
cannot operate without better predictability in terms of where 
it is going to be able to manage its resources and not knowing 
what you can depend on there. So we will continue to fight hard 
not only for that, but also the predictability that the 
industry needs.
    And just so you know, we are working hard. We have recently 
sent a letter to President Obama requesting a $57 million 
increase in the 2011 budget, particularly for forestry, focused 
on forestry, and then also an increase of $4 million for the 
fiscal year 2010 in the National Forest Timber Management 
Account for the Washtaw and the Ozark. We know--all you have to 
do is talk to anybody in the forest industry or in the Federal 
Treasury to know--that for every dollar we spend there, we 
return a huge payback to the Treasury. And it is done in an 
incredibly productive and respectful way to the environment, 
and it is a good thing to be doing, and it helps us manage our 
forest as well. So we appreciate that. Hopefully that will be 
some of the more immediate, but we are also going to work to be 
more predictable as we go through there.
    Any suggestions you have, the relationship between the 
national forests and our timber industry, in terms of 
maintaining vibrant forests and a vibrant timber industry? You 
all do a good job. I have been to your meetings down in 
Glenwood.
    Mr. Bedell. Nothing off the top of my head, but we will 
certainly be in touch.
    Chairman Lincoln. I hope you will, and I hope you will keep 
in mind and keep the Committee informed of what are those good 
relationships between our timber industry, our national forests 
and others on how we can do a better job there.
    Mr. Bedell. Thank you.
    Chairman Lincoln. Mr. Gillam, we are all so excited about 
the opportunities particularly with specialty crops. I attended 
last week over at the Heifer International Center just across 
the street there the Farm-to-School program that is kind of 
beginning to have a little bit of momentum behind it, looking 
at how we can work with local growers, particularly specialty 
crop growers, and reinforcing locally grown fruits and 
vegetables into the school program so that we give our children 
a sense of where agriculture--how important it is and where it 
comes from but, more importantly, also help to create a vibrant 
industry and economy for those young farmers you talk about, 
which it is enormously difficult in this environment, this 
economic environment. So any suggestions you may have to us 
about young farmers and what we can do, maybe any of the 
different programs like Farm-to-School or others that might be 
helpful.
    And the other thing you mentioned that I would like you to 
just briefly comment on is the agrotourism industry when you 
talk about our pumpkin patches and our pumpkin growers. I know 
I enjoyed it as much as my children did when they were small, 
getting out there and being an event for the school children, 
for the whole community to participate in, and when we see 
those kind of things destroyed as well, the impact it has on 
our communities. Maybe you can touch on either of those two.
    Mr. Gillam. I believe when discussing the food programs 
that have really become very popular here lately, that is one 
of the strongest, I think, initiatives to help attract farmers 
to the fruits and vegetable industry. I think the biggest thing 
that they have done is that they give some hope and some 
structure to different market outputs and different ways that 
they can go.
    The one thing that we have found over the years in trying 
to attract younger farmers into agriculture as a whole is they 
want to know that there is a future there for them, and they 
want to also be able to be a part of something that is 
important. And being a part of the nutrition push and helping 
our children eat healthier is something that they have 
responded to very well, and it is one of my hopes that the 
programs like discussed last week in a meeting here at the 
Heifer International Center will gain popularity, and through 
that we will be able to help form a foundation that will 
hopefully attract more and more people into our segment, but 
not just from row crop or other industries but new farmers that 
are going to get in and make a difference.
    In relation to the pumpkin festivals and the agrotourism 
industry, that is one of the strongest sectors of growth that 
we have seen in Arkansas over the last several years, not just 
with pumpkin festivals but there are other functions as well, 
farmers having duck hunts and other various things. It is 
something that has continued to see a lot of growth. Of course, 
the weather directly impacted pretty much all of those events, 
whether they were spring events or mid-summer or even the fall 
events that we have seen. And that is one of the things that I 
have heard the most about in the last 2 or 3 months from 
people, was just the impact that it had, not just economic 
impact but the sense of community that you derive from being 
able to attend those events. And people see that as a way to 
bring their communities together and to form that unity that is 
necessary as we continue to move forward and facing the 
problems that we have in rural development.
    So that is one of the things I have been most disheartened 
about with the rain, how it has affected everything. But I do 
think that we are going to see that continue to grow and 
hopefully rebound after this year and we can get back on track 
with that.
    Chairman Lincoln. That is great. Well, I know when I was in 
East Arkansas about 6 or 7 months ago, there was a group of 
Japanese touring, and there are a couple of farms over there, 
particularly rice farms, that do ecotourism and had them out 
and showing them how we grow rice and what a great product we 
produce. So agrotourism has got great potential, and we will 
look forward to working with all of you on that.
    Of course, you mentioned predictability for those young 
farmers, which we were just bemoaning with Mr. Bedell, and I am 
sure, Mr. Jones, you may have a thing or two to say about 
predictability. We would love to hear again your concerns. But 
you mentioned the importance of FSA lending programs for 
growers and rural communities. Maybe you can give the Committee 
a sense of how your business would be impacted without these 
programs, and then also give us a real-world example of how 
producers utilize those FSA lending programs.
    Mr. Michael Jones. Sure. Senator, in our bank through the 
years, the FSA guarantee program has been critically important 
to young farmers certainly, but also to farmers who have been 
battered and banged either by past weather patterns, the 
drought of 1980 being kind of another landmark year, the 
opposite extreme of this one; but in between these 30 years, 
there have just been any number of times that it has made the 
difference.
    I would guess that if you surveyed banks up and down the 
Delta, at times as much as 20 percent of a bank's portfolio 
would have guaranteed programs of some sort. We use the 
guarantees in our crop production lending where it fits. We 
also have a good number of equipment loans that are guaranteed 
through FSA.
    Chairman Lincoln. You said 20 to 30 percent? Is that what 
you said, in your portfolio?
    Mr. Michael Jones. As high as that at times. I would not 
say that it is that way all the time or in every shop. But it 
is that important. And the efficient administration of those 
programs is just as critical as a banker's decision as to 
whether the farmer can go forward or not.
    You had a second question there. Would you repeat it for 
me?
    Chairman Lincoln. Well, I was actually asking you about 
what would business be like without them.
    Mr. Michael Jones. We would lose those farmers. I hate to 
put it that bluntly, but in crop production especially. We 
might be able to find a way to limp through on the equipment 
loans where the collateralization and cash flow fit. But for a 
lot of farmers with crop production issues where they are thin 
on equity or do not have a strong payment history, that 
guarantee makes all the difference in the survival. And as you 
and these other panelists have already discussed, the loss of 
jobs in the rural areas is profound, and so many of those jobs 
connect agriculture. The old truism is when farmers suffer in 
the Delta, we all suffer. And that is still the truth.
    Chairman Lincoln. Well, I thank you, and I know that it was 
several years ago when we were going through one other 
disaster, and we actually had a panel of bankers that came to 
the Committee, and they made a tremendous impression when they 
started listing the concerns and the problems they had in what 
was going to be able to be possible and what was not. And it 
was abundantly clear that without those resources and without 
you there in the community, farmers could not make it. So that 
was difficult.
    Well, I want to thank all of the panel here today. Thank 
you so much for being with us and offering the Committee such 
good suggestions and ideas, certainly presenting your concerns, 
and, more importantly, we look forward to working with you in 
the future to address so many of those concerns and make sure 
that we continue to see the input into rural America that can 
revitalize it and then in turn allow it to be a part of 
revitalizing our country. So thank you all very much.
    [Applause.]
    Chairman Lincoln. Now I would like to introduce our second 
panel. Our first witness on this panel will be Lawrence 
McCullough. Lawrence is the State Director for USDA Rural 
Development here in Arkansas. He has worked for Rural 
Development for more than 38 years, and he is going to give us 
an overview of how the agency's programs work for our 
communities.
    Then we will also hear from Sam Walls. I know Sam is here 
because I saw him. Mr. Walls is the CEO of Arkansas Capital 
Corporation. Connect Arkansas is an affiliate of the Arkansas 
Capital Corporation. It has been a lending advocate for the 
preparation and education of Arkansas regarding the benefits of 
broadband use as well as for the facilitation of broadband to 
every Arkansas home and business. He will update us on the 
State's efforts to accomplish these goals.
    After Mr. Walls, Dennis Sternberg, who is the Executive 
Director of Arkansas Rural Water Association, will update us on 
his organization's efforts to ensure that our rural communities 
have safe drinking water.
    And then, finally, we will hear from Ms. Teddy Gardner. Ms. 
Gardener is the Executive Director of South Arkansas Community 
Development. Her organization provides housing assistance to 
families working to achieve homeownership.
    So I would like to welcome all of you. Thank you very much 
for joining us today. Please know that all of your written 
testimony will be made part of the official Committee record, 
and we again appreciate you adding your voices to today's 
hearing on what we can do for rural America.
    So, Mr. McCullough, we will let you start.

    STATEMENT OF LAWRENCE MCCULLOUGH, STATE DIRECTOR, RURAL 
   DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, LITTLE ROCK, 
                            ARKANSAS

    Mr. McCullough. Thank you, Senator Lincoln, for the 
opportunity to be here today. On behalf of Agriculture 
Secretary Tom Vilsack, Under Secretary for Rural Development 
Dallas Tonsager, and all of us at USDA Rural Development, I 
want to express our appreciation for your commitment to rural 
America and your leadership on rural issues.
    Rebuilding and revitalizing rural America is a high 
priority of the Obama administration and is the mission of USDA 
Rural Development. I am honored to have been chosen as a member 
of the President's team, and I look forward to working with you 
to ensure that Arkansas is among the leaders in building a new 
and stronger rural economy in the years ahead.
    The subject of today's hearing, ``Investing in Rural 
America,'' addresses directly the mission at USDA Rural 
Development. Rural Development administers and manages over 40 
housing, business, and community infrastructure and facility 
programs as laid out by Congress through a network of 6,100 
employees located in approximately 500 national, State, and 
area offices. We are among the most decentralized of Federal 
agencies. You do not have to come to Washington, DC, to do 
business with us. We make house calls.
    [Laughter.]
    In Arkansas, you will find us not just in Little Rock, 
which is our State headquarters, but also in Harrison, 
Jonesboro, Forrest City, Hope, Monticello, and Fort Smith as 
well. As a long-time career employee before being named State 
Director, I knew every one of the 124 dedicated men and women 
who make up our Arkansas staff. We live in the communities we 
serve. We are your friends and neighbors, and we will go the 
extra mile to deliver the services rural Arkansas needs to 
thrive and grow.
    We do face challenges. We are not immune from the economic 
downturn. Many Arkansas communities and businesses have been 
hard hit. We cover a lot of territory. As many of you have 
said, most of Arkansas is rural. There are areas of persistent 
poverty, and we are making a concerted effort to step up our 
outreach to the neediest communities. There are also areas that 
are dynamic and growing, and we will help these rural 
communities build on their success.
    Our staff has a wealth of experience. I am proud of them 
personally and proud of the work they do. Nearly half of our 
staff will reach retirement eligibility within the next 3 
years. They do a great job, and they will be hard to replace. 
Continuity planning is a priority.
    Rural Development in recent years has steadily increased 
investment in rural America while reducing staff and 
consolidating many offices across the country. We are doing 
more with less. In that context, I am appreciative of the 
authority the Congress provided in the Recovery Act to use up 
to 3 percent of appropriated funds for administrative purposes. 
We need that flexibility, and I want to thank you and the 
Congress for making this possible.
    But the bottom line is, we are here to help. Rural 
Development is the one agency in Government that can build an 
entire community from the ground up. Last year, using both 
regular program funds and additional funds made available by 
the American Recovery and Reinvestment Act, or ARRA:
    We provided over 5,000 guaranteed and direct single-family 
housing loans totaling over $480 million, to put more than 
5,000 rural Arkansas families into new homes.
    We provided over $3.8 million to 20 multi-family housing 
developments providing affordable rental housing in rural 
communities across the State.
    We assisted 16 rural businesses with loans and grants 
totaling over $3.3 million, creating jobs and strengthening the 
rural economy.
    We invested over $15 million in essential community 
facilities, more than $22 million in telecommunications 
infrastructure, and over $132 million in modernizing and 
extending the rural electric grid.
    Last but not least, we assisted 58 rural Arkansas 
communities with more than $31 million in loans and grants for 
water and wastewater projects.
    But the numbers do not tell the whole story. Many of the 
projects in which we are involved are community-led. 
Partnerships are a key element. A good example is the new 
Phillips County Library in Helena. Although this is a 
persistent poverty area, several community organizations led 
the effort and provided a significant local cost share. Rural 
Development provided $200,000 to assist with the cost of 
renovating an existing building, a 13,000-square-foot 
structure--formerly a grocery store--which is owned by the 
county with a total estimated project cost of some $1.5 
million.
    In Dermott, Rural Development helped Dermott Day Service 
Center with a B&I guaranteed loan in the amount of $650,000 to 
purchase and renovate an existing building to house eight 
classrooms, offices, kitchen, cafeteria, and a multifunctional 
auditorium. This facility will allow for future growth and 
enhance the overall environment for the children and staff. The 
Center is a nonprofit organization that provides early 
childhood education and clinical services for children ages 6 
months to 5 years old. The service area includes four counties 
in southeast Arkansas. This one project will save 28 jobs and 
create 5 jobs in Chicot County.
    And just a few weeks ago, we announced a major regional 
water initiative with the Ozark Mountain Regional Public Water 
Authority. They received $55.728 million in water loan and 
grant funds to be used to construct an intake structure and 
water treatment plant on Bull Shoals Lake as well as five water 
storage tanks and over 100 miles of transmission line extending 
from northern Boone County to Newton County and Searcy County 
in Arkansas. The new system will provide a dependable supply of 
quality water to 19 rural water systems of which many of them 
are facing water quality and/or quantity problems with existing 
wells. These 19 systems serve around 7,500 users with a 
population of some 21,000.
    It is examples like these that make Rural Development an 
exciting place to work and a great place for the communities we 
serve. I am grateful for the opportunity to serve as State 
Director and grateful for the partnership and support of our 
partners in the private sector, the local government, and the 
not-for-profit community. We have a job to do, and I know we 
can count on your continuing support as we move ahead.
    Thank you.
    [The prepared statement of Mr. McCullough can be found on 
page 85 in the appendix.]
    Chairman Lincoln. Thank you, Mr. McCullough.
    Mr. Walls.

 STATEMENT OF C. SAM WALLS, CHIEF EXECUTIVE OFFICER, ARKANSAS 
           CAPITAL CORPORATION, LITTLE ROCK, ARKANSAS

    Mr. Walls. Thank you, Senator. If I may, the other day I 
had an opportunity to observe our Senator, our Chairman. I have 
to tell you, as an Arkansan, it was a great source of pride to 
see my fellow Arkansan's leadership ability and the high regard 
in which she is held by her colleagues, and especially her 
genuine concern for the people.
    Chairman Lincoln. We appreciate you showing up. That was a 
great opportunity.
    Mr. Walls. It was a very proud moment, and thank you for 
allowing me to participate.
    Chairman Lincoln. We were pleased to have you there for the 
rural outreach meeting.
    Mr. Walls. I am today here in my capacity as the president 
of Connect Arkansas. We became active in August 2007, and we 
are a 501(c)(3) nonprofit. We have an inclusive board that is 
representative of many interests-- public, private, and 
education--and including providers representative of the 
various types of broadband technologies.
    The Connect Arkansas initiative is characterized by a 
commitment to a collaborative approach among all our partners. 
It is an initiative whose members are Arkansans who understand 
that in order for Connect to meet its objectives, we must all 
work together for the betterment of our people.
    To date, this overriding philosophical basis has enabled us 
to be ahead of the curve when compared to other States in this 
most important activity. We are most pleased to now include the 
Federal Government through the United States Department of 
Agriculture and the Department of Commerce as partners in this 
endeavor. We were particularly pleased that Connect Arkansas 
was one of the first entities to receive mapping funds made 
available through the stimulus act, which we believe validates 
the work that Connect has done to date.
    While the estimates of broadband's impact may vary, there 
have been numerous reports and studies over the past few years 
stressing that by increasing broadband use in our State, there 
will be a positive impact on the economy, create and save jobs, 
and improve the lives of our citizens. Whether you are the 
trademark attorney who lives in Eudora, Arkansas, or the high-
end boutique located in Magnolia, Arkansas, that caters to New 
Yorkers, one cannot underestimate the opportunity and quality 
of life that broadband enables for our rural areas.
    According to the 2008 State New Economy Index, Arkansas was 
ranked 47th in deployment of broadband communications. In 
Arkansas, although 87 percent of our population has access to 
broadband services in the home, only 49 percent of our 
households actually subscribe. These statistics illustrate the 
need to not just provide access, but to also ensure that our 
people use it.
    As a result of this, we focus on three areas. The first 
area is mapping, and to better focus our efforts, we first 
created an understanding of local needs by working with 
providers to develop a first-generation broadband map that 
shows where access is and where it is not and at what speeds it 
operates.
    To enhance our mapping efforts, we were awarded in October 
a $1.58 million grant made possible through the Federal 
stimulus program and administered by the National 
Telecommunications and Information Association, or NTIA. We are 
now working to develop an enhanced and substantially complete 
map by the first quarter of 2010.
    The second effort is public education. When addressing 
Internet connectivity, it is not enough to just provide access. 
Our survey results indicate that approximately one in three 
Arkansans are not interested in the Internet. National studies 
have shown that in order to address this group, you must make 
the Internet relevant to them. In order to do that, you have to 
teach your communities how to use it.
    Of paramount importance is the need to increase the number 
of Arkansans that are getting online. It is safe to say that as 
more Arkansans get online, the service providers will continue 
to expand and enhance their coverage. It makes good business 
sense to do so. We currently have initiated pilot information 
technology strategic plan programs in four counties throughout 
the State, and more recently, in addition to the NTIA funding 
that was awarded for mapping, we received an award of $500,000 
to deploy a regional rollout of the IT strategic planning 
program for Arkansas.
    The third area is implementation of the developed plan. 
Along with assisting communities in developing their broadband 
strategies, Connect will continue to work with each community 
to implement their vision. There will inevitably be those that 
may have limited resources with which to afford a computer or 
access, and we will work with service providers, State leaders, 
and private foundations to address this issue.
    There is absolutely no question that broadband access and 
use is of paramount importance to our Nation to ensure that our 
global dominance is maintained through this new century. 
Regardless of whether people live in urban or rural areas, we 
must get more of our citizens online. Unfortunately, in order 
to do that, we have to change the way our people think, and 
that is rarely a simple task.
    It is fitting that we are in the Clinton Presidential 
Library today because just the other evening I heard him speak 
at an event, and he talked about how we must think of new ways 
for our citizens to create and build wealth. And it occurred to 
me, as he was saying that, that the Internet is an 
indispensable part of any new economy.
    For our rural areas the need is even greater. We are here 
today because we are trying to address the special issues that 
rural America is dealing with. Education, health care, economic 
development, as well as a myriad of other quality-of-life 
issues are particularly difficult to address in our rural areas 
because often these communities lack the critical mass that is 
necessary to make capital investments in them.
    Quality Internet access and usage in these communities is 
going to be a fundamental component of any solution we develop. 
We all believe in the potential of our rural State. Addressing 
broadband Internet usage is an opportunity for Arkansas to take 
a huge step forward to invest in our people. Addressing 
broadband nationally is an opportunity for our Nation to ensure 
that our country, and especially our rural areas, can remain 
globally competitive.
    Thank you, Senator.
    [The prepared statement of Mr. Walls can be found on page 
120 in the appendix.]
    Chairman Lincoln. Thank you, Mr. Walls.
    Mr. Sternberg.

  STATEMENT OF DENNIS STERNBERG, EXECUTIVE DIRECTOR, ARKANSAS 
           RURAL WATER ASSOCIATION, LONOKE, ARKANSAS

    Mr. Sternberg. Thank you, Chairman Lincoln, for this 
opportunity to testify today. I speak to you on behalf of the 
Arkansas Rural Water Association, which is one of a nonprofit 
federation of State rural water associations that operate in 
all 50 States.
    Madam Chair, it is an honor to testify before you and this 
Committee today on the important topic of safe drinking water. 
Before I get started, I would be remiss if I did not also 
recognize that you are the first person in the history of 
Arkansas to become Chair of the Senate Agriculture Committee. 
And with your strong rural roots, I do not need to tell you of 
the many of the barriers our rural communities face every day. 
And I do not have to tell you that, in spite of these barriers, 
these are some of the best places in the world to live. This is 
why we are proud and honored that you hold this position, and 
we can firmly say rural American is well represented.
    The importance of safe, clean water and why we must 
continue and strengthen the efforts to make sure our citizens 
have it cannot be stressed enough. Simply put, water is life. 
However, far too many of us take it granted that the water we 
need to keep us healthy and our economy strong will always be 
there as soon as we want it. Every day, millions of your 
constituents count on the very first drop of water that comes 
out of their kitchen faucet to make that first pot of coffee or 
their breakfast. And when they do, they expect that water to be 
safe for themselves and their families. We must not forget that 
it takes a great deal of effort to make that first clean drop 
of water your constituents count on each and every day 
possible. It takes positive programs and well-trained personnel 
to make this happen. This is why I am proud to talk about the 
strong USDA programs that make it possible to have the 
facilities and trained people who can make sure that the clean 
water we must have will be here in the future.
    The current water and waste disposal grant and loan 
programs operated by the Department of Agriculture's Rural 
Utilities Service have a long, successful history of providing 
critical infrastructure assistance to meet one of the most 
basic needs in rural America--providing safe and affordable 
water and wastewater assistance to low-and moderate-income 
communities. This is one of the highest rated Government 
programs in history and one with a default rate that is almost 
nonexistent, and the delinquency rate is currently 0.6 percent 
nationally. Arkansas Rural Water helps these communities not 
only access these funds, but help to ensure that these funds 
are used efficiently to protect the community and the 
Government's investment.
    Rural Development also has the unique advantage over other 
Federal agencies by having a field structure with experience 
staff with community development expertise scattered throughout 
small-town Arkansas and throughout rural America. Without this 
assistance, many of these communities could not survive or 
compete in the global economy. As you are aware, the economic 
downturn has also disproportionally impacted many of these 
small rural communities more than our urban counterparts. Small 
rural communities are also faced with the additional burden of 
reduced tax revenues that impact their ability of providing 
essential services like water and wastewater.
    Arkansas Rural Water is there to provide on-site assistance 
to these small rural communities in Arkansas. Many of these 
communities lack the staff, capacity, funding, or expertise to 
address technical water and wastewater issues. I hear daily 
from rural communities in need of assistance, whether it is to 
design or construct a new system, repair an existing system, or 
respond to a pending emergency, we are always there. Our 
mission is simple: we are there to restore and improve the 
public health, environment, and sustainability of these small 
communities or, in other words, to give them a level playing 
field with our urban counterparts so individuals and small 
communities can prosper in this global competitive environment.
    We are able to accomplish this important mission because of 
the help we get from the Rural Development NRWA Circuit Rider 
Program and Wastewater Technician Program. This program 
provides technical assistance to eligible systems to meet the 
real-world challenges of bringing safe, clean water to the 
people. These challenges are real, and so are the solutions we 
provide because of the Circuit Rider Program. This program 
succeeds because of the high-quality circuit rider technicians 
that serve the water utilities in our State. These technicians 
work with the local operators that have the responsibility of 
keeping the safe water flowing on a wide variety of issues to 
include: operations and maintenance, treatment, compliance, 
construction, financial management, general management, and 
board training.
    The primary objective of this program is for the circuit 
rider and wastewater technician to work alongside the rural 
system officials and operators to show them how to solve their 
problems. The on-site system personnel must participate in the 
corrective actions taken during the visit. Technical assistance 
services will be prioritized as necessary to ensure the most 
efficient operation of the program. I have placed in the record 
of my remarks some letters from local operators that were 
reprinted in our ARWA Water Insight magazine. Please take a 
moment to look at them. Their words tell the story why this 
program is important, and they come from every single part of 
Arkansas.
    In Arkansas, we have trained over 1,900 water and 
wastewater system personnel a year for over two decades and 
provided over 2,400 technical assistance visits a year. Over 65 
groundwater protection plans have been implemented in local 
communities like the Highway 63 Water Association near Rison, 
and others are in the process of being adopted. We are on the 
front lines every day ensuring water is safe and available each 
time someone in rural Arkansas turns on the tap. When the 
northern half of Arkansas was hit with a major ice storm in 
January, ARWA was called on to provide emergency assistance 
with generators to scores of smaller community water and 
wastewater systems throughout the areas hit by the storm. Our 
technical staff made a difference in the lives of Arkansans who 
needed water more than ever during a tough time.
    We conduct this work though three USDA programs that are 
currently authorized in the 2008 farm bill.
    First is the Rural Development Circuit Rider Program. Since 
1980, circuit riders have produced on-site assistance to small 
communities in all States for water infrastructure development, 
compliance, training, certification, operations, management, 
rates, disaster response, public health protection--all 
necessary to encourage local responsibility and local solutions 
for protecting and enhancing water resources. This mission is 
simple-- grassroots assistance to communities in need by 
providing safe, affordable, and sustainable water and 
wastewater services.
    Second is the Farm Service Agency Grassroots Source Water 
Protection Initiative. This is the only statewide initiative 
ensuring environmentally progressive local hands-on use for 
local elected officials, landowners, agricultural producers, 
and other interested parties.
    Third is the Waste Water Technical Assistance program. This 
initiative provides on-the-ground technical assistance directly 
to communities for wastewater treatment facilities. Assistance 
includes design and upgrade recommendations, daily operations 
and maintenance, assisting with renewal of permits, and helping 
these systems meet compliance requirement from State and 
Federal regulations.
    These programs are essential for the long-term health and 
vitality of these communities. Thank you, Madam Chair for your 
continued support. I must also thank you for your leadership 
and support in the passage of the American Reinvestment and 
Recovery Act, ARRA, and I would like to briefly discuss the 
impact of that legislation thus far in Arkansas.
    ARRA provided $3.778 billion in water and wastewater loans 
and grants which represented the largest single infusion in the 
USDA water and wastewater programs in history, enough funds to 
completely eliminate the backlog of existing projects at the 
time this bill was passed. The department has spent about half 
of their recovery money to date. The only concern is the new 
backlog for assistance has actually increased to $5.9 billion.
    Let me bring it home to Arkansas. As Mr. McCullough 
mentioned, the Ozark Mountain Regional Public Water Authority 
recently received a loan of $19,365,000, $36 million in a grant 
for this needed project. This project would have never been 
possible without the large influx of these funds made available 
in this bill. It is also worthy to note that 76 percent of the 
users for this system fall in the persistent poverty range for 
income.
    In closing, NASA scientists recently announced that they 
have discovered water on the moon. This was widely reported in 
the media as a major news story. It made me think: There has 
never been a news flash when an Arkansan turns on their faucet 
to get a safe, clean water. I would like to keep it that way. 
And with this Committee's support of the outstanding USDA 
programs we have, this is one headline we should never have to 
see.
    Thank you, Madam Chairman.
    [The prepared statement of Mr. Sternberg can be found on 
page 105 in the appendix.]
    Chairman Lincoln. Thank you, Dennis.
    Ms. Gardner.

 STATEMENT OF TEDDY L. GARDNER, PRESIDENT/EXECUTIVE DIRECTOR, 
  SOUTH ARKANSAS COMMUNITY DEVELOPMENT, ARKADELPHIA, ARKANSAS

    Ms. Gardner. Thank you, Chairman Lincoln. I am always not 
sure if it is ``Chairman'' or ``Senator,'' but I guess it is 
both.
    [Laughter.]
    Chairman Lincoln. That is right.
    Ms. Gardner. I get to come to you today to talk to you 
about something that is very, very dear to my heart, and I work 
very closely with Mr. McCullough, and have for many years, in 
assisting families that do not make enough money to have decent 
living conditions and that would otherwise never have the dream 
of homeownership without these programs. Without a doubt, in my 
opinion, the USDA Rural Development Mutual Self-Help Housing 
Program is absolutely the greatest program there is. I am 
prejudiced here. It does so much for so many families that 
other programs do not. It is the only program that is out there 
that actually works in just rural Arkansas--or rural America.
    Also, I have had the privilege to be the National Rural 
Self-Help Housing Association president for 2 years, and that 
was quite a honor, and I got to work with organizations all 
over the Nation in doing this program. And so I have heard all 
the stories--well, not all the stories but a lot of the 
stories, and everyone agrees that this is the absolute greatest 
program there is. It is also the most difficult to run, but all 
good things are hard.
    Our organization works with many other organizations as 
well, and it is the leveraging that is very important. We work 
with the Housing Assistance Council out of Washington, DC, from 
land acquisition, and that enables us to be able to buy 
properties to hold for families so that we can get them at a 
discount and then re-sell it to the families. And by doing 
that, we only have to pay back 10 to 20 percent of the funds, 
and then the other 80 to 90 percent stays in-house for us to 
either grant to the families to make their mortgage payments 
even lower or to reinvest into more properties to help more 
people. None of those funds are used for operation, just 
strictly for land acquisition.
    We are also a HUD counseling agency, which is very 
important. I cannot stress enough the need for counseling for 
the families that go through these programs--not just through 
these programs. I would have all families go through some type 
of counseling before they go into homeownership. It helps to 
get them more sustainable. It helps them understand the 
responsibilities of homeownership. It helps them to understand 
how to maintain their home, the financial benefits of 
homeownership, how to prevent foreclosure. It could have helped 
in many ways to prevent some of the activities that have 
happened here recently. I cannot recommend strongly enough for 
those programs.
    I would also like today to talk to you about the difference 
in the families, some of the families that I have had the 
opportunity to work with. The list is so long, so I will not 
even begin to try and go through all of them. But we have 
helped the disabled families. We have helped the single moms, 
the single dads, the elderly. We had an 83-, 84-year-old couple 
that came in. He had a great job whenever he was working, and 
he retired and they were going to live happily ever after. And 
he got sick and was in the hospital for 2 months. He was a very 
proud man. He did not want to file bankruptcy. He did not want 
to do all of those things. He paid his bills. He cashed in his 
retirement, sold everything that he owned. He got them all 
paid, and their living conditions were incredibly bad. Their 
house was so clean whenever I went to visit them. It was just 
immaculate. But you had to be careful where you walked because 
you might fall through the floors. It was just--it was 
something. And they went several different places. Nobody could 
help them. And they came in, and I went, ``I can.'' I was so 
excited. And they got into a beautiful new home, decent 
housing, energy efficient. We do Energy Star, all of those 
things. Utility bills are less than $100 a month. You know, I 
am very proud, you can tell. I am very proud of what we do and 
how I get to work with all of these families hands-on.
    We are a grassroots operation. We have five employees. And 
we have done over 135 houses. We have now got another grant to 
do another 25 houses. It is very exciting. It is very exciting. 
You have those families that touch your heart, and it carries 
with you from now on.
    We had a family that he came in and his wife was in a 
hospital bed, and she had MS. He worked at McDonald's, and they 
did everything they could. They were able to keep their bills 
paid--or satisfied, not paid. Satisfied. So they were able to 
get in our program. They lived in a 800-square-foot apartment, 
three children, wife and husband, one bath, and she was in a 
hospital bed, and so the hospital bed would not fit in the 
bedroom, so it had to be in the living room. They came to us, 
and it was, like, ``I know you cannot help me, but I am going 
to tell you my situation, anyway.'' And when I got to call 
him--4 days before Christmas--to tell him he was approved, I 
thought the man was going to die. He was screaming, he was so 
excited. Now they have a four-bedroom house. Her health has 
taken a turn for the worse, but, I mean, this story, it just--I 
cannot even begin to tell you how great this program is and 
what an honor it is for me to get to work with all of these 
families.
    I cannot even begin to tell you how much I am so proud of 
you and what you are doing and how much it means to me that you 
are here today and listening to what is going on and the need 
for so much more of this throughout the Nation.
    Like I said, I have worked with organizations throughout 
the Nation. They need your help. They need your guidance. There 
is a lot more that we can do, but we have come a whole long 
way.
    Thank you.
    [The prepared statement of Ms. Gardner can be found on page 
70 in the appendix.]
    Chairman Lincoln. Thank you, Ms. Gardner.
    Well, that is a big part of what we have to do. Someone 
made the comment to me the other day that knowledge speaks but 
wisdom listens, and we do need to become wiser in this country 
about what we can do and how we can make a difference in 
people's lives, and certainly listening here today and 
throughout the Committee's effort is what we need to do to 
better understand the programs that exist, the good ones that 
are working, those that need the assistance or the motivation 
to improve our systems or the programs that exist out there. So 
we look forward to working with you for sure. But I want to 
thank all of you all for your testimony and just ask a couple 
of questions, if I may.
    Director McCullough, there have been many occasions when I 
or my staff have called on USDA Rural Development staff on 
behalf of our constituents here in Arkansas, and I have always 
found our staff here in Arkansas to be so very helpful. And I 
just wanted to take a moment here, if you have any of your 
staff that might be here today, to recognize them because they 
do a tremendous job and we appreciate so much in our office, 
when constituents come to us, to have such capable folks to 
call on. Do you have any of your staff with you?
    Mr. McCullough. We sure do.
    Chairman Lincoln. Would you all stand? I just want to thank 
you all.
    [Applause.]
    Chairman Lincoln. We just wanted to take a moment to 
acknowledge them and thank them.
    Mr. McCullough. They do a great job.
    Chairman Lincoln. They definitely do. I know from my staff 
they are called upon frequently, and there is always assistance 
on the other end of the line.
    Director McCullough, many times Arkansans contact me 
because they are unable to identify, just as Ms. Gardner 
mentioned, the resources they need to improve the local 
infrastructure in this instance or provide services to their 
communities. And I always tell people that it is not my job to 
dream their dream; it is my job to help make their dream become 
a reality. So I take the responsibility of helping Arkansans 
find the resources available to them very seriously, and your 
office has always been helpful.
    You mentioned the Ozark Mountain Water Project, which is 
phenomenal, but it is important to note that we would have 
never been able to have started that project without the 
recovery dollars. It was a voluminous project. It included a 
lot of people that it was going to serve, but it was difficult 
terrain and just a difficult project to get started. And 
without those recovery dollars, it would have been virtually 
impossible, I think, or it would have taken us generations of 
people's lifetimes to get that done.
    You mentioned in your testimony the number of field offices 
that USDA has around the State, but aside from having those 
field offices in several communities, what are some of the 
other of the agencies' outreach initiatives? And how do you 
ensure that people know that you are there and that you are 
able to help? Are there other programs of outreach that you all 
use?
    Mr. McCullough. That is a real good point, and I am glad 
you are bringing that up. One of the things that came with the 
ARRA financing was 3 percent of the funding was available to us 
for administrative. That enabled us to actually bring on board 
some employees, some additional employees. These employees are 
being channeled to these areas of persistent poverty, working--
and, of course, we have talked about the housing program and 
the impact that it has had, $482 million in obligations, 5,000 
loans. So ARRA has helped us.
    We recognize that with the closure of some of the offices, 
it is going to be necessary that we do a lot more in the way of 
outreach and meetings, and going to these areas where we know 
need exists and making ourselves available, talking about our 
programs, and being very visible.
    Also, through enhancing our performance goals, this is a 
means by which we can channel the attention of offices to those 
persistent poverty areas, and the national office has been 
involved also, utilizing again some of the ARRA administrative 
funding to make personnel available from a national level to 
actually come to Arkansas and to blitz the State, and we help 
them recognize areas that we need some help in.
    So there are a number of things, and we realize that, you 
know, we have got to do more, and we will.
    Chairman Lincoln. Well, we look forward to working with you 
on that. We bug you enough as it is, but, nonetheless, we 
certainly want to look collaboratively in ways that we can be 
more helpful in getting that word out.
    One last thing. One of my priorities as a Member of
    the United States Senate is to ensure that whatever we are 
funding in terms of initiatives, that it provides the greatest 
return on investment. And maybe from your perspective you could 
let us know which of the rural development programs would you 
say provides the greatest return on investment in Arkansas. 
Which one of those programs providing that greatest return 
maybe needs the most funding? Or maybe those are two different 
things.
    Mr. McCullough. That is a real good question, and I have to 
be very careful how I answer it.
    [Laughter.]
    Mr. McCullough. We have got three program directors that 
are here.
    I have got a granddaughter who comes and visits me often, 
and her grandmother and I, we do something that we know we 
should not do. When she was 3 years old, we asked that 
question: Which one of us do you like best?
    [Laughter.]
    Mr. McCullough. I know you should never do that, but at 
that very early age, the granddaughter would answer it very 
diplomatically by saying, ``I like both of you the same.''
    We need all of the programs that we administer, as the 
testimony here has validated, and I think each of them we have, 
if the question is how many--which programs probably focuses 
more on dollars obligated, we would be talking about the 
housing program. It reaches a lot of people. But without water 
and sewer, you do not need housing. Without businesses, 
business loans and businesses, you do not need-- you know, so 
it is a catch-22. We need all of them.
    Chairman Lincoln. Well, they are all interconnected, and we 
appreciate that, so we will not make you choose between any of 
your children.
    Mr. Walls, in your testimony, you state that Arkansas ranks 
almost last in deployment of broadband telecommunications, and 
even though 87 percent of our population has access to 
broadband services in the home, only 49 percent subscribe. I 
would love for you to expand on that in terms of what role does 
affordability play in accessing broadband for rural 
communities. Is affordability the only factor? What can we do 
really to ensure that Arkansans have not only access but they 
can afford it, but they also understand what it can do for 
them? Is there ever any--I have to say, my husband, Steve, and 
I work really hard to make sure that our children are--that 
they are not just on the Internet. You know, we have specific 
times and how much time they can spend on it and where they can 
do it in the house, only in certain areas where we are close by 
so that we can kind of keep a watch on it, because obviously it 
provides great opportunity, but it can also be harmful if it is 
not used properly.
    But what about the interaction, the intergenerational-- my 
kids are the ones that teach me. You know, it is amazing. I 
will be thinking, ``How do I do this?'' And they will say, 
``Well, Mom, you can just go on the Internet here and do 
that.'' Do we ever think about using the intergenerational 
opportunity there to really educate people about the value and 
the opportunity that exists so that maybe they will want it, if 
we can make it affordable?
    Mr. Walls. Well, first of all, Senator, I would like to say 
that my colleague Mr. McCullough here has got a great second 
career in the Diplomatic Corps. That was a good move on your 
part.
    [Laughter.]
    Mr. Walls. I admire the talent.
    That is an issue, and one of the examples that I use about 
relevancy is I have an 82-year-old father-in-law who, as you 
know from his age, was far removed from this kind of 
technology. And I said earlier in my comments about finding the 
relevance of the Internet to you in your life.
    Somewhere along the line--it was not from me, and it was 
not from either of his two grandsons--he got exposed to the 
Internet, and he went from an individual who spent virtually 
all of his time alone in his home to a prolific user of the 
Internet for the social quality that it brings. He has his 
buddies on the Internet, and he had the working background, and 
so he found--he was able to connect with people who had common 
interests with him.
    So for those of us who were not necessarily raised in this 
kind of environment, it really is about getting exposed to it 
one way or the other. Sometimes it is through our children. I 
am president of Connect Arkansas. My granddaughter is the one 
who put me on Facebook, and I refuse to be a Twitterer.
    [Laughter.]
    Mr. Walls. Maybe I am not the right guy for the job. But 
when it comes to the young people and what is important about 
them--and we talk about investment. We talk about return on 
investment. The easiest positive return on investment is the 
young people. In many respects, this is about them, and it is 
about seeing to it that in our schools at a minimum they are 
exposed to the technology, they have ready access to the 
technology and the knowledge that goes with it, and part of 
that should be the teaching of the ethics or the appropriate 
use of the equipment.
    It is my understanding--and I have struggled with this ever 
since we have taken this task on--getting a clear answer to 
where do we stand in our school system about the availability 
of the equipment and the availability of the instruction 
available to our children on this subject, that is something 
that we should not miss. But it is about the relevancy of it. 
It is about exposure of people to it. It is the sort of thing 
that I think that the individual has to find themselves. What 
we are in the business of doing in our additional application 
through the BTOP program is about public access and public 
adoption. It is about exposing people to the tool. And through 
their interaction with the tool, they will find the relevancy 
for themselves in the use of the products, and that is where we 
think the return on investment will come from.
    Chairman Lincoln. Well, it is true, and we have worked with 
a lot of our schools across the State to help them get some 
equipment that is helpful in expanding the children's access to 
computers and their knowledge of it. And there is no doubt that 
is important.
    I noticed a group of college kids talking the other day who 
were a little bit angry that the older people had taken over 
Facebook.
    [Laughter.]
    Chairman Lincoln. It was no longer hip because their 
parents were communicating with old military buddies and, you 
know, catching up with their kindergarten class from 50 years 
ago. They thought that it had been taken over by the older 
crowd, so I do not know. Maybe exposure is good, and we just 
keep creating things. But I do think it is important that 
intergenerational mix, the schools is a critical component of 
that exposure, and really seeing what you can do with it.
    It is also a great tool for our kids, and one of our 
objectives in so many ways is to provide an economy that our 
children can stay here, that they do not have to leave our 
small rural communities. I know that was my Mom's first plea to 
me when I was first elected in 1992, is please, please, please, 
help us in our small communities to create an environment, a 
community, you know, the economics where our children will want 
to stay there and not leave. And with the Internet, that is a 
perfect tool to keep them connected with the outside world, to 
help them to be productive economically, without a doubt.
    One last thing I would just ask. What have you learned from 
other States with Connect Arkansas? What is the next step for 
you all, and what have you learned from other States?
    Mr. Walls. One of the things that I mentioned in my 
comments was the collaborative nature of the Connect Arkansas 
philosophy. We at Connect understood early on that, as I said, 
for us to be successful--and, that is, the immersion of our 
people into this technology--it was going to have to be a very 
cooperative, very collaborative effort.
    Some other States, for whatever reason, do not have that 
kind of environment. One of the States that has, frankly, been 
at this for several years before we came along and has shared a 
great deal of their knowledge with us--and we are great 
partners with them, and I am a great admirer of them, but they 
have an adversarial relationship with their providers, and I 
have never been able to understand that. It does not make any 
sense. But they do.
    And so what I am very proud of here in Arkansas is that 
everybody who is involved with this Connect project, including 
the providers, it has been very collaborative, very supportive. 
And I said earlier in my comments we are ahead of the curve. We 
are ahead of the curve, and, quite frankly, with all candor, we 
have not put a lot of money in this. But we have gotten there 
because people have worked together. And these deadlines for 
this map that I told you about, the Federal Government has a 
definition of the kind of map they want to see, and we have a 
deadline of February the 1st in order to be ``substantially 
complete,'' and I believe it is March the 1st to be 
``complete.'' And it is a formidable task. We will meet the 
deadline, and we will meet the deadline because the providers 
here in Arkansas are supportive and help us in what we do. And 
as Arkansans, you should be very proud of that.
    Chairman Lincoln. That is great. Thank you.
    Mr. Sternberg, in your testimony, you state that the 
Arkansas Rural Water Association has trained more than 1,900 
water and wastewater system personnel a year for over two 
decades, which is just absolutely amazing, and provided over 
2,400 on-site technical assistance visits a year.
    Right now, what would you say are the biggest challenges 
for water system managers in rural water?
    Mr. Sternberg. That is a good question, and I think Mr. 
McCullough is going to agree with me and his staff probably 
will, too. Management of these utilities is getting harder and 
harder for just the simple fact of the infrastructure. The 
existing information is probably 30 to 40 years old now--the 
aging distribution lines, the aging infrastructure of the 
collection systems, the treatment plants. That is the big issue 
on the infrastructure.
    Then you have the aging workforce in the water industry. We 
are going to have such a turnover in the industry of licensed, 
qualified operators coming before us that we have got to do a 
better job training and have money to do that, to educate and 
do more training of personnel.
    AWWA, American Water Works, and the National Rural Water 
Association have both done surveys showing that the aging 
workforce in the water industry is approaching this in the next 
10 years, we almost turn over.
    Chairman Lincoln. That is critical because we have got--
and, of course, that is job creation.
    Mr. Sternberg. Yes, job creation.
    Chairman Lincoln. If we can train the folks that we need to 
come in----
    Mr. Sternberg. And that is the trouble with a lot of the 
small and rural communities, is hiring qualified licensed 
operators as some of these retire, because if you do not have 
good jobs, good-paying jobs in the rural community and have the 
infrastructure, most of the younger people are going to larger 
urban areas to try to find work.
    Chairman Lincoln. That is true.
    Mr. Sternberg. It is important to keep that infrastructure.
    Chairman Lincoln. What was interesting, I was traveling 
over in northwest Arkansas with a couple of the water guys, and 
one of them saw--there was a woman who had four children, and 
he said, ``Come here, I want to show you.'' So we pulled up 
behind her, and she had her pick-up truck, and she had two of 
those huge plastic--she was filling up water. I mean, we turn 
our tap on, and we get nice clean, safe water. And to think 
that with four kids she was filling up those tanks in the back 
of that pick-up truck at least every other day just to have 
water in her home, to wash her dishes and wash her clothes, but 
to provide drinking water and cooking and everything else. I 
mean, it just seems unheard of in this day and age, but it 
still exists in our State. It is amazing.
    When Dennis mentioned the fact that the money that came 
through attempted to take care of the backlog, then all of a 
sudden a new backlog appeared, and the reason being is that 
there are so many people out there that had given up hope that 
something was going to ever happen, and then all of a sudden 
when we apparently were trying, you know, to eliminate that 
backlog, all of those people that had lost hope began to put 
those applications back in. And so then we really got a true 
sense of what the need is that exists out there. So we 
appreciate what you all do.
    Mr. Sternberg. Can I add something to that?
    Chairman Lincoln. Sure.
    Mr. Sternberg. Talking about the need for additional 
funding, you know, USDA has done a tremendous job with their 
staff and what they do in rural Arkansas. But with applying a 
lot of times for funding, you have to deal with the regulations 
and the low-to moderate-income level issue. I truly think--you 
know, we rank in Arkansas, according to my list, 46th in the 
Nation. We need to look at that range-- and possibly the Senate 
Ag Committee can look at that--on how we can benefit and help 
our communities qualify easier for some of the funding that we 
need to make some of these big projects work.
    Chairman Lincoln. I have heard that same thing from some 
communities, that the current median household income 
requirements has just really limited their ability, so I think 
you are right. It is accurate to look at that and see how 
accurate it is. I think we actually rate third, the third 
lowest median income in the country, and if it does not fit us, 
then who does it fit? So that is a good point. But thank you, 
and thanks for all your hard work, and the years of working 
with you have been tremendously great, so I thank you.
    Mr. Sternberg. Thank you.
    Chairman Lincoln. Ms. Gardner, as Chair of the National 
Rural Self-Help Housing Association from 2004 to 2006, we are 
extremely proud that you have had that experience, and it is 
bound to have given you opportunity to work with nonprofits 
from across the country. Were there any lessons that just stick 
out in your mind that you learn from organizations outside of 
our State that you have been able to replicate here, any best 
practices for community development organizations that you can 
share with us?
    Ms. Gardner. Well, a lot of the building techniques, making 
our houses more energy efficient, and Mr. McCullough has also 
brought speakers in to talk to us about different methods and 
different ideas, not staying with the same-- looking outside 
the box. How is that? Also, yes, I was the president there, but 
I also wanted to mention that I am also the president of the 
Arkansas Coalition of Housing--I have to read it--and 
Neighborhood Growth for Empowerment. It is a long time. And so 
that works more directly with the organizations here in 
Arkansas, and the needs of those organizations here are 
tremendous as well. And that is not all just rural development 
because now we are talking the urban areas also.
    It would be wonderful--and I do not know that this is 
possible--if we could spread some of these programs into more 
of the urban areas for housing, because they need these 
programs just as badly. I thought I would throw that out.
    Chairman Lincoln. Well, I do not know if she is in the 
room, but Martha Jane Murray I know in our State working with 
the Clinton Foundation has done a tremendous amount in terms of 
energy efficiency. She went down to New Orleans after Katrina 
and worked there about how to work in energy efficiency in all 
types of different housing, low-income housing and others. And 
it was an initiative we worked on. I remember working back in 
1992 over in East Arkansas in some of the subsidized housing of 
greater energy efficiency because the one biggest issue of 
losing people out of that housing was their utility bills.
    Ms. Gardner. Right.
    Chairman Lincoln. So making sure that it is affordable, and 
with all the great new technologies we have, I hope that energy 
efficiency will be a big issue that we draw into and 
incentivize in some of these things.
    You mentioned counseling as well, which I think is really 
important. One of the big issues that I try to spearhead 
whenever I get the opportunity is financial literacy and really 
better understanding what an important role that plays. Maybe 
your involvement in counseling gives you a greater opportunity 
to expand on the real need for financial literacy and when we 
need to start that. If we started it earlier, it might be a 
little bit more helpful for your clients.
    Ms. Gardner. We have been working very, very closely trying 
to get into the colleges and trying to break in there, but 
really at that point, that is whenever your kids are going in 
and they are getting their first credit cards. But it even is 
happening in high school now, perhaps even as low as junior 
high, so that they can be more prepared.
    There is an old saying that whenever you teach your child 
to drive a car, you teach them. But whenever you give them a 
checkbook, there is nothing. When you give them a credit card, 
it is just open. You just expect them to know it. They do not 
know. And so if we could start at an earlier age to teach them 
about finances and that type of thing, then perhaps we would 
not have some of the problems that we have today.
    Chairman Lincoln. Well, I remember vividly getting the 
lesson on reconciling my checking account when I got it from my 
father. But it is a critical step in really providing them the 
ability to be able to manage finances and to see all the things 
that are an opportunity to them if they manage that well, so it 
is important.
    Just a last thing. You talked about land acquisition. Do 
you ever run into any problem with clearing titles?
    Ms. Gardner. Well, we just try not to buy that piece of 
property, is how we deal with that, because we do not have the 
time frame--our time is a 2-year program through Rural 
Development, and a 1-year program with 3 years to get the 
completion done with the Housing Assistance Council. So we 
really do not have the time to work on those kind of issue.
    Chairman Lincoln. It is a bigger issue in the more 
metropolitan areas, but it is one that we have run across in 
trying to help people with, you know, property that is 
abandoned and other things and really trying to get it back 
into profitable housing, which helps the neighborhood. But it 
is usually the clear title that is a problem.
    Just a last question. How do you get the word out about 
your organization and encourage folks to work with you?
    Ms. Gardner. Mainly word of mouth, dropping our brochures, 
just kind of whenever you are eating at a restaurant, just kind 
of leave one.
    Chairman Lincoln. Conveniently.
    Ms. Gardner. We just kind of think of all different kinds 
of ways. We do advertising on Channel 9 because that is free. 
We are a nonprofit. We do not have enough money. Any money that 
you can get, all grantees will tell you they need it.
    We do advertising in the newspapers. We will go and talk on 
the radio. Sometimes things work and sometimes they do not. It 
is amazing to me, with all the recruitment that we do, trying 
to get our word out, that we will have somebody come in and 
say, ``Gosh, I wish I would have known you were here.'' It is 
like, ``Ah, we are still not''--and so I wish that there was 
some way that perhaps Rural Development could work with trying 
to get the word out that there are organizations throughout the 
country that are there to assist them and then direct them, 
because it is needed, especially with the foreclosures and the 
bankruptcies. You know, I wish that we could make it mandatory 
that everybody that was going into bankruptcy had to go through 
counseling first, anybody that was going through a foreclosure, 
you have to do these steps before we are going to let you do 
this, because I think it could make a tremendous difference.
    Chairman Lincoln. Well, I want to thank all of you all on 
the panel for being here today and sharing with us and, more 
importantly, for the incredible work you have done over the 
years. I am certainly grateful to have had the opportunity to 
work with you, and I look forward to doing more of that. Thank 
you all very much.
    [Applause.]
    Chairman Lincoln. Now we are going to turn to our third and 
final panel for the day, and thank you all for your patience. I 
think it is good information for the Committee to have, and I 
am grateful to you for being here.
    First, we are fortunate to have Annett Pagan with Winrock 
International here with us. She is program director for U.S. 
Programs at Winrock. There she is. Annett is going to share 
with us how her organization has utilized USDA Rural 
Development programs to implement successful community 
development initiatives here in Arkansas, and I just know, 
having worked with Annett, she really does think outside the 
box, and it is a great opportunity for us in Arkansas.
    Our next panelist will be Dr. Robert Cole. Dr. Cole has 30 
years of Federal experience, including some time at USDA. He is 
now the director of East Arkansas Enterprise Community. He will 
address some of the challenges he sees for rural communities in 
accessing rural development funding. Dr. Cole has been a long-
time friend and somebody I have learned a great deal from, and 
I am grateful that he is here today.
    Then we will also hear from Dr. Calvin King. Dr. King is 
the executive director of Arkansas Land and Farm Development 
Corporation. He is going to share with us the difficulties he 
sees for limited resource farmers. Again, Dr. King has been a 
longstanding advocate in East Arkansas and somebody I met years 
ago, and I am grateful for his assistance and help in me better 
understanding some of these programs early on, and we 
appreciate him being here.
    Our final panelist is Doctor--I mean, Mr. John Squires, the 
CEO of Community Resource Group. Community Resource Group works 
with rural communities in seven States. Mr. Squires is going to 
discuss the challenges he sees for rural communities as they 
work to improve their infrastructure and generate economic 
growth.
    So welcome to all of you all. Thank you for joining us 
today. We very much appreciate you being with us. All of your 
written testimony will be made a part of the official record of 
the Committee, and, Ms. Pagan, we will let you proceed with 
your testimony.

STATEMENT OF G. ANNETT PAGAN, DIRECTOR, U.S. PROGRAMS, WINROCK 
              INTERNATIONAL, LITTLE ROCK, ARKANSAS

    Ms. Pagan. Thank you, Chairman Lincoln, and thank you for 
having us all here today. I am the director of Winrock 
International's U.S. Programs. Winrock is a large nonprofit 
organization based in Little Rock, Arkansas, that works with 
people around the world and in the United States particularly 
to empower the disadvantaged, increase economic opportunity, 
and sustain natural resources. I am pleased to be here today to 
discuss USDA Rural Development's programs and the benefits they 
provide to rural Arkansans and to sit on a panel with my 
colleagues who are my partners most of the time on these 
projects.
    Winrock's U.S. Programs has implemented grants and 
cooperative agreements funded by USDA for more than 15 years. 
In this time frame, we have been awarded more than $4.8 million 
to complete 27 rural development projects. From community and 
economic development to value-chain agriculture, Winrock's U.S. 
Programs has used USDA Rural Development funding to improve the 
lives of rural Arkansas.
    Winrock has implemented projects funded by the Rural 
Community Development Initiative, Rural Business Enterprise 
Grant, Rural Business Opportunity Grants, and Rural Cooperative 
Development Grants, as well as many other USDA programs outside 
Rural Development. We believe it is imperative that Rural 
Development programs remain committed to rural projects for 
increased success in small communities.
    Winrock International's Nonprofit Improvement Program, 
funded by USDA's Rural Community Development Initiative, has 
proven vital to the success and growth of Arkansas' small 
municipalities and rural nonprofit organizations.
    Winrock has been awarded this funding for this important 
project for 6 of the past 7 years. Winrock's Nonprofit 
Improvement Program began in 2003 with seven nonprofit 
organizations receiving technical assistance, allowing those 
nonprofits to build their capacity to take on larger and more 
complex projects within their communities.
    The Nonprofit Improvement Program now includes 45 rural 
municipalities and nonprofits who participate in activities 
provided by Winrock's community development experts. Winrock 
has been awarded $1.3 million in grant funding for this 
program. But the program participants have used the tools 
learned in this program to bring home to Arkansas more than 
$20.3 million in Federal, State, and private funding.
    Winrock's has long been involved with the Rural Cooperative 
Development Grant Program. The Arkansas Rural Enterprise Center 
was established in 1992 and has received approximately $1.9 
million in funding from that program. Those projects always 
include assistance to minority and socially disadvantaged 
groups. Our activities in 2008 and 2009 focused on working with 
Poultry Partners, Incorporated, which is made up of more than 
400 poultry producers in rural areas of northwest Arkansas, 
northeast Oklahoma, and southwest Missouri. Many of these 
producers employ minorities; approximately 20 percent of those 
poultry producers are Hmong.
    Other 2008-09 project activities included providing support 
to minority and limited-resource farmers who grow sweet 
potatoes in eastern Arkansas, and that 25-member Arkansas Delta 
Produce Marketing Association is 100 percent minority. This 
area of rural Arkansas is among the most impoverished in the 
State, with consistent high unemployment and low per capita 
income rates.
    Winrock has also received funding from the Rural Business 
Enterprise Grant and the Rural Business Opportunities Grants, 
which are vital to working with new rural businesses. However, 
reduced funding for these programs means projects are limited 
in scope. For example, the Rural Business Opportunities Grant 
awards now only can fund a $50,000 grant for a one-State 
project or merely $150,000 for a three-State project. This 
funding amount is, unfortunately, inadequate to support the 
types of replicable projects necessary to reduce the risk of 
investors and bolster opportunities for building new industries 
in rural areas. To fully support regional projects, award 
amounts must be increased.
    We are pleased that Congress has supported a funding 
increase for the Rural Cooperative Development Grant in 2010. 
The current appropriation is $7,924,000, or more than double 
the 2009 program funding. We appreciate your support on that, 
and I know that you remember when there was only about $1.9 
million in that program.
    Chairman Lincoln, I appreciate this opportunity to make 
this presentation today. I am happy to answer any questions and 
thanks again for a great woman, a great Arkansan, who is now 
the Chairman of the Senate Ag Committee.
    [The prepared statement of Ms. Pagan can be found on page 
93 in the appendix.]
    Senator Lincoln. Thank you.
    Dr. Cole.

STATEMENT OF ROBERT L. COLE, PRIVATE CONSULTANT, EAST ARKANSAS 
 ENTERPRISE COMMUNITY, AND PROGRAM COORDINATOR, UNIVERSITY OF 
    ARKANSAS AT PINE BLUFF, NATIONAL WATER MANAGEMENT CENTER

    Mr. Cole. Chairperson Lincoln, thanks so very much for 
allowing me to have the opportunity to make a statement, 
testify at this hearing. From a child to a young man, to now 
young senior citizen, I have pretty well dedicated my life to 
``Revitalizing Rural America.'' I appreciate having worked with 
you and having known you when I was employed for 30 years in 
USDA Rural Development, and since I have been retired for 15 
years, I have continued to work closely with Rural Development 
and have appreciated your support since then.
    As a native of Crittenden County and a resident of eastern 
Arkansas most of my life, I have seen the United States 
changed; I have seen the East Arkansas Delta change. That is 
where I spent most of my life. But whereas much has been done, 
there is still much to be done. During my 30 years at the U.S. 
Department of Agriculture, I served at all levels and retired 
in Washington and saw people go from the outhouse to the White 
House.
    Part of this testimony was obtained through working and 
calling friends and co-workers throughout the State, and, of 
course, Eldridge and I work close together in rural 
development, so we felt that we would talk about rural 
development, and I want to say that sitting here between Annett 
Pagan and Dr. King, having worked together with both of them 
for years, they will kick me on the ankle when I say something 
that I should not say.
    Lawrence McCullough, we are very proud to see you where you 
are, and although we are going to talk about rural development, 
you know, a lot of times, Senator, when you are on the payroll 
and an employee, there are certain things that you see and 
think but you cannot say them. But once you get retired, there 
are certain things that you think and you see and you can say 
them. And I do not know how to say anything but to be frank.
    First, I will have to say rural development, that is where 
my love is, that is where my heart is. From Farmers Home 
Administration, Farm Security Administration, Farmers Home 
Administration, and now Rural Development, watching those 
changes, at some times we had administrators that would come 
in, and they would tell us, ``You are the biggest banker in the 
county.'' And then when the administration changed, that 
administrator would come in and say, ``You are not a banker.'' 
And working with that agency and that organization, I would 
like to commend that panel before us, because all of the great 
things that they were saying about rural development, self-help 
housing, and having to see Lawrence McCullough not answer your 
question, that just made me kind of like a father seeing a son 
saying, ``Ditto, and I trained him well.''
    [Laughter.]
    Mr. Cole. But back in to rural development, there are some 
things that when I was in DC and under President Clinton rural 
development was being reorganized, you know, you can--there is 
a way to reorganize something or to make changes without 
totally tearing it down. I was one of those that did not feel 
like it was broken as bad as some people felt like it was 
broken. But, nevertheless, I had enough time in to retire, and 
I left, and they just tore rural development up.
    A lot of the changes were for the good, and some of the 
good was merging the old rural development, Farmers Home, and 
then changing the name to Rural Development, and closing some 
offices. We know that the cost/benefit analysis dictated that 
there needed to be some offices closed. But you know what? What 
we also know is that there is something wrong when a little old 
lady from Gillette, Arkansas, has to travel 225 miles round 
trip to talk about--to get information about a 504 loan or 
grant. We know there is something wrong.
    Of course, Lawrence and I have kind of had some visits 
about things like this, and since he has not been there long 
but those were some things that I--being in Forrest City, I get 
calls from people in Clarendon, Arkansas, about a housing loan. 
They called me because they knew I was a former housing chief. 
But they want to sit down and talk with somebody, and they 
cannot talk to them one on one because many of them--I think 
Ricky Carter says that rural development forces people--Ricky, 
I am not telling off on you--forces people to drive 
uncertainty. In other words, people have to drive and go places 
that they would not usually go or they might be too old to 
actually travel.
    A lot of that I think can be done by re-evaluating 
situations where people drive from Jonesboro to Newport or from 
Batesville to--yeah, from Osceola to Jonesboro or from Newport 
to Batesville. Those are pretty long distances, and my 
sensitivity has to do here with primarily the single-family 
homeowner who has to do all of this driving. And I think that 
some of this probably could be--that Rural Development ought to 
relook at those situations such as that, and maybe look at 
having some satellite offices somewhere. I know they have a few 
in the State, but having more satellites possibly. Now, FSA and 
NRCS, they still have offices in all the counties. Work out 
something where they can go and spend a day a week so those 
low-income families can go to them and not have to drive 200 
miles round trip. But I know that can be done, but somebody 
just has to look at it and utilize nonprofits such as ALFDC, 
the enterprise community, get them to help you do some of that 
outreach.
    I do not know how much of that administrative money with 
the stimulus that Lawrence kept talking about, but maybe you 
can get some of these nonprofits to help you, or somebody like 
in the rural water, that outreach for those towns. That is just 
great. But these little single-family housing borrowers, they 
do not have that kind of help. The self-help is one thing, but 
that is talking about in a certain geographical area. I am 
talking about the total State of Arkansas.
    U.S. Rural Development has many excellent opportunities for 
housing and community facilities. However, a certain part of 
the population do not have the knowledge, skills, and abilities 
complete the paperwork. Some of the paperwork that is simple to 
us every day is not simple to complete by these low-income 
families. And they have to have some of that one-on-one 
technical assistance. They cannot afford to hire a technical 
assistance provider or a consultant to help them. It has to 
come from somebody from rural development or somebody that is 
helping rural development to do this outreach.
    Small towns and infrastructure, we have heard quite a bit 
of talk about small towns and infrastructure. On 
infrastructure, definitely you have to have infrastructure if a 
small town is going to do anything. But many of the small towns 
do not have infrastructure plans, and if you do not have an 
infrastructure plan, then you cannot go and talk to anybody 
about helping you with infrastructure. They cannot afford to 
hire an engineer to help them to do that.
    So now I am going to talk a little bit about the East 
Arkansas Enterprise Community. In 1995, there were three et 
zones and 30 enterprise communities approved in the United 
States nationwide. The enterprise zones got $40 million each. 
Now, I am talking about the rural enterprise zones in rural 
enterprise communities because there were urban ones. The 
enterprise communities got $3 million each. After the 
administrative fee was cut off the top, it was $2.9 million.
    Now, all of the towns in the enterprise communities-- there 
were two in eastern Arkansas, but all of them and the one in 
Forrest City, East Arkansas Enterprise Community, all of those 
towns got infrastructure plans. Not only do they have 
infrastructure plans, they have preliminary engineer costs and 
estimates on all of their needs. Eleven towns and communities 
in the East Arkansas Enterprise Community have $74 million 
worth of infrastructure needs identified and in a place. They 
have $13 million which are shovel ready and meet all the 
requirements of the stimulus funds. We have plans, preliminary 
plans on those, and they are shovel ready and ready to go. But 
I heard someone else talking about they cannot afford the 25-
percent match or the 40-percent match based on this income. So 
they are just sitting there.
    Now, we do have a collaborating agreement with the Corps of 
Engineers where they have approved $20 million for 
infrastructure for this enterprise community. The water bill 
also authorized that Federal funds can be used to match funds, 
but you have got $20 million authorize, but no appropriation to 
go with it.
    Now, the Corps asked for $500,000 in 2009. That did not 
happen. They told us to get the match. We went to the Governor. 
We ended up with $3-point-something million in match, but we 
did not get the $500,000. So we are going to be able to do some 
projects without the Corps money. But the Corps money did not 
materialize. We could do a lot more projects.
    This year, they said that they could use $6 million, and we 
told them that we can get that match. We know that we can. But 
the Corps tells us that they stand ready to go when Congress 
appropriates the funds. There is the authorization.
    I know all the information about no new construction and 
all of that, but we have got to figure out something, some kind 
of way in 2010 to get some of this $20 million that is out 
there so that we can leverage this money that USDA got and also 
leverage money from the State.
    Now, the enterprise community took that $2.9 million and 
leveraged $25.6 million during that certification. Community, 
human, and economic development is where those dollars went.
    Chairman Lincoln. We will work with you, Dr. Cole. I 
appreciate it.
    Mr. Cole. We need your help on that.
    [The prepared statement of Mr. Cole can be found on page 60 
in the appendix.]
    Chairman Lincoln. Okay. Thank you.
    Dr. King.

STATEMENT OF CALVIN R. KING, PRESIDENT, ARKANSAS LAND AND FARM 
          DEVELOPMENT CORPORATION, BRINKLEY, ARKANSAS

    Mr. King. Thank you, Senator Lincoln. It is indeed a 
pleasure to have this opportunity to present to you today, and, 
of course, you have received my written testimony. I want to 
speak first in reference to the Arkansas Land and Farm 
Development Corporation. As you know, we have been around for 
some 29 years, and we have virtually basically three 
programmatic areas: that is, in agriculture and rural community 
development and our housing program and our youth program.
    I am also happy to say here today that also our chairman, 
Dr. Brian Cornelius, is one of our program graduates from our 
Youth Program, so we have what we consider as being a major 
achievement in that area, and where he is now president, he has 
returned to eastern Arkansas after finishing his doctorate at 
the University of Arkansas at Fayetteville and working for a 
major corporate, you know, C corporation in the Delta. Part of 
that contribution from a future workforce development that I 
consider as a major accomplishment for Arkansas Land and Farm 
Development Corporation.
    Let me say also in our work as it relates to the limited-
resource small farmers, we have some very serious challenges 
before us. One, we have a continued decline in the loss of 
black-owned land in the U.S. As you know, in 1910, African 
Americans owned roughly some 15 million acres of land. That has 
declined roughly to some 4 million or less acres in this 
country today, and there are major factors contributing to 
that.
    I must say one of the factors that we have right now has to 
do with some of the policies that are being implemented by the 
Farm Service Agency that have proven to be detrimental in this 
area, not just to minority farmers but also to limited-resource 
small farmers in general, but particularly things that are 
occurring now with the farming community and with our small 
farmers is payment offsets. There should be a moratorium on 
payment offsets, on program payment offsets for small farmers 
and particularly for minority farmers in some of the crisis 
situations they are facing at this point.
    We have situations now and issues, as we talk about 
providing stimulus, we are doing just the opposite for both 
families and households in this particular segment of the 
population in this community. The Farm Service Agency is 
offsetting Social Security payments, people's retirement where 
they have worked for a number of years in the farming arena, 
and have been forced out of that arena. As you well know, they 
have been some of the first to feel the pinch of the crisis 
some years ago. And as we move into what has now become a 
downfall type of economy for a much broader segment of our 
society, it is becoming a devastating process and application 
of policy for this segment of our society.
    But the offset payments from both program services for 
families and farmers is very detrimental as well as the offset 
payments for those individuals where there are now accelerating 
programmatic and policy initiatives toward foreclosures.
    I say that, Senator, to say that while that is an existing 
policy, there are alternatives. And I do not think we should be 
operating in a society today and implementing policies that are 
detrimental when there are alternative approaches to what is 
taking place with the small farmers and, in particular, with 
the minority farm segment of the population.
    While we have worked to address the issue of small family 
farm decline, we realize also that we would not be able to do 
our work if we were not receiving the support from USDA, in 
particular from what has been the 2501 program over the years. 
And I urge you, Senator, to continue to support that program, 
its efforts, which is now with the Office of Civil Rights, 
actually under Mr. Purdue Reed and his administration and the 
work that he is seeking to do as it relates to both the 2501 
program but also understanding what the issues are and what the 
needs are as it relates to limited-resource and minority 
farmers. And I think you would probably be very sensitive to--
it is very sensitive to some of the policy issues that are 
being faced right now in this segment of our community, 
particularly to the extent that, as I understand it, there are 
efforts taking place where the Farm Service Agency is being 
assessed on the part of USDA or the Federal Government itself 
to look at not just the Farm Service Agency but all USDA 
agencies, the type of program of service delivery that has been 
provided and to what extent it has been provided and how well 
it is being provided in today's time.
    Another area that I want to talk about is our housing 
program. Over the years, both in partnership with USDA Rural 
Development under RCDI, the Rural Community Development 
Initiative, we have been able to both implement some housing 
development program initiatives by using the tax credit 
program. And, of course, you know, the tax program comes 
through Arkansas Development Finance Authority.
    I must say while it has proven to be very beneficial to the 
State of Arkansas as well as the housing industry, along with 
the HOME program dollars, there is a need for more and changes 
in some of the existing areas right now, because along with the 
downfall, with the housing economy, as you know, so went the 
tax credits as far as purchase and marketability of those 
credits in a way where it was as attractive to both the banking 
industry and private industry as other segments were.
    But as a result of some of the outreach--but the funding is 
limited, and I will say for Mr. McCullough, there is more 
funding need for rural community development issues and 
outreach for rural development, and I agree with Dr. Cole as 
well on that.
    But from the housing development perspective, we were 
successful in the Lee County, Marianna area, where we by way of 
tax credits and HOME dollars, we built some 35 homes, a 
subdivision; there was equally some $2.6 million in housing 
development that was a result of tax credits and private 
investment dollars that took place in that. And that is what 
outreach can do.
    We have also in the four-city area been in partnership with 
the private sector to develop over $16 million in housing 
development that also is--this is in a multi-family type of 
housing development initiative, along with some in the El 
Dorado area. We presently have--which is pending now. And, 
again, understanding what is occurring in our economy--and 
these are basically low-income Delta region minority 
communities in the counties in which we have been working and 
other areas that we have worked in as well.
    We have pending right now with tax credit approval at the 
State level, Department of Ag--I mean Arkansas Development 
Finance Sty roughly $3.6 million for housing development that 
is drastically needed in the Helena-West Helena area. But, 
again, there are some issues around the tax credit issues 
itself as well as the availability for the other type of 
dollars for the State of Arkansas, some that was made available 
as a result of the stimulus package, but definitely there is a 
need for more, and in the HOME program.
    Now, what the HOME program does and how it has worked and 
been beneficial for the low-income communities in our area, it 
has been both for the renovation program as well as for the new 
housing construction program. As a result of, again, outreach 
and RCBI, we are working with roughly some seven communities 
right now through the RCBI program. We have been able to 
provide the assistance to these small towns to put together the 
packages that would allow them to get the financing--these are 
the cities, Helena-West Helena being one, Marianna being 
another, and other towns we are working in to get the necessary 
funding to go in and renovate homes up to $25,000 in grant 
dollars through the HOME program, and up to $90,000 in new home 
construction, and, of course, it creates affordability by way 
of only having half of that being an obligation in repayment 
funding through the HOME program with the Arkansas Development 
Finance Authority funding program.
    Now, that particular program, again, that is by way of HUD 
that comes into the Arkansas Development Finance Authority, and 
more funding is needed for that, and it is very beneficial not 
just for the housing industry but particularly for low-income 
communities.
    The other area I want to speak to is on the youth. Now, 
youth we consider as being our future workforce and next 
generation, and I think there should be a lot more emphasis and 
more outreach support for a community-based organization at 
this as we seek to work with you in understanding the need to 
both encourage them and continue their education. High schools 
need all the partnership that they can get in a lot of our 
areas, but both to encourage them and to prepare them more in a 
fashion where they are ready for the workforce, but more than 
anything, I think it is important that we also have programs 
that encourage our youth to focus on and have a better 
understanding of agriculture.
    There is an approach now as we talk about know your farmer, 
know your food, and as a part of that knowing your farmer and 
knowing your food, you know, I think that the education process 
for our young people is even more essential, both know your 
farmer, know your food, but also understand and know the 
structure of agriculture and the contribution that agriculture 
makes in our society and in our local community. And that is 
equally as important.
    Now, my primary focus area, as you will see from the 
position paper, the testimony that we submitted, is around 
alternative crops or vegetable crops. We firmly believe that 
this particular approach at this is one particular area--and 
Ms. Pagan gave reference to that as well in some of the work 
that has been done, and we have partnered in doing some of that 
work and working with farmers to create what we call 
cooperative limited liability corporation type initiatives in 
this arena with added-value processing, but particularly 
vegetable crop production, that it can provide opportunities 
for both new business enterprise as well as a diversified 
approach for the retention both of minority farmers and for 
family farmers.
    I think also in doing so, not should we just look at the 
focal point of the funding and the necessary funding in that 
area and that area, but that should be priority and possibly 
additional program diversity in that area as far as the farmers 
are concerned, be it by way of those individuals who become 
entry level into vegetable crops, that the Farm Service Agency 
can, by way of either its existing policy or new policy, be 
able to provide a certain forgiveness of debt that creates the 
flexibility for this segment of farmers to be able to diversify 
their farms where they have a strong economic survivability in 
that area.
    My final point, I think also along with that--and I commend 
what was recently announced with the dollars that went to the 
University of Arkansas at Pine Bluff for the establishment of a 
Foundation of Sweet Potato Plants for the State of Arkansas. 
But I would encourage more. I would strongly encourage more 
funding support for the University of Arkansas at Pine Bluff 
particularly as it relates to alternative crops and working in 
this particular area, this arena, from the added-value 
perspective as well as from the certification process in 
working with farmers and with communities and with 
organizations.
    We were the organization to certify the first black farmers 
in the State of Arkansas, some of the first farmers in the 
State of Arkansas, to be certified for good agricultural 
handling practices. And as we all know, that is a barrier point 
to expanding new market opportunity because it is a requirement 
in the marketplace.
    Again, I know my time is out. I am going to close at this 
juncture and say again, thank you, Senator Lincoln, for your 
support, and we look forward to that continuation.
    [The prepared statement of Mr. King can be found on page 80 
in the appendix.]
    Senator Lincoln. Thank you, Dr. King.
    Mr. Squires.

 STATEMENT OF JOHN SQUIRES, CHIEF EXECUTIVE OFFICER, COMMUNITY 
             RESOURCE GROUP, FAYETTEVILLE, ARKANSAS

    Mr. Squires. Senator Lincoln, congratulations on earning 
your title, and thank you very much for trying to bestow the 
title of Doctor on me.
    [Laughter.]
    Mr. Squires. I appreciate that very much, though I think 
most of the people that know me, that is not the first thing 
that would come to mind as far as what to call me.
    Before I start my remarks, I think I would be remiss if I 
did not acknowledge that the work that I have done for the last 
34 years and that my organization has done would not have 
happened had it not been for another person with a title that 
he earned after the fact, and that is Judge Olly Neal.
    Back in 1976, Olly was administering the Lee County 
Cooperative Clinic, and as I understand the story, he would see 
people coming into the clinic every month, and they would be 
having gastrointestinal problems, and they would be back the 
next month. And it did not take him very long to realize that 
it was because they were drinking contaminated water from 
shallow wells, and with that hooked up with the National 
Demonstration Water Project, and pretty soon he was trying to 
peddle this need for water all over the State of Arkansas and 
came up to northwest Arkansas back in 1976, and the rest is 
history. Thank you very much, Judge Olly Neal.
    My name is John Squires, and I am the founder and CEO of 
Community Resource Group based in Fayetteville, Arkansas. We 
are multi-State nonprofit rural development corporation with a 
34-year history of helping people in the rural South build a 
future in their own hometown. We work on issues that define 
quality of life in rural areas such as water and wastewater 
infrastructure, transportation, affordable housing, and access 
to capital.
    When you consider that three-quarters of the 1.2 million 
small businesses in rural America have less than 20 employees, 
it is easy to see why small business is so important to a rural 
State like Arkansas. Surveys indicate that small firms in rural 
areas are more likely to provide community leadership, invest 
in the local community, and are less likely to relocate. The 
challenge is to find ways to strengthen and help grow small 
businesses because in finding that, we find ways to strengthen 
and grow rural Arkansas' economy.
    The Center for the Study of Rural America at the Federal 
Reserve Bank of Kansas City identified three major challenges 
to the growth of entrepreneurial activity in rural America: 
labor, capital, and infrastructure. How do we invest in the 
small businesses and entrepreneurs in rural communities to help 
them grow and prosper, thus creating the good-paying jobs that 
will attract the skilled labor necessary to take rural Arkansas 
businesses to the next level and further improve the vitality 
of our rural communities?
    Thirty years as a rural development practitioner, including 
6 years on the board of Alt Consulting, a nonprofit business 
consulting firm based in the Arkansas Delta, has convinced me 
of three things.
    We need to focus our finite resources and efforts on 
businesses that have real growth potential. Before extending 
credit to small businesses, we need to provide high-quality, 
on-site, capacity-building assistance that is affordable but 
not free.
    We need to find alternatives to traditional collateral-
based lending. Small businesses located in low-income areas 
typically lack the assets to qualify for the loans they need to 
grow their businesses.
    Community Resource Group supports rural businesses by 
providing on-sit assistance and capital to improve rural 
community water and wastewater infrastructure. Thirty years 
ago, we started helping rural communities across the Ozarks 
Mountains to plan, finance, construct, and manage community 
public water systems that provided first-time services to 
hundreds of families that had previously relied on shallow 
wells and springs for water.
    Incidentally, these are the very community systems that we 
helped build that are now being connected to the regional 
system, and we are delighted.
    Today, CRG provides on-site assistance to approximately 500 
rural communities across seven States to ensure that public 
water and wastewater systems that are needed by the residents 
and business alike are operating properly.
    Since launching our infrastructure loan fund in 1992, CRG 
has closed over 300 loans to water and wastewater systems 
totaling more than $20 million. But it is the USDA's water and 
wastewater disposal loan and grant program that does the heavy 
lifting in rural America in providing major funding to rural 
water and wastewater needs of rural communities.
    This long-running program works well and has contributed 
mightily to the viability and vitality of so many rural 
communities. This program works. It simply needs an increased 
appropriation if it is to meet more of the backlog that we are 
discovering every day in order to provide safe water in our 
rural communities so that everyone can take it for granted.
    Like small private sector businesses, nonprofits providing 
technical and financial assistance to rural communities and 
small businesses are also challenged by the lack of access to 
adequate capital, especially for re-lending. The rural 
development programs, such as the Intermediary Relending 
Program, or IRP, represent an important source of financial 
support for nonprofits working on the front lines of rural 
development. However, in fiscal year 2009, the appropriation 
for the IRP program was $33.3 million, or just $660,000 per 
State, if divided equally. Funding for the IRP program needs 
desperately to be increased.
    While not perfect, USDA's Rural Development programs work. 
I would urge the Committee to build on what works and expand 
those USDA programs that are already successfully investing in 
rural America.
    In conclusion, for most of the 60 million residents of 
rural America, Rural Development at USDA is a primary source of 
Federal financial support for community economic development 
efforts. We appreciate the hard work and the responsiveness of 
the staff here in Arkansas and their hard work on behalf of 
rural communities across the State--even if the director cannot 
choose among his children.
    [Laughter.]
    Mr. Squires. The American Recovery and Reinvestment Act 
this year provided a very welcome influx of funds for rural 
development programs and is providing a significant but one-
time shot in the arm. We hope the important work of rebuilding 
essential community infrastructure that began in 2009 will not 
be forgotten in 2010 and beyond.
    We do understand that the Federal deficit is growing and 
that securing increased appropriation for rural programs will 
not be easy. But rural has never been easy, but it has always 
been worth investing in.
    Thank you, Chairman Lincoln and the Committee, for 
considering my testimony and for your focus on the needs of 
rural America and in Arkansas.
    [The prepared statement of Mr. Squires can be found on page 
97 in the appendix.]
    Chairman Lincoln. We very much appreciate your testimony, 
Mr. Squires. Thank you so much for being here. And I would like 
to echo your words of thoughtfulness to Judge Olly Neal, who I 
also have found in my career to be a great counsel and someone 
whose main objective is to help his neighbor and to work 
through the community to do that. So I appreciate that. I 
appreciate him being here.
    Thanks to all of you all for your testimony. I have got a 
few questions that I would like to kind of converse with you 
about.
    Ms. Pagan, when I meet with constituents who are just 
starting a project and they have got a dream--and as I tell 
them, it is not my job to dream their dream, but to help them 
make that dream happen--I also tell them that it is unlikely 
that they are going to find all of the funding they need in 
just one program. Oftentimes, they have to apply for several 
different grants, combine them in order to have enough funding 
to complete the project. I am just curious, and I hope I know 
the answer, but has this been Winrock's experience as well? And 
if so, can you give us some examples of partnering that have 
happened that you feel like is a wise use of collectively 
bringing dollars together?
    Ms. Pagan. Chairman Lincoln, Winrock's U.S. Programs has 
had the unique ability to piece together several USDA programs 
to move a project from the conception to reality, as I know 
several other members of this Committee have been able to do 
so.
    Winrock was awarded a Rural Business Opportunities Grant to 
look into value-added opportunities for farmers in eastern 
Arkansas a number of years ago, and the study indicated that 
there was really a need for oilseed processing in the Delta and 
resulted in private sector investment by the England Grain 
Dryer to bring a soybean oil extrusion plant on board. And this 
England Grain Dryer also needed some technical assistance. 
Through the Rural Cooperative Development Grant funding, we 
provided some much needed on-the-ground technical assistance, 
subsequently giving the England Grain Dryer the tools to 
leverage some funding with the Delta regional authority along 
with that private sector investment to complete the 
construction of the soybean oil extrusion plant.
    The building of this plant led to other private sector 
investments in several biodiesel production facilities in 
Arkansas. Biofuel refineries have potential to create jobs 
across the mid-South. A recent study coordinated by the Memphis 
Bioworks Foundation and Winrock International indicates the 
expanding biofuels and bio-based products business sectors 
could bring more than 25,000 jobs in the mid-South Mississippi 
Delta region, so a total of about 34 programs put together made 
that possible.
    Chairman Lincoln. Well, you mentioned the success you have 
had with the Nonprofit Improvement Program, and certainly it is 
impressive to see 45 rural municipalities and nonprofit 
organizations that you have worked with have been able to 
obtain that $20 million. Could you talk a little bit more about 
how local leaders can participate in that program in the kind 
of mentoring activities that Winrock provides? Or are there 
programs that you all do that help get leaders engaged and 
involved in that?
    Ms. Pagan. First of all, we have marketed the program 
through both the Arkansas Department of Rural Services and the 
Arkansas Municipal League. Because or this marketing effort and 
the great success of the program--and leaders around rural 
Arkansas have heard about the program--we now have a waiting 
list for participants in that program.
    The grant application requires that we have project 
recipients identified and secured for participation at the time 
of the grant. The real criteria for getting into the program is 
that the smaller the community and the more distressed the 
area, the higher the poverty rates and more likely they are to 
get into the program because we actually are scored higher with 
USDA Rural Development.
    They have historically decreased the amount of awards and 
raised the match requirements, and it leaves many organizations 
unable to participate and without technical assistance.
    In September, we submitted a new grant application that 
would include seven new participants, and at Winrock, because 
we believe that once you are a client, you are always a client. 
If funded, then those seven participants add and join the 45 
others who have continued to access our mentoring programs and 
workshop trainings. I know that you are well aware of the 
national study tool that is attached to this program.
    We know, though, that our on-the-ground experience shows 
that the short 18 months that these communities participate 
does not solve all their needs and their problems. So we 
continue to struggle to support those communities and 
nonprofits. Because of this limited funding amount and the 50/
50 match requirement, we must limit our services as well as the 
amount of organizations we can assist.
    We have seen and rural Arkansas has seen the success of 
this program. We strongly believe that rural communities and 
nonprofit organizations can strengthen their capacity and see 
projects to fruition. As I mentioned in my opening statement, 
this program is vital to continued improvements in rural 
communities.
    Chairman Lincoln. Well, it is so important because when you 
work with those rural communities, as we do in our office, you 
realize that there is a real need for technical assistance, and 
it is a real key for them to be able to reach that dream, 
because they do dream those dreams and it is a wonderful thing 
to see the innovation and the ideas that come out. But the 
technical assistance is absolutely critical to be able to 
access the resources and the things that they need. So that is 
very important.
    You mentioned biofuels. We are working hard. In the Senate 
Energy Committee, we marked up a bipartisan bill, and hopefully 
we can see that to fruition pretty soon because, unfortunately, 
we are seeing a lot of our biofuels industry dormant at this 
juncture--about 90 percent of them dormant, about 50 percent of 
them are bankrupt at this juncture. We have got to get that 
back into the economy. We have got to figure out--because those 
are good jobs. They are sustainable jobs. And, again, the 
excitement and the enthusiasm in rural America is there for 
that, so it is going to be important.
    Dr. Cole, you mentioned that the East Arkansas Enterprise 
Community has taken $2.9 million and leveraged $26 million more 
for community and economic development, and that 9:1 ratio of 
leveraged resources is so impressive. Can you tell us about 
some of the projects that you were able to implement with that? 
And what were your priorities there in terms of using the 
leveraged dollars to really maximize the outcome?
    Mr. Cole. There are 11 working benchmarks that the 
enterprise community had, and infrastructure was one of the 
important ones where we did the most leveraging. An example 
would be a community center. We were working with 11 small 
towns, and only three of them had community centers to start 
with. So we are talking about community development, and the 
community had no place to go to meet and sit down and talk 
about community and economic development.
    So we zeroed in on community centers for all of the small 
towns, and at the end of the certification, there were only two 
towns that were left that did not have community centers. But 
an example would be Wynne, the McCallum Center in Wynne, and 
most of this leveraged fund came from USDA Rural Development 
because it fits the programs and we knew the programs having 
come from there. So that particular community got together--
they did not have a community center--and they raised $100,000 
from the community, from the businesses. The enterprise 
community took $100,000 of the resources that it had and 
helped. They provided the land. They got the land, furnished 
the land, and we put $100,000 in to help with furniture and 
some other things. And the USDA Rural Development actually 
financed the community center.
    So there we took $100,000 and leveraged in excess of $1 
million. So those type of projects throughout the period 
enabled us to have what we saw was an economic impact and 
provided the towns and communities a place to meet and actually 
sit down and talk about community development.
    A town without a community center, they really cannot-- 
they have no place for a youth program; they have no place-- 
you know, some of them try to meet in churches, but you will 
have some people of the community that will not go to a certain 
church. So in order to be inclusive, every town needs this own 
meeting place. But that is just one example.
    Chairman Lincoln. Sure. You know, we just had a hearing on 
the child nutrition reauthorization, and one of the programs 
that we are really focusing on that is so important that is 
very difficult to important, particularly in rural areas, is 
the summer feeding program. Without a meeting place in those 
small rural communities, the idea of transporting those 
children to another congregate place where they could have that 
summer feeding program does not really seem like the best 
solutions. But when they do have a local community center, a 
place where you can do that, it is better--certainly you have 
got a better option at being able to feed those children during 
the summer. So thank you very much.
    Dr. King, you discussed the need to provide more training 
and technical assistance, which I have just been talking about, 
in farm development, crop production, risk management, local 
co-ops, and LLC development. I know that your organization has 
provided technical assistance to farmers. Can you describe some 
of your recent work and what has been successful for those 
limited-resource farmers that you have worked with?
    Mr. King. Well, one of our real focus areas has been 
retention of the farms, and success has been each farm that we 
have been able to retain and dealing with the consistent 
regulation changes with USDA Farm Service Agency, particularly 
as it has had to do with the program servicing area. That is 
both in the debt restructuring and working with farmers from 
that perspective to the extent of even going through the 
process of working with them through appeal proceedings and the 
processes for appeals, where you do know that individuals get 
the full benefit of what the full due process, what is 
allowable to them by way of USDA and use of the National 
Appeals Division to make sure that everything has been dealt 
with in a fair and equitable manner from a policy application 
perspective.
    We also provide training in that area, and we also bring 
together partners, and I am saying resource agents, that is, 
USDA itself. And we bring them together on a frequent basis to 
talk about both our programs and the application process of 
those programs, what is available to them, be it with Rural 
Development, be it with NRCS, including the Farm Service Agency 
as well as other agencies, both private as well as State 
agencies.
    The importance of that is that what we find in the 
communities we work in is the information dissemination just 
does not get there, or does not get there to the extent that 
people are really able to comprehend and really identify 
because there is so much. There is so much both in application 
process, there is so much also in the regulation aspects of 
that.
    So we find it beneficial when we have sessions just of this 
nature where we are working with our constituents from a 
training perspective and an information-sharing standpoint, 
they also understand the resource agencies and how those 
agencies can partner and best benefit them with the type of 
services that they provide.
    You mentioned the fact that there is a dream, you know, and 
you cannot necessarily get or really understand the fulfillment 
of that dream until you clearly understand what resources are 
there that could enable you to realize that dream and 
understanding what Rural Development does and how it can help 
from a housing perspective, how AFDA can help you and how AFDA 
and rural and urban partners together to provide housing, 
ownership opportunities, or how to bring about or create a safe 
housing situation about where use of the home monies and 
partnering the home monies back in with the HPG, the Housing 
Preservation Grant dollars, and that when you have a situation 
that is both unhealthy and unsafe, at all the same time where 
the income is not as set, where individuals are able to improve 
the status of what their situation is.
    So we work with them both from a training and from a hands-
on perspective on all of our clientele, in our housing areas, 
in our farm program area, and from a cooperative development 
program perspective as well.
    As I mentioned, one group with which we have been doing 
some partnership work, Winrock International along at Arkansas 
Land and Farm Development Corporation and others to deal with 
the issue around farm safety and farm security from a food 
perspective. The group that Ms. Pagan gave reference to, we 
have worked with them also as a collective group working from 
an LCC or the equivalent of a cooperative to understand what 
the food security and food security really represents in giving 
them access to market opportunity. There is a requirement 
within the marketplace and equally as much of a necessity for 
that in the future as we try to move more toward expanding and 
building on that type of enterprise.
    It is an enterprise that we believe that there are 
opportunities for expansion and development in, one, from an 
infrastructure perspective because now both Farm Service and 
Rural Development offer additional resources in that arena from 
a financing perspective, but it is important that our 
constituents and the small farmer and the minority farmers 
understand the process for accessing those resources, be it for 
getting the loans where you can put the cooling systems on 
those farms now, which it was not, you know, available at one 
given point in time, as well as the cooperative development 
funding. I think cooperative development funding and support by 
way of USDA--and I think Ms. Pagan would probably agree with me 
on this, is that we do not have the sufficient resources, the 
type of resources that are necessary in that arena. But we find 
also it is imperative that the small farmers and limited-
resource farmers work in a collective manner but from a core 
perspective of LCCs to build those type of organizations, small 
type of business enterprises in our rural community and in that 
particular area of the business community.
    Chairman Lincoln. It is essential. I had a friend that I 
grew up with in East Arkansas who wanted to move to fresh 
fruits and vegetables, and realizing how expensive it was going 
to be to have that equipment to be able to process or cool down 
immediately was something else. And you mentioned know your 
farmer. We had a great discussion, as I mentioned earlier, over 
at Heifer about the farm-to-school program, and also you have 
to do is visit downtown to the farmers market here where people 
truly do enjoy and certainly appreciate being able to know 
their farmer. And I think it is a great tool to really bring 
back the kind of respect and consideration that Americans need 
in terms of knowing where their food comes from, that it is not 
just coming from a grocery store shelf. And that is, I think, 
an important thing.
    Mr. Squires, your testimony focused--or you mentioned, 
anyway, the USDA Intermediary Relending Program, and as you 
mentioned, it makes loans to nonprofit lenders who in turn make 
the loan to finance business and community development projects 
in those rural areas. Your comments that the Community Resource 
Group has had difficulty in competing for those funds in recent 
years because of the IRP's scoring preference for organizations 
serving less than 14 counties, can you tell us why an 
organization like the Community Resource Group could use the 
IRP funds more effectively if it was allowed to serve that 
larger area? Administrative costs, I would think.
    Mr. Squires. When you are doing infrastructure loans, it is 
a difficulty. The restriction we are talking about here is a 
14-county--a preference for 14 counties or less, and if you do 
not serve less than 14 counties, you do not get those points in 
that category. If you are an infrastructure lender--and we do 
small infrastructure loans--it is very difficult in a 14-county 
area to revolve that money as quickly as it comes in. On a 
larger area, we are able to ensure that that money gets to the 
communities that need it as quickly as it comes back in. And it 
seems to us that the emphasis should be on not the size of the 
lender's service area, but the amount of distress in the 
community that is borrowing.
    Chairman Lincoln. The need.
    Mr. Squires. We would prefer to see the preference being 
given to USDA's persistent poverty counties, for example, of 
which there are 17 in Arkansas. That seems like an artificial 
restriction that keeps certain lenders from having access to 
that money.
    Now, I will say that we started our----
    Chairman Lincoln. Is there a definition for the 
persistently poor counties?
    Mr. Squires. Yes, it is basically that--I think the last 
three censuses have had more than 20 percent poverty, since, I 
think, 1960.
    Chairman Lincoln. How many of our counties in Arkansas 
are----
    Mr. Squires. Seventeen. We have a lot in the Delta. We have 
some up in the northwest, in Newton and Searcy, and then we 
have some down in the southwest.
    Chairman Lincoln. One of the other things we have talked a 
lot today about is the huge infrastructure needs that we have 
in our State's water systems and a host of other things. We 
talked about how expensive those improvements are going to be.
    You mentioned the Community Resource Group had made a 
$70,000 loan recently that would allow a small community in 
north-central Arkansas to upgrade equipment for its water 
system, and that is going to improve efficiency. It is going to 
save money for local residents. Maybe you could just briefly 
touch on how important it is for these rural communities to 
have access to this type of capital for maintenance and 
repairs. That is always hard to find, but it seems it is the 
sort of thing that really meets a critical need.
    Mr. Squires. As somebody mentioned earlier, our operators 
are getting older. They are getting older along with their 
systems.
    Chairman Lincoln. Dennis. Yes.
    Mr. Squires. And both USDA and EPA have indicated that the 
financing need for repairing these systems that are, frankly, 
wearing out is beyond--what appears to be beyond our ability to 
fund these. While USDA and the State SRFs, the State programs 
do the large funding, the transactions cost of doing a small 
loan is usually about the same as it is for a larger loan. And 
in USDA's case, for example, last year USDA did about 1,230-
some loans for about a total of about $2.5 billion, which means 
that the average loan size was $2 million.
    A small system of, say, less than 1,000 customers does not 
need a $2 million loan. It needs money to repair the leaks in 
its system, to upgrade its equipment, to extend that line out 
to another family. And those are the kind of loans that we 
provide, as well as when a system does need that big 
improvement, somebody has got to pay for the engineering up 
front. So we do those pre-development loans that coordinate 
very closely, and then we get taken out by USDA.
    A lot of our referrals, frankly, come from our State 
offices, both on the regulatory side and on the financing side. 
It is another way for them not to say no, and we can turn these 
loans typically in 2 weeks. We are very proficient at it, no 
loan losses in 300 loans, and it works very well. I think it is 
a nice add-on to the rural development programs.
    Chairman Lincoln. Well, that is great. Well, we want to 
thank this panel very much for your input in today's hearing, 
and we are grateful to you all for the tremendous work you do 
across our State and the great working relationship we have. We 
want to continue that with your good ideas and suggestions and 
concerns.
    This is going to conclude the Senator Agriculture 
Committee's field hearing. I want to thank all of our 
participants who have participated today, and I am grateful 
that you all were here to share your perspective with us. It is 
truly an honor for me to be the first Arkansan to serve as 
Chairman of the Senate Agriculture Committee, and I really look 
forward to working with you to shape the Committee's agenda.
    We have all worked, many of us, hand in hand and certainly 
for a long time in Arkansas to pursue rural development because 
most of us grew up in rural communities. We grew up in small 
towns, and we still believe in them. We still know that the 
best place to travel to is our Mom's kitchen table. We like to 
go home and oftentimes reminisce about what it would be like if 
we had been able to stay there. And I think as we look to try 
to build on rural development here in Arkansas, we know that 
there is a great opportunity that exists there, and we want to 
work together.
    I also want to thank the audience. You have been very 
patient. I appreciate your interest. As I mentioned earlier, I 
hope that you will take the opportunity to fill out the cards 
that you were given as you entered today. We would like to have 
an opportunity to answer your questions or address any concerns 
that you may have and certainly to get your feedback on the 
issues affecting our rural economy.
    Finally, the Committee will keep the official record open 
for 5 business days if you would like to submit a written 
statement. We are glad to take that. But I do appreciate the 
input from Arkansans to the Senate Agriculture Committee and am 
grateful for your passion and your interest in what we can do. 
And we look forward to working with you again with your 
feedback and concerns and hope that you will share those with 
us.
    So thank you all for being here. I wish everyone a 
wonderful, wonderful Happy Thanksgiving. We are blessed to live 
in this great country, much to be grateful for, and much to do 
in our work ahead of us. So thank you all for coming.
    The Committee is adjourned.
    [Whereupon, at 4:12 p.m., the Committee was adjourned.]
      
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                            A P P E N D I X

                           NOVEMBER 23, 2009



      
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