[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2012

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                              FIRST SESSION
                                ________
     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES
                    JACK KINGSTON, Georgia, Chairman
 TOM LATHAM, Iowa                   SAM FARR, California
 JO ANN EMERSON, Missouri           ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama        SANFORD D. BISHOP, Jr., Georgia
 CYNTHIA M. LUMMIS, Wyoming         MARCY KAPTUR, Ohio              
 ALAN NUNNELEE, Mississippi         
 TOM GRAVES, Georgia                

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
       Martin Delgado, Tom O'Brien, Betsy Bina, and Andrew Cooper,
                            Staff Assistants
                                ________
                                 PART 8
                                                                   Page
 Food, Nutrition, and Consumer Services...........................    1
 Marketing and Regulatory Programs................................  263

                                ________
         Printed for the use of the Committee on Appropriations
 PART 8--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,

              AND RELATED AGENCIES APPROPRIATIONS FOR 2012
                                                                      ?

   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2012

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS
                              FIRST SESSION
                                ________
     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES
                    JACK KINGSTON, Georgia, Chairman
 TOM LATHAM, Iowa                   SAM FARR, California
 JO ANN EMERSON, Missouri           ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama        SANFORD D. BISHOP, Jr., Georgia
 CYNTHIA M. LUMMIS, Wyoming         MARCY KAPTUR, Ohio              
 ALAN NUNNELEE, Mississippi         
 TOM GRAVES, Georgia                

 NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mr. Dicks, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
       Martin Delgado, Tom O'Brien, Betsy Bina, and Andrew Cooper,
                            Staff Assistants
                                ________
                                 PART 8
                                                                   Page
 Food, Nutrition, and Consumer Services...........................    1
 Marketing and Regulatory Programs................................  263

                                ________
         Printed for the use of the Committee on Appropriations

                     U.S. GOVERNMENT PRINTING OFFICE
 66-818                     WASHINGTON : 2011

                                  COMMITTEE ON APPROPRIATIONS

                    HAROLD ROGERS, Kentucky, Chairman

 C. W. BILL YOUNG, Florida \1\      NORMAN D. DICKS, Washington
 JERRY LEWIS, California \1\        MARCY KAPTUR, Ohio
 FRANK R. WOLF, Virginia            PETER J. VISCLOSKY, Indiana
 JACK KINGSTON, Georgia             NITA M. LOWEY, New York
 RODNEY P. FRELINGHUYSEN, New JerseyJOSE E. SERRANO, New York
 TOM LATHAM, Iowa                   ROSA L. DeLAURO, Connecticut
 ROBERT B. ADERHOLT, Alabama        JAMES P. MORAN, Virginia
 JO ANN EMERSON, Missouri           JOHN W. OLVER, Massachusetts
 KAY GRANGER, Texas                 ED PASTOR, Arizona
 MICHAEL K. SIMPSON, Idaho          DAVID E. PRICE, North Carolina
 JOHN ABNEY CULBERSON, Texas        MAURICE D. HINCHEY, New York
 ANDER CRENSHAW, Florida            LUCILLE ROYBAL-ALLARD, California
 DENNY REHBERG, Montana             SAM FARR, California
 JOHN R. CARTER, Texas              JESSE L. JACKSON, Jr., Illinois
 RODNEY ALEXANDER, Louisiana        CHAKA FATTAH, Pennsylvania
 KEN CALVERT, California            STEVEN R. ROTHMAN, New Jersey
 JO BONNER, Alabama                 SANFORD D. BISHOP, Jr., Georgia
 STEVEN C. LaTOURETTE, Ohio         BARBARA LEE, California
 TOM COLE, Oklahoma                 ADAM B. SCHIFF, California
 JEFF FLAKE, Arizona                MICHAEL M. HONDA, California
 MARIO DIAZ-BALART, Florida         BETTY McCOLLUM, Minnesota         
 CHARLES W. DENT, Pennsylvania      
 STEVE AUSTRIA, Ohio                
 CYNTHIA M. LUMMIS, Wyoming         
 TOM GRAVES, Georgia                
 KEVIN YODER, Kansas                
 STEVE WOMACK, Arkansas             
 ALAN NUNNELEE, Mississippi         
   
 ----------
 1}}Chairman Emeritus    
                                    

               William B. Inglee, Clerk and Staff Director

                                  (ii)


   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2012

                              ----------                              

                                             Friday, April 1, 2011.

   DEPARTMENT OF AGRICULTURE--FOOD, NUTRITION, AND CONSUMER SERVICES

                               WITNESSES

KEVIN CONCANNON, UNDER SECRETARY, FOOD, NUTRITION, CONSUMER SERVICES, 
    AND DEPARTMENT OF AGRICULTURE
JULIE PARADIS, ADMINISTRATOR, FOOD AND NUTRITION SERVICE, DEPARTMENT OF 
    AGRICULTURE
RAJEN ANAND, EXECUTIVE DIRECTOR, CENTER FOR NUTRITION POLICY AND 
    PROMOTION, DEPARTMENT OF AGRICULTURE
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE
    Mr. Kingston. And this hearing will start. I will start 
with an opening statement, and I am sure my friend, Ms. 
DeLauro, will probably have one, as well.
    We welcome you back. We appreciate the work that you are 
doing. We are very concerned about a $17 billion increase in 
this budget climate. I realize that a lot of that is driven by 
the farm bill. But it is interesting that we always seem to 
tinker with authorizing, which increases enrollment on 
appropriations bills, but we are not allowed to authorize to 
correct a program.
    I just want to remind you, though, that the boat we are 
in--we are all in the same boat, in terms of the leak. The new 
CBO estimations of the President's budgetary proposals say that 
if all of the President's budget was enacted, it would add $26 
billion to the deficit for 2011. And, as a result, the 2011 
deficit would be $1.43 trillion, or 9.5 percent of the GDP. 
Very, very serious numbers. The federal debt held by the public 
would double under the President's budget, growing from $10.4 
trillion, 69 percent of GDP at the end of 2011, to $20.8 
trillion, 87 percent of GDP at the end of 2021.
    Not my numbers; CBO's numbers, and something that I know 
that we are all very concerned about. And that is why we want 
to be sure, when we look at an increase this high, that we have 
looked at every way possible to make sure that that is a 
minimum amount of money, as opposed to a maximum amount of 
money.
    So, I look forward to your testimonies. As you know, your 
testimonies have been submitted for the record, so you are 
invited to summarize them.
    But let me yield the floor to my friend, Ms. DeLauro, for 
an opening statement.
    Ms. DeLauro. Thank you very, very much, Mr. Chairman. And I 
do not have a formal opening statement, but I am grateful to 
you for allowing me to say a few words. And let me welcome the 
Secretary and the administrator.
    And I just want to emphasize how important the nutrition 
programs are to the most vulnerable people in our country. And 
there was a FRAC report released several weeks ago. Nearly one 
in five Americans struggled to afford enough food for 
themselves and their families in 2010. In the last few months 
of 2010, some of the highest food hardships--those rates, in 
the 3-year period--were reached. The October 2010 rate of 19.3 
percent had been succeeded only in November/December 2008.
    And quite frankly, this is a low number, in comparison to 
others. In my state of Connecticut, the food hardship rate is 
14.5 percent. We are categorized as the richest state in the 
nation. And you have 14.5 percent of folks in Connecticut who 
are called food-insecure, which, in essence, means they are 
hungry, that they are hungry. So the numbers--and that is a 
good state; we rank 49th. That tells you something about what 
is going on in other states.
    The figures demonstrate that we have to have the strength 
of nutrition programs. They have to be there. And they have to 
benefit the most--those who most need it. The consequences of 
not doing this are completely unacceptable. We can't simply 
afford to leave people behind. And the problem may get worse as 
food prices continue to rise.
    If you will just bear with me one second, Mr. Chairman, I 
want to just--and I think for all of our subcommittees, some of 
the new members may not know Administrator Julie Paradis--but 
this is her last day as the FNS administrator. She is retiring.
    Mr. Kingston. She is also smiling a little bit more than 
normally. [Laughter.]
    Ms. DeLauro. Yes. That is only because of the recognition, 
because she loves what she does, and she does it well. It has 
been truly a privilege. I say that for all of us. And to spend 
your last day as a federal servant here with us, I've got to 
tell you, maybe I am going to just say, ``Get a life,'' here, 
Julie, but----
    Mr. Kingston. And you know, while Rosa and I have not--we 
do not always vote the same. We have great affection for each 
other, so we want to make this a memorable hearing for you.
    Ms. DeLauro. We will do it, we will do it----
    Mr. Kingston. We will both do our part. [Laughter.]
    Ms. DeLauro. I just want to mention Julie's career: USDA, 
Capitol Hill, feeding America, every reason to be proud of the 
legacy that you have left all of us. And to come out of 
retirement to work at USDA with what has been a real critical 
time in our country's history, and our ability to effectively 
be able to deliver the nutrition program.
    So, we are grateful to you, and the country has benefitted 
from your great work and your dedication and your passion for 
reducing hunger in America, a noble cause. It is the gift of 
life. You cannot do better than that, and what your goals are. 
So we are grateful.
    I also might add I am excited to see a new administrator, 
Audrey Rowe, who I have had the opportunity to work with--from 
Connecticut--over the years. And so we will, I know, spend many 
days together--to the new administrator. But Godspeed. Thank 
you.
    Thank you very, very much, Mr. Chairman.
    Mr. Kingston. Thank you, Ms. DeLauro. Mr. Farr, do you have 
any----
    Mr. Farr. I just want to associate myself with her remarks. 
It is a wonderful day--have a career public servant, and 
particularly to remind Congress at a time when they want to 
slash and burn and criticize government, it is important to 
recognize people who have made a career and done very well at 
helping this nation be a better nation. Thank you for your 
service.
    Mr. Kingston. Mr. Graves, do you have anything to add?
    Mr. Graves. I will wait.
    Mr. Kingston. Okay. Well, Mr. Under Secretary?

                           Opening Statement

    Mr. Concannon. Thank you, Mr. Chairman. Thank you, Mr. 
Chairman, and members of the Subcommittee, for this opportunity 
to present the Administration's fiscal year 2012 budget request 
for USDA's Food, Nutrition, and Consumer Services.
    As is noted in my written testimony, I too wanted to draw 
attention to the fact that our Administrator, after 31 years of 
public service, will be retiring today, it is her last day as 
the Administrator. And we want to thank her and acknowledge 
that, as the Members have already.
    Let me also introduce Dr. Rajen Anand to my right, the 
Executive Director of the Center for Nutrition Policy and 
Promotion, someone also with many years of public service 
devoted to improving public health and the well-being of 
Americans.
    We come before you today in a most challenging time for 
Americans. Even as signs emerge that the economy is beginning 
to return to vigor, families across the country continue to 
struggle with the aftermath of three years of recession. Demand 
for the nutrition assistance program remains extremely high. In 
December, nearly 44.1 million people received SNAP benefits, 21 
million of them children, the 26th consecutive month of record 
high participation, again, reflecting what is going on in the 
American economy.
    Participation in the school meals program remains at near 
record levels, with 32 million children receiving a meal 
through the school lunch program on an average school day, and 
two out of three of those receiving a free or reduced price 
meal, based on family income. These nutrition assistance 
programs have never been more important to our Nation. In good 
times, as well as bad, they provide an essential safety net so 
that no matter what other hardship and disruptions that our 
folks may face, American families need not experience hunger.
    This budget provides full support for the core nutrition 
assistance programs, in order to ensure access to benefits for 
all eligible persons who apply. And it makes targeted 
investments to restore the SNAP benefits that were eliminated 
by the Healthy Hunger-Free Kids Act of 2010. It also supports 
and encourages schools to improve meals through the Healthier 
U.S. School Challenge. It encourages States or leading entities 
to take up the challenge within those states of ending child 
hunger. It helps States improve SNAP customer service and 
process applications promptly. It expands the school breakfast 
program, and provides support and further promotion for breast 
feeding through the WIC program.
    The request also promotes improved nutrition and health, 
and addresses the crisis of childhood obesity by supporting 
prompt implementation of the Healthy Hunger-Free Kids Act, 
signed into law by the President in December. The Act, a 
historic victory for our Nation's children and families, 
includes real reforms for the Child Nutrition Programs, and 
will promote the health and well-being of our children for 
years to come.
    As a country, we cannot compete and win the future if our 
people are hungry, our children are poorly nourished, or new 
mothers and newborn infants do not have what they need for a 
healthy start. This budget recognizes and supports these 
fundamental facts, makes the right choices for our country, 
especially for those Americans most in need.
    I want to emphasize that while the resources requested in 
this budget are critical investments, they are not the whole of 
our strategy to address the important challenges that remain in 
moving our Nation out of the economic downturn and its 
aftermath. Our strategy includes leveraging our ongoing 
partnership with States to modernize, to streamline, and to 
improve program operations.
    As you know, all nutrition assistance programs are operated 
in partnership with State governments. And the very 
circumstances that have driven increased demand for these 
programs have also reduced the revenue available to states to 
operate the programs. This is particularly important in SNAP, 
in which States must cover half of the cost required to 
administer the program.
    Facing these pressures, many States have pursued, with our 
encouragement, business process improvements to increase the 
efficiency and effectiveness of SNAP operations. In the school 
meals program, we are promoting wider use of direct 
certification, which uses certification information from the 
SNAP and other means-tested programs to enable low-income 
children to receive free school meals without their families 
having to fill out, and schools having to process paper 
applications. These kinds of ongoing efforts are essential to 
keeping the programs effective and meeting the food and 
nutrition needs of our people in this time of limited 
resources.
    In the same vein, I want to underscore a strong commitment 
to program integrity. As you may know, the President has issued 
an Executive Order and a memorandum to all Federal agencies, 
directing us to reduce payment errors and eliminate waste, 
fraud, and abuse in the programs within our jurisdiction. I 
take this responsibility seriously, as a matter of proper 
management, but I also want to emphasize its fundamental 
relationship to our success.
    From my perspective, the ongoing mission of these programs 
is not separable from strong and sustained attention to program 
integrity and stewardship of Federal funds. Waste and abuse 
draw scarce program resources away from the people who need 
them most. We cannot afford such losses.
    And, just as importantly, the programs are ultimately 
unsustainable without public confidence that benefits go to 
those who qualify for them, are used appropriately, and achieve 
their intended purpose. We simply cannot sustain the Nation's 
commitment to these programs--which, with your support, is 
considerable--without honoring and fulfilling the expectation 
that we can manage them with integrity. This is one of our 
fundamental responsibilities.
    In closing, the budget request reflects the essential role 
these programs play in restoring our economic vitality, and 
sustaining the nutrition, health, and well-being of our people. 
It makes the right investments to make them as effective as 
they must be to meet the challenges that face our country.
    And I appreciate the opportunity to present, discuss it 
with you, and look forward to taking your questions.
    Thank you.
    [The information follows:]

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                           BUDGET REDUCTIONS

    Mr. Kingston. Thank you, Mr. Under Secretary. Let me ask 
this. In terms of this budget for this committee, this 
represents 75 percent of our appropriation. We have had nine 
hearings. I think we have one more next week, and that is our 
last hearing.
    Every agency has proposed reductions and proposed cuts. 
Some of them have a bottom line lower than last year, but most 
have offsets. The only thing that you have proposed are cuts 
that would have happened anyhow, because they were one-year 
programs. The TEFAP infrastructure, the Social Security data, 
and SNAP school garden plot, those are all fairly small, 
numerically, to begin with, in comparison to the cost of the 
program. But they were also ones that were going to expire.
    So, where have you seriously taken aim at doing it better? 
And, you know, you just mentioned the fraud and abuse. This 
might be a good time to tell us what you have done on that. But 
I am concerned that I do not see what I have seen in the other 
USDA agencies, in terms of their budgets.
    Mr. Concannon. Well, Mr. Chairman, thank you for that 
question. We--as I mentioned in my overview testimony, these 
programs, these nutrition programs, which ultimately, of 
course, benefit American farmers and growers, have never been 
as urgently needed as now.
    Mr. Kingston. I know that the stimulus program did not 
work, and the economy is in shambles, but what I want to know 
is: what have you done to reduce the cost of the program?
    Mr. Concannon. We have done a number of things, Mr. 
Chairman.
    Mr. Kingston. And there is bipartisan support on this.
    Mr. Concannon. Yes.
    Mr. Kingston. And I know that people in this town love to 
live in the reality, ``Oh, they want to starve kids.'' You 
know, you can feed kids and do it efficiently and do it 
effectively and be good stewards of the tax dollars. And so 
that is what I am asking.
    Mr. Concannon. Yes, Mr. Chairman. Well, as a matter of 
fact, I am recalling the enactment of the Healthy, Hunger-Free 
Kids Act of 2010, that reductions were made in both the SNAP 
Education Program, as well as in the WIC Program, as well as in 
the stimulus funds that were previously authorized in order to 
fund that program, without increasing the Nation's deficit.
    So, we have been very much in the middle, are very 
conscious of the need to make sure we are being good stewards.
    And, as I mentioned in my opening remarks, everything we do 
we do through States. And we have been working very closely 
with States right across the country to encourage them both to 
simplify the process, the eligibility process, to reduce the 
administrative costs associated with programs, and to 
strengthen their oversight, to make sure that people are not 
improperly receiving the benefits or fraudulently using the 
benefits.

                           PROGRAM INTEGRITY

    You mentioned--or at the end of your question--the interest 
in the question of fraud. I am happy to report that fraud is 
one of the areas that we pay particular attention to. The 
amount of fraud in the SNAP Program, as an example, is just 
under one percent, fraud being the misuse of benefits, 
typically involving vendors as well as consumers that may 
cooperate with them in this regard.
    In 1993, the program experienced way back in the era of 
food coupons, paper coupons, an annual fraud rate that was in 
excess of $800 million. The last year for which we have 
recorded data on fraud, 2008, it was in the $330 million range.
    Mr. Kingston. Let me ask you this.
    Mr. Concannon. That is still a large amount of money, but 
we----
    Mr. Kingston. Well, let me ask you this on that subject, 
because the OIG report said that 3,981 SNAP retailers were 
found guilty of fraud, yet they are still participating in the 
program. How could that happen?
    Mr. Concannon. Mr. Chairman, there are a number of steps 
that we can take to deal with retailers. I am very mindful of a 
recent public example of fraud out in the Seattle area. But we 
have immediate authority to disallow----
    Mr. Kingston. But--I know you have that, but you haven't 
done it. That is my point. According to the IG, not according 
to me. I got this from the IG, who testified before this 
committee that 3,981 have not been blackballed from the 
program. These are retailers. And I do not understand why there 
is a gray area to it.
    You know, it is kind of like if you get caught going 70 
miles an hour in a 55 zone, you get a ticket, period, no 
questions. Why aren't they blackballed already?
    Mr. Concannon. We do. To use that term, we blackball a 
number of them. And we have several levels of authority to do 
that. We can immediately disqualify them from the program.
    Mr. Kingston. Okay----
    Mr. Concannon. And we do that a number--we did 900 last 
year.
    Mr. Kingston. Mr. Under Secretary, let me be very 
respectful on this, but very firm. I want to know, out of those 
3,981, how many are blackballed.
    Mr. Concannon. Last year, 991 were permanently removed from 
the program. That is the number we used. In a number of other--
--
    Mr. Kingston. Let me commend you. That is very good. Now, 
what about the other 3,000?
    Mr. Concannon. In the other--in the instances of the other, 
we have time-limited sanctions. In other words, depending on--
an example of a fraud may be a consumer going into a store and 
actually paying for toothpaste, or paying for a non-food item. 
That is wrong. That is fraudulent. And in that case, that 
vendor is not permanently put out of the program. There are 
time limits, the first time, for non--they are knocked out of 
the program for a period of months. The second time that 
doubles. Third time, you are out forever.
    So, there are a number of examples like that. There are 
other examples where we turn the case over to the--either to 
the local law enforcement, or to the Office of Inspector 
General, and they may determine that they want to spend the 
time putting together a criminal case. And, as you would know 
often times the burden for us, to be able to hold up in a 
criminal case is much more than the administrative authority we 
have to just simply cut them off.
    Mr. Kingston. Yes, so----
    Mr. Concannon. We work very closely with the OIG.
    Mr. Kingston. And my time has expired. But if I am hearing 
you correctly, what you are saying is, of the 3,981, there is 
different categories of the fraud, some worse, some not so bad, 
and they are in an either first time, second time offense, and 
you are watching them.
    That is what we want to know. Of those 3,981, have names 
been taken and actions--because that is what really is--the IGs 
seem to be suggesting that, well, they were caught but nothing 
happened. So----
    Mr. Concannon. No, that----
    Mr. Kingston [continuing]. If you could, for the record, 
maybe send me the disposition of that, that would be very 
helpful.
    Mr. Concannon. I would appreciate----
    Mr. Kingston. And I would really appreciate that.
    Mr. Concannon. We appreciate it.
    [The information follows:]

    The time period covered in the testimony given by USDA's Office of 
Inspector General was 2004 through 2008. During that period, FNS 
permanently disqualified 3,891 stores from program participation for 
trafficking, which is the exchange of SNAP benefits for cash. That is, 
those owners are identified in the SNAP system and prevented from ever 
participating as a SNAP retailer again.
    In addition to these retailers that were permanently disqualified, 
during the same time period (2004-2008), FNS temporarily disqualified 
(usually 6 months) another 2,851 stores for less serious program 
violations, such as the exchange of SNAP benefits for ineligible items.
    Per Section 12, U.S.C. 2021, of the Food and Nutrition Act of 2008, 
FNS takes reciprocal action against program participation if a firm is 
disqualified from SNAP or the Women, Infants, and Children (WIC) 
Program. FNS referred all 6,742 stores (3,891 permanent 
disqualifications plus 2,851 temporary disqualifications) disqualified 
during the time period specified by USDA's Office of Inspector General 
to WIC State Agencies for removal of any stores with dual 
participation.
    Since that time, in fiscal years 2009 and 2010, FNS has 
disqualified an additional 1,824 stores permanently for trafficking, 
and 1,007 stores for shorter periods as a result of less serious 
program violations.
    In sum, between 2004 and 2010, 5,715 retailers have been 
permanently disqualified from participation in SNAP and 3,858 
retailers, have received lesser disqualifications for a total of 9,573 
disqualification actions.

    Mr. Kingston. And my time has expired. I appreciate it. And 
Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman. I have lots of 
questions. First of all, I appreciate all the good work you do. 
I think that, as we debated this health care bill, it was very 
evident that if we are going to have a healthier America--and, 
therefore, less costly health care in this system--it is going 
to start with having to change the dietary consumption in--and 
make it more nutritional in America, and particularly starting 
with kids, but also everyone else. We are all going to have to 
have healthier lives by more healthy eating.
    You are on the front line of that. And I have been telling 
the growers of healthy foods--and I think you, as the 
administrators of it--that you are really the first responders 
to America's health care needs. And I hope that we can start 
designing programs that really line up the public policy of the 
country to be consistent with really good health standards.

                    ADMINISTRATIVE COST IN THE NSLP

    I want to ask--I don't know whether to ask Ms. Paradis or 
Mr. Young. What is the percent of the entire child nutrition, 
food nutrition program, that goes to administrative costs 
versus just to purchasing food, like food school lunches and--
--
    Ms. Paradis. The administrative cost and the benefit 
dollars. Have we got that?
    Mr. Farr. Can somebody find that? If you can't find it 
right now, I will take the answer later, or I will take it----
    Ms. Paradis. Well, of course----
    Mr. Farr. What is your guess?
    Ms. Paradis [continuing]. The easy answer is that the 
lion's share, of course, is in benefits. You know, as we 
approach $100 billion, most of that is benefits. A relatively 
small percentage of that is administrative dollars.
    Mr. Farr. Well, that is--because that is not what I hear at 
the school delivery site, you know, at the lunch site. They 
tell me that the bureaucratic standards--and obviously, you are 
going to streamline them now, be able to qualify--but often 
case the bureaucratic cost of having to do all the monitoring 
and--not food preparation, just the monitoring, the computer--
is 60 percent of the program.
    Ms. Paradis. Well, there is no question. But what--a 
significant proportion is in respect to monitoring. That is 
largely because, over the years, we have realized the 
importance of maintaining the integrity of our programs, and 
maintaining our----
    Mr. Farr. Well, what is important, feeding the kids or 
integrity of programs? I have got schools where now--and this 
leads into this--we have got to get away from this stigma of 
having rich kids in one line and poor kids in another. I have a 
school in my district where the kid wouldn't go to lunch, 
because she was poor. But she couldn't eat upstairs. They 
actually put them on different floors. And everybody knows that 
if you are going to the lower floor, you are a poor kid. So she 
wouldn't do it, because she didn't want to admit that she was 
from a poor family.
    What are we doing to children like that? They are hungry. 
Why do we have a program--you are going to talk about integrity 
of management, but it is a dumb way to run a feeding program.
    Mr. Concannon. Congressman, that is an excellent point, and 
that is a deplorable situation for any child.
    I should point out that in the Healthy, Hunger-Free Kids 
Act of 2010--first of all, let me say the typical school meal--
when we reduce the school--reimburse the school for a fully-
paid meal, it is $2.72 per meal. About half of that $2.70-plus 
is the actual food product. The other half are all the folks in 
the food line, men and women who prepare the food, the chefs, 
and then there is a small portion of it for administration. It 
really isn't anywhere near close to 60 percent. Whoever would 
have conveyed that to you is just plain, outright not correct.
    Mr. Farr. Well----
    Mr. Concannon. It is a much smaller portion of it.
    Mr. Farr. I will tell you I--she is a career food 
nutritionist in the program and running it, and she took----
    Mr. Concannon. I want to be----
    Mr. Farr. I mean--having to count for every child and every 
meal, and whether that meal was given to that child, and that 
child was the right one to receive that meal is--there is a lot 
of bureaucratic mess.
    Mr. Concannon. There--no--
    Mr. Farr. There is a much better way of doing that.
    Mr. Concannon. There are administrative costs, and we are 
working hard at promoting, as you authorized us and directed us 
in the Healthy, Hunger-Free Kids Act of 2010 to do, to do more 
direct certification, to do more online applications, to use 
more technology so we don't put children or the school 
administrator programs--so I am very conscious that we want to 
reduce the admin portion of it. I just--the only note I want to 
make, it is not as much as that. It is more than it should be, 
we are working hard on it----
    [The information follows:]

    The latest national data on school meal production costs, from 
USDA's School Lunch and Breakfast Cost Study-II shows that the great 
majority represents the cost to prepare and serve meals--the cost of 
the food, the salaries of cafeteria workers, and some related expenses 
such as supplies, contract services, capital expenditures, and other 
charges.
    In school year 2005-2006, about 8 percent of all reported costs was 
for ``administrative labor,'' including the cost of processing 
applications, conducting verification of a sample of applications, and 
a wide range of other administrative tasks such as planning, budgeting, 
and management for the foodservice program. While SFAs vary widely in 
the proportion of reported labor costs devoted to administration, in 93 
percent of them administrative labor accounted for less than 15 percent 
of total reported costs.

                          OVERT IDENTIFICATION

    Mr. Farr. But why don't we approach it--let us feed kids 
that are hungry, and worry about whether they are classified as 
rich or poor somewhere else.
    Mr. Concannon. Well, to that question you mention of the 
separate line, and sort of the----
    Mr. Farr. I mean Colorado is picking up the bill for every 
kid, right? They are not going to do that----
    Mr. Concannon. Well, they are subsidizing.
    Mr. Farr [continuing]. Discrimination.
    Mr. Concannon. And some States like Connecticut, for 
example, subsidize the meals by $.10 per meal. So there are a 
number of States across the country that add a portion to it.
    But to your concern, in the Healthy, Hunger-Free Kids Act 
of 2010, you, I think--you, the Congress--gave us the authority 
to regulate all foods in schools in the future. And the--that 
is a very powerful directive to us. And the intent is to make 
sure that those a la carte, or those other meals, meet a 
quality standard, the same as the school lunch program, but 
also to close that gap of rich and poor, so you do not have 
kids from wealthier families getting in one line and, de facto, 
all the poor kids going in another direction. That should not 
happen.
    Ms. Lummis [presiding]. Thank you. Time has expired. Our 
next Member is Mr. Graves.
    Mr. Graves. Thank you, Madam Chair. Mr. Under Secretary, 
thank you for being here. And I know that the challenges you 
must face, and I appreciate the intent in which you go about 
your department there.

                            BUDGET REDUCTION

    And, as those that come before any of the subcommittees I 
am on, I ask for your assistance in helping us as we look at 
the situation we are in. I think we all know the fiscal 
challenges we have, and the chairman has already brought up 
some of his concerns about your proposal. And something I ask 
each one that comes before us is if you would work with us in 
providing us with options on how you can achieve your core 
mission at reduced budgets of what you are proposing at 10 
percent, 20 percent, and 25 percent. Would you commit to 
helping this subcommittee with some of those ideas?
    Mr. Concannon. We certainly would be willing to show you 
what the impact of those cuts would be.
    Mr. Graves. And I will have a letter to submit to the chair 
for the record, as well. And I appreciate your willingness to 
help us in that.

                            WIC ELIGIBILITY

    A couple of questions I have, and just thinking about your 
testimony--and I am going to read--you say that the programs 
are designed to respond to the needs--and this is your quote--
``the needs of the hardest hit households.'' And I think we 
have heard some of the concerns there is that eligibility has 
been expanded past maybe beyond the hardest hit.
    For example, the WIC program is designed to serve at--and 
this is the quote--``at or below 185 percent of the U.S. 
poverty income guidelines,'' but it appears that there may be a 
little wider discretion. And so I guess, if this is the case, 
and we are at 185 percent, is it true that many of the 
participants could gain eligibility at 300 percent of--or less 
of the poverty level?
    Mr. Concannon. That is Medicaid, I believe, income 
eligibility. That is not the eligibility for the WIC Program. 
And the WIC--it is unfortunate. I spent my career as a State 
Health and Human Service Director. And I think it is 
unfortunate that we even use those percentages, because I think 
185 percent of almost anything sounds like a lot. But 185 
percent of the Federal poverty level is still a very modest 
amount of money. One of the national----
    Mr. Graves. What would that number be? What would 185 
percent--what calculation do you use?
    Mr. Concannon. We will give you that.
    Mr. Graves. For, just say, a family of four.
    Mr. Concannon. We will give you that. We will have somebody 
pull that off a matrix here. It is standardized across the 
county--yes, what is it? They are getting it right here.
    But it actually is not that much. And I should point out 
that the WIC Program serves 49 percent of all the births in the 
United States, 49 percent of all the moms. And it is--research 
after research after research has shown it to be one of the 
most effective preventative health programs, because it helps 
produce good outcomes, in terms of births, preventing--for a 
family of four, 185 percent of the poverty would be $40,793, or 
$3,400 per month.
    Mr. Graves. So you can confirm, then, that a family of four 
would not qualify if their income was $67,000 or more.
    Mr. Concannon. They would qualify in a number of States for 
the Medicaid program if--Medicaid--States have options on how 
high they go for pregnant women, in particular. I can say that 
from the States that I worked in. We elected to go up to 200 
percent of poverty in Iowa.
    Mr. Graves. Do you verify income?
    Mr. Concannon. Yes, the income has to be verified. Yes, 
indeed.
    Mr. Graves. So all are income-verified.
    Mr. Concannon. Correct. For WIC, as well.
    Mr. Graves. Okay. Then I guess let me sort of----
    Mr. Concannon. But there may be, again--excuse me, I didn't 
want to interrupt--there may be Medicaid beneficiaries who 
also--who become eligible for Medicaid and get health services 
and so on through Medicaid, whose incomes may be up to 300 
percent. A relatively small number of States adopted that, but 
I am--that high----
    Mr. Graves. Would you believe that a family that has income 
at 300 percent of the poverty level should qualify?
    Mr. Concannon. I believe the State makes that decision. 
That is a State determination. And I think States--as I said, I 
spent my career in the States. I think if a State makes that as 
a policy, that is the State's policy.

                          PROGRAM PERFORMANCE

    Mr. Graves. What would be your measurement of success with 
your program? How do you measure that?
    Mr. Concannon. Our measurement of success--and we operate 
15 feeding programs. And our measurement of success is are we, 
one, reducing hunger or food insecurity, as has already been 
mentioned, and are we getting healthy, nutritious foods to 
persons through this program. And thirdly, I would say, are we 
helping American farmers and growers? And we pay attention to 
all three of those.
    Mr. Graves. You----
    Ms. Lummis. Thank you. Time has expired.
    Ms. DeLauro.

                 SNAP SPENDING CUTS AND FOOD INSECURITY

    Ms. DeLauro. Thank you very much, Madam Chairman. Let me 
just--it has been argued by some that the recent growth in 
spending in the SNAP benefits program has been problematic and 
should be targeted for cuts. I would remind the subcommittee 
that SNAP spending has increased. These increases are not a 
sign that the program is growing out of control, but has grown 
because of the declining economic circumstances of tens of 
millions of Americans.
    I would just say to my colleague, Mr. Graves, that in 
Georgia, in his district, 20.4 percent of that population is 
categorized as food insecure. For Mr. Bishop, it is 22.7 and 
for Mr. Kingston it is 22.4. I told you what Connecticut was a 
little bit ago.
    The recent SNAP increases have been caused primarily by 
three factors. The economic recession accounts for two-thirds 
of the increase between 2007 and 2010. Temporary increase to 
SNAP benefits that was enacted in the economic recovery 
program--and I will make a reference to that again. Economists 
across the political spectrum viewed this as the most effective 
and efficient form of economic stimulus. And, three, food price 
inflation, high between 2007 and 2008, ease 2009 and 2010, now 
on the rise again.
    CBO projections: as a share of GDP, SNAP is expected to 
return to pre-recession levels by the end of the decade. As the 
economy improves, the need for and the use of this program will 
also decline. The projections are consistent with CBO's 
unemployment projections, which forecast that the unemployment 
rate will remain above six percent until about 2015. Based on 
the projections, should SNAP be targeted for cuts? Is it 
contributing to long-term budget pressures?
    I have got several questions I am going to ask for some 
not-lengthy answers, Mr. Secretary.
    Mr. Concannon. Sorry. That is always a challenge for me.
    Ms. DeLauro. I know. Me, too. It is a challenge for me.
    Mr. Concannon. I do not--SNAP--unequivocally do not believe 
it should be targeted for cuts, because it is so responsive to 
what is going on in the American economy, even at the rate we 
are serving, and there is variability from State to State, as 
to the percentage of eligibles receiving the benefit.
    We know it is important. New York City released--or a study 
in New York City just a few weeks ago said the SNAP Program 
alone last year prevented 250,000 New Yorkers from slipping 
into poverty. The Census Bureau, back in January, pointed out 
that 4.5 million Americans did not slip into poverty last year 
because of the effect of the SNAP Program in their lives. And I 
have heard from supermarket executives from Texas to Maine 
about the importance of the SNAP Program in enabling not only 
their consumers, but enabling those stores to employ full-time 
workers and hourly workers.
    Ms. DeLauro. And so I am going to presume that it is not 
contributing to the long-term budget pressures that we have.
    Mr. Concannon. No, I do not believe that it is.
    Ms. DeLauro. Okay.
    Mr. Concannon. In fact, we know the multiplier effect----
    Ms. DeLauro. That's right, which I want to get to. If the 
economic recovery is faster or stronger than current 
projections, SNAP spending also would decline more rapidly, 
correct?
    Mr. Concannon. Correct.
    Ms. DeLauro. Okay.
    Mr. Concannon. Yes.
    Ms. DeLauro. In the long term, would the upward pressures 
on spending then be focused on population growth?
    Mr. Concannon. Yes.
    Ms. DeLauro. And food price inflation?
    Mr. Concannon. Yes.

                         SNAP ECONOMIC BENEFITS

    Ms. DeLauro. Okay. Now, the impact on SNAP on the economy, 
undeniable. I am going to give you Mark Zandi, the economic 
advisor to Senator McCain in his presidential election. A 
dollar of SNAP food stamp creates a ripple effect, which you 
pointed out, through the economy. What Mark Zandi did was he 
showed--I asked him this question at a hearing. When we were 
running up to the stimulus package, the economic recovery 
package, what would help to stimulate the economy most quickly?
    Three items: extension of unemployment benefits, refundable 
tax credits and a child tax credit, and food stamps. All three 
of those were part of the economic recovery package. The 
multiplier effect is, you know, you give somebody who is living 
paycheck-to-paycheck a dollar, they are going to spend it on 
whatever they need: groceries, pay the telephone bill, the 
electric bill. That dollar pays the salaries of grocery clerks, 
truckers who haul the food and produce it across the country, 
and the farmer who grows the crops. USDA----
    Ms. Lummis. Time has expired. Thank you. We will get back 
to you.
    Ms. DeLauro. Oh, I appreciate that. Thank you, Madam Chair.
    Ms. Lummis. Mr. Nunnelee.
    Mr. Nunnelee. Oh, thank you, Madam Chairman. Thank you for 
being here, Mr. Secretary.
    Your testimony--I think you make the statement that says, 
``We cannot compete and win the future if our people are 
hungry, and our children are poorly nourished. Our new mothers 
or newborn infants do not have what they need for a healthy 
start.''

                           PIGFORD RESCISSION

    I agree with you, and applaud that. But I have to ask. If 
that is your position, if that is the position of the 
administration, when it came time to settle Pigford II, how 
does taking $562 million out of WIC funds that have been 
approved by this committee to pay Pigford II line up with that 
statement?
    Mr. Concannon. Well, first, very importantly, let me 
mention that we have been in the situation for the last several 
years--and expect to remain in that situation--to be able to 
serve every eligible WIC mom and her child who comes forward. 
And the portion of the WIC appropriation that was applied to 
the Pigford settlement, a long-standing civil rights issue in 
the Department--I am happy that it was finally settled--we were 
able to make that contribution without in any way compromising 
access to the WIC Program, or any of the folks who are eligible 
for it.
    So, we have not sent out the signs, we haven't said, 
``Don't come our way if you are pregnant or have infants or 
young children below the age of five.''
    Mr. Nunnelee. So that means that we cannot expect, going 
forward, to have your department come before this committee and 
ask for additional funds to restore this $562 million that was 
cut?
    Mr. Concannon. No, we do not expect to have to do that, 
sir.
    Mr. Nunnelee. All right. Thank you. Now, different areas.

                          INCOME VERIFICATION

    We talked about verifying income eligibility. How do you 
verify income eligibility, and how often?
    Mr. Concannon. The--as I mentioned at the outset, virtually 
all of our programs are operated through State agencies.
    And in the WIC Program, as an example, most of the WIC 
programs across the country are operated by health departments, 
either the State or county health departments. I have been to a 
number of them in different States. They sit down with a person 
when they present themselves, and they go through--they ask a 
series of questions around family income, around health issues, 
pregnancy, et cetera, children in the household.
    And so, they also--there are a number of persons in the WIC 
Program who may also be eligible for the SNAP or the Food Stamp 
Program. Depending on which State you live in, it is still 
called Food Stamps in about 18 or so States, I am told. They--
the State agency, in that case--in most instances, people have 
to go into a State office or a county office, and they are 
asked a series of questions about income. And we have--or 
States, I should say, have--a variety of ways of verifying that 
income. States have access to IRS data, to Social Security 
data, to information kept by a database on prisoners, for 
example, who are incarcerated, for example, across the country 
in prisons. A small number of States use--have access to data 
systems that list child support, interstate child support 
payments and orders.
    So, there are a variety of external ways to verify that 
data. And that is very important to us. That is one of the 
factors we look at when we examine State eligibility systems.
    Mr. Nunnelee. Do we just ask people, ``Is this your 
income,'' or do we ask them to bring in their income tax 
statements, their paychecks?
    Mr. Concannon. Well, they need to have various means of 
verifying that. It can be--could be a stub of a paycheck. It 
could be, again, as I said, tax information. There are a 
variety of ways to verify that. But it isn't just a--it is not 
just ``Tell me,'' and we accept it on faith.
    Mr. Nunnelee. And then, final question. What about people 
that work for cash, that does not show up on IRS or paycheck?
    Mr. Concannon. You know, that is a challenge in the 
country, because I administered child support programs in three 
States. And I know, for people who are wanting to evade their 
child support obligations, it is a very serious matter when it 
happens. And, obviously, if somebody is working for cash, then 
the employer certainly is equally complicit in that.
    So, we do not approve that. If we think we have evidence of 
that, we certainly turn it over to the other authorities, who 
investigate that. But it is a problem.
    Ms. Lummis. Time has expired.
    Mr. Nunnelee. All right. Thank you, Madam Chairwoman.
    Ms. Lummis. Thank you, Mr. Under Secretary. Thank you, Mr. 
Nunnelee. Mr. Bishop.
    Mr. Bishop. Thank you very much, and welcome to the 
panelist.

              PARTICIPATION OF MILITARY PERSONNEL IN SNAP

    Let me just quickly ask you--I was very, very interested 
and associate myself with the questions and comments of Ms. 
DeLauro, with regard to the impact, the economic impact, of the 
nutrition programs, particularly the SNAP program.
    But let me ask you. How many of our military personnel, our 
young soldiers and their families, their young families, are 
participating in the food nutrition programs? Do you have any 
way of giving us what that number is? Because we are given the 
understanding that some of the lower grade officers, or lower-
grade----
    Mr. Concannon. Enlisted men, yes.
    Mr. Bishop [continuing]. Enlisted men, particularly, are 
not able to manage without the help of food stamps. And our 
military families, who are defending our nation, are having to 
depend on this supplemental nutrition effort.
    Mr. Concannon. We will have to provide that data for you. 
But again, I recall, from being a State director in the State 
of Maine, a large Navy base in the State where, particularly 
enlisted--families of enlisted men and women were eligible for 
the program, based on how inadequately, I would say, they were 
reimbursed.
    Mr. Bishop. I think that is important to put in the record, 
so that we can definitely document that information. So I would 
appreciate that very much.
    [The information follows:]

    The Department of Defense estimates that very few active duty 
military members receive SNAP benefits. DoD's latest study found 
roughly 2,000 military families in SNAP in 2002. This number is in line 
with estimates derived from the SNAP quality control system, which 
indicates that there were about 3,100 active duty military individuals 
receiving SNAP in FY 2008 and 3,200 in FY 2009.

    Mr. Concannon. Okay.

                              SNAP WAIVERS

    Mr. Bishop. There have been a number of SNAP waiver 
requests by states. What is the status of the waiver requests 
from states that are seeking to prohibit SNAP recipients from 
purchasing certain foods with their benefits?
    Mr. Concannon. Well, we have a--first of all, let me just 
say, generally, we have granted waivers to States that are more 
typically to ease the burden on the State agency, in terms of 
administrative responsibilities or, for example, to provide 
better access to certain populations.
    For example, seniors or disabled persons, the requirement 
for a face-to-face interview with a State agency, we have 
waived that in a number of cases, recognizing again the elderly 
or disabled persons.
    But to your question, we have a pending single waiver 
request from the City of New York that is currently being 
reviewed. And we have a number of questions about it, we are in 
the process of both--we have asked questions, they have 
responded to us, we are further reviewing that particular 
request.
    But let me just comment not so much about that individual 
request, as much as the broader question of eating patterns of 
people in the SNAP Program. In the Center for Nutrition Policy 
and Promotion, their studies, as well as other parts of USDA, 
consistently point out that poor people, as a percentage of 
their budget, eat pretty much the way the rest of us do, in 
terms of where they apportion, how much they spend on dairy, 
how much they spend on meat, how much they spend on cereals, et 
cetera.
    And we are also mindful of the fact that, in the SNAP 
Program--and I should point out SNAP----
    Mr. Bishop. Let me just--aren't some states asking for 
discretion to be able to allow foods that are not normally 
considered--to allow products that are not normally considered 
food to be covered by SNAP? Aren't there some requesting that?
    Mr. Concannon. Well, we have seen references to that, that 
those kind of questions have surfaced in some State 
legislators. But we have no formal request in that regard. We 
have a single formal waiver request from the City of New York 
that is being reviewed.
    But I wanted to point out that, under the Farm Bill, all 
foods are--as long as they are not hot foods, all foods are 
acceptable in the SNAP Program. The typical supermarket has 
65,000 or so items. And----
    Mr. Bishop. But the act defends what food is, doesn't it? 
That is not a matter of administrative discretion.
    Mr. Concannon. No, that is correct----
    Mr. Bishop [continuing].--Change the definition.
    Mr. Concannon. The law defines it. You are correct, sir.
    Mr. Bishop. Okay.
    Mr. Kingston. If the gentleman will yield, though----
    Mr. Bishop. I will.
    Mr. Kingston. You can use them for Burger King in Puerto 
Rico and a few other states. And that is a hot meal.
    Mr. Concannon. In a very limited number of States, again, 
for--targeted at homeless people and disabled or elderly folks. 
Very limited.

                  NUTRITION STANDARDS IN SCHOOL MEALS

    Mr. Bishop. Talk to me about the food standards, the school 
lunches. You issued a proposed rule which would raise the 
standards for school meals for the first time in 15 years. That 
has not necessarily been well received, although some of us 
applaud it. It hadn't been done in 15 years and, of course, the 
state of health of our young people has degenerated over that 
time period. Can you comment on that? I know my time is out.
    Mr. Concannon. Yes, you are correct. We have a pending rule 
that is actually--we are receiving comments right now, received 
over 3,000 comments. That period of comment ends the 13th or 
14th of this month. We are paying careful attention to the 
comments.
    But to your point, it is the first major improvement in 
school meals--and I have used school meals as the public 
utility for--32 million children have lunch every day in our 
programs. And to the extent that we improve the meal quality in 
all of the foods in the schools, we will hit even more. We will 
hit more of that 50 or so Americans--50 or so million American 
children.
    Mr. Kingston. Ms. Lummis.
    Ms. Lummis. Thank you, Mr. Chairman. I would like to yield 
a portion of my time for one question to Mr. Graves, because I 
ran a pretty tight clock on him. [Laughter.]
    Mr. Graves. Thank you, Ms. Lummis. I just want to go back 
to--we were talking about measurements of success.
    Mr. Concannon. Yes.

                          PROGRAM PERFORMANCE

    Mr. Graves. And so, quickly, I believe it was Ronald Reagan 
who said--and I am going to paraphrase and probably butcher 
it--but he said, ``We should measure the success of 
entitlements not by the addition to the enrollment, but more so 
by those who come off of the rolls.'' Would you agree with that 
statement?
    Mr. Concannon. Yes.
    Mr. Graves. Then how would you measure the success of your 
agency? Do you see the rolls decreasing over time? Do you see 
a--less dependency on the Federal Government in these needs? Or 
do you see it increasing?
    Mr. Concannon. We see--they are very, as I mentioned 
several times, they are very responsive to what is going on in 
the economy. And to the extent that the American economy is 
generating more jobs for individuals and families, the number 
of persons eligible for these programs will decline.
    Now, we also know that, to the extent that you are healthy, 
whether you are a child or an adult, whether you are getting 
adequate food, you are going to be much more able to fulfill or 
fill those jobs----
    Mr. Graves. So have you seen the rolls decline at all?
    Mr. Concannon. We haven't seen them in this most recent, 
but we have seen them historically decline. As the American 
economy improves, the unemployment rate goes down, then the 
food stamp rolls have gone down. So----
    Mr. Graves. Thank you. I will yield back to Ms. Lummis. 
Thank you.

               EFFECT OF REQUIREMENT FOR HEALTHIER MEALS

    Ms. Lummis. Thank you. Question about school breakfasts. 
Have you considered the unintended consequences of schools and 
states dropping the school breakfast program and lunch program 
if it gets too cost-prohibitive? Because these are unfunded 
mandates, in some part.
    Mr. Concannon. Well, we are very conscious of the concerns 
out there on the increased requirements for healthier foods.
    But we are also equally conscious that there are a number 
of schools across the country that are part of a category 
called HealthierU.S. School Challenge. And there was a major 
story in the Chicago paper, just within the last week, about 
schools in the Chicago area--these were four or five private 
schools--where they are serving, from scratch, healthy meals, 
whole grains, meeting these standards, within the $2.72 per 
meal.
    So it is going to be a challenge for many schools. But we 
certainly believe schools can meet that challenge. We are 
proposing to work with schools across the country. And we know 
it is a public health issue and it is a future issue. I think 
you were--Members of Congress were approached by retired 
generals and admirals last year who are fearful about the 
number of young people who no longer qualify for military 
service because they are so overweight. So, it is not just a 
nice thing for us to do, it is an urgent thing for us to do.
    I believe we can do it. I know change makes people anxious, 
but we are committed to work with schools across the country to 
help achieve it.

                    DIETARY GUIDELINES COMMUNICATION

    Ms. Lummis. Regarding the dietary guidelines, how do you 
weigh the goals of accuracy of scientific information and 
simplicity of understanding by the general public?
    Mr. Concannon. That is an excellent question. Let me say on 
that point we have relied for years on an icon, the food 
pyramid or the MyPyramid, which is----
    Ms. Lummis. Yes, that's what I learned when I was in 4-H, 
when I was a little kid.
    Mr. Concannon. Well, and we have, you know, future--or 
later editions of it, I should say, that, again, are science-
based, but they are great teaching tools for, I think, 
professional nutritionists, dieticians, health professionals. 
But they fall off, in terms of how they inform the average 
Americans.
    So, we have been working very much on additional ways of 
conveying to the average person. Because the latest dietary 
guidelines, perhaps for the first time, said something basic to 
Americans: ``Enjoy your food, but eat less.'' I think we 
somehow think in the U.S. super-sizing--bigger is better. It 
isn't necessarily so in the food arena.
    So, we are very much committed to the----
    Ms. Lummis. Can I ask you another question?
    Mr. Concannon. Oh, sorry.

             IMPACT OF BROAD-BASED CATEGORICAL ELIGIBILITY

    Ms. Lummis. Okay. Do you know what percentage of SNAP 
growth is a result of broad-based categorical eligibility, 
versus an increase in regularly eligible SNAP participants?
    Mr. Concannon. I know this--there are 42 States that have 
adopted broad-based categorical eligibility. Nebraska was the 
latest. We have looked at the effects of broad-based 
categorical eligibility, and the income eligibility for SNAP 
requires that the person net-net, even with broad-based 
categorical eligibility, their income cannot be above 100 
percent, net income above 100 percent, of the Federal poverty 
level.
    Because of broad-based categorical eligibility, there is 
about one percent of the current SNAP enrollment whose net 
income is above that. Or it may be two percent, but they 
represent less than one percent of the benefits being expended. 
So it is a very, very--most minimal impact on that.
    The principal benefit is--of broad-based categorical 
eligibility that I know--is that it helps people who have never 
envisioned needing SNAP, never envisioned going into a public 
office, who have lost their job or the company is closed. They 
can come in the door and we can serve them.
    Ms. Lummis. Thanks, Mr. Under Secretary.
    [The information follows:]

    It is not possible to distinguish the proportion of the recent SNAP 
growth that is due to improved access through broad-based categorical 
eligibility (BBCE) from the proportion that is due to the economy, but 
there are multiple reasons to suggest that the economic downturn is the 
main factor in participation growth.
    We know, for example, that only 2 percent of all SNP participants 
had income that exceeded the federal gross and net income thresholds, 
which indicates BBCE has not attracted large numbers of previously 
ineligible households.
    SNAP is designed to grow and contract with shifts in the economy. 
Participation typically increases as the economy declines and decreases 
as it recovers. Both the poverty and unemployment rates have 
significantly risen over the last few years, accompanied by increases 
in SNAP participation. Only now as the economic indicators begin to 
improve, do we expect SNAP participation growth to slow and then 
decline.

                         WIC INCOME ELIGIBILITY

    Mr. Kingston. Mr. Under Secretary, to pick up on that--and 
we are starting on our second round now--but the idea of the 
WIC program was for household incomes at or below 185 percent 
of U.S. poverty income guidelines.
    But because of categorical eligibility, some states can go 
up to 300 percent, and families of 4, up to $67,000 in 
household income. Forty-nine percent of the kids today are 
eligible for WIC. It is hard for me to believe that that many 
families have impoverished kids. Forty-nine percent. That was 
the number that you guys gave us last year.
    Mr. Concannon. I am trying to--you lost me in that.
    Mr. Kingston. And that is what drives it, because if you 
are eligible for Medicaid, then you get the categorical --and 
it can go up to 300 percent of poverty.
    And again, you know, in times of hard budgets, you know, it 
is almost like, well, those who have a job have to pay more for 
those who don't. And, you know, I understand, you know, income 
transfers and all that. But there comes a point where 300 
percent above poverty, that is the problem with categorical 
eligibility.
    And keep in mind that the President cut WIC last year $562 
million. It is interesting to note that the WIC people did not 
protest that much on it. I am glad to say my friend from 
Connecticut did. But you know, I can only imagine what would 
have happened if George Bush had cut WIC $562 million.
    Mr. Concannon. Yes. I am reminded that that 300 percent 
that you mentioned, then--and Mr. Graves asked me as well, 
earlier--relates to that Medicaid crossover, in terms of 
eligibility.
    But I would be surprised if there is--in fact, I will ask 
our folks to look at segmenting, if we can, how many folks have 
come into the WIC Program who are at that----
    Mr. Kingston. Would you agree----
    Mr. Concannon [continuing]. Or close to 300 percent.
    Mr. Kingston. Would you agree that 300 percent is 
excessive?
    Mr. Concannon. No. Unfortunately, I would not, in terms of 
if you are pregnant, and if you are living in high--States that 
are very expensive places, like New York State and so on, or 
California.
    [The information follows:]

    The latest data, from 2008, shows that only about 0.4 percent of 
participants have reported income greater than 250 percent of the 
Federal poverty level. This is so because only seven States have 
Medicaid income eligibility limits above 250 percent of poverty.

                             HOME DELIVERY

    Mr. Kingston. Or what about--let me ask you this, speaking 
of high places. Let us talk about Cape Cod a minute.
    Home delivery program to Cape Cod kids--is that a high 
poverty area? The home delivery program delivers food to homes, 
to kids. And I have never been to Cape Cod. I understand the 
Kennedys have places there. I have never been on the invite 
list. But all I can envision is huge houses and limousines. But 
we are delivering food there.
    Mr. Concannon. You have been paying attention to too many 
of those ads, then. There are a lot of poor people in Cape Cod, 
as well----
    Mr. Kingston. A lot of poor people in Cape Cod.
    Mr. Concannon [continuing]. Different parts of 
Massachusetts.
    Ms. DeLauro. Food security for Cape--not Cape Cod, but it 
is Congressman Frank's district, is 16.5 percent. So it----
    Mr. Concannon. Yes, there are poor kids there, yes.
    Mr. Kingston. Seems like the good rich people at Cape Cod 
need to take care of their neighbors a little bit better.
    Let me ask you this on WIC----
    Mr. Concannon. They are employees.
    Mr. Kingston. They are employees. I know they would not 
want to wash their own dishes, the good people at Cape Cod.

                     FTC INTERAGENCY WORKING GROUP

    Let me ask you this on the subject of WIC. You are familiar 
with the working group, the USDA working group with FTC and CDC 
and FDA. Now, are you aware that their December 2009--could my 
friends on the left calm down a minute? You are going to get 
your five. [Laughter.]
    Mr. Kingston. Hey, do I always deliver to you? You will get 
your five.
    Ms. DeLauro. Or better, sometimes.
    Mr. Kingston. You do. You get more than----
    Ms. DeLauro. Very appreciative.
    Mr. Kingston. Absolutely. It would not be the same for the 
administrator not to be able to see this show one more time. 
[Laughter.]
    Mr. Kingston. And we will send you videos of next year.
    Okay. We got the FTC coming out with proposals. This was 
December 2009. And it said that we should restrict advertising 
for peanut butter, jelly, soup, salads, yogurts, and most 
breakfast cereals, including Cheerios. Those would be not 
allowed to be advertised on teenage shows, which is about 50 
percent of the--any show that has an audience of teenagers, it 
is about 50 percent, which includes most sports programs, Nick 
at Night, all the normal thing. It is not just Skins. But they 
would not be able to see a Cheerio commercial, because I guess 
it is damaging to teenagers. And that is part of the USDA--they 
are in the working group on that. Are you familiar with that?
    Mr. Concannon. Yes, we are.
    Mr. Kingston. But those--most of that food is still 
eligible for WIC. So I am confused that my children might not 
be able to watch this stuff, but the same government who is 
saying this is bad for you to see is saying, ``But we will feed 
it to the children on WIC.''
    Mr. Concannon. Well, I think there is a difference between 
what--the ads that we send to children and what their parents 
elect to buy on their behalf. And I think that--that is an 
interagency working group. We participate. The lead is the FTC. 
And I am also----
    Mr. Kingston. Well, have you written to them and said, 
``That is a little hypocritical?''
    Mr. Concannon. No, I have not.
    Mr. Kingston. Don't you think it is hypocritical?
    Mr. Concannon. No, I do not.
    Mr. Kingston. You do not think it is hypocritical that 
you----
    Mr. Concannon. I think it is----
    Mr. Kingston [continuing]. Cannot let a Cheerios ad go to 
be seen by tender teenage ads [sic], but it is okay to feed 
them to WIC recipients?
    Mr. Concannon. Yes. Some of the foods that they keep 
advertising--because I think it is pretty clear the reason they 
advertise on Saturday mornings so heavily is they get kids to 
head to the refrigerator.
    That is part of our problem in the so-called food 
environment that--again, these kids are subjected to those ads. 
They go, they eat, or they go through the supermarket. I have 
seen little kids reaching for those sugar cereals----
    Mr. Kingston. And it is the ads. The free food that they 
get from WIC wouldn't entice them to eat it, then. I just----
    Mr. Concannon. By the way, Cheerios are approved in the 
FTC, and so is peanut butter.
    Mr. Kingston. Not in the December 2009 proposal. It is 
not----
    Mr. Concannon. It has been revised. It has been revised.
    Mr. Kingston. It is a proposal. It hasn't been revised. It 
hasn't been written, but it is their proposal. The proposal 
that is on the table would ban Cheerios. It is the December 
2009 proposal.
    Mr. Concannon. Well, there is a later one than that that is 
going to be released shortly, and Cheerios are in, and so is 
peanut butter.
    Mr. Kingston. I am excited about it. [Laughter.] Because 
now the Nick at Night kids and the WIC kids can eat a bowl of 
cereal together. It will be good bonding for all.
    All right. Mr. Farr, I appreciate it.

                     REQUEST FOR ELIGIBILITY FORMS

    Mr. Farr. You know, I think the problem is that none of us 
in this committee have ever had to fill out one of those forms.
    When I was a Peace Corps volunteer, I lived in a culture of 
poverty where you do not have any of those services. And the 
difference is, when you do not have those services, when you 
have that baby die because you did not have the WIC program, 
what does the parent do? They come knock on your door and ask 
you for money to be able to bury it.
    I was pretty shocked to be in a barrio, and in the first 
week two people came to my door with dead babies. I had never 
seen a dead baby. And people every single day were asking for 
handouts. That is what your poverty--if you do not provide the 
infrastructure to take care of poverty, it ends up on your 
doorstep.
    And one of the things I have also found is it is a lot 
harder to prove that you are poor than it is to prove that you 
are rich. And the problem in this country is we make people who 
do not know how to prove that they are poor have to do it. The 
terms we ask them, they do not even understand. So, I--you 
know, maybe it would help this committee if we could get copies 
of the forms that people have to fill out in order to be 
eligible for WIC and child nutrition programs. Maybe every 
member of the committee could fill it out, and we could just 
see--we would learn something.
    [The information follows:]

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                  IMPLEMENTATION OF SODIUM REQUIREMENT

    Mr. Farr. But I also want to ask you, because I am really 
concerned, and I think you are taking too slow a period to get 
the bad stuff out of these foods. Are--you indicated that you 
have got a new rule to get sodium out. But it is going to take 
10 years to get it out?
    Mr. Concannon. We have probably had more pushback on the 
sodium aspect of the dietary guidelines in our meal patterns 
than any other, because sodium is, throughout the--I personally 
never pick up a salt shaker, but I know I consume too much 
sodium because it is in so many--it is in some foods naturally, 
but it is in so many processed foods.
    Mr. Farr. That is right.
    Mr. Concannon. Yes.
    Mr. Farr. So why can't we get it out? How about fructose? 
Are we going to get that out?
    Mr. Concannon. I know we are--well, as examples, for USDA 
commodities, foods we buy, we are buying foods with less 
sodium, less sugar, you know, we are buying whole grains, we 
are buying cheese with less fat in it. We are, in the USDA 
Foods, definitely promoting healthier eating, as we are in 
this----

                   DISTINCTION BETWEEN TYPES OF SUGAR

    Mr. Farr. Do you make any distinction between sugars 
between regular, natural sugars, and being fructose sugars?
    Mr. Concannon. No, we do not.
    Mr. Farr. Well, chemically----
    Mr. Concannon. Not to my knowledge.
    Mr. Farr. Chemistry and medicine is certainly making that 
distinction, and saying it is a very--it is a big distinction. 
And maybe we ought to be addressing that. You are the nutrition 
people.
    Mr. Concannon. Well, it is about fructose versus sugar?
    Mr. Farr. By the way, while you are looking at that, just 
to--coming here, if I only had $2.70--I just paid, in the 
Members cloakroom, $1 for a cup of coffee, $1 for a banana, and 
$.50 for a box of raisins. That is $2.50. I didn't get much of 
a meal.
    Dr. Anand. We actually control for all added sugars. If you 
add sugar--it will reduce added sugars.
    Mr. Farr. Your added sugars?
    Dr. Anand. Right.
    Mr. Farr. Is an added sugar different than a sugar?
    Dr. Anand. Yes, because there are some naturally occurring 
sugars.
    Mr. Farr. Yes.
    Dr. Anand. So we are not talking about naturally occurring 
sugar. Only added sugar we are talking about. Reducing added 
sugar.
    Mr. Farr. Okay.
    Dr. Anand. And it will apply to also the fructose syrup.
    Mr. Farr. But are you making any distinction, or have you 
found in any of your research that there is a distinction 
between sugar and fructose sugar?
    Dr. Anand. I think there is no research that shows----
    Mr. Farr. Okay. Well, that is interesting, because the----
    Dr. Anand. Right.
    Mr. Farr [continuing]. University of California in San 
Francisco obesity center has been putting out a lot of 
information that there is a major problem with fructose sugars 
for obesity.
    Why is it taking 10 years, though? Why did we have to 
take--on this nutrition--I read your testimony. You know, I am 
very excited about what is going on with the child nutrition 
program. But then I read that the implementation is going to 
be--we are going to be doing pilot projects, we are doing 
research, we are developing guidelines, we are improving 
standards. What immediately has happened?

                 IMPLEMENTATION OF NEW CNP REQUIREMENTS

    Mr. Concannon. Well, immediately, again, we have put out 
these proposed standards that are, I think--well, I know we are 
hearing from schools and others, saying, among other things, 
``Your proposed reductions in sodium are too much for us to be 
able to handle.''
    So, we know it is going to take a gradual--and we have 
heard this from food processors----
    Mr. Farr. Well, I am not just--I guess what--my question is 
broader than just the ingredients. It is what is immediately--
remember the health care bill? We immediately had about five 
things that happened? Pre-existing conditions were no longer 
there, you could keep your child on insurance beyond age 21. Is 
there anything in the child nutrition program immediately 
happened, or do you have----
    Mr. Concannon. Oh, a number of things have already happened 
immediately. In fact, it was signed the 13th of December----
    Mr. Farr. I was there.
    Mr. Concannon [continuing]. We issued guidance in December. 
For example, all children in foster care--California has the 
largest group of kids in foster care in the country--are 
immediately directly certified for meals, so--for school meals. 
So they do not have to fill in paper.
    We have also--we have been sending out information to 
summer feeding programs, saying, look, we have simplified, as a 
result of this bill, a single site--let us say the Boys and 
Girls Club, or Catholic Charities--can operate more than the 
limited number of sites that were previously available.
    There are three or four pieces of guidance that are going 
out this current week. There were, literally, 100-plus elements 
in that bill. And we are implementing a number of them. We are 
picking them off, and many of them--again, immediately--for 
example, we told all 50 States in December, ``You may now 
operate supper feeding programs.'' Previously it was limited to 
13.
    So, we have done a number of things immediately on that 
bill.

                OPTION TO SUBMIT QUESTIONS DUE TO VOTES

    Mr. Kingston. The gentleman's time has expired. We have 
been told there is a series of votes coming up, and I think as 
many as--Ms. Lummis, Mr. Nunnelee, do you want to submit your 
questions, or do you want to----
    Ms. Lummis. I would like to submit.
    Mr. Kingston. And Ms. Kaptur has not had an opportunity, so 
this gives you time. And then, Ms. DeLauro, I know, wants some 
more. And Mr. Bishop, do you want to submit your questions?
    Mr. Bishop. I don't want to submit.
    Mr. Kingston. You don't want to?
    Mr. Bishop. No, I don't want to submit.
    Mr. Kingston. If we----
    Mr. Bishop. If I have an opportunity to ask this--to follow 
up on Mr. Farr's question, I will.
    Mr. Kingston. Okay. Well, we will just--we are going to go 
strictly five minutes, and maybe we can get at least a half a 
loaf. And if you don't want to submit, we can come back. It 
will probably be more like 12:45, though, before we can--so it 
is up to you guys.
    Ms. Kaptur, five minutes.
    Ms. Kaptur. Thank you very much, Mr. Chairman, very much. I 
apologize for not being here earlier. And I thank you for the 
five minutes, and I thank my colleagues and Mr. Bishop and 
others.

                    IMPACT OF CUTS TO TEFAP AND CSFP

    First of all, thank you for the great work you do. I come 
from a region with a great deal of unemployment, and long-term 
unemployment. Some statistics came out this morning from the 
Bureau of Labor statistics, indicating that unemployment had 
gone down. However, Gallup Poll has come out and said that, in 
fact, we are still stuck over 10 percent nationally. And that 
is the reality that we see in areas where the unemployment has 
lasted a very long time. And the situation is very, very dicey.
    I do not know where our community would have been without 
USDA, quite honestly. My questions really relate to the 
temporary emergency food assistance program, and the commodity 
supplemental food program. Because over a third of what we 
actually are able to give to people at the local level has been 
comprised of USDA commodities. Almost 30 percent comes from the 
emergency food assistance program.
    And I guess what I am worried about is, you know, people 
say, ``Well, we have got to save money, so it is okay that 
General Electric doesn't pay taxes, and it is okay that 
ExxonMobil doesn't pay taxes, and it is okay that Wall Street 
pays an effective tax rate of 11 percent, the big banks that 
caused this mess,'' and yet businesses in my district have to 
pay at a 35 percent rate, but the way you solve the problem is 
not to make them pay their fair share. The way you solve the 
problem is to cut the food to the people who are absolutely at 
the edge.
    I had an unbelievable experience the other day. I went in 
for a radio interview--I shared this with my colleagues--and 
the young woman who was interviewing me--we all know radio 
doesn't pay a whole lot for their staff--and we started talking 
about food. And she said, ``I am sorry that I weigh as much as 
I do, but she said, ``I really learned what it was to be 
poor.'' And she said, ``I am filled up with useless calories, 
but now I really understand how people at the edge eat.'' And 
she broke down, right on the radio show. I was--she had come to 
our community from out of town.
    So, my question to you is, in terms of the emergency 
assistance programs, the commodity supplemental food program, I 
am very worried about that one. Because, based on the cuts 
already this year, there will be several thousand less boxes 
delivered to Ohioans.
    And also in the TEFAP program, one of my colleagues--not 
anybody who is here this morning--on this subcommittee said a 
few weeks ago, ``Well, let United Way make up the difference.'' 
I am telling you. In my community United Way cannot make up the 
difference, because United Way contributions have been reduced 
because of this lingering unemployment.
    So, if anybody knows anything about revolution, we know 
that when you are well fed, you do not have as many 
revolutions. But I worry very much about people who are just 
truly at the edge. I got plates here from my community. One 
from a lady from Toledo, Ohio who says, ``The food bank is a 
great service to me and my family. I work every day, but most 
of my income is spent on bills, which are not going down,'' for 
electricity and gas, and all the rest, ``which leaves very 
little money for me to purchase food for myself and my two 
daughters.'' I could turn in thousands of these plates to the 
record.
    And so, my question really is, based on what is happening 
this year with this cut being crammed into nine months or eight 
months, and then with the cut proposed for next year, what is 
going to happen to TEFAP and to CSFP in places like Ohio, where 
our food banks totally depend on them?
    Mr. Concannon. Two sets of--they are very important 
questions.
    The food banks across the country last year served an 
estimated--and the food pantries--those 200-plus food banks 
serve food pantries--I have been to food banks in Ohio, as well 
as other states represented here--they serve about 60,000 
emergency pantries, churches, other places. And I have heard 
from one end of the country to the other, they are now serving 
people who in the past were their donors for those food banks, 
because of their changed circumstances.
    So, last year, the USDA provided $600 million in food to--
through the TEFAP program--to food banks that went on to food 
pantries. About----
    Ms. Kaptur. And I would say, sir, just for the record----
    Mr. Concannon. A little less----
    Ms. Kaptur. One of--we have two food banks. One of our 
major food banks, it charges nothing. The other food bank 
charges so much a pound. So everybody goes to the food bank 
that doesn't charge anything first. And they had--they have 
over 500 sites that they move food to. And in 2009 and 2010 
they saw the real increase of more than 36 percent in the 
amount of food they distributed from around 4 million to more 
than 6 million pounds of food. The need is just--please finish.
    Mr. Kingston. Well, Ms. Kaptur, your time has expired. Ms. 
DeLauro?
    And again, I am certainly willing to come back, I just--you 
know how these long vote series come, and things deteriorate. 
But Rosa?
    Ms. DeLauro. Thank you, Mr. Chairman, and thank you for 
your comments, Ms. Kaptur.
    Mr. Kingston. But, Mr. Under Secretary, we do want the 
answers to those questions.
    [The information follows:]

    The tentative caseload assigned for calendar year 2011 is 604,931, 
and current participation in the CSFP (through January 2011) is 
approximately 581,000 per month. The funding provided by HR 1 would 
support caseload of approximately 524,000, which is a reduction of 
approximately 81,000 from the caseload level in 2010 and the tentative 
assignment in 2011. Thus, States would have to immediately cut caseload 
and begin to reduce participation in the program. Participation is 
currently lower than assigned caseload. Therefore, at the HR1 level of 
funding approximately 57,000 participants (most likely elderly since 96 
percent of all participants are elderly) would have to immediately be 
cut from the program. Furthermore, States would have substantial cuts 
in their caseload assignments, which would reduce their administrative 
funding since each State's level of administrative funding is 
calculated by multiplying caseload by an administrative grant per 
caseload slot. States would lose, on aggregate, approximately $5.5 
million in administrative funds with a caseload reduction of 81,000.

    Mr. Concannon. Yes, yes.

                          SNAP ECONOMIC IMPACT

    Ms. DeLauro. Let me just say with regard to the SNAP 
program, every $5 generates $9 in total economic activity, 80 
percent of the benefits are redeemed within 2 weeks, 97 percent 
are spent within the month. SNAP recipients spend the increased 
benefits quickly, thereby being stimulative. I think that this 
is something that needs to be a part of the record.

                    SNAP PARTICIPANT CHARACTERISTICS

    Fifty-six percent--these are characteristics of SNAP 
recipients--fifty-six percent of all participants were children 
under eighteen years of age, or elderly sixty or older. Gross 
income, 86 percent of the households below the federal poverty 
level; 42 percent of households at or below 50 percent of 
poverty; 18 percent of SNAP households had no income. They get, 
on average, $134 a month. I defy the people who sit on this 
panel to live and have a food budget that is $134 a month.
    There are some in this institution who would want to make 
permanent the tax cuts for the richest two percent of the 
people in this country. They make--that would give them 
$100,000 in a tax cut. The rest of their money--and they would 
take that and put it in an account and wouldn't spend any 
money, and that may be noble, but do you think that they are 
worried about whether they are going to buy vegetables or they 
are going to be able to feed their family? Or maybe they are 
just going to be able to go out to dinner every night, and 
enjoy that $100,000 that they get in that tax cut?
    And, quite frankly, the people who want to go in that 
direction, they have demonstrated that they don't give a whit 
about the deficit. It doesn't make any difference that there is 
a deficit that is caused by extending those tax cuts to people 
who make over $250,000 a year. That is what we are talking 
about here.

                       STANDARD UTILITY ALLOWANCE

    Standard utility allowance, let me ask a question about 
that, because it has to do with Connecticut, and I will be very 
clear about that. Standard utility allowance for SNAP 
beneficiaries in Connecticut decreases today from $662 to $702 
from $720, a decrease for many in Connecticut. Gas prices have 
gone up significantly in the last several weeks. Food prices 
have also increased.
    Can we get some kind of a commitment that this issue will 
be revisited? And will FNS be able to keep the standard utility 
allowance at $720?
    Mr. Concannon. We cannot. I have to say on the standard 
utility allowance we have extended it several times. It does 
expire as of April 1st. But the most reduction in food stamp 
benefits in any state in the country cannot exceed $20 per 
month. We have extended it several times. I have been told 
unequivocally----
    Ms. DeLauro. We can't do it.
    Mr. Concannon. It is off--yes.
    Ms. DeLauro. Just wanted to add one comment here, and I 
will yield time.
    The average gross monthly income of food stamp 
beneficiaries is $711. Their average net monthly income is 
$329. We want them to bring their W-2 forms. I submit to you 
that we ask GE to bring its forms and tell us how they have 
managed to pay zero in taxes to the United States of America. 
And they ship their jobs overseas, and they take their 
technology and take it overseas. And we do not hold them 
accountable for anything. But let us make sure that anyone who 
gets $134, that they may be buying the right thing or the wrong 
thing for their families. Who are we? Who are we in this great 
nation?
    Mr. Kingston. Mr. Bishop?
    Mr. Bishop. I think I am going to end with Ms. DeLauro's--
--
    Mr. Kingston. Impassioned.
    Mr. Bishop [continuing]. Impassioned statement.
    Mr. Kingston. Statement. Well, we have about two minutes. 
And what I thought I would do--okay, go ahead, Ms. Kaptur.
    Ms. Kaptur. Yes. Mr. Chairman, I just wondered if they 
would be able to respond to the questions I asked on TEFAP and 
CSFP for the--in the remaining time.
    Mr. Kingston. Yes.
    Ms. Kaptur. Thank you, sir.
    Mr. Kingston. And also, though, I wanted to yield 20 
seconds to the administrator, if you want to say anything. This 
might be your last time on testimony. You can tell us to go to 
hell, if you want. [Laughter.] But I want to give you that--
Under Secretary said not a good idea. Not until the bill is 
passed. [Laughter.]

                           TEFAP ELIGIBILITY

    Ms. DeLauro. TEFAP, by the way, goes to people who are not 
eligible for food stamps. Is that correct?
    Mr. Concannon. No. Actually, TEFAP can--is pretty broad 
eligibility.
    Ms. DeLauro. Okay.
    Mr. Concannon. It goes to both--there is a major story 
today in the paper about working Americans having to go to food 
banks to get through the month. So people are struggling at all 
these income levels.
    But to your TEFAP question, the budget proposes $248 
million in TEFAP in our standard allocation to them. What I 
cannot tell you at this point is how much market support--
because more than half of that $600 million last year came from 
purchases over the course of the year for market support in 
dairy or other parts of the farm economy that were producing, 
and the USDA bought commodities and they went out into the food 
bank system. I do not know what those numbers will be, because 
we have to see how the ag economy fares over the course of the 
year.
    Ms. Kaptur. Well, we know it is more expensive.
    Mr. Concannon. I am sure it is--I just don't know----
    Ms. Kaptur. Excuse me, sir. We know it is more expensive. 
Food prices are skyrocketing.
    Mr. Concannon. Going up.
    Mr. Kingston. We have our three-minute warning.
    Ms. Paradis, do you want to say anything? We don't want to 
give you this----
    Ms. Paradis. You are very kind, Mr. Chairman. Thank you. I 
would like to say what an honor and a privilege it has been to 
serve the American people for 31 years, both at the Department 
and at the House Agriculture Committee.
    Mr. Kingston. It has been an honor for us to work with 
someone of your caliber. We do not always agree, that is not 
what we came to town to do. But we are always in agreement that 
this is the greatest country in the world, we need to move 
forward, and we need to share our vision.
    And so, it is just great that people like you are willing 
to spend 31 years in service to the U.S. Government. And with 
that, let us give you a standing ovation.
    Ms. Paradis. Oh, thank you.
    Mr. Kingston. And, Mr. Concannon, you can live one more 
year through this stuff. [Laughter.]
    Mr. Kingston. And with that, the committee stands 
adjourned.

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                                          Thursday, March 10, 2011.

      DEPARTMENT OF AGRICULTURE--MARKETING AND REGULATORY PROGRAMS

                               WITNESSES

EDWARD AVALOS, UNDER SECRETARY FOR MARKETING AND REGULATORY PROGRAMS, 
    DEPARTMENT OF AGRICULTURE
CINDY SMITH, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION SERVICE
J. DUDLEY BUTLER, ADMINISTRATOR, GRAIN INSPECTION, PACKERS AND 
    STOCKYARDS ADMINISTRATION
RAYNE PEGG, ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE

                           Opening Statement

    Mr. Kingston. Mr. Under Secretary, if you guys are ready, 
we are going to go ahead and start. Mr. Bishop and I are going 
to hold down the fort. And one of the things that we have 
experienced right now is all the subcommittees and committees 
are meeting all the time.
    In fact, I believe, Mr. Bishop, Mr. Issa told me that they 
were doing eight committees a week, or something like that. So 
we are not quite at that tempo, because we like to know what we 
are having hearings on. But we do believe that it is good to 
start on time and accommodate Members as they come and go. And 
a lot of people will be sending in questions for the record, 
and so forth. So there will be some other questions.
    But let me welcome you and just say one of our major 
concerns, as you know right now, is the budget. And so 
everything is kind of seen through the prism of spending and 
what we can do better for our mutual constituents.
    And I am going to recognize Sanford Bishop, see if he has 
any opening statements.
    Mr. Bishop. No opening statements, other than to just 
welcome you. You are some very, very key players in the mission 
areas that you serve. And of course, we look forward to hearing 
from you and knowing how we can help you best fulfill those 
missions. They are very, very important. The American people 
are depending on you in so many ways.
    And so, without any further discussion, we would like to 
hear from you.
    Mr. Kingston. And, Mr. Under Secretary, if you want to 
introduce your panelists that will be fine, and maybe start 
there. And then the floor is yours.
    Mr. Avalos. Okay. I do have an opening statement, Mr. 
Chairman. Did you want me to make that now, or----
    Mr. Kingston. Yes, yes. Whatever works for you.
    Mr. Avalos. Okay.
    Mr. Kingston. Do you want to highlight it? Whatever. But 
you do as you feel comfortable.
    Mr. Avalos. Okay. Very well, Mr. Chairman. Thank you very 
much. And, Congressman Bishop, thank you. I am pleased----
    Mr. Kingston. And I want to say something. I should have 
said from the beginning I am not sure--I know that we used to 
have some New Mexico pictures here. I do not know if that is 
one of them, but at one time your friend, Joe Skeen, sat in 
this chair. And I know that you were a constituent of his, so--
--
    Mr. Avalos. I am a little concerned you do not have any 
sheep hanging anywhere.
    Mr. Kingston. Okay. We used to have one, but Sanford and I 
ripped that out and put in cotton and peanuts. [Laughter.]
    Mr. Avalos. Well, perhaps, Mr. Chairman, I can supply you 
with some pictures of New Mexico peanuts and New Mexico pecans.
    Mr. Kingston. We will be glad to consider that.

                       Introduction of Witnesses

    Mr. Avalos. Okay. With me today, Mr. Chairman, are Rayne 
Pegg, our administrator for the Agricultural Marketing 
Service--AMS; Cindy Smith, our administrator for the Animal and 
Plant Health Inspection Service--AAPHIS, Dudley Butler, our 
administrator for the Grain Inspection, Packers and Stockyard 
Administration--GIPSA. And they also have statements for the 
record, and they will be here to answer questions.
    As the President said in his State of the Union Address, 
``We measure progress by the success of our people, by the 
jobs. By the jobs, they can find the quality of life those jobs 
offer.'' The Marketing and Regulatory Programs--MRP agencies 
provide a range of services that contribute to the success of 
our citizens as they compete in a global environment.
    MRP facilitates and expands domestic and international 
marketing of U.S. agricultural products, helps protect the 
agricultural sector from plant and animal health threats, and 
we help ensure humane care and treatment of certain animals.
    MRP assists agricultural producers and their management and 
marketing--provide information and marketing tools. This 
includes developing and overseeing national standards for the 
production and handling of agricultural products labeled as 
organic under the National Organic Program.
    By enhancing protection of the nation's agriculture from 
pest and disease, MRP also increases the efficiency of 
production in domestic and international marketing of U.S. 
commodities.
    MRP provides oversight to protect producers from unfair 
competition and unfair business practices.
    Efforts by MRP staff have yielded results. For example, 
last year APHIS helped resolve more than 100 sanitary and 
phytosanitary trade issues, including opening new markets and 
expanding existing market access for U.S. agricultural products 
valued at $2.4 billion.
    Domestically, APHIS has nearly eradicated the boll weevil, 
having cleared it from 98 percent of the 16 million acres of 
U.S. cotton in this country. GIPSA has maintained compliance of 
the Packers and Stockyards Act at a level of 80 percent. To 
help develop and support market opportunities and outlets for 
farmers in rural America, AMS purchased almost $1 billion in 
food produced by American farmers and processors.
    The 2012 budget funds the most important priorities, while 
exercising fiscal discipline that is necessary to reduce the 
federal deficit. As the Secretary said before to this 
subcommittee, the budget demonstrates the fiscal sacrifices we 
need to make. Now I would like to discuss the budget requests 
for the MRP agencies.
    For the Agricultural Marketing Service, the President's 
budget includes $98 million in discretionary appropriations so 
AMS may facilitate the competitive and efficient marketing of 
agricultural products. AMS programs benefit producers, traders, 
and consumers of U.S. food and fiber products. The budget 
includes an increase of $300,000 to maintain Farm-Bill funded 
reporting of organic commodities in our Market News Program. 
This is more than offset by program efficiencies, and includes 
an overall program decrease of $700,000.
    The request for the National Organic Program includes an 
increase of about $3 million. These efforts will better insure 
the integrity of the organic label.
    By combining the Transportation Service and Wholesale 
Farmers and Alternative Market Development Program into one 
program, the Agency will have more flexibility to support USDA 
priorities. The total includes an increase of almost $2 million 
to improve access to local and regional-produced foods.
    For the Microbiological Data Program, we are requesting an 
increase of $250,000 to enhance product sampling. Specifically, 
this will allow the program to capture a larger number of 
imports during the winter months.
    AMS provides the Environmental Protection Agency the data 
they need for pesticide risk assessments. To do so, the 
Pesticide Data Program must adequately reimburse cooperating 
states for their services. The budget includes an increase of 
$1.2 million for state sample collection, and testing the foods 
and drinking water needed by the federal program.
    In the Federal State Marketing Improvement Program, AMS 
provides matching funds to state departments of agriculture for 
projects aimed at improving market efficiency, reducing 
marketing costs for producers, and lowering food costs for 
consumers. The 2012 budget requests an increase of $1.3 
million, which will be targeted for grants focused on local and 
regional food systems.
    For Commodity Purchase Services, an increase of $882,000 in 
section 32 funds is requested to enhance our efforts with the 
Food and Nutrition Service's Farm-to-School team to better link 
locally and regionally-grown foods to school feeding programs.
    Given the expected completion of our data management system 
in 2011, a decrease of $1.1 million is included for our Country 
of Origin Labeling program.
    The Animal and Plant Health Inspection Service has a broad 
mission that includes protecting and promoting U.S. 
agricultural health, including regulating genetically-
engineered organisms, administering the Animal Welfare Act, and 
carrying out wildlife damage management activities. The budget 
proposes discretionary appropriations of approximately $837 
million, a net decrease of $76 million, compared to 2011.
    In general, the budget proposes a reallocation of resources 
from programs that have achieved success and for those which 
progress in eradication is not deemed possible at this time, to 
those where success in eradication may be feasible. The budget 
also places greater responsibility on cooperators, and proposes 
the eliminating of about $27 million in earmarks. These are 
difficult choices. But difficult choices like this allow for 
investments that we requested in 2012.
    For safeguarding and emergency preparedness/response, the 
budget requests a total of about $758 million. The new activity 
would encompass many individual items in the current APHIS 
budget presentation to deal with Pest and Disease Exclusion, 
Plant and Animal Health Monitoring, and Pest and Disease 
Management.
    For Animal Health, the budget includes an increase of $8.9 
million for animal disease traceability efforts. Capitalizing 
on the previous animal ID and disease eradication investments, 
as well as extensive outreach including a State, Tribal, and 
Federal traceability regulation working group, we are 
developing an approach that empowers states and tribes to find 
and use the most effective means to identify animals that are 
moving interstate. This line also includes an increase of $3.8 
million to adequately fund veterinary diagnostic work at the 
National Centers for Animal Health.
    Increases related to Plant Health would amount to $24.5 
million, of which $10 million would be utilized to control the 
light brown apple moth; $2.5 million would help eradicate the 
European grapevine moth. An increase of almost $12 million is 
needed to eradicate the Asian Longhorned Beetle in 
Massachusetts, New Jersey, and New York.
    For Wildlife Services, an increase of $1.4 million is 
requested to implement a more formal safety program for our 
staff. For Regulatory Services, the budget includes an increase 
of $12 million for biotechnical and regulatory activities.
    An additional $3.3 million will help enforce the Animal 
Welfare Act as APHIS, in response to an audit from the Office 
of Inspector General, seeks to increase compliance by 
problematic dog dealers.
    With more inspections, a greater number of referrals is 
expected to be received by the regulatory enforcement program. 
For Animal Welfare efforts, a $6.6 million increase is 
requested to enhance inspection activities related to dog 
dealers who repeat, and serious violators of the Animal Welfare 
Act. Increased inspections are expected to reveal a greater 
number of violations which, in turn, would be referred to the 
regulatory enforcement program.
    An increase of almost $400,000 would help APHIS respond to 
findings by the OIG, and enhance oversight of horse shows as 
part of its mandate to enforce the Horse Protection Act.
    The mission of the Grain Inspection, Packers and Stockyards 
Administration is to facilitate the marketing of livestock, 
meat, poultry, cereals, oilseeds, and related agricultural 
products, and to promote fair and competitive trade for the 
benefit of consumers in American agriculture. GIPSA fulfills 
the mission through the Packers and Stockyards Act and the 
Federal Grain Inspection Service.
    The budget proposes total discretionary appropriations of 
$44 million, including a request for an additional $2.2 million 
to allow the packers and stockyards program to further bolster 
market protections for buyers and sellers of livestock and 
poultry through greater compliance, investigative, and 
enforcement activities in the field.
    In closing, Mr. Chairman, the budget request for MRP 
supports the President's vision for a strong rural America, 
through MRP's contribution to the achievement of all four of 
USDA's goals. It does this while conserving taxpayer dollars. 
The 2012 MRP budget--discretionary appropriations--request is 
about a 7 percent, or almost $70 million, decrease below the 
2010 discretionary appropriations. The request includes funding 
for the highest budget priorities in the MRP mission area.
    Mr. Chairman, this concludes my statement. I look forward 
to working with this committee on the 2012 budget. And we are 
here to answer any questions you might have.
    [The information follows:]

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    Mr. Kingston. Thank you, Mr. Under Secretary. Mr. Farr, do 
you have an opening statement?
    Mr. Farr. No, sir.
    Mr. Kingston. Okay. Then we will go ahead and start with 
questions.

                           BUDGET REDUCTIONS

    First of all, I want to commend you on the APHIS budget. An 
eight percent decrease is music to, I think, everybody's ears. 
But I do have a question about core mission versus maybe some 
of the more popular programs.
    Examples, have a decrease in the cattle health program of 
12 percent; a 10 percent decrease in swine health; 50 percent 
reduction in aquatic animal health; 57 percent decrease in 
avian influenza; and 87 percent decrease for chronic wasting 
disease surveillance, but a 90 percent increase in biotech 
regulatory services; 170 percent increase in animal disease 
traceability; and 17 percent increase for animal welfare.
    And it would appear that the decreases come from the core 
missions, and the increases come from some--there may be newer 
and maybe a little more crowd-pleasing in popularity.
    And so, the balance between--and you know, one thing about 
USDA is I think the success of USDA, as an agency, is it does 
the dull normal, and it does the dull normal very well. And, as 
a result, we have a good balance and a good food supply. And 
so, I am concerned when we get caught in some of the other--
maybe the more political whims of the day, and you know, 
realize an animal or dog dealers--there may be some abuses, but 
I still wonder why that is such a federal issue.
    So, I would like you to comment on the balance between 
those programs and especially as respects your core mission.
    Mr. Avalos. Well, Mr. Chairman, I really appreciate that 
question and those comments. What we have done at APHIS, so 
many of these core programs that you mention, they have 
actually--we have been very successful. And being that we are 
in a very difficult budget situation, and we have had to make 
some really tough choices, we have really had to tighten our 
belt, and we have to address issues accordingly.
    A lot of these programs that you mentioned, we have had 
very good success in controlling or eradicating. So, instead of 
continuing to fund those programs, we took our limited 
resources and put them to programs that we felt needed more 
attention at this time. And also to address specific concerns 
from audits from the Office of Inspector General, particularly 
on the dog dealers.
    And I understand what you are saying, because before coming 
to Washington--you know, I am from the State of New Mexico, I 
am from rural America. And I did not realize that USDA dealt 
with dogs. It was new to me, also. But after being here, I 
understand that we do have the responsibility to enforce the 
Animal Welfare Act. And after going through an audit from the 
Office of Inspector General, you know, we had to make some 
changes. We had to implement some resources to address those 
concerns.
    Now----

                             ANIMAL WELFARE

    Mr. Kingston. I wanted to ask you, just kind of interrupt a 
second. But are you familiar with a case in, I believe, 
Brooklyn, New York, about a woman who killed a hamster? Have 
you seen anything in the news about that?
    Mr. Avalos. Mr. Chairman, I have not.
    Mr. Kingston. I don't know if anybody has seen that. A 
member of the Ag authorizing committee mentioned it to me, that 
a woman is actually, because of a local law--she apparently 
threw a hamster out the window, which is, of course, a horrible 
thing to do, but she is going to go to trial for it. And, you 
know, as disgusting of an act as that is, you wonder sometimes, 
in view of our financial issues and our unemployment issues and 
national security issues, is that where resources should be 
spent?
    And so, you know, with the dog dealers thing, I am 
concerned about us, again, maybe doing what's politically 
popular and getting away from core missions.
    Mr. Farr. Mr. Chairman, would you yield?
    Mr. Kingston. Yes.
    Mr. Farr. In the California legislature I carried a puppy 
mill bill, and I am authoring one here in Congress. The reason 
it is important for them to do the inspection is that people in 
very rural areas have been raising dogs in chicken pens like 
rabbits, breeding them, very high-value dogs, and then selling 
them at huge prices over the Internet. These dogs are not 
healthily bred, the mothers are not healthy, often times. And 
people buy dogs, they are cute, they are sweet, they spend a 
lot of money on them, and then they find out that they really 
got ripped off. And it is very hard. You know, you do not just 
return a puppy.
    So, it is a practice that is just--it is a kind of an 
underground scam, and it is huge in America. And that is why we 
are trying to shut down--some states have adopted tough laws. I 
do not know about hamsters----
    Mr. Kingston. Well, let me interrupt you one second.
    Mr. Farr [continuing]. Is a serious problem.
    Mr. Kingston. Actually, my time has expired, so we can go 
on your time now. [Laughter.]
    Mr. Kingston. I was quite generous with my remaining 
minute. And we will discuss this more. So, Mr. Farr, you are 
recognized.
    Mr. Farr. Well, I guess I will just continue on that. I 
would hope that--because you are going to spend some money on--
Secretary Merrigan announced that APHIS is going to reinforce 
its animal welfare efforts, including tougher penalties for 
repeat offenders and greater consistent action to strongly 
enforce the law.
    How are your efforts to enhance the animal welfare program 
going, and will the additional funding requested in this budget 
be enough to support those efforts?
    Mr. Avalos. Mr. Chairman, Congressman Farr, first of all, I 
want to state for the record that we do take enforcing the 
Animal Welfare Act very seriously, and we are mandated by law 
to enforce this, and we do take it very seriously.
    And in response to the OIG audit, you know, we received 
recommendations from the Inspector General, and we implemented 
an action plan. And the focus really is on enforcement, and it 
is on inspector performance. And I think, Mr. Chairman, going 
back to your question, I think inspector performance will have 
a lot to do with those kind of decisions.
    But anyway, our focus on the dog situation would be to 
regulate Internet sales, and to regulate dogs that are imported 
for resale.
    Having said that, I am going to ask our administrator at 
APHIS, Cindy Smith, to expand on my answer.
    Mr. Farr. Well, I guess the question here is really just is 
this money going to be enough to really do the kind of 
crackdown--this is big business, Mr. Chairman. It is--and it is 
a popular bipartisan bill. And is this money going to give you 
the responsibility to do it?
    I mean--and it is interesting. You know, this committee has 
seen--we regulate everything. You cannot transport chickens or 
pigs or cattle or horses or anything else--horses are kind of 
exempt, but everything else in agriculture has kind of the 
animal welfare interests in it. So if you are going to make 
money off animals, you have got to handle them in a way that is 
humane. This is a way of handling animals for profit in a very 
inhumane way. And it is just totally contrary to all the laws 
that we adopt for, essentially, animal husbandry and every 
other form of agriculture.
    That is why we have got to go after these people that are 
just--they are doing harm to an awful lot of animals, but they 
are doing more harm to people that are spending a lot of money 
thinking they are getting a cute little expensive pure-bred 
puppy, and find out that it has got all kinds of congenital 
diseases and mental issues, and just--the big thing in berthing 
is spacing, and there is no spacing at all with this dog 
breeding program.
    Mr. Avalos. To answer your question, the funding of the 
budget will allow us to do our job.
    Mr. Farr. Okay. That's all I need to know.
    Do I still have time left?
    Mr. Kingston. You still have two minutes.
    Mr. Farr. Oh, thank you, Mr. Chairman.

                        NATIONAL ORGANIC PROGRAM

    I wanted to ask you, on the organic program, as you know, 
you're operating on a $7 million budget since 2010 year. And 
you have about 16,000 certified organic operations, which are 
certified as farms or processors, or retailers.
    It's now a $29 billion industry. It's supporting more than 
150,000 jobs, and you're growing faster, that segment of 
agriculture is growing faster than any other segment.
    Your budget requests another $3 million to bring the NOP 
funding to $10 million.
    And I know you've cracked down on these imports, China 
imports, where they've falsified organic. You know, they lied 
about their certification process, and you were able to catch 
them. And that's terrific.
    I mean, this goes both ways. What we send abroad requires 
that we do it legitimately according to the rules of 
certification. And what we receive from abroad has to be done 
according to the international protocols on certification.
    With this industry growing--and I've seen it in California, 
where before--and there's another bill that I authored in the 
state legislation was creating the certified program.
    But what happened is as market prices went up for organic, 
people just started putting ``organic'' on everything. You 
could grow it in a pesticide pit and put ``organic'' on it, 
until these laws were created.
    And I think the consumer, you know, it's consumer 
confidence. And you're the ultimate enforcer of that, 
protecting that consumer confidence.
    And I want to make sure that you can do that well, because, 
you know, there have been people scamming the system, and they 
ought to be busted.
    Mr. Avalos. Congressman, I really appreciate your comments.
    And Mr. Chairman, can I respond? I only have four seconds 
left?
    Mr. Kingston. Without objection. You have 15 seconds. Maybe 
a little longer. [Laughter.]
    Mr. Avalos. I just wanted to reinforce that the organic 
sector is the fastest growing sector in agriculture, 
experiencing tremendous growth, and we're just getting started 
in that sector.
    And I think it's really important, this budget increase is 
needed to address the increase in demand for inspections. And 
it's really important to protect the integrity of the organic 
program and the organic label.
    And also, it's very, very important that we continue 
equivalency agreements with countries that want to export to 
this country, so we do not have a problem, like we did with 
China.
    And right now we only have one agreement. That's with 
Canada. And we are pursing an agreement with the European 
Community, and others.
    So anyway, the funding request is very important for us to 
maintain the integrity of the program and for us to address the 
increased demand for services.
    Mr. Farr. Thank you.
    Mr. Kingston. The gentleman's time is expired. Mr. Bishop 
and Mr. Nunnelee, we're going to go in the order of arrival. So 
you're next.
    Mr. Bishop. Thank you very much, Mr. Chairman. And let me 
again welcome you, the witnesses.

                   COOPERATIVE AGREEMENTS WITH STATES

    I've got a question. Given the fact that we are really, 
really struggling with budgets and we're trying to find 
effective and efficient ways of delivering the services and 
providing the oversight that has to be done in all of our 
marketing and regulatory programs, have you given any thought 
to the role that the states can play in helping to eliminate 
some of the overlapping inspections, some of the duplication, 
some of the state following the feds, and vice versa, when it 
happens, so that it could be streamlined and more effectively 
accomplished, with a better partnership, better relationship 
between the state and the federal regulatory schemes in your 
area of responsibility, for food inspection, for example.
    I know I've had some conversations with our Commission of 
Agriculture, who believes very strongly that if he had just a 
fraction of the resources that you are expending in Georgia, 
that he could enhance the inspections that take place, and that 
it would be win-win for both the federal government in the 
regulatory scheme, as well as the states.
    And it would avoid a lot of the duplication, because they 
go the same place as you go, they look for the same things that 
you do.
    And if, for example, you worked out a cooperative 
relationship, so that you could maybe even delegate or 
authorize the state to perform some of those inspections for 
you and do some joint training, that it might ultimately be 
lean and efficient, but effective.
    Mr. Avalos. Mr. Chairman, Congressmen, I really appreciate 
those comments, because they make a lot of sense.
    You know, I'm a firm believer that the Federal government 
shouldn't be the only answer, but the Federal government 
definitely has an important role to play.
    And we do have a lot of cooperative agreements in place 
with the states. And many, in fact probably other than 
salaries, the biggest bulk of our budget in all three agencies 
are cooperative agreements with States, which are very 
functional.
    They make a lot of sense. Sometimes they can perform the 
task, the duty, more efficiently than the Federal government 
can.
    And so many times they're doing it locally. They understand 
the playing field and their home turf, so they can do a better 
job in implementing programs.
    So I agree with you. I understand also that, you know, not 
only do we have budget constraints; States have budget 
constraints.
    But we are working very close with the States, and we're 
looking at cooperative agreements and how we can streamline 
those cooperative agreements and still maintain the integrity 
of that specific program.
    Mr. Bishop. Yeah.
    They seem to feel that of course, obviously, both the 
federal government and the states are strapped for resources.
    But with an effectively drafted agreement, it would appear 
that the federal could save some funds and some resources, and 
the state government would have their resources enhanced.
    They're there on the ground, anyway, and they go to the 
same places that you go. So it should work.
    And I would hope that you would look into that, and see how 
realistically we could develop a program, even if we just do 
some pilots.
    Perhaps, if you found some States that are willing and want 
to participate in that, just to see how it works, and if works 
well, then it's something that might be expanded to the rest of 
the States.
    Mr. Avalos. Absolutely, Congressman.
    You know, Congressman, I think I'm going to ask. Maybe my 
administrators might have additional comments. I'm going to ask 
Administrator Smith to comment.

                    BIOTECHNOLOGY REGULATORY PROGRAM

    Ms. Smith. I could just mention, of course, we work very 
closely with the States. It's very important to us. One 
specific example I could give you is in the biotech regulatory 
arena.
    Mr. Avalos. Mm-hmm.
    Ms. Smith. That's where our Plant Protection and Quarantine 
Officers do our inspections of our field trials for genetically 
engineered crops. And about five years ago, we started a pilot 
with the States to train States that were interested in working 
with us to do those inspections.
    And we do have several States that do inspections now----
    Mr. Kingston. The gentleman's time has expired.
    Mr. Nunnelee.
    Mr. Nunnelee. Thank you, Mr. Chairman. Well, we'll just 
follow up on where we left off. Let's talk more about 
regulation of biotech. I think I'm right. You're asking for a 
91 percent increase in your biotech regulatory services area?
    Mr. Avalos. Yes, that's correct.
    Mr. Nunnelee. Can you elaborate on that?
    Mr. Avalos. Congressman, first I just want to say that 
biotech is very important at USDA. Biotech is very important to 
the agricultural sector, and very important to rural America, 
because biotech offers another tool for us to meet the growing 
demand for food and energy.
    But on your specific budget question, I am going to ask 
Administrator Smith to answer your question.
    Ms. Smith. We appreciate the opportunity to provide some 
information on this request.
    As the Under Secretary stated, this is a very important 
issue for agriculture and for the country. And we have 
requested nearly a double increase to do a number of things.
    The first thing is to hire additional staff to complete 
both the documentation associated with our compliance with 
environmental statutes, such as the National Environmentl 
Policy Act--NEPA, as well as to do our risk assessments, which 
are the basis for our authority.
    We'll hire additional staff to be able to do that, because 
the number of applications that we are receiving to approve 
genetically engineered products has dramatically increased in 
the last few years.
    We also have significantly more field test locations and 
significantly more scientific constructs, or the scientific 
building blocks of what's being field-tested, that we have to 
evaluate, as well.
    So along those lines, then, to support field testing, we're 
also requesting funding to increase our oversight and our 
compliance, so that we make sure that those that we're 
regulating are keeping those field trials confined to where 
they're being planted and what they've been approved to do.
    We are also requesting an increase in funding to support 
some trade work that we need to do. We work bilaterally with 
other countries to facilitate the acceptance of our genetically 
engineered exports into their countries.
    And then finally we're requesting some funding to increase 
the transparency of our program.
    Mr. Nunnelee. All right. And I don't disagree. When I see 
that kind of increase, I am just obligated to ask about it.

                    ENVIRONMENTAL IMPACT STATEMENTS

    Following up, I think I see that you've got a request to 
outsource some environmental impact statements for about $3.5 
million.
    What process are you going to use to select those 
contractors?
    Mr. Avalos. Well, Congressman, I'm going to go ahead and 
defer to the Administrator.
    Mr. Nunnelee. Sure.
    Ms. Smith. Yeah. We have a formal contracting process that 
we follow in APHIS, as does the rest of the government, as 
well.
    We identify what the requirements will be, that we'll need 
to be able to evaluate within those environmental documents. We 
put that out for a public bid. We get offers on those, and then 
we make a selection of whatever entities have the best 
credentials to do that.
    Mr. Nunnelee. All right.
    And then final question on that subject. I also see that 
you're adding a professional project manager and a technical 
writer, total cost of $400,000.
    I've been in D.C. for ten weeks. I understand it's 
expensive to live here. But $200,000 a pop seems awful high.
    Ms. Smith. I appreciate your question.
    Part of that is also around the support that would be 
provided to those two functions. And what we're trying to do in 
particular with that project manager, is we currently have a 
workload of about 22 of these petitions to approve for 
genetically engineered crops, which is a tremendous number, 
compared to what we've had historically.
    We're used to having two, three, four or five in a year. 
And what we want to do is create a function within our 
regulatory unit, that makes sure that at every step in the 
process, as we are doing this very complex regulatory analysis 
and process that we go through, that every step in that process 
is maximized in terms of the use of our resources, and we're 
doing everything we need to be able to do, to get those 
approvals either done as quickly as we can, or to come to the 
point in which we determine that there are scientific issues 
that won't allow us to do that.
    Mr. Nunnelee. All right. Thank you, Mr. Chairman.
    Mr. Kingston. Mr. Graves.
    Mr. Graves. I'm going to wait, if that's all right.
    Mr. Kingston. Okay.

                      ERADICATING INVASIVE SPECIES

    I wanted to ask you, Mr. Under Secretary, about the Emerald 
Ash Borer versus the Asian Longhorned Beetle. Asian Ash is 
going to have a 65 decrease, whereas the Asian Longhorned 
Beetle, we've got six trees in Boston, and you want $25 million 
for Massachusetts and in New York, $18 million. I'm not sure 
how many trees in New Jersey, but it's $2 million.
    And yet on the Emerald Ash Borer, you're talking about 
equitable allocation of responsibility between states and the 
federal government role, which I believe is the right route to 
go. I'm glad that you are increasing partnerships.
    But it seems a little bit inconsistent on the Emerald Ash 
Borer versus the Asian Longhorned Beetle.
    Mr. Avalos. Mr. Chairman.
    Mr. Kingston. Mm-hmm.
    Mr. Avalos. The Emerald Ash Borer, is a pest that's gotten 
to where we can't really prevent the spread and we can't 
erdicate it at this time; whereas the Asian Longhorned Beetle, 
it's a pest----
    How come we're beeping? Anyway the Asian Longhorned Beetle, 
it's a pest that we are able to control the spread of at this 
time. We are close to eradicating this pest.
    In fact, Mr. Chairman, last week I was a keynote speaker at 
an Ag conference in the New England states--in Massachusetts--
and I found out that I was only 15 miles away from Worcester, 
Massachusetts, where the site is--where they're trying to 
prevent and eradicate the hot spot on Asian Longhorned Beetle.
    And I just wanted to share with you and with the committee 
the commitment that these people had there. There were the 
State and Federal partners, and it was awfully cold out there. 
It was windy, two feet of snow. They all had their snow shoes 
on. They were going up and down that mountain, cutting trees, 
grinding the trees and the logs.
    The commitment was incredible.
    So seeing that kind of commitment on the ground makes me 
feel that the money that we're investing is going to work. 
These guys are committed to preventing the spread--well, 
they're committed to eradicating that pest.
    So I guess what I'm trying to get at is: We have a chance 
with that pest.
    Mr. Kingston. But, what is their monetary commitment? Do 
you know offhand?
    Mr. Avalos. I do not, Mr. Chairman. And I don't know if----

                          STATE MATCHING FUNDS

    Mr. Kingston. If you could just provide that for me later 
is fine, you know, for the record. But I'm trying to figure 
out, is it equitable in terms of both pests? Or is it, you 
know, just is it consistent across the board?
    Because these things do flare up.
    Mr. Avalos. Okay. Do you want to add any clarification?
    Ms. Smith. When you say ``equitable,'' you mean in terms of 
the cost share being--by the state?
    Mr. Kingston. Yes. Is there a specific formula on how you 
do it?
    Ms. Smith. I can get you the specific numbers. But one of 
the things that I would emphasize on the Asian Longhorned 
Beetle is that the potential impacts of the Asian Longhorned 
Beetle really are tremendous, because you're talking about $12 
billion, we're protecting $12 billion worth of a resource in 
terms of the National Hardwood Forest, that the ALB is right on 
the edge of.
    In addition, you're also looking at protecting about $4.3 
billion in tourism.
    So it's a very significant resource being----
    [The information follows:]

    This year, APHIS' budget authority under a Continuing Resolution at 
the FY 2010 level would be $33 million and States are contributing 
$9.843 million. These figures result in a 77 percent APHIS cost share. 
For FY 2012, APHIS is requesting $44.491 million, while States are 
expected to contribute $9.43 million. As a result, the Federal cost 
share for FY 2012 would be 82 percent.

    Mr. Kingston. And let me ask you this, because cutting the 
trees and grinding the wood and so forth, is really 
reactionary.
    How are we doing in the lab, to prevent it? Where's the 
science of prevention? Do you know what stage it is----
    Ms. Smith. Right. Asian Longhorned Beetle, we're in a much 
better position to know what to do. We've successfully already 
eradicated it from Chicago, Illinois.
    And so we believe that just with the right resources, that 
this is something we can----
    Mr. Kingston. But do you know what the science is?
    Ms. Smith. For Emerald Ash Borer?
    Mr. Kingston. No, for Asian Longhorned.
    Ms. Smith. For Asian Longhorned Beetle, we are applying----
    Mr. Kingston. You know, one of the age-old problems this 
committee has, particularly in ARS-type issues, is where we 
study the sex habits of that pests in order to eradicate them, 
and then Readers Digest, ``Oh, the stupid idiots on Capitol 
Hill are studying Asian Beetle sex now.''
    And you know, but that is kind of what you need to do is 
figure out how to keep these guys from getting together.
    So maybe if you could give me a G-rated answer on that?
    Ms. Smith. Okay
    Mr. Kingston. But do you know, where is the lab? What's 
happening in the laboratory?
    Ms. Smith. The Asian Longhorned Beetle, our focus really is 
going ahead and doing the eradication now. So with that, we 
have the tools that we need, in terms of being able to do----
    Mr. Kingston. But I know. But what is it?
    Ms. Smith. I think----
    Mr. Kingston. Put on your Ph.D. Take me into the lab, 
what's going on?

                      ERADICATING INVASIVE SPECIES

    Ms. Smith. Well, we're not working in the lab, because 
we've got the answers already from the lab, and we're applying 
chemicals, pesticides to kill the beetle infestations.
    And we remove some of the trees, as well.
    Mr. Kingston. And pesticide is the only way we know how to 
do it?
    Ms. Smith. As well as----
    Mr. Kingston. Like at what stage do you get the--are you an 
entomologist or not?
    Ms. Smith. I'm not an entomologist.
    Mr. Kingston. Neither am I.
    Mr. Avalos. But Mr. Chairman, I'm not an entomologist 
either, but just what I learned on the trip out to the site, 
yes, they're applying pesticides to the surrounding trees, but 
these pests, they get into the ground, they get into the wood. 
And then, you know, they survive that sub-zero weather.
    Mr. Kingston. Mm-hmm.
    Mr. Avalos. By the science, the research that was given to 
these people in the field was that if they take the wood and 
they grind it to a half-inch or smaller, even if the eggs are 
in there, they can't survive.
    So that's the answer at this time is to take any infested 
wood, grind it up to that diameter, and the eggs, the larvae, 
they won't live.
    Mr. Kingston. But it has to be infested before we can do 
anything.
    All right. My time has expired. Mr. Farr?
    Mr. Farr. Thank you, Mr. Chairman.
    It's very interesting when you think about it. This 
committee has the responsibility essentially for the biological 
war that's out there. It's like the War on Terrorism, or 
anything else, because if you do have these invasive species 
coming in, or the way grow in certified products in this 
country, in order to send them out, that you've got to get into 
this kind of exotic and very regulatory program.
    And I mean, this is the witnesses that are essentially 
responsible for all the certification of marketing that we're 
doing it to the other countries, and to consumers that we're 
doing it right.
    And at the same time, the pest fighters.
    And you have a lot of challenges then, because there's all 
kinds of new stuff going on. And I wanted to give you a whole 
list, that you can just respond to in writing, of what you're 
doing about it.

             LIGHT BROWN APPLE MOTH/EUROPEAN GRAPEVINE MOTH

    Particularly I wanted to ask you about two of them. I mean, 
the nursery needs in California are by this Australian moth 
that got in--the light brown apple moth.
    And it's just created havoc. I mean, the State of 
California decided the best way to do it is aerial eradication 
by spraying an organic material. And the public just went nuts:
    ``You're not going to spray us.'' They go nuts if you tell 
them you're going to spray them with distilled water. They just 
don't like helicopters spraying.
    And actually, we're using law suits and brought the whole 
thing to a stop.
    The Feds have been phenomenal in making sure that the state 
does it right in finding alternatives.
    But I want to know, both with the light brown apple moth 
and this new wine grape growers need with the European 
grapevine moth--two moths that just could wipe out the biggest 
industries in California--how do you balance between having 
enough money to do the regulatory side--and just sort of the 
core that you do--but all of this eradication? The war is on 
the ground.
    And in every case, the host country in this case, or the 
industry, whether it be nursery industry or wine grape grower 
industry, they're putting up their own private capital to match 
the efforts of the federal government, or in the state.
    States usually have the responsibility under their 
agriculture departments. And that's what Mr. Bishop was talking 
about, is we need to develop a better farm team out there 
that's on the ground, first responders, to have the capacity, 
so that we don't have to send people from Washington to do 
that.
    But I'm just curious--and you're right out of the field. I 
mean, you understand this stuff, because you were in New 
Mexico, and you did an incredible marketing advancement of 
really being able to match crops to markets.
    And you bring this ground sense into the USDA. Now that 
you're there, how are you going to balance the need for what 
you saw on the ground when you were in New Mexico, and working 
with other Ag Commissioners? And the need for them to maintain 
a certain--I don't want any message to be given to the 
community out there that their life's depending on it, and 
they're putting up their risk capital.
    And they're still trying to fight, because you got to 
certify all this, every time you move a product out of county, 
you got to get a certificate. Our Ag Commissioner issues about 
200 certificates a month on the light brown apple moth.
    That's real labor-intensive, because you've got to go out 
there and do all the inspections.
    How are we going to get a handle on this war? Do we have 
enough money to do it?
    Mr. Avalos. Well, Congressman, I really appreciate your 
comments on these two very devastating pests. The light brown 
apple moth. You know, it attacks over 2,000 different species.
    It's an ugly pest.
    Mr. Farr. Mm-hmm.
    Mr. Avalos. And the European grapevine moth is just 
devastating to the grape industry, not only of California, but 
you know, we've----
    Mr. Farr. Yeah. We grow out there something called wine. 
And people kind of like that, California wine.
    Mr. Avalos. Absolutely.
    Mr. Farr. And it could wipe it out.
    Mr. Avalos. So anyway, to try to address your question, 
it's difficult, especially in tight by the situation is not 
only here at the Federal level, but I know it's also very tight 
at the State level.
    So we have to prioritize and we have to look at a pest that 
we have a shot at controlling and eradicating versus one that 
is too widespread and the resources that we put in will not 
benefit.
    So anyway that's pretty much the criteria that we've been 
using as to where we allocate our limited resources. And I 
don't know----
    Mr. Farr. I just want assurance. I mean, on the record. You 
can give it to me personally. But I want it on the record, 
because a lot of people are watching this hearing.
    That you're not going to let them down. I mean, you've 
invested heavily in that light brown apple moth eradication, 
with sterile flies and moths. And you're doing a lot with the 
European--and this is really, I mean, the grape industry is 
going nuts about that.
    But you're going to be there, and your budget says you're 
going to be there.
    I want assurances that you will be.
    Mr. Avalos. Congressman, we will be there. These two pests 
are devastating, and we're not going to give up on them. 
Because with these two I have a shot to prevent the spread, and 
we have a shot to eradicate.
    Mr. Farr. Thank you.
    Mr. Kingston. Mr. Nunnelee.
    Mr. Nunnelee. No questions.
    Mr. Kingston. Mr. Bishop.
    Mr. Bishop. Thank you very much.

                   HEALTHY FOOD FINANCING INITIATIVE

    Mr. Avalos, I was pleased to see that you are expanding 
your activities in terms of providing marketing opportunities 
for small farmers in the communities that are located near the 
farmers' markets out there.
    Can you tell me, about how many communities will be 
impacted by the program, and whether those programs that you're 
supporting will be evenly distributed throughout the country, 
including urban areas, but in our rural areas also?
    Mr. Avalos. Congressman, are you making reference to the 
Healthy Food Finance Initiative?
    Mr. Bishop. I am.
    Mr. Avalos. Very good.
    Just to kind of give a little bit of background to the 
committee on the Healthy Food Finance Initiative, a priority 
for this Administration is better nutrition, especially for 
low-income Americans----
    Mr. Bishop. Yeah.
    Mr. Avalos. In rural and urban food deserts throughout the 
country.
    The $35 million that we're requesting, it's to partner up 
with other federal agencies. We're just one of the players in 
this working group.
    This money would be used to develop or establish retail 
food outlets, maybe mobile food carts, in communities that 
don't have options. They don't have access to healthy food.
    You know, and this is not only food deserts, but it 
addresses so many other needs in communities where we don't 
have access to good, healthy food.
    But I just wanted to emphasize--well, to answer your 
question, we're looking nationwide. We're not prioritizing one 
area over another.

                              FOOD DESERTS

    In fact, we did the research and identified food deserts.
    Mr. Bishop. Right.
    Mr. Avalos. And we have a map that demonstrates where 
they're located.
    Mr. Bishop. Mm-hmm.
    Mr. Avalos. But I wanted to emphasize to you, Congressman 
and to the Committee, Mr. Chairman, that you know, this 
activity is going to create jobs, it's going to stimulate the 
local economies, and it's going to create new markets for our 
farmers.
    Mr. Bishop. Right.
    Mr. Avalos. And also, I wanted to emphasize that this is 
not just taxpayer money. You know, some of the projects will be 
leveraged with private sector investments. And really, 
Congressman, it's all about partnerships.
    The Federal government can't do it all, and we have to work 
with the States, and work with the private sector.
    And I know that there's a tremendous interest from the 
retail food industry.
    And I'll give you a quick example.
    Mr. Bishop. But there are programs, for example, on the 
local level, some of the states have had projects, where they 
were able to provide vouchers for individuals who were getting 
WIC, or individuals who were getting the EBT in the SNAP 
Program, so that when they went to get their authorization and 
benefits, they could come right outside the facility and have a 
farmer there, who would be authorized to accept those vouchers 
for fresh fruits and vegetables, which would enhance that.
    Those are the kinds of programs that I'm imagining that you 
will be expanding into those food deserts.
    But particularly the programs that USDA is in charge, the 
nutrition programs that USDA is in charge of.
    We've got senior commodity programs, we've got the WIC 
program, we got the SNAP programs, and the School Lunch 
Program, to enhance the utilization of fresh fruits and 
vegetables to enhance the value.
    How are you going to be able to do that, in terms of your 
marketing? What is your plan for implementing that? And of 
course, it goes along with what the First Lady has outlined to 
help us not have our kids too fat to fight. [Laughter.]
    Mr. Avalos. Congressman, thank you for those comments. And 
it does tie into the initiative of the First Lady, and this was 
important.
    The work we're doing, you know, we're not creating new 
programs; we're using existing programs.
    And I can talk about this from a personal standpoint, 
because before coming to D.C., when I was in New Mexico, I 
utilized these programs to do exactly that.
    The Farmer's Market Promotion Program, we used that 
funding. The Specialty Crops Block Grant Program, we used that 
funding to expand, not only farmer's markets, to utilize the 
WIC Program, to utilize the SNAP Program at the Farmer's 
Markets.
    So this concept is just one component, Congressman. It's a 
very important component. But we're also taking it a step 
further, where we can partner up with a retailer--a retailer 
that wants to bring in maybe a different version of one of 
their standard stores--partner up with maybe a mobile food 
vendor, that wants to bring in fresh fruits and vegetables 
certain times of the year, certain days of the week.
    So there's a lot of options available to us. And I can 
assure you the experience that I have on the ground in New 
Mexico, I will utilize here in D.C.
    Mr. Kingston. The gentleman's time is expired.
    Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman, and Mr. Avalos, for 
being here.
    You know, after reading your biography there--and I know 
you have a lot of experience in marketing, in agriculture and 
seeing the budget and some of the testimony here--could you 
help the committee and myself understand what the return on 
investment has been? Or how would you measure that with the 
investment in the know your farmer and the farmer's market 
activities of the marketing department there.
    And what's the taxpayer getting in return? That would help 
us a little bit.

            ``KNOW YOUR FARMER, KNOW YOUR FOOD'' INITIATIVE

    Mr. Avalos. Congressman, that's a good question. And thank 
you for the opportunity to talk a little bit about that, 
because I can give you some of my hands-on experience, of some 
of these programs.
    There's a Know Your Farmer, Know Your Food initiative at 
USDA. Really, it's not a new concept; it's been around for a 
long time all over the country.
    In fact when I was in Texas right before the Christmas 
holidays, I went into my favorite grocery store in Texas, the 
H-E-B Supermarkets. And they have a Know Your Farmer, Know Your 
Food Initiative they've had in place for three years.
    Nonetheless, that's probably the best way to measure this 
success--because I'm a firm believer that the Federal 
government should not be the only player.
    The Federal government should be a player in a lot of these 
programs; but private sector has got to come into play; State 
government's got to come into play. Other entities have to come 
into play.

                     SPECIALTY BLOCK GRANTS PROGRAM

    I'm going to talk a little bit about the Specialty Crops 
Block Grant Program. This program is absolutely critical to the 
countryside. Absolutely critical, because the money from that 
program actually trickles down to the producer, actually 
trickles down to the shipper, to the packer, and to the 
retailer.
    A good example is New Mexico chili peppers. About five 
years ago, we started to think outside the box, started to 
market the fresh green peppers outside of the state of New 
Mexico.
    And already there was transplants that took the tradition 
with them to Arizona, California, Texas, some of those 
surrounding states.
    So to sum up quickly, we started out with four states, 
utilizing, especially the Specialty Crops Block Grant Program, 
utilizing investments from the producer, the shipper, and the 
retailer.
    We expanded last year, the State of New Mexico was selling 
New Mexico green chili peppers, fresh market, to 28 different 
states. It went from maybe $8, $9 million sales to close to $35 
million in sales in five years.
    I think that's a good return on the Federal investment.
    Mr. Graves. Does that happen across the board globally? Or 
is that just one example?
    I think where we are right now, I mean, you know as a 
committee, we have to make decisions on what's the best 
investment of the limited resources we have? And they're very 
limited. And what return is the taxpayer getting on that 
investment?
    I think there are several members on this committee that 
think that it might be better to return those tax dollars back 
to the taxpayers and allow them to be their own marketers, and 
sell their own produce, without the picking of winners and 
losers coming from the federal government.
    Mr. Avalos. Well, I appreciate that comment. But I can't 
tell you which program is better than the other program. But I 
can tell you that the investment by the government and their 
return can be demonstrated across the country.
    I haven't worked in marketing for 30 years, at the state 
level. I have my old counterparts. And in fact, I reached out 
to them not too long ago, at the last--what is it, North 
American Agricultural Marketing Officials' Convention--and 
we're trying to put together a list of success stories from the 
Specialty Crops Block Grant Program to demonstrate the return 
on the Federal investment.
    And I got a note from my administrator, Rayne Pegg, at AMS. 
I think she wants to comment on this for a minute.
    Mr. Graves. Oh, that would be great.
    Mr. Avalos. So I'm going to turn it over to her.
    Mr. Graves. Thank you.
    Mr. Kingston. You have 30 seconds.
    Ms. Pegg. Oh, okay, I'll make it quick.

              FEDERAL-STATE MARKETING IMPROVEMENT PROGRAM

    Looking at some of the modest increases that we have for 
the 2012 budget, if you just look at the Federal-State 
Marketing Improvement Program--FSMIP--increase, that's 
currently a $1.3 million program, and we're looking at doubling 
that. Even under the $1.3 million program, we're leveraging, 
there's a match of roughly four to five million dollars that 
we're getting from those that are applying to the program.
    So we are getting a match of dollars, and it's kind of a 
small grants program that's really helping people address many 
of the issues that they need to address, whether it's 
transportation issues, how to get stuff to market.
    So these are small investments that are making a big 
difference.
    Some of the other investments and budget increases, the 
$1.9 million that we're looking for the Transportation and 
Marketing Program. You're seeing producers gathered together, 
40 to 100 producers gathered together, and they're seeing price 
increases of $100 more per head on cattle sales, when they're 
banding together.
    So these are about creating sustainable market 
opportunities and giving the right technical support, so that 
you do create a sustainable model that can meet both the small 
and medium and large sized producers throughout the country.
    Mr. Graves. Thank you.
    Mr. Kingston. Ms. Lummis.
    Ms. Lummis. Thank you, Mr. Chairman.

                        BRUCELLOSIS INTERIM RULE

    First question regarding some APHIS issues. Thank you.
    APHIS recently implemented an interim rule on brucellosis 
regulations. And this is regarding the greater Yellowstone 
area.
    And once upon a time in a former life, I was part of the 
GYIBC, the Greater Yellowstone Interagency Brucellosis 
Committee. So I know how long this has been going on. And the 
difference in missions, the competing missions of federal 
agencies.
    I mean, you have APHIS, who's trying to eradicate a disease 
that needs to be eradicated. And you have the National Park 
Service, fighting tooth and nail because of the role that 
wildlife plays in the eradication of the disease.
    So it creates in the stage just kind of an untenable 
situation for state veterinarians, livestock boards, livestock 
producers, and wildlife managers.
    Now I note that given the requirement for states to produce 
management plans within six months--normally this is a cost-
sharing deal--what resources should states expect the federal 
government to put towards brucellosis management in the greater 
Yellowstone area, when implementing these plans? Because of the 
cost sharing stuff?
    It's kind of an unfunded mandate if it's not a cost-sharing 
deal.
    Mr. Avalos. Do you want me to respond, Congresswoman? You 
were looking at Administrator Smith. I just wanted to make 
sure.
    Ms. Lummis. You know, whoever wants to.
    Mr. Avalos. Why don't we both take a crack at it.
    Ms. Lummis. Thanks.
    Mr. Avalos. You know, I realize your concerns about the 
funding, and I realize that there is a tough budget situation, 
and a very short time line.
    So I can tell you this: That, you know, USDA will look for 
ways to continue to contribute. I can't tell you right now 
today how much, but I can tell you that we will look for ways 
to support and to contribute.
    And I don't know, Administrator Smith, if you have 
something you can add to that.
    Ms. Smith. Yes. I would just express that commitment as 
well. Of course, we want to work with the States, and recognize 
that we're all in a bit of an uncertain funding situation.
    But we recognize that these diseases, the States really are 
on the front lines for where these diseases are located. And we 
very much appreciate that. We need to be working with the 
States to do this.
    I will also share that this interim rule, really the heart 
of this interim rule is to reduce some of the pressure on the 
States and the producers in the States, by allowing the States 
to keep their class-free status, and just focusing on where the 
disease actually is right in those----
    Ms. Lummis. In the zone----
    Ms. Smith. The limited zone.
    Ms. Lummis. Yeah. I appreciate that so much. Thank you.
    Mr. Avalos. And Congresswoman, I just wanted to say that I 
appreciate that you understand how this works. I appreciate 
that you understand the impact that brucellosis has on the 
cattle industry and how bison and elk impact on that.
    Ms. Lummis. Oh, it's a conundrum. And obviously it's not 
going to be an easy one to resolve. So you know, thanks for 
hanging in there with the States and with the producers. 
Because livestock producers are between a rock and a hard place 
on this one. We end up being the pawn between basically two 
federal agencies with competing missions.
    And so it's a toughy.

                          GRASSHOPPER PROGRAM

    Question on grasshopper funding. I'm all over the map 
today. How many protected acres has APHIS budgeted to treat for 
grasshopper outbreaks this summer?
    Mr. Avalos. Congresswoman, when you say grasshoppers, that 
reminds me back in the 1980s in my home state of New Mexico, I 
actually worked on the grasshopper and range caterpillar 
spraying program.
    Ms. Lummis. Oh.
    Mr. Avalos. I was quite a bit younger back then, and I 
remember walking up and down the range land, dodging 
rattlesnakes and taking a count on grasshoppers.
    So I appreciate that program real well, but I appreciate 
the damage that grasshoppers can do to range land and to crop 
land.
    I know that very, very well. So to try to answer your 
question, you know, the notes they gave me--because I did ask 
about grasshoppers----
    [Laughter.]
    Mr. Avalos. Surveys that were taken indicate that the 
grasshopper population in the west should be less this year. 
However, I know in your State in areas where there wasn't a 
spraying program for grasshoppers, the population's probably 
come back a lot stronger.
    Ms. Lummis. Yep, yep.
    Mr. Avalos. So you know, now I'll let Administrator Smith 
clarify, if I'm not correct, but we do have the resources to 
continue the spraying program on the range land.
    Mr. Kingston. The gentlewoman's time has expired. If you 
could just maybe submit it? Or we'll have another round, if you 
want to.
    [The information follows:]

    Information from USDA----
    APHIS is currently conducting surveys to identify areas that may 
have high grasshopper and Mormon cricket populations this year. 
However, based on preliminary information and requests from land 
managers, APHIS anticipates that fewer than 200,000 rangeland acres 
will require treatment. Because treatment costs vary by location, the 
exact costs are unknown at this time.

    Mr. Farr.
    Ms. Lummis. Thanks, Mr. Chairman.
    Mr. Farr. I'd just like to note for the record that the 
Greater Yellowstone Interagency Brucellosis Committee was an 
earmark of $650,000 by Reiburg and Simpson.
    So earmarks really do help pinpoint problem-solving, and I 
hope we'll get back to them some day soon.

                        AUSTRALIAN STRAWBERRIES

    I have an issue on California strawberries: big, huge 
industry in California. Value added. Probably one of the most 
successful of all agricultural products grown in the United 
States. All done privately, no subsidies at all.
    And I want to thank you, you wrote a letter asking 
Australia to drop its requirement for extensive sampling of 
strawberries. I mean, these are fresh fruit, you lay them 
around for days while you're sampling them. They rot, and then 
you don't accept them.
    And so it's an interesting way of sort of having a, you 
know, banning imports, or not getting imports, or not getting 
sales.
    And I wondered whether you've gotten a response to that 
letter, and whether you're going to be able to establish a pre-
clearance program? Are you acting on that on trying to do pre-
clearance and get Australia to stop being so----
    Mr. Avalos. Congressman, unfortunately I don't have an 
update to give you at this time, and I don't know if our 
administrator does or not.
    Ms. Smith. Actually I don't have an update on the 
strawberries with Australia. But we'd be happy to get you in on 
that.
    Mr. Farr. Okay Well, work on that. And we're really looking 
for being able to get a pre-clearance.
    Ms. Smith. Okay.
    [The information follows:]

    USDA sent a letter to the Australia Department of Agriculture, 
Fisheries, and Forestry (DAFF) on March 10, 2011. APHIS officials spoke 
with their counterparts in Australia about the request later that day, 
and the DAFF officials expressed support for our preclearance proposal 
and for the timeframes we proposed. Australian officials assured us 
that they will provide a formal response soon. We will continue to 
discuss this issue with them.

                            SPECIALTY CROPS

    Mr. Farr. You--for newer members, I'd just like to say that 
it's very interesting, when I came on this committee, I didn't 
have a lot of background in agriculture. And you sort of listen 
to all these things, and you think, ``Well, this is kind of 
wacky. Why do we spend all this money?''
    But I'll tell you, since being on this committee in the 
last 18 years in Congress, I've had a hundred stories of why 
government is so helpful to private sector farmers.
    And it's interesting, just last week, not in this section, 
but we had a loan guarantee from the Department of Agriculture. 
The big banks would not loan to this business. It had been very 
successful for many, many years. And they needed $4 million. 
And they just walked away and said, ``We're not going to help 
you.''
    And they ended up going to a small bank, and went to the 
USDA and got the loan guarantee. And this small bank says 
``This is the biggest loan we've ever made, $4.2 million.'' 
Saved 95 jobs of this big ag distributor, who takes all these 
specialty crops and puts them all over California.
    And it's just, you know, you wonder, why do you need loan 
guarantees? Why do you need these little things? These little--
it is really.
    And I mean, I've become totally--the more you learn about 
this, the more you realize that the government role is 
absolutely where private sector won't go. They just drop the 
ball. There's gaps out there.
    And I've found in politics that the people come to you when 
those gaps exist, and ask you to kind of glue things together.
    And I think if we just kind of meat-ax and chop a lot of 
these programs, you're going to kill the missing link that 
really helps get access to food in a safe way.
    And whether it's poor people trying to get it through food 
stamps, or growers trying to get peppers to market, as you 
indicated. And I'm going to submit for the record, a lot of 
pest issues, because I'd like some response on them.
    But I just want to also say that I think that your entity 
is so important to be doing a good job, and I think that you, 
Mr. Avalos, what I'd really hope and I think this committee 
would hope, is that if you can find your experience at the 
local level.
    I think the federal government's got to work more closely 
with states and local governments; I think we ought to delegate 
a lot of those authorities; I think we ought to hand out a 
carrot and say, you know, ``If you get certified, we'll give 
you some block money to go do it.'' And then we ought to check 
the heck out of you to make sure that you're doing it right.
    But we do have to not spend money unwisely. We have to 
spend it very wisely. But we also have to get a better bang for 
the buck. And I think you're in a position where you can do 
that.

                  MR. AVALOS' AGRICULTURAL BACKGROUND

    Mr. Avalos. Congressman, maybe just to make remarks again, 
Mr. Chairman, I am new to the committee. I haven't been to this 
committee before. I just wanted to give just a quick, quick 
background that I have been in agriculture all my life.
    I am from New Mexico, grew up on a family farm, and I 
worked in agriculture all my life. So I come to D.C. as the 
Under Secretary overseeing three very, very important agencies 
that directly impact on the people I worked with back home. And 
coming to D.C. is almost like coming to a foreign country to 
me, but one thing that I do bring to the table is that I look 
at things very differently in working with a champion writer-
coach like Cindy Smith who has been in D.C. most of her life.
    I look at things different. I look at any decision I make 
or decision our agencies make. I look at it from the 
countryside to D.C. There are a lot of people that have been 
here a long time. I look at it from D.C. to the countryside. So 
I bring that perspective, and I will try to utilize the benefit 
of all entities and agriculture.
    Mr. Kingston. Thank you.
    Mrs. Emerson.
    Mrs. Emerson. Thanks, Mr. Chairman, and forgive me for 
being late, but I was running my own hearing this morning. So 
thank you all for being here today. I appreciate it.

                PACKERS AND STOCKYARDS ACT-PROPOSED RULE

    Under Secretary Avalos, many producers have expressed 
concern over the past months about GIPSA's proposed rule to 
amend the ``Packers and Stockyards Act.'' And I think that we 
all agree that transparent and fair markets are important for 
producers, for packers, for processors, retailers and 
consumers. However, I have to say that many of my livestock 
producers are very, very concerned, and I have a very large 
livestock industry in my district.
    They are very concerned that the new rules would go too far 
and threaten their value-added marketing opportunities. I think 
that they are concerned that the new rules would remove 
incentives for premiums by treating all products like a 
homogenous commodity. And so you know the state of Missouri 
adopted a Missouri livestock marketing law back in 1999. It was 
implemented, I think, in May of 2001, and the law was very 
similar to policies included in the GIPSA livestock marketing 
regulatory proposal.
    Our producers felt this new regulation almost immediately 
and the legislature had to repeal that in a special session, 
probably three or four months after it was implemented. In our 
State there was an immediate two percent impact on cattle 
prices, and a four and a half percent decrease in hog prices 
costing our industry millions of dollars. And packers were 
reluctant to pay the same price for Missouri livestock as for 
neighboring state livestock. Buying in Missouri brought the 
added risk of a lawsuit for price discrimination.
    And I understand that you all are doing an economic 
analysis on the rule, which, of course, I think should have 
been done in advance of proposing the rule. Hopefully, that 
won't happen again. So two questions: Number one, has USDA 
studied the economic impact of our Missouri law on producers; 
and, if so, were those issues addressed in GIPSA's proposed 
rule. And, second, does USDA intend to go through a notice and 
comment period on a completed economic analysis before moving 
forward on a final rule?
    Mr. Avalos. Congresswoman, I am not familiar with the law 
from Missouri, but just as you were talking, I was thinking. 
This sounds very serious, if it had such an impact on cattle 
and hog prices. So I am hoping during the comment period that 
producers from your State did submit some comments. This is a 
very, very important part of the rulemaking process that we get 
comments that talk about this rule and the negative impact it 
has on the industry, because it's important.
    The rulemaking process we went through, we got over 60,000 
comments; and we are taking that very, very serious, and we are 
reviewing them thoroughly. And these comments that we are 
submitting, I hope there were some on this rule. You know, they 
are going to be used for the final cost benefit analysis. They 
are going to be used to draft a final rule.
    I wanted to talk a little bit about the process on the cost 
benefit analysis. On the proposed rule, we did prepare a cost 
benefit analysis as part of the rule. It was reviewed by our 
chief economist, and we did receive quite a few comments from 
private sector economists, university economists. We have seen 
quite a few comments on the proposed rule.
    Mr. Kingston. If the gentlewoman would yield?
    Mrs. Emerson. I would be happy to yield.
    Mr. Kingston. Mr. Under Secretary, I want to emphasize, 
though, that members of congress on a bipartisan basis would 
have a respectful disagreement on that, and 115 wrote the 
Secretary to raise that issue. So even, I think, there is a 
great deal of concern that it has not been open and 
transparent. And I yield back.
    Mrs. Emerson. Thank you.
    I'm sorry. Would you like to continue?
    Mr. Avalos. No. So I guess what I want to say is we have 
followed the standard rulemaking process. I think that we have 
a very good system in place in this country, and I just want to 
show respect to the rulemaking process and let the system work; 
because one thing I can tell you, Congresswoman and Mr. 
Chairman, and members of the Committee, this is really 
important to me, having come from the countryside. And I 
promise you I have gotten comments from a lot of people. Okay.
    And, unfortunately, I can't discuss them here, but I can 
tell you that I really truly and USDA truly want to keep 
farmers and ranchers and producers in business. We want to make 
sure they have access to value-added, have access to premiums, 
and at the end of the trail, I want to make sure that we have a 
sensible, workable, functional common sense rule.
    Mrs. Emerson. Well, I thank you.
    Mr. Chairman, can I just make one comment since you 
borrowed some of my time?
    Mr. Kingston. Okay.
    Mrs. Emerson. I would just simply say that coming from the 
countryside, as you did, and I have great respect for that and 
it's really nice to have that perspective, like real world 
experience. And I think that it makes for a better 
understanding of all the problems everyone faces, producers 
face around the country. But it just seems to me that coming 
from that perspective, you yourself--and you don't have to 
comment on this. This is my comment. You yourself would want a 
cost benefit analysis done or an economic analysis done before 
a rule was even proposed, I would think. So thank you so much.
    Mr. Kingston. Thank you.
    Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman.
    Sorry I couldn't be here earlier. We had a concurrent 
hearing with HUD. The Transportation HUD Committee and the 
Budget Committee, so I was interested in just placing on the 
record the importance of funding for Emerald Ash Borer, because 
of the significant impact it's having in our region of the 
country where at least ten percent of our tree cover, and maybe 
more, will be gone. And it's really an incredible sight to see 
entire neighborhoods completely denuded of trees and the 
replanting that will be necessary.
    And USDA has been really helpful over the years with the 
spring planting programs, and so forth, but I just wanted to 
mention that. I also just wanted to make a comment. And not so 
much of a question, but to encourage you in your GIPSA 
regulations and administration to protect small producers, and 
also to do what is right from a humanitarian and a scientific 
standpoint.
    I know I happened to go through several houses on the East 
Coast--poultry houses--and watched what happened to the 
individual farmers who really became contract laborers for big 
integrators and were placed into debt. And all of the risk in 
the contract was placed on the farmer--not the integrator.
    The birds died, for example, and I was so upset by what I 
saw that I called USDA and asked them to put a standard 
contract for farmers to look at so they wouldn't get bilked in 
the contracting process. I don't even know if that still 
remains on the GIPSA website. I hope it does, but I couldn't 
believe some of the questions that the farmers didn't ask when 
they got themselves into these really raw deals.
    For example, the financing question itself it did on 
weights and measures, the integrator controlled the feed that 
went to the animals. And so the farmer had to buy the feed from 
one supplier that happened to be the integrator. That's a nice 
cozy deal. And there was no separate weights and measures when 
that product came to site.
    I said to the farmers as we were walking through their 
farmsteads. I said, ``Could I ask you a simple question? Who 
controls the manure? That's black gold. Do you?'' And the 
farmer said, ``We never asked that question.'' I said, ``You 
mean it's not in your contract?'' ``No.'' I said, ``Well, 
that's interesting.''
    I went to lunch with the company, the integrator, and they 
brought out from the back room during lunch palletized manure--
not for us to eat. But it was very interesting to me that they 
thought ahead, but the farmers were not even a part of the 
conversation. I then saw the immigrant workers that were 
working there and I will never forget that. The conditions they 
worked under, the nitrogen they breathed in, no shirts, no 
gloves.
    I couldn't believe it. I thought it was the 19th century, 
and I didn't sense that there was a real integration of 
Department of Labor, Environmental Protection Agency, USDA on 
those sites. Some of these so-called integrators also have 
polluted major parts of our country, and we have got a problem 
over in Mercer County, Ohio, now, with a place called Grand 
Lake St. Mary's, because of poultry farming and I believe 
livestock.
    And I don't really know what you can do about that at 
GIPSA, but I would encourage you to protect the farmer. On your 
website, give them good legal advice. Protect the small 
producer and go after those that are really making lots of 
money and controlling major shares of this marketplace, and 
take advantage of their market power to do so. I just think 
that there's another shoe that has to fall, here, so I want to 
encourage you on. And I really felt that our farmers--they 
weren't farmers anymore. They were in bondage.
    So I just share that experience for the record.
    Thank you very much.
    Mr. Avalos. Thank you for your comments, Congresswoman.

                 PACKERS AND STOCKYARDS ACT ENFORCEMENT

    Mr. Kingston. Mr. Under Secretary, I want to get back a 
little bit to Ms. Emerson's question. And you may want to 
answer this, or Mr. Butler you may want to. And the gist of it 
is you are asking for expanded authority, yet I have to 
question your handling of the Eastern Livestock situation. And 
your increase request is $2.2 million on top of $24 million 
which you already have.
    Last year it was estimated that 750 sellers in 30 states 
were impacted by the financial failure of Eastern Livestock. 
They were bouncing a number of checks, which totaled up to $130 
million, and according to USDA documents, USDA informed Eastern 
on June 17, 2010, that they needed to increase their surety 
bond to secure livestock operations under the ``Packers and 
Stockyards Act'' before continuing operation. But I'm wondering 
why more wasn't done earlier to enforce this.
    And so the big question is there was some questionable 
activity going on, and what was the action of GIPSA before the 
checks started bouncing or as soon as they started bouncing. It 
would appear to me that we did not act quickly enough on that 
one.

                  EASTERN LIVESTOCK FINANCIAL FAILURE

    Mr. Avalos. Mr. Chairman, thank you for the question and 
thank you for the opportunity to try to clarify it.
    You know, Eastern Livestock, they were reviewed by GIPSA. 
They were determined to be in compliance. Their financial audit 
was prepared by a private sector CPA firm.
    Mr. Kingston. Do you know if it was a compilation audit or 
was it an audited statement, completely? Do you know--certified 
according to Generally Accepted Accounting Principles?
    Mr. Avalos. I know it was determined by an administrator, 
but I don't really know----
    Mr. Butler. It was done by a private firm out of 
Louisville, Kentucky. It was an unqualified financial 
statement, which as I understand is the highest grade that you 
can get. It was attached to their yearly report, which is a 
normal process for some companies that we regulate.
    Mr. Kingston. So it was according to the General Accounting 
Principles?
    Mr. Butler. Correct.
    Mr. Kingston. And it was an audited statement, audited 
financial statement?
    Mr. Butler. Correct.
    Mr. Avalos. So, Mr. Chairman, I just wanted to say that 
with that information nothing suggested a potential for 
financial failure. In reality, this was a check kiting scheme. 
The bank didn't even know. And GIPSA, they did their job, 
according to the guidelines you're supposed to work under. 
There was just no way for them to know in advance.
    Mr. Kingston. So it was more of a criminal act?
    Mr. Avalos. Absolutely.
    Mr. Kingston. Once the letter was written to them about 
increasing their surety bond, what happened after that to 
prevent continued damage to the livestock?
    Mr. Avalos. Mr. Chairman, I am going to defer to 
Administrator Butler. I think he can do a better job of 
answering this question for you.
    Mr. Butler. Once we wrote the letter instructing them to 
increase their bond from, I believe it was $850,000 to a little 
over a million, they did not follow through with that. We 
turned that over to the office of General Counsel for 
prosecution.
    But I would like to further say, in addition to what the 
Under Secretary said, this has been publicized in the documents 
that are on file. It's in bankruptcy, a large bankruptcy being 
handled by the trustee. This was a very, very sophisticated 
check kiting scheme. As he said, the bank didn't catch it.
    The bank examiners didn't catch it. Obviously, the 
accounting firm didn't catch it, and so at GIPSA we do not do, 
or our reviews are limited on what we do. We go in to see if 
somebody's solvent and do they have enough money in their 
account to pay their bills. Are the assets current assets in 
excess of current liabilities? We determine whether they're 
paying on time.
    The Act requires that they pay within one business day. 
That is very essential, because if they don't, if it's extended 
out, you have problems with the trust. We have a trust involved 
where they have priority in case something happens. If it's 
extended out past 60 days, the bond is not applicable. And so 
this was a catastrophic failure unlike anything that I've seen. 
I've been in the cattle business for years, and you say it was 
a criminal act, you know, the Department of Justice is involved 
in it, and we just can't say much more about it.
    Mr. Kingston. My time has expired, but I wonder rather than 
having a whole set of new rules for GIPSA if we shouldn't go 
back and say that you have the ability to increase their bond 
higher than you did. Or, if somebody doesn't comply with your 
request that they increase the bond, that you have faster 
authority to shut them down or take remedial action on a faster 
basis. And then do something in that June to November period 
that would give you more authority when somebody is clearly on 
the fault line and then all the red flags pop up.
    Then we can act faster to prevent more livestock producers 
from going broke over this. And my time is expired, but I want 
to ask you on the next round about the poultry, or--excuse me--
since we have done things to help poultry farmers in a similar 
situation, if we are doing enough or if there are things that 
can be done for the livestock producers.
    So you be thinking about that. My time has expired.
    Mr. Bishop.
    Mr. Bishop. Thank you very much. I just want to go back to 
GIPSA for a moment.

                 PACKERS AND STOCKYARDS ACT ENFORCEMENT

    You're proposing an increase of $2.2 million for GIPSA, 
which result, as you project, in 500 additional inspections and 
compliance reviews. According to the budget, this would 
increase industry compliance to 84 percent. What would it take 
in funding and new inspections to reach 100 percent compliance?
    Mr. Avalos. Congressman, that's a good question. It is a 
question I don't think I can answer, but I would like to make a 
few comments.
    The increase in funding, the request for the increase, 
really is for stronger enforcement to increase the level of 
compliance, number of reviews, the time it takes to process 
claims. I think this is all very, very important; and just as 
important is protection that is given to an additional 8,400 
livestock producers in this country.
    I have always said in discussions I have had with 
Administrator Butler: compliance, it's so much less expensive 
than litigation. And obtaining compliance is really, really 
important at GIPSA, and to avoid litigation would save the 
taxpayer a lot of money.
    I wanted to give an example to determine kind of----
    Mr. Bishop. Could you possibly submit that later for the 
record?
    Mr. Avalos. Sure, absolutely.
    Mr. Bishop. That would be helpful to us.
    Mr. Avalos. Okay.
    Mr. Bishop. Because, I mean, 84 percent compliance is fine, 
but that is 16 percent noncompliance.
    [The information follows:]

    Fiscal year 2007 was the first year that the Packers and Stockyards 
Program adopted as its performance measure, the percent of industry 
compliance, and this data is available through FY 2010. During this 
period, compliance has improved from an initial 73 percent to the 
current level of 80 percent. Within these data ranges, the compliance 
rate improvements came primarily from improved management strategies 
that increased field agent performance and additional employees in the 
field.
    Costs would increase substantially to reach higher levels of 
enforcement, as increased presence in the marketplace would require 
additional employees and mechanisms that would serve as a deterrent, 
such as penalties and enforcement. Reaching 100 percent compliance 
would involve rising marginal costs especially since most regulated 
entities are spread throughout the country and effective enforcement 
requires employees to travel to them.

    Mr. Avalos. Okay. And, now, Mr. Butler, do you have 
something that you could add to that?
    Mr. Butler. Well, I, like the Under Secretary, agree that, 
you know, we are better served from an industry standpoint to 
try to have compliance--deterrence if you will--have sensible 
regulations where people know the rules of the game. It would 
be a malaise if we were playing basketball and didn't have any 
rules and didn't have any referees, so I understand that.
    I understand the cost of prosecution, and we are trying to 
not have to prosecute as much. I think the money is better 
spent trying to educate and conduct oversight, our oversight in 
the field. So I agree with you exactly. Getting a hundred 
percent compliance would probably be like getting everybody not 
to speed on the highway. That's a very difficult situation.
    We would love to get up around 90 percent, and we hope that 
we can do that, because it actually saves money and it helps 
the industry as a whole, all people in the industry, every 
facet of the livestock industry and the poultry industry. But, 
if I might, some of our lower compliances are on the poultry 
side, because we don't have full administrative authority.

                          INDUSTRY COMPLIANCE

    Mr. Bishop. Mr. Butler, don't you think that the American 
people really deserve to have full compliance with those rules 
and regulations? And I know often we fall short of perfection, 
but I think that was some great educator was noted for saying 
that failure is not a sin. Low aim is.
    You know, failure to reach a goal is not the calamity, but 
having no goal to reach. And it seems to me that we ought to be 
trying to get as close to that hundred percent compliance as we 
can, and I was just trying to see if you knew what it would 
take to get there. You say the 500 would get you to 84 percent 
compliance.
    Mr. Butler. I will try to get with my people and come up 
with that number.
    Mr. Bishop. Thank you.
    Mr. Kingston. Mrs. Emerson.
    Mrs. Emerson. Thank you, Mr. Chairman.

              PUBLIC COMMENTS ON GIPSA'S ECONOMIC ANALYSIS

    Under Secretary Avalos, let me ask a follow-up question, 
because I don't think I was clear enough.
    I just asked a quick question on the previous GIPSA thing. 
Are you all going to have a public comment period on the 
economic analysis that you all have done?
    Mr. Avalos. No.
    Mrs. Emerson. No? Okay. Thanks.

                      ANIMAL TRACEABILITY PROGRAM

    Now, let me switch over to NAIS, if I could. And you are 
very lucky that you weren't here during the previous experience 
with it, but you all are asking for nearly $9 million of an 
increase for animal disease traceability, which used to be NAIS 
or Animal ID, or whatever you wanted to call it. And there's 
quite a troubled history with this program, and there was 
little buy-in, if any, really from the livestock producers whom 
I represent. And I understand this spring you all are going to 
propose a rule on traceability, which will include dates for 
phased-in mandatory adoption.
    So if I remember correctly, it was when TOP turned to a 
mandatory system that the past Administration was confronted 
with most of the producer opposition, at least in my district, 
and everything went crazy at that time. So I have three 
questions I would like to ask about this.
    Number one, why are you all so confident that you are going 
to avoid the same objections that the NAIS plan experience? 
Number two, APHIS's implementation plan expects to begin 
enforcing identification collection requirements in 2012, early 
in 2012. Has the Department identified exactly what burden 
these requirements will place on our producers? And, third, the 
implementation plan dissipates compliance levels for cattle 
identification to be near 80 percent shortly after the reg goes 
into effect and exceed 90 percent within the first year.
    Personally, I think that's overly optimistic. We probably 
are at about 37 percent registration with the old rule, and 
that was after six years and $142 Million. So if you could 
answer those, I would appreciate it.
    Mr. Avalos. Congresswoman, I have heard about the past 
National Animal Identification System--NAIS. I heard about it 
and I hear about it. I heard about it in the countryside. 
Anyway, first I want to state for the record that we are so 
fortunate, this country, that we have the largest, the most 
diverse livestock industry in the world, because that brings 
with it many challenges and many issues, and many 
opportunities.
    We have a brand new, well, we have a different approach. We 
are looking at this approach of traceability totally different. 
The previous approach was a mandate with the top down, very 
little input if any from producers, from States and Tribes. So 
what we did, immediately, we reached out to the producers. We 
reached out to the Tribes, reached out to the States. We 
reached for the input from them.
    In fact, we had the first listening session in your State. 
And with the work and the input from the States and the 
producer organizations, the Tribes, we came up with standards, 
standards that everyone has to meet. But we are also offering 
flexibility. Every State, every Tribe can meet those standards 
in the way it works for them, and I think that's very 
important. I think that's where we're getting the buy-in. And 
I'll admit that the cattle industry did not like traceability. 
The problem has been the cattle industry, not only in your 
State, but all over the country, but for good reason.
    I come from a cattle state. I come from the West. I 
understand the cattle industry, and it's different, because you 
have to identify each animal. You don't identify a lot. You 
don't identify a pen. So it is a little bit more difficult than 
some of the big ranches in the West. It is really difficult to 
register them. It is a task to register and identify these 
animals.
    So, anyway, having said that and trying to answer your 
questions, as far as determining the burden on the producers, I 
think the buy-in is already there, because they understand from 
their state, and I understand sometimes a producer doesn't 
agree with a State vet. But we also have input, and we have got 
a lot of input from producer organizations.
    Now, to get to the cattle and the compliance of 90 percent, 
on the cattle side, we are going to identify the mature animals 
first, because they were the high risk animals. And until we 
reach that level to be maybe 70 percent, is the targeted 
amount, then we are going to phase in the feeder cattle. And it 
is not until we start phasing in the feeder cattle that we see 
that we can reach 80-90 percent compliance in the cattle 
sector.
    So I hope that answered the question and maybe explains it.
    Mrs. Emerson. Thank you very much. Thank you.
    I may submit a follow-up question for the record as well as 
some others, Mr. Chairman, but I have to leave.
    Thank you.
    Mr. Kingston. Thank you.
    Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman, for having the hearing 
and going this many rounds.

               REGULATORY REQUIREMENT FOR SHIPMENT PLANTS

    I have a lot of questions. I will submit many to the 
record, but I just want to ask one question, because it seems 
to me we are stepping on our message. And it has to deal with 
APHIS' requirement for rules for shipping plants from 
California and other Western states that have sudden Oak Death 
Syndrome problems, because USDA mandated the safeguards that 
ensure that these plants are free of disease.
    But now you are requiring the shippers, California 
Nurseries, for plants--that there are certain plants they are 
shipping--to notify the receiving state the plants are 
arriving. So the question here, I mean it's tough on the 
industry. You are saying do all these additional protocols, 
which are expensive, and then you can ship.
    But then you are also saying beware state, or beware buyer, 
this is coming from an infested state or infested nursery. And 
it just seems to me the road to confidence in our own rules to 
ensure a plant's safety doesn't mean that they are safe. And is 
it signaling that APHIS is going to require advance 
notification for other pest infections?
    Mr. Avalos. Congressman, I am going to defer to 
Administrator Cindy Smith.
    Ms. Smith. I really appreciate the opportunity to respond 
to this, because we appreciate the regulatory burden that we 
create in the government as we try to protect agriculture.
    With this particular requirement, we have done a couple of 
things. We have changed our approach to reduce which plants, 
which hosts to sudden oak death to P. Ramorum, that the 
shippers will have to make notification on from 50 plants down 
to 5. So what we have done is really reduced that burden very 
dramatically by focusing on the five plants that we think will 
contain about 90 percent of the risk.
    We have also reduced the areas that will have to meet with 
these requirements--fewer counties and parts of counties--so we 
have reduced it in that way. The other thing I would say is 
that----
    Mr. Farr. Is it affecting price?
    Ms. Smith. Well, what I would point out related to that is 
we are not aware that it is affecting price. I don't have that 
information, but what I would say is we are allowing these 
plants to be shipped before we get the test results back to see 
if they are testing positive for P. Ramorum in order to reduce 
the regulatory burden and keep commerce moving.
    In the event though that these plants were to test positive 
after they were shipped and went off to a state and then were 
distributed out of a nursery, those shippers would incur a much 
greater amount of cost in terms of trying to track down and do 
tracebacks of their plants. So while it does seem like a 
burdensome process, we do think that it will also actually be 
saving money for the shippers, if it did turn out that their 
test results turned out to be positive.
    Mr. Farr. And do you think, sort of, it sounds like it is a 
pilot in a sense? I mean getting it down to this kind of a 
style of management. Is this going to affect shipping of other 
infected plants?
    Ms. Smith. I think that will be determined by what it is we 
are testing for and how long it takes to get those test 
results. And then, of course, we always try to factor in what 
our regulatory requirements are, how much of an impact they are 
going to make.

                     APHIS' REGULATORY ENFORCEMENT

    Mr. Farr. Well, I can see a lot of interstate battles going 
on. I mean, you know, California and Florida are always 
competing on oranges. We both grow, and they all want the 
industry to grow. But the minute one has a problem, it's to the 
glee of the other. Because all of a sudden, you know, 
California has got a problem, and we in Florida don't, or vice 
versa, and we can get more. You know, we dominate the market.
    So I think these sort of trade wars that go on all the 
time. We have to be careful where government might be creating 
a problem that isn't there. I mean I can see why you want to do 
it, but I also think if indeed your protocols that you spend a 
lot of time and require growers and handlers to fall on--if 
they follow those protocols. I don't know why we need to have 
the scarlet A written on the plant.
    Ms. Smith. I would say that we completely appreciate what 
looks like competing interests from different States that grow 
the same commodities. And I think our regulatory enforcement 
activities really are geared at trying to reduce any additional 
burden another State might want to put on, say, a State like 
California or Oregon that has this kind of an issue. So we 
really are trying to reduce the regulatory burden as much as we 
can, and try to prevent battles between the states by making 
sure we are focused on science and putting the best methods in 
place.
    Mr. Farr. Well, we will hear from the industry if you are 
not, but it seems you are sending the message that you can't 
trust our protocols, because even after you follow them, we are 
still going to--we are going to brand you. And going there I 
can understand on a lot of liability issues, but, boy, it is 
also a question of whether what we are telling people to do to 
prevent catching the disease is going to be to their liability, 
so, handle it carefully.
    Ms. Smith. Okay.

              PUBLIC COMMENTS ON GIPSA'S ECONOMIC ANALYSIS

    Mr. Kingston. Mr. Under Secretary, you use the word 
``partnership'' and ``reaching out'' and in your own 
description taking a view from the farmland to Washington, 
instead of in reverse. But it seems inconsistent the way you 
answered Mrs. Emerson's question about the GIPSA economic 
analysis extended comment period, that it would not be open. 
And, you know, everything you have said, that you support 
transparency, partnerships and discussion, it takes a lot of 
constituent complaints to get 115 congressmen to write a letter 
to any secretary on any issue.
    And, I can say this as a member of this committee. We have 
had complaints on the GIPSA rulemaking process on this thing 
probably as much as I had ever seen on anything. And so I don't 
understand why you are not doing that.

                       GIPSA'S RULEMAKING PROCESS

    Mr. Avalos. Mr. Chairman, we have followed the standard 
rulemaking process from the very beginning. We have been 
accused of overextending our authority. We received over 60,000 
comments. So there is no doubt it is determined that we have 
stirred up the countryside, and for good reason. This is a 
major change to a law that has been in place since 1921. And, 
if I could, I would like to just make a general statement that 
would come from my thoughts for the countryside.
    You know, this proposed rule, like I said, it brings a 
major change to the Packers and Stockyards Act. And it is 
normal to resist change. It is normal to be concerned about how 
it is going to impact someone's livelihood, how it is going to 
impact the day-to-day operation of the farm or the ranch, how 
it is going to impact the bottom line, the future of the farmer 
ranch and the future for their kids.
    Like I said, we received over 60,000 comments, and I want 
to go on record thanking the people that took the time to 
prepare and submit these comments, because I know it took a 
commitment. It took an expense to do that, and this is very 
important, and we take those comments very, very seriously.
    Mr. Kingston. Well, what the complaint from the agriculture 
authorizers are--and as you know, this is a fairly bipartisan 
culture in Ag politics, if you will. But what the complaint is, 
is that during the Farm Bill there were hearings on this and 
there was discussion. And they wanted you to fill in the 
blanks, but you went beyond the blanks, and that's where the 
rub is. And, you know, there seems to be a trend of being very 
cautious about the bureaucracy overreaching and setting up, as 
you are talking about, profound changes, which probably should 
come back to the U.S. Congress rather than this potential 
authority. Because it appears to me that getting back to what 
Mr. Butler said is that compliance is better than lawsuits, 
cheaper than lawsuits.
    Working together is better than working from an adversarial 
standpoint. And what I envision is on the path that it seems to 
be on right now, we're going to have some real clashes between 
the Executive Branch and the Legislative Branch if you come out 
with a rule that appears to overreach and overstep, 
particularly in a process that hasn't been as transparent as 
our constituents wanted to be. And, also because of that, you 
know, profound changes, even though you have complied with the 
law, maybe the spirit you haven't complied with.
    And you know how it takes a while to stir up farm folks, 
but once they are stirred up, they lock in on a position and 
you do have them stirred up.
    Mr. Avalos. I understand, Mr. Chairman, and I appreciate 
your comments.
    Mr. Kingston. Well, we opened this up a little bit more. 
What can we get you to do? We never authorize on 
appropriations, as Mr. Farr well knows, of course. But there is 
some temptation here.
    Mr. Avalos. At this time I cannot tell you that we will 
open up the cost benefit analysis for comment, but I will take 
your request. I will take that back to my office and back to 
the Secretary.
    Mr. Kingston. I believe that, again, this is not me alone 
talking, but there is a strong bipartisan movement here that we 
need this process to be more open than the economic analysis to 
be maybe more third-partyish, you know, kind of rubber-stamped. 
So we do have concerns, and I will look forward to working with 
you on this process.
    Mr. Avalos. Yes, sir, Mr. Chairman.
    Mr. Kingston. And, Mr. Farr.
    Mr. Farr. No further questions.
    Mr. Kingston. Well, with that, we certainly appreciate you 
being here, and sorry about the New Mexico photos, but we will 
get that rectified. Thanks a lot.
    Mr. Avalos. Thank you, Mr. Chairman, Congressman Farr.
    Mr. Kingston. This hearing is closed.

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