[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
 JO ANN EMERSON, Missouri
 ROBERT B. ADERHOLT, Alabama
 CYNTHIA M. LUMMIS, Wyoming
 ALAN NUNNELEE, Mississippi
 TOM GRAVES, Georgia                SAM FARR, California
                                    ROSA L. DeLAURO, Connecticut
                                    SANFORD D. BISHOP, Jr., Georgia
                                    MARCY KAPTUR, Ohio

 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 9
                                                                   Page
 Secretary of Agriculture.........................................    1
 Commodity Futures Trading Commission.............................  209
 Farm and Foreign Agricultural Services...........................  291

                                ________
         Printed for the use of the Committee on Appropriations
 PART 9--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 9
                                                                   Page
 Secretary of Agriculture.........................................    1
 Commodity Futures Trading Commission.............................  209
 Farm and Foreign Agricultural Services...........................  291

                                ________
         Printed for the use of the Committee on Appropriations

                     U.S. GOVERNMENT PRINTING OFFICE
 68-236                     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

                              ----------                              

                                            Tuesday, March 1, 2011.

                        SECRETARY OF AGRICULTURE

                               WITNESSES

HON. THOMAS VILSACK, SECRETARY OF AGRICULTURE
KATHLEEN MERRIGAN, DEPUTY SECRETARY OF AGRICULTURE
JOSEPH GLAUBER, CHIEF ECONOMIST, DEPARTMENT OF AGRICULTURE
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Mr. Kingston. The subcommittee will come to order. Today we 
have as our first witness of the year the Secretary of 
Agriculture, the Honorable Tom Vilsack; Deputy Secretary 
Kathleen Merrigan; USDA's chief economist, Dr. Joe Glauber; and 
Mike Young, the USDA's budget director. We welcome all of you.
    There are a lot of appropriation hearings taking place 
today, and for a while it looked like we may have to go ahead 
and do this one without any members, but Mr. Farr and I are 
here, so that is a quorum.
    Mr. Secretary, we are always glad to have you on the Hill. 
We certainly enjoy working with you. And as a former state 
representative, I have a common background--at least, I served 
in the state legislature eight years. And both Mr. Farr and I 
and other members appreciate on the ground approach to 
governing, knowing that you know how so many of the programs 
work up close.
    We are interested in your testimony today and want to work 
with you. We note that you have $1.3 billion less in 
discretionary spending less in fiscal year 2011, but there are 
some new investments which we may have to discuss, some 
research and export promotion, renewable energy, conservation, 
and rural infrastructure.
    As you know, the interest on the national debt is set to 
climb from about $200 billion a year to $685 billion in the 
next seven years, basically a tripling. And I was quick to 
point out, both in Washington and back in my little briar patch 
in Georgia, that if you are looking for blame, all parties have 
fingerprints on them, Republicans, Democrats, and Independents. 
We have all run up the clock.
    Most of the money is in the health and retirement programs. 
We know that. And yet both parties have been historically 
reluctant to touch those political sacred cows. I think that 
that time is coming near when we are going to have to do that. 
But in the meantime, discretionary money is going to continue 
to be squeezed. And so we have to look at all these programs 
together. And I am looking forward to working with you, as we 
have in the past several years already.
    And with that, I would like to yield to Mr. Farr, the 
ranking member.
    Mr. Farr. Thank you very much, Mr. Chairman. 
Congratulations on your first hearing of the new committee. And 
I am excited that we also have the chair and ranking 
Appropriations member, Mr. Dicks and Mr. Bishop, here as well.
    I don't have an opening statement. I just wanted to comment 
on one thing that I am very interested in hearing, about your 
leadership in trying to bring this, for lack of a better word, 
rural strategy to America to re-look at rural communities in 
total about all of the effects of all the agencies on them, to 
try to do really effective recovery.
    I know you have been working on more of a vision for rural 
America, and I want to see if we can use our appropriating 
process to make sure that we are hitting all the right buttons 
to make it work rather than just kind of a traditional let it 
rain. And maybe the tide will rise high enough to do something 
good for a lot. I think you have got a much more holistic 
approach to it, and I would appreciate hearing that.
    But I have no other opening comment.
    Mr. Kingston. Thank you, Mr. Farr.
    Mr. Dicks.
    Mr. Dicks. Thank you. Mr. Secretary, we are glad to see you 
here today with your group. And the one thing I hope you can 
touch upon as we go through this budget is we were on the floor 
with H.R. 1 here a week ago and made some significant cuts in 
food safety inspection. I hope you can, during your statement 
or in the questions, address that issue and what the impact 
would be on the Agriculture Department.
    Mr. Kingston. Thank you, Mr. Dicks. And I want to welcome 
the former chair, Ms. DeLauro, here. I am now on your right and 
you are now on my left, as we have kind of always been anyhow. 
[Laughter.]
    Ms. DeLauro. No, you really wanted to be on the left. What 
a difference a day makes.
    Mr. Kingston. Would you like to say anything or just----
    Ms. DeLauro. Oh, no, no, no.
    Mr. Kingston. Well, I want to thank you----
    Ms. DeLauro. I am just happy to be on the committee. I love 
this committee.
    Mr. Kingston. Well, I want to thank you for your service as 
chair. You did a great job. We enjoyed working with you and 
your staff, and we hope to continue in that relationship.
    My Georgia colleague, Mr. Bishop, we haven't recognized 
you. But if you want to say anything?
    Mr. Bishop. Let me just congratulate you on the 
chairmanship, and I look forward to working with you and the 
subcommittee as we have to make sure that America continues to 
produce the highest quality, the safest, the most economical 
food and fiber anywhere in the industrialized world. And of 
course, what we do here will determine whether that happens in 
that.
    So I am very, very anxious to get to work and to hear from 
the Secretary and for our committee to move forward.
    Mr. Dicks. Mr. Bishop, would you yield to me just for a 
second?
    Mr. Bishop. I would be delighted to yield.
    Mr. Dicks. I too want to congratulate Congressman Kingston 
on becoming chairman. He and I have worked together on defense 
over the years, and I know he will take a hard and thoughtful 
approach to this committee's important work.
    Mr. Kingston. Well, I thank both of you.
    And with that, I want to yield the floor to the Secretary. 
But one last statement, one thing I want to say. You have been 
joined by your hometown or home state colleague, Mr. Latham. I 
knew he wasn't going to stand you up.
    We are going to stick with the five-minute rule, as we have 
in the past. And we will go back and forth from majority to 
minority, so I will abide by that, and Mr. Farr will, and Mr. 
Dicks, and everyone else.
    So with that, I would also like to ask anybody who has a 
BlackBerry or cell phone to please turn it off.
    And Mr. Secretary, the floor is yours.

                           Opening Statement

    Secretary Vilsack. Mr. Chairman, thank you very much, and I 
certainly appreciate the opportunity to be with the committee 
this morning.
    Obviously, I would like to have the written testimony that 
we prepared submitted for the record. And rather than reading a 
statement, which is the tradition, I would just simply like to 
make one observation and then go to the questions that you all 
have.
    Mr. Kingston. Without objection.
    Secretary Vilsack. Yesterday I had the privilege of sitting 
in on the meeting that the President of the United States had 
with the nation's governors. It was an opportunity for the 
President to have interchange with the nation's governors.
    And during the course of his remarks to the nation's 
governors, he said something which I think basically summarizes 
our challenge. And I say ``our challenge'' because I think we 
have a shared responsibility, a mutual responsibility, to craft 
a budget that reflects the values and the priorities of the 
American people, and particularly those who live, work, and 
raise their families in rural communities.
    What the President suggested was that any budget decision, 
whether it is in the 2011 debate or the 2012 debate, really has 
to be a reflection of shared sacrifice and shared opportunity. 
And I think that that is an appropriate way to frame our 
conversation today.
    There is no question that the budget that we submitted, the 
budget that you all are considering, reflects a good deal of 
sacrifice that will be asked of Americans, of those who live in 
rural communities. But there is also an opportunity for us to 
continue the growth and the expansion of the economy that we 
have recently seen in rural America as a result of a very 
strong agricultural economy and a reduction of the unemployment 
rate at a rate faster than the rest of the country.
    So I look forward to working with the committee. Our team 
is assembled here and prepared to respond to the questions you 
have today. And if we can't get a full answer today, we will 
certainly be glad to supplement our conversation in writing.
    [The information follows:]

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                              INITIATIVES

    Mr. Kingston. Well, thank you, Mr. Secretary. And let me 
begin with asking you a question about some of your new 
initiatives.
    As you know, the House originally said we are not going to 
have any earmarks. And then the Senate came along and 
eliminated about $400 million in earmarks. But it is my 
understanding that that money, rather than go into deficit 
reduction, the administration plans to use that to fund new 
initiatives.
    Is that correct, or am I missing something? And if that is 
not correct, where does the offset for new initiatives come 
from?
    Secretary Vilsack. Depending upon the mission area, Mr. 
Chairman, we can establish for you that the elimination of 
earmarks, it does in fact go to reducing our discretionary 
spending. Let me take the National Institute of Food and 
Agriculture (NIFA), for example. We obviously are very 
interested in increasing competitive grants under the 
Agriculture and Food Research Initiative (AFRI) program because 
we think that that is the most significant and best way to 
leverage resources with our universities in the private sector.
    Having said that, that increase in AFRI research is offset 
by the elimination of earmarks that have been designated by 
Congress in the past. And the net result of NIFA is a reduction 
of $138 million over what it was in 2011, as proposed.
    In the Agricultural Research Service (ARS), we increase 
commitments to regional biofuel feed stock research because we 
think that is appropriate, to expand an industry that we 
believe has great potential for rural America in terms of job 
growth and providing additional opportunities and income for 
farmers. That is offset by $41 million in earmarks that have 
been eliminated under the ARS portion of the budget.
    So I could go through each line item of the budget, each 
area and mission area. But I think what you will find is the 
Animal and Plant Health Inspection Service (APHIS) earmarks 
basically offset some of the marketing and regulatory programs 
that we are proposing to increase because of invasive species 
and pests and disease that we think have significant impact on 
the economy of particular crops.
    So I think we could go through all of these. But I can 
assure you that the bottom line is a net reduction in 
discretionary spending, which the President has directed us to 
do and I know the Congress is interested in seeing as well.
    Mr. Kingston. So the money, though, does come from what 
really has already been eliminated, in that the earmarks aren't 
there. Is that correct?
    Secretary Vilsack. We were working off of a budget that 
included specific allocations for projects--for example, 
specific research projects, for example, where money was being 
accumulated. That has been reduced. We made an effort to try to 
prioritize, as best we could, programs which we thought 
either--let's take APHIS, for example.
    We prioritized programs in APHIS where we thought perhaps 
we had already made sufficient progress, or perhaps we had 
based our view on an eradication strategy, when in fact the 
science would tell us that eradication is probably not going to 
work, so we need a containment strategy. We tried to prioritize 
as best we could. Obviously, Congress is going to have a 
potentially different set of priorities, but this is a starting 
point for conversation and discussion on a budget.
    Mr. Dicks. Mr. Chairman.
    Mr. Kingston. Yes.
    Mr. Dicks. If you would yield, just to ask a question on 
this point.
    The money you are talking about is fiscal year 2010 money, 
isn't that correct, where the administration made a decision to 
not spend the earmarked funding until they could see what 
happened with the 2011 budget?
    Secretary Vilsack. It is correct it is the 2010.
    Mr. Dicks. So that is the money we are talking about. And 
so the earmarks were not done, but that money was still there. 
How much was that amount?
    Secretary Vilsack. Well, it depends on which mission area 
you are talking about. If I can ask Mike.
    Mr. Dicks. Thank you for yielding.
    Mr. Kingston. Yes. Let me ask the gentleman a question 
because it is my impression that the President's budget has 
already acknowledged that earmarks would be gone, and therefore 
that money is not in there.
    Mr. Dicks. In 2012, right?
    Secretary Vilsack. Correct.
    Mr. Kingston. So then this would just--those increases 
actually are not offset because that money is not in the 
budget.
    Secretary Vilsack. In some cases, Mr. Chairman, there was 
money that was allocated in previous budgets that is being 
essentially wiped out, if you will.

                             CROP INSURANCE

    Mr. Kingston. Well, let me ask you another question. You 
had talked about the crop insurance savings being $6 billion.
    Secretary Vilsack. Yes.
    Mr. Kingston. Four billion went to deficit reduction. Where 
did the other two go?
    Secretary Vilsack. The other $2 billion portion of it went 
into expanding crop insurance products for range and pasture 
and grassland areas. Roughly 14,000 additional policies have 
been sold as a result of that expansion.
    A portion of it is going to go to a premium reduction 
program for good performers to encourage----
    Mr. Kingston. Mr. Secretary, my own time has expired and I 
have to call the clock on me. But I get the gist of what you 
are saying.
    Mr. Farr.

                          RESEARCH FACILITIES

    Mr. Farr. I will follow up a question on that. So all of 
the money that went through earmarks, for example to build 
facilities, have been wiped out for your ag research stations?
    Secretary Vilsack. That is correct. And the reason--and I 
understand that there is obviously a great deal of interest in 
research, and you specifically have a great deal of interest in 
it, as you should.
    The problem has been that we have not really prioritized 
these research projects, and what we are going through right 
now with ARS is a discussion and a review and a study of 
exactly how to prioritize research and research facilities so 
that we make decisions based on what we think is in the best 
national interest, as opposed to something that has been 
earmarked specifically by a Member of Congress in the past and 
which the administration essentially agreed to in the past.
    Mr. Farr. So even meritorious earmarks that will pass that 
test will----
    Secretary Vilsack. Well, I think there is no question that 
there is a need for improved research facilities in this 
country. And there is no question that we are going to have to 
invest in those facilities. Research is extremely important in 
terms of a multitude of areas--to rebuild rural America, to 
make sure that we continue to invest in crop productivity and 
livestock protection, and so forth.
    So there has to be research facilities. But my belief is 
that you have got to prioritize, and you can't prioritize if 
you continue to provide small amounts of money to build up an 
account that, over time, eventually gets to a point where you 
can build a facility with it.
    Mr. Farr. And once that decision is made that you have set 
these priorities, then where will the money come from?
    Secretary Vilsack. Well, it will come from essentially 
whatever you do with budgeting. You have got to make decisions 
and you have got to establish priorities. And if in year 2013 
or 2014, whatever the year might be, we make a determination 
that four or five research facilities are extremely important 
to be done, then it will be up to us to find resources in the 
budget to offset or additional income revenue sources to 
provide the resources to build those facilities.
    Mr. Farr. Will you be working with other federal agencies 
like the Food and Drug Administration--FDA--to see where you 
might collaborate in research facilities?
    Secretary Vilsack. We do, and we are working very closely 
right now with the Department of Homeland Security on a 
facility, a specific facility in Kansas. So yes.
    Mr. Farr. So those factors will go into your prioritization 
as what other partners you have in----
    Secretary Vilsack. Partners, and I think it is fair to say 
that to the extent that we become, I think, creative about 
leveraging resources--I mean, we are getting to a point now 
where I think we have to be very careful about money we spend. 
And if we are able to leverage those resources with additional 
investment outside of government, that is something that--that 
is a factor that also ought to be considered.
    Mr. Farr. Well, I appreciate that approach. I always 
thought that that might be the approach you have used in the 
past. But I really resent the fact that you have worked many, 
many years to try to build up an account to build a facility 
that I think will pass all the scrutiny that you have just 
outlined, and then have to start all over again.
    Secretary Vilsack. Congressman, I understand the 
frustration. All I can say is that when I came into this 
office, there had not been a review or prioritization of these 
facilities at all, to my knowledge, and that we are in the 
process of conducting that right now, which I think is the 
prudent approach.
    Mr. Farr. Yes. I think it is a prudent approach. I just 
don't like throwing the baby out with the bath water.
    Secretary Vilsack. Well----

                       RURAL STRATEGY FOR AMERICA

    Mr. Farr. Would you for a moment just explain to the 
committee what you are doing in this kind of rural--what you 
explained to me about the idea of looking at a rural strategy 
for America--remember, your comment that rural America has not 
been in a recession, it has been in a depression for about the 
last 10 years--your concept of revitalizing rural America?
    Because in hearing that, I look at this that you are going 
to zero out the Resource Conservation and Development Program. 
I always think, is that being part of an effective strategy for 
rural America, and wonder why you have decided to zero that 
out.
    Secretary Vilsack. Well, conservation spending overall is 
going to increase when you compare it to the authorized level 
in the Farm Bill. We will increase over what we had last year 
because it is part of the strategy of rebuilding our rural 
economy.
    The greater the resources invested in conservation, the 
greater the chances are that you can expand outdoor recreation 
opportunities, which are a significant strategy for rebuilding 
America. You have to prioritize. I mean, we are faced with 
constraints, and we tried to prioritize where we thought the 
best bang for the conservation buck could be obtained.
    Some of the smaller programs had to go. Some of the 
guaranteed loan programs in conservation had to go. But EQIP 
was increased. We continue to promote the Conservation Reserve 
Program--CRP--which is another place where the crop insurance 
money went, Mr. Chairman, which is what I would have said if my 
time had not expired.
    Mr. Kingston. The gentleman's time has expired.
    Mr. Latham.
    Mr. Latham. Well, thank you, Mr. Chairman, and welcome, 
Secretary.

                               FARM BILL

    We are starting the process of writing a new Farm Bill, and 
I just wondered if you had set out priorities. Or what do you 
envision as far as changes going forward?
    Secretary Vilsack. Representative, I think it is fair to 
say that we recognize the responsibility that Congress has in 
writing the Farm Bill, and we stand ready to provide the 
technical assistance and support the Congress needs to write a 
good Farm Bill.
    I can't say that we have established priorities because we 
see this as a collaborative process. We have set in motion a 
process within USDA to begin taking a look at current Farm Bill 
provisions to determine if there are things that are 
inefficient, ineffective, complex, confusing, things that need 
to be straightened out, amplified, modified, so that we have a 
good list of those programs.
    And then secondly, I think Bob Stallman, at a recent Farm 
Bureau meeting in Atlanta, I think, summarized it fairly well. 
I think we are confronted--and I say we--are confronted with 
the challenge--Do we want a safety net system that provides 
some resources to farmers on an annual basis, regardless of how 
good the agriculture economy might be on that particular year, 
as opposed to something that would provide significant help and 
assistance when it is most needed?
    And I think that is one of the fundamental questions that 
has to be answered. We obviously believe that there is a move 
towards risk management, and more appropriate risk management 
techniques, and that is reflected, obviously, in our proposal 
to reduce some of the direct payments to some of the higher 
income farming operations.
    But I would say part of our priority is also on this issue 
that Representative Farr began to address, and that is, how do 
we rebuild the rural economy? I think an expansion of broadband 
is part of that. I think conservation is part of it. And I 
think clearly, in my view, biofuels and renewable energy is a 
significant part of that and needs to be reflected in the Farm 
Bill.
    Mr. Latham. Are you planning a series of hearings around 
the country? Has there been a schedule? Because it is going to 
start pretty quick.
    Secretary Vilsack. Right. I don't think that we are going 
to replicate what happened in the past, which is the 
administration doing a series of hearings and then coming up 
with its own Farm Bill. Again, I think we see this as a 
collaborative process.
    I am sure that we will be out in the field, if you will, 
listening to folks and getting input. But I don't think it will 
be quite done in the same way that Secretary Johanns did it 
when he was in this position.
    Mr. Latham. I would just hope that it is policy-driven, 
which the last Farm Bill was. It tried to determine policy and 
then fit the dollars in with it. The previous Farm Bill, 
basically, was all about the number of dollars and then trying 
to fit policy into that. It was reverse. I mean, I think the 
policy part comes first myself.
    Secretary Vilsack. Well, you know, the reality is that you 
need both. You need the right policy and you obviously----
    Mr. Latham. But the good policy is--that is where we are.
    Secretary Vilsack. I don't disagree with that.
    Mr. Latham. How are we doing?
    Mr. Kingston. You have a minute, almost two minutes.
    Mr. Latham. Oh, that is plenty of time.

      GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION RULE

    The new GIPSA rules that are coming down, I have real 
concerns about the impact that is going to have on a lot of 
producers. Tell us--you are going to do an economic analysis of 
the impact.
    Secretary Vilsack. Yes.
    Mr. Latham. Where is that, and is that going to be subject 
to peer review?
    Secretary Vilsack. We made the decision to open the 
proposed rule for comment in an effort to try to better shape 
the economic analysis that would take place. We received, I 
believe, over 60,000 comments, roughly 30,000 of them unique. 
They are being categorized and classified and put into 
categories.
    When that process is completed, Joe Glauber will use that 
as a basis of putting together an appropriate team, and an 
analysis will be done. A thorough analysis will be done. We are 
anxious to obviously get this done in as appropriate and as 
thoughtful a way as possible, and we think we have had a 
substantial amount of input on this already.
    We recognize there are concerns, but we also have heard--
when I traveled around the country with the competition 
hearings with Attorney General Holder, we heard a lot of 
concerns about the current system and the fairness of it. What 
we are really trying to do is establish a fair system and a 
transparent system.
    Mr. Latham. I would just hope that we have enough time to 
have peer review to look at it. Sometimes you have some 
dramatic unintended consequences. I was just in Marshalltown 
last Friday. I toured the former Swift plant there, and the 
concern they have is right now they are paying additional, but 
they get over half their hogs from one source. They are all 
uniform. It is economically advantageous for them as far as 
processing to have that type of product coming through.
    I am more concerned about the little guy out there because 
I think he is going to be put at a real disadvantage long-term.
    Secretary Vilsack. That is not our intent.
    Mr. Kingston. The gentleman's time has expired.
    Mr. Dicks.
    Mr. Dicks. Thank you.

                   FOOD SAFETY AND INSPECTION SERVICE

    I wanted to ask you about food safety inspection and the 
effect of H.R. 1 on the Department. The Food Safety and 
Inspection Service--FSIS--is responsible for safety of domestic 
and imported meat and poultry. As noted above, H.R. 1 would 
hold funding for the FSIS to the 2008 levels.
    The administration estimates that this would require a 
furlough of all FSIS employees, including all inspectors, for 
30 to 47 working days. This would have amounted to 20 to 30 
percent of the working days left in the fiscal year if the bill 
were enacted on March 4th.
    Without inspectors available, meat and poultry plants would 
be legally required to stop operating. The administration 
estimates that the economic loss from stopping plant operations 
at $11 billion. It also expects that consumer prices for meat 
and poultry would rise with curtailed supply.
    Are those comments accurate?
    Secretary Vilsack. Representative, I think it is fair to 
understand that the FSIS portion of our budget is predominately 
personnel. Predominately personnel. We have done a study 
recently that is reflected in our 2012 appropriation request in 
which we could, obviously, given enough time, adjust our 
workforce a bit without necessarily resulting in closures of 
facilities.
    But if you impose upon FSIS a significant reduction and you 
give us less than a fiscal year, if you give us six months or 
five months in which to manage that reduction, you are going to 
see personnel reductions and you are going to see impacts, 
obviously, on facilities.
    Our hope and belief is, honestly, the confidence that we 
have in all of you, is that hopefully that won't happen, that 
there won't be a reduction of that magnitude, and that there 
won't be any kind of shutdown or interruption of government.
    Mr. Dicks. Well, we hope that you are right and that in a 
working-out between the House and Senate on this issue, that 
this can be resolved in a positive way.

                            WATER AND WASTE

    Under the Water and Waste Direct Rural Utility Services, we 
see some very significant cuts, from--in 2011 was 
$1,022,000,000 down to $770,000,000 minus $251 million. Grants 
are cut from $469 million to $409 million. These are programs 
that are absolutely essential in rural America. And I know we 
have to make some reductions, but are you concerned about what 
the impact of these cuts will be on rural programs?
    Secretary Vilsack. Well, the reality is we are always 
concerned. Having said that, I think it gets back to my opening 
comments, Representative. I think what we are faced with here 
is a balance between shared sacrifice and shared opportunity.
    These water projects are important to the communities 
involved, and we did a substantial number of them and are in 
the process of completing a substantial number of them as a 
result of the Recovery Act. Well over 800 projects were funded 
through the Recovery Act.
    And so it is obviously important to the community. We will 
do the best we can of leveraging those resources at whatever 
level Congress ultimately decides to appropriate.
    Mr. Dicks. Right. Well, I want to say that those programs 
have been very important in Washington State, and the rural 
communities deeply appreciate the help and assistance that they 
have received. And what we are worried about is that it is the 
lowest income areas that we are talking about that may be 
negatively hit by this.
    Secretary Vilsack. Well, we will do our best to make sure 
that we provide resources to those lowest income areas. And I 
will tell you also, this is about economic development and 
jobs. You cannot attract economic development to a community if 
you don't have access to water.
    Mr. Dicks. Yes. Again, I want to thank you for coming out 
to Washington State. We enjoyed your visit, and we look forward 
to continuing to work with you.
    I yield back my time, Mr. Chairman.
    Mr. Kingston. The gentleman yields back.
    And the chair recognizes Mr. Aderholt, and I want to 
welcome you to this committee.
    Mr. Aderholt. Thank you, Mr. Chairman. It is good to be on 
the ag committee, and we appreciate the Secretary and the 
Department of Agriculture coming over and testifying before the 
subcommittee today.

                                POULTRY

    One of the major agricultural products of the district I 
represent is poultry, and of course knowing that there is 
fierce protectionism from other countries, every time we try to 
complete a free trade agreement or simply arrange sales to 
another country. What is the status of sales of U.S. chicken 
products to Australia, Russia, and China?
    Secretary Vilsack. We have been working--let me start with 
Russia. We have worked to reopen the Russian market. They 
originally expressed concern about the chlorine wash process 
that we used in poultry treatment. As a result of an elaborate 
set of conversations with the Russians in Russia about the 
technical aspects of this, we were able to reach an agreement 
which reopened that market, and we are in the process of 
selling poultry.
    However, having said that, there are a number of steps that 
the Russians have taken recently in connection with specific 
plants, suggesting that there are additional issues that need 
to be resolved. So there is an ongoing conversation with the 
Russians about reopening the poultry market, and it actually 
took President Obama speaking to the Russian president 
specifically about this during President Obama's visit to 
reopen.
    In China, we are obviously continuing to work to reopen. 
China now is our number one trading partner generally in 
agricultural products, surpassing Canada and Mexico. That 
market is reopened. But, you know, it is always fragile.
    We think that there are tremendous opportunities in other 
parts of the country--other parts of the world, rather--to 
reopen trade and to expand trade. I am taking a trip in the 
spring to Indonesia and Vietnam. I think there are tremendous 
opportunities in that region. I think that is the reason why 
the President has been engaged in the Trans-Pacific Partnership 
discussions, to sort of create a much larger, multilateral 
arrangement.
    So Korea, obviously, another opportunity for us, and we are 
anxious to make sure the free trade agreement gets through the 
process as quickly as possible.
    Mr. Aderholt. Anything in particular regarding the status 
of sales in Australia?
    Secretary Vilsack. You know, I will have to get back to you 
on that, Congressman. I am not specifically sure about 
Australia. Our focus has primarily been on China and Russia, 
where they have from time to time created nonscientific 
barriers that we have to kind of knock down.
    [The information follows:]

    Australia currently bans imports of U.S. fresh/frozen chicken and 
turkey meat due to concerns related to infectious bursal disease (IBD). 
This disease is present in both countries; however, as a result of an 
import risk assessment (IRA) on chicken meat, Australia concluded that 
the U.S. strain is exotic to Australia. The United States believes that 
the IRA overestimates the risk presented by imports of these products. 
In 2009, the United States asked Australia to add market access for 
U.S. cooked turkey meat to the list of issues that USDA is looking to 
have addressed on a priority basis. USDA continues to press Australia 
on this issue, and has had recent discussions that indicate the matter 
will be given greater attention by the Australian side going forward. 
In 2010, the United States exported over $2.5 million in poultry 
products to Australia, the majority of which were eggs and egg 
products.

    Mr. Aderholt. And certainly I know those would be large 
markets as well.

                            TRADE AGREEMENTS

    Just sort of tied into that with talking about the sales 
and trade agreements, a lot of times I talk to constituents and 
they want to know the benefits of these free trade agreements. 
And a lot of times they hear about the impact they have on 
manufacturing.
    But could you share some examples of where agriculture has 
actually really flourished when there has been trade 
agreements--for example, under CAFTA and under even NAFTA, but 
in CAFTA in particular, where you have seen some real positive 
efforts that have flowed from these agreements in the past?
    Secretary Vilsack. Representative, what I usually do when I 
talk about trade is to talk about the overall agricultural 
trade situation. And this year is a good year to talk about it 
because we had a record export year in agricultural trade. We 
did--and we anticipate this year, the current year that we are 
in, we will do roughly $136 billion worth of agricultural 
trade. That will be $20 billion higher than last year's effort, 
and last year's effort was a record effort in exports.
    Every billion dollars of agricultural sales, export sales, 
generates somewhere between 8,000 and 9,000 jobs. So it is a 
job creator. Obviously, it is nice to know that we have in this 
area a trade surplus. We are anticipating the trade surplus 
this year to be $47 billion. There are not very many parts of 
our economy where we can talk about a trade surplus.
    So we are basically creating wealth from the ground, 
exporting it outside the country to CAFTA countries, to 
Southeast Asia, to Europe, and to certain African countries and 
South American countries. We are heavily engaged in promoting 
trade, and we are going to continue to be so.
    Our budget does propose additional resources because it can 
create new opportunities. So across the board, we have seen 
significant increases in agricultural trade.
    Mr. Aderholt. And I would assume that that would be the 
case with the South Korean and Colombian----
    Secretary Vilsack. Well, there is no question on South 
Korea. We know precisely what will happen. We will see tariffs 
reduced on 60 percent of our agricultural products. It is 
roughly a $5 billion market today. Those tariffs are roughly 53 
percent, which are quite high. We will see an elimination on 60 
percent of those items immediately, and then over a period of 
time the reduction of the other tariffs. So there is no 
question there is a great opportunity there for us.
    It is part of our strategy to focus on countries where 
there are expanding middle classes or countries where we think 
barriers to nonscientific--nonscientific trade barriers can be 
reduced. And Korea obviously has an expanding middle class, and 
I think will provide impetus and momentum for additional trade 
agreements.
    Mr. Aderholt. Thank you.
    Mr. Kingston. The gentleman's time has expired.
    Ms. DeLauro. Thank you very much, Mr. Chairman, Mr. 
Secretary and staff. Welcome.
    Just give me five seconds more, Mr. Chairman, just to say 
thank you. It was a hard decision for me to make the choice 
that I did in moving to ranking on HHS. I love the work of this 
committee. I have been very proud of the work that we have all 
done together in a bipartisan way, and it has been a pleasure 
working with you. I am looking forward to working with you 
again and with my colleague, Mr. Farr, in the ranking position.
    And I just want to say a thank you to the Secretary and his 
staff for the good work I believe we have been able to do over 
the last several years. So thank you.
    Mr. Kingston. Thank you.

                   FOOD SAFETY AND INSPECTION SERVICE

    Ms. DeLauro. With that, let me just follow up on a couple 
of areas that Mr. Dicks began to explore. I really am 
interested, and if we don't have an answer today, I would like 
to know, that because of the $88 million cut over the remainder 
of the year if the current Appropriations Bill becomes law, I 
think we have to--and we can't, and I know you are not 
suggesting this, Mr. Secretary--that we just can't hope for the 
best that will come out of this process.
    But just in quantifiable data, which I think we need to 
know something about, is how many inspectors would have to be 
furloughed for how long a period of time? How many chickens and 
beef carcasses would be destroyed because they will go 
uninspected? What positions are you proposing to eliminate, and 
how would that affect the daily and continuous plant 
inspections?
    I would like real numbers attached to this and a plan 
attached to this. As I say, I don't think we can hope for the 
best here. I think we need to have a plan B, and I think 
everyone here--and the public as well--needs to know what the 
impact of those cuts would be.
    When FSIS inspection is inadequate, we get the scandals 
like Westland/Hallmark, that beef debacle that we had in 2008. 
And as an adjunct to that, what are the safeguards on the 
proposed savings? What is in place? What is in place to assure 
us that we do not have another inspection failure like that 
was?
    Secretary Vilsack. Well, Representative, let me just say 
generally--we will provide you the specifics--but generally 
speaking, the concern that I have about all of these 
conversations about budgets and the difficulties that we are 
having in trying to get a 2011 budget finished is--Are we going 
to have sufficient time in which to manage whatever you 
ultimately decide?
    Having been a governor for eight years, having balanced 
eight budgets, if you give me enough time, we can work around. 
But if you try to squeeze into six months a rather substantial 
cut in an area of the budget that is personnel-driven, you have 
no other recourse. It is not like you can plan. It is not like 
you can figure out how to deal with the situation.
    But if you have time--and by time, I mean an extended 
period of time; that is why the President has suggested and 
proposed a freeze of discretionary spending for several years. 
That gives his managers, his Cabinet members, time to manage it 
appropriately. If you squeeze a substantial reduction in a 
short period of time, it becomes very difficult to manage. And 
FSIS is a good example because that is a place where it is very 
personnel-driven.
    [The information follows:]

    Last week the Senate voted on the House passed version of H.R. 1 
and the Senate version of the bill that would have funded the 
government for the remainder of the year. As you know, neither proposal 
had sufficient support to pass the Senate. This is an indication of the 
difficult decisions under consideration. The Administration has made it 
clear it is willing to support a reasonable compromise that makes 
targeted investments while cutting spending in a measured way that will 
help us reduce the deficit. This assumes that we will be provided 
enough time to properly manage the implementation of any reductions 
that ultimately result from these decisions.
    In the case of FSIS, it is important to note that 85% of the FSIS 
budget is for personnel, so a reduction of the magnitude contemplated 
by H.R. 1 would likely have an effect on the FSIS workforce. Since 
October 1, 2010, the Agency has undertaken a review of all spending and 
made significant progress in reprioritizing non-essential travel, 
operating, and staffing to support core mission requirements. These re-
prioritizations were necessary to provide adequate funding for pay cost 
increases (those merit promotion and within-grade-increases) and 
unfunded benefit increases, such as rising health care costs and an 
increasing number of FERS employees. As part of the FY 2012 budget 
process, FSIS has also identified several proposals that are part of 
the 2012 budget that will make FSIS more efficient. However, if FSIS 
were to be reduced to FY 2008 levels with five or six months left in 
the fiscal year, there would likely be no way to avoid impacting the 
FSIS workforce.
    To mitigate an $88 million reduction, the Agency would seek to 
manage the effects in such a way as to minimize the impact on the 
Agency's regulatory responsibilities, on industry, and ultimately the 
consumer. FSIS would likely need to furlough employees, and in one 
scenario, FSIS would need to furlough frontline inspection personnel 
(currently more than 8,000) resulting in approximately 6,200 federally 
inspected meat and poultry plants being shut down for over one month.
    It is difficult to estimate the exact impact on the industry, but 
during FY 2010, FSIS inspection program personnel ensured public health 
requirements were met in establishments that slaughter and/or process 
147 million head of livestock and nine billion poultry carcasses. 
Assuming a similar level of slaughter and processing in FY 2011, 
disruption of inspection for over a month would likely result in 
billions of dollars of impacts.

    Ms. DeLauro. And I will reiterate, but I would like to see 
the numbers. I think it is important to know the numbers. And 
you as an administrator and as a governor know that you have to 
plan for the worst scenario, and I think that that is 
important. I also would just say what the closure of these 
plants would be, and I think people have got to understand what 
the effect is on the cost of meat and poultry products as a 
result of that.

                          INTERSTATE MEAT RULE

    Let me move to state and meat/poultry inspections. The 2008 
Farm Bill directed FSIS to establish a program whereby certain 
meat/poultry establishments currently under state inspection 
would be eligible to ship their products in interstate 
commerce. There was careful negotiation on that among the 
consumer organizations, state departments of agriculture, the 
National Farmers Union, and labor organizations.
    The comment period for the proposed rule to implement the 
new program closed on December 16, 2009. The Department did not 
send the Final Rule to the Office of Management and Budget for 
final clearance until January 7, 2011. Why was there such a 
long delay in transmitting the Final Rule to OMB, and when do 
you expect the Final Rule to be published in the Federal 
Register?
    Mr. Kingston. Mr. Secretary, you have about--actually, time 
has expired, so if you could just summarize it quickly and 
submit the rest of it for the record, that would be helpful.
    Secretary Vilsack. We are expecting it soon from OMB, very 
soon. My hope is--we talked about this just yesterday, about 
the interstate meat rule--our hope is that it gets done very 
soon. This was a pilot project, and I think we just wanted to 
make sure it was done right in terms of the amount of time.
    [The information follows:]

    The comments were substantive and the Agency benefited from a 
thorough analysis in developing the docket.

    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Kingston. Thank you.
    Mr. Nunnelee, I want to welcome you to the committee. But 
inasmuch as Mr. Bishop has been the first one here today, I 
feel like we need to go to him. So if you don't mind, Mr. 
Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman. I appreciate 
your courtesy. And welcome again, Mr. Secretary.

                       RENEWABLE AND CLEAN ENERGY

    Although the President's fiscal year 2012 proposed budget 
for USDA decreased to $23.9 billion from the $27 billion in 
fiscal year 2010, you still invest $6.5 billion in support of 
renewable and clean energy. In particular, the Agriculture and 
Food Research Initiative is getting an increase of $8.2 million 
for a research initiative to develop high-quality, cost-
effective feed stocks, as you mentioned, for biofuel 
production. And the Rural Business Cooperative Services, which 
operates the Renewable Energy Loan and Grant Program for the 
purchase of renewable energy systems and energy efficiency 
improvements, will see a combination of mandatory funding and 
grants programs at about $57 million above fiscal year 2011.
    This is laudable, but I am concerned regarding the future 
of ethanol production as a vehicle alternative fuel source. The 
ethanol plant in my district, which you visited last year, was 
just forced to seek bankruptcy due to a number of factors, and 
I understand that that story is similar around the country.
    I think that we all support ethanol as an alternative fuel 
source. But how can we work to support and strengthen the 
industry, particularly given the tremendous pressure that it is 
experiencing now, both politically and economically?
    Secretary Vilsack. Representative, first of all, there are 
over 200 ethanol production facilities in the country. We had a 
record amount of ethanol produced. Ethanol production is up 23 
percent this year. So there may very well be, as is the case in 
your district, an individual circumstance where a facility 
didn't make it. I think in your facility's case, it is a 
particular technology concern and challenge that they were not 
able to overcome.
    Having said that, here is why it is important to continue 
to support biofuels and renewable energy, because if we reach 
and when we reach the 36 billion gallon mandatory amount that 
you all have set as the goal, we will produce roughly a million 
jobs in rural America. A million jobs. And we will see $100 
billion invested in biorefinery plants across the country.
    The key here is for us to make sure that we multiply feed 
stocks used and available to produce ethanol. It is not and 
cannot and will not be solely based on corn. There are a number 
of interesting strategies that we are currently investing in 
that we believe ultimately will result in us being able to 
produce ethanol and biofuels in all parts of the country, 
utilizing whatever that part of the country has as its feed 
stock.
    It could be woody biomass in the Northwest. It could be 
perennial grasses in the Southeast. It could be algae in a 
facility in the Southwest, as we currently are investing in. It 
could be animal waste. It could be landfill waste, which we are 
investing in, a plant in the Deep South. I mean, there are a 
multitude of ways to do this. It is really about rebuilding the 
rural economy, and you have got to provide new products, or you 
have to differentiate what you are producing from everything 
else that is of a like kind that is being produced.
    Mr. Bishop. I agree with you, Mr. Secretary. And for the 
past several years, the corn price has been pretty much tied to 
the price of oil due to ethanol production, which has become a 
major concern to our pork producers and our cattle producers in 
terms of feed consumption, feed efficiency, and feed waste.
    How can we better balance and/or differentiate corn 
production and costs for ethanol production versus animal 
consumption?
    Secretary Vilsack. Well, first of all, fortunately, we are 
seeing good prices in our livestock area. And so we want to 
obviously continue to expand market opportunities for those 
livestock producers so they have strong markets.
    Secondly, when you are producing ethanol, you are not just 
producing ethanol. You are also producing a feed supplement 
that is quite efficient and quite effective in cattle in 
particular.
    So I think there are additional reasons why this is an 
industry that we should continue to support for the livestock 
industry. Obviously, we are keeping an eye on the livestock 
industry, but at this point in time we seem to be doing okay. 
And we are going to continue to work hard to make sure markets 
are available, and that we become more efficient, and that we 
expand the number of feedstocks available so that we don't rely 
solely on one feedstock.

                               BROADBAND

    Mr. Bishop. I have just a few seconds left. Let me switch 
to broadband right quickly. A number of Georgia residents are 
waiting for broadband coverage in the service resulting from 
the 2009 stimulus program. And we have spoken with the three 
primary service providers who won the contracts in Southwest 
Georgia. But they tell us that while they have submitted all 
the paperwork, RUS hasn't processed the loans and they haven't 
received the funding yet. In one case, the paperwork has been 
pending since the fall.
    What is the total number of funds that are allocated to 
grantees? And is there a way we can expedite the process?
    Secretary Vilsack. The 330 projects, I can't say 
specifically as it relates to your particular project. If you 
can allow us to get back to you, we will be happy to look into 
that. There may very well be a reason why there has been a 
delay.
    [The information follows:]

    Under the Recovery Act, the Rural Utilities Service approved $3.5 
billion in funding for more than 300 broadband projects across the 
country. These projects are moving forward on schedule to meet the 
three-year deadline mandated by the Recovery Act. Of the nine Recovery 
Act-funded broadband projects in Georgia, funds have been made 
available to one awardee, Flint Cable TV, as RUS has cleared the 
document and environmental review for that particular project. For the 
remaining Georgia projects, RUS is working to clear the documents for 
three projects and is working to finalize the environmental findings 
for five projects.
    Of the total funds obligated nationwide, $1.974 billion in project 
funding is available for construction or pending final clearance, and 
$82 million in funding has been drawn down by awardees. In order to 
ensure responsible administration of Federal funding, documentation for 
these broadband projects undergoes a comprehensive review by RUS loan 
and grant specialists. We are doing everything in our power to expedite 
these projects to ensure they meet the construction deadline.

    Mr. Bishop. Thank you, Mr. Secretary.
    Mr. Dicks. Would you yield to me just briefly?
    Mr. Kingston. The gentleman's time has expired. But I am 
sorry unanimous consent to give Mr. Dicks----
    Mr. Dicks. I have to go on to another meeting.

                                ETHANOL

    But Mr. Secretary, I think you have got to make that story 
about ethanol--you need to get that out there because there is 
a lot of misinformation being spread all over this country 
about that program. And you are an expert on it, and the 
administration needs to talk a lot more positively about it, I 
think.
    Secretary Vilsack. We make every effort to do that, 
Congressman. You are right.
    Mr. Dicks. Thank you.
    Mr. Kingston. Mr. Nunnelee. No questions.
    Mr. Dicks, you have more time. Mr. Nunnelee just yielded 
back.
    Mr. Dicks. I got things to do. [Laughter.]
    Mr. Kingston. Well, let me welcome you again to the 
committee.

                          PAYMENT ERROR RATES

    Mr. Secretary, I wanted to talk to you a little bit about a 
subject you and I have spoken about in the past, and that is 
the payment error rates. And I had noticed that you have 
brought down the error rate for farm programs, and one of the 
more fascinating hearings that we have each year on this 
subcommittee is when the Inspector General comes in and talks 
about people who are gaming the system. And it is not just 
individuals. It can be institutions, and it can be our own 
sloppiness that causes payment errors.
    But I wanted to have you comment on the farm program 
payment errors and then I want to talk to you about the 
Supplemental Nutrition Assistance Program--SNAP--benefit 
payment errors because it appears that one of the rates has 
gone down in farm payments, whereas SNAP has sort of leveled 
off at about a 4 percent rate. And I have some statistics, but 
let me just ask you to comment on those two.
    Secretary Vilsack. Well, on the farm payment, we have done 
a couple of things. First of all, there was a concern about 
deceased individuals receiving payments. And so we have teamed 
up with the Social Security system to make sure that we are 
appropriately providing resources. There are circumstances 
where a farmer dies during the year and their family is 
entitled to the payment, and at that point it ought to stop. 
And we are doing a better job of making sure that we keep an 
eye on that.
    We have also teamed up, as you well know, with the Internal 
Revenue Service--IRS--to make sure that if folks are above the 
income thresholds, that we receive notice of that. And we are 
doing that in an appropriate, secure, privacy-protected way.
    We have also taken a look at ways in which we analyze some 
of our disaster programs. The Noninsured Crop Disaster 
Assistance Program--NAP program--for example, had a high error 
rate. We think that might be because of the sampling process 
that we are using, and so we are looking at ways in which we 
can reduce that. So we have seen reductions.
    On the SNAP side, I would just simply say that you have to 
also recognize that there has been a significant increase in 
the number of SNAP recipients in the last two years. Roughly, I 
believe, 13 million people have been added to the rolls, and so 
that is a 30 percent increase. And we have still been able to 
maintain a less than 4 percent error rate, or less than 5 
percent error rate. The standard is less than 6 percent.
    We are going to continue. We have challenged our team to do 
a little bit better this year to continue to increase that 
percentage of proper payments.
    Mr. Kingston. Let me ask you this. As I read the IG report 
on both these programs, the farm program and the SNAP program, 
some of it is kind of like the Readers Digest article stuff. 
There was--I believe it was in Detroit, a grocery store where 
the employees were selling--like swapping cigarettes for 
electronic benefit cards and, you know, just things that seemed 
outrageous and easy to do something about, but it had gone on 
for years.
    And I am not sure about that particular case. But some of 
these appear to be easier to deal with than others in terms of, 
you do this once, you cannot continue to participate in the 
program. And the thing about the SNAP program is it is $3.6 
billion. So the amount of money involved for 4 percent--that is 
not that high, but the amount of money is tremendous.
    Secretary Vilsack. I agree with you. And one of the 
benefits of the electronic benefit transfer system is it allows 
us to essentially keep an eye on--one of the incidences that I 
have heard of recently is somebody buying substantial amounts 
of water, and dumping it out and then basically turning in the 
containers for deposit.
    So there are ways in which we can see if there are a 
disproportionate number of purchases. We can track that. We can 
keep an eye on it. We can have people in those stores, 
basically, examining and keeping an eye on it.
    So we are committed to this. We know that this is a big 
number. It is a small percentage, but a big number. But given 
the fact that we have seen a 30 percent increase in 
participation in the program, I think it does speak well for 
our efforts that we have been able to at least maintain an 
error rate that is historically a solid rate.

                             SNAP PURCHASES

    Mr. Kingston. With all the discussion, particularly led by 
the First Lady, on nutrition and proper diet and the new food 
pyramid and all these things, is it time to track electronic 
benefit purchases with nutrition and health, and tie that in 
and move in that direction?
    Secretary Vilsack. Well, we are obviously studying the 
request from the City of New York to do something akin to that. 
It is a lot easier said than done, simply because there are 
over 300,000 products that can be sold in a grocery store.
    We at this point have preferred a more incentive-driven 
effort. We have a pilot project that the Farm Bill basically 
directed us to put together in Massachusetts, in which we are 
trying to see if by encouraging with point-of-sale incentives, 
we can see increased fruit and vegetable purchases as opposed 
to some of the other purchases.
    Candidly, the studies would show that there is 
fundamentally no difference in terms of purchasing or diet 
choices between folks who are on SNAP and the rest of the 
population, in large part because even the folks on SNAP have 
cash that they use at the grocery store because only 10 percent 
of the people receiving SNAP are cash welfare recipients. So 
most of them are working and struggling families.
    So I think our view is education and incentives will work 
more effectively than trying to figure out a very complicated--
and I will just give you one example, and then my time is up.
    But let's say that you had a system in place where you 
couldn't buy a certain snack food with SNAP. How do you enforce 
that? The 18-year-old cashier who lets it go through, are you 
going to penalize her or him? Are you going to close the store 
down? How do you enforce it?
    And I think these are very technical, practical questions 
that, again, seems like a great idea, but the implementation of 
it becomes a lot more difficult than you would expect.
    Mr. Kingston. I am sure we will be talking about this as 
time goes on.
    Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman.

                       REVITALIZING RURAL AMERICA

    Mr. Secretary, I again want to get back to your sort of 
explanation of what you are going to do with your leadership. 
And I think your background as governor and mayor are very 
important to this.
    You say in your opening testimony that: ``Rural America 
offers many opportunities, but it also faces a number of 
challenges that have been experienced for decades. Rural 
Americans can earn less than their urban counterparts. They are 
more likely to live in poverty. More rural Americans are over 
the age of 65, and they have completed fewer years of school, 
and more than half of America's rural counties are losing 
population.''
    ``In addition, improvements in health status have also not 
kept pace, and access to doctors and health services has been a 
key challenge for rural America. Within the context of a 
reduced federal funding level, our budget proposes to focus 
resources on the most effective means to address the long-term 
challenges facing rural communities in America. A critical 
element is engaging with the public and private partners to 
revitalize rural communities by expanding economic 
opportunities and creating rural jobs.''
    I agree with every word. But then you go on, and this is 
what I want to know, is how do you get a better bang out of the 
buck here when you eliminate or cut all these programs? 
Conservation district loans, rural housing programs, rural 
utilities, rural businesses, watershed flood protection, 
Watershed Rehabilitation Program, RC&D programs, ARS, 
Grassroots Source Water Program, NIFA, and several programs in 
NIFA. And I think, in all, 34 programs that affect rural 
America are being cut.
    How are we going to revitalize rural America by cutting out 
the base?
    Secretary Vilsack. Well, I would say a couple things. First 
of all, on the housing issue, when you take a look at the 
guaranteed loan program that we have--we have substantially 
increased over the course of the last couple of years. When I 
came into office, I think we were doing something in the 
neighborhood of $4 or $5 billion worth of guaranteed loans. We 
are proposing approximately $20 billion in guaranteed loans. So 
our view is that we can meet the housing needs with the budget 
that we have proposed.
    On the----
    Mr. Farr. Just on that, the problem is getting worse, and 
you can meet it by having fewer loans. Right?
    Secretary Vilsack. Well, actually, I don't think it is 
fewer loans, sir. I think, actually, you will see the same 
number or--certainly the same number. They will be different 
types of loans. What we have proposed is a reduction in direct 
loans, and we have increased--a reduction in direct loans, but 
an increase in guaranteed loans.
    So the amount of housing units and home loans that we are 
able to do is going to be roughly the same. We are still 
looking at something in the neighborhood of 90,000 home loans. 
So I don't think you are going to see a substantial decrease.
    On the assisted housing, there is a decrease. But part of 
the reason there is a decrease is because some of these units 
are going into foreclosure, and some of them are being 
converted to higher-income tenants, which often happens.
    Mr. Farr. Rather than going through all 34 programs and 
justifying why you think that cut is warranted, is there an 
overall strategy----
    Secretary Vilsack. Yes.
    Mr. Farr [continuing]. Kind of measurable objectives that 
one can look at, and go back to rural communities and say, 
well, maybe we are eliminating or consolidating silos, but we 
are going to get a better bang for our buck.
    Secretary Vilsack. Well, we have proposed the establishment 
of a regional approach, in which we think we can leverage our 
resources and our capital more effectively. We also----
    Mr. Farr. Is that just regional among federal agencies, or 
does it also include state and county?
    Secretary Vilsack. Actually, the local geographic area. So 
we are talking----
    Mr. Farr. So, for example, as governor of Iowa, you know 
how your counties work and what kind of county offices that may 
not be federal employees but are doing some very effective--do 
you--thinking about, you know, what kind of collaboratives they 
can enter into?
    Secretary Vilsack. That is part of it. And part of it is 
working with local economic development and Chamber of Commerce 
folks, working with local government officials and state 
officials, to leverage their resources, the private sector 
resources; but most importantly, to figure out precisely what 
that region does best and to invest in what it does best.
    Mr. Farr. So it is individualized by region in the country?
    Secretary Vilsack. There are seven regions that we have 
selected for a sort of pilot.
    Mr. Farr. That is pilots. Yes.
    Secretary Vilsack. Yes. One of them is actually in 
Southwest Iowa. It is a group of six or seven counties that are 
working together.
    So there is regionalism. There is also a reflection and an 
effort that we are undergoing to increase capital markets, 
capital opportunities from the private sector. We think we need 
to engage the capital markets and venture capital more 
effectively. We need to figure out ways in which we can 
encourage more capital into rural America. And that may mean 
regulatory changes. It may mean statutory changes in terms of 
the permission of Farmer Mac and the Farm Credit Administration 
and community-supported banks, a way in which we can figure out 
how can we encourage you to invest more in rural America. So 
there are lots of strategies.
    Mr. Farr. Have you published that vision?
    Secretary Vilsack. Pardon.
    Mr. Farr. Have you published your vision? I mean, is it 
other than--it is hard to pull out of all this budget data. Is 
there more than--is there some statement of sort of a rural 
strategy for America?
    Secretary Vilsack. Well, we are actually working with the 
White House, with my fellow Cabinet members, to essentially 
establish a much broader vision, not just USDA's vision but a 
government-wide vision.
    Mr. Farr. Yes. When do you think that will be out?
    Secretary Vilsack. Well, our hope is in the next couple of 
months. I mean, I can give it to you right now, but--I mean, 
from our perspective I can give it to you right now very 
easily. And we do have it published. It is published in our 
high-performance goals. It is published in our strategic vision 
for the Department, which we will be happy to provide you with.
    [The information follows:]

    The Department of Agriculture, as identified in its Strategic Plan 
for FY 2010-2015 (http://www.ocfo.usda.gov/usdasp/sp2010/sp2010.pdf), 
is committed to assisting rural communities to prosper so that they 
become self-sustaining, repopulating, and economically thriving. USDA 
strives to expand economic opportunities in rural America and to create 
jobs for rural residents. To achieve this vision for rural America, 
USDA has established a high priority performance goal to create, strong 
and local regional communities. As part of the strategy to achieve this 
goal, USDA has identified nine regions to participate in pilot projects 
that leverage Federal resources in combination with State and local 
resources. As a result of these pilots, USDA is seeking to develop 
strong regional economic strategies for expanding exports; linking farm 
production to local consumption; producing biofuels and renewable 
energy; capitalizing on broadband; and innovatively using natural 
resources as wealth-building tools for rural places.

    Mr. Farr. Thank you. Thank you, Mr. Chairman.
    Mr. Kingston. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman. Before I ask my 
question, I just want to express my appreciation to the 
gentlewoman from Connecticut for her kindness and the great job 
she did as chairman. You should be ranking here. You sold us 
out. [Laughter.]
    Anyway, thank you.
    Ms. DeLauro. Thank you.

                          PROPOSED LEGISLATION

    Mr. Latham. Mr. Secretary, in your budget there is a 
proposal to limit eligibility of direct payments by adjusting 
the adjusted gross income, supposedly to save about $2.5 
billion over 10 years. You have also got a series of user fees 
for APHIS and FSIS, GIPSA, and NRCS.
    Are you submitting legislation, or is there any effort to 
reopen the Farm Bill to do these things? And if that does not 
happen, do you have other offsets to make up for the funding 
that you are not going to get?
    Secretary Vilsack. We really think if we are going to have 
a good quality discussion about the budget, and we are to 
establish it as a reflection of our values and priorities, 
there does need to be what the President referred to yesterday 
as shared sacrifice and shared opportunity.
    With farm prices as strong as they are today, we think it 
is appropriate to ask the most successful farmers to consider 
perhaps receiving a little bit less than they have been 
receiving. And we are happy to talk about the process that we 
would follow to essentially have that happen. I am sure 
Congress has the capacity to make that happen. And we think it 
ought to happen, and we have proposed this the last couple of 
years.
    On the fees, if I can just say, in many cases those fees 
are designed, in part--certainly in the FSIS area--to basically 
pay for facilities where we have to inspect more frequently 
because of difficulties and problems. So we are asking folks 
who maybe have not lived up to the standard to possibly pay a 
little bit more for the extra work that they are causing.
    Mr. Latham. I guess the reality is, though, that they are 
not going to reopen the Farm Bill before they write a new one. 
And so, are there other offsets or something that you are going 
to use to make up for the--if, in fact, you do not get your 
user fees?
    Secretary Vilsack. We are not going to give up on that, 
Representative.
    Mr. Latham. Okay.
    Mr. Kingston. If the gentleman will yield, if the 
Department has a proposal, or knows of a proposal that we could 
look at that is appropriation legal or germane, we would look 
at it, because as you know, it is always going to be offered on 
the floor, anyhow. And I think we would rather be in a 
proactive position, working with you, than a defensive 
position.
    Secretary Vilsack. And we are happy to. I mean it is 
relatively simple. We are just simply saying the limits that 
you have got in the Farm Bill today would be reduced by 
$250,000, both on the non-farm and the farm income. So you 
could, as a farmer, have $500,000 income or $250,000 of non-
farm income, and still potentially qualify.
    Mr. Latham. I am not debating the merits.
    Secretary Vilsack. Yes.
    Mr. Latham. I am just saying the reality is that they are 
not--the authorizers are not going to open up the Farm Bill.
    Secretary Vilsack. Well, it is a new day here. We are 
talking about a lot of things we have never talked about 
before.

                    ENVIRONMENTAL PROTECTION AGENCY

    Mr. Latham. Yes? I hope so. Well, one thing is, obviously, 
you are familiar, in Iowa and across farm country, everybody is 
very concerned about what the Environmental Protection Agency--
EPA--is doing, and whether it be the greenhouse gases, 
particulate matter, dust, anything, how much do you work with 
EPA, as far as trying to get some common sense maybe on some of 
the regulations? Because production agriculture is going to 
shut down if, in fact, some of these ideas are put forth.
    Secretary Vilsack. Well, I think we have had an impact on 
some of the rules that have recently been submitted. The 
Tailoring Rule is a good example of some of the impact that we 
have, in terms of biomass, and suggesting that they really need 
to take a look at the models and study----
    Mr. Latham. Milk spills.
    Secretary Vilsack. Well, and that is another one. And 
actually, I think Administrator Jackson has been open and 
receptive to my comments. We work with our Agriculture liaison 
on a regular basis. He is either in our shop or we are in his 
shop on a weekly, if not daily, basis.
    We do also facilitate conversations between the commodity 
groups, livestock groups, and the EPA administrator, and we are 
suggesting, specifically as it relates to the dust issue that 
you have raised, that there ought to be an opportunity for 
farmers to basically provide some specific input in the form of 
hearings or some set of meetings. And I think the administrator 
is open to that.
    And I think she is also willing to go out into farm country 
and sit down and visit with folks, so that there is a clear 
understanding of what is being proposed. Oftentimes there is a 
misunderstanding in listening to some of these conversations. 
And at times there is an opportunity for EPA to be educated 
about what is actually happening on the farm, and improvements 
that have already taken place on the farm that may not have 
been factored into consideration. So I think there is an 
openness.
    Mr. Latham. Well, and I hope so. I mean the belief by a lot 
of folks is that you are only going to be able to harvest, like 
in Iowa, corn and soybeans after it is wet and soaked, and 
obviously, you cannot harvest, because----
    Secretary Vilsack. I do not think that is going to happen.
    Mr. Latham. Well, but that is the way the rules are being--
I appreciate it, and I am going to have to leave, Mr. Chairman, 
so thank you.
    Mr. Kingston. Thank you. Ms. DeLauro.

                   FOOD SAFETY AND INSPECTION SERVICE

    Ms. DeLauro. Thank you, Mr. Chairman. Just a quick update. 
If we do have to--and it looks like we will, with an $88 
million cut, in terms of the inspection FSIS--what that would 
mean in the chairman's district in Georgia, that means 15 
plants would have to furlough people. Mr. Latham's district, 44 
plants; Ms. Emerson, 12; Mr. Aderholt, 32 plants would deal 
with furloughs of inspectors in those areas. Mr. Nunnelee, 10 
plants; Ms. Lummis, Wyoming, has no federally-inspected plants, 
but the state has 22 state-inspected meat and poultry plants 
that receive up to half their funding from FSIS.
    When the funding has been tight in the past, FSIS has cut 
funding to states with state-inspected programs. It just gives 
you a little bit of the flavor of what the nature of that cut 
will mean to all of us.

               IMPORTATION OF PROCESSED POULTRY PRODUCTS

    Let me move to the area of animal and plant health 
inspection service to APHIS. It was because of APHIS's concern 
with avian influenza outbreaks in the People's Republic of 
China--sound familiar, Mr. Secretary?
    Secretary Vilsack. Yes, it does.
    Ms. DeLauro. That limited the scope of the April 24, 2006 
FSIS rule to permit the importation of processed poultry 
products, only if the source of the raw poultry came from 
either the U.S. or Canada. The APHIS interim rule that was 
published in January permits certain countries that have 
experienced outbreaks of avian influenza in their poultry 
flocks. China is included on that list to export poultry 
products to the U.S. under certain conditions.
    Can you tell us why the USDA changed its position from the 
one taken in 2006? And I find it very interesting, Mr. 
Secretary, that the publication of the interim rule occurred 
right after the visit of Chinese President Hu Jintao to 
Washington.
    I don't know whether that was a coincidence, or some sort 
of an understanding that was reached while he was here, that 
such a rule would be published. But we are only going back in 
history to when the first effort on the processed chicken was 
articulated by USDA prior to your time, when it happened just 
after a visit from the Chinese president, and when they had 
agreed to open up their borders to our beef.
    I have a series of other questions on Chinese chicken, but 
let me ask that. I do not know how much time I will have to get 
to the others.
    Secretary Vilsack. I will do my best to answer that 
question, and make sure that if I do not, we will provide you 
additional information.
    Ms. DeLauro. Okay.
    Secretary Vilsack. Essentially, you know, as a result of 
legislation, we asked the Chinese to update us on precisely 
what their rules and regulations were, which they did. We then 
sent an auditing team to China to take a look at their 
processing facilities, and also to have a discussion with them 
about the opportunity to have poultry come into the United 
States from China.
    We have done the audit. We had a set of questions which we 
submitted to the Chinese. Until those questions are answered, 
and until we complete that auditing process, we are not in a 
position to okay and authorize processed poultry from China to 
come into the United States.
    When that happens, the only poultry that will be allowed to 
come into the United States that is processed in China is 
poultry that comes from approved facilities. In other words, 
the United States----
    Ms. DeLauro. I understand.
    Secretary Vilsack. Okay.
    Ms. DeLauro. Yes, I understand.
    Secretary Vilsack. In terms of poultry coming from China 
that is raised in China, we felt that there was a need for a 
rule, for opportunity for comment, and that is quite a ways 
down the road before that gets done. And that is the process we 
are following.
    So, today there is nothing coming in. We believe at some 
point in the near future, perhaps processed poultry from China 
that is from a source that is an approved source--not Chinese, 
but an approved source--may come in pursuant to the agreement 
that we reached, based on all the processes that they have gone 
through. If they want poultry that is slaughtered in China to 
come into the United States, they are going to have to go 
through a much more elaborate process.
    Ms. DeLauro. Well, but it says here in your letter, which 
was to Mr. Farr in February, ``Furthermore, if China adequately 
responds to any potential issues in the slaughter order, the 
next step would be--publish the proposed rule--proposing to add 
China to the list of countries eligible to export slaughtered 
poultry''----
    Secretary Vilsack. Right.
    Ms. DeLauro [continuing]. ``To the United States.''
    Secretary Vilsack. Right.
    Ms. DeLauro. That sounds like it is not as far away as you 
suggest.
    Secretary Vilsack. Well----
    Ms. DeLauro. My time is going to be up in a second. I will 
come around, because as I say, I have an additional set of 
questions with regard to----
    Secretary Vilsack. Two steps, one that could happen soon, 
based on facilities that have been approved.
    Ms. DeLauro. That is processing.
    Secretary Vilsack. Right.
    Ms. DeLauro. Right.
    Secretary Vilsack. That have been approved already. And, 
two, at some point in time in the future, assuming that China 
can comply with our rules and regulations and laws concerning 
equivalency, at that point they would be authorized.
    Now, whether they can or not, we do not know, because we 
have not gone down that road yet.
    Ms. DeLauro. Mr. Chairman, I hope there will be another 
round. Okay? Thank you.
    Mr. Kingston. There will be. The chair welcomes Ms. Lummis, 
another new member to the Committee. Welcome.
    Ms. Lummis. Thank you, Mr. Chairman. Hi, Mr. Secretary.

                                 CODEX

    My first question is something I am just learning about 
myself, and it is about something called Codex, which is a UN-
based international commission that sets science-based 
standards for food safety. And I understand USDA is our 
nation's interface with Codex.
    There seems to be a problem in that there are efforts to 
change certain standards within Codex from science-based to 
non-science-based in a way that could interfere with U.S. 
exports to foreign countries. And so, my question is this. 
Because Codex is important for U.S. ag trade, is the USDA 
increasing its focus on Codex activities?
    Secretary Vilsack. I would say that we have remained 
focused on Codex activities, and in advocating consistently a 
science-based and rules-based system. In fact, we are in the 
process now of trying to get Codex to approve changes which we 
think are, indeed, science-based, for which there is resistance 
in other parts of the globe. But our approach has always been 
to emphatically support a science-based system.
    Ms. Lummis. And do you coordinate that with the U.S. Trade 
Rep?
    Secretary Vilsack. Yes.
    Ms. Lummis. Okay. Does the USDA work with Codex to try and 
make sure that they are continuing to focus on science-based 
standards, as opposed to going off on some of these non-
science-based tangents?
    Secretary Vilsack. Absolutely. I mean we are very 
consistent about that, both in our multi-lateral conversations 
and our bilateral conversations. It basically is sort of the 
governing principle of our discussions on barriers and trade--
phytosanitary standards.

                      SNAP CATEGORICAL ELIGIBILITY

    Ms. Lummis. Thank you very much. My next question is about 
SNAP and the budget, as it relates to SNAP. I know SNAP 
accounts for a big portion of the Ag's budget growth. And part 
of what seems to have expanded SNAP is these broad-based, 
categorical eligibilities that are allowed. So even people who 
qualify for TANF but do not qualify for SNAP, separate and 
apart from TANF, can receive SNAP benefits.
    And we also know, of course, that the number of Americans 
receiving SNAP has grown by more than 12 million in the last 24 
months.
    Do you know what portion of SNAP growth is the result of 
these categorical eligibilities versus just in increase in 
regular SNAP participants?
    Secretary Vilsack. I think the primary reason why we have 
seen a SNAP increase is that, as people lose their jobs or are 
having to work part-time jobs or less, fewer hours, they 
qualify.
    The reason why categorical eligibility is important is 
because--the chairman and I just had a conversation about error 
rates. One of the strategies for dealing with error rates is 40 
percent of the errors are actually people that should be 
qualified for SNAP that aren't, 60 percent are folks who are 
qualified who shouldn't be. And so, categorical eligibility 
makes it a little bit easier to make sure that we are not 
making as many mistakes as we have made in the past. So that is 
number one.
    Number two, it is an administrative efficiency. You know, a 
lot of states with strapped budgets are cutting back on their 
personnel that are administering the SNAP program. So this is a 
way of making sure that we do not have people, lots of people, 
falling through the cracks who need SNAP.

                         CONTINUING RESOLUTION

    Ms. Lummis. Okay. Thanks, Mr. Chairman. My next question is 
about the CR that the House passed two weeks ago. Have you had 
a chance to review it--because we had about five billion in 
cuts in that CR--and compare it to what you are recommending in 
your budget, to see if there is any points of agreement or 
overlap between what was cut in the CR and what you are 
recommending?
    Secretary Vilsack. I want to make sure that I understand 
what you are asking me, because I get confused. Are we talking 
about the proposal that was recently announced that would 
extend things for two weeks to give you time to--or are you 
talking about the bill that passed the House?
    Ms. Lummis. I am talking about the bill that passed the 
House.
    Secretary Vilsack. Well, yes. Well, there are substantial 
reductions. We had a conversation earlier today about the 
impact on FSIS and food inspection, and I think, you know, the 
reason we had that discussion is because, in that area of the 
budget, it is primarily personnel.
    So, if you reduce that budget by a significant amount, and 
you ask that it be managed in a short period of time, the only 
way you manage it is by dealing with personnel. And the only 
way you can deal with it in a short period of time is through 
furloughs or layoffs which, in that area, shuts down plants.
    Ms. Lummis. Mr. Chairman, my actual question is areas of 
agreement. Have you seen any areas where you can agree with the 
cuts that were in the CR that passed the week before last?
    Mr. Kingston. If the gentlewoman will yield, since your 
time has expired, we will have another round. I think it is a 
great question, if you can hang out and ask it.
    Ms. Lummis. You bet. Thanks.
    Mr. Kingston. Thank you. Mr. Bishop.

                          GOVERNMENT SHUT DOWN

    Mr. Bishop. Thank you very much, Mr. Chairman. Along the 
same lines, the buzz word the last few weeks has been ``shut 
down.'' And as the tensions continue to rise with the House, 
the Senate, and the White House on reaching an agreement for 
the rest of the fiscal year before one expires a few days from 
now, can you kind of tell us what a shut-down--and God forbid 
that we have it--will actually look like?
    I know that the President indicated that he had instructed 
all of the agencies to make plans so that there would be a plan 
in place, should there be a shut-down. But thinking back to 
1995/1996, there were over a million federal workers that were 
sent home during the series of shut-downs then, and major work 
furloughs happened at the Department of Education, Veterans 
Affairs, Housing, Social Security, and Agriculture.
    So, short-term or long-term government shut-downs would 
affect your department's programs, particularly those 
administered by FSA, RUS, and the broadband program, as well as 
rural development. How do you plan to communicate that to 
constituents? What is your plan for it? What will it look like? 
How do you determine what is essential?
    Secretary Vilsack. Well, first of all, part of our 
challenge is that, in 1995, the Agriculture budget had already 
been approved. And so, our history, in terms of the 1995/1996 
time period, is a little bit different than some of the other 
departments.
    Having said that, it obviously--we start with a proposition 
that you all are going to get this worked out. And that is our 
hope, that is our belief, and we hope we are right about that. 
At the same time, we recognize----
    Mr. Bishop. We do, too.
    Secretary Vilsack. We recognize that you have to be 
prepared, as Representative DeLauro indicated. You have got to 
be prepared. And so, we have gone through that process of 
taking a look at how this would impact our work. And, frankly, 
the polestar for this is the Antideficiency Act. I mean it 
essentially tells you what you have got to do. You have got to 
make sure that you are focused on protection of people. And we 
will obviously do that. And that is----
    Mr. Bishop. People, meaning your customers, or people, 
meaning your personnel? Or both?
    Secretary Vilsack. People, meaning people who could be hurt 
if things do not get worked out. You know, for example, in the 
food safety area, that would be something we would probably 
take a very long, hard, close look at.
    At the same time, there are strange things that could 
occur. For example, we have a lot of research facilities that 
are using animals in their research. And the question is, do 
they become emergency personnel, that they stay on the job to 
feed the animals or not? And we are in the process, obviously, 
of working through all those kinds of questions and decisions 
that would have to be made, and to do it in a way that is also 
consistent with collective bargaining arrangements and 
arrangements to make sure that the work force is fully informed 
and engaged.
    So, we go through that process. And obviously, the time 
period that is involved, you know, complicates it or simplifies 
it, depending upon how long or short the stoppage would be. 
But, you know, it is fair to say that if there is a stoppage, 
there are certain loan programs. The question would be whether 
or not you would have somebody on board to collect payments so 
you would avoid defaults and foreclosures. These are the kinds 
of questions that we are asking ourselves right now.

                       H-2A GUEST WORKER PROGRAM

    Mr. Bishop. Thank you, Mr. Secretary. I had an opportunity 
recently to meet with a group of southeastern fruit and 
vegetable growers. And the major issue that they had was among 
their list of concerns--and they had a list of them--is the 
management of the H-2A guest worker program.
    New regulations were instituted, including an adverse 
effect wage rate, which they say could cost them millions of 
dollars in inflated wage rates over the prevailing wages, 
particularly in Georgia and Florida. And they have indicated 
that they would have to consider moving to production offshore 
or not participating in the H-2A program.
    We tried last year--and I was a part of a Georgia 
delegation urging the Department of Labor to take into 
consideration the impact of these regulations on our producers. 
We did not get very far.
    Can you help us, offer some guidance on how we can get a 
better handle on the situation, particularly with the need for 
farm labor?
    Mr. Kingston. In 10 seconds, Mr. Secretary.
    Secretary Vilsack. Honestly, you need comprehensive 
immigration reform. That is the answer. You need comprehensive 
immigration reform. If you are serious about farm labor--and 
you should be--when you realize how much of our fruit is picked 
and processed by immigrant hands, you really ought to have a 
comprehensive immigration proposal that, once and for all, 
solves these problems. Otherwise, you are going to continue to 
have situations like this.
    Mr. Bishop. Thank you. That was 10 seconds.

                           BROADBAND PROGRAM

    Mr. Kingston. Mr. Secretary, one of the questions that I 
have--and you may remember; I know Ms. DeLauro remembers--that 
in terms of the rural broadband, I had a lot of questions when 
that was proposed in 2009.
    Now, the Federal Communications Commission--FCC--is 
proposing another $1 billion program for rural broadband, which 
I know is not under your purview, but you know, there is 
overlap. And one of the questions that I have is how much are 
you guys talking, in terms of the USDA program and their 
program?
    There has been some concern about coordination and some of 
this stuff that Mr. Bishop kind of alluded to earlier. But if 
the FCC gets another $1 billion, how is that going to work, in 
your view? Because the inspector general said there were 
significant problems already in the USDA program.
    Secretary Vilsack. You mean in the past?
    Mr. Kingston. Yes.
    Secretary Vilsack. Okay. Well, we are, obviously, providing 
input to the FCC as they put together their proposal. We also 
work with the Commerce Department when they established the 
recent map that was provided, basically shows where the gaps 
are.
    As much as we did, and as much as we have done, there are 
still significant parts of the country that do not have access 
to high-speed Internet and, for that matter, to much advanced 
technology at all. And until we get to the President's goal of 
85 percent of our rural areas being helped and assisted with 
rural broadband and appropriate telecommunications facilities, 
you know, we are going to continue to promote this, and try to 
find the resources.
    Within our budget we have got carryover that we intend to 
use in 2012, because we focused on getting the Recovery Act 
money out the door, which we did. We are focused on making sure 
those projects get completed, and then using the loan guarantee 
program--the loan programs that we have under the Farm Bill.
    Mr. Kingston. Well, I would just suggest that if we are 
talking all the doom and gloom, potentially, of closing down 
meat and poultry plants, that maybe the FCC should not be 
borrowing another $1 billion--which it is, borrowed money--to 
extend rural broadband. Maybe that could wait a while and come 
behind----
    Secretary Vilsack. Here is the trick, though.
    Mr. Kingston. And I know that is a different agency.
    Secretary Vilsack. Here is the trick, though, that we have 
to--we, collectively--have to figure out.
    You cannot simply control deficits and get the deficit and 
the debt down by simply cutting spending. You also have to grow 
the economy. So, at the same time you are looking at 
appropriate reductions or tough questions and choices that you 
have got to make, you also have to invest in the future, so 
that you can grow the economy, so that it can help you grow 
yourself out of the deficit circumstance.
    And I think one tool for growing, particularly in rural 
America, is expansion of broadband. It helps small businesses 
expand their markets, allows them to have input costs that are 
less expensive. It enables farmers and ranchers to have real-
time information so they can make more informed decisions about 
their operations, and it creates real distance learning and 
telemedicine opportunities to improve quality of life that, in 
turn, allows you to promote economic development.
    So, I think you have got to--there is a balance here. And, 
as the President said, it's a shared sacrifice. But also, the 
other part of it is shared opportunity. And you have got to 
balance the two.
    Mr. Kingston. Well, we did have, what, $7 billion in the 
stimulus program for it, and now it's another billion? It was 
three and three, three-and-a-half, three-and-a-half.
    Secretary Vilsack. I do not know what it cost in 2011 
dollars to put the Rural Utility Service into place in rural 
America when it was in the 1930s and 1940s, but I imagine it 
was a fairly significant--this is a very large amount of money 
that is going to be required over a long period of time to get 
the job done right.
    We still have a lot of places in America that just do not 
have this. And as long as they do not have it, they are going 
to be second-class citizens, in terms of economic opportunity.
    Mr. Kingston. Well, I think we all have, in terms of 
priority, the concern about meat and poultry inspection. It 
would be, to me, a lot more urgent than broadband at this 
point, after spending this $7 billion.
    And I also get concerned about the crony capitalism that 
seems to take place in this town of big businesses who can 
always cut a deal and always get theirs and, you know, you look 
at the Democrat National Convention or the Republican National 
Convention, it is the same sponsors hosting all the events. And 
I just wonder if this is not something where big businesses 
figured out, ``Hey, we can make a buck on this,'' and I get 
concerned about it.
    Secretary Vilsack. Well, a lot of the folks--I cannot speak 
about urban and suburban areas, but a lot of folks who are 
getting the benefit of these resources are relatively small 
operations in rural areas. And, in some cases, they are small 
telecommunications companies.
    You know my state, for example, has got 150 small telephone 
companies, and I know several of them received grants to 
basically expand broadband. So I am not sure that in rural 
America, that it is necessarily all large operations that get 
the benefit of this.
    Mr. Kingston. And my time has expired. We will discuss this 
some more, I guess, in time. And Ms. Kaptur.
    Ms. Kaptur. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary, and officials from USDA.

                             FARM PAYMENTS

    Mr. Secretary, on page four of your testimony, you make a 
passing reference to mandatory targeted farm payments. I am 
wondering if your budget officer might know how much the United 
States, on the mandatory side, pays out, let's say, in fiscal 
year 2011, in mandatory payments to indirect subsidies to 
farmers across this country. Do you happen to have that number?
    Secretary Vilsack. I think I am going to take a stab at 
that, and Joe Glauber can correct me, or Mike can correct me if 
I am wrong.
    I think we are projecting this year somewhere in the 
neighborhood of $10 billion, and last year it was somewhere in 
the neighborhood of $12 billion. And the reason why it is 
different is that we do not anticipate counter-cyclical or loan 
deficiency payments because of the high commodity prices.
    Ms. Kaptur. Yes, and I noticed you also reference that 
there is a trade surplus in agriculture, which means we are 
exporting more than we are importing.
    Do you have any idea what the largest payment in America 
is, how much it is, and where it goes? Which state? Which 
producer? Do you keep those records?
    Secretary Vilsack. I am sure we probably have something 
along--certainly on the state level. But I do not know, I 
cannot tell you today where the largest amount of the payments 
go.
    Ms. Kaptur. Would any of your staff have any enlightenment 
they could provide on that point?
    Secretary Vilsack. We can certainly get it to you.
    [The information follows:]

    The following table provides payment information for the top 10 
recipients in fiscal year 2010. It should be noted that payments to 
entities may exceed relevant payment caps provided that the payments to 
the individuals who comprise the entity do not exceed the payment caps.

------------------------------------------------------------------------
    State        County         Name             Program        Amount
------------------------------------------------------------------------
Kansas.......  Butler...  Mid America       Grasslands        $1,074,212
                           Title Company     Reserve Program.
                           Inc.
Colorado.....  Bent.....  Bison Title       Grasslands           958,346
                           Company.          Reserve Program.
Texas........  Angelina.  CPT Log Co LLC..  Biomass Crop         894,915
                                             Assistance
                                             Program.
Michigan.....  Ottawa...  Boersen Farms     Supplemental         700,000
                           Grain.            Revenue
                                             Assistance
                                             Program.
Wisconsin....  Portage..  Potter Living     Grasslands           683,578
                           Trust.            Reserve Program.
Pennsylvania.  Juniata..  Fogleman, Ned A.  Grasslands           639,769
                                             Reserve Program.
Louisiana....  Tensas...  Balmoral Farming  2009 Direct          614,388
                           Partnership.      Payments.
Illinois.....  Edgar....  Moody Farms       Supplemental         612,547
                           Partnership.      Revenue
                                             Assistance
                                             Program.
Ohio.........  Logan....  Heintz Farms      Supplemental         600,000
                           Enterprise.       Revenue
                                             Assistance
                                             Program.
Indiana......  Johnson..  Bright & Kemper   Supplemental         597,733
                           Farms.            Revenue
                                             Assistance
                                             Program.
------------------------------------------------------------------------

                  COMMODITY SUPPLEMENTAL FOOD PROGRAM

    Ms. Kaptur. All right. I would appreciate that very much, 
because I have to say that I am very, very concerned about the 
cuts this year in the Commodity Supplemental Food Program, 
which are proposed for this fiscal year now at $20 million.
    We are spending billions in farm subsidy payments. I would 
like to know where they are going. They are on the mandatory 
side. We cannot get at them in this subcommittee. And yet, I 
come from a state where 20,000 very low-income people are going 
to be cut off of their--I may have that figure wrong, I think 
it is 4,000--4,000 in just my state of Ohio, and I think 
nationally it is 20,000. I may have the national number 
incorrect. But in any case, there will be 4,000 cuts in my 
state of Ohio.
    And one of these people is going to be a lady named Kitty 
in Lima, Ohio. And I just want to read this into the record. 
She is a diabetic. She is living on social security. She gets 
$580 a month on her social security. And she spends $250 of 
that on medicine. And she worked, she thought her social 
security would be enough, but it is not. But the food box gives 
her a chance, when she gets it, to pay for her medicine and to 
help her make ends meet.
    And there are 20,463 Ohioans who rely on that $30 box of 
food. And I just look out there and I say, ``At this point in 
our country, why do we have to cut the Commodity Supplemental 
Food Program? How many jobs does that create, when we cut the 
Commodity Supplemental Food Program? How does that create one 
job in America?''
    Secretary Vilsack. I may be confused. I'm not sure that we, 
in our budget, were proposing that. Are you talking about the 
current bill that passed the House?
    Ms. Kaptur. Right.
    Secretary Vilsack. Oh, okay.
    Ms. Kaptur. Right. The bill that passed the House cut $20 
million in the Commodity Supplemental Food Program.
    Secretary Vilsack. Well----
    Ms. Kaptur. And in my district alone, 4,000 people are 
going to be impacted by that. And my question for 2012, what 
are you proposing for CSFP? But, you know, I am just befuddled 
that these big payments go out----
    Secretary Vilsack. We are----
    Ms. Kaptur [continuing]. And I have a hunch it is hundreds 
of millions of dollars----
    Secretary Vilsack. We are proposing an increase.
    Ms. Kaptur. Oh, that is good news. But what are you doing 
this year for those places where--can you do anything to make 
us whole, as these proposed cuts on CSFP are implemented at the 
state levels?
    Secretary Vilsack. Well, right now we are trying to manage 
a very difficult circumstance, because we do not really know 
the direction of the 2011 budget. We are trying to manage it 
within the 2010 guidelines, which may or may not be 
appropriate, depending upon the mission area and depending upon 
what you and Congress ultimately decide to do.
    Ms. Kaptur. Right. Well, I hope my colleagues on this 
subcommittee will help me out, because what is going on here is 
really wrong, and it hurts real people, and it hurts--we have 
got them on a list, and we have got them lined up for food.

                           COMMUNITY GARDENS

    And that gets to my next question, Mr. Secretary. You have 
been a real leader of this, and many of your associates, but I 
am interested in helping the people who live in the poorest 
places get food. Maybe not only through government food 
programs, but by raising their own food. And what has 
happened--this is not a new story to many of your associates--
we are approaching spring now. I am wondering what USDA can do 
to help us produce food in those areas where we have high 
unemployment and poverty.
    I can tell you we hit 120 community gardens last year in 
our community. And in the areas that are the poorest, the 
seniors come and pick them to the ground. They pick them to the 
ground in the heart of the city. Now we need seed, we need 
technology, and we need training.
    I just got back from Israel. I saw the most incredible 
little solar house that they created there, and I know what 
people in my community are doing, raising 2,300 tilapia, just 
in one pond that can go to needy people--excuse me, Mr. 
Chairman, I am just going to take a couple of extra seconds 
here--what can USDA do to help us with the technology to meet 
the need where it really exists, and get those who are 
unemployed involved in production of their own food?
    Secretary Vilsack. Ten seconds.
    Mr. Kingston. Ten seconds. You have done well with 10 
seconds.
    Secretary Vilsack. Just one program--there are many, but 
one program--USDA just recently awarded three-quarters of a 
million dollars to Ohio State University to work with beginning 
farmers and ranchers to develop small farming projects which 
would support the Cleveland Urban Agriculture Incubator Pilot 
Program to work and combine folks with opportunities in the 
city to be able to essentially use urban farming opportunities.
    So that is one, but there are a number, and we would be 
happy to provide you other lists of items that we have got.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8236A.025
    
    [GRAPHIC] [TIFF OMITTED] T8236A.026
    
    [GRAPHIC] [TIFF OMITTED] T8236A.027
    
    Ms. Kaptur. Thank you. Thank you very much. Thank you, Mr. 
Chairman.
    Mr. Kingston. Thank you, Ms. Kaptur. Ms. Lummis?
    Ms. Lummis. Thank you, Mr. Chairman. And I would follow up 
with the gentlelady who just spoke by adding that government is 
not the only answer to these problems. Meals on Wheels works, 
food banks work, churches work, United Way works, Rotary clubs 
work, cattlemen and cattlewomen's associations and other farm 
commodity groups work to help alleviate these needs and meet 
these needs.
    And you know, I do think that we have to consider all of 
the available resources, not just government resources, when we 
are looking at the tremendous needs out there. I acknowledge 
there are needs. But there are other providers, other than the 
Federal Government. And at a time when we are broke, I think it 
is important that we remember that the Federal Government is 
not the only answer to these problems, albeit the Federal 
Government plays a role.

                         CONTINUING RESOLUTION

    Mr. Secretary, I would like to go back to the question that 
I had earlier, and that is, at a time when the Federal 
Government is broke, and we have to cut spending--now, maybe 
you do not agree with that premise, but that is the premise 
that is operating in my head--you saw the CR that passed the 
House of Representatives. Obviously, it has not passed the 
Senate. The President has said he is going to veto it.
    But I wonder, after having seen the collective thinking of 
the House of Representatives two weeks ago, and seeing some of 
the cuts that were proposed to agriculture, which amounted to 
roughly $5 billion for the remainder of this fiscal year, are 
there any areas where we agree?
    Secretary Vilsack. That is a difficult question to answer, 
and here is why. Because, you know, on the one hand, if you are 
asking--are you in agreement with any of the cuts that we have 
specifically proposed, that is one question.
    Are you asking me if you reduce community facility grants 
by $13 million, you know, does that--is that okay, can you live 
with the rest of whatever is left in the community facility 
grant program, and is that going to be allowed to continue?
    Here is what I would say. I cannot give you a specific 
answer today, in terms of specifics, because we really--we just 
analyzed what the reaction and the impact would be on the cuts.
    But what I can say is, give us time to manage. When you say 
$5 billion, that does not sound like a lot of money in the 
scheme of things, but when you squeeze it into a four, five, 
six-month period, it is a large cut. And, depending upon what 
mission area you are cutting, if you are cutting FSIS, all you 
can do is personnel. There is just not much else you can do, 
and you do not have enough time to do, in a thoughtful way, in 
using supervisory-to-employee ratio control or attrition, 
substituting people at a lower pay scale for a higher pay 
scale, you do not give us time to do that.
    If you are talking about reducing commitments to rural 
development, then I would simply say, well, you have got to be 
careful about that--back to my comments to the chairman--
because you are basically compromising our capacity to invest 
in the future, and to be able to grow our way, in addition to 
cutting our way, out of this difficulty.
    Honestly, we did not get into this circumstance overnight. 
And, candidly, we are not going to get out of it overnight. 
Give us time to manage. Give us time to manage. I think that is 
why the President proposed this freeze over a period of five 
years; it gives us time to manage. It gives me sort of a 
playing field. I know I am not going to get any more money, I 
am not going to get any less. I am going to have to figure out 
for the next couple of years how to live within that budget. I 
can plan, I can make a long-term strategy.
    I cannot do that in four or five months. It is very 
difficult. So, you just basically take a meat axe to things, 
and you do what the Congress directs you to do. And I guarantee 
you, people are going to get hurt. I do not know how many 
people, I do not know in what category, because it ultimately 
depends on what that bill ultimately looks like.
    Ms. Lummis. Well, and Mr. Chairman, I appreciate your 
answer, but I would also suggest that when the country is 
broke, freezing at the highest level that spending has ever 
been is not the answer. And I yield back.
    Secretary Vilsack. Can I just--10 seconds? I think it is 
fair to point out what the President pointed out to the 
governors yesterday, that if you were to do that, discretionary 
spending would be at its lowest level, as a percentage of the 
gross domestic product, since Dwight Eisenhower was President.
    So, I mean, there are--this is a real proposal. It is not 
trying to window-dress, but it is trying to give people time to 
manage appropriately.
    Ms. Lummis. And, Mr. Chairman, I would suggest that in real 
and nominal dollars, not worried about GDP and percentage of 
GDP, we are at the highest levels we have ever been. Thank you. 
I yield back.
    Mr. Kingston. Mr. Farr.

                      INVESTMENT IN RURAL AMERICA

    Mr. Farr. I would just like to comment. I do not think it 
is about that. I think it is about investment. If you look at 
the mortgage we are all carrying, we are broke. You cannot pay 
that off by the end of the year. If somebody told you you had 
to pay it off, you would go nuts. But if they said, ``Do you 
have a plan to pay it off over the next 30 years, a monthly 
payment,'' we all agree then. We are not panicked about our 
mortgage. It is the biggest damn debt we have. What is missing 
here is a plan to pay off the debt. And it cannot just be done 
by cut, squeeze, and trim.
    Mr.--well, Secretary--I would hope--and I think this 
discussion is really appropriate--we need you as a champion for 
rural America. I mean all the questions Mr. Kingston, Ms. 
Kaptur, Ms. Lummis has been asking, essentially, is what are 
these cuts, and what is the effect, and yet there is no kind 
of, I think, strong enough statement yet by you by--that we 
really need to shift our priorities in America within the 
Department of Agriculture.
    I mean the Department of Agriculture was created by Abraham 
Lincoln. And if you look at America, it was built by the 
Department of Agriculture. What did we do? We gave away land. 
We made people go West. And if you went West, we would give you 
land. We built the railroads by giving them land. We built the 
infrastructure, we paid for the roads, public paid for that. We 
paid for the rural communications system. The government paid 
for that.
    I mean, infrastructure of rural America has always been 
underwritten by government. And it seems to me that the issue 
here is that we are going to have--rural America, where our 
food and fiber comes from, we are going to have to think 
modernly. And to think modernly, it is going to be shifting 
priorities.
    And I would hope that you come in with a farm bill and 
radically suggest that we drop a lot of these welfare payments 
to farmers, and invest in where people are really working, what 
is necessary to, you know, build a stronger rural--competitive. 
And, yes, you can bring in the service clubs and help. But they 
all assist in a partnership, they cannot do it by themselves.

                            ORGANIC RESEARCH

    But I want to just--one of the things I want to ask you 
about is that, with Kathleen Merrigan here--and that was one of 
the best appointments you ever made, because I represent a lot 
of organic growers, and certainly she is the national--the 
queen of organics, if that is a--but what I am concerned about 
is that I do not see any emphasis here to sort of bring 
organics up. It is the fastest-growing industry out there, and 
it is in the research area that I am really concerned, that we 
need to make sure that there is parity.
    It should be part of your rural strategy. We have got a lot 
of--organic can be a lot smaller farmer. You may not be 
producing product year-round, but you can get into market. And 
I am wondering what you can do. It is going to be a farm bill 
issue, but can we look forward to bringing in and bringing up 
the research for organic to that, at least equivalent to what 
is going on in traditional agriculture?
    Secretary Vilsack. Representative, I think I can say this 
with some degree of confidence, that no administration has done 
more for organic agriculture than this administration, whether 
it is research, whether it is specialty block grants, whether 
it is market news, whether it is enforcing the standards, 
whether it is export equivalency agreements with Canada, and 
working on one with Europe to expand exports, whether it is 
beginning an appropriate dialogue and conversation about the 
need for organic and conventional and genetically engineered 
agriculture to basically live in the same neighborhood 
together, whether it is using additional resources from the 
conservation programs under the Environmental Quality 
Incentives Program--EQIP--there has been a substantial amount 
of work done in this space, and there will continue to be a 
substantial amount of work done in this space.
    It is part of the strategy. It is part of our strategy to 
grow rural America. It is part of the regional and local food 
initiative that is part of a five-pronged strategy for 
rebuilding rural America that includes broadband, conservation, 
biofuels, export opportunities, and local and regional food 
systems.
    Mr. Farr. Well, I appreciate it. I would look forward to 
seeing how much of that you are going to be advocating for.
    I want to just point out that Napa County has recently 
created a Food Council, made up of all school folks and farm 
bureaus and all, and they are really looking at how do you grow 
the nutritional food in our country and serve it in our county, 
get it into all the institutions, so that all the political and 
civic actors in that county sit on this council. It is a very 
exciting one, and reports directly to the ag commissioner--
every county in California has an ag commissioner--and also 
respectively to the county board of supervisors. And maybe we 
ought to be thinking about creating these councils all over the 
country.
    Secretary Vilsack. We are, and it is part of--food councils 
are being established all over the place. In fact, I was the 
first governor in the country to establish a state food policy 
council.
    Mr. Farr. Well, good for----
    Secretary Vilsack. So we are very familiar with that. And I 
think we have sacrificed substantially for California by giving 
up my chief of staff to be your new Secretary of Agriculture. 
It is the least we could do.
    Mr. Farr. And when she calls back, I hope you will just say 
yes to everything she asks for.
    Secretary Vilsack. Well, that may be a problem.
    Mr. Farr. I have another question in the next round.

                               FARM BILL

    Mr. Kingston. Mr. Secretary, I want to follow up on Mr. 
Latham and Ms. Kaptur's comments about the farm programs, and 
invite you to send us a letter to the Committee on some of the 
things that you think we could look at without waiting for the 
farm bill. As Mr. Latham discussed, you know, it is very hard 
to open that up. But I also think, as a practical reality, as 
you have said, we might not want to wait on those things.

                      CONSERVATION RESERVE PROGRAM

    I would also ask you to include comments on the CRP, 
because that, as I understand, is now 32 million acres, I 
think, very over-subscribed. The land was supposed to be highly 
erodible, and I do not believe a lot of it is highly erodible. 
I think it is paying farmers not to farm in many cases. I 
understand the cost may be as high as 50 percent of the crop 
programs, but it is only 10 percent of the acreage. Not sure 
about that, but I just think that that is one we should look 
at.
    And I also do not think that there is an adjusted gross 
income issue on that, but maybe there should be. Because I know 
a lot of people who own land, who are not farmers, who are 
participating in CRP, who are getting that monthly check for 
their land.
    And so, you do not have to respond right now, but if you 
would, I would love to----
    Secretary Vilsack. Can----
    Mr. Kingston. Go ahead.
    Secretary Vilsack. I just want to respond to one aspect of 
your comment, and that is the notion that CRP is over-
subscribed, in terms of productive land, and so forth, and not 
focused on environmentally-sensitive land. Actually, I think we 
are seeing much more focus on environmentally-sensitive land. 
Because crop prices are as high as they are, folks are going to 
take that more productive land and put it into crop production. 
That allows us to use a scoring system that really does focus 
on environmentally-sensitive lands.
    I can tell you that eight billion tons of sediment has been 
prevented, as a result of CRP, going into our roads and 
streams, which makes it a lot less expensive to take care of 
water quality. I can tell you that there are tremendous habitat 
increases as a result of CRP, which encourages more outdoor 
recreation, and it is part of the American great outdoors. We 
know that this is a multiple hundred billion dollar industry 
that we can tap into.
    So, you know, I think we have to take a look at CRP, as you 
have suggested. But I do think we are focusing on where it 
needs to be focused. But if you have incidences where that is 
not the case, I am certainly----
    Mr. Kingston. I have concerns about it, and I will say 
this. They are my constituents a lot more than maybe some other 
people on this panel. But I just think that in the spirit of 
putting things on the table, that should also be on the table 
to take a look at.
    Secretary Vilsack. We have a wonderful program----
    Mr. Kingston. And I am not totally attacking it, either. I 
am just saying I have got some concerns. We should look at it.
    Secretary Vilsack. We have got a wonderful program, of 
longleaf pine that is part of the CRP program that we are 
excited about, which is obviously your area.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8236A.028
    
    [GRAPHIC] [TIFF OMITTED] T8236A.029
    
    Mr. Kingston. Let me yield to Mr. Farr.

                           AGRICULTURAL LAND

    Mr. Farr. Mr. Secretary, you ought to look and see whether 
states have used zoning powers, rather than these payment 
powers. It seems to me that, in an awful lot of cases, we are 
paying for things that just should not be used for farming, 
because under adequate zoning measures they would not allow you 
to farm that way.
    Secretary Vilsack. I could be wrong about this, 
Representative, but I do not think too many states actually 
zone agricultural land. I know my state does not.
    Mr. Farr. Well, we do, in California. We zone it, we 
preserve, repairing corridors in all the areas, the slopes, and 
everything like that, because of all the areas that do not--to 
prevent erosion.
    Secretary Vilsack. I am sure that is true in your state, 
but I do not think that is necessarily true in a lot of states. 
And I am not sure there would be a lot of state legislative 
support for that notion. Nor could we mandate it.
    Mr. Farr. Well, that is an expensive way to lead a horse to 
water.
    Mr. Kingston. Let me yield back. Ms. DeLauro.

                     NUTRITION ASSISTANCE PROGRAMS

    Ms. DeLauro. Thank you, Mr. Chairman. Just let me set the 
record straight for a moment--and I am delighted that the 
gentlewoman from Wyoming is back in the room--let me note, with 
regard to SNAP participation, 2007, 27.3 million people; 2008, 
November, 31.1 million; November 2009, 38.2 million; November 
2010, 43.6 million, 14 percent of the population is taking 
advantage of the food stamp today. This is not because of 
categorical programs, this is because of a recession where 
people have lost their jobs, or their wages have been lessened. 
They have lost their homes, they have lost their health care, 
businesses. They can no longer even afford to put food on the 
table.
    Yes, we are looking at the notion that this is a Federal 
Government going broke. I suggest that it is not a question of 
not attacking the deficit, which we ought to do, we ought to be 
willing to shut down programs that do not work, that are 
ineffective. But we also ought to be willing to cut the tax 
subsidies to the very special interest groups.
    Let me start with the $40 billion that we paid today--and I 
can cite it chapter and verse--$40 billion in subsidies to the 
oil industry. The last time I looked, they were pretty fat and 
happy, that they did not need to really have $40 billion of the 
largesse of the Federal Government. We could apply that $40 
billion to deficit reduction, and we do not have to touch these 
programs.
    The other piece that I think is very, very important--and 
we ought to take a look at $8 billion in agricultural 
subsidies, or almost $8 billion in the multi-national 
corporations that take their money and they go overseas and 
they park it there, and they do not have to pay any taxes here. 
That is where we ought to start, rather than Ms. Kaptur's 
constituent, who cannot deal, because the Commodity 
Supplemental Food Program is going to be shortened.
    Talk about Meals on Wheels. Because of the budget cut last 
week, it is 10 million less meals on wheels that will be served 
to home-bound elderly. $40 billion for the oil companies and 10 
million less meals served to the elderly.
    Another comment with regard to SNAP, in terms of error 
rates--and I mentioned this to the chairman, as well, and the 
chairman and I have gone back and forth on this over the 
years--the two highest states with the highest rate of error, 
Texas and Indiana. And those are the two states that decided 
that it was a good idea to privatize the food stamp program.
    I appreciate where you have gone on the error rate and 
bringing it down. And with that increase that I just cited, it 
is pretty extraordinary that we have been able to keep that 
error rate where it is. I wish Wall Street had less of an 
error--that kind of an error rate than you all have done with 
your program.
    Mr. Bishop. With regard to Ms. Kaptur's concern, one of the 
things that I have to applaud the Agriculture Department for 
with our commodity support programs is that they were 
reinforcing and restocking the soup kitchens and the food 
pantries during this recession. The food pantries, because of 
the numbers that Ms. DeLauro just got through citing, were 
running out of food. But because of the funds that were 
allocated and set aside by USDA in our commodity programs, they 
were able to restock those organizations that are very, very 
appreciated, church organizations and others.
    But that is necessary for folks like Ms. Kaptur's 
constituent, many of them.

                            CHINESE POULTRY

    Ms. DeLauro. I thank the gentleman. And let me just move, 
if I can--I do not know how much time is remaining--but to 
Chinese poultry. Chinese public found 70 percent of--70 percent 
of the Chinese folks are not confident about the safety of 
their country's food supply. Another report stated that Chinese 
are pursuing their own food safety measures by growing their 
own vegetables. They are concerned about pickled vegetables, 
canned food, dairy products, fresh meat, meat products. 
Contaminated meat products was one of the items that topped 
their list.
    We have seen reports that China has sentenced a food safety 
activist for two-and-a-half years for organizing parents whose 
children were sickened in the 2008 Chinese milk scandal.
    You did conduct the audits between December 1st and 
December 21st. In conducting the audits, analyzing the results, 
does FSIS factor in things like the reports I outlined? When 
will the audits be posted on the FSIS website? Did the Chinese 
Government provide you with a list of the six facilities that 
were visited by FSIS? Will the six facilities be eligible to 
export poultry to the U.S., if there is an equivalency 
determination? I think you answered that question.
    It is my understanding that allowing the Chinese to export 
products from a slaughtering facility would require a separate 
rule. And, finally, has the USDA calculated how the U.S. 
poultry industry would be impacted if we had allowed increased 
poultry exports from China?
    Mr. Kingston. The gentlewoman's time has expired. The chair 
has the time, and will yield one minute to----
    Ms. DeLauro. I thank the gentleman. Thank you.
    Secretary Vilsack. I wish you had only given me 10 seconds, 
Mr. Chairman. [Laughter.]
    You have asked a lot of questions, and I think we will 
provide you with the specific answers to those questions.
    Ms. DeLauro. Okay.
    Secretary Vilsack. I would say the last question you asked, 
in terms of the impact----
    Ms. DeLauro. Impact, right.
    Secretary Vilsack [continuing]. You know, a lot of our 
poultry is actually going into China and being processed and 
brought back. So, in that sense, there is some benefit, 
potentially, to our poultry growers.
    We want to make sure that when we do this, if we do it, we 
do it safely. I know that is the concern that you have always 
had. It is what has motivated your concern in this area. We 
have taken it very seriously. And the folks have spent a lot of 
time and asked a lot of detailed questions about these 
operations. And not every operation in China is going to get 
permission to do this, only those that we are confident will 
meet our standards, or exceed our standards.
    There are some that will meet and exceed our standards. And 
if they do, then we ought to let them participate. If they do 
not, we should not. And that is one of the reasons why we have 
reservations about poultry coming from China, slaughtered in 
China. We are just not yet comfortable there. And we will not 
move until we are.
    [The information follows:]

    FSIS does not typically incorporate such public survey information 
into its equivalence analysis process because of the unscientific 
nature of such data, findings, and conclusions, although the Agency 
does maintain a general awareness of such information from third party 
sources. Ultimately, FSIS' approach to a food safety system audit 
relies on a verifiable scientific, data driven analysis of the 
government's handling of food safety issues.
    Once the two China audit reports (slaughter and processing) are 
finalized they will be posted on the FSIS website no later than 30 days 
from the date they are finalized, in accordance with the 30-day 
requirement stipulated in the FY 2010 Agriculture Appropriations Act 
(P.L. 111-80).

    Ms. DeLauro. Thank you.
    Mr. Kingston. The chair yields to Mr. Bishop.

                         PEANUT PRICE REPORTING

    Mr. Bishop. Mr. Secretary, in March of 2009 the Inspector 
General completed an audit of in-shell peanut prices that are 
paid to farmers and reported to the National Agricultural 
Statistics Service. And FSA, they use this data to calculate 
the program payments. The OIG believes that the price data that 
is supplied by the peanut buyers is unreliable, and that FSA 
should seek authority for mandatory price reporting of all in-
shell peanuts.
    While I look forward to working with the Department to 
resolve this issue, it seemed that any proposal to provide FSA 
with new statutory authority on price reporting should be done 
in the broader context of the upcoming 2012 farm bill, and that 
is a single, stand-alone issue. Likely, there will be 
considerable changes and modifications to the current structure 
of many of our farm programs, and any proposed changes to the 
peanut program should really be a part of that discussion, 
whenever it occurs.
    I just wanted to sort of share my thoughts with you on 
this, as it is a subject that is very important to me, being 
from Georgia. And not speaking for the chairman, but probably 
important to the chairman, as well.
    Secretary Vilsack. You know, the investigation report 
indicated that perhaps some of those prices were being under-
reported, and that is obviously a concern, because a lot of 
decisions are made as a result of that information. And so, we 
want to make sure that the data that folks are making very 
important decisions on is as good as it can be. That is why we 
think that it is appropriate to consider seriously a mandatory 
reporting requirement.
    We are looking for ways in which we can make the process 
more transparent, and provide folks information. And we will 
work with folks to make that happen. If it is part of a larger 
discussion, that is obviously Congress's wish. But our view is 
that if we want to get correct information to people, we are 
going to have to have something different than what we have got 
now. Because what we are getting is not necessarily accurate.
    Mr. Bishop. Thank you. I will yield.
    Mr. Kingston. Ms. Kaptur.

                       FEDERAL PROGRAM ASSISTANCE

    Ms. Kaptur. Thank you. I am sorry Ms. Lummis left the room. 
I have to react, and just put some data on the record here. The 
TEFAP program alone provides a third of the commodities that we 
have in our food banks in Ohio.
    [The information follows:]

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    And it is obvious that her district must be very different 
than my own, because we could not survive without the federal 
programs. Everybody is strung out: our churches, our Saint 
Vincent DePaul Societies, anybody working in the food area. We 
have had heart attacks among these seniors working in some of 
these programs. They are literally at the edge.
    And so, I take exception to her remarks. She represents a 
different part of America. Wyoming is kind of an interesting 
state. It has gotten over a billion dollars in mineral rights 
subsidies that we pay out as a government. Just in her state 
they have gotten: disaster payments of over $167 million since 
1995; and the Conservation Reserve Program, over $125 million; 
in the wheat subsidy program, $86 million; in the EQIP program 
over $80 million. I can go down all the lists. But Wyoming, in 
many ways, is a federal preserve.
    I do not represent a federal preserve. We are out there in 
the free market, and times are tough. So I just wanted to place 
on the record that I have deep respect for the people who are 
trying to feed hungry people. And my biggest challenge is 
trying to work with USDA and others to figure out how we can be 
more self-sufficient inside the boundaries of these communities 
that are so terribly, terribly impacted with hunger and with 
need. And I am amazed at the patience of the American people in 
enduring what they are being asked to endure.
    And I am very, very worried about food. And our United Way 
has had to cut back projects because of the hunger needs across 
our community. Every single group, every single group. There 
just is not any more, unless we can produce our own.
    And I was very pleased, Mr. Secretary, that you talked 
about what you are trying to do in Cleveland. But that is not 
the only place in Ohio that is so severely impacted. So, I 
would hope that whatever we are able to work out through USDA 
that we could go into these heavily impacted areas, bring new 
technology, bring seed as we embark upon the spring season 
here. We can produce more of our own.
    We need help in aquaculture. All these fancy research 
projects, they keep it down the state capital. They keep it 
down, wherever. They don't move it out into community is a real 
problem and we are capable of doing this. But we do need USDA's 
direct engagement with us through their stakeholders statewide 
and so forth.
    We have very willing people. We are technology short and 
training short in areas where we are food short and we can 
produce it ourselves, but we need more focus. We need more 
prototype projects. We need USDA to help us. Our people don't 
get all these subsidies for mineral rights and everything else.
    So we do live in a different part of America, and we're 
there to help you with your budget. But to the extent that you 
can provide the information I asked on the first round of who's 
getting all these big, mandatory payments out there in the 
country in a time when we have to trim in terms of the overall 
budget and balancing the overall budget, it shouldn't come out 
of the hides of people who are truly living at the edge. And 
these areas that have got 10, 12, 15 percent unemployment, 
we've got some neighborhoods in Youngstown and Toledo, 50 
percent unemployment.

                              FOOD ACCESS

    Recognized reality in the part of America that we come 
from, and USDA is very, very important to us right now, and we 
have to be transformative in what we do. We have whole sections 
of community with no supermarket. I mean the places aren't 
there to buy the food, folks. It isn't like here in Washington, 
and even parts of Washington don't have supermarkets. So we 
have got to provide food close to where people live and 
technology has to lead us there.
    I'm saying it as much for the Secretary as for everybody 
sitting out there in the audience representing these different 
interest groups. We have to use our technology to save us. What 
I saw in Israel was phenomenal: little hoop houses, little 
greenhouses, that look like some of those that we are trying to 
use in our cities now, but we've got to hook up solar capacity 
so that we can heat them through the winter months. We can make 
them productive four months out of the year.
    USDA, all you have to do is shake up some of these 
researchers that are sitting in these fancy labs all over the 
state of Ohio, and they never come down in our communities. 
That isn't good enough anymore, because the need is too great. 
So I make my plea. You've heard me once and again and again and 
again, and we can't get these big bureaucracies to move 
effectively.
    If there's anybody out there in the audience who wants to 
come to the Ninth Congressional District from Toledo all the 
way over to Cleveland, you're all invited to come. I invite 
you, Mr. Secretary. Maybe you can get the bureaucracies to 
really disgorge some of that knowledge and make it relevant to 
people on the street. But we don't have the time.
    We don't have the luxury right now, and we don't get the 
billion-dollar mineral subsidies and forestry subsidies, and 
agricultural subsidies like the state of Wyoming. And, 
probably, some sort of oil depletion subsidy that I haven't 
figured out yet out there, a gas subsidy or something. But we 
need help in the food sector, and Detroit does and a lot of 
other places that are really at the edge, and I thank you very 
much for allowing me to put that on the record.
    Mr. Kingston. Mr. Secretary, do you want 10 seconds to 
respond to that?
    Secretary Vilsack. Well, I appreciate that, Mr. Chairman.
    I think it is important for us to make sure that you all 
understand and appreciate we are taking all of these challenges 
very seriously, and we have a healthy food financing initiative 
that was in our 2011 budget. It is in our 2012 budget designed 
to address the issue food deserts.
    We have done an atlas. We have identified where these food 
deserts are. We have creative programs that are working in 
Detroit and other major metropolitan areas to try to address 
the food desert issue. We are very serious about that. We are 
very focused about it, and we are going to get things done 
about it.
    We have everything from value-added producer grants to 
farmer market promotion grants, to hunger free community 
grants, to using our business and industry loan programs to try 
to address some of the issues that you've addressed in terms of 
urban farming. We have our people's garden program, which is 
providing--last year provided 90,000 pounds of donated food to 
soup kitchens and to food banks.
    There is a concerted effort on this, and, you know, one of 
the challenges and one of the frustrations that I have. Since 
you all have been expressing your frustration, let me express 
one of mine. This is a department that has a lot of missions 
and we are talking about a lot of missions all the time. And it 
is very difficult to focus on one piece of our mission to the 
exclusion of everything else. We have got to talk about 
production and agriculture, because that's important. We have 
got to talk about rural development. That's important. We have 
got to talk about exports. That's important. We have to talk 
about food safety. That's important. We have to talk about new, 
creative ways to embrace farming in all parts of the country, 
and we are doing all of that, all of it.
    I would encourage you to take a look at our website. I 
would encourage you to take a look at these programs in terms 
of where these resources are going. We are very serious about 
this issue. And to the gentlewoman's comments about the food 
programs, we are proposing an additional amount in these food 
programs, and I would say the state of Texas is a good example.
    They had a horrible record, and we basically went down to 
Texas and said, ``You've got a horrible record. We're here to 
help.'' And, to their credit, they responded and actually 
engaged the non-profit sector and outreach to encourage more 
SNAP participation, and they've seen their numbers increase 
dramatically.
    And Indiana, to its credit, finally realized that they were 
making a serious mistake in terms of how they were 
administering their program, and they are in the process of 
transitioning, and that has improved the record as well. So we, 
I think, are on top of a lot of these issues. It's just hard to 
talk about all of them simultaneously.
    Mr. Kingston. Reclaiming my time, Mr. Secretary, one of the 
things I wanted to say for the record in terms of the 
gentlewoman from Wyoming. I know her well and I know that she 
will measure spending with the same yardstick regardless of the 
social spending or mineral rights, or anything else.
    I think that she is going to be an extremely valuable 
committee member in that regard and that she will challenge all 
of us, which I think is very important. But I think, you know, 
we will all see she will go after the Red State, the Blue State 
Program, the big corporation. I think she has that same 
populace streak the gentlewoman from Ohio has and a very 
positive populace streak.

                            EPA REGULATIONS

    Mr. Secretary, on that subject of the USDA and your broad 
mission, when I think of USDA, I would describe it on a bumper 
sticker of a resource to farmers, a technical partner to 
farmers, an information center for farmers. And I think that 
the farmers in my district would probably say, yeah. That's 
right. If I say EPA, it's totally off the page. It's just rant 
and rave. They are against us, they are regulatory. They want 
to play ``I gotcha.''
    They are arbitrary and it's always--not always, but I think 
in the last decade or so that the USDA has kind of been a 
buffer between the EPA and the farmer, but the EPA is getting 
more and more aggressive. They have issued 25 new regulations 
and proposals that affect production of agriculture. And I am 
not saying that is all bad regulation, but farmers would rather 
deal with USDA as they feel that the USDA employees tend to 
come from rural areas and understand farming, and appreciate 
their mission; whereas, EPA, again, comes at it from a 
regulatory angle.
    They are coming out with a new pesticide general permit 
that has to be in place April 9th that has some concerns. There 
has been a court decision on it. There are some other issues 
that EPA is coming out with last year. We dealt with a 
potential regulation that said that dairy farmers had to have 
an emergency plan if they spilled milk, because it was an oil-
based liquid, and things that again may be well intended, but 
still very, very regulatory and difficult for farmers.
    For the record, I would like you to respond to that of what 
you are doing. You had mentioned earlier you dealt with them. 
You talked to them regularly, but I think the farmers back home 
would rather see you step it up a little bit more and help 
maybe settle some differences between EPA, same mission as you 
guys, but I think that you had a better feel for rural America.
    Secretary Vilsack. Mr. Chairman, first of all, Lisa Jackson 
can do a great job of explaining her agency, and no doubt you 
will have an opportunity to visit with her at some point. But 
let me just simply say that often what they are required to do 
is not something that they have thought they ought to do. It is 
because Congress has directed them to do it, or a court has 
directed them to do it.
    And, what we faced when we came into this administration 
was a backlog of undecided court cases and undecided mandates, 
and so forth, that this EPA was required by law and by court 
decision to address. So that's number one.
    Number two, you know, there are ways that you can work 
within the system and outside the system to try to impact and 
affect, and make sure that the regulations are as good as they 
should be and as reasonable as they should be. We have had some 
good success, I think, in making sure that whatever is 
ultimately decided and ultimately put into effect; not what's 
being proposed or what's being discussed, or what the folks in 
the countryside think might be being proposed, but what in fact 
is proposed.
    I think we have had a pretty good track record of modifying 
and sort of cutting off some of the potentially egregious 
proposals by working with the EPA, by working in partnership by 
developing lines of communication, both between our office and 
EPA, and most importantly between producers and EPA. And we 
have encouraged the administrator to get out into rural 
America, and she has done that and she is going to do more of 
that.
    So, you know, I think that is a very effective way. If what 
you have and what the desire is that we somehow pound the table 
and criticize openly EPA, I am not sure that that would 
necessarily be as persuasive in the ultimate end result.
    Mr. Kingston. Well, my time has expired. I think you are a 
blend of philosophy and common sense, and temperament, and I 
don't think that's prevalent at the EPA. And I think that the 
folks back home in rural America see a big difference in the 
agencies, and they would like you to be maybe a little bit more 
of an advocate for them.
    In between the two, I would see you sometimes as being a 
referee, and I don't mean that you're being remiss on this at 
all, but I'm just saying that I think production agriculture 
feels like they are being besieged by new EPA regulations over 
and over again, and USDA, maybe, could be more of a buffer.
    Secretary Vilsack. I think that they have to understand 
that one of the reasons why they have that perception is 
because there was a lot of things that weren't done that were 
sort of backlogged, and a lot of things that courts are now 
saying you've got to do, on the one you mentioned, the 
pesticide. EPA went in and said, ``Give us a little more 
time.'' The court said, ``No, you've got to do it now. You've 
been given time. You need to do it now.''
    So, you know, what are they supposed to do? I mean they got 
a court order telling them they have got to do it. They got to 
do it. And what we try to do is make sure that when they do it, 
how they structure it, that they fully understand or appreciate 
exactly how the impact is going to be, and you can add that to 
a list of things I need to talk more about along with 
everything else that you all talked about. And that's just the 
point. There is a lot to talk about in this agency.
    Mr. Kingston. Yes. My time is expired. Mr. Farr.

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN

    Mr. Farr. Mr. Chairman, I have a couple of sort of micro 
questions, one on the Special Supplemental Nutrition Program 
for Women, Infants, and Children--WIC--breastfeeding and 
formulas. WIC people met with me yesterday and were telling me 
that we put a lot of emphasis in teaching breastfeeding, but 
the tragedy is that about 70 percent of the women after leaving 
the hospital drop the breastfeeding and pick up the formula.
    The concern was that the amount of money being spent in 
sort of advertising formula, and in the formula I guess there 
are two kinds. There's the super model formula, or the one 
that's got all the so-called functional ingredients, and it is 
costing your department about $90 million a year just for them 
to buy that. And the question here is has there been a plan or 
to study the difference between get some scientific review as 
to whether the higher-cost products are actually as effective 
as the formula industry claims?
    Indeed, if the generic formula, I guess, for lack of a 
better word, is as good as the super product, the more high-
cost product, why not just fund that? And have you any interest 
in looking at the difference between the two formulas in the 
sense of cost savings?
    Secretary Vilsack. I hope this is a response to your 
question, and if it is not, we will have to get you a specific 
response. One thing I do know is that we have been working with 
states to slow the decline in rebates in this area, and despite 
our efforts, we have seen a drop from 95 percent of wholesale 
prices to 80 to 85 percent in 2009.
    You know, we have revised the package. We are constantly 
looking for ways to make sure that we provide the best package 
for the most affordable cost.
    Mr. Farr. I think it is not just cost. It is essentially 
what your leadership--and I appreciate this--leadership on, you 
know, agriculture is the basis of our whole new health care 
policy in America. If we are going to grow healthier Americans, 
it's got to start with nutrition. And the claims here, 
obviously, this is not my field.
    The claims here that if the formula is really getting kids 
addicted on sort of an obesity program very early in life and 
if the emphasis here is to really minimize the amount of 
formula--some people have to have formula--but to minimize the 
formula by really educating people as to the total value of 
breastfeeding for as long as possible.
    Secretary Vilsack. I think we are making an effort to 
increase education in that particular area, and I think the 
budget proposes additional resources for that education 
program.
    [The information follows:]

    The Healthy, Hunger-Free Kids Act of 2010 requires that we review 
the WIC food packages at least once every 10 years. The last review of 
the WIC food packages was initiated in 2003. As such, we anticipate 
initiating a new review within the next two years. We can certainly 
include taking a look at enhanced versus non-enhanced infant formula as 
part of the next review.
    We must keep in mind, however, the Food and Drug Administration 
determines the regulatory requirements for infant formulas and 
determines if a product may be marketed in the United States. Due to 
the array of infant formulas that are produced and in order to ensure 
infant formula rebate solicitations remain competitive, WIC Program 
regulations require State agencies to issue rebate solicitations for an 
infant formula that is suitable for routine issuance to the majority of 
generally healthy, full-term infants. The infant formula manufacturer 
determines the formula that best meets this requirement.The lowest 
bidder is awarded the contract and the formula that the manufacturer 
bid is considered the Primary Contract Brand infant formula. The 
Primary Contract Brand formula is considered the formula of first 
choice and all other infant formulas are considered alternative 
formulas. However, all formula in the manufacture's infant formula 
product line is considered contract formula. But, if the infant formula 
manufacturer adds a new, more costly formula after the contract is 
awarded, WIC State agencies have the discretion to deny its inclusion 
to the State agency's allowable food list.

    Mr. Farr. Yeah. And I hope that the point is that maybe 
some savings, if you are going to look for savings, it might be 
from not authorizing this higher cost formula that doesn't 
really get a bang for the buck. That's the question. Secondly, 
on the other micro--and this will finish my round--this came 
from the cattlemen.

                   INTERNATIONAL IMPORTATION AND TRADE

    Explain to me. South Korea has foot and mouth disease, and 
therefore we don't import any live--I mean we only import 
cooked meat from South Korea for importing anything right now.
    Secretary Vilsack. I believe that is accurate. There is a 
certain temperature that it has to be cooked in.
    Mr. Farr. But, however, we are importing from Brazil and 
Argentina that also have foot and mouth disease, but the 
cattlemen don't want it. Frankly, they don't want any live meat 
brought in or raw meat brought in from those two countries for 
the same health risk issues as these issues that you have 
determined shouldn't bring any uncooked meat in from South 
Korea.
    Secretary Vilsack. We have been able to determine that 
there are certain regions of those countries that are foot and 
mouth free.
    Mr. Farr. But, how effective are we then? I mean, you know, 
those diseases cross boundary lines so quickly.
    Secretary Vilsack. I think we have been effective so far, 
because we haven't had that circumstance in the country.
    Mr. Farr. Yeah. I know that. It seems to me that is a weak 
response, because, you know, we deal with all these exotic 
pests and we know damned well that they break out from county 
to county. It is very hard to stop that. And I don't know a lot 
about foot and mouth disease, but it is supposed to be really 
bad.
    Secretary Vilsack. Yeah. Yeah. I mean there are a series of 
steps in the process. First of all, establishing that it is 
foot and mouth free; secondly, there are inspection processes 
both in country and at the border that APHIS is engaged in and 
the customs folks are engaged in. So, I mean it is not as if we 
are just not paying attention to this. We are paying attention 
to it, and, obviously, we take this very seriously.

                             BRAZIL COTTON

    Mr. Farr. Well, I think what scares--the bigger picture--is 
that the cattlemen feel very hurt by the fact that it seemed 
like they were a trade-off allowing certain counties in Brazil 
to export trade-off for that incredibly dumb deal that we had 
to make for cotton by paying hundreds of millions of dollars.
    Secretary Vilsack. With due respect, Representative, it was 
not a dumb deal, and I will push back on that. And here is why 
it wasn't a dumb deal. We would have been hit with $800 million 
of penalties as a result of the WTO case.
    $500 million of it would have been additional tariffs on 
our products, and almost $300 million on intellectual property 
that would have significantly compromised potential agri-
business interests in terms of our ability to protect our 
intellectual property.
    Mr. Farr. Why don't we deal with that in the Farm Bill 
rather than----
    Secretary Vilsack. Well, we have to deal with the cotton 
issue and we have to deal with the GSM 102 program in terms of 
whether or not it is providing, in terms of the repayment 
period and the interest rate, whether it is providing a level 
playing field, if you will, for the rest of the world. We will 
have to deal with that and the payments to Brazil stop when it 
is dealt with in the Farm Bill.
    Mr. Farr. Well, but can we get a better answer than on the 
importation of cattle from Brazil?
    Secretary Vilsack. I am not sure what you are looking for, 
sir. I mean the reality is we have established that there is no 
risk in these regions. We have established an inspection 
process in place to prevent it, if it does in fact hit us at 
the border. And we have not had an incident.
    Mr. Farr. Well, I don't know how much, if we look at the 
amount of imports.
    Secretary Vilsack. Well, we can provide you that 
information. Sure.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8236A.034
    
    Mr. Farr. Thank you.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                            CHINESE POULTRY

    Mr. Secretary, a final question on the Chinese chicken 
issue, and then I want to ask an animal I.D. question. In the 
past you have supported the rider language that has been in the 
bill with regard to Chinese chickens. And let me just ask you 
if you will continue to support that language.
    Secretary Vilsack. I'm sorry. The language?
    Ms. DeLauro. The language that is in the----
    Secretary Vilsack. That basically provides us----
    Ms. DeLauro [continuing]. What has been removed in the CR. 
Would you continue to support that language?
    Secretary Vilsack. We are happy to continue to provide you 
with reports, and basically live with the agreement that was 
reached last year, or a year and a half ago, whenever it was.
    Ms. DeLauro. And that's what the language would require. 
Thank you. Thank you, Mr. Secretary.
    Secretary Vilsack. Yes, I am happy to live with it.

                 NATIONAL ANIMAL IDENTIFICATION PROGRAM

    Ms. DeLauro. Again, we have had a conversation about animal 
ID in the past, and I noted with regard to the APHIS budget 
that it has been reduced by about $72 million. But eliminating 
the funding for a number of activities, it includes several 
increases, including $9 million for the animal ID program. And 
we have gone through this before with $145 million that we have 
already spent there, and my view of it is instead of a strong 
national program.
    I think what we have here is a fragmented system with 
standards that are negotiable and applies to some animals 
moving across state lines. And the budget requests more than 
$14 million. It's an increase of $9 million for the program.
    I value an animal ID program. I really do. I support that 
effort, but I think it is strange to me how we can support the 
agency's new plan when both its path and its destination, I 
think, are inadequately defined at this point. And how was the 
agency work to define outcomes in the past to achieving them to 
ensure success of this program? Are we still moving towards the 
system that enables traceback of any livestock species in two 
days, and will all beef and dairy cattle be included in this 
program?
    Secretary Vilsack. This is a program that by the very 
nature of it was not very well received, less participation 
than we had hoped. So the determination was made to try a 
different route. The route that we are trying, I think over 
time, gets to all cattle, but it will take some time to get to 
all cattle. And there are performance standards that we are 
establishing in concert with the state Agriculture 
commissioners and tribes that we think are doable and they 
allow us to trace back to the state of origin in a relatively 
short period of time.
    There are a variety of standards that we are currently 
looking at, just to give you a sense, in terms of measuring the 
time required for a state where a diseased animal was found to 
determine what state or tribe the animal immediately came from. 
We think that eventually we want to get this down to three 
business days. We want to be able to do this in a way that is 
most effective and least costly so that there is more 
participation and involvement.
    And that's the reason why the additional money is being 
asked for, because we want to provide incentives and resources 
to producers in the states so they will be more inclined to 
accept this program than they were the last program. The last 
program just wasn't very effective when only 30 percent of the 
people participated.
    Ms. DeLauro. We will still maintain our differences in this 
area, Mr. Secretary, and we will have many more conversations 
about it.

                       FOOD SAFETY WORKING GROUP

    Quick question, if I can, on the food safety working group. 
The budget request is about $4 million less and you all 
recommended, which I support, increased sampling and funding 
for additional baseline studies with regard to the prevalence 
of pathogens in food products. But we see a $4 million decrease 
in this effort. What is different between 2011 and 2012 in 
those proposals? Are we looking at something of a less robust 
program of sampling and study in light of the pressure to cut 
spending?
    If we do receive an $88 million reduction like that 
proposed by the House majority, will that result in less 
sampling and less data gathering to identify risk to public 
safety from contaminated meat and poultry products?
    Secretary Vilsack. The sampling, primarily the savings in 
sampling are the way in which we are conducting the sampling 
and the shipping costs. We had a program called the Save Award, 
in which we asked people to identify where money could be 
saved. And one of the savings had to do with how we shipped 
back the empty containers that are used in sampling. And 
someone finally concluded it would be just better not to use 
the most expensive way of shipping those sampling cartons back. 
So that saves about a million and a half dollars.
    Primarily, what we have done with FSIS is we had a study 
done of looking at how we use our workforce and how we can use 
it more efficiently and effectively, and they identified some 
savings that we are applying to offset some increases in FSIS 
that we are proposing. I don't anticipate that this is going to 
result in us doing less. In fact, I would anticipate we will 
probably do more, because we were identifying other pathogens 
that we need to be taking very seriously in taking a look at. 
And we are obviously hopeful that we can get the performance 
standards in the poultry area through the process in an 
expeditious way, so that too will require additional scrutiny.
    We are focused, primarily, on establishing a public health 
information system that will allow us to do a better job of 
collecting data and be able to potentially predict trends and 
predict problems before they occur, and we are trying to work 
to develop a better unified incident command response so that 
we can respond more quickly than we have in the past, and do it 
in a more coordinated fashion with FDA.
    Ms. DeLauro. Thank you very much, Mr. Secretary, and I will 
just, the rest of the questions, submit for the record.
    Mr. Kingston. Ms. Kaptur.

                         PAYMENTS AND SUBSIDIES

    Ms. Kaptur. Thank you, Mr. Chairman, and I would like to 
submit for the record the mineral revenue payments to the 
states where Wyoming leads with over a billion dollars.
    I also want to submit to the record all the USDA subsidies 
since 1995 to the present showing very large companies getting 
over half a billion dollars in subsidies. We will submit the 
top 20, and then also a ranking of the way that USDA subsidies 
go out to all the states. I think if I submitted this for the 
record now, as we proceed forward this year, we are going to be 
able to inject not just efficiency but equity in the kinds of 
cuts that we make.
    I also wanted to mention that if we look for a state like 
Wyoming, compared to my own, the state of Wyoming doesn't even 
have as many people as I have in my congressional district. The 
state of Wyoming has 544,270 people. They rank very high in 
terms of per capita federal spending: $38,705 per resident. 
This is all federal spending in the tiny state of Wyoming--
very, very interesting, the distribution of federal dollars.
    And a state like Ohio with 11 million people, many of whom 
are strapped right now, the statewide per capita for us is less 
than half that much. It's about $15,749 per citizen. So one 
asks oneself what's going on here in the distribution of 
federal dollars in a time of deep recession--very, very 
important to look at the whole of what's going on in this 
country, and why some people don't feel the pain and other 
places feel it very, very much.

                       RENEWABLE ENERGY PROGRAMS

    Mr. Secretary, I wanted to ask you a little bit about your 
renewable energy programs, and I really want to compliment you 
for the work that you dedicated your life to in this area. What 
do you see happening on the energy production front, the pace 
of research in some of our biofuels, the types of contracts, 
perhaps USDA's been involved in, whether it is solar fields, 
whether it is wind farms, whether it is biofuels, plants? Could 
you just kind of give us a little backdrop on where you see 
USDA heading in the future in terms of these energy programs 
that are so vitally important to us and that could be 
renewable?
    Secretary Vilsack. Yes. We see this as a critical component 
to rebuilding a rural economy that works for folks. We have 
five regional research centers. They are virtual centers that 
are basically focusing on trying to identify more efficient 
ways to use renewable energy.
    We are aggressively promoting the Rural Energy for America 
Program--REAP. We have over 4,000 projects that have already 
been funded under REAP. There are 68 feasibility studies that 
we recently announced to look at alternative and more efficient 
ways to produce bioenergy, biofuels, renewable energy. We are 
working with farmers and ranchers to encourage them to 
incorporate renewable sources on their properties. We have 
already saved 4.3 billion kilowatts of power by virtue of the 
programs that we have sponsored. So we are going to continue to 
see more and more of this.
    We are going to continue to see it as a very important part 
of the innovation strategy the President has established. Clean 
energy is a future opportunity for this country. You know, if 
you want to rebuild an economy, you have to build something or 
do something that nobody else is doing, or you have to do it 
better than everyone else is doing. And in the clean energy 
area, there is an enormous opportunity for us.
    So it is additional research. It is additional on the 
ground activities. It is working with these regional 
partnerships I have talked to Representative Farr about to 
encourage them to incorporate in their strategy renewable 
energy. It is about using the energy programs to build bio 
refineries to assist producers of feedstocks for advanced fuels 
to be able to do so in an economically feasible way. Here is 
one challenge that I think we have.
    But I think there is a deep sentiment on the part of some 
in Congress to consider an abrupt end to the kinds of 
incentives and support that the industries have had in the 
past, specifically in the bio-fuel area.
    My concern with it is that if you have an abrupt end, you 
are going to compromise your ability to continue the progress 
we have seen.
    We saw this with the bio-diesel tax credit; when we 
basically ended that, we lost 12,000 jobs and 50 percent of 
production capacity, almost immediately.
    This is a maturing industry; it is not a mature industry. 
And our view is that you need to really divide a glide path--
not a cliff, but a glide path--for reducing the supports and 
tariffs over time; and that you need to think about redirecting 
some of those resources to building additional opportunities 
for bio-fuels vehicles that can use bio-fuel, and a more 
convenient supply.
    So there is a lot of activity in this space, and we are 
going to continue to be aggressive about it, because it is a 
million jobs-plus, and $100 billion of capital investment.
    Ms. Kaptur. Thank you, thank you, Mr. Chairman.
    Mr. Kingston. Thank you, Mr. Secretary.
    Mr. Farr, do you guys want one more round? Or do you? Okay, 
one more round?

                GOVERNMENT ACCOUNTABILITY OFFICE REPORT

    Let me then ask you a question. You may or may not have 
seen the Wall Street article about a GAO report that is coming 
out on duplication of----
    Secretary Vilsack. I have read the article.
    Mr. Kingston. And I think we will all be looking forward to 
reading that GAO report and we will work with you on any of 
that duplication that you feel is--really, that is not my 
question so much as I just want to mention that when the GAO 
comes out, then we can more intelligently see what these things 
are.

                              FOREIGN AID

    But my question in this open-mike town meeting that you are 
doing so well at, Mr. Secretary: Have you ever read the book, 
Dead Aid by Dr. Dambisa Moyo, who is a Zambian woman?
    Secretary Vilsack. No.
    Mr. Kingston. It is actually a very interesting book about 
foreign aid, and how it is ruining the economies of 
particularly Africa.
    One example that stuck in my mind--let's say you are in 
Senegal, there is a mosquito net maker, and he has got ten 
employees and he pays them $2,000 a year, and those ten 
employees support families with them.
    And so, you know, he is chugging along, the small 
entrepreneur in Senegal. And then comes Bono or celebrity of 
the day, feeling all generous and compassionate, and well 
intended, and dumps 200,000 free mosquito nets on the market. 
And when that happens, the Senegalese entrepreneur is dead, 
because he is selling his nets for five bucks each.
    You got free mosquito nets flooding the market now. He is 
out of business. The ten employees are out of work. Their 
dependents.
    It is a very vicious cycle. And this woman, who was born in 
Zambia and got her Ph.D. from Oxford or a master's from Harvard 
and an M.B.A. from American University, who has worked for the 
World Bank and Goldman Sachs, and seems to be really a very 
intelligent person, has approached it in a very, I would say, 
thorough way, but says that so often our foreign aid is really 
killing the Third World and keeping them from being able to 
develop.
    I worry about that with food aid, that so often we are 
putting food on the market and benefitting American farmers, 
and benefitting American shippers; but to the end-user maybe it 
is keeping them from learning how to grow their own food, and 
running off the budding entrepreneurs.
    But that is the discussion that we need to have as a 
society.
    There are companies, Land O' Lakes, for example, who are 
very interested in helping develop and nurture the entrepreneur 
in Africa. And I believe you were there several months ago?
    Secretary Vilsack. I was there last year. Actually my 
youngest son is currently in Namibia, setting up a series of 
franchising arrangements for women-owned businesses to sell 
solar-powered technology to villagers in areas that have no 
electricity.
    So I am somewhat familiar with what you are talking about.
    Mr. Kingston. Well, the USDA employees that I have met in 
Africa, I think, are very on-hand, and they are doing a very 
good job. They seem to know the locals and know the local 
entrepreneurs and movers and shakers.
    And it is very interesting to talk to them.
    But I am concerned about that with food aid, that----
    Secretary Vilsack. Well, if I can, you know, I think one of 
the reasons that you ought to be reassured is that we have got 
the Feed the Future Initiative, which is really designed to 
build capacity, to build, at least from an agricultural 
perspective, the capacity of people to be more productive 
agriculturally, and to build the markets that would allow for 
appropriate sale locally.
    Mr. Kingston. Mm-hmm.
    Secretary Vilsack. And to generate the revenue and income 
and to develop credit systems. And I think the Feed the Future 
Initiative is our effort to try to respond to the concerns at 
least within the agricultural space of capacity-building, as 
opposed to just simply ``Here is food that you need.''
    Obviously there are emergency circumstances in situations 
where that is appropriate, and is necessary. The McGovern-Dole 
Program, I think, is appropriate, because it does create an 
incentive for kids to go to school and they get an education.
    But overarching it is our Feed the Future Initiative with 
the United States Agency for International Development--USAID--
to try to set up a much more productive agriculture.
    Mr. Kingston. I would be interested in working on some 
pilot program concepts with you, if we could pick and choose 
some areas, and maybe look at doing some of these things 
differently.
    For example, perhaps vouchers to some of the areas. Because 
I do feel that there is a corporate welfare angle to our food 
aid that may be as an unintended consequence, but it is still 
there.
    Secretary Vilsack. We have got several pilots currently 
working along those lines in four or five different countries: 
Malawi, Tanzania, Cameroon, and a couple others.
    So we probably should visit with you about those programs, 
and see whether that is in line with what you are talking 
about, or if you want to do something different, or more 
expansion of that effort.
    Mr. Kingston. And I will invite you to read that book, 
because I know you have no reading material at all. And you are 
just bored out of your minds.
    But I am sure somebody in the Department has read that book 
and is familiar with this woman. And I would like to get her 
down here as a witness to the hearing at some point in the 
future, because I think this was a very interesting book.
    So I yield back.
    Mr. Farr.
    Mr. Farr. Well, thank you Mr. Chairman. I would like to 
follow up.
    A week ago I was sitting in Jakarta, in the fourth most 
populous country in the world, Indonesia, and certainly the 
largest Muslim country in the world; 17,000 islands and 7,000 
which were occupied on.
    And one of them near the far end, independent country of 
East Timor, which we visited, was also one of the poorest 
countries in the world. And it really hits you when you do not 
even see just basic material things in a country like this.
    I have been in the Peace Corps, and I have never seen--I 
would not call it abject poverty, because the people are not 
dejected--but just lack of access to any of the, you know, to 
enough food and water, just basics. You know, whole-culture 
poverty.

  MCGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD NUTRITION 
                             PROGRAM GRANTS

    And so I am very concerned when the CR that we passed last 
week cut the program, the food aid program, in half, the 
McGovern-Dole Program.
    And I wish you would enlighten a little bit more on what 
those kinds of cuts. You cannot go into alternatives, Mr. 
Chairman, you know, with vouchers, unless you have money to 
vouch.
    And so if we are just whacking that program in half, it is 
going to have world-wide implications on our foreign policy and 
the reason we got into the food programs in the first place.
    Secretary Vilsack. Twenty-eight million children have been 
benefitted from that program, somewhere between four and five 
million on an annual basis, since its inception.
    The best way I can respond to that question is to just 
relay an experience I had with that McGovern-Dole program in 
Kenya.
    We were at an orphanage, and it was an emotional moment for 
me, because I started out life in an orphanage. And so I, you 
know, in one sense I was trying to relate to these kids, who 
were in this orphanage.
    And I was doling out the food for lunch. And they had the 
red cups in the World Food Program and you put a cupful of 
sorghum and rice into this cup. And for some of these kids, it 
is the only meal that they would get in a day.
    And so I asked them--they were various ages--I said, ``Why 
do you like coming here? Why do you like coming to school?''
    You know, if you ask that question in the United States, 
somebody would say, ``Well, I like it because I want to play 
football,'' or ``I like it because I'm studying chemistry,'' or 
``I like it for music,'' or whatever.
    They would give you some answer. Every single----
    Mr. Farr. Recess----
    Secretary Vilsack. Well, unfortunately there are not as 
many schools with recess. That is another issue.
    But every single child I asked had the same answer: ``I 
like this place, because I get fed.''
    So you know, if America wants to convey a sense of reaching 
out to people, that would be one program that I think we ought 
to think very seriously about maintaining; because it does 
create a relationship and it does help kids go to school. And 
that means they will be better educated over time, our hope is.
    I would be very wary about that, from my own personal 
experience.
    Mr. Farr. Well, sitting in the seat you sit, hopefully you 
will be very vocal about that, as we move on in the year.

                          WIC FORMULA PRODUCTS

    And lastly, since this is the last round, I want to just 
get a response. I mentioned to you that you have the authority 
to commission an independent scientific review to determine 
whether the higher cost formula products are actually as 
effective as the formula industry claims. Would you be willing 
to look at that, if it is going to save you $90 million?
    Secretary Vilsack. We ought to be always looking at 
opportunities to save $90 million.
    Mr. Farr. All right. Well, I would like to pursue how you 
might do that.
    I do not have any further questions, Mr. Chairman. Yield 
back.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                                FOOD AID

    Just to follow up on the food aid issue, which is an area, 
as you know I try to spend a lot of time on.
    And I have to tell you, I think it is unconscionable, the 
cuts in the CR to Food for Peace, and for McGovern-Dole.
    I listened to something the Secretary said. And the fact of 
the matter, McGovern-Dole is about girls, young girls. And if 
there is no program like this, they stay home; they go when 
this program exists, because their families figure that they 
may even be able to bring some food home at the end of the day 
for the rest of the family.
    But I think we need to take a look at food aid in terms of 
national security. And that is just not me talking about that. 
You talk to the Defense Department, you talk to----
    If you are going to want to feed your kid, you are going to 
take it from wherever you can get, be it the Taliban, be it 
some terrorist organization. If they feed your kid, hey, I will 
do whatever you say, lest my kid has to go hungry.
    Now that being said, what we do is we do partner, as the 
Secretary said. Land O' Lakes, to be specific, in Tanzania, 
it's $8 million from the Federal Government, in order to 
participate in this program.
    CARE, Catholic Relief Services, they do a great job, they 
do a wonderful job. But it's a partnership. They engage with 
the Federal Government.
    So you've got a public/private, whenever it is, you've got 
a partnership here.
    We should not be out of that mix, for our own national 
security, which is so incredible. You know, it sounds good: Cut 
foreign aid, you know. And it's a great piece of red meat that 
you throw before the public, and it just says, ``Okay, that's 
where we're going.''
    That is, it's unwise in terms of what we do.
    And I'm not saying that these folks would not participate, 
but they couldn't probably participate, some of these relief 
organizations, unless there were a federal commitment to this 
effort.
    So let's look elsewhere, as I say. Where do we start to 
make the cuts? And there are lots of places we can do that.

                       SINGLE FOOD SAFETY AGENCY

    I'll get back to you, I think, on this GAO report, because 
I want to read it first, Mr. Secretary, because you know where 
I'm going to go with this, and that's a single food agency, 
because that's one of the areas that they identified. And I 
will look carefully at what they say, and so forth.
    And I think what I will want to ask you as a result of 
that, is how much savings do you think we can capture with a 
single food safety agency?
    So. But I will reserve that until I read the report, and 
I'm just more knowledgeable about what they have said.

                 THE EMERGENCY FOOD ASSISTANCE PROGRAM

    The Emergency Food Assistance Program, zeroing out the 
infrastructure grants, no particular reason, just cost savings, 
any----
    Secretary Vilsack. Tough choices.
    Ms. DeLauro. Okay.

                    DISCRIMINATION CASE SETTLEMENTS

    Women Farmers. Let me just address that for a second. And I 
know you have been working in this area with women and Hispanic 
farmers. I applaud the move, and you know that I've been 
working on this for a while.
    But I do have some concerns about the process. I would be 
less than honest.
    As I understand it, the same total amount of funds as other 
discrimination case settlements, Pigford, Keepseagle. But it's 
spread out significantly among a larger number of farmers--not 
all women will be adequately reimbursed for the losses they 
incur.
    Secretary Vilsack. That's not correct.
    Ms. DeLauro. Okay. Please----
    Secretary Vilsack. That's not correct.
    Ms. DeLauro. Yeah. Okay. How will it work?
    Secretary Vilsack. Well, there are basically two tiers.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. The first tier, depending upon the 
nature of your documentation of discrimination. You have 
documentation, you are entitled to $50,000, you're entitled to 
debt relief, and you're entitled to tax relief. And there's no 
cap on the number of people theoretically that could get that 
relief.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. So it's not correct to say that it's the 
same amount of money, because we don't know yet, because we 
don't know how many people will be able to provide the 
documentation.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. But whatever that number is, you 
multiply it by that amount. So it's an uncapped amount from the 
Judgment Fund.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. The second category are folks who do not 
have as extensive documentation, but still can establish a 
claim of discrimination. It may not be quite as strong in that 
case----
    Ms. DeLauro. Much like Pigford II, if you will?
    Secretary Vilsack. Yes. In that case, basically, there is a 
$1.2, $1.3 billion fund that those folks could basically 
partake in.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. And depending upon the number that's in 
that second group, will depend on how much. But they can get up 
to $50,000 in the same level of relief as the first group.
    Ms. DeLauro. Mm-hmm. But Pigford II was not capped in any 
way, as I understand it? Is that right?
    Secretary Vilsack. Oh, Pigford II was capped, because it 
was capped by the appropriations.
    Ms. DeLauro. By the appropriation.
    Secretary Vilsack. Yeah.
    Ms. DeLauro. I'm going to take another look at this, in 
terms of----
    Secretary Vilsack. I think, if I can maybe clear up the 
confusion?
    Ms. DeLauro. Sure----
    Secretary Vilsack. In Pigford I, you had two categories, 
you had $250,000, and you had something less than that. And the 
reason why you can't do that in this particular circumstance is 
because these cases were never certified as a class action.
    Ms. DeLauro. I understand.
    Secretary Vilsack. And that's because there's a third 
alternative. So you've got two tiers. The third alternative is 
if you don't like either one of those two tiers, you can pursue 
your lawsuit in court, which was not true in Pigford.
    Once the Pigford settlement occurred, that was it, your 
rights were--you had to take the settlement or not.
    Ms. DeLauro. Right. But you did have another round of 
Pigford, which had people who had filed their claims late. 
Look, and I supported the Pigford Resolution of what you did.
    Secretary Vilsack. Right. But that's capped.
    Ms. DeLauro. Mm-hmm.
    Secretary Vilsack. And this is not capped. And you also 
have the right--they can't go to court--that women and Hispanic 
farmers, if they are not satisfied, can go to court.
    Ms. DeLauro. But it's awfully difficult to go to court on 
your own, Mr. Secretary, I think you know that.
    Secretary Vilsack. Listen, I'm on--yeah.
    Ms. DeLauro. No, I understand. And I'll take a closer look 
at that, because I would like to get it resolved.
    There are a very, very larger number of women farmers, who 
over the years have been discriminated against, and they ought 
to all have, you know, equal and fair treatment. And I know 
you're trying to move in that direction.
    Mr. Kingston. [Off mic] The gentlewoman's time has expired. 
And the Chair recognizes Ms. Kaptur.

                                FOOD AID

    But I wanted to say this. In terms of the food aid and the 
relationship, it might be a good exercise to look at the U.N. 
voting incident relationship with food aid.
    I know, for example--and I think my memory is correct on 
this--that in 2000 we gave Afghanistan about $73 million in 
food aid. And if you look at sub-Saharan South Africa and what 
the--Botswana votes with us, Rwanda does not.
    Most of them do not vote with us in the U.N. I've argued 
with the State Department that the U.N. voting record is 
irrelevant, if we're not going to use it for any meaningful 
relationship building. So much of the U.N. voting record has to 
do with Israel and Middle East politics, that I think the 
African countries have a hard time identifying with it.
    But if you said, ``Okay, we're only going to give food aid 
to those who vote with us, we could probably walk away from all 
of it.''
    Well, half of it. I'm not sure of the numbers are. I know 
Mr. Gohmert has actually introduced a bill that says: If you 
don't vote for us 50 percent of the time, we cut you off from 
all foreign aid.
    And I think he's doing that to drive a message. But I would 
say, in terms of building relationships, when I have gone to 
Africa, I made it a point to ask them why they don't vote with 
us in the U.N. And they don't what the heck I'm talking about.
    And I talk to them about the U.N. voting record. They still 
don't know what we're talking about. And that includes somebody 
whom I respect highly, Paul Kagame in Rwanda, for example.
    But, you know, people look at you and say, ``What are you 
talking about, U.N. voting record?''
    And so I don't think it's a fair evaluation of our 
relationship with countries. But at the same hand, when we talk 
about, ``Well, this is national security,'' or ``This is 
building relationships,'' there should be some metrics on it.
    And I am not putting this on food aid, either. I'm talking 
in the big picture of foreign aid, because it is true that it's 
enormously unpopular with constituents.
    And everybody wants to balance the budget, cutting foreign 
aid, and we all know there's no money there, in terms of the 
$3.7 trillion budget.
    But to me, this is a discussion that we should have as a 
society, in terms of you know, ``What is the objective here? 
What is the metrics?''
    I used to live in Ethiopia, and when I was there, the 
population was probably at 15 million people. Today it's 82 
million people. And Ethiopia, as you know, in the last 50 
years, they've been up, they've been down, they've had 
dictators, they've had communism, they've had it all.
    But one of the NGO workers over there told me, when I was 
at an orphanage, as you do--and I like to get out there, and I 
always said I don't want to leave until I see the plate in the 
child's hand--but she said, ``Well, this might be the only meal 
this child receives today.''
    Which I believe was true. But on the other hand, well how 
did Ethiopia, if they were so, you know, helpless, how did they 
get from 15 million to 80 million people?
    You know, we seem to have this, I'd say it's a celebrity 
fixation of: Oh, if not for us, these poor countries would 
never get by.
    And I don't think that necessarily true. I think that's our 
assumption so often.
    I'll also say another element to this is you do have China 
and other countries that are in Africa, that we absolutely have 
to have this presence there.
    I'm a hundred percent for total engagement. But I think we 
should also look at where we are achieving things and where we 
are not achieving things, or what is it that we're achieving, 
and how are measuring, and so forth.
    But I know of your trip there last year. I think it was a 
great trip. And again, very, very high marks from me to all the 
USDA employees I've met, not just in Africa, but all over the 
world. They are really, where they need to be. They are on the 
ground with the people, making a difference.
    Secretary Vilsack. Thank you.
    Mr. Kingston. Ms. Kaptur. Sorry.
    Ms. Kaptur. Thank you, Mr. Chairman. Thank you for an extra 
round of questioning.

                 THE EMERGENCY FOOD ASSISTANCE PROGRAM

    I wanted to ask, on the infrastructure program for TEFAP, 
that the continuing resolution cut $6 million from: Could any 
of you clarify for me what does that mean in terms of the 
ability to deliver food at the local level?
    And also, have you considered ever using USDA's authority 
to help your CSFP distribution sites, and food banks that 
receive TEFAP, procure fuel at a more competitive price, and 
bid on vehicles that they use, which are dilapidated and old, 
and they're not green--that's for sure--to somehow at their 
national meetings gather them, and figure out a way to use the 
meager dollars they have more efficiently?
    Secretary Vilsack. That's a very good idea. And I don't 
know that we have necessarily encouraged that kind of thought 
process. But that is something that we'll certainly take back 
and encourage.
    When I think of the infrastructure, I most often think of 
refrigeration in the capacity that will adequately store foods. 
And I think that's where a lot of our dollars have gone.
    And you know, the reality is, if we didn't have to do this, 
we probably wouldn't. But the reality is--We've got to make 
choices. And what we've tried to do in this budget--and 
everyone will have a problem with it, and everyone will have a 
problem with any budget that gets passed--when you're dealing 
with shared sacrifice and shared opportunity, it really is 
tough to get the priorities right.
    We did our best effort here to try to balance those 
priorities. But when you, something's got to give. And that, 
unfortunately, is one area, where we felt we could give a 
little in the short term to try to get ourselves back on track.
    Ms. Kaptur. Thank you, Mr. Secretary.
    You might also interview the places that distribute these 
commodities on their energy bills, and see if there is a way 
that some of the energy systems that Secretary Chu is looking 
at, and some of the programs that Secretary Solis has, for 
green energy installation couldn't help some of these places 
reduce their overhead long-term, because they do pay 
significant bills at the local level.
    Again, I have this question of, you know, can bulk 
whenever, bulk purchase of something save money? Whether it's 
windows, you know, so they're not leaking heat all the time. 
You know, how do we more efficiently handle all of these sites?
    We've asked the military to do that. Well, I don't go to 
all the meetings when these folks come into town, and have 
their national meetings. But I think it's something at least to 
push the envelope on, as you move forward.
    And thank you for your receptivity there.

                      MONETIZATION OF COMMODITIES

    Could you also answer for me, does USDA do any more 
monetization of commodities under the old Title II, I think it 
was, you know, where our bulk commodities were sent to 
countries, sold, and if it didn't disrupt their internals, use 
those monies for development? Is that sort of out the window?
    Secretary Vilsack. It is fairly limited, I think. It's very 
limited.
    Ms. Kaptur. If you could provide some insight on that, 
because we have had surpluses recently. So at least that's my 
impression.
    Secretary Vilsack. Surpluses of.
    Ms. Kaptur. Of commodities in this country.
    Secretary Vilsack. Actually supplies in most cases are very 
tight right now.
    Ms. Kaptur. Very tight?
    Secretary Vilsack. Yeah. That's why the prices are high.
    Ms. Kaptur. Okay. Any insight you could provide on that 
program would be greatly appreciated.
    [The information from USDA follows:]

    The Title I and Title II programs under the Food for Peace Act, and 
the Food for Progress program provide commodities to private voluntary 
organizations, international organizations, or foreign governments. 
Most commodities provided under the Food for Progress program are bulk 
commodities and are monetized. The Title II program also provides 
commodities to be monetized, primarily in non-emergency development 
programs, but most Title II program resources are used for emergency, 
direct feeding programs. Monetized sales proceeds support agricultural 
development, health, and other development activities. The Title I 
program of the Food for Peace Act is not active.

                            TRADE AGREEMENTS

    And then finally, I want to say with the Chairman, I'm very 
impressed that he has talked about the impact of U.S. programs 
abroad and what it does to local people. Our food programs 
globally actually, though they are responsible for over half of 
what's donated, in one way or another, sort of pale in 
comparison to many of the free trade agreements that we sign.
    So for example, with Mexico, which continues to vex me, the 
NAFTA agreement in 1993 has provided a total of over a trillion 
dollars of trade deficit with the nation of Mexico; but one of 
the most hidden parts of that agreement that has hurt so 
greatly on our continent, are over two million farmers in 
Mexico, who lost their land, and they lost their livelihood. 
They were living in the Ajito System. It was totally disrupted, 
as our production was 18 times more efficient more than 
Mexico's.
    And so the shipment of yellow corn down there wipes out 
tens of thousands of farmers, who grew white corn. And I think 
if there is a judgment day, I think America will be judged very 
harshly for what was done there, and continues until today with 
the illegal immigration we suffer as a result of desperate 
people, seeking desperate means, just to survive.
    All the small businesses that were wiped out. That was the 
most heartless agreement. And it might have benefitted a few 
companies that export, but the harm it did. And all you have to 
do is read the headlines about drug trade now. What are people 
resorting to? Desperation.
    And it is imbedded in that NAFTA agreement, and we refuse 
to go back and look at it. And it's hurting people every day.
    And I can tell you there are people that I have personally 
met, who have been killed in Mexico, because they tried to deal 
with the labor trafficking issue, which is an ugly underbelly 
of this agreement. People are trying to survive and being 
bootlegged, really, across the continent.
    We keep closing our eyes to that.
    I hope the Chairman might help this subcommittee be a place 
where eyes are opened as to what is really going on down there. 
I wish their government cared about their people. Obviously, 
they don't.
    But it seems to me we have a responsibility, because we're 
a partner to that agreement.
    So I thank you very much for being interested in the 
impacted programs globally, and would encourage you to include 
some of these free trade agreements, and take a close look at 
them.
    Mr. Kingston. I thank the gentlewoman.
    And that concludes our hearing. And I don't know about you, 
Mr. Secretary, but all this talk about food has made me hungry.
    Thank you very much for being with us.
    Secretary Vilsack. Thank you.
    Mr. Kingston. We are adjourned.

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                                          Thursday, March 17, 2011.

          COMMODITY FUTURES TRADING COMMISSION FY 2012 BUDGET

                                WITNESS

GARY GENSLER, CHAIRMAN, COMMODITY FUTURES TRADING COMMISSION
    Mr. Kingston. The Committee will come to order.
    I want to welcome Chairman Gary Gensler and the CFTC with 
us here today for a one-man panel. Yesterday we had five people 
at the desk. So you have a lot of answers in your head.
    We are glad to have you here on St. Patrick's Day.
    CFTC is always of interest to this Committee, and more and 
more we plan to have other CFTC hearings and have more 
involvement in it this year not just because of Dodd-Frank, but 
because there are so many people that are in it now. It is a 
tail that really and truly wags a huge dog, and $226 trillion, 
if that is correct, in swaps and $36 trillion in futures. So if 
those numbers are right, and I know you know what they are 
exactly in your head, but it is an enormous surprise, has a 
profound impact.
    You know, we are in tight budget. I know you have asked for 
a two-year appropriation. I do not know that we are going to be 
doing any two-year appropriations, but we will have that 
discussion and are going to work with you throughout this 
process.
    With that, let me yield the floor to Mr. Bishop and see if 
he has anything.
    Mr. Bishop. Thank you very much.
    Let me welcome you, Mr. Gensler. Obviously, your area of 
expertise and your agency has gotten a great deal more 
attention in the last few months than in previous years, and so 
we are welcoming you.
    And I notice that you have requested some significant 
increases over the last, and I would just imagine that it has 
to do with some of your increased responsibilities that have 
been given to you by the Congress.
    So without further ado, we look forward to hearing your 
testimony and getting into the question and answers. Thank you 
for being here.
    Mr. Kingston. And with that, Mr. Gensler, the floor is 
yours.
    Mr. Gensler. Thank you so much, Chairman Kingston, 
Congressman Bishop.
    I thank the Chairman for seeing me last week, and I look 
forward to having additional meetings with you. I think it is 
very helpful.
    Ranking Member Farr.
    I thank you for inviting me to speak about the 2012 budget 
request. I also want to congratulate both Congressman Farr and 
Chairman Kingston on your new roles, and I look forward to 
working with you.
    The CFTC is a good investment for the American public. Each 
part of our Nation's country relies on well functioning 
derivatives markets. It is essential that producers, merchants, 
and other end users can manage their risk. And what the 
derivatives markets fundamentally do is to allow those 
companies to lock in a price in the future. Such a price 
certainty allows those companies to better make essential 
decisions and investments. So it is about price certainty and 
lowering risk.
    The business certainty that derivatives markets can provide 
only exists to the degree that end users have confidence in the 
integrity of the market. So where does the CFTC fit in? We were 
created to oversee commodity futures markets, initially 
agricultural markets, but ultimately all commodities. So the 
tens of thousands of farmers, energy users, corporations, 
municipalities, anyone really who wants to hedge a risk could 
have the basic assurance of fair treatment and the ability to 
lock in a price.
    The CFTC fulfills this mandate through market surveillance, 
industry oversight, enforcement. We pursue fraud, such as Ponzi 
schemes and market manipulations, and we oversee the exchanges 
where people buy and sell these instruments, and clearing 
houses.
    We are also a cop on the beat. That is not our own role 
because we want to make sure there is transparency, but we are 
a cop on the beat to make sure those markets are free of fraud, 
manipulation, and other abuses.
    So I would also add that though we are not a price setting 
agency, rising prices and basic commodities, agricultural and 
energy products, highlight the importance of having an 
effective market oversight that insures integrity and 
transparency.
    Our scope has been traditionally over the futures market 
that has existed for decades. In the 1980s, a new type of 
derivatives, swaps, emerged. Swaps remained unregulated until 
the Dodd-Frank passage, and the swaps market, as the Chairman 
noted, is about seven times the size of the futures market that 
we currently oversee, and at close to $270 trillion, is nearly 
20 times the size of our economy itself, just arithmetic, 
dollar for dollar.
    So our budget request takes that into consideration. The 
President asked for $308 million. It is an increase from the 
168 or so million level that we are operating at under the 
continuing resolution. To put in context, our agency right now 
has about 675 people. We were at 634 when we peaked in the 
early 1990s. We were shrunk about 25 percent by 2007 and 2008, 
and only with the help of this Committee and Congress did we 
get back to where we were in the 1990s.
    To take on the new responsibilities of the swaps market for 
the first time, the request is to go to 983 people, about 45 
percent more staff, but also to double our technology so that 
we can be efficient and use that technology wisely, to process 
applications, conduct surveillance, investigate fraud and the 
like, but we will need technology as well.
    If I might, before I conclude, spend a moment on 2011 
because I know you are in the midst of discussing that with 
your colleagues. The President did request $261 million for the 
year we are in. Of course, we are operating under the 
continuing resolution, but given the size and complexity of the 
swaps market, seven times the size and more complex than the 
futures market, the current funding of $168 million under the 
continuing resolution is not sufficient for the expanded 
mission.
    We recognize the budget deficit presents significant 
challenges to Congress and to the American public, but we 
cannot forget also the 2008 financial crisis which was very 
real. An investment in the CFTC we think is a good investment. 
It is warranted because, as we saw in 2008, without oversight 
of the swaps market, billions of taxpayer dollars were at risk.
    I thank you. I am happy to take any questions you may have.
    [The information follows:]

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    Mr. Kingston. Thank you, Mr. Gensler.
    Mr. Farr, do you have any statements?
    Mr. Farr. No. I just hope that we can really get a clear 
understanding of the magnitude of your new role, of your 
extended authority. I mean, $277 trillion amounts of swaps is 
almost unimaginable.
    Now they are telling us we have got to go vote.
    And I really respect the idea that we have got to have 
referees in this game, and we need to understand, you know, 
what those referees need to have to do their job well.
    But I have no opening statement.
    Mr. Kingston. Thank you.
    I think since we have about seven minutes or so before we 
need to go, we could get in at least ten minutes if you want to 
try.
    But I will start and stay strictly on the time limit.

                              SPECULATION

    Mr. Gensler, one of the questions that is out there, and 
this is not going to be directly a budget question at the 
moment, but on oil and oil speculation, that is one of the 
things that when gas prices go up, it is the fault of the 
speculators.
    And it is a huge industry we know. It has to do with all 
kinds of different factors, but could you comment on that 
question? It has even been suggested in other committees that 
the CFTC has not done enough to rein in oil speculators.
    So I guess the question would be: can oil speculators drive 
up the price of oil? And how do they do that? And is the CFTC 
the proper agency to monitor it or prevent it if it is abused?
    Mr. Gensler. The CFTC plays a key role in overseeing 
markets where hedgers meet speculators. It could be somebody 
who is a farmer who wants to lock in a price and get certainty 
for the price of corn or wheat at harvest time, and then a 
speculator might be the party on the other side, and that 
allows that farmer to invest and buy the feed and grain.
    So similarly in the oil market, so speculators and hedgers 
meet in the marketplaces, and they both have a role in the 
marketplace in energy markets.
    The role of the CFTC is to make sure those markets are 
transparent; that they're free of fraud and manipulation. They 
are, in essence, fair to the public, and that is a key role 
and, I think, the higher prices sort of highlight the 
importance of our engagement.
    Congress also gave us something called position limit 
authority. That is to limit the burdens that might come from 
what is called excessive speculation. That is how Congress has 
laid it out since the 1930s. The Dodd-Frank Act expanded that 
to swaps as well, and part of the reason we have asked for an 
increase in funding is to help us actually aggregate the 
positions across the swaps and the futures market so that we 
can do our surveillance for manipulation in the energy markets 
across swaps and futures; that we can aggregate the positions 
for the position limits as well.
    Mr. Kingston. All right. Now, the position limit authority, 
is that for one blanket industry or is that for individual 
traders?
    Mr. Gensler. The way Congress laid it out, again, back in 
the 1930s and revised it a bit recently is that it relates to 
parties who are not bona fide hedgers. A bona fide hedger is 
somebody who has the physical product in a merchandising 
channel.
    So on the others, if we might call them speculators, it 
would apply to each of them individually, and that is how we 
have taken it up over the decades in working with the 
exchanges, and we put out a proposal in January of 2010 under 
the then law. We had 8,200 comments. We re-proposed it under 
Dodd-Frank, and the comment period closes in a week. We hope 
the public will comment, and we have already, I think, 3,500 
comments.
    Mr. Kingston. Can oil speculators drive up the price of 
oil?
    Mr. Gensler. I think speculators are part of a market. So 
they are part of pricing, whether it goes up or goes down. 
Speculators are part of a market. It is our role as an agency 
to make sure that if they meet in a transparent market, no one 
is cornering and squeezing it or manipulating that market, and 
that it works for the American public.
    Mr. Kingston. Were they betting on a market trend or are 
they driving a market trend?
    Mr. Gensler. Well, it is often----
    Mr. Kingston. And I know they can do potentially both.
    Mr. Gensler. It is often very hard to discern which it is, 
and that is why it is important to have an effective cop on the 
beat and also to have these effective position limits so that 
somebody is not so large in a market that they have a 
concentrated position in a market.
    Mr. Kingston. We may come back to this, but I wanted to let 
Mr. Farr get in a round before we need to run.
    All right. Now, Mr. Bishop was here first. So let your 
conscience be your guide. [Laughter.]

                              AGRICULTURE

    Mr. Bishop. The CFTC, because of its historical connection 
to agriculture markets, but the number and scope of non-
agriculture issues, of course, has dramatically grown over the 
last few decades. And despite the importance of non-
agricultural issues, agriculture issues are still a critical 
component of your work.
    I am a little concerned that given the fiscal environment 
in which we are operating today and the inevitable budget 
reductions that every agency is facing in the federal 
government, including yours, that the CFTC's management of our 
agriculture markets could get the short end of the stick, if 
you will.
    So how do we make sure that agriculture does not 
disproportionately pay for the reductions in your budget, 
combined with the growing pressures that you are under to 
expand your non-agricultural activities?
    Mr. Gensler. Congressman Bishop, we are honored to be in 
front of the Agriculture Subcommittee of the Appropriations 
Committee and overseen by the Agriculture Committees in both 
the House and the Senate. I think it is a good working 
relationship.
    I do have some of the concerns you raise, if we are not 
able to secure the necessary funding. I know it is a challenge 
for you all. I mean, for us to come in and ask for more money, 
you know, I would rather be in another place, but to not secure 
that extra funding would mean we would have to shift some 
resources and shift resources from some of the traditional 
futures market, agriculture and energy to the financial 
markets.
    The interest rate swap market, which makes up 80 to 90 
percent of that swap market, that is, interest rate swaps, is 
not agricultural swaps. So what we do do every Friday, we have 
a surveillance meeting. Our five Commissioners meet in closed 
doors, hear from the surveillance staff. We talk about cotton, 
corn and wheat, soy, cattle, hogs. I mean, each Friday we talk 
about the agricultural markets almost every Friday, but I do 
fear what you are saying.
    Mr. Bishop. How do we assure that?
    Mr. Gensler. I think the best way to assure it is the 
president's request of $308 million, if I might say.
    Mr. Bishop. And you are trying to get some advanced 
budgeting, too, I think.
    Mr. Gensler. That is true. In 2011, and I know that you are 
all challenged, and I am not sure I would want your job; it is 
a difficult job you have, but the President's 2011 budget was 
to try to start to get some resources, both technology and 
people, to plan for when the swaps market would be coming in 
under our oversight later this fall, and it was for about 240 
more people or $261 million. That is correct.
    Mr. Bishop. If we fool around and do not get that done, 
then you have got to make some other changes in order to comply 
with the congressional mandate.
    Mr. Gensler. I think we have to make difficult choices like 
we have already made. We have cut our technology budget this 
year from $31 million down to $21 million. It means that we are 
just doing maintenance technology rather than programming.
    I think if we stayed at the $168 million, simply put, we 
would not be able to oversee, as Congress had asked us to 
oversee, both the futures market and the swaps market, this 
market that is about seven times larger than what we currently 
see.
    Mr. Bishop. Thank you.
    I am not going to take all of my time. I yield back.
    Mr. Kingston. Mr. Farr.

                         SWAPS MARKET OVERSIGHT

    Mr. Farr. In essence, I mean, this swaps market is a 
relatively new, in historical purposes, responsibility, and you 
indicated it has just outgrown the futures market. I mean, I 
cannot even comprehend 277 trillion notational swaps, that 
amount of swaps, and you talk about the fact that there are new 
types of entities. There are the swap dealers, the swap 
execution facilities, the swap data repositories.
    And then you go on to say, and this is what I do not 
understand, the swap market is more complex than the futures 
markets because it includes customized bilateral hedging 
arrangements. Whereas all futures trade on exchanges, some 
swaps will be traded over the counter.
    What are customized bilateral hedging arrangements?
    Mr. Gensler. It is where a company wants to lock in a 
price, but they want to lock in a price on something that might 
not be so standardized that other people want to do it. An 
example might be an airline that wants to lock in the price of 
jet fuel on certain dates and months at a certain airport. 
Maybe it is an airport. I do not know your district well 
enough, if you have a small airport in Carmel.
    Mr. Farr. In Monterey.
    Mr. Gensler. In Monterey. So the Monterey airport, somebody 
wants to lock in the price of jet fuel on a certain date in 
July. Well, another airline may or may not want to be on the 
other side. So that is an example of something that is 
customized.
    Mr. Farr. Well, in light of the incredible activity that is 
going on, have you asked for enough money?
    Mr. Gensler. Well, I am also, I guess, an American citizen 
and conscious of the budget deficit. The President does lay out 
in the budget that in 2013 the thought is we would need to get 
to about 1,140 people.
    When we look through each of our areas and said what do we 
need to cover the swaps market, we think that whether we are 
able to work with this Committee and Congress to get there in 
2013 or later, we will need to be an agency in that 1,100 to 
1,200 person range, and our technology will need to be 
significantly higher.
    To put it in context, the financial services industry, the 
brokerage industry is much larger than CFTC. It has about 
800,000 employees in brokerage, or 5.6 million in financial 
services, and it spends in the brokerage industry alone 20 to 
$25 billion a year on technology. We are spending, well, $20 
million this year. We are asking for $66 million, but in 
technology.
    Mr. Farr. In the security of the whole economic security of 
the planet, frankly, of the financial institutions depends on 
these good kind of regulators. When you have to do the duty for 
the intel community as well, I am sure, I mean, they must have 
some backup or monitoring you or just being aware what is going 
on.
    Mr. Gensler. Well, we are the first line of oversight for 
these very important markets, and as you said, it is hard to 
get your hands around such a market that is so large. But you 
can think that when you fill up a tank of gas, and it is 
costing more for a tank of gas these days, but if you fill up 
and you put $80 of gas in your tank, you can think somewhere in 
the economy there might be about $1,500 of derivatives behind 
it. I mean, you just do the arithmetic and multiply, and do not 
know where it was in the supply chain, but every part of the 
supply chain has benefitted because they can get certainty on a 
price in an otherwise uncertain world.
    Mr. Farr. How do you do this? Is it looking for anomalies?
    Mr. Gensler. It is often using rule writing to set some 
broad parameters so that markets have to be transparent. 
Congress did it for us in Dodd-Frank, and then it is using 
technology, and the technology is the way to aggregate data and 
then build what is called automated alerts to see if something 
looks manipulative that we then investigate.
    Twelve million contracts trade in the futures markets a 
day. Humans cannot oversee that. You need technology as well.
    Mr. Farr. And that is traded 24-7 in the world globally?
    Mr. Gensler. The swaps market is. Most of the futures 
markets have a few hours off a day.
    Mr. Farr. I have got some more questions, but we will go.
    Mr. Kingston. We will suspend and be back as soon as 
possible. We have two votes on the floor. So get some coffee.
    Mr. Gensler. All right. Thank you very much.
    [Recess.]

                              DEFINITIONS

    Mr. Kingston. The hearing will come back to order.
    Our members are somewhere between here and the Capitol, but 
Mr. Farr is about one or two minutes behind me, and he said to 
go ahead and get going.
    I wanted to find out, and this should have been my first 
question, but some definitions that would be useful for the 
Committee, useful for the record, too. What is a swap? What 
does a swap do? Who is a major swap participant? Who is an end 
user? Who qualifies for the end user exemption? And for a major 
swap participant, what is a substantial position in swaps?
    I am not sure how long of an answer that requires, but if 
you could walk through those with me. So what is a swap? You 
know, you do not have to define 100 percent of it. If you 
define 90 percent of it, that is helpful.
    Mr. Gensler. Okay. And if you will help me because I did 
not get the whole list, but I----
    Mr. Kingston. We will just go one by one.
    Mr. Gensler. Futures contracts started way back in the 
Civil War time and got regulated in the 1920s and 1930s. Swaps 
started in 1981 and have grown in the last 30 years. they are 
mostly related to interest rates and currencies. It is where 
somebody, helps protect a risk of an interest rate moving up or 
down or a currency rate moving up or down. That is probably 80-
plus percent of the market.
    The next piece of the market Congress asked us to cover is 
commodity swaps. It would be if somebody was entering into a 
risk contract for oil at a certain point in time in the future.
    And specifically excluded from swaps, and this is important 
for many end users to a later question, is if somebody is 
entering into contract to actually deliver the product. That is 
called a forward. I will deliver a car to a person. You might 
think of forwards in this case, I will deliver the oil or I 
will deliver the corn or wheat, or even have an intention to 
deliver. So forwards are excluded from the definition of 
futures and have been since the 1930s. They will be also 
excluded from the definition of swaps.
    Another thing excluded from the definition of swaps is 
securities based swaps, and I see if I caught Chairman Emerson 
who has the other subcommittee and, the SEC has securities 
based swaps, and a lot of credit default swaps are securities 
based swaps because they are on an individual company. They are 
on an individual company or they are on a narrow group.
    So the CFTC has interest rate swaps, currency swaps where 
the currency could go up or down, oil and gas, agricultural, 
metal swaps, and then a small group of swaps related to 
securities if it is on a broad base of securities, like the S&P 
500.
    But if it is on a small group or a narrow group, that is 
over at the Securities and Exchange Commission.
    It does not include insurance. It does not include 
commercial loans. It does not include things that you think it 
does not include.
    Mr. Kingston. And what about a swap dealer?
    Mr. Gensler. A swap dealer is defined in the----
    Mr. Kingston. And I want to also ask even though I need 
kind of a working definition for members of the Committee; is 
there a legal definition that is in place so while the comment 
period is being made people know for sure what category they 
are in or out of?
    Mr. Gensler. There is a legal definition of swap in the 
statute. Congress did this in Section 721 of the statute, if I 
remember because I read it often, but the SEC and CFTC are 
working together on a joint rule to bring further 
clarification, and some of that further clarification is just 
where the dividing line is between the CFTC and SEC. And the 
interest rate swap people understand from the statute is 
covered.
    On the dealer question that you raised, again, Congress 
addressed that. I do not remember that statute number. It might 
have been the same definitions section, as to what a swap 
dealer is. Somebody who is making markets; you can think of the 
large banks, but you can also think of what AIG once was doing 
as a dealer.
    The CFTC and SEC put out a proposal to give further 
definition to that last fall. The comment period closed a few 
weeks ago. We have 170 comment letters. It's one of the rules 
that we think we should move early on.
    I gave a speech yesterday when I laid out some sequencing 
and phasing of this, but I think that, as you suggest, Congress 
laid out it pretty specifically. We did the proposal in the 
fall. We got about 170 comments. We hope to move on that, 
finalize that this spring, if we can. Of course, it takes ten 
Commissioners, five at each Commission.
    Mr. Kingston. And what is a major swap participant?
    Mr. Gensler. A major swap participant is a category 
Congress included in the statute that is likely to be a very 
small group of parties. It is somebody who is not a dealer, but 
would be regulated like a dealer, and what Congress laid out is 
this would be only if their net outstanding positions and swaps 
were such that they are so large that if that party failed, if 
they went bankrupt, it would have systemic ramifications.
    I am sort of summarizing it, but again, the SEC and CFTC 
worked together on a proposal in the fall. The comment period 
closed a few weeks ago, but we set a number of thresholds in 
that.
    If somebody were clearing all of their swaps, they would 
not likely meet these thresholds, but it was more if they had 
these customized swaps that Congressman Farr and I were talking 
about before, and they were substantial enough, and they did 
not have a margin or collateral on them and we had a series of 
numbers. Certainly we can get back to you with those numbers.
    I do remember one was that there was $5 billion of overall 
exposure. So that is not the notional amount. You could have 
far greater notional amount. You could have hundreds of 
billions maybe, but it is just if you defaulted today, what 
would be your exposure to your counterparties that is not 
covered.
    And I think Congress meant it to be a small number. 
Frankly, from the commenters, we think it will probably be 
maybe a handful of parties at most would fall into that 
category.
    Mr. Kingston. Okay. When we get back, I do want to find out 
definitions for end user and talk about the end user exemption 
a little bit and major swap participant and the clearing house 
or the SWF. I think it is just very helpful for our Committee 
to understand as many of these basic glossary terms as 
possible.
    Ms. Emerson.

                   PROCESS FOR WRITING RULES WITH SEC

    Mrs. Emerson. Thanks, Chairman.
    I am sorry I am late. My own subcommittee is going, and I 
have got to get back to it, but I have got one question just 
with regard to swaps, and then I have something else I want to 
ask you that is sort of a CFTC-SEC question, as you can 
imagine.
    So do you think that the Dodd-Frank law will, in fact, 
prevent the type of or at least make more transparent the whole 
credit default swap situation that we encountered with AIG?
    Mr. Gensler. I think so. I think that the SEC will have a 
lot of that jurisdiction, those types of swaps, but between the 
CFTC and SEC, Congress said let's bring transparency, and it 
did it in about five or six ways. Those that are standard 
enough would have to be traded on swap execution facilities.
    Mrs. Emerson. What does ``standard enough'' mean?
    Mr. Gensler. If it can be cleared at a clearing house, and 
there would have to be public comment, we have to put all of 
these things out to public comment and run a 60-day process, 
which I think is really helpful. But if it can be cleared at a 
clearing house and then in addition that a trading platform 
called a swap execution facility makes it available for 
trading, and lastly, that it is not so large to be a block 
because if it is large enough to be a block, then Congress said 
we do not want to disrupt liquidity there.
    The second way that Congress said that there would be 
transparency is that all credit default swaps, as well as 
interest rate swaps, after there is trading in it, have to be 
reported in a timely way. It is called real time reporting, and 
I think that is very important.
    One of the things in AIG that happened that Congress 
addressed as well is AIG and their counterparties could not 
agree on the values after they entered into these transactions. 
For years there can be valuation disputes. So Congress weighed 
in, and I think it is a really important thing that lowers risk 
that these swap dealers have to share with their counterparties 
on a daily basis how they are valuing the contract for the 
years to come.
    And we have published some rules, and I know the Securities 
and Exchange Commission has as well, about that daily 
valuation.
    Mrs. Emerson. That does sound like it is a stronger 
incentive to do the right thing, I guess. So between you and 
the SEC, well, the SEC has got about 100 new rules that they 
have got to get done, and you have probably a similar amount, 
but when Chairman Schapiro was up here the other day, she made 
clear that they were working through the rules on a very 
deliberate basis as opposed to just trying to get them all 
done, which I agree with. I think it is much better to take 
your time and do it right because sometimes there are 
unintended consequences as we all know.
    So do you expect to meet your deadlines?
    Mr. Gensler. No.
    Mrs. Emerson. Okay. So what do you do then in the meantime? 
I mean, can you still implement sound policy without having a 
regulation to force that?
    Mr. Gensler. What we have been able to do we do not have as 
broad a portfolio as the SEC.
    Mrs. Emerson. Right.
    Mr. Gensler. We really swim in this very deep lane called 
derivatives. We swam in the lane in futures. Those markets 
worked pretty well actually through the crisis. And now 
Congress has asked us to swim in a lane that is 7 times deeper, 
the swaps lane, but it is still derivatives.
    We have put together 30 topic areas to do rules in. We have 
published 28 of those 30. So we have a little bit of a natural 
pause here. There are more rules because sometimes we publish 
more than one rule on a topic, but I think we have published 42 
or 43.
    We have a handful left. To answer your question, we think 
we will take up this entity definition, the end user exception, 
some process rules, and some rules that are actually just a 
little easier to get to, privacy and so forth, the definition 
of agriculture commodity. In the springtime we are hopeful, but 
we are not going to come to any rule until we adequately 
summarize public comment, we adequately get Commissioner 
feedback, and we adequately talk to other regulators and 
coordinate.
    So we, too, do not believe in rushing anything. There are 
the other rules that are going to come in the summer and maybe 
even into the fall that will be finalizing rules. So there is a 
July date in the statute.
    Congress has also given us, I think, important latitude to 
phase implementation. So even if we finalize a rule in May or 
June, it might be dependent upon another rule, in a sense, the 
product definition that the Chairman referred to. So we can 
finalize a rule and say, ``But it is not effective until the 
other rule is finalized,'' so that people have adequate time to 
know what the whole mosaic is, and then also have an adequate 
time to change their back office and technology and their 
spending.
    Mrs. Emerson. Mr. Chairman, can I just ask one quick, 
quick, quick follow-up?
    Mr. Kingston. Yes.
    Mrs. Emerson. So how does the exact process work where you 
and the SEC actually have to both agree on a rule and you have 
got five Commissioners and Mary has got five Commissioners? How 
does this all work?
    Mr. Gensler. Well, if it is a joint rule, it cannot even be 
published in the Federal Register until both Commissions vote. 
So what we have done, Chairman Schapiro and I, I mean, I am 
closest with my three daughters and then maybe my fellow 
Commissioners, but then it comes to Chairman Schapiro and 
myself. We talk often.
    We come to a draft term sheet together. We try to socialize 
that term sheet with our Commissioners, get feedback, and then 
the staffs start to write the document, and we try to share 
that full document with the ten Commissioners, get feedback, 
continue to negotiate.
    The proposals we try to schedule on the same day. Sometimes 
they are two or three days apart, but we----
    Mrs. Emerson. So how long does it take? Well, the easy 
ones, forget that. The more difficult?
    Mr. Gensler. Well, the product definition rule, in part, is 
because it has to be joint.
    Mrs. Emerson. Right.
    Mr. Gensler. We are still socializing and negotiating.
    Mrs. Emerson. All right. Thank you very much.
    Mr. Kingston. Mr. Farr.

                       EFFECT OF CUTS IN FUNDING

    Mr. Farr. I would like to sort of put this a little bit 
into perspective and have a better understanding of, you know, 
what we have been through. I mean, just the title you have of 
Commodity Futures Trading Commission, I do not think I have 
many constituents that really understand what that is and what 
you do. Yet they all know that we had a huge crisis in this 
country that sort of started on Wall Street, and it had to do a 
lot with exchanges.
    And out of that Congress had oversight hearings and came up 
with the Dodd-Frank and proposed that we really grow your 
regulatory role, and we are in the process of doing that, even 
in a field where people do not understand much about it.
    And yet there is already some push-back, that we should not 
be doing this. You are growing too fast, and I notice that in 
H.R. 1, which was the bill that passed the House, there was a 
$57 million cut in your existing budget for this year, 2011.
    What would that cut do, and who are your enemies out there? 
Who does not want you to be able to have a better regulated 
market?
    I mean, where I come from certainty is investment, and in 
politics all my life, local government, State government, and 
federal government, the rulemaking, the laws that we make 
essentially are to provide some certainty that bad things will 
not happen and that if you do these things and follow the 
rules, you will have a fair game, a level playing field.
    I thought it was interesting in your comment to the 
Chairman--you are both Chairman, but to this Chairman, our 
Chairman--and I would like to hear more about it, that 
essentially in the oil, whether the trading creates a higher 
price for gasoline, for oil, and your response was, well, our 
role is to make a level playing field, at least to have 
transparency so that the fairness of the game is understood.
    Mr. Gensler. Right.
    Mr. Farr. So what happens if we get a $57 million cut out 
of your existing budget, plus do not give you the more, when, 
indeed, you are talking about a whole new world opening up 
there with derivatives and swaps and stuff that we have never 
really deal with in the past?
    Mr. Gensler. Well, it depends somewhat when it would 
happen. If it were to actually happen in fiscal 2011 and we 
were to have to go to $112 million funding for the whole 12 
months, though we are six months into the year, we would not 
only have to go back to the head count that we had in 2008, 
which was about 440 and we are at 670 now. We would have to 
actually cut not just 230 people, but probably twice that 
because we are halfway through the year.
    It is arithmetic, but I mean, it is----
    Mr. Kingston. If the gentleman will yield though, you have 
enough staff right now to write the rules. So we are not 
talking about the rulemaking. We are talking about moving from 
that point on.
    Mr. Gensler. Mr. Chairman, you are absolutely right. At the 
$168 million funding, we have enough staff to write the rules, 
and they are talented, dedicated staff.
    To Congressman Farr's question, if we were to actually go 
to $112 million, we would not have that. We would actually 
probably have to do a reduction of force of 60 or 70 percent of 
our people if it happened midyear for the full year.
    Now, that is just arithmetic, and I know that your question 
is more toward going forward. If we stayed at the 168----
    Mr. Farr. Well, I mean, obviously as the Secretaries have 
said, if this cut takes place right now, your only ability is 
to cut personnel because you do not have time to do any 
planning.
    Mr. Gensler. Yes, we are not an agency with grant money. So 
we really just have a little over 60 percent of our budget is 
staff; about 18 percent is technology; and 7 or 8 percent is 
space. You know, you have the leases.
    So if it were to happen in the middle of the year, and so 
that the markets that we oversee would not have an effective 
oversight, the exchanges work well in the futures market right 
now, but they work with an effective regulator called the CFTC. 
We would not be able to take up anything in the swaps 
marketplace, of course, and even our ability to oversee the 
future marketplace.
    I do not think the public could have the confidence in the 
futures market at $112 million.
    Mr. Farr. There would be less certainty and more 
speculation and more risk, and so on. But what about who are 
your enemies? Who does not want this to happen?
    Mr. Gensler. Well, I think that we are a good investment to 
the American public. I think that it helps because transparency 
levels the playing field, and all of the companies that want to 
get certainty can work in a marketplace that does not have 
manipulation and fraud and has competition.
    It does shift some of the information advantage from large 
institutional participants in the financial markets.
    Mr. Farr. Because of transparency.
    Mr. Gensler. Because of transparency, and I think that is 
what Congress addressed in the reform bill, that there will be 
transparency and will lower risk through the use of clearing 
houses. So it shifts some of the advantage actually to the 
farmers and ranchers and energy users and the corporations and 
local governments in all your districts because they can rely 
on a market that they have more confidence that it is fair.
    Mr. Farr. Thank you. A good answer.
    Mr. Kingston. Mr. Nunnelee.

                         AUTOMATED SURVEILLANCE

    Mr. Nunnelee. Thank you, Mr. Chairman.
    Thank you for being here. I am new and I am still learning, 
but I do bring my experience in private business.
    In your budget request you request funding technology to 
automate surveillance. What kind of surveillance are you going 
to be conducting and when does it stop?
    Mr. Gensler. The surveillance we do now, we are fortunate 
in the markets we do oversee to get the entire positions and 
the transactions on a next day basis. So, for instance, when 
the May 6th events occurred, when the markets gyrated quite 
dramatically that day, the very next morning our staff was able 
to have the data files, very large data files, and use 
computers to look through them.
    But we also do surveillance in the cotton markets, the 
wheat and corn markets, as well as the financial markets, and 
meet as a Commission on a closed-door basis every Friday to 
hear from the surveillance staff. Sometimes it is a position 
limit violation. Sometimes it is something that is called a 
wash sale or trade practices. Sometimes it is a potential 
manipulation, and we have to dig into it.
    Most of the markets work well, but there are thousands of 
participants. So there is always somebody doing something I can 
tell you from the Friday meetings. So that is the nature of 
surveillance, and it gives confidence to the market that there 
is somebody looking closely at the markets.
    We also aggregate the data, and we try to put it out. Every 
Friday we put out something called a Commitment of Traders 
report. It is in the futures market. We would like to extend 
that to the swaps market, and a lot of the data you will see, 
whether it is on the nightly news or even members of Congress 
use it in their letters to us, quotes our Commitment of Traders 
report because it aggregates the data, and you start to have 
transparency that way as well.
    Mr. Nunnelee. All right. So who monitors your surveillance? 
Who is looking over your shoulder?
    Mr. Gensler. Well, you are, Congress. I mean, we welcome 
the oversight. I think it is a good thing for the American 
public. We have an independent Inspector General as well. We 
have, of course, annual audits.
    And in terms of the surveillance of the markets, the 
exchanges themselves have a self-regulatory function, and we do 
rely on them often as a first line of defense as well, that the 
markets themselves, the Chicago Mercantile Exchange and the 
Intercontinental Exchange and so forth.
    Mr. Nunnelee. I am reminded of a store we had in 
Mississippi 40 or 50 years ago. The governor sent prisoners 
from the penitentiary in Parchman, MS up to Little Rock to get 
mules. They were trustees in the penitentiary. So he felt 
comfortable doing that.
    Well, they made it to Little Rock and enjoyed their 
freedom, and instead of coming back home, they went on to 
Texas. Eventually they were apprehended, but the governor made 
the observation. He said if you cannot trust the trustees, who 
can you trust.
    So I just think it is important that I ask that question.
    A final question. As you are adding automated surveillance, 
other companies in the marketplace are replacing personnel with 
automation, and that is the way they are achieving 
efficiencies. But you are asking for money for additional 
automation for surveillance as well as additional personnel. 
Why can't you make do in the same manner that private business 
is doing all over America?
    Mr. Gensler. It is an excellent question, but if I can 
analogize, our market share is growing. We cover something 
called the futures marketplace that has existed for about 150 
years, but we do not cover the swaps marketplace that existed 
for 30 years, and those are both in this lane of derivatives. 
And so we are being asked by Congress to take on something 
about seven times the size of what we are taking on now.
    So thus, we have asked for about a doubling of technology 
and 45 percent increase in staff. I wish it was just all 
technology, but it still takes some people to oversee the 
markets and bring the Ponzi scheme cases and the like.
    Mr. Nunnelee. All right. Mr. Chairman, I have got other 
questions about personnel, but I will get those in the next 
round.
    Mr. Kingston. Mr. Bishop.

                       SWAP EXECUTION FACILITIES

    Mr. Bishop. Thank you very much.
    I am interested in exploring the line of questioning that 
Mrs. Emerson had started. As part of the Dodd-Frank bill, swaps 
trades are required to be done through the swap execution 
facility, a swap SEF. Most market participants will then have 
to register with the CFTC, namely, swaps dealers and major 
swaps participants.
    As I understand it, swap execution facilities will be 
regulated jointly by the SEC and the CFTC. If this is correct, 
I am curious to know how the oversight will be divided and who 
will have the final call when issues arise.
    How do you plan to avoid the issues of regulatory arbitrage 
and agency sapping by the regulated entities?
    With the budget situation being as difficult as it is, to 
what extent are you going to cooperate with the SEC to create 
and maximize efficiencies and to avoid redundancies?
    Mr. Gensler. We are working very closely with the 
Securities and Exchange Commission at all levels. What Congress 
did, and we are following is to draw a bit of a dividing line. 
So some products will be clearly regulated by the SEC if it 
relates to a single security or a basket of securities.
    We are a regulatory agency that oversees risk markets, and 
they oversee capital formation and investor. The risk market's 
interest rate swaps would just be, for instance, over at the 
CFTC, hedging of risk of an interest rate moving up and down, 
as would the oil markets and agricultural markets.
    So mostly it is just divided by product, and that will 
avoid a lot of, as you say, the regulatory arbitrage. I 
wondered if I might say one other thing. We will regulate the 
swap dealers. We estimate there may be in the order of 200 or 
so legal entities that will be swap dealers. In some cases 
there will be three or four in the same bank. So it is actually 
fewer than the 200, and for major swap participants we estimate 
just a handful.
    The tens of thousands of users of these products we will 
not be directly regulate.
    Mr. Kingston. Thank you, Mr. Bishop.

                               END USERS

    Mr. Gensler, getting back to my question on what an end 
user is and, therefore, who qualifies for the end user 
exemption.
    Mr. Gensler. In the statute if somebody is not a financial 
entity and is using the swaps for commercial hedging, they do 
not have any requirement to use a clearing house. So we 
published a rule in the fall. It is one of those that we hope 
to try to finalize in the early phase.
    And we gave more clarification. We in essence said if this 
commercial firm is hedging an input, hedging a liability, 
hedging something now or in the future, hedging a currency, we 
gave a long list of things; you are out. I think we were broad 
enough, but we got a lot of comment letters, and we will still 
summarize those comment letters, but the congressional intent 
as we understand it is if you are not a financial entity and 
you are hedging something, almost anything--the Congress did 
not say what--then you do not have to use a clearinghouse.
    To go further, Congress separately gave authority in 
regulating the dealers, these maybe 200 or so swap dealers, to 
set margin at these swap dealers; that the swap dealers might 
collect or pay margin to lower risk in the system. And as we 
move forward with this, we only oversee the non-banks and the 
SEC similarly the non-banks, but it is our intent to try to 
publish this in April, but consistent with congressional intent 
in the clearing requirement, these end users would be outside 
of the margin requirements as well.

                               SEQUENCING

    Mr. Kingston. Well, this slowly gets us back to Mr. 
Bishop's and Mrs. Emerson's question in terms of the sequencing 
of the rulemaking because we do have people telling us that 
these definitions are not set quite clearly enough for them to 
comment because they are not sure which direction they are 
going in.
    And one of the statements, and I am not sure what the 
independent estimate came from, but CFTC said that the cost 
benefit analysis for confirmation portfolio reconciliation and 
portfolio compression rule was going to be $2,400 an entity, 
but one study said it actually could be millions of dollars per 
entity.
    And then for regulations establishing and governing the 
duties of swap dealers and major swap participants, the CFTC 
said it should be about 11 percent of one full-time employee, 
but an independent study showed it could be as many as five 
employees would need to do that. So it is a pretty big 
difference.
    Mr. Gensler. One of the things that we have directed staff 
to do is to summarize all that we hear from the public on cost 
benefit analysis, a very important part of our rulemaking. In 
fact, it is in our statute itself, the Commodities and Exchange 
Act, to do cost benefit analysis.
    The best place to hear it from is actually market 
participants, and before we move forward on any final rules, we 
will be not only summarizing them but considering them, and 
each of the five Commissioners will take that into account.
    Some of those facts and figures you mentioned might be also 
that we also do estimates in the paperwork reduction piece of 
rulemaking. So I am not sufficiently familiar with each of the 
estimates in each of the rules for this hearing, but sometimes 
the commenters address that.

                        MAJOR SWAPS PARTICIPANT

    Mr. Kingston. Okay, and then major swap participant and a 
substantial position in swaps, what are those definitions?
    Mr. Gensler. A substantial position in swaps is in the 
statute only as it relates to this definition of major swap 
participant.
    Mr. Kingston. And that is the smaller group that is 
regulated like a dealer but does not deal in it?
    Mr. Gensler. That is correct, and it is really meant to be 
a very small group that might have a systemic effect on the 
whole country. The numbers----
    Mr. Kingston. Those are the major kind of name brand Wall 
Street firms?
    Mr. Gensler. The major Wall Street firms are most likely to 
be dealers. I mean, they have been dealing in the trillions of 
dollars of swaps. I think that----
    Mr. Kingston. Who are some of the names of them?
    Mr. Gensler. Of dealers?
    Mr. Kingston. Of a major swap participant. Just who are 
some of those? Are those household? Because if I understood you 
now, you are saying swap dealers are more the kind of Main 
Street/Wall Street dealers.
    Mr. Gensler. That is correct. That is correct.
    Mr. Kingston. And so who would be the major swap 
participants? And does everybody know where they fall at this 
point?
    Mr. Gensler. Tens of thousands of people know because they 
are not. The two or three or four who think they might be have 
been coming in either to the Securities and Exchange Commission 
and CFTC to comment on the role and even at the end of the day 
they might not be. You know, it is really just that few.
    Mr. Kingston. Okay. And my time has expired, but getting 
back to the Emerson-Bishop line of questioning on these 
definitions and on the sequences of the time, because you are 
looking at so many rules, I think what we were kind of moving 
toward is, well, which rules do you really think will be in 
place, and when and which ones will not, but we can have 
another round on that.
    Mr. Gensler. Okay. I think I could address it for any 
member whenever you wish.
    Mr. Kingston. Mr. Farr.

                    PROBLEMS RELATED TO DERIVATIVES

    Mr. Farr. Well, go ahead. I mean, it seems to me, I mean, I 
am pretty naive at all of this, but I mean, swaps are a general 
term for all kinds of instruments, derivatives, and all, and it 
is just an exploding market. I mean, you indicated that it is 
how many bigger than the futures market?
    Mr. Gensler. About seven times the futures market.
    Mr. Farr. And growing exponentially?
    Mr. Gensler. It is growing pretty quickly.
    Mr. Farr. And, therefore, this is a whole new area that we 
are getting into and regulating, right?
    Mr. Gensler. That is correct.
    Mr. Farr. And so people are saying, well, go really slow 
and do not spend a lot of money to do it, and others are saying 
we are way behind. Get as many referees in there as you can, 
and it seems to me at least you are able to defend the request.
    I would think that it is not even near enough because what 
we have not been talking about, it has been pretty technical, 
but all of the Ponzi schemes that have been broken up, and 
perhaps you ought to talk about some of the enforcement and why 
is it that people do not want this to be regulated?
    I mean, you said that there are some big actors in there 
that they know how to play the game, but in the process there 
may be some injury, uncertainty, a lack of transparency, and 
people get hurt. And the people you talked about getting hurt 
are the small people, are the farmers and producers.
    Mr. Gensler. Well, I would actually go further. The people 
who got hurt were the American taxpayers. I mean, there is over 
seven million people still out of work that do not have jobs.
    Mr. Farr. Not all because of the futures market though.
    Mr. Gensler. No, but a lightly regulated company called AIG 
was very heavily involved in the swaps market and it was 
ineffectively regulated, and it was a big gap in our regulatory 
structure. It was not the only reason for the financial crisis. 
We had an asset bubble. We had a lot of things going on in the 
housing markets, a lot of things, but the swaps market played a 
critical role in this crisis, and millions of people are still 
out of work and other millions of people have homes that are 
worth less than their mortgages.
    Mr. Farr. Well, much less the pensions lost, the tuition 
for their children. I mean it is the tragedy of all of these 
kinds of Ponzi schemes which happened all around me. I mean, in 
my area it is dramatic the number of people that were taken.
    Mr. Gensler. So we currently in our enforcement area bring 
cases called Ponzi schemes where somebody is putting themselves 
out as an investment advisor but usually using an investor's 
money to defraud somebody else and saying, ``I have got these 
returns.''
    And we bring dozens a year, and usually in the foreign 
currency area. You see them also in the commodity space. We 
only do that in futures. We do not have oversight yet to the 
swaps marketplace. It is a very important thing.
    We are asking for resources in our enforcement area. We 
have about 165 to 170 people. Right now our 2012 request is to 
take that to 235 people, about 65 more people in that area 
because of the expansion of the marketplace.
    Congress also gave us new authority in the anti-
manipulation area that will help in markets, in the energy 
markets and the like, for the first time; that we would have a 
broader anti-manipulation authority as well.
    Mr. Farr. How could you step in and tell somebody who might 
speculate on these oil prices that you might be able to, with 
your rules and regulations, be able to step in if, indeed, it 
was doing something that is not authorized?
    Mr. Gensler. We picked up in the manipulation area some 
authority similar to what the Federal Trade Commission and FERC 
and the SEC have to pursue what is called fraud based 
manipulation.
    Mr. Farr. Enron.
    Mr. Gensler. Well, historically we have had a price based 
manipulation authority, and I think Congress saw that what the 
FERC, and the FTC, and the SEC had might be good for us to have 
as well, and so it is basically if somebody is using fraud to 
manipulate the markets. We have a proposed rule out, we have 
not finalized that yet, but it is a broadening of our authority 
that I think will be important in these markets.
    Mr. Farr. Thank you. My time has expired.
    Mr. Kingston. Mrs. Emerson.
    Mrs. Emerson. This is really hard to do in five minutes, 
Chairman.
    Mr. Kingston. We will have lots of rounds.

                             INTERNATIONAL

    Mrs. Emerson. I know. I know. Okay. Let me just ask you one 
more question. With regard to AIG, this is not my line of 
questioning, but Mr. Farr's question prompted my interest.
    With regard to AIG, do you believe that if we had not 
gotten rid of Glass-Steagall that AIG would have been able to 
engage in the types of activities it did?
    Mr. Gensler. I think AIG probably started their Financial 
Products Unit before that law was passed.
    Mrs. Emerson. Before.
    Mr. Gensler. If I remember the history, and that AIG was an 
insurance company. So I think, respectfully, I think they were 
already in this.
    Mrs. Emerson. Okay. I just wanted to know.
    Mr. Gensler. I think.
    Mr. Kingston. And if the gentlewoman will yield.
    Mrs. Emerson. Yes, sir.
    Mr. Kingston. It was AIG, London primarily, wasn't it?
    Mr. Gensler. AIG Financial Products was in Connecticut and 
London. It happened to be that the head of it was in London. 
You are correct, but they had personnel both in Greenwich, 
Connecticut and London.
    Mr. Kingston. And I was going to follow that line later, 
but I just wanted to----
    Mrs. Emerson. No, no, no. that is okay because I am going 
to go back to something else.
    Mr. Kingston. Because one of my questions does have to do 
with you are dealing with multinational countries, and a Dodd-
Frank here might not help in Germany, for example, you know, or 
a company that is located in Germany or London.
    Mrs. Emerson. And I was actually going to ask, and we can 
share the time and then you can give me extra. [Laughter.]
    So all of the regulations that we will put in place to try 
to at least know what is going on better in the marketplace, 
you are coordinating it with your counterparts in the G20 
countries?
    Mr. Gensler. Yes, we are. We actually had a group of 18 
different countries join a CFTC conference just two days ago, 
but that is just an example. I will be in Brussels next week. I 
am able to take my daughters. It is vacation, too, but I am 
going to go to Brussels and Paris and coordinate more there.
    We are making very good progress. The European parliament 
is taking up a bill actually this spring to do things very 
similar to the derivatives portion of Dodd-Frank, not the other 
portions, but derivatives.

                               TECHNOLOGY

    Mrs. Emerson. All right. Because obviously, the more 
coordinated we are, the more opportunity we have to prevent 
another meltdown like we had before.
    Let me ask you about the flash crash last year and/or 
algorithmic trading, which is a word that I have trouble 
saying. I know that the committee that you all set up with the 
SEC suggests that regulators need to be more forward thinking 
toward these emerging trends, and so my question is: do you 
have the tools necessary to keep up with, you know, every new 
trend that emerges?
    Mr. Gensler. Frankly, not yet. What has happened in the 
last ten years is the markets have increasingly gone 
electronic. I mean, the American public thinks of the floor of 
the New York Stock Exchange or the floor of the Chicago 
Mercantile, but now well over 80 percent, about 85 percent of 
our futures markets we oversee are electronic trading. That 
does not mean they are algorithmic, but they are electronic.
    And so we have to enhance our technologies, as other 
members have said, but also our people to stay abreast of that 
and to aggregate that data and properly surveil that data.
    Mrs. Emerson. Yes, and I think you did a good job in going 
through the new investment in technology and really going 
through step by step by step, but interestingly enough, my 
subcommittee, we just had Vivek Kundra of the CIO for OMB and 
really for the entire Government and the GAO and GSA to talk 
about technology and the fact that we have squandered billions 
and billions and billions of dollars.
    And so my question is with this very detailed plan that you 
have for new investments in technology, has that, number one, 
been coordinated through OMB? I mean, one of the things that 
Kundra told us is that, you know, you are wanting to do this. 
We know about the flash crash that happened last May-ish or 
whenever it was, and the fact is that it takes so long to get 
the new plans through OMB and/or all of the people that you 
need to get it through that when you get your new equipment, if 
in fact it is the right thing, then it is going to be obsolete 
already, and so obviously they are trying to make a lot of 
changes, and I applaud that greatly.
    But is this all coordinated, I mean? And have you 
coordinated with the private sector? Because obviously if you 
need to do something that can keep up with what is being traded 
on Wall Street, then private sector expertise is the best thing 
for you to use at least for ideas.
    Mr. Gensler. Right. So we do coordinate with OMB and the 
$66 million request and the details behind that with OMB. The 
actual implementation as an independent regulator, and this is 
true at the SEC, we are not then going back on every contract 
with them.
    Our coordination with the private sector is very real, 
especially on data feeds. We are going to need to link data 
feeds to these data repositories, and I think it was good that 
Congress said the data could actually be held outside of our 
agencies. The SEC, CFTC, we do not have to build the data 
repositories, but we have to build links and then Congress 
actually included something I really like. It said those data 
repositories have to provide us direct electronic links, but we 
still have to build them, pay for them, make sure that the 
computers can talk to each other.
    Mrs. Emerson. And how long do you anticipate this is going 
to take?
    Mr. Gensler. I think it is a multi-year process, and the 
reason is, of course, we have to finish the rule writing, which 
I think hopefully we will do this year. We are human. I mean, 
the date is July, but some of this is going to be well into the 
fall, and I think that the data repositories then have to get 
up and running and we have to, working with you, get 
appropriate funding.
    I mean, a lot of it is a funding challenge as well.
    Mrs. Emerson. Well, Mr. Kundra did say that they are really 
trying to push everybody toward cloud computing because it is 
much, much more efficient, much faster, and certainly a lot 
cheaper, and that way you do not have to build entire, huge IT 
systems for yourself, but rather you can use the cloud 
computing or the Internet based platform, if you will.
    Mr. Gensler. Well, in this case, though I would not use his 
term, I think Congress had foresight in saying there could be 
outside data repositories. They can charge others for that data 
service, but they have to have a direct feed to the regulators 
so we can look into that data and have transparency to police 
the markets.
    Mrs. Emerson. Okay. I appreciate that. Thanks.
    Mr. Kingston. Mr. Bishop.
    Mr. Bishop. Thank you. Along those lines, earlier you 
mentioned the resources, and you compared and contrasted the 
resources you have, the resources that you're requesting with 
the resources of the entities that you'll be regulating.
    Could you kind of go back through and kind of lay that out 
again, to make it clear? Because it appears that even with what 
you're requesting to accomplish, particularly with the IT--and 
I think you talked about the investment that the commercial 
entities are putting into their IT, which makes yours really 
look antiquated, that, you know, you're going to have all you 
could do to keep up with it, even if you got what you're asking 
for with personnel and IT updates.
    So I'm really wondering, how are you going to assume that 
we go through this process? Will you effectively be able to 
keep up, and do what you're charged with doing, without being 
so far behind, because they're expending so much more resources 
on the best IT, so that they actually can run faster than you 
can.
    Mr. Gensler. Right. The Commission has a technology 
advisory committee chaired by one of our Commissioners, Scott 
O'Malia. And recently, they reported to us, as to a lot of 
technology issues.
    But the TAB group talked at that--that's an outside 
consulting group--and said that they estimate the brokerage 
industry spends $20 to $25 billion per year on their 
technology.
    We spent $31 million last year. We spent less than the 
industry spends in a few hours.
    Mr. Bishop. I'm sorry, the industry spends how much?
    Mr. Gensler. $20 to $25 billion a year.
    Mr. Bishop. Billion. And you spend $25 million.
    Mr. Gensler. And we spent $31 million last year and $20 
million this year under the--so my math isn't quick enough, but 
it's probably what they spend in, you know, five to ten hours.
    The point is not the relationship, the point it is a very 
large industry with hundreds of thousands of employees, and 
millions of transactions per day.
    We're not asking for more than $66 million in that 
category. I know that your challenges are enough that we won't 
ask for more than that.
    But what we're looking to do is try to build over a number 
of years the pipelines, the interfaces with these outside data 
repositories. The outside data repositories will probably be 
spending very many multiples of what we're doing.
    And I think Congress had foresight. Let the outside build 
the data repositories. At least, we have the data links, and 
then we have to build the software. That $66 million, the 
increase of about $35 million, most of that is for software 
applications, to build the applications to do, in essence 
automated alerts into the data; but let somebody build the 
warehouses, and so forth.
    Mr. Bishop. Yeah. But you also got to have the personnel to 
analyze that, once it's captured.
    Mr. Gensler. That is correct. And the personnel in some 
circumstances to bring enforcement actions.
    Mr. Bishop. Exactly.
    Mr. Gensler. Because judges want people in front of them, 
not computers, of course.
    Mr. Bishop. Right. So unless you get all of that, you still 
can't do what Congress had mandated that you do?
    Mr. Gensler. It's a large market. We have excellent staff. 
But I am in front of this committee, suggesting if, with your 
help, that we try to build the resources to be sufficient for 
the mandate that we have.
    Mr. Bishop. You're so diplomatic. Thank you.
    Mr. Kingston. Mr. Nunnelee.

                           CONSUMER EDUCATION

    Mr. Nunnelee. Thank you, Mr. Chairman.
    In your testimony, you talked about enhancing consumer 
education, consolidating consumer education, and protection 
functions into a single office. Can you elaborate about what 
that would entail?
    Mr. Gensler. We had shrunk in our staff in the last decade. 
And this is something that a number of the Commissioners and I 
have talked about for the last couple of years, that we really 
would want to have a dedicated function here.
    We're a little different than the Securities and Exchange 
Commission, where there's a broad investor public. But still we 
think there's a role to play to help the public understand and 
protect themselves against fraud and Ponzi schemes--basically 
bad actors out there, pretending to make a return--like Bernie 
Madoff did in a very bad way--but pretending to make a return, 
investing in foreign currency or in commodities.
    And so it would be a very small office. We could get the 
exact numbers. I just don't recall them. But Mark Carney, our 
Chief Financial Officer, is here, and maybe could help me while 
I'm sitting here. I can't remember the exact numbers in the 
office.
    [Discussion was held off the record.]
    Mr. Gensler. Yeah, so it's initially three to five people 
in the office.
    Mr. Nunnelee. How will you go about communicating this 
information to the consumers?
    Mr. Gensler. We haven't stood up the office yet. So we 
think it's a very real need to have the office. We also have a 
new whistleblower responsibility, or authority, that we have to 
stand up, as well.
    So I think some of those plans are yet to be formulated. 
But certainly, we'd have to leverage with just a few people. 
We'd have to leverage the Internet and leverage, you know, 
public messaging that way, so that people can better understand 
and protect themselves.
    Mr. Nunnelee. All right. And then you're asking for roughly 
300 new employees?
    Mr. Gensler. That's correct.
    Mr. Nunnelee. My concern is this first step, and you'll be 
back next year, asking for more, and it's going to lead to more 
buildings and leases, and equipment, et cetera. Can you help me 
with concern?
    Mr. Gensler. We've included in the budget what we think is 
adequate space in leasing. I feel quite good about that.
    In terms of the people, if I could use an example. We 
currently oversee fourteen clearinghouses. A clearinghouse 
stands between two parties to these transactions, so that if 
one of them defaults, the taxpayers don't have to pick it up, 
basically.
    I mean, that's the core of what Congress said.
    We expect that to grow to 20 or 21 clearinghouses. We 
already have the six knocking on our doors. I mean, this is not 
just an estimate, that is a guess. I mean, actually I could 
name them for you, and so forth.
    And so the example, as we have about 40 people currently, 
who oversee those 14 clearinghouses. It's growing by 50 
percent. We think we need 70. That's 30 more people.
    And so the detailed budget goes through each of the areas' 
estimates. We're trying to be like a businessman. And I grew 
up, my dad had a small business. And I was on Wall Street for 
18 years.
    We've tried to sort of think through in each place these 
numbers.
    And that's just one example.
    Mr. Nunnelee. All right. Thank you, Mr. Chairman.
    Mr. Kingston. Thank you.

                            OWNERSHIP LIMITS

    Mr. Gensler, I wanted to ask a little bit about a question 
specifically about the Lynch amendment, which was added to the 
Dodd-Frank bill in the House on a narrow vote. It has to do 
with CEF ownership limits. And it was not in the original bill. 
And then it fell out in conference.
    But I understand that you guys are pursuing it, even though 
it wasn't part of the final package. Is that correct? Or what 
are you guys doing on it?
    Mr. Gensler. The final bill included Senate language, that 
specifically is a provision on conflict of interest. Over there 
they might call it the Senator Sherrod Brown provision.
    But conflict of interest was in the bill. And so the SEC 
and CFTC made proposals in the fall with regard to ownership 
limits. And we're still sorting through those comments. But it 
does have ownership limits on swap execution facilities, as the 
chairman asked, where no one party could have more than 20 
percent ownership, but there's no aggregate limit.
    Mr. Kingston. Well, if it was specifically rejected by the 
Senate, then isn't that a statement that they did not want 
that? Are you're saying, ``Well, they dropped it because it was 
elsewhere in the bill''?
    Mr. Gensler. No, actually the conflict of interest 
provision, I believe all of the rules we've proposed are 
consistent with what Congress has asked, and certainly we're 
looking for your comments and the public comments, so that the 
final rules will be different. They'll change, based on those 
comments.
    But this area, Congress spoke specifically to conflict of 
interest, and it explicitly talks about ownership limits. It 
doesn't set any of those limits. It leaves it to the regulators 
to make proposals. And so----
    Mr. Kingston. Yeah. Why don't we both go back. Because I'm 
confused on that. As I understand, it did pass the House, but 
it was rejected by the Senate, and so maybe we could figure out 
why it was rejected.
    Mr. Gensler. Right. It's correct that it's not--it was a 
different provision from the Senate.
    Mr. Kingston. And here's what I'm concerned about. These 
businesses are almost liquid, you might say. They rent 
facilities, their offices. But their product, if anything, is 
somewhat in their head and on their computer and in their 
laptop.
    And if our regulations get to be too onerous, they're 
multinational, they close up in America, they reopen elsewhere. 
And at the 2009 G20 meeting, it was discussed that we'll all 
walk together and be in sync.
    But elsewhere you've said we're going to be ahead, and 
maybe as much as a year and a half or at least a year ahead on 
rules and regulations. And it would appear to me during that 
gap, that American-based companies would be at a competitive 
disadvantage internationally, because they would be living 
under, you know, the brand new set of rules that their 
international counterparts don't have to abide by.
    Or they could just say, ``Well, you know, there's a lot of 
money to be made in that one-year period of time. Let's just 
relocate for a year and see what happens.''
    And you know, we see this in lots of industries, when the 
regulatory burden gets too much in America, they move. But this 
group, since they really don't have plants and machinery and 
huge labor issues, they can transplant pretty quickly.
    Mr. Gensler. U.S. companies, I believe, will benefit from 
the provisions in Dodd-Frank. Markets work best when they're 
transparent, open, and competitive.
    The Wall Street firms, to which I think you may be 
referring, whether the Wall Street firms--I mean, tens of 
thousands of American companies will benefit from what Congress 
has done and the rule-writing the SEC and we are doing.
    The Wall Street firms--you're right--may say, ``Well, maybe 
I can move to London, or Frankfurt,'' or something like that. 
Well, in fact, the way the bill was written, it says, ``If 
you're dealing with a U.S. party, you're still covered.''
    So if they want to deal from London with a U.S. customer--
you know, somebody in your district in Georgia, they still have 
to make sure that is reported and it's transparent, and it 
comes under, you know, the various protections.
    Mr. Kingston. But there still would be the tax advantage of 
being elsewhere, right?
    Mr. Gensler. I'm not going to swim outside my lane. I'm not 
an expert on taxes.
    Mr. Kingston. We do that all the time, Mr. Chairman.
    Mr. Gensler. I'm trying not to, I'm trying to just say--
this derivatives lane is pretty deep.
    Mr. Kingston. Well, my time has expired.
    Mr. Farr.

                              FUNDING CUTS

    Mr. Farr. Did you see the movie, Inside Job?
    Mr. Gensler. I have not yet seen it, but I understand it 
won an academy award.
    Mr. Farr. It won an academy award. And when I saw it, I was 
just appalled. I think Congress looked pretty good in that 
movie, because we were doing our oversight job. But I'll tell 
you, the administration--and not just the government 
administration--but certainly the administration of Wall Street 
and enforcement and all that, just seemed to be asleep at the 
switch.
    And everybody, I mean, people were just so disgusted, 
walking out of that movie. Like ``What happened?''
    I mean, this committee doesn't have jurisdiction over SEC. 
But Congress does. And Congress enacted the Dodd-Frank. You're 
only a portion of that.
    But I want to go back to H.R. 1, because our House has 
taken the stance of cutting $57 million out of your budget. 
That's existing this year's budget. Not even talking about the 
new increase of 139 million.
    If indeed we're not going to cut those for the SEC--because 
we've seen the movie, Inside Job, and we know that's where most 
of the knowledge about exchanges exist, and where people's 
401ks and all those things that they follow are there--in 
essence, you're really in kind of esoteric field.
    And as I understand, you really don't have that many 
players. I mean, people who do this are a small number, 
compared to the people that play in the stock market.
    So there's just probably more transparency, because the 
press covers it, because people take an interest in it.
    Mr. Gensler. Mm-hmm.
    Mr. Farr. So what happens if we cut your budget--I mean, 
Congress, this House has voted to do that--and that may portend 
to what may come out of the next year's budget, where they cut 
$57 million, or they don't give you your $139 million increase.
    And you've indicated that it's a lot of speculation going 
on here--there's Ponzi schemes going on. Does it suggest that 
perhaps if we, having seen Inside Job, that we're going to 
regret not giving you the resources that you need, because 
there's going to be more fraud?
    Mr. Gensler. I think it does. I think it's a little bit 
like the patient who doesn't take the daily tab that the doctor 
says to take.
    You don't know when you might regret that you haven't taken 
your Lipitor, or something.
    We're a very small, as you said, possibly esoteric Agency. 
We cover this deep but important market that all across this 
great land, people can rely on these markets to get certainty 
and make their investments.
    I agree with you, the regulatory system and the financial 
system both failed the American public. That's why millions are 
still out of work, and the economy still has challenges, such 
great challenges.
    I agree with you that it's hard sometimes to connect what 
we do with the American public. My 84-year-old mother sometimes 
asks me this.
    But I do think that if we were cut 35 percent in funding, 
this year halfway through the year, we'd have to cut two-thirds 
of our staff, and we could not ensure confidence in these 
markets, and the confidence in the pricing of oil, the 
confidence in the pricing of wheat, cotton, corn, interest 
rates, currencies.
    And those run throughout the country's economy; they're 
important for investment, for job growth.
    But we're somewhat esoteric, as you say.
    And you might not see it immediately. It might take some 
time for the problem to emerge. It might be well past this 
Congress before it emerges.
    Mr. Farr. And it's your market that controls the energy 
futures, not the stock market. Right?
    Mr. Gensler. It's our oversight of those markets that 
relates to the price of gas at the pump, yes.
    Mr. Farr. Well, it seems to me, Mr. Chairman, that it's 
pretty scary if we don't give them the tools they need, in 
light of what we've just experienced, that if, indeed Congress 
has enacted the laws to ensure better oversight, better 
transparency, a more fair playing field, that we need to hire 
the referees to go in there to make the game played right.
    So I would hope that when we do adopt our budget this year, 
our appropriations bill, that we will give you the money you'll 
need to hire the referees.
    Mr. Kingston. Ms. DeLauro. Or Mr. Bishop.
    Mr. Bishop. Ms. DeLauro.

                       IMPORTANCE TO THE ECONOMY

    Ms. DeLauro. Thank you, Mr. Chairman, and thank you, Mr. 
Bishop and Mr. Farr. My apologies to you, Chairman. The Labor, 
Health, Human Services and Education Subcommittee just 
completed its hearing, so I'm sorry to be delayed.
    But I welcome you and thank you very, very much for the 
good work and efforts that you have been making in this area.
    It used to be that the work of the Commodities Futures 
Trading Commission never saw the light of day in the not-too-
distant past. But we clearly now understand its functions and 
what it does and its ability to deal with speculation and oil, 
et cetera, and a whole lot of other areas, which are critically 
important to our future economy, and the regulation of the 
markets here against fraud.
    Now you may have answered this, so I just will be very 
quick. And that is about the cut to the FCTC funding, $112 
million.
    My view is that would cripple your ability to police the 
markets, and you'd would be impaired, less able to deal with 
high-risk traders, et cetera.
    And Agency staff--and if you have answered this, I 
apologize, but then answer quickly--Agency staff that would 
have to be furloughed or terminated, what percentage of your 
staff?
    Mr. Gensler. If it happened mid-year, about two-thirds of 
our staff would have to be RIF'd.
    Ms. DeLauro. Okay. And what's the number that's attached to 
it?
    Mr. Gensler. Oh, I'm sorry, we have about 675 people we'd 
have to get down into the low 200's.
    Ms. DeLauro. Hundreds, got you. Okay.
    Mr. Gensler. And again, if it happened mid-year for the 
full year.
    Ms. DeLauro. Yeah.
    Mr. Gensler. If it was only for the remaining part, it 
would be different.
    Ms. DeLauro. Impact. The agency's work on Ponzi schemes--I 
know Mr. Farr mentioned that--would it be more difficult to 
find the next Bernie Madoff?
    Mr. Gensler. I don't think that we would have an ability to 
find any, small or big. I think if we had to a 60 to 70 percent 
head count reduction, the 200-plus people left would have such 
low morale, we could not give Americans confidence in our 
oversight.
    Ms. DeLauro. You couldn't get there from here?
    Mr. Gensler. No, we'd have to rebuild the morale.
    Ms. DeLauro. Okay.
    Mr. Gensler. We've never been an Agency that small.
    Ms. DeLauro. Mm-hmm.
    And what about the implementation of the Dodd-Frank Wall 
Street reform?
    Mr. Gensler. If we stayed at the staff we are currently at, 
we can finish the rules, but we can't effectively oversee the 
markets. If we were, as you say, cut, we would even have a 
challenge there.
    Ms. DeLauro. You couldn't even then--okay.
    Mr. Gensler. Well, I'd stick around. And the Commissioners 
would be there. A little harder to read all the comments.
    Ms. DeLauro. No, no. But I'm just saying is with regard to 
Dodd-Frank, you really couldn't get anywhere with it, if you're 
cut at the level that's being discussed? Or passed in H.R. 1?
    Mr. Gensler. Yeah. I mean, we'd dust ourselves off and we'd 
continue to effectively read comments and try to do the rule-
writing Congress has asked us to do. But it would be delayed.
    Ms. DeLauro. All right.
    A question on a key component of the Wall Street reform is 
that it will require data collection, publication through the 
clearinghouses to improve market transparency, provide 
regulators with important tools for monitoring and responding 
to risks.
    If CTFC does not have adequate resources, would this mean 
that the data would go uncollected and unpublished, and thus 
continue what caused the problem, a less transparent market?
    And if you're unable to monitor and respond to risk, 
because of funding cuts, what kind of environment does this 
create in terms of those who would abuse the system the way 
that some have, and have allowed them to prosper, but create 
havoc?
    Mr. Gensler. It's why this is such a good investment, I 
believe, for the American public--in this large country, to 
expend what were asking for, as the President asked for $300 
million--is a good investment.
    So we can do that data collection, so we can monitor the 
markets, so we can publish data, as we do in the futures 
market, on a weekly basis.
    For the first time, people could see what's the aggregate 
positions in the swaps markets in oil, in natural gas, and 
cotton?
    Nobody can see that right now. It's not doable.
    Ms. DeLauro. And we would not be able to see that? That 
would be the impact?
    Mr. Gensler. We need adequate resources to be able to do 
it.
    Ms. DeLauro. Resources to be able to do it. That was my 
next question.
    Mr. Gensler. To aggregate it and publish it.
    Ms. DeLauro. So that's that. Right, so less--they're being 
registered, regulated, there's transparency peace in that.
    Mr. Gensler. A big transparency peace.
    Ms. DeLauro. Mm-hmm.
    Mr. Gensler. And markets work best when they're 
transparent.
    Ms. DeLauro. And would the swap dealers, could they operate 
outside the clearinghouses? Would we know?
    Mr. Gensler. Well, I think the law is very clear that they 
have to operate with clearinghouses; but we wouldn't be able to 
monitor or oversee them.
    Ms. DeLauro. Mm-hmm.
    Mr. Gensler. Those clearinghouses or the dealers.
    Ms. DeLauro. How do you think the derivatives market would 
be impacted?
    Mr. Gensler. I think that the derivatives marketplace will 
work best if there's an effective and well-funded Agency, 
because I think it instills confidence in the users of the 
products.
    I think when there's not, and there's less confidence, many 
of the companies in your district and every district, state 
governments, then would have to guess whether the market's 
going to work for them.
    So when it's a fair market, it's a level playing field, and 
it's transparent, free of manipulation and fraud, there's more 
use of the market, people can get price certainty; it's really 
an important factor to grow an economy.
    Ms. DeLauro. Mm-hmm.
    Mr. Gensler. It's part of our modern financial system.
    But the I think the derivative markets--I'm saying it in 
the positive--will benefit by a well-resourced CFTC, even 
still, we're talking about a relatively small agency--you know, 
the 980 people and the $66 million of technology is relatively 
small compared to the hundreds of billions of dollars--I mean, 
the financial industry, the top 25 banks holding companies in 
the America have $800 billion of revenues.
    So you can give a sense of, you know, the size we are, 
compared to the financial industry.
    Ms. DeLauro. Mm-hmm. Let me say thank you to the chairman, 
but thank you, Mr. Gensler, again for your work. And I for one 
want to make sure that you get the resources that you need, 
because it seems to be addressing the specific issues that got 
us into, you know, this financial crisis.
    And seems to me that if we would abrogate our 
responsibility if we didn't use the resources to provide you 
with the tools that we need to make sure it doesn't happen 
again.
    Thank you. And thank you, Mr. Chairman.
    Mr. Gensler. Thank you.
    Mr. Kingston. Mr. Bishop.
    Mr. Bishop. I'll pass.

                          MARGIN REQUIREMENTS

    Mr. Kingston. Mr. Chairman, I wanted to find out a little 
bit more in terms of the margin requirements on end-users--and 
I'm not sure if there's ambiguity about it, or not, but because 
I know this was another issue that was debated on the floor--as 
I understand it, that you have ``exempted some end-users from 
clearing and exchange trading requirements, but not issued a 
rule governing margin requirements for non-cleared and non-
exchanged traded swaps.''
    Is that correct?
    Mr. Gensler. It's very clear in my mind and amongst our 
Commissioners, because I've testified on behalf of them, that 
when we publish a rule--and we hope to do this in April--that 
consistent with Congressional intent, that these commercial 
end-users would not be brought up or caught up into this margin 
rule.
    We only cover the non-bank swap dealers at the CFTC. But 
with regard to the ones we cover, that's where we are.

                               RULEMAKING

    Mr. Kingston. Okay.
    You probably have this somewhere, but just to kind of sort 
out the rules, as I understand, in Dodd-Frank, there were 21 
mandatory provisions, and there were 31 discretionary 
provisions. And you have identified 31 areas for proposing 
rules.
    You had mentioned earlier there were something like 42. And 
were those rules? Or are those provisions?
    So I guess what I need to know is: In 21 versus 31 versus 
42, what is what and what is your sequence?
    Mr. Gensler. Okay. All good questions.
    When the President signed the bill, we went through it, and 
we identified 30 topic areas. It was a good way to inform the 
public. A topic area could be like clearinghouses, for 
instance.
    And we published that on our website, and we took public 
meetings, and we've had at least 600 public meetings, and about 
3,000 comments from the public, even before we made any 
proposals.
    We knew that Congress gave us 12 months, and we're human, 
we'll be beyond that 12 months when we finish. But so we 
thought we'd take the first six or seven months, and try to put 
proposals out there, just like this Congress puts proposals out 
and gets feedback.
    And so we have successfully working with the public and the 
SEC and others put out just over 40 proposals in 28 of those 
topic areas.
    Again to use clearinghouses, we decided to actually put the 
proposals out, and I think it was four different proposals. 
Most of them were a just a proposal per topic area; but a 
couple of times we split it, just as a committee might split 
their work.
    We're going to consolidate those clearinghouse ones later, 
when we go to a final rule. But we put them out separately, so 
that we can get public comment.
    The comment periods have been very helpful. We have public 
roundtables. If somebody, for instance, still had a comment on 
a rule where the periods closed, we have discretion to still 
take that comment, and we have been putting those comments in 
the comment file.
    In sequencing the final rules--I know this was an earlier 
question of yours, Mr. Chairman--on sequencing the final rules, 
we think three things will have to happen before we move on any 
of them:
    One is that we actually summarize the public comments 
sufficiently on cost benefit analysis, on the law, on the 
policy, and so forth.
    Two is get Commissioner feedback. We've benefitted from 
wonderful Commissioner input, everybody thoughtfully engaging.
    And three is working with international and domestic 
regulators to get their feedback.
    And then putting a final rule out. We don't see any final 
rules this month of March. I don't think we'll move any in 
April.
    I laid out in a speech yesterday--I was talking to Martin 
right before we came in, your staff director.
    Mr. Kingston. The man who knows every line in the bill. 
[Laughter.]
    Mr. Gensler. And I want to know him.
    That we've started to talk amongst the Commissioners about 
thinking about an early phase, a middle phase, and a late phase 
of finalizing rules.
    But this should not be confused with how they're 
implemented. Because even if we just finalize something early, 
it could be implemented well out there. And two of them that we 
think we should move to finalize early are those that you've 
raised:
    The definitions for entities.
    Who's a swap dealer?
    The end-user exception.
    You know, those are things that we would like to finalize 
early some time this spring, if we're able to. If we're not 
able to, we'll do it later, obviously.
    But we think those are really important to move early.

                        REGULATOR AND REGULATED

    Mr. Kingston. One of the things that always is a concern of 
Congress, and members have different perspectives on it, is the 
regulator and the regulated. Sometimes there is an ivory tower 
view of the world by the regulator. Or is it a chummy 
relationship?
    And we need to have the balance.
    EPA recently or a year ago came out with a regulation 
classifying milk as oil, because there is some oil in it; and a 
dairy farmer would have to have an emergency response plan if 
their truck spilled milk, even on the farm.
    A little ridiculous.
    Chairman Obey, at the time, led the effort to get that 
clarified. It was a bipartisan feeling of Congress that it was 
a regulatory overreach.
    We're having an issue right now regarding grain inspection 
in stockyard, the GIPSA rule, where the members of Congress on 
a bipartisan basis feel that there might be an overreach on the 
interpretation of what the Farm Bill called for.
    And that's the balance that we're concerned with, because 
this stuff is very technical, and you're talking about being in 
your lane, you know. I always say Congress is the ultimate 
paradise for attention disorder, because you go from military 
issues to medical issues to education issues to this committee, 
from food stamps, to foreign programs, the FDA, to CFTC.
    And so we are several miles wide, and not as deep as we 
want to be. But that's one of the things that we're very 
concerned about, is to make sure that there is an appropriate 
balance, an arm's length distance between you and the Wall 
Street firms, but at the same time that it is not ivory tower.
    And that's just sort of a philosophical discussion.
    But my time is expired.
    Ms. DeLauro.
    Ms. DeLauro. I don't have any questions, Mr. Chairman. But 
I would say with regard to that--and I would just say this 
about Chairman Gensler--that I think this is someone who 
understands, knows Wall Street, knows how it works, et cetera, 
but also understands what is needed in this crisis that we have 
been through, and how we might, in an appropriate way, if you 
will, address the issue.
    Now that may not make, you know, some of the folks happy. 
But it is not an ivory tower view of how we need to make sure 
that we don't deal with the risk we've had over the years, and 
put some pieces in place that can prevent those things to 
happen together, how we might be able to make this a 
transparent market, how we can lower the risk factor, how we 
can ferret out those who would abuse the system.
    So I think--and I would have to believe--that while there 
could be some tensions, but that this is an instance, with the 
Chairman at that head of this Commission, that we are looking 
at what is real, and reality in terms of fostering the kinds of 
regulations that we are looking at, which is what leads me, and 
has led myself--and I know in a bipartisan way what we did was 
to talk about the resources that were necessary in order for 
this regulator, for this Agency, to be able to do the work that 
is being laid out.
    Otherwise, I think we find ourselves moving backward in a 
process, which really needs to have some certitude, and some 
reality-based initiatives that we can move forward on.
    Mr. Gensler. I thank you. It's good to see you again, too, 
by the way. Thank you for that compliment.
    One of the things we have done is we've decided early to 
post on our website every meeting we had, even if it wasn't 
required to have, you know, that transparency. And it's well 
over 600 meetings.
    And you will see, naturally--because large institutions 
tend to come and knock on the door more than investor 
advocates--that the bulk of those meetings are with either end-
users, or the financial community, or the trading community, or 
hedge fund, and so forth.
    And we post all the meetings, the topics discussed, who's 
there, and so forth.
    I think that's been helpful to gain transparency, and I 
know that your staff could take a look at it to see.
    So we have a very open process. And then we've taken a 
commission that actually only had one public meeting a year for 
ten years, and we're doing everything in public meetings, as 
you do.
    I mean, which I think is the right thing to do.
    And we have five Commissioners. I think we're a benefit. I 
think the Commissioner structure is a good thing for America, 
that you have that debate and that sometimes there are 
differences. Hopefully we bridge those differences, you know, 
as best we can, in a bipartisan way.
    Mr. Kingston. Mr. Bishop.
    Mr. Bishop. I have no questions.

                            COMMODITY PRICES

    Mr. Kingston. I wanted to get back--and I think this will 
be my last round--but you've probably heard this song before 
about the boll weevil. And there's a line in it that the 
merchant got the cotton, the boll weevil took the rest. Nothing 
left for the farmer's wife, but one old cotton dress, and it 
was full of holes.
    And often, particularly for Mr. Bishop and me--and you 
know, we've gone to the MERC, we've gone to the Chicago Board 
of Trade, we've gone to New York, and there's such a distance 
between them geographically and culturally and in other ways in 
terms of the cotton market might be good up in Chicago and New 
York, but it's not good down home on the farm.
    And often it seems like the traders do well, but the farmer 
doesn't benefit from it. And so can you comment on that? And 
right now, you know, my opening question was about gas, the 
price of gas. We are hearing from those who say that 
speculators are driving up the costs at the pump.
    And so talk to me about the benefit to the farmer and why 
they're not always sharing in the price fluctuations. And I 
understand the hedge-in concept, but it still seems like 
sometimes they're the afterthought.
    Mr. Gensler. Yeah. Right.
    These markets at their core are about those producers and 
the merchants. So the cotton farmer, if we use that, to plant 
the crop, and even to buy the land, and know what you're doing, 
you want to be able to say: ``I need certainty on the price at 
harvest time.''
    I mean, that's the fundamental core of this market.
    And in the oil markets, it's very similar that the energy 
producer has some certainty, and the grain company has 
certainty of the market.
    And cotton is an example right now. There are those in the 
cotton markets that are very concerned. There's been a great 
deal of volatility in the cotton markets recently as cotton's 
moved up to $2.00 and so forth.
    Sometimes it's up-limit. That means it goes up the limit of 
the day. Or down-limit the very next day. And it's very 
difficult for them to hedge.
    So these markets at their core really have to work for that 
cotton farm, or that cotton merchant, wheat, corn, and soy in 
the agricultural markets; as well, even in the interest rate 
markets.
    Because their speculators have a big role in markets. The 
markets can't be just solely 100 percent hedgers; you need 
somebody on the other side of the trade.
    Over the last ten years, speculators have taken a greater 
percentage of the market. As markets become more electronic, 
they become more global, there's more index investment in these 
markets. And parties have started to think, ``Well, maybe 
cotton is an asset class, I should invest in cotton''--maybe 
not cotton specifically, but agricultural markets--the same way 
I invest in an emerging market debt. You know, it just becomes 
an asset class.
    So our role, this small Agency's role, is to ensure that 
when those speculators and hedgers meet in a marketplace, it's 
a fair and open market to police the manipulation--because 
there will be somebody in a marketplace, someplace, that's a 
bad actor--and make sure that they're transparent.
    That's the core of what we do, and why I think we're a good 
investment, so that cotton farmer can have the certainty and 
greater confidence in a market than sometimes you would have, 
given the volatility.
    And as say, there are such great geographic and cultural 
distances between that cotton farmer in Georgia and New York.
    And so we help, I think--we don't bridge that gap 
completely--but we help build confidence in the market that 
they're fair and transparent.
    Mr. Kingston. Mr. Bishop and I might invite you and your 
daughters to do a little South Georgia tour with us sometime.
    Mr. Gensler. I'd be honored to go.
    Mr. Kingston. I know the girls would find that interesting.
    Mr. Bishop.
    Mr. Bishop. I have no further questions.
    Mr. Kingston. Well, Mr. Gensler, thank you very much for 
your testimony today. Thank you for the time. We will stay in 
touch and be talking.
    Mr. Gensler. Yes. And I thank you for our consideration of 
a budget request that I know is difficult with the American 
deficit, that we've actually asked for more money. So I thank 
you for your consideration.
    Mr. Kingston. The two-year ask is going to be a problem. 
But we want to work with you, and we don't want to derail 
things. But we do want to have some input and watch the rules 
as they go along.
    And that's why the sequencing is important. And I will be 
following up with some written questions on that.
    Mr. Gensler. And if you'd like, I'd be glad to come up and 
walk you through the sequencing and lay out some charts, if you 
think that would help you.
    Mr. Kingston. That might be a good idea.
    Mr. Gensler. All right. I look forward to that. Thank you.
    Mr. Kingston. Well, thanks a lot.
    The committee stands adjourned.

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                                         Wednesday, March 30, 2011.

                 FARM AND FOREIGN AGRICULTURAL SERVICES

                               WITNESSES

MICHAEL T. SCUSE, ACTING UNDER SECRETARY FOR FARM AND FOREIGN 
    AGRICULTURAL SERVICES
JOHN D. BREWER, ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE
VAL DOLCINI, ACTING ADMINISTRATOR, FARM SERVICE AGENCY
WILLIAM J. MURPHY, ADMINISTRATOR, RISK MANAGEMENT AGENCY
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                            Opening Remarks

    Mr. Kingston. Seems like everybody had the great idea that 
10 o'clock Wednesdays was the proper time to have all hearings. 
So people are picking and choosing and Mr. Farr is on his way. 
Folks will kind of come and go. Your testimony has been 
submitted, so you are welcome to sum it up.
    But I will turn the gavel over to you, but have a couple of 
comments that I wanted to say on the outside. With our budget 
situation, increases in budget are going to be very difficult 
to come by. And so I think one of the things that we are going 
to be doing with you through this process is, you know, are 
there areas that you can reduce and if not, there might be 
people who will reduce it for you. So it is always better if we 
sit down at the table and talk.
    And with that, I will go ahead and yield the floor to you, 
and the committee will be in order, and we will go ahead and 
convene.

                           Opening Statement

    Mr. Scuse. Thank you, Mr. Chairman. Mr. Chairman and 
members of the subcommittee, I am pleased to be with you today 
to present our 2012 budget and program proposals for the Farm 
and Foreign Agricultural Services--FFAS. And accompanying me 
today on my far right I have William Murphy, who is the 
Administrator of our Risk Management Agency. To my immediate 
right I have John Brewer, who is the Administrator for the 
Foreign Agricultural Service. To my immediate left is Acting 
Administrator for the Farm Service Agency, Val Dolcini. And to 
my far left, I have Michael Young, the Director of the 
Department's Office of Budget and Program Analysis. So these 
are the gentlemen that will help me today hopefully answer the 
questions that are posed to us.
    Mr. Chairman, we appreciate the difficulties of today's 
budget environment and the need to reduce the Federal deficit 
as you spoke to in your comments. We have reviewed our programs 
and developed budget proposals for 2012 that will streamline 
agency operations, improve efficiency, and reduce our 
administrative costs.
    Turning first to the Farm Service Agency--FSA, the budget 
request for salaries and expenses for FSA reflects our focus on 
streamlining processes, investing in more efficient systems, 
and evaluating our internal costs to maximize efficiency. The 
total request for appropriated sources is $1.7 billion, a net 
increase of $143 million over the 2011 annualized continuing 
resolution level.
    Within the request is a decrease of $41 million to be 
achieved through a proposed reduction of 504 Federal staff-
years, a decrease in funding for non-IT service contracts, and 
a decrease for travel and relocation expenses. FSA has taken 
aggressive action over the past several years to reduce 
discretionary administrative expenditures and will continue to 
do so during 2012. The budget also provides increases of $60 
million for civil rights settlement costs and $2 million for 
new initiatives to improve tribal relations.
    For critically needed information technology improvements, 
the budget includes increases of $96 million to continue the 
agency's Modernize and Innovate the Delivery of Agricultural 
Systems initiative, or as we call it MIDAS, and $26 million to 
support the Department's effort to modernize and upgrade the 
common computing environment for the service center agencies.
    FSA also plays a critical role in our Nation's agricultural 
producers by providing a variety of direct loans and loan 
guarantees to farm families who would otherwise be unable to 
obtain credit they need to continue their farming operations. 
The 2012 budget proposes a total program level of about $4.7 
billion, reflecting credit usage forecast at the time that this 
budget was developed.
    In 2012, the Crop Insurance Program provided about $78 
billion in protection on 256 million acres. I think that shows 
the importance of the Risk Management Agency--RMA. Our current 
projection is that indemnity payments to producers on their 
2010 crops will be about $3.5 billion on a premium volume of 
just over $7.5 billion. Our current projection for 2012 shows 
the value of protection will rise considerably largely due to 
commodity price increases.
    For salaries and expenses of RMA, $82 million in 
discretionary spending is proposed, an increase of $2 million 
above the 2011 annualized continuing resolution amount. The 
request includes additional funding for maintenance of the RMA 
IT system.
    Our Foreign Agricultural Service--FAS, I would like to turn 
to FAS, the lead agency for the Department's international 
activities and the forefront of our efforts to expand and 
preserve overseas markets and foster global food security. The 
2012 budget is designed to ensure that FAS has the resources 
needed to continue to represent and advocate on behalf of 
American agriculture on a global basis and create new market 
opportunities overseas. The budget provides a program level of 
$236 million, an increase of $49 million above the 2011 
annualized continuing resolution amount.
    The budget provides an increase of $20 million for FAS 
trade expansion and promotion activities as part of the 
National Export Initiative. The FAS budget includes funding of 
$14.6 million for the management and support of the 
Department's participation in reconstruction and stabilization 
activities, including Provincial Reconstruction Teams in 
Afghanistan and Iraq.
    For the International Food Assistance Program, the budget 
includes appropriated funding of just under $1.9 billion, 
including $200 million for the McGovern-Dole International Food 
for Education and Child Nutrition Program and nearly $1.7 
billion for Food for Peace Title II grant food assistance 
programs.
    Mr. Chairman, I thank you for the opportunity to present 
our 2012 budget and program proposals. I would be pleased to 
answer any questions that you and other members of the 
subcommittee may have.
    [The information follows:]

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    Mrs. Emerson [presiding]. Thank you very much.
    Ms. DeLauro, did you have a statement that you wanted? 
Questions you wanted to start with? Go ahead and start with 
your questions.
    Ms. DeLauro. Thank you very much. Good morning and welcome, 
Madam Chair, and I welcome all of you to the subcommittee. It 
is good to see you.

                           FOOD AID PROGRAMS

    And what I want to do is to talk a little bit about the 
nutrition international food aid programs. The budget maintains 
funding for Food for Peace at the 2010 program level but trims 
the McGovern-Dole program from $209.5 million in 2010 to $205 
million for 2012. However, the House continuing resolution 
proposal cut Food for Peace by $687 million and McGovern-Dole 
by $109 million. That is a 42 percent cut.
    According to some estimates, the cuts would eliminate over 
15 million people from the Food for Peace Program and an 
additional 2\1/2\ million food aid recipients would be dropped 
from McGovern-Dole. We are talking about almost 18 million 
people being dropped from the food aid programs.
    And McGovern-Dole is about children and particularly about 
girls. The importance of these programs cannot be emphasized 
enough, in my view. The Food for Peace Program targets 
communities where there is persistent hunger; 30 percent or 
more children are undernourished. Reductions in the programs 
would severely limit our ability to provide assistance in 
response to conflicts, to drought, and to other disasters, and 
we know that this has serious national security implications. 
Reductions in McGovern-Dole will prevent many young girls from 
attending schools.
    Given the proposed cuts, given the fact that world food 
prices are increasing dramatically again, can you outline what 
kind of impact this would have on world hunger and how would 
the cuts impact our national security efforts? And I might add 
that we are feeding some of the poorest and hungriest people in 
the world.
    Mr. Scuse. Thank you. I think that you yourself very 
eloquently outlined what would happen should these cuts be put 
in place. And I think you recognize the fact that over the 
years we have been able to serve about 28 million people 
through McGovern-Dole. Projections for this next year we would 
be able to feed, if we receive their funding, about 5 million 
children in the world. So it would be a dramatic impact on our 
programs should we see cuts of that nature.
    The only thing that I can say----
    Ms. DeLauro. Let me just ask you to be more specific about 
that because you are on the front lines. You know what is going 
out. Let's talk a little bit about that impact.
    Mr. Scuse. If I may, I think I would like to reiterate what 
Secretary of State Clinton said in a letter to the House 
Appropriations Committee just a couple of months ago, that cuts 
to foreign operations in humanitarian assistance accounts would 
be devastating to our national security and damage our 
leadership around the world, that coupled with the fact that 
there would be many people around the world that we wouldn't 
have the ability to provide assistance for.
    As you and members of the panel know, today for the first 
time, there are approximately a billion people today that are 
hungry, that are in need of some sort of food assistance.
    So today, I think our programs are more important than ever 
before. And unfortunately, that number probably will grow. So 
we need to be able to provide all the assistance that we 
possibly can.
    Ms. DeLauro. Well, I hope you will work with us to speak 
out against what this 42 percent cut will mean to 18 million 
people. And quite frankly, it is probably the bulk of the 
people are women and children.
    Mrs. Emerson. Will you yield to me for just a second?
    Ms. DeLauro. Absolutely.

                             GLOBAL HUNGER

    Mrs. Emerson. I am very concerned about this issue myself. 
And I wonder, has USDA actually put together any numbers on 
connections between hunger and the growth in radical 
organizations around the world? In other words, I mean can you 
actually quantify, are you able to quantify?
    Mr. Scuse. I have not seen any work that we have done in 
USDA that would actually quantify that. But there are those 
that believe that there is a direct correlation between those 
areas of the world where there is extreme hunger and the 
potential for terrorist activities.
    Mrs. Emerson. So given the fact that you stated just a 
moment ago that we will see a rising need for more food because 
of prices and perhaps some other external challenges going on, 
how can your Department respond, if necessary, given the state 
of the budget requests?
    Mr. Scuse. I mean, we are looking at using all of the tools 
that we have available to us to respond to the growing needs of 
those around the world where we are facing extreme shortages 
for food. And one of those areas, one of the things that we are 
doing in a government-wide program is our Feed the Future 
Program, where USDA has targeted five countries in two regions 
of the world to bring together our programs not just in the 
USDA but across government to help us look at how we are 
delivering assistance.
    Can we do a better job of delivering food assistance? And 
if you don't mind I would like to turn to Administrator Brewer, 
who is Administrator for the Foreign Agricultural Service, for 
a bit more detail on food assistance.
    Mrs. Emerson. I am happy to do that and I will give you 
your time back since I stole it, but I wanted to continue the 
line of questioning.
    Mr. Scuse. It is a very important issue and we appreciate 
the opportunity.
    Mr. Brewer. Yes, ma'am. I just wanted to add something to 
what the Secretary amplified, some of the things that the Under 
Secretary said.
    Again, while we do not ourselves do projections on global 
hunger trends, we do follow it closely via the work of the 
Economic Research Service within USDA as well as our work with 
Food and Agriculture Organization--FAO--in Rome who follow 
these things. So through our work with them, we do get some 
idea and some updates on this. Again, we don't follow it, we 
don't produce those ourselves, but we do try and get that input 
and apply that as we use our food aid programs and as we look 
and try and target our countries and priorities. So we do get 
that input.
    Mrs. Emerson. Ms. DeLauro, you have probably time for 
another question.

                           NATIONAL SECURITY

    Ms. DeLauro. I would just add this. I think the national 
security aspect that Congresswoman Emerson has talked about and 
which has to do with--I am back from Afghanistan where we are 
looking at how we are trying to stave off militarily the 
Taliban. And I think there is an adage here and I don't care 
where you are and where you go, if you can't feed yourself and 
you can't feed your kids and you have some organization, be it 
a terrorist or nonterrorist organization help you and assist 
you with that process of feeding your children, you are going 
to take advantage of it.
    So I believe we can both tap into both the Department of 
Defense and the State Department that will confirm that there 
is a relationship between the hunger issue and the issue of 
security and accepting assistance from wherever you can get it. 
Clearly I think each one of us here if our kids were in 
jeopardy and we had the opportunity to get food for them, we 
would take it and do that.
    So I think one has to consider both of these pieces. It is 
just not--to feel good, you know, if you can't do this on the 
humanitarian side of it and look at that aspect of it with 18 
million people who would be--and I have a problem with your 
cutting back on McGovern-Dole right out. But dealing with 18 
million people, most of whom are women and children, is a 
problem. But then take a look at it from a national security 
emphasis.
    And I thank the gentlewoman for her comments. I will come 
back in a second round with other questions.
    Mrs. Emerson. Thank you, Ms. DeLauro.
    Mr. Graves.
    Mr. Graves. Thank you, Madam Chair.
    Mr. Under Secretary, I appreciate you being here. Thank you 
for your presentation.

                             FUNDING LEVELS

    Could you help us a little bit with understanding the 
relationship with the requests for this year in comparison to 
2010, 2008? We have been looking from an office perspective and 
haven't been able to find that difference. So what is the total 
request for 2012 and then maybe what was it in 2010 and 2008 
and what are the variances there?
    Mr. Young. Bear with us one minute.
    Mr. Graves. Sure.
    Mr. Young. Okay. Sir, what I have here available is the 
enacted level for 2008. That is about $3.1 billion for this 
entire mission area. For 2010, that number is $3.9 billion and 
for the 2012 budget it is $4.0 billion.
    Mr. Graves. Okay. That is great. Thank you for sharing that 
with me.

                           FUNDING REDUCTIONS

    And the reason I ask I think everyone knows the situation 
we are in as a nation fiscally and this committee has been 
working extremely hard, as I am sure you have as well, to find 
out where we can operate more efficiently and effectively as a 
government.
    And part of our objective and ultimate goal is to try to 
move back to those 2008 levels, and that looks like that would 
be a considerable reduction as well for you but probably falls 
in line with sort of my questioning. And that is as each agency 
has come before us I ask them all if they would help us, if 
they would work with us and if they would be willing to look to 
see how they can operate and accomplish the core mission but 
with reduced resources in the amounts of 10 percent and 20 and 
25 percent to allow the subcommittee an opportunity to work 
with you in a partnership at how you can accomplish your 
missions. But we cannot make those decisions for you. And most 
have been very willing and cooperative and already 
communicating back on with our office.
    So I guess the question for you is would you be willing to 
do that to help us a little bit and provide some options as to 
how you could accomplish your goals and missions at a reduction 
of 10, 20, and 25 percent budgets.
    Mr. Scuse. Thank you for the question, Congressman. A 
little bit about my background. I was Secretary of Agriculture 
for the State of Delaware and, as you recognize, the states 
have been reducing budgets for a number of years. So I have 
been part of the process to reduce budgets and reduce spending.
    This administration, I think you all are aware, supports 
cutting spending and doing it in a measured way, making 
reductions over a period of time so that we will have the 
ability and our stakeholders will have the ability to absorb 
those cuts. So the answer to your question is yes. I mean, we 
are looking for ways to reduce the spending, but do it in a way 
that we can all live with it.
    We also believe that the sacrifice needs to be shared by 
all. And if I may at this time point out that our mission area 
at USDA, FFAS, through the Risk Management Agency, has already 
provided $4 billion in deficit reduction with the renegotiation 
of the Standard Reinsurance Agreement--SRA. So we have stepped 
up to the plate, Congressman.
    Mr. Graves. So did I understand you to say yes, you would 
help us and provide us with alternatives in how you could reach 
those three goals for us as a subcommittee? Doesn't mean we 
will lock you into any of those, but it gives us a working 
document with which to work from.
    Mr. Scuse. We will look at ways to work with Congress to 
reduce our budget.
    Mr. Graves. Particularly this subcommittee, I hope.
    And just to follow up, you are right about it is being 
shared by all because this question is being asked to all. And 
we would hope that all would work with us on this because I can 
assure you that if those choose not to, we will have to do it 
ourselves and we would rather be a working partner with you. 
And as I have done with each, I have a letter to submit for the 
record here, of which I have asked this request to the chair. 
If that is okay, Madam Chair.
    Mrs. Emerson. Without objection.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8236B.019
    
    Mr. Graves. Thank you, Mr. Under Secretary.
    Mrs. Emerson. Mr. Farr.
    Mr. Farr. Yes. I just for the new members of this committee 
one of the things you might want to use in this back shelf is 
the explanatory notes that goes into all the details of each 
Department and what the expenditures are line by line. It is a 
very, very good background for looking at the intricacies of a 
hundred billion dollar agency.

                     AGRICULTURE PAYMENTS BY STATE

    Thank you very much for your presence here. I read your 
testimony and you start out by thanking us for the $117 million 
that was spent on IT last year. Can you break out with that all 
of that new IT what essentially the domestic and foreign, the 
two sort of arms of your agency, how that trickles down to the 
products, to the ag crops that are grown in each of our 
congressional districts?
    Mr. Scuse. A breakdown per cost per congressional district?
    Mr. Farr. How much aid comes in by--because in all due 
respect to all of the price and income support and the farm 
credit assistance, it doesn't go to everybody.
    Mr. Scuse. We can provide you with a breakdown for dollars 
per your district, but overall, if you look at our IT costs, 
especially for the----
    Mr. Farr. The point is there is a lot of discussion in your 
testimony about how good this new IT is and how you are working 
on getting everybody trained and essentially implementing it 
all for greater credibility, a lot of discussion about 
implementing configuration changes but very little on what the 
products are that you could produce that you couldn't produce 
before.
    One of the difficulties--you have been a State ag 
commissioner. California is still the leading ag State. We 
produce over 400 crops. Most States don't even come close to 
that. I produce 85 in my one county. $4 billion. We don't get 
much help at all. In fact, I can't tell the farmers you know 
what does USDA do for us in this county with $4 billion in 
agriculture, because it is specialty crops, not commodity 
crops.
    And I think there is a lack of understanding of exactly how 
you help on the ground. And coming from a State in all of those 
different counties that you had to manage, I am very interested 
in how the breakdown--Washington is very bad at being able to 
tell Members of Congress what we do for you. Government is here 
to help. Well, then tell us what you are doing.
    Mr. Scuse. Congressman, we will be more than glad to 
provide you a breakdown.
    [The information follows:]

    Because of the nature of IT investments, we are not able to provide 
you with a state by state breakdown of the benefit that these dollars 
convey. We can, however, provide you with a state by state programmatic 
breakdown of the payments that we are able to make as a result of those 
IT investments. The table follows. It represents outlays made during FY 
2010, which are not necessarily the same as obligations made during FY 
2010.

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    Mr. Farr. I would like to know by crop and by congressional 
district; if not, at least by State and by crop.

                          FSA IT MODERNIZATION

    Mr. Scuse. Okay, and if I may address part of your question 
with IT. We are in the process of our modernization project, 
which is MIDAS. Our county offices are dealing with technology 
and equipment that dates back to the 1980s.
    Mr. Farr. I am not questioning that. I am all for IT.
    Mr. Scuse. Okay. I must have misunderstood part of the 
question, Congressman.
    Mr. Farr. No. You thanked us for the money and you are 
doing it. I am just wondering what can we get out of it. How is 
it going to be useful for this committee and for members of 
this committee to be able to go back home and explain to people 
what all of these programs are that are--the farm loan 
programs. The administration is thinking about putting out new 
regulations on homeowner mortgages and loans and things like 
that that require a 20 percent down payment. How much is 
required for your direct loans that the lender has to put in 
for your direct loans for farm families?

                           DIRECT FARM LOANS

    Mr. Scuse. Congressman, I don't believe that our lenders 
are required to put down anything for our direct loans. And I 
think you understand the importance of those loan programs to 
our producers.
    Mr. Farr. Does the same size fit all, different States have 
different values of--I mean, you can't get into farming in 
California without a million bucks, but I don't think anybody 
would qualify for these loans.
    Mr. Scuse. And you are right. Our programs are targeted to 
the family farms, the smaller family farms. But in all the 
States----
    Mr. Farr. We have small family farms; it is just that the 
real estate is so expensive.
    Mr. Scuse. But the real estate is so expensive in your 
State, and we understand that. But our programs are targeted 
towards those producers who are unable to obtain credit from 
commercial lending institutions.
    Mr. Farr. Could we see what States, how that boils out by 
State breakdown?
    Mr. Scuse. Yes, sir. Not a problem.
    Mr. Farr. I also want to do it for the other----
    Mr. Scuse. Administrator Dolcini.
    Mr. Dolcini. Most recently, I was the State Director in 
California of the Farm Service Agency there. And over the last 
couple of years and really prior to my tenure, we have done a 
really good job I think in our counties--and you have got two 
service centers in the 17th Congressional District--about 
reaching out to socially disadvantaged--SDA--farmers in 
California. And fully 40 percent of our loan portfolio in the 
State of California, which for the last fiscal year was around 
$120 million or so, went to SDA borrowers.
    So the folks that work in the Salinas office and the 
Hollister office and other offices up and down the State and 
really many offices around the country have done a great job in 
reaching out to new customers.
    Mr. Farr. That is great. I want to know about it. I am the 
Congressman who represents that district, and I still don't 
have that information. So how many loans and if it is public as 
to who is getting them, just give us the list.
    Mr. Dolcini. We will get that to you.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8236B.033
    
    Mr. Farr. It would be nice to be able to brag about it.
    Mrs. Emerson. Mrs. Lummis.

                           FSA COUNTY OFFICES

    Mrs. Lummis. First some questions about FSA.
    In Wyoming, there are only 17 FSA offices, and in States 
like Kansas, they are like Starbucks. There is one on every 
corner. So my question is, is there flexibility, if there are 
budget reductions, to close FSA offices in States that have FSA 
offices like Starbucks without affecting the States like mine 
where ranchers and farmers have to drive 100 miles to the FSA 
office?
    Mr. Scuse. I understand what the appearance is, but it is 
also you deal with the number. It also has something to do with 
volume. And if you look at some of the areas where we have the 
higher concentrations of county offices, you are dealing with 
very large numbers of producers. And in your State you have few 
producers who control huge tracts. So that is part of the 
response.
    But our budget request does not include office closures for 
the 2012 budget year.

                  COUNTY OFFICE LEASES AND PROCUREMENT

    Mrs. Lummis. Thanks. I met with some FSA employees a couple 
weeks ago, and they told me that they had lost the flexibility 
to renew county leases and that they can't buy supplies from 
local non-listed vendors. They have to buy supplies from 
certified vendors. And across Wyoming, there are a lot of small 
communities that don't have certified vendors.
    And can't we provide local FSA offices the flexibility to 
renew their own leases and purchase goods from local vendors of 
their choice? Is there a cost savings to this?
    Mr. Scuse. Thank you for bringing the first issue up anyway 
about the office leasing.
    My understanding is that issue was addressed in the 2008 
Farm Bill--the 2002 Farm Bill--I had my years mixed up--where 
the authority was given through the leasing to GSA and taken 
from the Farm Service Agency to do those leases. So that 
authority was taken away from the Farm Service Agency and given 
to GSA.
    As far as the other issue with us, with our procurement of 
supplies, I can't answer that question, but I assure you that 
we will look into it and see what that issue is.
    [The information follows:]

    All Federal Agencies, which would include FSA County Offices, are 
required to follow the Federal Acquisition Requirements (FAR) and its 
updates. In accordance with Agriculture Acquisition Regulations (AGAR) 
Advisory 97, the process for purchasing of goods and supplies is as 
follows:
    Through the Federal Strategic Sourcing Initiative (FSSI), the U.S. 
General Services Administration (GSA) has awarded 15 Blanket Purchase 
Agreements (BPAs) for office supplies. Thirteen of these BPAs were 
awarded to small business entities. Patronization of these BPAs 
represents a great opportunity for our agencies to achieve significant 
savings. By leveraging the buying power of the federal marketplace, the 
GSA Federal Strategic Sourcing Initiative has obtained discounted 
pricing on all office supplies, including paper and toner. Under these 
BPAs, discounts increase as the agencies procure more items. Beginning 
January 3, 2011, all Department of Agriculture office supply purchases 
must be made through the GSA Office Supply FSSI BPAs or USDA's 
AbilityOne Supply Store, Paperclips Etc.
    These new BPAs are easy to use, provide additional discounts to the 
negotiated prices already available on GSA's Schedule 75 for office 
supplies, and provide the federal government with a fast and effective 
way to order, while ensuring prompt, cost-effective delivery and 
quality customer service. Additional benefits include:
           ensuring compliance with applicable regulations, 
        including the AbilityOne Program;
           fostering new markets for sustainable technologies 
        and environmentally preferable products; and
           simplifying data collection and enhancing 
        transparency by enabling agencies to better manage spending and 
        cost savings for office supplies.
    For those purchases where the use of the BPA is not practical or 
emergency needs exist, the purchase card may be used within the 
limitation of the purchase card holder's purchasing authority.

                           FARM LOAN PROGRAMS

    Mrs. Lummis. Thank you. As you guys know, there is rural 
and then there is rural. And in Wyoming we are really rural. A 
question about duplication of programs. This has to do with 
your loan program.
    Mr. Farr asked whether there was a down payment required 
for FSA loans. The answer was you don't think so.
    Mr. Scuse. We don't believe so.
    Mrs. Lummis. What is the subsidy rate for the U.S. 
taxpayers on these farm credit programs? What is the interest 
rate, for example?
    Mr. Scuse. The interest rates for our programs vary from 
direct farm ownership loans, 4.5 percent, joint financing would 
be 5 percent, and other farm ownership loans, emergency loans 
would be 4.5 percent.
    Mrs. Lummis. The GSA, Farm Credit Services, doesn't this 
duplicate what Farm Credit Services does, these USDA loan 
programs?
    Mr. Scuse. No.
    Mrs. Lummis. Tell me the difference.
    Mr. Scuse. We are lending money to borrowers who don't have 
the ability to obtain commercial credit.
    Mrs. Lummis. Okay.
    Mr. Scuse. They have been denied the ability to get funding 
from commercial banks.
    Mrs. Lummis. Even Farm Credit Services. If we get a 
preferred rate--you know normally if you don't qualify for 
credit, you are at farm credit or something like that or a 
commercial bank, you would have to pay more for credit. And yet 
what we are saying is if you don't qualify for credit, we will 
give it to you cheaper. So in other words, that seems to be a 
disincentive to good operators.
    Mr. Farr. Based on how much default you have.
    Mr. Scuse. And I think if you will look at those costs or 
those interest rates, I think a lot of those interest rates are 
in line with the commercial banks now and what they are lending 
our producers money for. I think that cost is comparable. So I 
don't know that we are giving a discount for those loans to 
those producers.
    Mrs. Lummis. Thank you.
    Madam Chairwoman, one more question, this one about trade, 
or should we wait around?

                           FARM LOAN DEFAULTS

    Mrs. Emerson. It would be helpful if you could give us 
information on the percentage of loans that default as well. 
You can get back to us on that.
    Mr. Scuse. Thank you. We will be more than glad to provide 
you that. I think you will be very pleased to see our default, 
the rate compared to the commercial industry. We have done a 
very, very good job of managing our lending operation at FSA, 
and our default is extremely low.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8236B.034
    
    Mrs. Emerson. Mr. Nunnelee.

                       NATIONAL EXPORT INITIATIVE

    Mr. Nunnelee. Thank you, Mr. Secretary, for being here.
    Shift gears a little bit. The President has said the 
National Export Initiative that he wants to double exports over 
the next 5 years. Obviously ag exports are going to play a huge 
role in that, and that is pretty important for the people I 
represent in Mississippi.
    Could you specifically talk about your agency's role in 
achieving that goal and what resources you are going to need to 
achieve that goal? And then in general, talk about the role 
that ag exports will play in achieving that goal.
    Mr. Scuse. Thank you. Agriculture exports we believe are 
part of the safety net for our farmers and ranchers throughout 
the United States, not just for the work that Farm Service 
Agency does or the Risk Management Agency, but our exports are 
vital to keeping our farmers and ranchers productive. I think 
you have probably all seen the numbers, the projections for 
this year. We are projecting trade, agricultural trade at 
$135.5 billion, which is above the record year of 2008, which 
was $114.9 billion, by $20 billion. So agriculture trade is 
going very, very well. We work very hard to open up doors for 
our commodities that our farmers and ranchers produce, break 
down barriers, work with other countries to develop free trade 
agreements.
    So to give you more specifics on what we are actually doing 
with those, I will let the Administrator, John Brewer, give you 
some more specifics on exactly how we accomplish that.
    Mr. Brewer. Thank you, sir.
    Congressman, there is not a whole lot to add to what the 
Under Secretary said. Basically again through our export 
promotion programs, we are contributing to the National Export 
Initiative--NEI--effort. We are certainly collaborating very 
closely with other members of the President's export cabinet, 
Treasury, Commerce, et cetera, to work to make sure that we as 
a government achieve that goal of doubling exports by 2014. 
Agriculture plays a part of that role, and certainly we are 
doing all we can to contribute to it.
    Within the 2012 budget requests, all of you have seen the 
effort we have, which is the additional $20 billion to deepen 
and broaden our efforts to continue to work toward achieving 
the goal of doubling exports. And I can get into more details 
if you would like during the course of the rounds with the 
committee.
    Mr. Scuse. But it is just not the work that we are doing 
here in Washington as well. We have 98 offices in 75 countries. 
We have staff overseas to help us deal with the issues and 
facilitate trade. If there are issues in a foreign country, we 
have staff there to address those issues as soon as they arise 
so that we can get our products moving again in other 
countries. So it is a broad effort to facilitate trade for 
agriculture products.
    Mr. Nunnelee. Thank you, Madam Chair.

                           AGRICULTURE TRADE

    Mrs. Emerson. Coming from an agricultural district myself, 
the thing that does concern me, I mean believe me, I am all for 
increasing exports by as much as you possibly can. What 
concerns me, however, is the non-tariff barriers. And that is 
something we should probably discuss and how you coordinate 
with FDA and the like on phytosanitary/sanitary regulations, 
all of those barriers, in spite of having a very laudable goal 
of increasing exports.
    Mr. Latham.
    Mr. Latham. Thank you. Just to kind of follow up with that.
    How much difference is there in bushels exported? What 
happens when there is worldwide restriction of supply? The U.S. 
is kind of a supplier of last resort. Prices are very high. How 
much is the increase in price related rather than bushel 
related?
    Mr. Scuse. To give you an exact dollar amount I can't at 
this time comment on exactly what that breakdown would be. I 
posed basically the same question because my concern was, okay, 
are we getting the increase in trade simply because we are 
getting the additional price from the rising cost of the 
commodities. Corn, soybeans, cotton are at or near record 
highs. And the answer that I received was no. The $135.5 
billion is not based just on price increases. It also comes 
from volume increases.
    Mr. Latham. Which is related to less worldwide supply 
obviously, and we are normally the supplier of last resort to a 
lot of these places. And as it is restricted elsewhere, we pick 
up and certainly with corn where it is, soybeans where they are 
today, that is a big part of the whole equation. I am not sure 
that we are actually shipping that many more bushels.
    Mr. Scuse. I think we are. If you look at our trade with 
China last year as an example and the amount of soybean 
exports, we exported a record amount of soybeans to China last 
year. So we are exporting a tremendous amount of product. 
Personally, I don't believe that we are the supplier of last 
resort.
    Mr. Latham. Well, historically we have always had increases 
with world shortages in the U.S.
    Mr. Scuse. In a trip trade mission that I took to Peru last 
month going and visiting a feed company for the largest poultry 
producer, there was a mountain of soybeans there. And when I 
posed the question as to why because it was located so close to 
other countries, the response was because of the quality. We 
had the best quality and we were providing a product that had 
the best feed value for them. So we are producing great 
products here in this country.
    Mr. Latham. Did you ask them if they were Latham brand 
soybeans?
    Mr. Scuse. Next time, Congressman, I will ask. And I will 
find out next time.
    Mr. Latham. Okay. Thank you.

                             CROP INSURANCE

    Mr. Murphy, with the Standard Reinsurance Agreement last 
year we have seen a lot of consolidation as far as local 
agencies and fewer agents out there. I don't know if you have 
concerns about the consolidations and what that means to 
service to farmers.
    Mr. Murphy. We haven't noted that much consolidation going 
on out there. I pick up anecdotal information as well. I have 
not heard of any growers unable to find an agent. We have 
consolidations within the program as a normal rule. Even in 
2008, a year the companies made more money than any other 
previous year, we had major consolidation.
    Mr. Latham. You are talking about agents.
    Mr. Murphy. Yeah. But I haven't heard that much 
consolidation going on. I think what is going on is there have 
been some agencies being purchased by the companies, but not 
fewer agencies. But I will look into that.
    Mr. Latham. What do you see? We have a Farm Bill coming up, 
there is going to a big push by a lot of people to do away with 
direct events. There is going to be a much larger emphasis on 
risk management. Do you have any proposals out there? What do 
you see happening?
    Mr. Murphy. With the upcoming Farm Bill? At this point our 
position has been to work with the committees on any questions 
that they have going forward. I know there is a lot of 
interest.
    Mr. Latham. Is that like a universal answer? I have been 2 
days now with Transportation trying to figure out what they are 
going to do with the Highway Bill. We will sit down and visit. 
Okay. Let's visit.
    Mr. Murphy. There is a lot of interest out there. 
Producers, I think the program has improved tremendously for 
them. There is a lot of interest from the lenders to maintain 
crop insurance going forward. So I would expect that and we are 
prepared to meet the demand that is out there.
    Mr. Latham. Is there any discussion of the Department 
taking over risk management entirely from the private sector?
    Mr. Murphy. None that I have been involved with, sir.
    Mr. Latham. I asked the Secretary last year and he wouldn't 
give me an answer.
    Mr. Murphy. The private agent system, private company 
system has been extremely successful in the program. So I 
haven't entered into discussions on another.
    Mr. Latham. Has there been any debate in the Department?
    Mr. Murphy. There was some debate when we were doing the 
SRA initially but not within the Department.
    Mr. Latham. Where was it then?
    Mr. Murphy. It was above the Department.
    Mr. Latham. Well, we could do that like the student loans. 
Apply it to health care.
    Mr. Murphy. Insurance is a different animal. I think you 
have to have an understanding of the concepts of insurance to 
be able to work with the growers on the proper coverage levels 
they should have. So I think it is critical that we maintain 
the agent system.
    Mr. Latham. I see I am out of time. Thank you.

                      CROP INSURANCE PARTICIPATION

    Mrs. Emerson. I am going to go ahead and ask a follow-up 
question about that because in my congressional district we 
grow a lot of rice and a lot of cotton and, consequently, the 
farmers in my part of the country simply have argued forever 
that crop insurance policies don't work for them. And because 
of the coverage being tied to yields and to revenue, the 
insurance unfortunately really can't account for irrigation 
costs, other types of inputs.
    And so I would love to know exactly how RMA is working 
within USDA to address the disparity if you can tell us exactly 
why this does exist. And obviously you see it but what kind of 
efforts you all are making to better incentivise producers to 
use this as a risk management tool because the northern part of 
my State, Missouri, it is totally different, down in the 
southern, mid-south, agriculture, and it is very frustrating I 
think to a lot of my producers and certainly those folks who 
aren't engaged in agriculture on a day-to-day basis simply 
can't understand why crop insurance wouldn't work.
    Mr. Murphy. Right. We have been concerned about this as 
well. In fact, Chairman Peterson, the former chairman, he was 
very concerned and said we had to move forward to address this. 
We have been. We have initiated some studies to look at why 
producers are purchasing a lower level. The good news is it has 
actually been increasing participation levels.
    Mrs. Emerson. Let me say this, at the University of 
Missouri and other institutions their most recent study says 
that only 63 percent of my producers have crop insurance in my 
district.
    Mr. Murphy. Right. It is lower than any other part of the 
country by all means. We are working with the individual 
commodity groups, such as the rice growers and cotton growers, 
for specific ways we can improve the policies. We are working 
on an addendum to the rice policy right now. Hopefully that 
will be developed within the next couple of years. We are 
working with the different practices down there to make sure 
that the rates do reflect the practices being--there is an 
increase in irrigation throughout the south, so what we are 
taking a look at is can we have a different structure for 
irrigated acreage versus non-irrigated acreage and address the 
fact that the producers are already instituting measures to 
guard against the risks that they have. Can we reflect that in 
a premium, that sort of thing.
    So we are putting a lot of effort in there. A big issue 
down there has been the transitional yields. If you don't have 
the history on a particular land. We are hopefully within the 
next year or two to be expanding the personal field concepts 
that we are piloting in North Dakota. Right now I think that 
will help a lot there. Rate reviews are going on for the crops 
down there. In fact we did one on sugarcane a couple of years 
ago and we actually reduced the rates by 50 percent. So we are 
looking for ways to work with the groups.

                         ACREAGE CROP REPORTING

    Mrs. Emerson. It seems to me that a lot of my producers say 
it is too expensive and unwieldy. But the fact of the matter is 
when you are dealing with the whole administrative costs of 
crop insurance--and I realize that it is fairly significant in 
a lot of respects. We give the Farm Service Agency folks the 
same information that the crop insurance people want. And it 
seems that if you all could get better coordinated, it would 
certainly make the life of our producers not only much easier 
but it would save a ton of money. And it is just absolutely the 
most frustrating, ridiculous thing that I have ever seen. So is 
it that hard?
    Mr. Scuse. Thank you for bringing that up. As a farmer, it 
has also been one of my concerns as well where we have to go 
and report to two different agencies. We started last summer an 
initiative, Acreage Crop Reporting Streamlining Initiative, 
where we are bringing the agencies together on a single report. 
That is FSA, RMA, National Agricultural Statistics Service 
(NASS), and Natural Resources Conservation Service (NRCS). We 
are using different identifiers for land. We don't need to be 
and should not be doing that. We are going to consolidate that 
and use one identifier for land. Another part of that project 
is when I walk in to give a report to the Farm Service Agency, 
that report will be shared to my crop insurance agent. So I 
don't have to go do that reporting twice.
    So we are headed down that road. That is our objective. And 
to take that one step further, with today's technology, why 
should I have to actually physically visit an office when I can 
sit at home and then put my information on the computer and do 
a download? That is another part of this project where we are 
not going to require producers to actually visit our offices. 
They will be able to do their reports at home. So we are headed 
down that path.
    Mrs. Emerson. Timetable?
    Mr. Scuse. We hope to have it done in--part of it will be 
done in 2 years.
    Mrs. Emerson. Why the heck does it take 2 years to do that?
    Mr. Scuse. Well, it has taken us a long time to get to 
where we are today. But in order to bring all of the systems 
for all of the agencies and make the changes necessary, that is 
going to take us about 2 years.
    Mrs. Emerson. So it is an IT issue sort of?
    Mr. Scuse. It is an IT, it is an inputting issue. It is 
changing the way that the four agencies actually do their 
business and records.
    Mrs. Emerson. Are you moving to cloud computing so that we 
don't have to have our farmers stacked up, 4 o'clock they call 
on the east side of my district, at 5 o'clock they call on the 
west side of my district, or log into the computer when it is 
sunny.
    Mr. Scuse. Ultimately, that is where we are headed, and the 
Congresswoman brought up a good point, provided we have the 
funding to do this, and that is the direction that we are 
headed in.
    Mrs. Emerson. It seems to me at the end of the day a little 
bit of investment here will save a whole lot. And I might add 
that it will be helpful if you could use one power of attorney 
for each one of--I mean, if there is one power of attorney at 
FSA, there is no need for NRCS to have one and another one and 
another one and another one.
    Mr. Scuse. And as we do these consolidations, then things 
that make sense, like the power of attorney issue where we can 
share that between the agencies, we will be able to do which we 
can't do today.
    Mrs. Emerson. Isn't this embarrassing?
    Mr. Scuse. Yes, it is. And that is why we are headed in 
that direction to better serve our farmers and ranchers, but 
not only to better serve our farmers and ranchers, but think 
about what it is going to do to our office staff and the burden 
that it will lessen on the office staff. We know we are not 
going to get any more human resources in the field. We have to 
do it better and we have to do it smarter and more efficiently. 
This will allow us to do that.
    Mrs. Emerson. I appreciate that. I wish we could speed it 
up. Two years seems like a ridiculous amount of time.
    Mr. Murphy. If I could add to that. Moving to a single 
acreage report will have about 90 percent of the programs on 
the same acreage reporting data in 2012. So we are moving ahead 
very quickly on that aspect.
    Mrs. Emerson. It is just common sense, though.
    Mr. Bishop.

                   CONSERVATION RESERVE PROGRAM (CRP)

    Mr. Bishop. Thank you very much. Let me apologize for my 
delinquency. Let me just ask you a little bit about the CRP 
program, sir.
    The purpose of it is to assist farm owners and operators in 
improving and competing with our resources of our 
environmentally sensitive land from agricultural production and 
keeping it under long-term resource conserving cover.
    CRP participants enroll for 10 to 15 years to return for 
low payments annually along with cost share technical 
assistance. Over the years, the program has become a target for 
anybody that is not particularly knowledgeable about 
conservation but for rates both the farmers as well as Federal 
support for farmers and the CRP will likely again be targeted 
for reductions and elimination as we move forward to the 2012 
Farm Bill.
    So could you give us your view of the CRP program, its 
national importance as a proponent of our national conservation 
strategy and can you tell me whether or not the administration 
will continue to fight the CRP in the 2012 Farm Bill?
    Mr. Scuse. Thank you, Congressman, for the opportunity to 
address a very important issue. The CRP program which started, 
as you know, about 25 years ago, we believe is an extremely 
important program in protecting our natural resources and our 
environment. Since its inception 25 years ago, we believe that 
that program has saved 8 billion tons of topsoil from eroding. 
On top of that, we have protected 200,000 miles of rivers and 
streams and improved the water quality in those areas.
    Just last year alone, CRP land sequestered 51 million tons 
of carbon, and you add to that the wildlife benefits that CRP 
provides and the opportunities for sportsmen to take advantage 
of those opportunities and additional income. We believe that 
the CRP program is in fact one of the most important programs 
that we have.
    Yes, we know in the last Farm Bill it was reduced from 36 
million acres down to 32 million. But we have a commitment to 
try and keep our CRP land at as close to 32 million acres as we 
possibly can.
    We started signup on March 14th for the next round, there 
is 4.4 million acres that come out of CRP, and that signup will 
run until April 15th. So hopefully we will get enough land 
enrolled to stay near that cap. But it is a very important 
program, and we look forward to working with Congress and 
continuing a very important program.

                         AGRICULTURAL RESEARCH

    Mr. Bishop. Thank you very much.
    Mr. Brewer, I would like to welcome you to the subcommittee 
and it is a pleasure to see a brother doing God's work. The 
United States is blessed with some of the best agriculture 
research in the world, technology, biotechnology. We have the 
most talented farmers in the world. And in my district, for 
example, peanuts and cotton are king and of course we believe 
that we have got the best in the world.
    My question how can the subcommittee and the Congress help 
you utilize all of the wonderful resources you have in ag 
research to strengthen our ties overseas with our foreign 
friends and to serve our products better, to maintain that, 
given the fact we are facing budget cuts?
    My experience, traveling oversees, is that American 
agriculture is the highest quality anywhere in the world and 
because of that, once they get there, because of our 2-year 
research, we are able to make it a high quality.
    How are we going to continue that competitive edge in 
foreign agriculture with the budget cuts that we are facing 
with ag research, ARS?

                      SCIENTIFIC EXCHANGE PROGRAMS

    Mr. Brewer. Sir, thank you very much for your question. It 
is good to see you again.
    Regarding research, to step back a little bit and just kind 
of tell you what we are doing to share that research, because I 
agree with you, we have a great research capability here within 
the United States. A lot of that is being shared via our 
various scientific exchange programs.
    We have the Norman Borlaug Program, in which we bring and 
share or allow foreign scientists and foreign folks in the 
agricultural community in other countries to come and train 
here in the United States. We have our Cochran Exchange 
Program, allowing for opportunities for foreign scientists and 
agricultural professionals to come and train and spend some 
time in the United States to learn about a specific area of 
agriculture that may be their area of expertise.
    We also have specific scientific exchange programs with 
China. I believe we have one as well with Taiwan to have that 
exchange of ideas, exchange of research, exchange of issues.
    So we are certainly, through our various programs within 
the agency, are certainly sharing that, also within our 
capacity building program and our capacity building efforts 
that we work in conjunction with AID, USAID, to again build the 
capacity of other countries to ensure two-way trade. I mean, 
you have got to have two-way trade for them to want to buy our 
products. They have to have the opportunity to sell to us as 
well, so in our capacity building we do that as well.

                    NATIONAL EXPORT INITIATIVE (NEI)

    The second part of your question about selling our 
products, certainly peanuts, as well as pecans or other 
horticultural, as well as cotton. Again, our involvement in the 
NEI effort is certainly something that we are strongly engaged 
in and are doing a great deal to promote our products. Our 
offices overseas are being very much engaged in and can do more 
and want to do more to put the foreign buyer with the American 
seller of our products. So our overseas presence is something 
very important with that as well.
    I can engage more with you about other issues, but that is 
certainly there.
    Mr. Bishop. I think my time is up, but I am wondering how 
this is going to be impacted by the budget cuts that we face.
    Mr. Brewer. I would be glad to talk to you about that.
    Mrs. Emerson. Mrs. Lummis.

                           FOOD AID PROGRAMS

    Mrs. Lummis. Thank you, Madam Chairman.
    Back to foreign food aid, as I understand it there are 
three major programs, McGovern-Dole, Food For Peace, Food for 
Progress, are those the three majors? Okay.
    Which of those do you think is the most efficient and 
effective at supporting long-term development across the globe? 
If you had to prioritize those three programs, how would you do 
it?
    Mr. Scuse. I will defer to the Administrator on that.
    Mr. Brewer. Ma'am, let me step back. The programs have 
different focuses. Certainly the McGovern-Dole program is 
focused on education, which is something I think we can all 
agree is very, very important. The Food for Progress is for 
educational, I am sorry, economic development, so again you are 
focusing on another angle that we believe is very important, 
and then Food For Peace is for emergency response, as 
humanitarian efforts. So, each of those are priorities, each of 
those are important.
    So to weigh them against one another is difficult because 
they are focusing on different areas. There are three different 
areas.
    Mr. Scuse. There are three different programs and it is 
almost impossible because they have three different purposes 
and missions and purposes.
    Mrs. Lummis. I hear you, but of course we are spending 
money we don't have and we are going to cut spending. So we are 
put in a position if the agencies don't tell us how to 
prioritize spending cuts or expenditures, we are going to 
prioritize them. And I would so much rather hear agencies come 
and help us prioritize these programs, because we are going to 
cut them. And we can do the across-the-board gig, but I don't 
know that that is the best way to go. So I am really hoping 
that agencies will help us figure out how to do these cuts.
    Let me ask it this way then.
    What characteristics define the most successful program and 
how could those characteristics be applied to the other food 
assistance programs?
    Mr. Brewer. Well, again, Congresswoman, we have got three 
different programs with three different priorities. If I can 
step back and kind of touch base on something.
    Mrs. Lummis. You know what, I will just switch over to free 
trade.
    Mr. Scuse. Thank you.
    Mrs. Lummis. It would, however, help us if you would help 
us prioritize.
    Mr. Scuse. And we would love to be able to help you do that 
but, you know, those three programs are so important and so 
critical.
    Mrs. Lummis. So it would be better to do across-the-board 
cuts to those programs?
    Mr. Scuse. I don't know how we would be able to single one 
program out over another because the nature of those three 
programs is so different.
    Mrs. Lummis. Okay.
    Mrs. Emerson. I am just going to say one thing to Mrs. 
Lummis and something that you all probably should have said was 
that at least on the Public Law 480 piece. This is helping the 
American farmer as well because it is our commodities that are 
being donated and so that is helpful when we have excess 
commodities for our farmers, and that is the one piece that 
makes that program much different.
    So, go ahead, I am sorry.
    Mr. Scuse. Thank you for your assistance.

                         FREE TRADE AGREEMENTS

    Mrs. Lummis. Thank you. I am not saying every program is 
going to get cut, but I am saying we do have to prioritize, 
because we are not going to be able to spend the same amount of 
money we have in the past. That is all I am saying.
    Okay, let me switch to free trade and here is one that is a 
fun question. How much is each of the pending free trade 
agreements projected to increase agriculture's positive trade 
balance? I am talking about South Korea, Colombia and Panama, 
because I see these as programs where many agribusinesses 
support them, they argue for quick approval because of the 
Obama administration's National Export Initiative, and that 
that is a government-wide goal of doubling U.S. exports over 
the next 5 years, which seems to me you know the way, you know, 
we want to grow our way out of the economic malaise we are in. 
We want to expand free trade. We want to sell more of our 
commodities overseas. We know this produces jobs in the U.S. So 
I am all about it.
    So have you studied these and how they will affect American 
farming and ranching?
    Mr. Scuse. Yes, there are some projections out there. The 
Korean Free Trade, South Korean Free Trade Agreement is 
projected to increase agricultural sales from, anywhere from 
$1.9 billion to as much as $3.8 billion currently. That is a 
$5.2 billion market.
    The Colombia Free Trade Agreement is projected to increase 
sales just under $700 million, and I believe the Panama FTA is 
projected to increase sales just under $200 million.
    Mrs. Lummis. Thank you very much. That is good news for 
U.S. agriculture and for our balance of trade, so I appreciate 
that.
    One more about CRP. Whoops, my time is expired.
    Mr. Kingston. Your time has expired. Ms. DeLauro.

                            TRADE WITH CUBA

    Ms. DeLauro. Thank you, Mr. Chairman. I would also like to 
ask you if you could tell us what, by lifting the embargo on 
Cuba, how much that would add to our agricultural 
opportunities, and they are so close we wouldn't have to go the 
distances with our products that we now have to. So if you 
could get that information to me I would appreciate it.
    Mr. Scuse. Yes, I don't have that at the top of my head.
    [The information follows:]

    Agricultural trade with Cuba is permitted under terms of the Trade 
Sanctions Reform and Export Enhancement Act (TSRA) of 2000. While trade 
is permitted, no U.S. government assistance or programs can be used to 
promote agricultural exports to Cuba.
    Starting at zero in 2000, U.S. agricultural exports to Cuba grew 
steadily throughout the decade, peaking at $685.5 million in 2008. In 
2009, exports declined to $525.9 million and again in 2010 to $360.6 
million. In the last few years, the United States was the largest 
foreign supplier of agricultural products to the citizens of Cuba.
    There is evidence of demand in Cuba for numerous agricultural 
products. In 2010, poultry led U.S. agricultural exports to Cuba with 
sales valued at $109.1 million, and corn exports were the second 
largest export at $94.8 million, followed by oilseeds at $83.7 million.

    Ms. DeLauro. No, just get it to me about lifting the 
embargo on Cuba and what that would mean in terms of U.S. 
agricultural products.

                         IMPROPER FARM PAYMENTS

    I would like to talk about some priorities that we can look 
at in terms of cutting, and that has to do with improper farm 
payments.
    We have a GAO report released earlier this month, extensive 
report, Opportunities to Reduce Potential Duplication in 
Government Programs, Save Tax Dollars, and Enhance Revenue. The 
report noted that taxpayer dollars can be saved with 
strengthened oversight of farm program payments, including 
direct payments.
    I might add that the State of Wyoming, 544,000 people, 
31,285 of them are compensated with a subsidy. That is about 
$678 million, so the average is about $21,672 per person in 
terms of subsidies. So I think it is important to know that 
when we try to take a look at what payments are going where and 
where we can begin to look at what our priorities are in terms 
of cutting back.
    Let me go back to improper farm payments. I can list for 
you, GAO did, USDA provided farm program payments to thousands 
of individuals, incomes exceeding income eligibility caps. Some 
of the examples, founder, former executive of an insurance 
company, received more than $300,000 in farm program payments 
in a 4-year period that should have been subject to income 
limits.
    Individual with ownership interest in a professional sports 
franchise, more than $200,000 in payments that should have been 
barred by income limits. There are a number of others. I can 
provide you with those examples. I am sure you read the GAO 
report and you know what those examples are.
    The conclusion was that reducing or eliminating direct 
payments to farmers, particularly those to large farming 
operations, could achieve cost savings of approximately $5 
billion per year, significant savings for our taxpayers. I 
thought it was awfully interesting to note as well when I read 
the GAO report that direct payments were expected to be 
transitional, transitional.
    In addition, direct payments go to farmers regardless of 
risk factors. That means that you need to lose crops, there 
needs to be no decline in prices, you just get the payment. 
When I say transitional, accordingly the payments were 
scheduled to decrease over time and expire in 2002. However, 
subsequent Farm Bills have continued these payments.
    Now, what are some of the actions that FSA has taken to 
reduce the error rate for farm payments and, if and when FSA is 
able to achieve a stable IT infrastructure, would it be able to 
reduce erroneous farmer payments? Do we want to take a look at 
priorities to reduce the deficit?
    Let's not take it out of the mouths of the hungriest people 
in the world or people here in the United States, for that 
matter, who are hungry today. Let's go where there are improper 
payments and capture that funding in order to be able to reduce 
our deficit. Tell me about FSA and being able to do this.
    One highlight, July 2007, USDA paid $1.1 billion in direct 
payments to more than 170,000 deceased individuals. Can we get 
the house in order and be able to reduce the deficit through 
improper payments? Please respond to the question.

                           INCOME ELIGIBILITY

    Mr. Scuse. Okay. I think there are several different 
questions there. The issue with the improper payments going to 
those that should not receive them, we believe that we have 
addressed that issue the last 2 years. Now, our producers, when 
they sign up for a program, have to sign a form where we are 
then having the Internal Revenue Service--IRS--to look at the 
income levels of those individuals.
    Ms. DeLauro. Excuse me for one second. The recent GAO 
report came out in March, here it is, Opportunities to Reduce 
Potential Duplication in Government Programs, Save Tax Dollars, 
and Enhance Revenue. That is what I was quoting from when I 
dealt with this current list of improper payments. Right now, 
it is still existing.
    Mr. Scuse. Well, as I said, Congresswoman, we have started 
a process where those individuals that are participating in our 
programs now have to sign a form giving the IRS permission to 
go back and look at their records to make sure that they are, 
in fact, income eligible. We believe that will go a long way if 
not totally eliminating the abuse of the program for those that 
make more money and that are participating in our programs that 
should not be.

                            DECEASED FARMERS

    The second part of your question on deceased farmers, there 
is a reason why deceased individuals are, in fact, receiving 
payments. They signed up for our programs. They started the 
farming operation so they or their estate is entitled for 
payment of that money because their farms did, in fact, 
participate in the program.
    Mr. Kingston. The gentlewoman's time has expired. Mr. 
Latham.
    Mr. Latham. I thank the gentleman.
    Farmers are not immortal.
    Mr. Kingston. Well, would the gentleman yield a minute. If 
the gentlewoman would yield. I think, actually, with unanimous 
consent I would like to ask for the time to let you answer the 
question of dead farmers, because there is a question about 
eligibility for the family of the deceased, isn't there?
    Ms. DeLauro. Yes. Let's talk about the food stamps and you 
die and whether or not your family is entitled still to be able 
to get them.
    Mr. Kingston. Well, I only want to know the explanation. Is 
there an explanation on it?
    Mr. Bishop. For the dead farmer?
    Mr. Kingston. For the dead farmer.
    Mr. Scuse. For the deceased farmer. They signed their farm 
up for a program, for a farm program. They, in fact, 
participated in that farm program for that crop and year. So at 
the conclusion of that year, that farm, that farmer or his 
estate is, in fact, entitled to the funding for that program.
    Ms. DeLauro. Subsequent years though are at issue.
    Mr. Scuse. No, not for subsequent.
    Ms. DeLauro. Well, but this has gone on for subsequent 
years.
    Mr. Scuse. Okay. Unless, Congresswoman, it is for a long-
term program, long-term funding such as an Environmental 
Quality Incentives Program--EQIP--or a CRP program, those are 
long-term programs that they have put their farms, enrolled 
their farms in, which they would be entitled to a payment.

                            DIRECT PAYMENTS

    Ms. DeLauro. The issue here is then, and as long as the 
gentleman kept the time open for a second here--and I really 
would like an answer from you on direct payments that were 
supposed to go out of existence in 2002.
    Should those direct payments go out of existence, in your 
view, in terms of no risk involved, you get paid regardless of 
risk and in addition to which you don't have to have a crop 
decline, you don't have to have any loss of crop, you just get 
a payment?
    Should we use and save $5 billion in this program?
    Mr. Scuse. Well, Congresswoman, that issue was debated in 
the 2008 Farm Bill right here in Congress.
    Ms. DeLauro. I am asking your opinion. You are in charge of 
this program.
    Mr. Scuse. You know----
    Mr. Kingston. He is acting.
    Mr. Scuse. Yes, and my opinion is immaterial. That decision 
is for Congress to make, and it was debated strenuously in the 
2008 Farm Bill.
    Ms. DeLauro. True. I would concur it is Congress' decision. 
And if we are looking for places where we can cut, where there 
is no risk, you just get a payment because you get a payment. 
You have to take no risk at all.
    Mr. Kingston. If the gentlewoman will yield back.
    Ms. DeLauro. I will yield back, Mr. Chairman. You got my 
point.
    Mr. Kingston. Yes. And I think what we would be interested 
in----
    Ms. DeLauro. You got my point.
    Mr. Kingston. As the entire committee would, and I am sure 
you are as well, on those areas where there is clearly abuse, 
if you have some language recommendation and we could dare to 
authorize an appropriation bill, we might want to float that 
language. Because I think improper payments is something that 
we are all concerned about and that is where you could come up 
with a lot of bipartisan consensus on ways to reduce spending.

                             RECORDS CHECK

    Mr. Dolcini. Sir, I just have one more data point to add on 
the dead farmer issue. The Social Security Administration has 
something called the death master file that FSA cross-checks 
four times a year. That is twice what we are required to do 
statutorily, just to make sure that our records are as accurate 
as we can possibly make them, Congresswoman.
    Mr. Scuse. If I may----
    Mr. Kingston. If you will, we will work with you on 
whatever language it would take to help us all get there.
    Mr. Scuse. Well, the point of what the administrators have 
made and what I did with our IRS records is the fact that we 
are, you know, we are making, you know, a great deal of effort 
in trying to prevent those payments from being made. But with 
this, with the Social Security records, with the IRS, we are 
making great progress.
    [The information follows:]

    As a result of Executive Order 13520, Reducing Improper Payments, 
issued in November 2009 and the Improper Payments Elimination and 
Recovery Act (IPERA) passed in July 2010, a number of actions were 
initiated by the Office of Management and Budget for FY 2010. One of 
those was the designation of fourteen ``high-error programs'' that 
significantly contributed to the government's improper payments. GAO, 
in the subject report, and based on Agency Performance and 
Accountability Reports for FY 2010, cited ten of the fourteen high-
error programs as accounting for the majority of the reported improper 
payments for FY 2010. None of the FSA programs are categorized as high-
error programs.
    It must be noted that the GAO report stated that, based on the 
continued improvement of FSA programs with regard to improper payments, 
the Marketing Assistance Loan Program was applauded for reducing 
projected improper payments by $50 million dollars from FY 2009 to FY 
2010. Comparable improvement in other programs has also been achieved 
for other FSA programs.

    Ms. DeLauro. We need a response to the GAO report from you 
about direct payments, about direct payments. This is a recent 
one and specifically directed toward reducing duplication, 
saving tax dollars, and enhancing revenue without----
    Mr. Kingston. The gentlewoman's time has expired. We have 
got to go to the Republicans to get some questions here.
    Ms. DeLauro. You have not been here, Mr. Chairman. The 
Republicans have all been asking questions.
    Mr. Kingston. I know. I am about to bring up foreign aid 
with my friend from Atlanta.
    Mr. Scuse. Mr. Chairman, just one second here, personal 
privilege, I do have a response to your Cuba question.
    Mr. Kingston. You have no personal privilege on that right 
now. We will have to let Ms. DeLauro get the time back. We know 
what her position is on Cuba.
    Mr. Latham.
    Ms. DeLauro. Thank you very, very much. He can come around 
and ask it. That is okay. We can have another round and ask it.
    Mr. Scuse. Yes, we will get it.
    Mr. Kingston. I am confident that you will.

                            DIRECT PAYMENTS

    Mr. Latham. Do I finally get a chance? I think we have 
learned that farm programs can be deadly, anyway, and I think 
the gentlewoman will be pleased to hear that there is a growing 
consensus, certainly, like in the Iowa Farm Bureau, to do away 
with direct farm payments. And that is going to be a major bone 
of contention, I think, in the next Farm Bill. We are certain 
it is more of a regional issue than it is maybe--than anything 
else.

                         NEW PRODUCTION ACREAGE

    But I was curious earlier, talking about the benefits 
response to Mr. Bishop's question about the CRP. There are 
estimates by USDA we are going to have 9.8 million acres come 
into production in 2011 to meet increased demand from 
commodities, so where are those acres coming from?
    Mr. Scuse. That is a very good question.
    Mr. Latham. Well, it is your projection.
    Mr. Scuse. And if you ask that question tomorrow at this 
time I can give you an answer, because our crop reporting, crop 
intentions report comes out tomorrow morning, which will give 
us an idea of the acreage that is going to be planted by the 
various crops. That report will be signed at 8:30 tomorrow 
morning. That is, in fact, a very good question.
    You know, we need to see. Is it going to come from the 
vegetable industry? Are we going to lose acreage from rice 
plantings to go to cotton?
    At this time, I don't know exactly where that acreage is 
going to come from, but we will be able to get you an answer 
this time tomorrow.
    Mr. Latham. Please come by.
    Mr. Scuse. I will make sure.
    [The information follows:]

    In the baseline for the FY 2012 President's Budget, USDA projected 
that plantings in 2011 will be 9.8 million acres higher than 2010. The 
recently released ``Prospective Plantings'' report is roughly in line 
with this projection, as farmers indicated they will increase plantings 
of the 8 major crops (corn, wheat, soybeans, cotton, rice, barley, 
sorghum, and oats) by 8.6 million acres, based on the annual National 
Agricultural Statistics Service (NASS) survey conducted around March 1, 
2011. The most significant difference between the projection and the 
intended acreage was for soybeans, which was 1.4 million acres lower. 
This may reflect further gains forecast for Brazilian soybean 
production now being harvested and some cancellations of soybean 
purchases by China, slightly dampening soybean market expectations.
    Very strong prices for virtually all the crops are providing market 
incentives to plant more this year. When prices increase, farmers will 
bring additional land into production, as they have done in the past, 
generally tapping more marginal lands. The 8-crop total of 253.8 
million acres of intended plantings for 2011, if realized, would still 
surpass the 2008 total of 253.1 million acres, another year of very 
high prices. This is not surprising, with several crop prices at record 
or near record highs. In addition, current CRP enrollment, 31.2 million 
acres, is 3.4 million acres lower than in 2008. The planted crop mix 
varies by year, reflecting prospective returns for each crop, 
rotations, fallow needs, double cropping, and weather effects. Compared 
with 2008, the intended planting choices in 2011 show less hay, dry 
beans, peanuts, and sunflower.

    Mr. Latham. Okay.

                     IMPACT OF GIPSA RULE ON TRADE

    With the FAS, there is a proposed rule for GIPSA that is 
pending out there. Is that going to have any impact as far as 
trade?
    Mr. Brewer. Congressman, can we give you an answer for the 
record? I am thinking right now on what that will be.
    [The information follows:]

    On June 22, 2010, GIPSA published a proposed rule in the Federal 
Register. The purpose of the new regulations is to describe and clarify 
conduct that violates the Packers and Stockyards Act, and is intended 
to increase fairness in the poultry and livestock industries. USDA does 
not believe the proposed changes would have an impact on trade; 
however, the agency received over 60,000 comments during a 150 day 
comment period and will closely review any such comments that were 
raised in regard to trade issues.

    Mr. Latham. Okay. Well, in the proposed rule, buying and 
selling of livestock. And I don't know what, if that is going 
to have any impact as far as your operations. I don't know if 
maybe the acting is not a real under secretary but he plays one 
here today.
    Mr. Scuse. The Grain Inspection Packers and Stockyards 
Administration--GIPSA--role deals primarily with domestic 
production.
    Mr. Latham. Right, yes. Do you see any--okay. Are you 
involved with that as far as the rule?
    Mr. Scuse. The GIPSA rule, no, sir.
    Mr. Latham. Well, there is obviously a lot of concern with 
that in the community. Actually, Jack, why don't you go ahead. 
I think for now I will submit some questions for later, but 
that is fine.
    Mr. Kingston. I think the Secretary would like you to 
continue because he knows Ms. DeLauro is getting back up there.
    Mr. Farr.

                   CONSERVATION RESERVE PROGRAM (CRP)

    Mr. Farr. Thank you. Both Mr. Bishop and Mr. Latham talked 
about the CRP program, and I just would like to better 
understand it. I understand that they are to assist essentially 
best management practices so that we don't degrade soil, water 
and air and wildlife habitat, riparian, and so on.
    But I understand, if California is a big State and has an 
awful lot of resources, there is only $47,000, I think, in 
California in the CRP program, where the biggest user in the 
country is Iowa. Now, Mr. Latham is a really effective Congress 
Member.
    Mr. Latham. Tell the folks at home that.
    Mr. Farr. I am saying it right now on the record. But I 
just can't for the life of me understand why Iowa has better, 
more conservation resources to protect than California? And I 
would like to ask Mr.--I mean, you talk about getting long-term 
resources. Aren't there any carrots in this? Don't you require 
zoning practices?
    I mean if it is wildlife habitat, riparian, I think you 
shouldn't be able to farm on that. That is just not good 
management practices. Why do we have to pay people to preserve 
what is essentially against the law if it was Federal land or, 
in California, you could never do it because you have to do 
local zoning practices that have to outline where these things 
are.
    You can't farm on steep lands. You can't farm, you can 
graze. You can't cut down riparian corridors by loggers or 
anything because you have got to save the fish habitat, which 
is also a big business for salmon fishermen and other 
anadromous fish types.
    So I don't understand why this program is so important and 
what kinds of assurances you get out. There is no long term, 
other than you get an annual rental payment, for not doing what 
you shouldn't do anyway.
    Mr. Scuse. Well, let's not lose sight of the fact this is a 
voluntary program, okay. We don't mandate that anyone go----
    Mr. Farr. But how do you ensure it is long-term protection? 
Do you have a Williamson Act----
    Mr. Scuse. Well, we have signup for a 10- to 15-year period 
of time.
    Mr. Farr. And how do you break that? If you want to come 
along and a developer says I will pay you a gazillion dollars 
for your land because I want to build my next Wal-Mart there 
and they are in the CRP program, what do they do?
    Mr. Scuse. It is a pretty solid agreement. You are in for 
the 10- or 15-year period of time. I mean, you know that when 
you go in.
    Mr. Farr. Is it automatically renewed?
    Mr. Scuse. No, no.
    Mr. Farr. You have to wait for it to run and then renew it?
    Mr. Scuse. When it comes out then you have the ability to 
re-enroll. Like I said earlier, we have 4.4 million acres.

                       STATE PARTICIPATION IN CRP

    Mr. Farr. Why shouldn't we require States that are 
participating in this to be a little more proactive in helping 
to do land management?
    Mr. Scuse. Well, one part of the CRP is the Conservation 
Reserve Enhancement Program--CREP--which we do, in fact, have 
State involvement in. So, I mean, there is part of this program 
where the States are actually putting up some of the funding 
for it. For those areas that are extremely environmentally 
sensitive that the States want to protect, they are in fact our 
partner in this.
    Mr. Farr. The point is that the Federal Government ought to 
be a leader in recommending those things to the States to 
implement.
    For example, if you are going to graze on Forest Service 
lands or BLM lands, you have got to do best management 
practices. We require those standards. So what, and those are 
used, I think, in a lot of purposes for just cattle ranching, 
because they are smart things to do to protect the water 
quality and so on.
    The point is that if the CRP program--is it just going to 
be a payment program or are we really going to provide some 
leadership of knowledge that we have learned over the years of 
how to do this and get it implemented into land use structure 
in this country? Each State has a different land use planning 
but Mr. Dolcini, you know, he knows California, and we have 
land that you can put into ag conservation programs. It is a 
20-year contract for Williamson Act and is automatically 
renewed every year unless you opt out. If you opt out, it 
doesn't expire for the next 20 years. It starts running the day 
that you opt out.
    But that was more to protect those lands from property 
taxation issues. And I just--and California doesn't get very 
much use out of CRP. It kind of shocks me. Why not?
    Mr. Dolcini. Well, the short answer, Mr. Farr, is that CRP 
in California hasn't been that attractive because land values 
are so much higher in California than they are in a lot of 
other States. And so rental rates that we would pay a 
participant under CRP just aren't, you know, they don't pencil 
out.
    Mr. Farr. So none of the soil and water and air and 
wildlife resources get protected?
    Mr. Dolcini. No, we do work, FSA in California has a great 
relationship with the Natural Resources Conservation Service 
and in some instances with the State of California and the 
Department of Conservation there to focus on lands that are 
particularly environmentally sensitive. And CRP does work in 
San Luis Obispo County, in Yolo County, Siskiyou County, a 
couple of other small pieces of the State.
    Mr. Farr. That is because you have incredibly good Farm 
Service folks there to advise the farmers.
    Mr. Dolcini. Well, that is right.
    Mr. Farr. It is their personalities that make it work 
dedication.
    Mr. Dolcini. It is the dedication, frankly, of a lot of 
great USDA employees in the field that have really worked with 
local farmers and ranchers to sell those programs.
    Mr. Farr. Okay, if that is what California learned from the 
program and has very little usage, why can't we help other 
States wean themselves off of this?
    Mr. Dolcini. Well, that is a good question. I mean, 
certainly, my experience in California will hopefully be of 
benefit to my colleagues around the country. And if I can, you 
know, if I can talk about some of the collaborative work that 
we have done as an agency there in the hopes that it will be 
replicated elsewhere, as I know that it is.
    Mr. Farr. I really appreciate that. That is leadership and 
I would like to see some leadership in this program rather than 
just coming back every year and telling us how many contracts 
have been signed, we put a cap on it. It has got to work 
better. We have got to learn something from it.

                    STABILIZATION AND RECONSTRUCTION

    Let me switch, because my time is limited, to Mr. Brewer. 
Are you aware of the State Department USAID's program on 
stabilization reconstruction?
    Mr. Brewer. Yes, sir.
    Mr. Farr. How do you tie into that? I mean we had General 
Abizaid, when he was the theater commander in the Middle East, 
telling us that he would rather have one USDA native speaking 
language expert than 100 soldiers.
    Mr. Brewer. Yes, sir.
    Mr. Farr. That the value of an agricultural expert who 
could speak the language is more valuable. And so we created 
that program in the State Department to especially find career 
people who were linguists and were in area studies and say, 
look it, you can specialize in being kind of a special mission, 
just like you do in special ops that you can do in the 
military, where you pull all your skill sets together 
regardless of what service you are in. And you go in and do a 
special operation, whatever that is. It is not always just 
wiping out people, it is some steps to stabilization.
    And the idea is in sub-Saharan Africa, we are going to need 
people on the ground. You are not going to be able to do any 
food aid programs or anything. They can't afford it. It hasn't 
developed any infrastructure for their ability to grow or you 
are going to have massive starvation, according to the CIA and 
other environmental reports, if we don't build the 
infrastructure on the ground in sub-Sahara Africa.
    We are going to get people that are going to have to live 
out in the boonies, speak the native languages, for Peace Corps 
types. And I don't see, I mean, I would like to know how USDA 
is--you are paying for a lot of this, and are you taking 
advantage of being part of that team that USAID and State 
Department is putting together? They have a training center out 
here in Virginia where you go and get S&R training and you get 
this big jacket that says you have been trained in 
stabilization and reconstruction. It is a whole new career.
    Mr. Brewer. Yes, sir. Thank you for your question, 
Congressman.
    Where we are involved in the efforts that are being funded 
through the State Department is our activities in Afghanistan, 
as well as----
    Mr. Farr. Who takes the lead, does the USDA?
    Mr. Brewer. Well, what we are doing is we are providing 
technical assistance within Afghanistan. We are using, a lot of 
that is being paid for with State Department AID funds.
    Now, within the 2012, our 2012 budget requests, we have a 
request for $14.6 million. That money is to basically do the 
management of the funds that we are getting from the State 
Department and from United States Agency for International 
Development--USAID. So that is our role. We are using that 
$14.6 million to manage these other funds.
    Mr. Kingston. The gentleman's time has expired.

                      CONSERVATION RESERVE PROGRAM

    Mr. Dolcini, I wanted to ask you, on CRP in terms of total 
crop acreage planted, how many acres is that? It is 32 million, 
right?
    Mr. Dolcini. 31.9.
    Mr. Kingston. That is right. So what percentage of total 
crop acres is that?
    Mr. Dolcini. I don't know, sir, off the top of my head.
    Mr. Kingston. I am thinking it is 10 percent, if that 
sounds right.
    Mr. Dolcini. Of all United States crop acreage?
    [The information follows:]

    Currently, there are 31.2 million acres enrolled in the 
Conservation Reserve Program (CRP), of which, 30.5 million 
acres are classified as cropland. This represents 7.5 percent 
of cropland as defined by the 2007 Census of Agriculture. CRP 
costs are fairly constant over time, and over the last 5 years 
have averaged $1.9 billion. You refer to CRP costs being 50 
percent of the crop payment. Assuming this refers only to 
direct payments of $5.4 billion per year, then CRP costs would 
be 35 percent of the direct payment costs.
    You also mention that there is a concern that CRP tree 
plantings in Georgia are over-prescribed. In Georgia, 269,000 
CRP acres are planted to trees, representing about 0.3 percent 
of the private forestland in Georgia. That number includes 
about 195,000 acres of ecologically important longleaf pine 
plantings. Total longleaf pine acreage has declined by over 90 
percent in the Southeast since European settlement.

    Mr. Kingston. Yes. I am thinking that might be right. I 
don't need to know right now, but here is the other question, 
what percentage of the payment programs is it because here I 
have some concern. I understand it is about 10 percent of the 
acres but about 50 percent of the crop payment.
    And that is where I think the CRP does get disproportional. 
Flying over the State of Georgia in small planes, just about 
every stand of pine trees you see is now planted and it would 
appear to me that it is over prescribed because it is not all 
highly erodible land, but the $10 an acre, whatever, is 
something that people are pretty happy about and that is where 
I think we have some concern.

                      DIRECT LOAN DELINQUENCY RATE

    I want to ask you also, though, on rural development, 
excuse me, on your programs in terms of your loan, direct loan 
delinquency rate is 5.9 percent, but the guarantee programs, 
the delinquency rate was 1.7 percent, which is a pretty big 
difference. And I was wondering what you were doing to reduce 
your delinquency rate on direct loans.
    Mr. Dolcini. You know, the dollar amount is a little bit 
lower than the total percentage of direct borrower delinquency, 
so we are just working more aggressively these days with 
borrowers around the Nation. We have done a lot of investments 
in web-based applications that I think are allowing us to keep 
track of the----
    Mr. Kingston. But do you know why it is so high, why there 
is a difference?
    Mr. Dolcini. Between the guaranteed and direct, I don't 
know, sir.
    Mr. Kingston. Mr. Scuse.
    Mr. Scuse. I think if you look at those that are eligible 
for the direct loans versus those, the ones where we do the 
joint loans for the bank, I think there is a difference in 
financial capabilities, number one; and, number 2, if you look 
at our delinquency rate, it is true that the commodity prices 
the last couple of years have been very good, but if you look 
at what has happened to the livestock industry, especially the 
dairy industry, and what the pressures that that group has been 
put under the last couple of years as well as up until recently 
the pork producers, there has been some issues.
    Mr. Kingston. I think that this committee, as much as the 
authorizing committee, we are going to want to take real strong 
looks at ag programs in general, the traditional ag programs, 
and look for ways to reduce and that delinquency rate stands 
out to me, the CRP program, and there are some other things and 
then the GAO report. We are all, I think, fairly united on 
that.
    The other thing that I want to ask you about, MAP comes 
under--I am not ready for you yet, Mr. Brewer, I am coming your 
way.
    Okay. Let me ask you, Mr. Dolcini, but we will start off 
with MAP when we get there.

                  NATIONAL AGRICULTURE IMAGERY PROGRAM

    Mr. Dolcini, on aerial photography you spend $10 million a 
year doing that, approximately.
    Does Google pay you for the map?
    Mr. Dolcini. I don't think they do, sir.
    Mr. Scuse. No.
    Mr. Kingston. They don't. You know, the folks spend $10 
million on lunch at Google, and you can Google, and I think the 
committee has seen this. But this is a USDA map that Google is 
using basically for commercial purposes. I think that is 
something we are going to take a real strong look at.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T8236B.035
    
    Mr. Kingston. And, you know, if it was for the children's 
home back in Des Moines, since Iowa gets all the money, we 
probably had a different view. But since Google is using that, 
not Google, but I think that they are going to have a--they are 
just grabbing it. It is public.
    Mr. Scuse. It is public. They have the ability to have 
access to that and in order to charge for that there would have 
to be some sort of legislation because we don't have that 
ability to charge for that.
    Mr. Bishop. We have the ability to legislate that.
    Mr. Kingston. Yes. We want to look at that.

                        FOREIGN SERVICE OFFICERS

    All right, Mr. Brewer, I think my time is about up but I 
wanted to say this with my 6 seconds, I have had the 
opportunity and insist on the opportunity of seeing your 
employees whenever I travel, including last week in Guatemala. 
And I have got to tell you, I think they are some of the finest 
public employees there.
    I have questions about the missions, which I want to talk 
to you about, that I think my next question to you is why do we 
do this foreign aid? But I have got to say, your employees have 
always impressed me. They are on the ground with the folks. 
They are not afraid to take their coat and tie off. They are 
not just advisers, they are friends in the villages and I think 
that they actually are far more effective than the average 
State Department counterpart. State Department are good, too, 
but I really like that.
    Mr. Brewer. Thank you very much for that, sir. Just to 
quickly let you know, Bob Hoff and Robert Hanson say hello.
    Mr. Kingston. Oh, they were all over me.
    Mr. Brewer. And they say hello. I am very proud of them.
    Mr. Kingston. I would say you question a program and you 
get a lot of friends. Mr. Farr--I am sorry, Mr. Bishop. 
Actually, I want to say Mr. Farr, who has traveled a lot and 
does a lot of the on-the-ground stuff, he was with me, too, in 
it as well.
    Mr. Bishop.

                  REGIONAL DIFFERENCES IN AGRICULTURE

    Mr. Bishop. Thank you very much. Let me just quickly 
respond to some of the comments from Mr. Latham and Ms. DeLauro 
with regard to direct payments as we look forward to the Farm 
Bill discussions. I hope that you and the Department and the 
administration and my colleagues will understand that these are 
regional issues when it comes to direct payments, when it comes 
to CRP and the overall safety net for the total agricultural 
portfolio and that no cookie cutter approach will work, that 
there are different crop portfolios for different regions of 
the country and they require different kinds of support.
    And when we develop our farm programs, what works in Iowa 
with regard to direct payments may not be the same, have the 
same effect as it would have in Georgia or the Southeast, 
because the portfolio of crops in the Southeast are totally 
different and the farmers have different needs and have a need 
for different kinds of support, including CRP.
    Let me just shift gears for a moment, though, and you can 
comment if you like.

                     SOCIALLY DISADVANTAGED FARMERS

    But I want to talk about the minority farmer support by 
FSA. A big part of the direct and the guaranteed farm operating 
and ownership loan funds is targeted to the socially 
disadvantaged borrowers based on county level demographic data. 
Although the targets vary by loan program and by county, about 
14 percent of the funds are targeted to socially disadvantaged 
borrowers. A key performance measure for the farm credit 
programs is the percentage of beginning farmers, the racial and 
ethnic minority farmers and women farmers that are financed by 
FSA.
    Can you tell us what the total percentage of loan farm 
funds and the total dollar amount were that were actually 
targeted and received by the socially disadvantaged farmers 
last year? And if you have it available, can you provide the 
data for States of Georgia, California, Connecticut, Wyoming, 
Washington, Mississippi, and Iowa?
    Mr. Scuse. Congressman, to your last question, I don't have 
those numbers with me, but we will be more than glad to get 
those numbers for you and for the record.
    [The information follows:]

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                         AGRICULTURE SAFETY NET

    Mr. Scuse. And to your first comment, you are exactly 
right. There are regional differences in the United States that 
do affect the different programs, whether it be, you know, CRP, 
direct payments or whatever. So there are regional differences, 
and that is why the discussion needs to take place within 
Congress for those programs because of those regional 
differences.
    Mr. Bishop. The bottom line is we have got to make sure 
that for our national security purposes, for our economic 
security purposes, for our health purposes and our capacity 
that there is a safety net. When prices are high, the programs 
perhaps are not necessary, as necessary for our farmers. But if 
there is some kind of disaster, if there is a problem or if 
there is a supply and demand problem, then our farmers will 
need to have that support so that safety net has got to be in 
place all the time. All the time it may not be needed, but 
whatever framework we put in place has to be adaptable to 
reflect the economic exigencies and other national security 
exigencies that we may have, because we don't want to ever be 
in a position of having to be able to get our food and our 
fiber from outside of the country because our own farmers can't 
produce it.
    We are like that now with national security with the steel 
industry. We can't even build battleships with our own steel 
produced here. We got to import it.
    So this is a question I would hope that would be on the 
table and considered when we develop farm policy long term with 
the Farm Bill and with our budgets because we have got to 
maintain capacity.
    Can you respond to that?
    Mr. Scuse. As I said in one of my earlier remarks that we 
believe that this mission area, all three agencies do provide a 
safety net, a critical safety net for our farmers and ranchers 
throughout the United States, whether it be a loan program or 
the other programs administered by the Farm Service Agency, the 
Risk Management Agency and the crop insurance they provide or 
the great job that Foreign Agricultural Service does.
    Mr. Bishop. Let me interrupt you to say that the farmers 
have given good reviews on the last Farm Bill. But if we go and 
tamper with it, you know, something that the farmers think is 
not broken, other than the deficiencies, the fraud, waste and 
abuse and the overpayments, that type of thing, it seems to me 
like, you know, we are fixing something that is not broken.
    Mr. Dolcini. Mr. Bishop, I do have some good statistics to 
report on that very question. You know, you acknowledge the 14 
percent goal. FSA has exceeded that goal over the last several 
years and we have gone from about 16 percent in 2007 to about a 
little over 19 percent last year.
    I mentioned to Mr. Farr that, you know, we have done a good 
job in California and I think a lot of States can take a lot of 
credit for really going the extra mile when it comes to 
reaching out to farms and ranchers in our loan programs and our 
farm programs. But we will get back with you on the specifics 
of those other States, sir.

                      MARKET ACCESS PROGRAM (MAP)

    Mr. Kingston. Mr. Brewer, I wanted to ask you about the MAP 
program because there was an amendment on the floor to 
eliminate it and our committee defended it on a bipartisan 
basis but, you know, the $200 million has been called corporate 
welfare, and I am not sure how much longer we can defend it. 
But you also have the National Export Initiative, $20 million. 
And I am not sure where those two overlap and what we can do to 
help MAP year after year.
    Mr. Scuse. Can I start while the Administrator, you know, 
gets his paperwork?
    Mr. Kingston. Yes.
    Mr. Scuse. The MAP program and the Foreign Market 
Development Program both are extremely important, and here is a 
number that I hope will help you defend these programs.
    These two programs, our data shows that for every dollar 
that is invested in these programs there is a return of $35.
    Mr. Kingston. Well, and I am going to have to interrupt you 
on that. You know, all programs say that. I mean, if you were 
in our desk for one day you would have five groups from health 
care to education, whatever.
    Mr. Scuse. That are going to say the same thing.
    Mr. Kingston. And that is the problem. And some of them are 
true, and I do think you do have an investment issue here.
    Mr. Scuse. Congressman, look at our results. I mean, look 
at 2008 and the record imports that we had in 2008 of--or 
exports, I am sorry, of $114.9 billion and you look at our 
exports this year projected at $135.5 billion. I mean, we are 
exporting products. We are helping our farmers and ranchers, 
and we are helping offset this Nation's trade deficit.
    So, you know, I think our numbers prove, and we have got 
the proof to back up those numbers.
    Mr. Brewer. Congressman, if I could add just one thing, you 
are absolutely right about the programs saying that. But in the 
case of MAP, not only is the program saying that but the 
cooperators are saying that.
    U.S. Grains Council has come out with their own study that 
is showing that for the amount, the investment that we put in 
there, they are getting $50 in return in investment. So it is 
not just the program saying that, it is the participants as 
well.
    Mr. Kingston. Once you establish a bulkhead for a product 
in a country, do you withdraw the funding and move to another 
country and try it? You know, try to expand it or does it just 
become, okay, here is the floor?
    Mr. Brewer. Well, the MAP program is sharing what we put in 
and our cooperators put in as well. We followed the strategy 
and we worked closely with them and worked with their strategy, 
industry strategy of where they feel they need to be. And so 
that is how the movement goes primarily, is working closely to 
find out what markets are strong for their products.
    Mr. Kingston. Politically speaking, we hear from the 
Washington people only, not from the folks back home on MAP and 
we don't ever hear from them until Jeff Flake or somebody 
offers an amendment to cut them.
    I look at programs like that very suspiciously because, you 
know, if we are not hearing it from the grassroots and we are 
not hearing it year around, and if we can't see it or feel it 
or touch it, which we can't, it is just--I think that your 
signal to them right now should be MAP is in trouble.
    Mr. Brewer. Sir, interesting you should say that. And I 
have got good news for you, because two of our latest 
cooperators are actually from Georgia, the Georgia Pecan 
Growers and the American Biomass Trade, both located in 
Georgia, are new cooperators, participants in MAP. And I will 
make sure to get the message to them that they need to make a 
little bit more noise, because I am certainly hearing from them 
and to the value that the MAP program is providing.
    Mr. Bishop. So am I.
    Mr. Brewer. So I will make sure that they need to step up 
and reach out to you. And I will tell them that you said hello 
and that they need to reach out to you.
    Mr. Kingston. Yes. Well, tell them that Mr. Flake says 
hello, too.

                              FOREIGN AID

    Okay. You know, the national objectives to foreign aid--and 
you and I have talked about in a little bit.
    Mr. Brewer. Sure.
    Mr. Kingston. But, you know, you did have the goodwill 
aspect from Cold War left over. You had the development from 
the 1949 Truman Doctrine saying we are going to help 
undeveloped countries, and then there was the surplus food--we 
don't have surplus right now, correct? And then to develop 
export markets. You know, with MAP, with free trade agreements 
and the money, we kind of have number four handled. I think if 
Truman was alive today and looked at what we have gotten for 
foreign aid, billions of dollars and many years later, I think 
he would have to say we haven't done anything. And I am not 
even sure about the goodwill. Do you feel like we get goodwill?
    Mr. Brewer. Sir, let me again, as I heard your question.
    Mr. Kingston. My time has now expired. Here is what I am 
going to do. I will come back. You are going to tee it off with 
that. Just write that down. We will have our continued dialogue 
about it.
    Ms. DeLauro.

                        DIRECT PAYMENTS BY STATE

    Ms. DeLauro. Thank you very much, Mr. Chairman.
    I would like to make a request. I would like to get a list 
by State of the direct payments that we put out. I don't know 
if there is a way to identify who is getting direct payments. 
That may be proprietary information.
    But to the extent possible, what I would like to do is to 
know about those direct payments and, again, because--and I say 
this to my colleague from Georgia, this is a payment regardless 
of risk that is involved and it doesn't mean crop loss. It 
doesn't mean decline in price or anything else, which I 
understand. That is a different system. But the direct payment 
system is one that I think we need to take a hard, a hard look 
at.
    Let me just ask a couple of questions on just the cuts that 
are forthcoming in H.R. 1, depending on what happens.
    Well, anyway, the bill that was passed in the House in two 
areas, the FSA and in FAS. You have FSA, 2,200 county offices, 
50 State offices, a large number of mandatory discretionary 
programs.

                       FUNDING REDUCTION IMPACTS

    According to USDA, funding at the 2008 level would result 
in at least a 39-day furlough for all FSA employees. In return, 
that would result in delays in processing payments and loans. 
After the proposed cuts in H.R. 1 become law, how many FSA 
employees would have to be furloughed and for how long? If you 
don't have that answer now, I would like to get that answer.
    How many local county offices would close? All of them? If 
these offices are closed, where would farmers go for 
information about their payments, loans or disaster assistance? 
And would the cuts result in delays in processing payments and 
loans?
    Comparable to FAS, you have got 100 overseas offices, a 
major mission is to facilitate the export of U.S. agricultural 
products; 2011 budget proposed a $54 million increase for 
export promotion activities as part of the administration's 
NEI. It also included $14.6 million, as you pointed out, for 
reconstruction, stabilization in Afghanistan, Pakistan, Iraq 
and Haiti.
    If the proposed cuts in H.R. 1 become law, how many 
employees would have to be furloughed and for how long? Would 
it lead to closure of some overseas offices? How would the cuts 
impact the agriculture reconstruction and stabilization work in 
Afghanistan, Pakistan, Iraq and in Haiti?

                          WORK IN AFGHANISTAN

    I just mentioned to you that I came back from Afghanistan. 
I was there last weekend. And I will just tell you that the 
people that I met with, agricultural team OIC, USDA, Eric 
Grant, USAID Afghanistan. I met with the minister in Laghman 
Province who deals with Ministry of Agriculture, Irrigation and 
Livestock and the parliamentarians that have jurisdiction over 
the agriculture section, an area I was particularly interested 
in from several points of view.
    One, I want to know what we are doing and what the 
production piece is. And, by the way, I would compliment your 
folks as well. These are people who came to me while I was 
there saying do not cut back, whether it is USAID or USDA, 
because we are beginning to take root, no pun intended here.
    And the other piece for me is how integrated women are 
becoming into the farming efforts as well because the world's 
farmers are women.
    And I also asked, what are we paying for? I would like to 
know what we are paying for. They do not need tractors. They 
need basic farming tools to teach people basic agricultural 
training, to make the land more productive and sustainable, and 
how that, in fact, what we will leave when we do leave, which 
we need to transition as quickly as we can so that they can, 
the Afghans can take care of themselves, in my view.
    But that is why the importance of understanding what these 
cuts mean overall. So I would like to get that data and that 
information from you as quickly as possible before we move 
further on what these cuts are going to be, whether it is for 
April 8 or beyond, where we are going to be in terms of these 
efforts and the FSA piece as well.

                       DIRECT CONSERVATION LOANS

    I would just reinforce the loan issue. I have a couple of 
questions about crop insurance, but maybe I can do those for 
the record. I don't know how long we are going to be here. But 
to support my colleague from Georgia here on the direct 
conservation loan program, I would just lay out these 
questions, because zeroing out the direct loans skews the 
program to larger loans, larger operations away from those who 
have the most difficult time securing credit to begin with.
    Has the Department done any analysis on how it would 
fulfill their priority mission contained in the Farm Bill if it 
did not have direct conservation loan funds? Do you have an 
analysis of which categories of borrowers would and would not 
get funded with a single guaranteed loan option, and what is 
the justification for having both the direct and guaranteed 
loan options for farm operating loans and farm ownership loans, 
but having only one option for the conservation loans?
    And I will get those to you in terms of answers for the 
record. Thank you, Mr. Chairman.
    Mr. Scuse. Thank you, Congresswoman.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] T8236B.037
    
    [GRAPHIC] [TIFF OMITTED] T8236B.038
    
    [GRAPHIC] [TIFF OMITTED] T8236B.039
    
    Mr. Kingston. Thank you.
    Mr. Brewer, the floor is yours.

                           FOOD AID PROGRAMS

    Mr. Brewer. Okay. Thank you, Congressman.
    I think what I wrote down is why do we still do these food 
aid programs? I think that is the gist of your question.
    The bottom line, we strive to promote self-sufficiency in 
the country that we work in and work with sustainability, self-
sufficiency. These are things not only in the interest of the 
country that we prioritize, that we work with, that we--part of 
our tool kit is food aid, that we do. Sustainability is 
something that is just extremely important. It helps us in our 
trade area, it addresses our trade interests, it addresses our 
humanitarian concerns. It addresses our concerns about women 
and education and just those issues are in their interests and 
in our interests.

                          PERFORMANCE METRICS

    Mr. Kingston. Do you have a metrics that shows progress? 
One of the things that we had last year, very telling, we had 
the GAO in and asked them which NGOs were effective and they 
did not have an answer. The reason they did not have an answer 
is they did not have a clear signal as to what we were trying 
to accomplish.
    And one of the criticisms is, I think is a solid criticism, 
on our foreign policy, particularly as respects the Middle 
Eastern war is well, what are the metrics of progress and what 
is the vision here? And I think the vision is cloudy and the 
results are a little cloudy. You know, it has been suggested 
that, well, we get friends in there looking at the Sudan. And 
one of the things I am always interested in is Sudan votes with 
us 10 percent of the time in the U.N. But they get $569 million 
in Public Law 480.
    Ecuador gets zero in Public Law 480, and they vote with us 
25 percent of the time. So they are doing better and they don't 
get anything from us.
    Bolivia gets zero and they vote with us 30 percent of the 
time.
    Togo gets zero and they vote with us 46 percent of the 
time.
    Colombia votes with us 60 percent of the time and we are 
not moving on a free trade agreement with them, which is a huge 
problem in Colombia and Panama and in South Korea right now in 
terms of if we want to make friends in three countries, there 
is three countries right now that we are really disappointing.
    Nambia gets zero and they vote with us 27 percent of the 
time compared to Ethiopia, which votes with us 17 percent of 
the time and they get $413 million in aid.
    So, you know, the argument promoted not necessarily by 
USDA, but by State Department as we get friends, we get 
goodwill. There is no result in that that you can see in the 
U.N. Voting record. It would be, I think, helpful to us if in 
your discussions with the State Department that you say, hey, 
look, what is the deal on this, because our constituents use 
this voting record as a way to figure out who our friends are 
and who our friends aren't.
    And the voting record really, the information that goes 
into it needs to be changed or modified because this isn't a 
fair picture, I don't think, when you say Ethiopia is with us 
17 percent of the time. I know that they are with us more than 
that on things that are of our interest, but this is where our 
constituents are going to go, and that is why some of the 
polling numbers that we have right now say the number one thing 
you should cut is foreign aid, you know, and foreign aid is a 
small percentage of the budget but it is enormously popular in 
terms of all the problems of the world in terms of cutting 
spending.
    You know, stability, the Ivory Coast right now is possibly 
going to have a civil war or very close to it right now. We 
have foreign aid to them, but it hasn't helped in terms of 
stability.
    Here is an interesting one. Nigeria doesn't get Public Law 
480 money. They vote with us 63 percent of the time, which I am 
not even sure if that is accurate. We will have to double-check 
that one.
    But I really feel very strongly that we have to have 
metrics. We go look at these programs and the typical approach 
to charity is kind of a celebrity in charity. Oh, I am going to 
come here because I am from the West, and I am going to feel 
real good and I am going to give the villagers some food and I 
am going to walk back and my halo has never shined brighter. 
And, you know, 20 years down the road nothing has happened.
    I was in Zimbabwe once, I think I told you this, looking at 
a small plot of food. And, Rosa, this is something that I think 
I mentioned to you, seven NGOs in the backyard of a guy who had 
a yard smaller than this room teaching him how to plant 
tomatoes and lettuce and all that.
    And I would say you know what, the folks in Zimbabwe aren't 
that dumb and they are not that dependent. What you have done 
is you have kept seven NGOs busy and all the people who come 
over there feel good about themselves, but you are not helping 
this.
    And the irony is right across the street, if you call it a 
street, was a guy who had a little barber shop going. And he 
had generated electricity because, as you know, they don't have 
electricity all the time. And he was cutting hair out in his 
yard and he had a chair and he had a little mirror up on a 
tree. And he had a little bamboo kind of room that people 
walked in. And I thought that is the guy you ought to be 
helping. He is the entrepreneur. He is the guy who could go out 
there and create jobs.
    He doesn't get a nickel of it and the other guy has seven 
NGOs in his backyard banging into each other of college 
students who were telling him how great he can be. I have a 
feeling he knew how to plant tomatoes. And that is something 
that haunts the heck out of me, especially coming off the book 
``Dead Aid,'' which if you haven't read, I am hoping you will. 
If you haven't, I will send it to you. Have you read it?
    Mr. Brewer. I have not read it.
    Mr. Kingston. My time has expired. I will get back to 
preaching with you in a minute. You and I have had these 
conversations before. We are going to continue to.
    Mr. Farr.

                            AGRARIAN REFORM

    Mr. Farr. Well, Mr. Chairman, I will just follow up on it. 
I was a Peace Corps volunteer in Latin America. And all of the 
countries that we are dealing with that are sort of at-risk 
issues are agrarian countries and we have got--it seems to me 
interesting to be talking to Mr. Brewer some day that we have 
got this conflict where we want to make the world dependent on 
our food and that is why we set up these great export programs 
and loan people money to buy food from us. At the same time in 
order to stabilize these countries, we are going to have to get 
them to grow food that is going to sell in the world market. 
Yucca, there is not a lot of--there is not a world demand for 
yucca, which is the staple of Colombia, but so and I don't 
think you are going to stabilize these countries until you can 
get their agrarian section in productive agriculture. And some 
of that--a lot of it is they don't necessarily grow the 
products that we grow and certainly aren't going to grow it 
to--but we are not going to get papayas from many places in the 
United States nor bananas nor coffee or any other kinds of 
things that we import.
    So it is about getting the people who can be on the ground 
who can speak the language and, first of all, see if the 
farmers even want to grow this stuff. You can't make people 
grow something they don't want to grow. They are not going to 
be good at it. And if it is for their own market, we have all 
these cultural biases about food. So first thing I learned is 
it is really hard to change cultural habits about eating. We 
can see that in how Americans have to struggle with dieting. 
But just try to deal with other countries who don't even want 
to eat the crops that we grow. So it gets down to the ground in 
how we have the right kind of people. And I just hope that our 
foreign aid presence evolved really ought to be in agrarian 
countries, as Mr. Kingston is saying and Ms. DeLauro talked 
about and Mr. Sanford. It needs to be almost a lead agency. 
Diplomacy is not what is going to bring these countries to some 
kind of economic stability. It is going to be in agrarian 
reform that allows people to have ownership of land and they 
can go out and start financing their land like everybody else. 
Small farmers can become very successful. You don't necessarily 
have to have a big corporate farm to be successful.
    So I would hope that we use our limited dollars a lot 
smarter and leverage with other Federal agencies. They need us 
more than we need them. Now, if the military recognizes that 
economic development isn't going to begin just by the military. 
It is going to begin by, as General Abizaid said, an ag expert.

                            MARKET PROMOTION

    Anyway, one of the things that I would like to just ask is 
our market promotion, you said it is essentially--we are in 
about five major export markets. Is Mexico one of those?
    Mr. Brewer. I am sorry, sir, five major----
    Mr. Farr. You are reducing non-trade barriers in five major 
export markets, increasing agriculture exports by $2 billion 
per year. Is Mexico one of them?
    Mr. Brewer. Yes, sir. I believe it is one.
    Mr. Farr. It is the number one trade partner with 
California. Because I am very interested in how you do that. A 
lot of it has to do with border issues, inspections. We are 
trying to get a lot of product over there as fast as possible 
because it is all fresh stuff, the same thing getting--we have 
a lot of California growers who are growing in Mexico and will 
continue to do so particularly with labor issues and being able 
to get Mexican labor here. If we can't get Mexican labor in the 
United States then the United States is going to go hire 
Mexican laborers in Mexico. The biggest tomato grower in the 
country is now all in Mexico. They have abandoned its U.S. 
investments.

                           TRADE WITH MEXICO

    Mr. Scuse. We meet with the Mexican Government through the 
Consultative Committee on Agriculture--CCA--to look at barriers 
and how to work through some of the issues. You know that there 
has been an issue with Mexican trucking and the tariffs that 
were put on. The administration has worked very hard with the 
Mexican Government to resolve that situation, and we look 
forward to that being resolved in the very near future. But we 
continue to have dialogue with the Mexican Government just like 
we do other governments where there are issues or barriers that 
are preventing our products from getting into those countries. 
So we continue to have the dialogue and open up--hopefully open 
up some of those markets.
    Mr. Farr. I think what you are hearing from us as a 
committee is, if you are going to deal with cuts, and there are 
going to be other members of this committee who want to cut 
across the board, we need to know what the impacts are going to 
be, particularly if this is so fundamental to our foreign 
policy, our trade policy, our relationships with our NAFTA 
partners and hopefully our partners in FTA and others. I think 
the Ag Department may be able to have a better voice here on 
the Hill than the State Department on those issues.
    Mr. Scuse. We need that ability to have that dialogue with 
those countries that have barriers in place so that we can go 
through those and increase our trade or reopen some of the 
markets that have been closed to us.
    Mr. Kingston. The gentleman's time has expired, but I do 
want to say I think on the truck issue that the people who are 
directly involved in it need to be talking more about it far 
more than the MAP beneficiaries because it is a huge issue and 
it is so important to our friends and neighbors in Mexico that 
this thing work. But if we want to help Mexico and these South 
American countries get away from--having a little more 
independence from the drug cartels and some of the other things 
that are hurting their economy. That is one of the ones that 
really is so important to Mexico. But we don't hear from 
constituents on it. Now you might in California.
    Mr. Farr. Yes, I do.
    Mr. Kingston. But we don't hear what I think we should be 
hearing.
    Mr. Bishop.
    Mr. Bishop. Thank you very much.

                          FSA STAFF REDUCTION

    Let me just move to the FSA employment reduction issue. FSA 
is projected to execute a structured buyout of 504 Federal 
employees to meet a proposed 10 percent reduction of the 
Federal workforce in fiscal year 2012, which is expected to 
lead to a net $27 million reduction in salaries and benefits in 
2012 and a total savings of $174 million through 2015.
    I am more interested in the rationale and the plan behind 
the proposed reduction of the 504 employees. Can you share with 
us on a regional basis where the reductions will occur around 
the country, and if you don't have the information can you 
submit it for the record by region and by State?
    Can you tell the subcommittee if the agency also proposes 
to reduce the number of FSA State offices concurrent with the 
reduction of the 504 employees and, if so, how many and where, 
which States? Are there any levels that are targeted staff 
performance goals in terms of loan servicing by program and 
other related goals and objectives by State and by individual 
offices, and will those objectives need to be modified if there 
is a reduction of the 504 employees pursuant to your plans?
    Mr. Scuse. Thank you, Congressman.
    We are not proposing in that to reduce or close any State 
or county offices. Let me start by saying that.
    Mr. Bishop. That is good news.
    Mr. Scuse. I knew it would be.
    We are looking at our Federal staff that is here in 
Washington, D.C. as well as other Federal offices, Kansas City 
would be another example of where we have Federal staff that we 
need to look at the jobs that are being done and how we can 
downsize government and be more effective and make it more cost 
effective. So we are going to be looking at all of our Federal 
agencies other than those that are in the State and county 
offices to get this reduction of 504 which, as you mentioned, 
is 10 percent of our workforce.
    Mr. Bishop. Thank you. I appreciate that very much because 
I am particularly concerned with the ground level where the 
rubber meets the road in terms of the delivery of services and 
the mission of your agency and the convenience, the customer-
friendly operation of those offices is very, very vitally 
important to the folks in our area, particularly throughout the 
Southeast and in my district and in Georgia.
    So that is a very, very serious concern to me, and I 
appreciate your comments there because there is lot of angst 
right now about the possibility of offices being closed or 
consolidated which will hamper even with the budget cuts, 
particularly with budget cuts, the ability of your customers to 
access the services that the agency provides.
    Mr. Scuse. Mr. Dolcini has something he would like to add.
    Mr. Dolcini. We are engaged in looking at the series and 
classifications of these Federal positions and where they would 
be easiest to achieve.
    But Mr. Bishop, I just want to echo your comments about the 
dedicated county office staff around the Nation. When I came to 
Washington, I had managed 30 county offices and about 200 
employees in the State of California to a network of 2,248 
county offices with roughly 15,000 or so Federal and county 
office employees. These are the men and women who for the last 
7 or 8 decades have delivered farm programs across the counter 
to the Nation's farmers and ranchers. And I was telling Mr. 
O'Brien that most FSA county offices are like coffee shops in 
many respects. You go to talk with your fellow farmers and 
ranchers to learn a little bit more about local agricultural 
issues. They really perform an essential service throughout 
rural America.
    So I appreciate your comments.
    Mr. Kingston. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman. I am going to submit 
questions for the record on crop insurance and the issue of 
improper payments.

                       CROP INSURANCE ERROR RATE

    Mr. Kingston. If the gentlewoman will yield. Is this your 
last question?
    Ms. DeLauro. I am going to wrap up.
    Mr. Kingston. I think you might want to throw something at 
Mr. Murphy. He has had a free ride, and he has been sitting 
there.
    Ms. DeLauro. But I am going to submit them for the record 
because I want to make another point, and I know we have gone 
over the time already.
    Two North Carolina farmers this week were sentenced for 
their part in a multimillion dollar crop insurance fraud 
scheme. Earlier this month a California farmer was found guilty 
of defrauding the Crop Insurance Program, faces 30 years in 
prison and a million dollar fine. And I understand the $6 
billion saved, $4 billion, there is $2 billion that also in 
fact does add to the baseline of the Farm Bill, which we are 
going to deal with next year. I will put that aside for the 
moment.
    But I will submit my questions with regard to the budget 
cuts, your ability to improve quality control, reduce improper 
payments. And while the error rate for crop insurance is 5 
percent, it is higher than the error rate for the nutrition 
programs, which is 4\1/2\ percent. And what are some of the 
measures that you are going to be taking to reduce the error 
rate.

                           FOOD AID PROGRAMS

    I would like to just get back and I will wind up with this. 
This is on the foreign aid issue and the food aid programs.
    What we do is we feed starving people, and it is based on 
need. I suspect that these starving people haven't any idea how 
many times that their government votes with the United States 
or not. And yes, we do this because it has to do with regional 
stability, which is a reality. And I think our defense people 
would be the first to talk about regional stability and food 
aid programs.
    Mr. Kingston and I have talked about this a lot, so we are 
friends underneath all of this that we get engaged in here. But 
he often brings up the book that was written by Dambisa Moyo 
from Zambia, Ph.D. In economics, and she talks about the book 
is what, ``Dead Aid.''
    But I will say that what she does is that when she talks 
about foreign aid, Ms. Moyo said that she means systematic 
bilateral or multilateral aid. On page 7 of her book she says, 
``This book is not concerned with emergency and charity-based 
aid.'' She is concerned that these types of aid can encourage 
the view that all aid is good. She recognizes they are 
comparatively small efforts and that emergency aid in 
particular has, ``obvious and fundamental merits.''
    Food for Peace is largely an emergency program. The World 
Food Program is an emergency program and we have found many 
times over that of nations who have been the recipients of aid 
during a crisis have become donor countries when they are out 
of that crisis and there are other areas of the world that need 
that help.
    McGovern-Dole she talks positively about foreign aid 
programs that she calls conditional cash transfers and provided 
only if the recipient does some specific good thing. He or she, 
and it is mostly ``she'' attend school regularly. If you saw 
the faces of those little girls in Afghanistan and what that 
education means to them and their families sending them because 
there is a food component. Otherwise these little girls do not 
get the advantage of being either educated or fed.
    So her criticisms do not apply to McGovern-Dole or to most 
of the Food for Peace. It is important to recognize that when 
we do talk about aid.
    I would also add that she strongly criticizes farm 
subsidies in the United States and in the European Union, 
particularly--and it is not pointed in any direction--cotton 
and sugar subsidies, making it impossible for African farmers 
to compete in the global marketplace. And I have her words 
here. America's cotton farmers receive more in subsidies than 
the entire GDP of Burkina Faso, three times more in subsidies 
than the entire U.S. Aid budget for Africa's 500 million 
people.
    I could go on. Sugar subsidies hurt Africa. OXFAM estimated 
that the regime has deprived Ethiopia, Mozambique, Malawi in 
potential export earnings. So we need to talk about the aid and 
look at it in its broadest perspectives of what we do with the 
food aid that we provide and today, quite frankly, we are 
providing it on an emergency basis.

                             SUSTAINABILITY

    One of the things we are trying to do in Afghanistan and 
other places with USDA presence and with USAID presence is the 
opportunity for these farmers to become sustainable, that their 
land becomes more productive with some of the talent that we 
have. That is what Norman Borlaug was all about and what we 
fund in this bill. So that in fact they can raise their 
productivity, feed themselves so that we can lessen what we do 
here. But it has a regional stability that we can not buy 
anywhere in terms of our own security.
    Mr. Kingston. Now if I were a smart aleck, I might say like 
in Rwanda or the Ivory Coast, that kind of stability.
    Ms. DeLauro. Ivory Coast is a different entity.
    Mr. Kingston. What about Rwanda? What about Afghanistan? 
They got food aid before 2000. $73 million.
    Ms. DeLauro. And quite frankly, we should have done more 
about Rwanda than we did at that time and I hope we have 
learned some lessons from Rwanda.
    Mr. Kingston. I do, too.
    Rosa, you are finished? Mr. Sanford.
    Because I do want to take another round and I might respond 
to some of this.

                          FOOD AID INCENTIVES

    Mr. Bishop. In conjunction with the line that the 
gentlelady just finished, with regard to our aid having 
conditions attached to it, I would like to put it in the 
context of our global competitor, China, that is engaging in 
aid all across the globe now, particularly in Africa where they 
give their aid without any strings attached. So it places us in 
a difficult competitive position to try to attach strings and 
requirements and conditions upon some of the aid that we give 
to these countries in Africa if we want to generate goodwill, 
which obviously we want to, and create stability, which 
obviously we would like to have. But to do it by the carrot-
and-stick approach with the incentives as conditions when we 
have got China on the other hand with a pocket full of money, 
not experiencing the kind of budget shortfalls that we are, and 
they are giving their aid without any strings attached at all.
    How do we deal with that?
    Mr. Brewer. Should I respond to that rhetorical?
    Mr. Bishop. In the context of some of the suggestions that 
Ms. DeLauro was making.
    Mr. Brewer. Congressman, I think, again, I don't want to 
compare our way of giving aid and our values and why we have 
done it to China because we have given much more than China. I 
mean, according to statistics from World Food Program we have 
given 41 percent and they give less than 1 percent. So I mean 
we are getting the job done. We are clearly showing the value 
and the importance we give on this.
    Certainly for the effectiveness of our programs, again as I 
said earlier in response to an earlier question, our three 
major food aid programs have specific purposes behind them. And 
so to not have a strategy or incentives in which to graduate 
and which to go for economic development, et cetera, kind of 
defeats the value of the program. So there is merit to that. 
But I understand what you are saying.
    Mr. Bishop. I agree with you. There is merit and obviously 
we would like to encourage certain behavior and would like to 
utilize our help as an incentive to encourage that behavior. 
However, it makes it much more difficult when we have another 
actor in the global scene, the global neighborhood that is 
giving out the goodies without strings attached. And to that 
extent, it creates friends where we may be losing our 
influence.
    And apparently at the escalating pace that is developing 
with the Chinese involvement now nationwide and our beginning 
to look at pulling back, particularly with our budget crisis, 
it seems to be putting us in a less competitive situation going 
forward.

                              FOREIGN AID

    Mr. Kingston. All right. Are you finished?
    Let me say this. I think, number one, I think it would be 
good to have a hearing just about foreign aid in terms of USDA. 
I think that would be helpful.
    Also, I am in agreement with emergency aid. However, I 
would argue that on your tenth year, it is not emergency aid. 
Ethiopia was mentioned, I think, 11 times in the Old Testament; 
it is one of the oldest countries in the world. When I lived 
there, the population was 14 million. Today it is 80 million. 
And I think that there is a certain view in the West that, oh, 
well, we are coming here, we are going to feed you because we 
feel guilty about ourselves and you are undeveloped still and 
you can't take care of yourself. You know, the example in the 
book, and I am hopeful you will get past page 7. But I am very 
glad that my good friend has that book. I want to sign it for 
you. I am going to give one to Mr. Brewer, too.
    Ms. DeLauro. I don't think I will pay any attention to what 
you say.

                      FOOD AID AND ENTREPRENEURISM

    Mr. Kingston. I am glad you are reading good literature. 
But it gives an example of okay, you are in Senegal, and I have 
been to your guy there on the ground, his name is David 
something, absolute champ of a guy. We went out to a feeding 
program, and by the way, where did it go--we used to have our 
stack of rice that we give. It is not called rice. Can't quite 
read it. That was something that this committee did. And to me 
I think it is nice that when you talked about the adventurism 
of China, for us to go into remote spots and see the package of 
food that says ``USDA'' on it, I think that promotes good will. 
But the example in this book was okay, you got a guy in Senegal 
and he has a mosquito net company and he's got five people and 
they are sitting around and they are making nets and they sell 
these nets for $20 each. Each of the employees has five or six 
dependents and so of the five employees maybe you could say 
there are actually 20 to 30 people who are living off the 
mosquito net business.
    And then celebrity of the week comes through and says oh, 
they are having mosquito and malaria problems in Senegal. Why 
don't we dump on the market 200,000 free mosquito nets? 
Celebrity goes home feeling real good and makes all the right 
circuits, the cocktails, the halo again shining brightly. But 
what happens to that entrepreneur? We have killed him. What 
happens to those five employees? They are out of work. What 
happens to the 25 dependents? They are gone, too. We have an 
angle on a lot of our food aid, and I didn't really realize how 
strong it was until I got this gavel. And guess who is a big 
proponent because I have said why don't we do vouchers; if we 
really want to teach people how to fish, why don't we do 
vouchers? Suddenly do you know who is calling on me is American 
shippers. Interesting. I have been on this committee for many 
years. Never heard from them. Did you know they had such a dog 
in the fight? Did you know they were so involved with food aid?
    Ms. DeLauro. They ship it, and it is by law they ship it on 
U.S. carriers.
    Mr. Kingston. They are extremely charitable about it, and I 
know they ship it at cost. Isn't that right? How much do we 
spend for American shipping of this food aid? How much do you 
think it is? How much of your budget goes to shipping?
    Mr. Brewer. I know in one of our programs we have $40 
million--I think it is the Public Law 480 program, we have $40 
million in Commodity Credit Corporation--CCC--funds that are 
for that. And then when that----
    Mr. Kingston. How many programs have vouchers where you are 
actually doing what we are pretending to do, letting people 
become independent by giving them vouchers to create their own 
mosquito net type companies but for food?

                        REGIONAL FOOD PURCHASES

    Ms. DeLauro. That is different than food. USAID was 
different, it is foreign aid. This is food aid. But your point 
is well taken because we had a pilot program, I think it is $25 
million, to deal with this committee to look at how you dealt 
with regional purchases, et cetera. Now the next Farm Bill will 
be an opportunity to look very--I think you know, you are 
right. I mean, this is what the point is. Food aid is 
different.

                          INTERNATIONAL NEEDS

    Mr. Kingston, if you are starving, there is, if you are 
starving for a year, you could be starving for 5 years. We have 
got places in the world where they are starving and it has been 
continuous. Do you say well, hey, the food aid is there for 5 
years; you can starve after that. Because that is not the 
point.
    Mr. Kingston. But the point would be for a country as old 
as Ethiopia that, okay, because of the Italians and the Nazis--
I mean they had some real problems in Ethiopia with stability 
and okay, there has to be metrics that are moving folks towards 
this independence where they don't have to rely on American 
food.
    Ms. DeLauro. Your book talks about Ethiopia and Malawi, et 
cetera, and says here is why cotton and sugar subsidies hurt 
Africa. This is OXFAM. Estimates that the regime has deprived 
Ethiopia, Mozambique of potential export earnings of $238 
million since 2001.
    Mr. Kingston. I am not here to defend cotton or sugar.
    Ms. DeLauro. But I am just saying----
    Mr. Kingston. And absolutely because I will up you one, 
too. Why don't we do--because Colombia, I don't know the 
product that Mr. Farr talked about, but they export the heck 
out of flowers and they will do a lot more with FTA which we 
can't seem to move. If we want to help Panama and Colombia 
right here in our own hemisphere, move the FTA.
    Ms. DeLauro. Cuba.
    Mr. Kingston. Oh, now you have gone too far.
    Mr. Bishop. With regard to sugar let me remind the 
gentlelady that charity does begin at home.
    Ms. DeLauro. There are two sides of the argument.
    Mr. Kingston. We are going to have my friend Mr. Brewer 
back and you might be the official Secretary at that point, so 
you can come back, too. I know you are looking forward to that.
    Mr. Scuse. I appreciate that.
    Mr. Kingston. And we are going to give each other book 
reading assignments, and we are going to talk about it. But I 
have a concern, and I can tell you that the interesting thing 
about Ms. DeLauro and me is that we don't always vote, which 
you probably had no clue on this, we don't always vote together 
but when we start talking--what is scary--the closer we get to 
each other in terms of these things, and I can promise you that 
fair-minded people could come up with reforms on food aid that 
everybody could be happy about and go home and talk about 
proudly.
    But I have great concerns of what we are doing to entire 
regions and continents. And I want to ask you one question.

                              SOUTH SUDAN

    South Sudan, biggest country in the world, how long is it 
going to take us to get there? Anything on that? Any thought 
process on that? Now that one could be an emergency. I don't 
know.
    Ms. DeLauro. South Sudan. You still have Somalia today. You 
mentioned the Ivory Coast. We have met with the AFRICOM people, 
the people who now have the military responsibility for looking 
at this area and what is happening in these places which are 
emergency situations.
    Mr. Kingston. Well, with that, this hearing is--I don't 
think we really want you to talk. We were having a good time.
    Mr. Scuse. I want to thank you and thank the committee and 
the membership for the questions today. Very good questions. I 
know that we owe you some responses, but I want to thank you 
for the opportunity to be here and to meet everyone.
    Mr. Brewer. I was going to say, your South Sudan question, 
whatever happens first it will be AID would go in on an 
emergency basis and we would follow based on the eligibility of 
our programs.
    Mr. Kingston. Well, thanks a lot.
    Mr. Brewer. We will monitor that.
    Mr. Kingston. We will stay in touch with all of that, and 
the committee is now closed.
    [The statement of Mr. Brewer follows:]

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Brewer, J. D.....................................................   291
Dolcini, Val.....................................................   291
Gensler, Gary....................................................   209
Glauber, Joseph..................................................     1
Merrigan, Kathleen...............................................     1
Murphy, W. J.....................................................   291
Scuse, M. T......................................................   291
Vilsack, Hon. Thomas.............................................     1
Young, Michael...................................................1, 291


                                 INDEX

                              ----------                                
        
                                                                   Page
Secretary of Agriculture.........................................     1
Acreage Crop Reporting...........................................   342
Administrative Claims............................................   193
Advisory Committees..............................................   143
Aerial Photography...............................................   462
Agency's Core Mission............................................   485
Agrarian Reform..................................................   373
Agricultural Land................................................    69
Agricultural Technology Innovation Partnership...................   205
Agricultural Trade Data..........................................   487
Agricultural Trade/Exports.......................................   108
Agriculture......................................................   222
Agriculture Payments by State....................................   318
Agriculture Research.............................................   345
Agriculture Research and Biomass.................................   180
Agriculture Safety Net...........................................   363
Agriculture Trade................................................   339
Amendments.......................................................   153
Animal Traceability..............................................   188
APHIS............................................................   201
Automated Surveillance...........................................   231
Beef Trade With China............................................   478
Brazil Cotton....................................................    83
Broadband.......................................................41, 195
Broadband........................................................    54
Budget Constrained...............................................   419
CFTC Rulemaking Impact on Agriculture Producers..................   252
Chinese Poultry.............................................70, 85, 184
Civil Rights.....................................................   205
CLERK'S NOTE.....................................................   102
Climate Change...................................................   473
Cochran and Borlaug Fellowship Programs..........................   490
CODEX......................................................51, 147, 477
Commodity Futures Trading Commission.............................   209
Commodity Prices.................................................   249
Commodity Supplemental Food Program.............................57, 197
Common Computing Environment Refresh.............................   153
Community Gardens................................................    58
Congressional Relations........................................121, 155
Conservation.....................................................   497
Conservation Reserve Program..........................65, 344, 353, 356
Consumer Education...............................................   239
Continuing Resolution.......................................52, 62, 192
Cooperative Programs.............................................   506
Country Strategy Support Fund....................................   467
County Office Leases and Procurement.............................   335
Crop Insurance........................................30, 340, 376, 499
Crop Insurance for Environmentally Sensitive Areas...............   516
Crop Reporting...................................................   495
Cultural Transformation..........................................   160
Dairy Exports....................................................   493
Dairy Import Assessments.........................................   493
Deceased Farmers.................................................   349
Definitions......................................................   225
Delinquent Loans.................................................   123
Department-Wide/Cross-cutting Issues.............................   118
Direct Conservation Loans......................................367, 504
Direct Loan Delinquency Rate.....................................   357
Direct Payments................................................350, 352
Direct Payments by State.........................................   365
Disaster Programs................................................   511
Discrimination Case Settlements..................................    93
Early Outs and Buyouts...........................................   146
Earmark Funding..................................................   192
Effect of Cuts in Funding........................................   229
Emergency Funding................................................   172
End Users........................................................   233
End Users and Margin Requirements................................   273
Energy Programs..................................................   202
Environmental Protection Agency..................................    48
EPA Regulations..................................................    79
Error Rates......................................................   114
Ethanol..........................................................    42
Exceptions from Transfer of Functions............................   153
Farm and Foreign Agricultural Services...........................   291
Farm Bill........................................................32, 65
Farm Bill Programs...............................................   513
Farm Loan Defaults...............................................   337
Farm Loan Programs...............................................   336
Farm Payments....................................................    56
Farm Program Payments............................................   513
Farm Service Agency..............................................   191
Federal Program Assistance.......................................    72
FETRA Assessment.................................................   465
Financial Management Modernization Initiative....................   156
Food Access......................................................    78
Food Aid...........................92, 94, 183, 346, 371, 376, 378, 470
Food Aid and Entrepreneurism.....................................   379
Food Aid Programs................................................   312
Food Labeling Initiative.........................................   106
Food Safety....................................................170, 182
Food Safety Working Group........................................    86
Food, Nutrition and Consumer Services............................   109
Foreign Agricultural Service Cuts in H.R. 1......................   501
Foreign Aid......................................................    89
Foreign Aid......................................................   365
Foreign Aid......................................................   379
Foreign Market Development Program Success Stories...............   476
Foreign Service Officers.........................................   360
Forestry Initiatives.............................................   181
Formula Funds....................................................   179
Free Trade Agreements............................................   347
FSA County Offices.............................................335, 507
FSA Cuts in H.R. 1...............................................   501
FSA Loan Programs................................................   419
FSA Security.....................................................   495
FSA Staff Reduction..............................................   375
FSIS....................................................34, 38, 49, 200
FSIS Inspection Program..........................................   171
FSIS Retention Rate..............................................   170
Funding Cuts.....................................................   242
Funding Levels...................................................   314
Funding Reduction Impacts........................................   366
Funding Reductions...............................................   315
FY 2011..........................................................   273
GIPSA Rule.......................................................    33
Global Agriculture Development...................................   509
Global Hunger....................................................   313
Government Accountability Office Report..........................    88
Government Shut Down.............................................    52
H-2A Guest Worker Program........................................    53
Headquarters Employees...........................................   161
Homeland Security................................................   159
Horse Protection.................................................   176
HR 1 Impacts.....................................................   287
Impact of GIPSA Rule on Trade....................................   353
Implementation of ACRE and SURE...........................462, 496, 511
Importance to the Economy........................................   244
Importation of Processed Poultry Products........................    49
Improper Farm Payments.........................................348, 502
Income Eligibility...............................................   349
India............................................................   109
Initiatives......................................................    29
Intentional Program Violations...................................   115
International....................................................   236
International Importation and Trade..............................    82
International Needs..............................................   380
Interstate Meat Rule.............................................    39
Investigations...................................................   287
Investment in Rural America......................................    63
IT Modernization.................................................   422
Japan and Trans-Pacific Partnership..............................   478
Legislative Proposal for User Fees...............................   285
Loans Written Off................................................   124
Major Swap Participants..........................................   234
Margin Requirements..............................................   246
Market Access Program..........................................364, 474
Market Promotion.................................................   373
McGovern-Dole International Food for Education and Child 
  Nutrition 
  Program.............................................90, 189, 484, 499
Monetization of Commodities......................................    96
More Regulation for Exchanges that Performed Well During Crisis..   280
National Agriculture Imagery Program.............................   358
National Animal Identification Program...........................    85
National Export Initiative.....................................339, 345
National Security................................................   314
New Production Acreage...........................................   352
NIFA Research....................................................   100
Non-Rural Communities............................................   507
Non-Traditional Farmers..........................................   505
Nutrition Assistance Programs....................................    69
Nutrition Education Crosscut.....................................   155
Obligations Under Other USDA Appropriations......................   490
OIG..............................................................   174
Opening Statement--Hon. Secretary Vilsack........................     3
Opening Statement--Mr. Brewer, FAS...............................   382
Opening Statement--Mr. Gensler, CFTC.............................   209
Opening Statement--Mr. Kingston..................................     1
Opening Statement--Mr. Kingston..................................   209
Opening Statement--Mr. Kingston..................................   291
Opening Statement--Mr. Scuse, FFAS...............................   291
Opening Statement--Mr. Dolcini, FSA..............................   396
Opening Statement--Mr. Murphy, FCIC..............................   408
Organic Research.................................................    64
OSEC Staffing....................................................   125
Outside Legal Counsel............................................   144
Ownership Limits.................................................   241
Pay Scale and Merit Based Compensation Adjustments...............   281
Payment Error Rates..............................................    42
Payments and Subsidies...........................................    87
Peanut Price Reporting...........................................    71
Performance Metrics..............................................   371
Personnel and the IT Budget......................................   253
Pest Disease Programs............................................   172
Pigford II/WIC Unobligated Balances.......................101, 193, 463
Position Limits..................................................   282
Poultry..........................................................    36
Presence in Foreign Countries....................................   480
Problems Related to Derivatives..................................   234
Process for Writing Rules with SEC...............................   227
Proposed Legislation.............................................    47
Public Affairs...................................................   118
Public Health Information System...............................171, 187
Questions for the Record--Mr. Aderholt...........................   495
Questions for the Record--Mr. Bishop.............................   191
Questions for the Record--Mr. Dicks..............................   179
Questions for the Record--Mr. Kingston...........................    99
Questions for the Record--Mr. Kingston...........................    99
Questions for the Record--Mr. Kingston...........................   419
Questions for the Record--Mr. Kingston...........................   252
Questions for the Record--Mr. Latham.............................   493
Questions for the Record--Mr. Rogers.............................   176
Questions for the Record--Ms. DeLauro............................   182
Questions for the Record--Ms. DeLauro............................   499
Questions for the Record--Ms. Emerson............................   181
Questions for the Record--Ms. Kaptur.............................   197
Questions for the Record--Ms. Kaptur.............................   505
Questions for the Record--Ms. Kaptur.............................   287
Records Check....................................................   351
Re-Establishment of Agricultural Policy Advisory Committee.......   469
Regional Differences in Agriculture..............................   360
Regional Food Purchases..........................................   380
Regional Innovation Initiative...................................   206
Regulations Governing Poultry Imports..........................185, 201
Regulator and Regulated..........................................   248
Renewable and Clean Energy.......................................    40
Renewable Energy.................................................   100
Renewable Energy Programs........................................    87
Research Facilities..............................................    30
Resource Constraints/Lack of Planning............................   252
Resources Devoted to Rulemaking..................................   274
Revitalizing Rural America.......................................    44
Rising Farmland Prices...........................................   100
Rulemaking.......................................................   247
Rural Strategy for America.......................................    32
Scientific Exchange Programs.....................................   345
Sequencing.......................................................   233
Single Food Safety Agency........................................    92
SNAP.............................................................   110
SNAP Categorical Eligibility.....................................    51
SNAP Purchases...................................................    43
Socially Disadvantaged Farmers...................................   361
Sod Saver Program................................................   517
South Sudan......................................................   381
Special Supplemental Nutrition Program for Women, Infants, and 
  Children......................................................81, 110
Speculation......................................................   221
Stabilization and Reconstruction.................................   355
Standard Reinsurance Agreement...................................   514
State Participation on CRP.......................................   354
Strategic Watershed Action Teams.................................   179
Study to Restructure and Streamline the Federal Government.......   486
Sustainability...................................................   377
Swap Execution Facilities........................................   232
Swap Execution Facilities........................................   284
Swaps Market Oversight...........................................   223
Taiwan...........................................................   479
Tariffs on American Products.....................................   107
Technical Assistance and Agricultural Research...................   510
Technology.......................................................   237
TEFAP.......................................................93, 96, 198
Tomatoes.........................................................   194
Trade Agreements.......................................37, 97, 107, 472
Trade with China.................................................   109
Trade with Cuba..................................................   347
Trade with Mexico................................................   374
U.S. Agriculture Export Strategy...............................467, 470
U.S. Implementing Derivatives Regulations........................   284
Unauthorized Programs..........................................103, 154
Undue Preference Rule............................................   201
Unfair Agricultural Trade Barriers...............................   469
Urban Farmer Outreach............................................   507
US School's Challenge/Let's Move Initiatives.....................   103
Value Added Agriculture..........................................   506
Vulnerability of the Food Supply to a Terrorist Attack...........   157
Water and Waste..................................................    35
Web Based Supply Chain Management System.........................   173
WIC..............................................................   199
WIC EBT..........................................................   116
WIC Formula Products.............................................    91
WIC NSA Costs....................................................   118
Women Farmers..................................................186, 503
Work in Afghanistan..............................................   366
Working Capital Fund and Greenbook...............................   163

                                  
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